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OPEC+ Cuts production, saves Oil Industry from a breakdown
OPEC+ Cuts production, saves Oil Industry from a breakdown
In a watershed moment for the oil and gas industry, OPEC and its partners in the OPEC+ group concluded a deal on Easter Sunday that, in association with efforts from the G20 and International Energy Agency, could see up to 20 million barrels of oil per day separated from a severely oversupplied oil market. The deal is set to increase the oil price and render some much-needed stability for an industry in crisis.
Initially announced Thursday, the agreement was delayed as Mexico refused their share of production cuts. The original OPEC+ deal would have seen a cut of 10 million barrels of crude per day from an October 2018 baseline, for an initial two-month period. With OPEC+ letting Mexico off the hook, the official OPEC+ cut now stands at 9.7 million barrels, as Mexico agrees to cut 100,000 barrels per day instead of 400,000 barrels per day.
In reality, however, the OPEC+ deal will cut more than the quoted 9.7 million barrels, since current production levels are much higher than the October 2018 baselines used to calculate the production cuts. The deal sees Russia and Saudi Arabia absorbing the brunt of the cuts, each agreeing to cut their production down to 8.5 million barrels per day. Saudi Arabia’s production stood at 12.3 million barrels per day, and Russia was producing 11.29 million barrels of oil per day in March. Both countries, however, used 11 million barrels per day as their baseline in the deal.
“These production adjustments are historic. They are largest in volume and the longest in duration, as they are planned to last for two years. We are witnessing today the triumph of international cooperation and multilateralism which are the core of OPEC values,” said Secretary General of OPEC H.E. Mohammed Barkindo. Barkindo also noted that the OPEC+ deal paves the way for further collaboration with the G20.
In a meeting on Friday, the G20 nations also agreed to take action to stabilize the market. The United States, for example, is set to use the Strategic Petroleum Reserve to store vast quantities of oil. Additionally, the US will see production cuts of at least 2 million barrels as the market responds to a lack of demand. The US has also reportedly offered to take on an additional cut of 300,000 barrels per day on Mexico’s behalf, although the details of how such a deal would play out have not been released.
The OPEC+ group is expected to request the G20 to cut over 3 million barrels per day of production. The G20 energy ministers agreed Friday to create a task force to monitor the situation and formulate strategies. The Texas Railroad Commission, the agency that regulates the state’s oil and gas industry, is also scheduled to meet on Tuesday to discuss regulating formal cuts, though the US has largely maintained that the free market will determine oil production cuts.
US President Donald Trump tweeted his support for the OPEC+ deal on Sunday.
“This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia,” he said.
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Finally, in a reported, but not confirmed, side deal, Saudi Arabia, Kuwait and the United Arab Emirates could agree to reduce production by an additional 2 million barrels of oil per day.
OPEC has “Breathed Life” into Africa
The historic production cuts provide a much-needed financial boost to Africa’s oil and gas producers, including Nigeria, Angola, South Sudan, Sudan, Gabon, Congo-Brazzaville
and Equatorial Guinea, as the sudden drop in oil and gas prices coincided with the COVID-19 health crisis and the economic repercussions of closing businesses and restricting movement to deal with the pandemic.
In a statement, Nigeria’s Minister of State for Petroleum Resources, Hon. Chief Timipre Marlin Sylva, said he expects the oil price to rebound by $15 per barrel in a short-term outlook.
“This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel,” he said in a statement.
NJ Ayuk, Chairman of the African Energy Chamber, lauded the efforts of the OPEC+ deal, as a stable oil market will provide economic relief and save jobs throughout the continent.
“OPEC has hit a home run,” Ayuk said. “OPEC has breathed life and given hope to African nations, oil workers, investors and the African business community. We need to focus on exploration soon again. Now we have the ball; we need to run with it and start the process of bouncing back. We need to defend the African oil industry like a junkyard dog in the face of a hurricane.”
South Sudan, a member of the OPEC+ alliance, also welcomed the deal, said the country’s Minister of Petroleum Hon. Puot Kang Chol.
“South Sudan is East Africa’s only producing country. Our production was over 350,000 barrels per day before the civil war. At the present moment, we are producing about 185,000 barrels per day with a target on attracting more investment into the oilfields to get our nation to 300,000 barrels per day. The current price war and coronavirus has affected our economy,” he said.
“We welcome all efforts to stabilize the oil market and South Sudan will continue to play its role. Our government will continue doing its utmost best in making the oil production and fighting the Coronavirus a priority and we will continue collaborating with all our partners,” he added.
