Oil & Energy

Global Energy Advisory

Published

8 years ago

November 20, 2017

This week in energy was dominated by the predictions from two top energy sources – OPEC and the International Energy Agency.
On the one side you had OPEC, which is meeting on November 30th to decide the fate of production guidelines going forward. It might be no surprise, in advance of that meeting that they would upgrade their view of the global demand picture and they did – seeing at least their share of demand increasing by more than 400,000 barrels a day. This prediction would bode very well for the Saudi/OPEC strategy of continued restrictions on production going forward.
On the opposite side was the IEA, whose World Energy Outlook reduced their forecast for oil demand to a ‘mere’ 1.5m barrels a day increase in 2018 – a number that’s already historically huge, but a reduction from a forecast they had in fact increased – two times already – in 2017. More impactful, perhaps, was their longer-term forecast of global energy use. Despite their robust call for a 30 percent increase in total energy demand to 2040, they somehow managed to discount the role that crude oil was likely to play in fulfilling that demand.
Whether I buy the IEA’s prognostication skills 20+ years into the future given their helpless track record or not – (I don’t) – the WEO was blamed for a sell-off in oil futures in the last week.
Let’s discount these reports for the moment. This sell-off was more likely a result of the huge influx of hedge fund and other speculative account long positions that had accumulated in the last weeks, a negative trend I spotted and pointed out in last week’s column.
The most important question to answer is of course: What now?
It has been my position during the last several months that oil is making its way towards a new bull market and the predictive analyses do nothing to alter that position. Indeed, the one fundamental piece of news that might slow down my enthusiasm for oil isn’t related either to the IEA’s WEO report nor the overeager buying of hedge funders – it is the unsettling increase of a net nine rigs from the Baker-Hughes report of November 10th, including seven fresh drilled from the Scoop/Stack. Whether this is a trend that will creep rigs upwards again – something I definitely wasn’t expecting through the end of the year – is something that bears watching for the next several weeks.
But until that trend is definitively upended, every dip must be viewed as a buying opportunity.
And here I invite you to look at some of the names that might have rocketed upwards and might have become too expensive to enter – now moderating slowly to more appetising levels.
You know I am not your broker and will not deliver names you must buy and prices at which they must be bought. But I again will voice my preference for independent Permian shale names that have core acreage that’s proven to be profitable at $55 a barrel, with decent financials.
Many names will come to mind, including Pioneer Natural Resources (PXD), Concho Resources (CXO), Cimarex (XEC), EOG Resources (EOG) – and other smaller cap names like SM energy (SM) Centennial Resources (CDEV), Matador (MTDR) and Jagged Edge (JAG).
Until our thesis is broken, these are the places to look to take advantage of a market that I believe is just taking a small break from its inevitable upwards climb.
Source: Oilprice Report for 17/11/17

Oil & Energy

No Subsidy In Oil, Gas Sector — NMDPRA

Published

4 days ago

September 8, 2025

The Tide

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said there are no subsidies in the oil and gas sector as Nigeria operates a completely deregulated market.

The Director, Public Affairs Department, NMDPRA, George Ene-Italy, made this known in an interview with newsmen, in Abuja, at the Weekend.

Reacting to the recent reports that the Federal Government has removed subsidies or increased the price of Compressed Natural Gas (CBG), Ene-Italy said, “What we have is a baseline price for our gas resources, including CNG as dictated by the Petroleum Industry Act”.

He insisted that as long as the prevailing CNG market price conforms to the baseline, then the pricing is legitimate.

Furthermore, the Presidential – Compressed Natural Gas Initiative (P-CNGI) had said that no directive or policy had been issued by the Federal Government to alter CNG pump prices.

The P-CNGI boss, Michael Oluwagbemi, emphasised that the recent pump price adjustments announced by certain operators were purely private-sector decisions and not the outcome of any government directive or policy.

For absolute clarity, it said that while pricing matters fell under the purview of the appropriate regulatory agencies, no directive or policy had been issued by the Federal Government to alter CNG pump prices.

The P-CNGI said its mandate, as directed by President Bola Tinubu, was to catalyse the development of the CNG mobility market and ensure the adoption of a cheaper, cleaner, and more sustainable alternative fuel and diesel nationwide.

Oil & Energy

‘Nigeria’s GDP’ll Hit $357bn, If Power Supply Gets To 8,000MW’

Published

4 days ago

September 8, 2025

The Tide

The Managing Director, Financial Derivatives Company Limited (FDC), Bismarck Rewane, has said that Nigeria’s Gross Domestic Product (GDP) could rise to $357b if electricity supply would increase from the present 4.500MW to 8,000MW.

