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Fuel Queues May Persist Until We Fully Deregulate – Minister

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The Federal Government
has said Nigerians, especially residents of the Federal Capital Territory (FCT) and some other cities, may continue to witness fuel queues until there was complete deregulation of petrol.
Minister of State for Petroleum Resources, Timipre Sylva, stated this while briefing State House correspondents at the end of the weekly Federal Executive Council, FEC, meeting, weekend, presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa, Abuja.
The Minister also said the council approved the award and procurement for provision of a conference hostel facility in Yenagoa, adjacent to the Nigerian Content Towers at N22 billion to Megastar Technical Construction Company, with completion period of 24 months.
Responding to questions on the persistent fuel queues in Abuja and some other parts of the country, the Minister said the situation, particularly in the FCT, would persist for a while until fuel was finally deregulated.
He explained that the fuel queues were not caused by shortages in supply of fuel but for the reluctance of petroleum marketers to sell at the recommended retail price.
According to him, there are queues in Abuja because selling at the recommended N165/litre of fuel is unprofitable to marketers, who resolved to take advantage by diverting products from the city centre to where they could sell above the recommended retail price.
“If you look at it, there are no queues when you leave Abuja. In most places, it is only in Abuja metropolis you continue to have these queues. So, it is as though there is less supply to Abuja than to the rest of the country.
“It is not so. It is because if you go out of Abuja, they can afford to probably sell at higher prices. And I’m sure a lot of you must be buying at higher prices”, the Minister said.
Giving updates on the rehabilitation of the nation’s refineries, Sylva said the Port-Harcourt refinery would soon become operational, adding that the Dangote Refinery would commence operation by January next year.
“So, these issues will gradually be resolved and we will get to the point where Nigeria will be fully supplied from in-country refined products,” he assured.

On why Kaduna and Warri Refineries’ workers were still drawing salaries, even when they were not producing anything, the Minister explained that most of the workers had been redeployed, with a few others doing skeletal services to prevent pilfering at the facilities.

Commenting on the high cost of gas (diesel), the Minister said it was so because the product had been deregulated.

“But, of course, you know the geopolitical tensions in Ukraine and Russia is still on and it’s really affecting the global prices of this commodity.

‘’So, it is not really something from Nigeria. It is something that is affecting the global community; everywhere in the world is having the same problem.

“If you go to the UK, they are still talking about inflation; if you go to America, they’re talking about inflation, because there are issues and it’s all coming from the geopolitical tensions in Ukraine and Russia”, he said.

On his part, Minister of Environment, Muhammed Abdullahi, said Council awarded the contract for consultancy services and design of centre of excellence for environmental restoration with an Integrated Contaminated Soil Management Centre at the sum of N449,250,040.50 (VAT inclusive).

He explained that the centre was in fulfillment of the President’s promise to Ogoni people and was meant to impact on them in terms of employment generation and laboratory tests for land remediation efforts on the site contaminated, so it could be made easily cultivatable by the people for their fisheries, farming activities and access to water.

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Oil & Energy

FG Woos IOCs On Energy Growth

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The Federal Government has expressed optimism in attracting more investments by International Oil Companies (IOCs) into Nigeria to foster growth and sustainability in the energy sector.
This is as some IOCs, particularly Shell and TotalEnergies, had announced plans to divest some of their assets from the country.
Recall that Shell in January, 2024 had said it would sell the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance.
According to the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, increasing investments by IOCs as well as boosting crude production to enhancing Nigeria’s position as a leading player in the global energy market, are the key objectives of the Government.
Lokpobiri emphasized the Ministry’s willingness to collaborate with State Governments, particularly Bayelsa State, in advancing energy sector transformation efforts.
The Minister, who stressed the importance of cooperation in achieving shared goals said, “we are open to partnerships with Bayelsa State Government for mutual progress”.
In response to Governor Douye Diri’s appeal for Ministry intervention in restoring the Atala Oil Field belonging to Bayelsa State, the Minister assured prompt attention to the matter.
He said, “We will look into the issue promptly and ensure fairness and equity in addressing state concerns”.
Lokpobiri explained that the Bayelsa State Governor, Douyi Diri’s visit reaffirmed the commitment of both the Federal and State Government’s readiness to work together towards a sustainable, inclusive, and prosperous energy future for Nigeria.
While speaking, Governor Diri commended the Minister for his remarkable performance in revitalisng the nation’s energy sector.

