OPEC output falls despite Iran return

 OPEC said on Monday its oil production fell in February despite member Iran steadily increasing its output after international sanctions were lifted in January following a landmark nuclear deal.

 The decrease can be largely attributed to a steep production drop in Iraq, which has suffered from the global price slump for crude and rival oil exports by the autonomous Kurdistan region, the Organization of the Petroleum Exporting Countries said in its February monthly report.

Crude output dropped by 175,000 barrels per day in February to average 32.28 million barrels per day (mbpd), it said. “Crude oil output decreased mostly from Iraq, Nigeria and (United Arab Emirates), while production increased in Iran, Saudi Arabia and Kuwait,” the report noted.

The cartel’s output still exceeds demand, which the cartel now projects at 31.5 mbpd, slightly lower than last month. Iran, which has the world’s second-largest crude reserves, pumped out 3.1 mbpd in February, up from 2.9 in January, according to OPEC.

World oil prices fell sharply on Monday after Tehran reportedly announced over the weekend that it would only join an output freeze proposed by Saudi Arabia and Russia once its supply had reached pre-sanction levels of 4.0 mbpd. Despite the losses, the oil market has picked up in recent weeks, prompting the International Energy Agency to suggest on Friday that a tentative recovery may be underway.

The OPEC reference basket rebounded for the first time in three months, the cartel said, gaining more than 8% to reach $35.62 on Monday. The cartel attributed this to “numerous positive factors, such as the freeze proposal and “a fairly healthy physical oil market… despite ongoing oversupply, a slowing global economy, record high inventories and a strengthening US dollar”.

Crude prices have crashed from peaks above $100 per barrel in mid-2014 to under $30. While OPEC had traditionally cut back production to support prices, cartel kingpin Saudi Arabia this time changed tack. It stepped up output to defend market share and push out higher-price producers like US shale oil companies. The strategy appears to be partially working, with the cartel predicting a production drop of 700,000 barrels per day this year in non-OPEC countries led by North America, to an average 56.93 mbpd. “The expectation of reduced cash flow in 2016 has prompted many companies to reduce investments, deferring major new projects until a sustained price recovery can be maintained,” OPEC said. The organisation added that it would “closely monitor” the impact of lower oil prices on government spending plans in the Middle East.

Group supports Kachikwu over unbundling of NNPC

…wants  NASS to back Minister

By Oluwagbenga Bankole

The Niger Delta Indigenous Movement for Radica Change (NDIMRC) has applauded the Minister of State for Petroleum and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Dr. Ibe Kachukwu for the unbundling of the Corporation into 30 companies.

The oil monitoring group also condemned the strike action by  oil workers over the unbundling of the
Corporation.

In a press statement signed by its President, Nelly Emma, Secretary, John Sailor and Public Relations Officer (PRO) Stanley Mukoro, the group hailed Dr. Kachukwu over the unbundling of NNPC.

While saying that the Minister has done the right thing, the group urged Nigerian Senators and members of the House of Representatives to support the unbundling of the Corporation and give the Minister the necessary backing.

According to the group; " The unbundling of the NNPC will go a long way in eliminating bureaucracy in the operations of the Corporation and as it is now, each of the constituent units in the restructuring will be profit driven".

“We are also in full support of the conversion of the Group Executive Directors (GEDs) by the Minister to Chief Executive Officers (CEOs) and their redeployment to the various business components,” the group said.

It also stated that, “The former GEDs never helped the Corporation as they were behind the frequent fuel scarcity in the country and strikes by oil workers. Since the former GEDs have so much money, they used their money to frustrate all plans of the Federal Government to make NNPC a better place. Nigerians are going to reap the benefits of the unbundling of the NNPC very soon.”

“All moves made in the past to reposition  NNPC for profitability were thwarted by the former GEDs. They never helped the Corporation as they connived with oil majors to create artificial fuel scarcity in the country. They also sponsored strikes by oil workers,” the group claimed.

Calling on Nigerian lawmakers to throw their weight behind the unbundling of the NNPC by Dr. Kachikwo, the group said, “Going on strike  this moment by oil workers as a result of the unbundling exercise is not the best. We should all give our support to the Minister. Our senators and members of the House of Representatives should give legislative backing to Dr. Kachikwo over the restructuring of the NNPC because that is the way to go.”

