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OPEC+ Cuts production, saves Oil Industry from a breakdown

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OPEC+ oil

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.

Mohammed Barkindo, OPEC Secretary General

“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.

Minister of State for Petroleum, Chief Timipre Sylva

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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Customs Corner

Arewa Economic Forum Declares Support For Ag. CGC Bashir Adewale Adeniyi

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By Muhammad Bashir

Author: Muhammad Bashir, Abuja

…As Customs CG Vows to Enhance Trade Facilitation, Rejuvenates Northern Inland Dry Ports

The Chairman of Arewa Economic Forum (AEF), Ibrahim Shehu Dandakata, has said the Acting Comptroller-General of Customs, Bashir Adewale Adeniyi MFR, has solid support for the Forum, considering his notable commitment to enhance border security and trade facilitation in the North.

Dandakata made this known on Tuesday, 26 September 2023, shortly after they met with the Ag. CGC at the Customs Headquarters, Abuja — emphasizing that “his commitment to implement policies that will improve the region is one hundred percent absolute.”

The Chairman, who eulogized the Former Comptroller-General of Customs, Late Dikko Inde, for bringing numerous dividends to the region, expressed optimism that the current administration of Ag. CGC Adewale Adeniyi will exceed what the previous CGCs have done, “we raised an issue, and Mr Adeniyi quickly swung into action on the matter, and we had a great response.” he added.

He said, “We are talking about fiscal policies and entrenchment of a regime that will create an enabling environment for businesses to thrive in Northern Nigeria, most especially in the agricultural sector; therefore, what CGC Adeniyi is doing will be sustainable and far-reaching.”

During the meeting at the CGC’s office, the Chairman appreciated the Ag. CGC for taking progressive steps to make things better in the North, highlighting that “Nigeria now has a very responsive government, and AEF is proud to have a very responsive CGC.”

According to him, the idea behind visiting the Ag. CGC was to bring new ideas that will help his administration to succeed, adding that the Forum is looking forward to witnessing the enhancement of cross-border trade in Ilela, considering its magnitude in boosting the region’s economy.

He, however, pleaded with the Ag. CGC to look into the conditions of Inland Dry Ports in the North, which, according to him, “are essential in carrying out businesses in the region – and as it stands, they’re not functioning.”

The Chairman also seized the opportunity to invite the Ag. CGC for an Economic Summit slated to take place before the end of the year, assuring that the summit will revolve around creating awareness for people to invest in the North.

Responding, the Ag. Comptroller-General of the Nigeria Customs Service, Bashir Adewale Adeniyi MFR, says his administration is up and doing to enhance trade in the North, considering its importance in boosting Nigeria’s economy and prosperity.

The Ag. CGC, who spoke about the current situation in the Niger Republic and how it affects trade in Nigeria, also said that “considering the significance of trade in Northern Nigeria, the Nigeria Customs Service finds it interesting to engage in trade talks, but can be achieved when there’s absolute peace in the area.”

He assured the entourage of Customs’ commitment to look into the matter of Inland Ports and consult the Federal Government to fast-track the process, adding that “Customs is willing to support the situation.”

As regards the Forum’s forthcoming Summit, the Ag. CGC said that NCS will watch out for the Economic Summit to attend, adding that “there’s so much economic potential in the North, which, if revamped, will contribute to the development of the country’s economy.”

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Customs Corner

A Deeper Dive into the Impactful Journey of Acting CGC Adewale Adeniyi

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A Deeper Dive into the Impactful Journey of Acting CGC Adewale Adeniyi

The announcement of Bashir Adewale Adeniyi’s appointment as the Acting Comptroller General of Customs for the Nigeria Customs Service while he was on an official assignment at the World Customs Organization (WCO) Policy Commission and Council Session in Brussels was met with jubilation, not just among Customs officers but also by Nigerians and the international community. This move has injected fresh hope into the organization and raised expectations for transformative leadership.

Adeniyi’s rise to this pivotal position is a testament to his unwavering commitment to his career, which spans an impressive three decades. His journey began with remarkable promise, and he consistently proved himself through dedication and excellence. From his early days as the Customs Public Relations Officer to his significant roles at the Nigeria Customs Command and Staff College in Gwagwalada, Abuja, Adeniyi steadily built a reputation for outstanding performance.

His appointment as Acting Comptroller General was no coincidence; it was the culmination of a career marked by dedication and professionalism. His leadership style has been characterized by a hands-on approach. From the outset, he embarked on a tour of Customs Formations, emphasizing his commitment to improving customs operations and national security.

Adeniyi’s dedication to his official responsibilities and beyond is extraordinary. He has flagged off projects to expand office and residential accommodations, warehouse facilities, and a model college for training and retraining of officers. These initiatives underscore his commitment to the growth and modernization of the Customs Service, departing from conventional leadership approaches.

But what truly sets Adeniyi apart is his integrity. He has garnered numerous awards and recognitions, including the National Honour of Member of the Order of the Federal Republic (MFR) and Fellowship of the Nigerian Institute of Public Relations. His decisive actions, such as the seizure of $8,065, 612 million at Murtala Mohammed International Airport while he was an Area Controller, have solidified his reputation for fearless and effective leadership.