OPEC+ Cuts Respond to Slashes in Demand
Each nation, aside from Saudi Arabia and Russia, which are both cutting substantially more, is expected to cut 23 percent of production from May to June. Iran, Libya and Venezuela are exempted from the production cuts, and Mexico is only cutting 100,000 barrels per day.
After this initial two-month period, overall production cuts will lower to 8 million barrels per day from July to December and then lower to 6 million barrels per day from January 2021 to April 2022. The OPEC+ group will meet in July to discuss further action, if needed.
With about 40 percent of the world’s population ordered to stay home to stem the spread of COVID-19, demand for oil and gas has decreased by about 30 percent, from over 100 million barrels per day to under 85 million barrels per day, according to the Energy Information Agency.
The International Energy Agency, which called for the G20 meeting of energy ministers on Friday, argued the market conditions were too much for OPEC+ alone to handle.
“The extreme volatility we are seeing in oil markets is detrimental to the global economy at a time when we can least afford it,” said Dr. Fatih Birol, Executive Director of the IEA.
“Today’s oil crisis is a systematic shock that threatens global economic and financial stability. It requires a global answer. That is why the G20 can be an indispensable forum for decisive leadership when it is urgently required,” he added.
Brent crude was averaging $55.70 per barrel in February, but, with an oil price war and the impacts of COVID-19, both Brent and WTI have reached their lowest level in years, with Brent hitting $22.76 per barrel in March, its lowest price since November 2002.
As demand for oil and the price of oil has declined, storage capacity is also reaching its limits. In just a few weeks, analysts predict oil production may be shut in due to a lack of global storage capacity.
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By Ibe Wada
Officers and men of the Nigeria Customs Service, Federal Operation Unit, Zone A, have completed a one-month intensive weapon handling training along with a study tour to Gbaji Check Point, Badagry.
The Commandant of the Nigeria Customs Training College, Ikeja, DC Haniel Hadison, who spearheaded the sixty-six participants and other officers to Gbaji on Tuesday, April 16, 2024, noted that the initiative is aimed at bridging the gap between theoretical knowledge and real-world application.
He said, “Our outing is in line with the concerted efforts of the Comptroller General of Customs, Bashir Adewale Adeniyi, MFR, in capacity building, and we are thankful for the approval of the one-month weapon training of some selected officers of the Federal Operations Unit, Zone A, Ikeja”.
“We are here this morning at Gbaji, the approved checkpoints manned by the Federal Operations Unit and other sister agencies. We have brought our students to come and see how checkpoint activities are being carried out to relate what they have learned to what is happening in real-time at the checkpoint. ” He added.
DC Hadison explained that the study tour aligns with the college’s curriculum regarding customs activities.
“For the past three weeks or thereabouts, these selected officers of FOU ‘A’ have undergone weapon handling and checkpoints exercises, also exposed to different Customs activities as it relates to enforcement, such as weapon handling and discipline, escorts activities, bodily duties and other enforcement activities, patrols activities, arrest techniques as it concerns global best practices.” He stated.
Hadison emphasised that the training is a continuous one, as the Service will continue to expose officers to best practices of weapons handling and discipline.
He appreciated the CGC for the opportunity given, even on the last day of the training.
After teaching and showing the officers firsthand techniques on checkpoint assessment, Assistant Comptroller Adewale Egunjobi, the Officer in Charge of Operations, Gbaji, expressed satisfaction with the student’s performance, affirming their readiness to assume greater responsibilities within the service.
“It’s a mission accomplished. Today marks one of my best days in the service, witnessing these students showcase their skills. I have complete confidence in their abilities to uphold customs’ standards. “.
Chief Superintendent of Customs Ibrahim Salati, the National Coordinator of Rural-Urban Border Patrol Operations, commended the officers’ proficiency in weapon handling and enforcement techniques.
Salati emphasised the importance of practical training in preparing officers for their duties.
“When you look at them, the way they handle rifles shows that the purpose of the training has been achieved,” Salati stated.
“We owe gratitude to the CGC and the Commandant for emphasising the practical side of training, ensuring our officers are well-prepared to tackle enforcement tasks.”. He concluded.
…Knocks DSS in Opening Match
Cynthia Idowu
The Men’s Basketball team of the Nigeria Customs Service is presently competing with other security agencies in a basketball championship competition in Abuja.
