Oil
Saudi Arabia may be overcoming addiction to oil-fired power
…Saudi monthly crude exports at highest since November 2005
…Production averages nearly 10 mln bpd from June-September
…More oil production brings more gas to save crude for export
…Cooler weather, more gas, less energy waste help temper oil use (Updates throughout)
DUBAI – Saudi Arabia may be starting to overcome a long addiction to generating electricity from its own oil, easing a nagging concern for a global market reliant on free-flowing crude exports from the kingdom.
Over the summer months this year, the country reversed a trend of burning ever increasing amounts of its oil output for domestic power production, thanks to more gas supplies, greater energy efficiency and some cooler weather.
Saudi Arabia’s growing reliance on liquid fuels to meet summer surges in demand for air conditioning prompted the International Energy Agency (IEA) to warn in 2011 that its oil exports may shrink in years to come.
However, government figures showed the volume of oil burned for power production in the world’s leading crude exporter fell to 689,750 barrels per day (bpd) from June to September this year. That compared with a record 763,250 bpd in the same period of 2012, according to the figures issued through the Joint Oil Data Initiative (JODI) on Sunday.
“That’s very good news and it is going to continue declining… We expect next summer to be less than this year,” a senior industry source in Saudi Arabia said.
Saudi Arabia is by far the largest user of crude oil for power generation, with most other countries having abandoned oil-fired power plants long ago in favour of gas, nuclear and renewable energy.
Officials had hoped to cut back on oil-fired power production in 2012 using output from the new Karan gas field but an abnormally hot summer meant the decline was pushed back to this year.
“There are three reasons for the decline. One is the weather, the second is the start of the efficiency programme and the third is the increasing use of natural gas for electricity,” said the senior industry source.
“You are going to see domestic consumption going down or at least stabilising,” the source said, while noting that economic growth – which tends to push up power use – is strong.
As about half Saudi Arabia’s gas supplies come from its vast oilfields, a rise in crude output to an average of 9.997 million bpd this summer – the highest over a four-month period since JODI records began in 2002 – also boosted gas supply.
OPEC’s most powerful oil producer has increased crude production by around 2 million bpd since summer 2010 to make up for lost supplies from Libya, Syria and Yemen due to war or unrest, and from Iran because of international sanctions.
The most subdued summer oil burning season on JODI records dating back to 2009 helped to boost Saudi crude oil exports to an average of 7.606 million bpd from June-September, the highest four-month average since the winter of 2005/06.
A sharp drop in domestic demand in September 2012 helped to drive Saudi crude exports up to 7.844 million bpd, the highest level since November 2005, despite the kingdom producing less crude than in August.
Although production averaged just 9.482 million bpd from November 2005 to February 2006, exports hit 7.648 million bpd because Saudi domestic use slumps in the cooler winter months.
DEMAND TO WANE?
Demand for Saudi crude might wane in the next few years, leading to lower gas output and supply problems.
A possible reason for this is a return of large volumes of Iranian oil to the global market if talks between Tehran and world powers on its nuclear programme lead to an easing of the sanctions, while demand for imported crude falls in North America due to rising shale oil production there.
Saudi Arabia has ambitious plans to build nuclear and solar power plants because every barrel of crude saved is worth over $100 on the export market, but those programmes have made sluggish progress.
Until those plants start production, Riyadh needs to keep up its efficiency drive and keep pumping crude at near record high levels to avoid a rebound in oil burning in power plants in summers to come.
Saudi electricity use has risen by about 6 percent annually over the last decade, with summer peak demand more than doubling from 2002 to over 48 gigawatts in 2011, according to the national electricity regulator.
– REUTERS
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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