According to the group also, “There should be no fear of job loss among the staff of the Corporation and so oil workers should not allow themselves to be used by some elements, especially the former GEDs to go on strike over the restructuring being carried out by the minister.”

“The minister is not ready to sack any worker as a result of the unbundling and so the strike by the oil workers is uncalled for. The former GED for Explorations and Productions who in the past announced himself as the GMD of the NNPC and other GEDs are behind the strike action because they do not want to leave their positions. But they must be moved as we are in a new dawn to reposition the Corporation. It should be made clear here that the former GEDs who are currently sponsoring various groups to kick against the restructuring of the NNPC to cause a chaotic situation in the country are not going to be sacked by the Minister, but to be moved from their positions.

“The Dr. Kachikwu that we know is not a failure and the glory of God is upon him. He is God fearing and we should all support him as he wants nothing but the best for the Oil and Gas sector in the country.”

The group also used the medium to appeal to the Minister to look into the cases of NNPC workers he retired prematurely on resumption of office as the GMD of the Corporation.

“We want to implore the Minister to look into the cases of those he retired prematurely on resumption as GMD of NNPC. Those that have clean records should be recalled by the Minister.”

Power generation rallies to 4,200MW

After weeks of plummeting fortunes, the nation’s power generation rose yesterday to 4,200 Mega Watts (MW) from 3,755MW.

The power generattion profile peaked at 5,074MW early February, before it started cascading.
The current height, according to the Transmission Company of Nigeria (TCN), was due to the completion of maintenance on the gas pipeline to the generating stations.

In a statement signed by The Asst. General Manager (Public Affairs), SO/MO, TCN, Clement Ezeolisah: “Power generation has started improving and is now over 4200MW on daily average,”

He attributed the recent outages to scheduled maintenance programme on the pipelines supplying gas to the generating stations.

Electricity consumers had in recent times been groanning under epileptic power supply, which has drastically impacted on domestic and commercial activities.

The new development may have however raised hopes of improved power supply in the country, if other factors should work in tandem with the administration’s plan for lower outages.

Meanwhile, other industry sources hinted that the tariff intrigues are brewing concerns around the gas producing companies, which are worried that the failure to implement the Multi Year Tariff Order (MYTO 2015) might make the electricity business less viable.

According to the sources, if the new tariff fails to sail through, it would leave the industry with non-cost reflective tariff, which might trigger the debt profile of the distribution companies and transmission companies.

The Acting Chief Executive Officer of the Nigerian Electricity Regulatory Commission (NERC), Dr. Anthony Akah, had lamented incidents of vandalism that led to reduction in peak power supply through the national grid from over 5,000MW attained early February.

Akah therefore solicited support of members of the public and the council to collaborate with the service providers and security agencies in ensuring security of electrical installations.

He said that the commission would soon compel electricity distribution companies to publish their meter deployment schedules, so as to ensure adherence to the meter roll out plan, contained in the performance agreement signed with government by the utility firms.

About nine power generating stations across the country were either completely or partly affected by the gas supply challenges, forcing the national grid to shut-in about 2044Mega Watts (MW) of electricity.

Affected stations included Olorunshogo National Integrated Power Plant (NIPP) was completely shutting-in 600MW; Sapele NIPP shuts-in112.5 MW; Omotosho (Gas), 190MW; Geregu NIPP, 145MW; Delta, 340MW; Omotosho NIPP120MW; Egbin 440MW; Olorunshogo (Gas) 38MW due to gas shortage; while Odukpani was shutting-in 59.1MW due to water constraints.

OPEC’s oil, gas investment may drop to $320b this year

The International Energy Information Administration (IEA) expects oil and gas investment in Organisation of Petroleum Exporting Countries (OPEC) to drop from $1.2 trillion it recorded in 1012 to $320 billion in 2016.

The IEA, which made this disclosure in its Medium Term Oil Market report released recently, stated that as a whole, oil export revenues slumped from a peak of $1.2 trillion in 2012 to $500 billion in 2015 and, if oil prices remain at current levels, this will fall in 2016 to approximately $320 billion.

According to the report, massive economic retrenchment in countries such as Algeria, Nigeria and Venezuela will reduce their ability to invest in the oil sector.

