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Major Oil Rally Could Be On The Horizon

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This year has been a true rollercoaster ride for the U.S. stock market, but it is increasingly looking to end on a high note.
The S&P 500 has climbed nearly 11% in the first two weeks of November as the world moves closer to vanquishing one of mankind’s biggest threats in modern history.
Oil is anything but dead.
And here are two reasons to stick with oil: Barely a week after pharmaceutical giants, Pfizer and BionTech gave the world hope of an effective Covid-19 vaccine, peer Moderna Inc. has unveiled a potentially better cure.
Moderna has reported that its COVID-19 vaccine candidate, mRNA-1273, has demonstrated efficacy rates of 94.5% in early tests and remains stable at 2° to 8°C (36° to 46°F), or roughly the same operating temperature of a standard home or medical refrigerator, for at least a month.
In contrast, Pfizer’s vaccine needs a much cooler temperature of -94 degrees Fahrenheit (-70° C) and up to -109 degrees Fahrenheit for shipment for the vaccine to remain viable, which could pose a major challenge in some locations.
Not surprisingly, the energy sector—one of the hardest hit by the pandemic—has been on a tear since the Pfizer vaccine hit news feeds, jumping 23.4% over the past week alone.
The oil and gas industry has been deeply out of favor over the past few years, and trying to call a bottom on the bear market might be a fool’s errand. However, the latest developments offer hope to the incurable optimists that the worst might finally be in the rearview mirror for the industry.
Other than his never-ending tweetstorm, Trump has mainly kept a low public profile after losing to Biden in one of America’s most divisive elections in modern history. But a few days ago, he came out and publicly accused Pfizer of delaying its Covid-19 vaccine ostensibly in a bid to ruin his chances at re-election.
Well, guess what, it appears several other pharmaceutical companies are guilty of the same curious timing of their own—maybe even better—vaccines.
CureVac’s says its CVnCoV vaccine is stable for three months at +5 Celsius, or the standard refrigerator temperature. The vaccine remains stable for up to ready-to-use room temperature for 24 hours.
Sanofi and GlaxoSmithKline’s have announced that their two-dose recombinant protein vaccine can be stored between 2°C- 8°C.
Johnson & Johnson also has a Covid-19 vaccine in the pipeline, which, if successful, could be stable at refrigerated temperatures of 2°C – 8°C for at least three months and up to two years at -20 °C.
In short, there seems to be no shortage of Covid-19 vaccine candidates that are potentially even more stable than the Pfizer/BionTech vaccine.
That’s music to the ears of the oil and gas market, coming after a second wave of Covid-19 infections effectively killed the oil rebound.
Better still, the Pfizer and Moderna vaccines could go into mainstream distribution in a matter of weeks. Indeed, broad vaccine access is expected by mid-2021.
That might be just in time to validate OPEC’s latest projections, which have called for the oil market to bounce back next year at a historically quick pace. According to the July report, OPEC sees oil demand spiking ~25% to 29.8 million barrels per day in 2021, slightly above levels recorded in 2019.
Obviously, a lot of that will hinge on OPEC’s ability to maintain production discipline, but so far, the coalition has remained committed after the harsh lessons of the past few months.
That said, a solid recovery in oil demand might take months, even in the event of a successful vaccine. The IEA has predicted a recovery in oil demand of 5.8 million barrels per day in 2021, only ~300,000 barrels per day higher than its forecast a month ago after Pfizer announced its vaccine.
No matter how massive the hydrogen hype is, or how much money is being poured into this as the answer to our clean energy future, it’s still not a near-term solution.
It’s science fiction to imagine that oil and gas will suddenly disappear because of renewable energy progress. This is all longer term, even if the media makes it seem like it’s going to happen tomorrow.
It’s been clearly established that natural gas will be the bridge to a clean energy transition, especially since electricity will likely end up being one of our most important energy sources, and natural gas is at least cleaner-burning than oil.
For the near to medium-term, it’s only the COVID demand culling that’s really trouncing oil, and all the positive vaccine news will likely continue to drive forward momentum. And in the meantime, if oil demand starts to slow compared to pre-COVID rates as we bolster renewables, natural gas demand should emerge stronger still.

Kimani first published this article in the London-based Oilprice.com

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Oil & Energy

BUA Group, A’Ibom Sign MoU For Refinery’s Access Road

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Bua Group has signed a memorandum of understanding, (MoU), with Akwa Ibom State Government, and the host communities in Ibeno Local Government Area, for the construction of access road to the proposed Bua Refinery and Petrochemical plant site in Ibeno, last week.
Akwa Ibom State Commissioner for Power and Petroleum Development, Dr. John Etim, who presided over the signing of the MoU, applauded BUA for their commitment to the project, prompt documentation and the preparation of the site towards the construction of the refinery.
Etim said that the refinery project will bridge the gap between host communities and Akwa Ibom State, thereby bringing about more developments in the oil and gas sector of the State.
The Commissioner called on all parties concerned to be committed to the terms of agreement and to ensure that peace dominates their relationship, while appealing to the host communities to protect the facilities which is now in their custody
“The refinery and petrochemical project is in line with the Governor’s vision to industrialise the State, develop local capacity in key industries where value can be added and raw materials sourced locally.”
Speaking shortly after the MoU signing, the Chairman of Ibeno local government, Williams Mkpa, expressed delight over the development, describing it as a giant stride in the industrialisation vision of the Akwa Ibom State Government.
The paramount ruler of the area, Owong Effiong Archianga, assured the company of his people’s unalloyed support and cooperation to see to the actualisation of the project.

