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Iran has said it will deliver a broad military response to any retaliatory strike made against it in the wake of the oil facility attacks. It has warned the Gulf could go up in flames, some- thing Trump might not be thrilled to see ahead of his 2020 re-election campaign, especially if there are substantial casualties among the US armed forces stationed in the region.
“Although oil production was restored fully by end-September, we believe that there is a risk of further attacks on Saudi Arabia, which could result in economic damage,” Fitch also noted.
“We have revised our assessment of the vul- nerability of Saudi Arabia’s economic infrastruc- ture to regional military threats as a result of the most recent attack,” the agency added.
S&P Global Ratings last week affirmed its
A-(minus) rating of Saudi Arabila, saying how- ever that the rating could come under down- ward pressure should Saudi oil infrastructure be attacked repeatedly.
Fitch said it was forecasting a widening of the Saudi fiscal deficit to 6.7% of GDP from last year’s 5.9%. It pointed to a loosening of fiscal pol- icy and lower average oil prices and production.
The finance ministry said the deficit was “well within the parameters” it had set for the 2019 budget and that financial assets “substantially exceed” liabilities.
Ratings agency Moody’s cut its 2019 forecast for Saudi economic growth to 0.3% from 1.5% after the attacks, but it explained that the move was largely the result of an overall decline in Saudi oil production.™
reFininG
NNPC head talks up downstream interest
aFriCa
LAST week Nigerian National Petroleum Corp. (NNPC) managing director Mele Kyari was talk- ing about saving Nigeria’s ailing downstream sector. This week, he’s been talking about getting two of the world’s largest oil companies involved.
“They are ready for any investment opportu- nitythatislowrisk,”hewasquotedbyS&PPlatts as saying on October 1 of apparent interest from Saudi Aramco and Abu Dhabi National Oil Co. (ADNOC). While Nigeria is a major player in the global oil and products markets, it is hard to imagine that either company would view an investment in the Nigerian downstream as low risk. However, fuel marketers have had a great time in Nigeria for years and the country’s coastal infrastructure perhaps makes it the most obvious point for fuel imports into West Africa.
However, given that Kyari spoke recently about improving domestic refining capabilities to bring about fuel independence, his tune has changed significantly if he views further reliance upon foreign fuels as an improvement for the Nigerian downstream.
Kyari was reported to have met with ADNOC CEO and UAE Energy Minister Sultan al-Jaber, saying that part of the company’s plan was “to have a presence in West Africa”.
He added: “We have upstream opportuni- ties, midstream opportunities, downstream opportunities. It is up to them to select where they want to be, but we would like them to be in midstream.”
Platts quoted Kyari as saying that Aramco was “quite keen on getting the opportunity to supply gasoline to West Africa and we will pro- vide them with the right platform ...We are the largest importer of gasoline in West Africa. It is a clear opportunity for them.”
OPEC compliance
The same day, NNPC MD said that his country
was not fully compliant with OPEC’s production policy, but said that Nigeria intended to take steps to ensure its compliance.
Speaking to the press at a conference in Fujairah, Kyari noted that Nigerian fields had yielded 2.1-2.2mn barrels per day of crude oil and gas condensate during September.
He said that Nigeria would reduce oil output in order to conform to the production quotas set by OPEC.
The NNPC chief did not say exactly what the country would do or how large the cut would be, but said that the reductions would apply to crude oil and not to condensate.
“We will [cut output] across the assets. The OPEC quota [applies to] crude production only, not [to] condensate, so it doesn’t affect the con- densate [figures],” he said.
He also stated that he did not expect the reductions to have a major financial impact on Nigeria. “Our non-conformity is clearly on the crude, and it’s not significant,” he said. “So when you spread it across all the assets, it will not be a shock.”
Kyari went on to say that Nigeria hoped to push oil production up to around 3mn bpd over the next two or three years. He did not say how it might reach this target or how rising output might affect relations with OPEC.
As a member of OPEC, Nigeria is party to the agreement signed between the cartel and Russia, along with other allied oil producers, last December.
Under that agreement, which is due to remain in force until March 2020, Nigeria is due to help OPEC meet its pledge to cut oil production by 800,000 bpd on end-2018 levels.
But according to a Reuters survey, it exceeded its quota by 265,000 bpd in September. This was the largest gap posted by any cartel member dur- ing that month, the news agency commented.™
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w w w . N E W S B A S E . c o m Week 39 03•October•2019