OPEC Considering Deeper Output Cuts To Prop Up Oil Prices
By Mohammed Shosanya
Lagos
– Plan by the Federal Government to fix Nigeria’s ailing refineries and
make them work to capacity has been shut down by Maikanti Baru, Group
Managing Director, Nigerian National Petroleum Corporation (NNPC), Daily
Independent has learnt.NNPC sources said the plan informed
Minister of State for Petroleum Resources, Ibe Kachikwu’s optimism last
year that he will resign if Nigeria continues to import fuel by 2019
thinking the plan would be followed through. He had since shifted the
country attaining self-sufficiency in terms of refining petroleum
products to 2020.Impeccable sources told Daily Independent that
the government had embarked on private public partnership (PPP)
arrangement to bring back the ailing facilities to life.It had
concluded agreement with Oando, an indigenous energy company operating
in the upstream, midstream and downstream; global commodities trader,
Trafigura and world’s largest oil trader, Vitol, to rehabilitate Port
Harcourt refineries with installed capacity of 110,000bpsd.The
sources also said the government was to hand over Warri Refinery and
Petrochemical Company (WRPC) with installed capacity of 125,000bpsd to
Sahara Energy, a subsidiary of a leading international energy and
infrastructure conglomerate; Italy’s Saipem, MRS Oil Nigeria Plc and
Vitol to refurbish.It also concluded arrangement to hand over Kaduna Refining & Petrochemical Company Ltd. to MRS Oil Nigeria Plc and Vitol.
The
source said Vitol and other firms guaranteed to inject fund in all the
refineries with installed capacity of 445,000bpd, noting that the
rehabilitation will cost $1.6 billion.The PPP talk which had
been on for over a year was to see the oil firms recoup their investment
after repairs of the refineries from sales of crude oil, the sources
said.Spokesman of the corporation, Ndu Ughamadu, didn’t respond to calls and text messages to his phone for NNPC’s reaction.
Several
billions of dollars have been sunk by successive administrations in the
country to bring the refineries to life without any fruition.President
Muhammadu Buhari had earlier said it was “disgraceful” that no refinery
is currently performing up to 50 percent installed capacity, adding
that when he was military head of state all refineries were working.But
stakeholders in the nation’s oil and gas sector who spoke with Daily
Independent berated the Federal Government over the botched maintenance
of the refineries, saying the government had not shown the requisite
political will to make the refineries work optimally despite its
promises.They also said that the fact that the incumbent
government makes provision for fuel subsidies in 2019 budget shows that
the much publicised efforts to bring back the ailing refineries and stop
the deluge of products importation was a fluke.Nnimmo Bassey,
environmentalist and oil expert, told Daily Independent that turn around
maintenance for refineries in Nigeria has become a huge sinkhole.He
also said it is a huge embarrassment that rather than having the
refineries working at full capacity Nigeria is spending astronomical
amounts on fuel subsidies.“And more disturbing is the fact that
the 2019 national budget has a huge slice for more subsidies. Government
should carry out a radical surgery of the malaise of the refineries and
excise the cancer decisively. Dancing around the matter will continue
to benefit the so-called cabal while the productive areas of the economy
suffer,” he added.Chief Martin Onovo, a petroleum engineer and
one-time presidential aspirant on the platform of the National
Conscience Party (NCP), regretted that the current administration made
rehabilitation of the refineries and stopping of importation of
petroleum products one of its cardinal campaign promises but failed to
bring same to fruition.He said the current government has no
business tossing Nigerians around on the status of the refineries when
it knows that it would take a long walk to put the assets in good shape
and it lacks the capacity to ensure it runs efficiently.Onovo
told Daily Independent that the failure of the Buhari’s administration
to evolve aggressive strategy to promote or encourage in-country
refining of product has eaten deep into the country’s revenue and
exposes the government as agent of lies and deceit.He added that
Nigerians should hold the incumbent administration by the jugular for
failure to appropriate substantial funds of the N25.6 trillion accrued
to it since 2015 to breathe life into the refineries.OPEC Considering Deeper Output Cuts To Prop Up Oil Prices
Meanwhile,
faced with declining prices and growing inventory in the international
oil market, the Organisation of Petroleum Exporting Countries (OPEC) and
its allies are considering deeper output cuts to prop up oil prices.The
determined move by OPEC is coming when it had not even started
implementing its new six-month agreement to cut output to 1.2 million
barrels per day.The planned deep cuts would specifically be
beneficial to Nigeria which depends on oil for over 80 percent of
revenues to fund its budgets.Already members responsible for most of the reductions have pledged to extend or even deepen it.
Officials
from Iraq, Kuwait, and the United Arab Emirates have agreed with Saudi
Arabia’s expectation that the group, along with Russia and other oil
producers, would extend the agreement for another six months.At a
press briefing in Kuwait at the weekend, Iraqi, the U.A.E. and Algerian
energy ministers took turns repeating the message that OPEC would
deliver its 800,000 barrels per day cut and continue their cooperation
with other producers to balance supply and demand.The U.A.E.’s
energy minister, while stressing that the 1.2-million barrel-a-day cut
will clear an inventory build-up in the first half, hinted additional
curbs could be discussed.“The planned cuts have been carefully
studied, but if it doesn’t work, we always have the option to hold an
extraordinary OPEC meeting and we have done so in the past,” Suhail
Mohammed Al Mazrouei, who is also OPEC president, said in Kuwait at the
weekend.“If we are required to extend for another six months, we
will, if it requires more, we’ll always discuss and come up with the
right balance.”Last week, oil capped its biggest weekly decline
since 2016 on concerns that weakening economic growth and surging U.S.
supply will lead to a surplus next year, overwhelming OPEC’s efforts to
stabilize the market.The slide continued even after the
Organization of Petroleum Exporting Countries and its partners surprised
traders with the size of the supply reduction announced on Dec. 7.
Source:- Independentng
Leave a Reply