Oil & Energy
OPEC Looks Beyond Politics, Focuses On Long-Term Production
The Organisation of Petroleum Exporting Countries (OPEC), met last Thursday for its regular monthly review of production policy. This time, no one seems to expect surprises, and the reason is that in the past couple of months, the cartel and its allies in OPEC led by Russia have been in remarkable sync. And they appear to have had enough of consumers’ pressure.
The Energy Minister of the United Arab Emirates, Suhail Al-Mazrouei, sounded a sober note earlier this week as he struck at Western countries for having what can only be described as a hypocritical attitude to fossil fuels.
“I think in COP 26 all the producers felt they were uninvited and unwanted but now we are again superheroes, it’s not going to work like that,” the Minister said at the Global Energy Forum organized by the Atlantic Council in Dubai.
The top Emirati energy official went on to explain the basics of the oil industry, stressing that production is tied to long-term planning, which is incompatible with calls and actions on investment cuts in order to put more money into renewable energy.
That should have been obvious to everyone familiar with the very basics of economics, but it appears to have escaped some currently in charge in Europe and the United States.
Their reasoning seems to be that oil producers have a vested interest in selling their oil while it is in demand because in 20 years, per climate change plans, demand won’t be that strong.
It is a valid line of reasoning and one that the oil producers themselves have recognised. It is this, at least in part, that has motivated the UAE and Saudi Arabia to invest in boosting their output capacity.
The UAE is aiming for 5 million bpd in total production, and the Saudis are eyeing 13 million bpd in production capacity.
This should be good news for oil-thirsty importers, but this capacity is not coming online this year while the importers, specifically the ones in Europe, are eager to reduce their dependence on Russian oil right now, by the end of the year.
The obvious substitute for Russian oil would be oil from the Middle East, but as Reuters’ John Kemp recently explained, this is easier said than done.
Although, theoretically, new markets would be good news for oil exporters, OPEC is still limiting its production, and some members are failing to pump even as much as that limited amount agreed by the OPEC+ group.
Also, as Kemp pointed out in his column, rerouting oil flows from Asia to Europe makes very little strategic sense: Europe is an oil market in decline, unlike Asia. In other words, Gulf producers don’t really have an incentive to sell more oil to Europe. Nor do they have an incentive to join the Western condemnation of Russia.
“When it comes to OPEC+ — I would take that privilege of saying I’ve been at it for 35 years, and I know how we managed to compartmentalize our political differences from what is for the common good of all of us,” Saudi energy minister Abdulaziz bin Salmantold CNBC’s Hadley Gamble this week, speaking of the Russian issue.
“That culture is seeped into OPEC+, so when we get into that OPEC meeting room, or OPEC building, everybody leaves his politics at the outside door of that building, and that culture has been with us,” bin Salman also said.
Indeed, one only needs to recall that OPEC involves both Saudi Arabia and Iran, the two Middle Eastern archenemies, and they have managed to act in concert on oil despite their differences.
OPEC, and OPEC+, appear to be stronger than ever. It is hard to believe that just two years ago, Saudi Arabia and Russia locked horns over oil policies and even engaged in a sort of an oil output blitz to make their respective points, pushing prices down sharply just before the pandemic really got going, pushing them a lot further lower. The two cooled off pretty soon and have been working in harmony ever since.
Crude oil prices slipped briefly below $100 per barrel on signals that the negotiations between Russia and Ukraine had struck a constructive note.
However, soon after the news, traders apparently realized this wouldn’t automatically mean the lifting of sanctions on Russia, and prices rebounded, helped by the API’s weekly inventory report, which estimated a decline of 3 million barrels.
The villain-turned-superhero trope is one that is well known and frequently exploited in literature and film. There are plenty of examples of this trope in geopolitics as well, as well as its mirror image of the superhero-turned-villain. Yet OPEC clearly does not want to star in such a film.
OPEC has its priorities, and it is sticking to them, even in the face of growing pressure from its political partners in the West. The latter might need to be more convincing in their assurances that they are committed to this partnership, and even that may not be enough to sway the cartel into producing more oil.
By: Irina Slav
Slav reports for Oilprice.com
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