Oil & Energy
Global Energy Advisory
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
Nigeria’s losses due to crude oil theft has been said to be more significant than those of some other members of the Organisation of Petroleum Exporting Countries(OPEC).
The Chairman, Senate Ad- hoc Committee on Crude Oil Theft, Senator Ned Nwoko, made this known in an interview with newsmen in Abuja.
Nwoko noted with dismay the detrimental impact of the issue, which, he said include economic damage, environmental destruction, and its impact on host communities.
According to him, the theft was not only weakening the Naira, but also depriving the nation of vital revenue needed for infrastructure, healthcare, education and social development.
The Senator representing Delta North Senatorial District described the scale of the theft as staggering, with reports indicating losses of over 200,000 barrels per day.
Nwoko disclosed that the ad hoc committee on Crude Oil Theft, which he chairs, recently had a two-day public hearing on the rampant theft of crude oil through illegal bunkering, pipeline vandalism, and the systemic gaps in the regulation and surveillance of the nation’s petroleum resources.
According to him, the public hearing was a pivotal step in addressing one of the most pressing challenges facing the nation.
‘’Nigeria loses billions of dollars annually to crude oil theft. This is severely undermining our economy, weakening the Naira and depriving the nation of vital revenue needed for infrastructure, healthcare, education, and social development.
‘’The scale of this theft is staggering, with reports indicating losses of over 200,000 barrels per day more than some OPEC member nations produce.
‘’This criminal enterprise fuels corruption, funds illegal activities and devastates our environment through spills and pollution.
‘’The public hearing was not just another talk shop; it was a decisive platform to uncover the root causes of crude oil theft, bunkering and pipeline vandalism.
‘’It was a platform to evaluate the effectiveness of existing surveillance, monitoring, and enforcement mechanisms; Identify regulatory and legislative gaps that enable these crimes to thrive.
‘’It was also to engage stakeholders, security agencies, host communities, oil companies, regulators, and experts to proffer actionable solutions; and strengthen legal frameworks to ensure stricter penalties and more efficient prosecution of offenders”, he said.
Nwoko noted that Nigeria’s survival depended
Shell Nigeria Exploration and Production Company Ltd. (SNEPCo) has called on Nigerian companies to position themselves strategically to take full advantage of the growing opportunities in upcoming offshore and shallow water oil and gas projects.
The Managing Director, SNEPCO, Ronald Adams, made the call at the 5th Nigerian Oil and Gas Opportunity Fair (NOGOF) Conference, held in Yenagoa, Bayelsa State, last Thursday.
Adams highlighted the major projects, including Bonga Southwest Aparo, Bonga North, and the Bonga Main Life Extension, as key areas where Nigerian businesses can grow their capacity and increase their involvement.
“Shell Nigeria Exploration and Production Company Ltd. (SNEPCo) says Nigerian companies have a lot to benefit if they are prepared to take advantage of more opportunities in its offshore and shallow water oil and gas projects.
“Projects such as Bonga Southwest Aparo, Bonga North and Bonga Main Life Extension could grow Nigerian businesses and improve their expertise if they applied themselves seriously to executing higher value contracts”, Adams stated.
Adams noted that SNEPCo pioneered Nigeria’s deepwater oil exploration with the Bonga development and has since played a key role in growing local industry capacity.
He emphasized that Nigerian businesses could expand in key areas like logistics, drilling, and the construction of vital equipment such as subsea systems, mooring units, and gas processing facilities.
The SNEPCO boss explained that since production began at the Bonga field in 2005, SNEPCo has worked closely with Nigerian contractors to build systems and develop a skilled workforce capable of delivering projects safely, on time, and within budget both in Nigeria and across West Africa.
According to him, this long-term support has enabled local firms to take on key roles in managing the Bonga Floating, Production, Storage and Offloading (FPSO) vessel, which reached a major milestone by producing its one-billion barrel of oil on February 3, 2023.
The Emohua Local Government Area Administrator, Franklin Ajinwo, has pledged to improve electricity distribution in Oduoha Ogbakiri and its environs.
Ajinwo made the pledge recently while playing host in a courtesy visit to the Oduoha Ogbakiri Wezina Council of Chiefs, in his office in Rumuakunde.
He stated that arrangements are underway to enhance available power, reduce frequent outages, and promote steady electricity supply.
The move, he said, was aimed at boosting small and medium-scale businesses in the area.
“The essence of power is not just to have light at night. It’s for those who can use it to enhance their businesses”, he said.
The Administrator, who commended the peaceful nature of Ogbakiri people, urged the Chiefs to continue in promoting peace and stability, saying “meaningful development can only thrive in a peaceful environment”.
He also charged the Chiefs to protect existing infrastructure while promising to address the challenges faced by the community.
Earlier, the Oduoha Ogbakiri Wezina Council of Chiefs, led by HRH Eze Goodluck Mekwa Eleni Ekenta XV, expressed gratitude to the Administrator over his appointment and pledged their support to his administration.
The chiefs highlighted challenges facing the community to include incessant power outage, need for new transformers, and the completion of Community Secondary School, Oduoha.
The visit underscored the community’s expectations from the LGA administration.
With Ajinwo’s assurance of enhancing electricity distribution and promoting development, the people of Oduoha Ogbakiri said they look forward to a brighter future.
By: King Onunwor