Russia-Ukraine Crisis Affecting Demand For Nigeria’s Crude, Says NNPCL

The Nigerian National Petroleum Company Limited (NNPCL) has provided insight into how the lingering conflict between Russia and Ukraine has impacted Nigerian crude oil inflows in the international oil market, leading to a dip in demand from the once-dependable Asian market at the onset of hostilities in the Eastern bloc. Maryamu Idris, Executive Director, Crude & Condensate, NNPC Trading Limited, who said this in a panel presentation at the Argus European Crude Conference in London, added that that the substantial price shocks impacting commodity and energy prices globally, the conflict between Russia and Ukraine has triggered a situation where India, a primary destination for Nigerian grades, increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes. “To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 in the subsequent six months afterwards. And so far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India,” she said. On the other hand, she noted that the Nigerian crude flow to Europe has increased in a bid to fill supply gaps left by the ban on Russian crude, pointing out that six months before the war, 678,000 bpd of Nigerian crude grades went to Europe, compared to 710,000 bpd six months later and 730,000 bpd so far this year. “This trend makes it evident that Nigerian grades are increasingly becoming a significant component in the post-war palette of European refiners. Several Nigerian distillate-rich grades have become a steady preference for many European refiners, given the absence of Russian Urals and diesel. Forcados Blend, Escravos Light, Bonga, and Egina appear to be the most popular, and our latest addition — Nembe Crude – fits well into this basket. This was a strong factor behind our choice of London and the Argus European Crude Conference as the most ideal launch hub for the grade,” Idris also said. On production challenges, Idris remarked that, like many other oil-producing countries, Nigeria had faced production challenges aggravated by the COVID-19 pandemic, including reduced investment in the upstream sector, supply chain disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements. These factors, she said, contributed to production declines in the second half of 2022 and early 2023. Idris, however, noted that the challenges are fast becoming a thing of the past with the introduction and implementation of a new framework for the domestic petroleum industry (the PIA of 2021), rejuvenating the business landscape, and re-positioning NNPC Limited to adopt a more commercial approach to the management of the nation’s hydrocarbon resources. According to her, NNPC Limited has secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years. “NNPC Limited is championing concerted efforts in partnership with host communities and private stakeholders to address the security and environmental challenges in the Niger Delta to further fortify production growth. Suffice to say we have already begun seeing significant progress on the rebound. In September 2023, Nigeria recorded its highest crude oil and condensate output in nearly two years, reaching 1.72 million barrels per day. This, we believe, is just the beginning of our production rebound.” She affirmed that in addition to sustainably growing upstream production volumes, NNPC Limited is also increasing its participation in the downstream sector in line with a ‘wells-to-wheels’ approach, taking the country’s unique hydrocarbon molecules as close as possible to end-users. The vehicle for this, she said, is the restructured NNPC Trading Company, focused on growing NNPC’s presence in the global market for crude, condensate, gas, and petroleum products. The Argus Crude European Crude Conference Panel Session was held with the theme, ‘The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?’ Vice President Crude of Argus, James Gooder, moderated the event.

No Plan To Increase Petrol Pump Price –NNPCL

The Nigeria National Petroleum Company Limited (NNPCL) has said it has no plans of increasing the pump price of petrol. In a statement posted on its verified X handle, and signed by the company’s Retail Management, it urged Nigerians to ignore speculations about a possible increase. NNPC Limited GCEO, Mele Kyari, had repeatedly stressed that the company would not increase the price of petrol from its present N617 per litre. “Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our PMS pump prices as widely speculated. “Please buy the best-quality products at the most affordable prices at our NNPC Retail Stations nationwide,” the statement read.