The tournament, scheduled to commence on the 15th, will run through to the 20th of April 2024 at the Indoor Hall of the MKO Abiola International Stadium, Abuja.
Abdulrahman Mohammed, a former D’Tigers guard, is joined by teammates like Daniel Moko and Samson Abdulrahman Mohammed.
Abdulrahman, who recently coached the Customs women’s team to top place at the FIBA Africa, Zone 3 championship last December, is confident that the team will not disappoint the leadership of the Nigeria Customs Service, led by Comptroller-General Bashir Adewale Adeniyi, MFR.
“This is our first time participating in the championship, as some key players were unavailable during the first edition. However, we are fully prepared for the challenge. I have confidence in our players, many of whom have represented Nigeria locally and internationally,” Mohammed said.
The championship will feature seven teams, including the Nigerian Army, Nigerian Navy, Nigerian Air Force, Nigerian Customs Service, Nigeria Police, Nigerian Security and Civil Defence Corps, and the Nigerian Correctional Service.
Meanwhile, the Nigeria Customs men’s basketball team on Tuesday night showed their gallantry by defeating the Directorate of State Service (DSS) by 101-68 points on the opening day.
The Comptroller General Bashir Adewale Adeniyi, who graced the occasion, cheered his men to victory with 16 16-point advantage at halftime 51-35.
Customs, however, proved too strong for their opponent as they easily won the fourth and final quarter by 27-10 points to close out the game with 101-68 points.
Customs, under the stewardship of coach Mohammed Abba, will take on its strongest Group B opponent, The Nigeria Police, at 3:00 pm on Wednesday (today) in the race for a semi-final spot.
In other games played on Tuesday, Nigeria Police defeated the Federal Road Safety Corps by 76-41 points, while Group A leader Nigeria Security and Civil Defense Corp defeated the Federal Fire Service by 92-50 points.
Other games on the bill on Day 2 of the championship are Road Safety taking on DSS at 1:00 pm while the Nigerian Air Force will feel the pulse of the NSCDC at 5:00 pm.
Customs’ manager, Abba, says his side will take one game at a time as all teams have equal chances of getting to the knockout stages.
Customs Corner
Customs Lilypond Command Facilitates 5,891 Containers of Export Commodities Valued at $236M
By Lucy Nyambi
The Nigeria Customs Service, Lilypond Export Command, has processed 5,891 (20ft and 40ft) containers of export commodities valued at $236,087,888.53 in the 1st quarter of 2024.
Announcing the Command’s outstanding performance to Newsmen on Tuesday, 16 April 2024, Comptroller Ajibola Odusanya revealed that the commodities comprise Agricultural produce, manufactured goods, solid and extractive minerals, among others.
Comparing activities with the corresponding period in 2023, Comptroller Odusanya noted that analysis revealed a substantial growth trajectory in Q1 2024.
According to him, “total containers processed in 2024 Q1 surged by 44% to reach 5,891(20ft and 40ft) containers as against 3,784 (20ft and 40ft) containers processed in 2023 Q1, signifying heightened trade activity at the Command.
“Export commodities’ value also surged by 42% to USD$236,087,888.00 as against $154,459,566.39 recorded in 2023 QI, underlining the sustained momentum in export performance.”
The Area Controller stated that the Nigeria Export Supervision Scheme (NESS) also witnessed an impressive 114% increase, “reaching N1,389,331,520.15 from N378,268,430.57 received in 2023 Q1, indicative of enhanced revenue generation and compliance.
“Surcharge payment for plants & machinery, and imported goods doubled from NGN 8,785,188.00 in 2023 Q1 to NGN 18,218,964.00 in 2024 Q1, representing a 70% difference, aligning with fiscal policy directives.”
Comptroller Odusanya emphasised the importance of increased export trade activities in firming up the Naira value.
He attributed the surge in export trade activities to President Bola Tinubu’s vision to encourage export, stating that, “the Nigeria Export Promotion Council (NEPC) has been on top of that sensitisation, and the little we can do at our end in customs, is to support them.”
He reiterated the Command’s commitment to fostering consolidation, collaboration and innovation to ensure seamless trade facilitation.
“Export business is our business here. We facilitate the trade of export and give maximum corporation to those people that are ready to do legitimate export trade,” he stressed.
Nigeria Customs Personnel Complete Intensive Weapon Handling Training, Study Tour
Nigeria Customs Men’s Basketball Team Battles Sister Security Agencies in Tournament
Customs Lilypond Command Facilitates 5,891 Containers of Export Commodities Valued at $236M
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