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CSO Urges Oil Communities To Challenge PIA In Court

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A Civil Society Organisation, Policy Alert, has faulted President Muhammadu Buhari’s signing of the Petroleum Industry Act 2021, urging communities to test the provisions of the Act before the courts.
President Buhari had signed the erstwhile Petroleum Industry Bill, PIB, into law last Monday amidst protests from community groups and many other stakeholders that the Bill do not adequately cover the rights and interests of the host communities.
In a statement signed by its Communications and Stakeholders Engagement Officer, Mrs. Nneka Luke-Ndumere, Policy Alert, which is working for economic and ecological justice, described the presidential assent to the PIB as “grossly insensitive and problematic.
“It is sad that the bill has been assented to in the most controversial manner despite its many obvious flaws and its rejection by many stakeholders,” the statement read.
It added: “For example, the controversial provision for a direct payment of 30 percent profit oil and profit gas to the Frontier Exploration Fund potentially shortchanges the oil producing states and local governments of some of its thirteen percent derivation as it bypasses the requirement in section 162 (2) of the 1999 Constitution (as amended) which provides that all revenues be channeled through the federation account.
“This is most unfair, viewed against the ceding of only three percent of previous years’ operating expenses to the Host Communities Development Trust Fund and the punitive provision to charge costs of any damage to facilities against the community’s Fund, among other obnoxious provisions.
“That Mr. President has gone ahead to give assent to these vexing provisions only reinforces the politics of exclusion and expropriation that has for long characterised the relationship between the Nigerian state and the oil producing communities.
“We are also concerned that the host communities’ component of the legislation flies in the face of one of its stated objectives to address tensions between host communities and companies as it has all the ingredients for escalating rather than abating such conflicts.
“At a time when fossil fuel investments are being deprioritised elsewhere as a result of the global energy transition, it is unfortunate that this Act failed to provide a bridge between the current era of fossil fuel dependency and the low-carbon energy future that Nigeria aspires to within the framework of government’s much vaunted commitments under the Paris Agreement.”
The statement also said: “Granted, the new legal framework introduces some predictability and clarity to the governance and fiscal arrangements in the oil and gas industry. We are also not oblivious to certain clauses that respond to some of our earlier demands, such as those providing that the Board of Trustees of the Host Communities Development Trust will now be determined in consultation with the host communities, with  membership drawn from community members. But that is just as far as it goes.
“As a tool for improved benefit sharing to host communities, the Act falls flat on its face. It actually ridicules the exertions of the host communities and advocacy groups that have clamoured over the years for a law that yields some space for participation, direct socio-economic benefits and environmental remediation for oil-rich communities.
“The theatre of action will now have to move to the communities and the courts of law. As implementation of the Act gets underway over the next 12 months, we urge host communities and civil society groups to begin to seek interpretation of some of its more controversial provisions before the courts.”

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Kyari Tasks Greenfield Refinery On Fuel Importation

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The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has charged members of the Board of the NNPC Greenfield Refinery Limited (NGRL), to explore all available options to bring an end to the current challenge of petroleum products importation.
Mallam Kyari gave the charge Thursday while inaugurating the Board of the newly incorporated subsidiary of the Corporation, NNPC Greenfield Refinery Limited (NGRL), at the NNPC Towers, Abuja.
The NNPC Greenfield Refinery Limited is a subsidiary of the Corporation set up in December 2020 with a mandate to oversee the establishment and operation of new refineries.
The GMD, who is also the Chairman of the NGRL Board, challenged members of the Board to focus on profitability in order to remain afloat and avoid liquidation.
“As a business, this is a big opportunity for us and this company’s balance sheet must change positively. Going forward, with the Petroleum Industry Act (PIA), I can tell you that if you continue to post negative for three years, you are out. So, there is really no excuse”, Mallam Kyari stated.
He urged the Board and Management Team of the new company to set up a proper structure with the required skills, technology and financing to drive the company’s operations, adding that he was optimistic that the company would be able to achieve its mandate.
“Our company must grow and we can’t do well except we are able to process our production whether it is the liquid or gas. If we don’t monetise it then we have done nothing. This is really a new chapter and we are committed to making it work,” he said.
The NNPC helmsman stated that all the Corporation’s initiatives in the areas of new refineries, condensate refineries and equity acquisition in credible private refineries were geared towards ensuring energy security for the country.
In his remarks, the Alternate Chairman of the Board and Group Executive Director, Refinery and Petrochemicals, Engr. Mustapha Yakubu, declared that the operations of the company would be guided by the principles of cost effectiveness in line with the new Petroleum Industry Act (PIA), noting that profitability would be the key focus.
Speaking in similar vein, the Group General Manager, Greenfield Refineries and Project Division (GRPD) and Managing Director of the NGRL, Engr. Bege Talson, disclosed that the Division was working with third party investors to establish greenfield, modular and condensate refineries with a combined capacity of 250,000barrels per stream day (bpsd).

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