Page 8 - AfrOil Week 09 2022

AfrOil PERFORMANCE AfrOil

However, the IEA’s efforts to reduce prices failed missed the 23-nation group’s 40.493mn bpd by
to counter the geopolitical and supply security 972,000 bpd.
risk premium associated with the ongoing con- For the long-term sustainability of the deal,
flict in Ukraine as ICE Brent crude futures hit a members will be urged to redouble efforts to
nine-year high of $113.94 increase output, particularly in view of last
Concerns about the OPEC+ group’s ability to year’s upward adjustment of the baseline for the
ramp up output were clearly a factor in the rise OPEC+ quotas, which will unwind the restric-
with data from OPEC’s Joint Technical Com- tions by almost 1.6mn bpd when it comes into
mittee showing that production in January had effect in May. ™

Sylva concerned about rising crude prices

SOMALIA NIGERIA’S Minister of State for Petroleum will move around, maybe $80, maybe $70,” he
Resources Timipre Sylva has expressed concern said. “We are hoping it will come down to some-
about the rise in world oil prices, saying that the where around $70 to $80, which will be sustain-
increase was complicating the state’s efforts to able for us to the end of the year.”
balance the country’s interests as a producer and Ayodele Oni, an energy partner at Lagos-
exporter of crude and as an importer of refined based Bloomfield Law Practice, told Vanguard
petroleum products. late last week that he also had reservations about
“That’s why we like to have that balance right high oil prices. Echoing Sylva’s point about fuel
here in Nigeria as well,” Sylva told reporters imports, he said that bullish energy markets did
ahead of the 2022 Nigeria International Energy have some positive implications for Nigeria but
Summit (NIES) on February 23. “You know that were likely to be negative in their overall impact.
we are right now a net importer of petroleum “The positive aspect is that our revenue
products. And when the price of crude is up, it increases. Looking at the crude oil benchmark
also affects the price of petroleum products.” in Nigeria’s budget, it is obvious that we will earn
Nigeria is currently in the difficult position much more than we expected, but the setback
of needing to produce enough crude oil to is that we are not refining crude in-country
earn the money it needs to pay for the fuel its at the moment, as the four refineries are still
citizens consume, but whenever that crude oil under rehabilitation,” he said, referring to the
fetches the best price, fuel inevitably costs more, four oil-processing plants owned by Nigerian
he explained. “So at the end of the day, we are National Petroleum Corp. (NNPC).
not necessarily making a lot of gains because we “With this situation, we will spend more on
are taking from the high prices,” he was quoted importation of refined products and the subsidy
as saying by Vanguard. “We’re also importing payment will also increase substantially, which
higher priced products.” is a big problem for us. This development will
Sylva reiterated his discomfort with rising affect our income, revenue and also increase our
oil prices in an interview with Bloomberg Tel- expenditure,” he continued. “This rising crude
evision on February 25, saying that Nigerian oil price is more disadvantageous than advanta-
authorities would prefer to see crude oil trading geous to Nigeria because we do not refine locally.
in the $70-80 per barrel range rather than in the If we are refining sufficiently locally, it will be a
area of $100 per barrel. “I’m hopeful the prices blessing to us.” ™

Prices for benchmark WTI crude oil have topped $110 per barrel on the NYMEX this week (File Photo)

P8 www. NEWSBASE .com Week 09 02•March•2022