Crude oil flies to $86bpd over Gabon coup concerns

The coup in Gabon has fueled a modest increase in the prices of crude oil due to threats to the country’s 200,000 barrels per day (bpd) of crude oil exports.  Gabon is the second-smallest OPEC producer. Earlier on August 30, a cohort of senior military officers declared that they had assumed control following the announcement by the state election body that President Ali Bongo had secured a third term. Bongo’s father Omar had ruled as president for 42 years. According to a report by Wall Street Journal, since Gabon’s coup announcement, global crude oil prices have seen a modest increase due to seeming threats to exports from the country. “The coup and the threat of disruptions to Gabon’s oil exports are supporting oil prices, but only modestly as the nation is a minor OPEC oil producer, DNB Markets analyst Helge Andre Martinsen says. Brent crude oil is up 0.3 per cent at $85.19 a barrel. “The nation’s output stands at a modest 190,000 barrels a day, but it has been the only African OPEC member to hit its production quotas. So far, there has been no sign of disruption to Gabon’s oil output. Still, the coup serves as a reminder of the geopolitical risk in the oil market, Martinsen says.” It is important to note that as of 12:50 PM (GMT+1) on Wednesday, August 30, Brent crude price was at $86 per barrel. The Gabon coup is raising supply concerns alongside Hurricane Idalia in the United States, which has raised oil supply concerns as well. Meanwhile, on Wednesday, Amena Bakr, OPEC’s chief correspondent posted on Twitter that so far, it appears that oil production from fields in Gabon is not affected by the military coup. Similarly, Assala Energy, which is wholly owned by Carlyle Group (CG.O), said its oil production in Gabon has been unaffected by the military coup in the country. “We can confirm that all our personnel are safe, our operations continue as usual and our production is not affected,” a company spokesperson said. The private equity fund’s non-U.S. energy arm first invested in Assala in 2017 when it acquired Shell’s (SHELL) ageing operations in Gabon for $628 million. However, earlier this month, Carlyle agreed to sell Assala to French producer Maurel & Prom which owns and operates oil and gas assets in Africa, Europe and Latin America, including three licences in Gabon, for $730 million.

Crude production plunges to 1.22mbpd in Q2 2023 -Report

Hope for increased crude oil production deemed with second quarter figures plunging to 1.22 million barrel per day (mbpd), Nigeria’s statistics bureau, has said. The decrease is coming in spite of the restoration of fragile peace in the Nigeria Delta region; the second quarter of 2023 recorded an average daily oil production of 1.22 million barrels per day (mbpd). This according to the Nigerian Bureau of Statistics (NBS) was much lower than the daily average production of 1.43mbpd recorded in the same quarter of 2022 by 0.22mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29mbpd. The real growth of the oil sector was 13.43 per cent (year-on-year) in the second quarter of 2023, indicating a decrease of 1.66 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-11.77 per cent). Growth also decreased by 9.22 per cent points when compared to the first quarter of 2023 which was –4.21 per cent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of -14.12 per cent in the second quarter of 2023 and contributed 5.34 per cent to the total real Gross Domestic Product (GDP) in the second quarter of 2023, down from the figure recorded in the corresponding period of 2022 and down from the preceding quarter, where it contributed 6.33 per cent and 6.21 per cent respectively. The statistics bureau further said the non-oil sector grew by 3.58 per cent in real terms during the reference quarter (Q2 2023). This rate was lower by 1.19 per cent points compared to the rate recorded in the same quarter of 2022 and 0.81 per cent.

Current oil output unlikely to change as OPEC meets Friday

The Organization of Petroleum Exporting Countries (OPEC) is not likely going to make any changes to the current oil output policy as tighter supplies and resilient demand drive an oil price rally. Ministers from the OPEC and allies led by Russia, known as OPEC+, meet on August 4 and the panel, called the Joint Ministerial Monitoring Committee, can call for a full OPEC meeting if warranted. Oil has rallied to a three-month high this week above $85 a barrel for Brent crude, as tighter supply and rising demand outweigh concern that interest rate hikes and stubborn inflation could hit economic growth.The Six OPEC+ sources said the Committee would probably not make any changes to existing policy during Friday’s online meeting as one of them cited the rising oil price as a reason to take no action.The OPEC and the Saudi Energy Ministry did not immediately respond to requests for comment on Tuesday.In the latest comments from an OPEC member about the market, the energy minister for the United Arab Emirates told Reuters on July 21 that current OPEC+ actions were sufficient for now and the group was “only a phone call away” if any further steps are needed. The UAE minister sits on the JMMC, which is chaired by Saudi Energy Minister Prince Abdulaziz bin Salman. Still, a surprise cannot be ruled out. The Saudi minister in July said OPEC+ would “continue the effort at surprising markets”. In April, several OPEC+ members announced cuts just ahead of a JMMC meeting that was expected to take no action. At its last policy meeting in June, OPEC+ agreed on a broad deal to limit supply into 2024 and Saudi Arabia pledged a voluntary production cut for July that it has since extended to include August. Analysts told Reuters last week they expected Saudi Arabia to extend the voluntary cut for another month to include September. National Australia Bank said in a report on Tuesday that it expected the Saudis to announce an extension of their voluntary cut at the committee meeting on Friday.