Page 12 - AfrOil Week 12 2020

AfrOil POLICY AfrOil
 It also threatened to abandon the OPEC+ deal altogether and let it expire at the end of March unless the latter agreed.
This gamble did not pay off. Russia refused to approve the additional cuts, saying it was only willing to keep existing production quotas in place. As a result, the OPEC meeting ended with no agreement – and with both Russia and Saudi Arabia vowing to pump more oil. Accord- ingly, crude prices sank by around 30% between March 6 and March 9.
Subsequently, officials in Moscow said that Russian producers would be able to raise out- put by 500,000 bpd in the short term, bringing this up to around 11.7-11.8mn bpd, and their counterparts in Riyadh spoke of pushing yields up by more than 2mn bpd to 12.3mn bpd. Saudi Arabia then began slashing the price of its crude by $6-8 per barrel, and Russia may follow suit.
Customers needed
Under these circumstances, Nigeria’s govern- ment is probably hoping that it can attract cus- tomers by offering oil at a discount. It may also be working to clear a backlog of unsold March and April-loading cargoes that have not found buyers yet.
Traders told Bloomberg, though, that this strategy might not succeed. Currently, they said, demand is sufficiently weak that buyers may not want Nigerian oil, even at a lower price.
Nevertheless, Abuja’s decision could have consequences for European crude markets. If Bonny Light and Qua Iboe are selling at a dis- count to Brent, Bloomberg said, sellers of North Sea crudes will be under pressure to cut their prices too, a development that would reinforce the bearish trend on world oil markets. (This may already be happening, the news agency said, pointing to S&P Global Platts data show- ing that Forties crude prices had dropped to an 11-year low.)™
Nigeria’s Bonny Island terminal (Photo: Techint)
Uganda tasks state-owned firm
with bulk fuel sales to local retailers
UGANDA
UGANDA’S government has officially tasked a state-owned business, Uganda National Oil Co. (UNOC), with selling bulk quantities of imported petroleum products to local retailers.
UNOC took up its duties last month, saying in a statement that it had begun bulk trading of petroleum products on the domestic fuel mar- ket. It said: “Simply put, the company going for- ward will import and sell petroleum products in bulk to registered local oil marketing companies (OMCs); hence the term bulk trading.”
According to the statement, the Ugandan government has assigned this task to UNOC in order to “strategically position” the company as the main link in the local supply chain for refined fuels. “The move will enhance the secu- rity of petroleum product supplies into Uganda, while delivering sustainable value propositions to the OMCs, subsequently benefiting all Ugan- dans,” it asserted.
Proscovia Nabbanja, the CEO of UNOC, said that fuel imports were in line with the com- pany’s mandate for upholding the interests of
the state across the value chain of the petroleum industry. This includes the downstream sector, where UNOC operates petroleum product stor- age facilities and distribution pipelines, in addi- tional to selling bulk quantities of fuel, she said.
UNOC has marked the assumption of its new responsibilities by drawing up its first preliminary supply deal with STABEX, a local OMC. The two sides signed a memorandum of understanding (MoU) last week, in a ceremony witnessed by Tanzania’s Minister of Energy and Mineral Development, Mary Goretti Titutu.
Daniel Cherutich, the general manager of STABEX, was also present at the signing cere- mony. He said that his company was pleased to be UNOC’s first customer for bulk fuel sales.
In the statement, UNOC said it would make the first delivery of fuel to STABEX before the end of March.
It did not disclose the details of the deal, but it did say it would be covering “a fraction of [the OMC’s] monthly fuel requirements, as per the agreed terms and conditions.” ™
P12
w w w . N E W S B A S E . c o m
Week 12 25•March•2020