Rewane also noted that Nigeria has spent not less than $30 billion in the power sector in 26 years only to increase the country’s power generation by mere 500MW, from 4,500 MW in 1999 to 5,000MW in 2025 though the sector has installed capacity to generate 13,000 MW.

In his presentation at the Lagos Business School (LBS) Executive Breakfast Session, titled “Nigeria Bailout or Lights Out: The Power Sector in a Free Fall”, Rewane insisted that the way out for the power sector that has N4.3 trillion indebtedness to banks would be either a bailout or lights out for Nigeria with its attendant consequences.

He said, “According to the World Bank, a 1.0 per cent increase in electricity consumption is associated with a 0.5 to 0.6 per cent rise in GDP.

“If power supply rises to 8000MW, from current 4500MW, the bailout shifts money from government into investment, raising consumption and productivity. And, due to multiplier effects, GDP could rise to $357 billion.”

The FDC’s Chief Executive said “in the last 30 years, Nigeria has invested not less than $30 billon to solve an intractable power supply problem.

“The initiatives, which started in 1999 when the power generated from the grid was as low as 4,500MW, have proved to be a failure at best.

“Twenty-six years later, and after five presidential administrations, the country is still generating 5,000MW. Nigeria is ranked as being in the lowest percentile of electricity per capita in the world.

“The way out is a bailout, or it is lights out for Nigeria”, he warned.

He traced the origin of the huge debts of the power sector to its privatisation under President Goodluck Jonathan’s administration, when many of the investors thought they had hit a jackpot, only to find out to their consternation that they had bought a poisoned chalice.

Rewane, who defined a bailout as “injection of money into a business or institution that would otherwise face an imminent collapse”, noted that the bailout may be injected as loans, subsidies, guarantees or equity for the purpose of stabilising markets, protect jobs and restore confidence.

He said, “The President has promised to consider a financial bailout for the Gencos and Discos. With a total indebtedness of N4.3 trillion to the banking system, the debt has shackled growth in the sector.”

Rewane warned that without implementing the bailouts for the power sector, the GENCOs and DISCOs would shut down at the risk of nationwide blackout.

Rewane, however, noted that implementing a bailout for the power sector could have a positive effect on the country’s economy if Nigeria’s actual power generation could rise from today’s 4,500 MW to around 8,000 and 10,000 MW.

The immediate gains, according to him, would include improved power generation and distribution capacity, more reliable electricity supply to homes and businesses as well as cost reflective tariffs.

Oil & Energy

NEITI Blames Oil, Gas Sector Theft On Mass Layoff

Published

4 days ago

September 8, 2025

The Tide

The Nigeria Extractive Industries Transparency Initiative (NEITI) has blamed the increasing crude oil theft across the nation on the persistent layoff of skilled workers in the oil and gas sector.

The Executive Secretary, NEITI, Orji Ogbonnaya Orji, stated this during an interview with newsmen in Abuja.

Orji said from investigations, many of the retrenched workers, who possess rare technical skills in pipeline management and welding, often turn to illicit networks that steal crude from pipelines and offshore facilities.

In his words, “You can’t steal oil without skill. The pipelines are sometimes deep underwater. Nigerians trained in welding and pipeline management get laid off, and when they are jobless, they become available to those who want to steal crude”.

He explained that oil theft requires extraordinary expertise and is not the work of “ordinary people in the creeks”, stressing that most of those involved were once trained by the same industry they now undermine.

According to him, many retrenched workers have formed consortia and offer their services to oil thieves, further complicating efforts to secure production facilities.

“This is why we told the Nigerian Content Development and Monitoring Board (NCDMB) to take this seriously. The laying off of skilled labour in oil and gas must stop”, he added.

While noting that oil theft has reduced in recent times due to tighter security coordination, Orji warned, however, that the failure to address its root causes, including unemployment among technically trained oil workers would continue to expose the country to losses.

According to him, between 2021 and 2023, Nigeria lost 687.65 million barrels of crude to theft, according to NEITI’s latest report. Orji said though theft dropped by 73 per cent in 2023, with 7.6 million barrels stolen compared to 36.6 million barrels in 2022, the figure still translates to billions of dollars in lost revenues.

Orji emphasised that beyond revenue, crude oil theft also undermines national security, as proceeds are used to finance terrorism and money laundering.

“It’s more expensive to keep losing crude than to build the kind of monitoring infrastructure Saudi Arabia has. Nigeria has what it takes to do the same”, he stated.