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The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Limited, Alhaji Mele Kyari, noted that the company is striving to become the most profitable national oil company in Africa. With the passage of the Petroleum Industry Act (PIA), Alhaji Kyari added that the NNPC is at an advantage over other companies, as the new legislation will provide business opportunities that will allow the corporation to leapfrog other companies to become a global competitor. NNPC declared a profit of approximately $693 million (N287 billion) after tax in its 2020 financial report in which Kyari sees as an opportunity for further growth.
Meanwhile, the NNPC team, led by Kyari, has secured $5 billion from the African Export-Import Bank (Afreximbank) to fund major investments in Nigeria’s upstream sector. Afreximbank has agreed to underwrite $1 billion for the forward sales base trade finance transaction. Additionally, the parties agreed to collaboratively explore the idea of an African Energy Bank.
The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva announced that the planned removal of the fuel subsidy is suspended, pending an amendment in the PIA being made available to the National Assembly. H.E. Sylva further noted that with the ongoing rehabilitation of refineries as well as the Dangote refinery set to come on stream in 2022, subsequent removal of subsidies might be more feasible. H.E. Sylva disclosed in a meeting with oil marketers on the Compressed Natural Gas/Autogas transition program that the Federal Government will begin the conversion of petrol-powered vehicles to Autogas from March 2022 – targeting the conversion of approximately five million cars at the end of the program. The Minister said the Government was out to ensure that it made available the alternatives required before petrol subsidy removal.
Africa-focused oil and gas firm Tower Resources has raised approximately $2 million (£1.5 million) via a placing and subscription of 576,923,077 new ordinary shares of 0.001p each for 0.26 pence per placing share and a discount of 29% to the closing share price on January 13, 2022. The company said it would use the net proceeds to advance its portfolio and to cover working capital requirements. This includes funding maintenance and planning expenditure in Cameroon to maintain the long-lead items inventory ready for the start of drilling and testing of the NJOM-3 well – pending completion of the farm-out – and to make payments and pre-payments to contractors.
Tower Resources said back in September 2021 that the documentation for its proposed farm-out of a share in the Thali offshore block in Cameroon had been finalized and submitted to the country’s authorities for approval. As reported in August, Tower Resources agreed to farm out a 49% non-operating working interest in its Thali Production Sharing Contract to Beluga Energy Limited. The farm-out covers US$15 million towards the cost of the NJOM- 3 well that Tower is planning to drill on the Thali block.
On January 27, oil prices fell after Brent crude hit a seven-year high above $90 a barrel, as the market balanced concerns about tight worldwide supply with expectations that the U.S. Federal Reserve will soon tighten monetary policy. The U.S West Texas Intermediate crude futures closed 74 cents lower at $86.61 a barrel, while Brent crude futures fell 62 cents to settle at $89.34 a barrel. The U.S. Energy Information Administration’s weekly report for January 26 showed a build in U.S. crude inventories to 2.377 million barrels in the week ending January 21, against analysts’ forecasts for a 728,000-barrel draw. A 515,000-barrel build was reported during the previous week.
Oil prices had surged with Brent climbing above $90 a barrel for the first time in seven years amid tensions between Russia and the West. Threats to the United Arab Emirates from Yemen’s Houthi movement had added to oil market jitters. Russia and the West have been at loggerheads over Ukraine, fanning fears that energy supplies to Europe could be disrupted, although concerns are focused on gas supplies rather than crude.
The market is starting to turn its attention to a February 2 meeting of the Organization of the Petroleum Exporting Countries and allies led by Russia, (OPEC+). OPEC+ is likely to stick with a planned rise in its oil output target for March. It has raised its output target each month since August by 400,000 barrels per day as it unwinds record production cuts made in 2020. However, the group has faced capacity constraints that have prevented some members from producing at their quota levels.
While the Russia-Ukraine tensions have a role in lifting oil prices, real supply challenges within OPEC and the U.S have been the main drivers pushing the market higher. OPEC+ missed its planned supply increase target in December 2021, accentuating capacity constraints limiting supply as fuel demand continues to recover. OPEC+ is also gradually reversing its 2020 output cuts as fuel demand recovers.