It stated: “The IEA has regularly warned of the potential consequences of the 24 per cent fall in investment seen in 2015 and the expected 17 per cent fall in 2016. In today’s oil market there is hardly any spare production capacity other than in Saudi Arabia and Iran and significant investment is required just to maintain existing production before we move on to provide the new capacity needed to meet rising oil demand. The risk of a sharp oil price rise towards the later part of our forecast arising from insufficient investment is as potentially destabilising as the sharp oil price fall has proved to be”.

It noted that global oil supply growth is plunging as an extended period of low prices takes its toll.According to the report, while U.S. light, tight oil (LTO) output is falling steeply for now, the market will begin rebalancing in 2017 and by 2021 the United States and Iran are seen leading production gains among non-OPEC and OPEC countries, respectively.

The report noted that while oil prices should start to rise gradually once the market begins rebalancing, the availability of resources that can be easily and quickly tapped would limit the scope of rallies – at least in the near term.

However, the report points to the risk of an oil price spike in the later part of the outlook period arising from insufficient investment.

“It is easy for consumers to be lulled into complacency by ample stocks and low prices today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil-security surprises in the not-too-distant-future,” the IEA Executive Director Fatih Birol, said while launching the report at IHS CERAWeek.

The report sees 4.1 million barrels a day (mbpd) being added to global oil supply between 2015 and 2021, down sharply from the total growth of 11 mbpd in the period 2009-2015. The drop in supply growth comes as upstream investment dries up in response to the current glut that is pressuring prices. Global oil exploration and production capital expenditures (capex) are expected to fall 17 per cent in 2016, following a 24 per cent cut in 2015 – which would be the first time since 1986 that upstream investment has fallen for two consecutive years.

The report stated: “US production is seen reaching an all-time high of 14.2 mbpd by the end of the forecast period, but only after falling in the short term. LTO output declines by 0.6 mbpd this year and by a further 0.2 mbpd in 2017 before a gradual recovery in oil prices, combined with further improvements in operational efficiencies and cost cutting, allows production to resume its upward climb. The United States remains the largest contributor to supply growth during the forecast period, accounting for more than two-thirds of the net non-OPEC increase. Freed from sanctions, Iran leads OPEC gains: Iranian oil output rises 1 mbpd to 3.9 mbpd by 2021”.

FG moves to unbundle NNPC into 30 companies

NNPC GMD, Dr. Ibe Kachikwu

The Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, has said that the NNPC is to be unbundled into 30 profit-making companies with separate Managing Directors in the weeks ahead as part of the ongoing transformation of the national oil company.

 

Dr. Kachikwu made this disclosure at the 25^th Oloibiri Lecture Series and Energy Forum in Abuja with the theme: “Technological Advances in Hydrocarbon Exploration and Exploitation: Solutions to Global Oil Price Stability”.

 

The Minister stated that the NNPC has been moved from a loss position of N160 billion to some N3 billion by January 2016, adding that by year end the Corporation should start making some profit.

 

“For the first time, we are unbundling the subset of the NNPC to 30 independent companies with their own Managing Directors. Titles like Group Executive Directors are going to disappear and in their place you are going to have Chief Executive Officers and they are going to take responsibilities for their titles. At the end of the day, the CEO of an upstream company must deliver an upstream result,” Dr. Kachikwu stated.

 

He also informed that as part of measures to stabilize crude oil prices, some members of the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet with Russia on 20^th March, 2016, in Moscow to fine tune collaborative strategies.

 

The Minister noted that the President Muhammadu Buhari administration is focusing on developing the nation’s gas resources in order to boost revenue as part of the diversification policy of the Federal Government.

 

Dr. Kachikwu said the petroleum sector, under his watch, would rapidly review the contracting cycle of projects from two years to six months in the upstream, stressing that efforts are in top gear to review the existing Production Sharing Contracts which is long overdue.

 

The Minister applauded the National Assembly on their efforts on the Petroleum Industry Bill (PIB) which he said would go a long way to promote efficiency in the governance structure of the industry.

 

He noted that for the Nigerian oil and gas industry to make remarkable progress, there is need for all the stakeholders in the upstream, midstream and downstream sectors to be on the same page on cost control, contracting circle, technology and environmental issues.

