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A
currency trader watches monitors at the foreign exchange dealing room of the
KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Aug. 9, 2016. Asian
stock markets were little changed Tuesday after Wall Street closed nearly flat
amid little market-moving news. Prices of oil retreated slightly after reports
of a new OPEC meeting sparked a rally. (AP Photo/Ahn Young-joon)
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The International Energy
Agency (IEA) expects global demand for oil to grow less than previously expected next
year due to a weaker economy.
Associated
Press report continues:
The
Paris-based agency, which consults oil-importing nations, lowered its forecast
for demand growth next year to 1.2 million barrels a day from 1.3 million
barrels a day previously. That would be a slowdown from this year's growth of
1.4 million barrels a day.
The
price of oil has fallen in recent weeks, and the international benchmark,
Brent, was down another 54 cents at US$43.51 a barrel after the IEA's report on
Thursday.
The
recent drop in prices appears due to a combination of waning expectations of
economic growth and high supply. The IEA noted global supply rose in July and
that there was an inventory overhang in June.
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| Oil barrels |
Nigeria Records
Highest Drop In Output At OPEC
• To lose ₦120b as gas export line remains shut
The
Guardian Nigeria reports that Nigeria is fast losing its clout among global oil
producers as the country recorded the highest drop in crude production in the
Organization of Petroleum Exporting Countries (OPEC) in July.
OPEC,
which accounts for at least 40% of the global oil supply market,
yesterday put unplanned crude oil supply disruptions among its members at 2.3
million barrels per day (mbpd) in July, due to increased outages in Nigeria and
Libya.
To cap an already bad situation, Nigeria will also be losing revenue from gas
supply suspension, as Royal Dutch Shell PLC, on Wednesday, declared Force
Majeure on a single pipeline that supplies liquefied natural gas to the Nigeria
Liquefied Natural (NLNG) gas plant.
Already,
Nigerian Petroleum Development Company (NPDC) is losing ₦20 billion monthly to
the closure of the Forcados export line, according to the Nigerian National
Petroleum Corporation (NNPC).
NPDC
would have lost a substantial portion of estimated crude oil sales of over ₦120
billion by the end of September when the export line may have been repaired.
OPEC
report released yesterday revealed that Nigeria recorded the highest decline in
crude oil production in July. The organisation disclosed that Nigeria’s crude
oil production dropped from the 1.549 million bpd it recorded in June to 1.508
mbpd in July. This is far less than the country’s target of four million
barrels daily and the expected 2.2 million bpd estimated in the 2016 budget.
Secondary
sources have it that OPEC-14 crude oil production (following the rejoining of
Gabon on 1 July), averaged 33.11 mbpd in July, an increase of 46 bpd over the
previous month. Crude oil output increased mostly from Iraq, while production
in Nigeria showed the largest drop.
Shell
Petroleum Development Company (SPDC) spokesman, Precious Okolobo, who confirmed
the last disruption in flow of gas to NLNG, told The Guardian that the leak
occurred on the Eastern Gas Gathering System, or EGGS-1, pipeline which supplies
the bulk of Shell’s gas to the Nigeria LNG plant on Bonny Island. Some supply
continues through other pipelines.
He
said: “SPDC on August 8, declared Force Majeure on gas supply to NLNG following
a leak on the Eastern Gas Gathering System (EGGS-1) pipeline through which it
supplies the bulk of its gas to NLNG. The pipeline has been shut down for a
joint investigation into the cause of the leak and repairs. SPDC continues to
supply gas to NLNG through other pipelines.”
Militancy
in the Niger Delta has resulted in the declaration of Force Majeure on
Nigeria’s major export pipeline since February this year.
NNPC
said in its latest report that it recorded deficit in June due to decrease in
revenue generation as a result of decline in Petroleum Products Management
Company (PPMC) sales by 13.30% or ₦14.9 billion and increase in products
distribution costs.
“Also,
June 2016 operations witnessed the major impact of incessant vandalism. During
the month, more than 261 vandalized points were recorded. In NPDC, a substantial
portion of estimated crude oil sales for the month of over ₦20 billion could
not be realized due to the Force Majeure declared by SPDC as a result of
vandalized 48-inch Forcados export line,” it added.
Apart
from raising concerns in OPEC, Nigeria’s declining oil production also
attracted the attention of the U.S. Energy Information Administration (EIA),
which said in its monthly report that Nigeria alone recorded average
disruptions of crude oil production of 0.7 million bpd during the month in review,
representing 100,000 bpd higher than in June.
According to EIA, the increase in outages comes as militants target pipelines that transport Bonny Light crude oil.
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