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Your Investment Is Safe, FG Tells Investors In Gas

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The Federal Government has assured investors in the nation’s gas sector of the security and safety of their investments.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo,  gave the assurance while hosting top officials of Shanghai Huayi Energy Chemical Company Group of China (HUAYI) and China Road and Bridge Corporation, who are strategic investors in Brass Methanol and Gas Hub Project in Bayelsa State.
The Minister in a statement stressed that Nigeria was open for investments and investors, insisting that present and prospective foreign investors have no need to entertain fear on the safety of their investment.
Describing the Brass project as one critical project of the President Bola Tinubu-led administration, Ekpo said.
“The Federal Government is committed to developing Nigeria’s gas reserves through projects such as the Brass Methanol project, which presents an opportunity for the diversification of Nigeria’s economy.
“It is for this and other reasons that the project has been accorded the significant concessions (or support) that it enjoys from the government.
“Let me, therefore, assure you of the strong commitment of our government to the security and safety of yours and other investments as we have continually done for similar Chinese investments in Nigeria through the years”, he added.
Ekpo further tasked investors and contractors working on the project to double their efforts, saying, “I want to see this project running for the good of Nigeria and its investors”.
Earlier in his speech, Leader of the Chinese delegation, Mr Zheng Bi Jun, said the visit to the country was to carry out feasibility studies for investments in methanol projects.
On his part, the Managing Director of Brass Fertiliser and Petrochemical Ltd, Mr Ben Okoye, expressed optimism in partnering with genuine investors on the project.

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Oil & Energy

Oil Prices Record Second Monthly Gain

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Crude oil prices recently logged their second monthly gain in a row as OPEC+ extended their supply curb deal until the end of Q2 2024.
The gains have been considerable, with WTI adding about $7 per barrel over the month of February.
Yet a lot of analysts remain bearish about the commodity’s prospects. In fact, they believe that there is enough oil supply globally to keep Brent around $81 this year and WTI at some $76.50, according to a Reuters poll.
Yet, like last year in U.S. shale showed, there is always the possibility of a major surprise.
According to the respondents in that poll, what’s keeping prices tame is, first, the fact that the Red Sea crisis has not yet affected oil shipments in the region, thanks to alternative routes.
The second reason cited by the analysts is OPEC+ spare capacity, which has increased, thanks to the cuts.
“Spare capacity has reached a multi-year high, which will keep overall market sentiment under pressure over the coming months”, senior analyst, Florian Grunberger, told Reuters.
The perception of ample spare capacity is definitely one factor keeping traders and analysts bearish as they assume this capacity would be put into operation as soon as the market needs it. This may well be an incorrect assumption.
Saudi Arabia and OPEC have given multiple signs that they would only release more production if prices are to their liking, and if cuts are getting extended, then current prices are not to OPEC’s liking yet.
There is more, too. The Saudis, which are cutting the most and have the greatest spare capacity at around 3 million barrels daily right now, are acutely aware that the moment they release additional supply, prices will plunge.
Therefore, the chance of Saudi cuts being reversed anytime soon is pretty slim.
Then there is the U.S. oil production factor. Last year, analysts expected modest output additions from the shale patch because the rig count remained consistently lower than what it was during the strongest shale boom years.
That assumption proved wrong as drillers made substantial gains in well productivity that pushed total production to yet another record.
Perhaps a bit oddly, analysts are once again making a bold assumption for this year: that the productivity gains will continue at the same rate this year as well.
The Energy Information Administration disagrees. In its latest Short-Term Energy Outlook, the authority estimated that U.S. oil output had reached a record high of 13.3 million barrels daily that in January fell to 12.6 million bpd due to harsh winter weather.
For the rest of the year, however, the EIA has forecast a production level remaining around the December record, which will only be broken in February 2025.
Oil demand, meanwhile, will be growing. Wood Mackenzie recently predicted 2024 demand growth at 1.9 million barrels daily.
OPEC sees this year’s demand growth at 2.25 million barrels daily. The IEA is, as usual, the most modest in its expectations, seeing 2024 demand for oil grow by 1.2 million bpd.
With OPEC+ keeping a lid on production and U.S. production remaining largely flat on 2023, if the EIA is correct, a tightening of the supply situation is only a matter of time. Indeed, some are predicting that already.
Natural resource-focused investors Goehring and Rozencwajg recently released their latest market outlook, in which they warned that the oil market may already be in a structural deficit, to manifest later this year.
They also noted a change in the methodology that the EIA uses to estimate oil production, which may well have led to a serious overestimation of production growth.
The discrepancy between actual and reported production, Goehring and Rozencwajg said, could be so significant that the EIA may be estimating growth where there’s a production decline.
So, on the one hand, some pretty important assumptions are being made about demand, namely, that it will grow more slowly this year than it did last year.
This assumption is based on another one, by the way, and this is the assumption that EV sales will rise as strongly as they did last year, when they failed to make a dent in oil demand growth, and kill some oil demand.
On the other hand, there is the assumption that U.S. drillers will keep drilling like they did last year. What would motivate such a development is unclear, besides the expectation that Europe will take in even more U.S. crude this year than it already is.
This is a much safer assumption than the one about demand, by the way. And yet, there are indications from the U.S. oil industry that there will be no pumping at will this year. There will be more production discipline.
Predicting oil prices accurately, even over the shortest of periods, is as safe as flipping a coin. With the number of variables at play at any moment, accurate predictions are usually little more than a fluke, especially when perceptions play such an outsized role in price movements.
One thing is for sure, though. There may be surprises this year in oil.

lrina Slav
Slav writes for Oilprice.com.

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