 

He called on stakeholders to adopt integrated approach towards resolving some of the challenges of the industry in Nigeria.

 

In his welcome remarks, the Chairman of the Society of Petroleum Engineers (SPE), Engr. George Kalu, said the Oloibiri Lecture Series and Energy Forum of this year coincides with 60 years of oil exploration and production in Nigeria, adding that the low price of crude oil affords Nigeria the opportunity to reduce cost through industry collaboration.

APC govs disagree over Buhari’s stance on N5000 for youths

A CRACK may have developed among the ranks of the governors of the ruling All Progressives Congress (APC) as Governor Tanko Umaru Al-makura of Nasarawa State and his Imo State counterpart, Owelle Rochas Okorocha, yesterday took different positions in their reaction to President Muhamnadu Buhari’s decision to ditch the N5000 unemployment benefits to Nigerians.

The governors gave their opinions separately yesterday while speaking with reporters after their meeting with Vice President Yemi Osinbajo in Abuja.

To Al-makura, the President has the prerogative to so review any policy at any given time and his decision stands in as much as it is to the best interest of the nation.

According to the Nasarawa governor, “the President is the person that can tell you precisely how he is working on campaign promises and interventions that he has created, using his ingenuity. And if at any point in time, the President is reviewing that issue, I think he is the only person that can do so in the best interest of the country. And so, it is not challengeable by anybody whatever his position.”

He, therefore, called on Nigerians to give the benefit of doubt to enable him implant the laudable agenda that he has for Nigerians.

While Okorocha, who is Chairman of the Progressives Governors’ Forum (PGF) agreed with the President on the need to improve on infrastructure to boost productivity, he, however, believed that, one way or the other, the APC campaign promises must be fulfilled to the people.

“To be honest with you, it is a great idea, but there are many ways to give that support. Sometimes, it could be in cash which has its own challenges. Handling of that is also in itself a wonderful and great idea,” he said.

The President had declared in Saudi Arabia, during a meeting with a select group of Nigerian community in Makkah that, rather than paying the N5000 as canvassed by his party on the heels of the presidential election, he would instead focus on repairing infrastructures such as roads, bridges, schools, among others.

No Banking Day: CBN calls for vigilance against excessive charges

The Consumer Advocacy Foundation of Nigeria (CAFON), a non-profit making organization, has threatened to boycott banking services from today, Tuesday, March 1, 2016, owing to perceived arbitrary charges by commercial banks.

Central Bank of Nigeria, CBN, has called on bank customers to be vigilant against excessive bank charges and channel complaints to appropriate authorities, instead of participating in the boycott of banking services.

 CAFON said: ‘’It is pertinent to note that the Nigerian banking system had seen radical reforms in recent years in order to drive the Vision 20: 2020 programme.

As part of this broad policy initiative the Central Bank of Nigeria, CBN, rolled out the cashless policy with a number of options in the electronic payment systems, including the mobile banking.

 ‘’To achieve this, the CBN had enlisted electronic and telecom service providers to ensure convenience and safety. ‘’In addition, the Bank also set up the Consumer Protection Department, CPD, saddled with the responsibility of ensuring that bank customers are not unduly short-changed by the commercial banks. “Meanwhile, it is equally expected that while the regulators are doing their bit, bank customers must not only insist, but persist in demanding that their respective banks give them good service and at affordable charges. ‘’Nigerians should note that the bank-customer relationship is personal and contractual and should seek for redress when shotchanged.’’

 Meanwhile, the Central Bank of Nigeria, CBN, has called on bank customers to be vigilant against excessive bank charges and channel complaints to appropriate authorities instead of participating in the boycott of banking services.

The apex bank stated this in response to the boycott of banking services today called by Consumer Advocacy Foundation of Nigeria (CAFON). Two weeks ago, CAFON launched a campaign against the introduction of Stamp Duty charge of N50, Current Account Maintenance Fee and excessive bank charges.

The group called on bank customers to boycott all banking services in March to protest the charges. 

However in a statement issued yesterday, the CBN faulted the boycott, saying CAFON should rather encourage Nigerians to take complaints that were related to wrongful bank charges to the appropriate quarters.