Oil & Energy
Budget: ‘2.3mpbd, $60 Oil Benchmark, Not Realistic’
An energy expert, Mr Bank-Anthony Okoroafor, says the projected 2.3 million barrel of crude oil production per day and 60 dollar oil benchmark in the 2019 budget is not realistic.
Okoroafor in an interview with our correspondent in Abuja, last Sunday, said the projection does not follow the uncertainties in the global oil market.
“Production of 2.3 mbpd projection for 2019 may not be realistic owing to OPEC’s plan to cut production in order to shore up prices and growing crude inventory and excess supply verse demand.
“The benchmark price of 60 dollar used for the budget is not smart based on all the uncertainties and volatility surrounding the price of oil and surplus production,’’ he said.
According to him, the reality today is 59 dollar per barrel.
He added that the global crude oil price would average 61 dollar a barrel in 2019 according to the short- term energy outlook by the U.S. Energy Information Administration.
“The estimate is 11 dollar per barrel lower than the EIA prediction just a month ago.
“The forecast dropped after oil prices dipped below 50 dollar a barrel in November, the average for the month was 65 dollars.
“They believed higher U.S. supplies will flood the market at the same time slowing global growth and will cut into demand. Saudi Arabia and Russia had also produced oil at record levels.
“On December 7, OPEC agreed to cut 1.2 million barrel per day from the October levels. Members will cut 800,000 barrels per day and allies will cut 400,000 bpd. Cuts will continue for six months.
“OPEC’s goal is to return prices to 70 dollars a barrel by early 2019. Will this happen based on the volatility of oil prices today? Only time will tell,’’ he said
Okoroafor further stressed that government must consider all of the uncertainties in the global market noting that the volatility of oil prices would continue in 2019.
He added that the U.S. average daily production would rise to a record level of 12.1 million barrels per day in 2019 from 9.4 mbpd in 2017 and 10.9 mbpd in 2018.
He said that the U.S. shale producers became effective that they were profitable at 30 dollars per barrel adding that production from West Texas alone would increase by two million bpd in 2019.
“The oil wells in Gulf cannot stop producing even at low oil prices. OPEC has not been willing to cut output enough to rebase the oil price.
“Members do not want to lose market share to U.S. companies.
“Increased U.S. production in 2019 means OPEC will no longer have the clout to control prices. Finally global demand for oil will drop in 2019 as China which consumes 12 per cent of the global oil production has slowed down”, he said.
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