His competence and qualifications are beyond question. He has actively participated in numerous Customs-related summits and meetings worldwide, gaining invaluable expertise and knowledge of customs operations. This extensive experience positions him as a highly qualified leader for the organization.

Adeniyi’s vision extends into the future, with a strong emphasis on technology and innovation. He envisions a Customs Service that fully embraces technological advancements, emphasizing data gathering, mapping techniques, and satellite imagery to enhance operations. His plans for collaboration with technology institutions promise to usher in a new era of efficiency.

Furthermore, Adeniyi’s commitment to the welfare of Customs Service staff has been unwavering. He has worked diligently to address long-standing issues and improve conditions for officers and employees, reinvigorating the Service and earning widespread appreciation.

Adeniyi’s leadership extends beyond the confines of his office. He has actively engaged with government establishments and executives across the federation, fostering cooperation and achieving tangible results. His dedication to President Bola Ahmad Tinubu’s success is evident, and his hands-on approach to leadership is commendable.

In the months ahead, Nigerians can anticipate the positive impacts of Adeniyi’s leadership. His tenure promises increased business activity, facilitated trade, reduced smuggling, enhanced revenue generation, and increased foreign investment, which will benefit the country and its youth.

In conclusion, as some seek to obstruct progress for their personal gain, it is crucial for Nigerians to rally behind the positive changes Adeniyi is bringing to the Nigeria Customs Service. His leadership is a beacon of hope, and we must collectively reject the efforts of economic saboteurs and opportunists who seek to disrupt our nation’s growth and progress.

Muhammad Bashir, a public affairs analyst writes from Abuja

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Customs Corner

Comptroller Senas Ukpanah Resumes as CAC, Enugu/Anambra/Ebonyi Customs Area Command, Charges Officers on Synergy, Discipline.

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omptroller Senas Ukpanah Resumes as CAC, Enugu/Anambra/Ebonyi Customs Area Command, Charges Officers on Synergy, Discipline.

Author: Vivian Daniel, Abuja

Following her assumption of duty as the Customs Area Controller (CAC) of Enugu/Anambra/Ebonyi Area Command, Comptroller Comfort Senas Ukpanah has charged Officers and men of the Command to be ready to walk the talk with her in moving the Command forward.

She made the appeal in her welcome speech at the Enugu/Anambra/Ebonyi Area Command’s Conference Hall on September 15, 2023, while taking over the Command’s helm of affairs from Comptroller Adebola Mumeen Adegbite, who also resumed as CAC of Edo/Delta Area Command.

“I urge you all to gear up for the task ahead, a task of transformation of the Command through a core cardinal program, centred on discipline/codes of conduct, revenue collection, facilitation of legitimate trade, inter-agency collaboration and synergy, as well as stakeholder’s engagement,” she said.

She also charged all Senior Officers to redouble their efforts in all areas of the Command’s operation to enable the Command to meet and surpass its Revenue target. The CAC drew their attention to the Key Performance Indicator (KPI), Revenue and charged Officers to ensure that areas of Revenue leakages are identified and blocked, especially now that the Federal Government relies so much on Customs for GDP growth.

Meanwhile, the outgoing Comptroller, Adebola Mumeen Adegbite, spoke about the Command’s achievements during his administration. He stated that the Command generated 17 billion naira from January to date.

Comptroller Adebola Mumeen Adegbite also eulogised the Officers of the Command for their support during his leadership and the stakeholders who came for the occasion while calling on them to redouble the same support for the new Controller – Comptroller Comfort Senas Ukpanah, whom he described as “a core professional and highly disciplined officer.”

The new Customs Area Controller, Comptroller Comfort Senas Ukpanah, also spoke on the need for training and retraining to enable Officers to be at par with the latest operational developments in the service, especially in the areas of ICT given the imminent full automation of Customs processes and procedures. She also spoke on the need for Senior Officers to mentor the junior ones in line with the theme of the 2023 International Customs Day (ICD).

In her response, the CAC appreciated the outgoing Controller’s leadership abilities, which led to his accomplishments.

Comptroller Comfort Senas Ukpanah applauded the appointment of the Ag. Comptroller-General of Customs, Bashir Adewale Adeniyi MFR, which she described as well-deserved and while addressing other Senior Officers in the Command, she highlighted her agenda towards a better and efficient Service within her Area of Responsibility (AoR) alongside her core cardinal programs, which will centre on discipline/code of conduct; revenue collection, facilitation of legitimate trade; inter-agency collaboration and synergy, as well as stakeholder engagement.

Furthermore, the CAC reiterated the need for the Officers to pay close attention to the Key Performance Indicator (KPI) of Revenue Generation and cautioned officers to block all avenues for revenue leakages.

The new Area Controller also harps on training and retraining officers, especially in the area of ICT, to align with the automation mantra of Customs processes and procedures.

She also stressed the need for Senior Officers to mentor the junior ones as it relates to the theme of the 2023 International Customs Day celebrated every 26 of January, “Nurturing the Next Generation: Promoting a Culture of Knowledge-sharing and Professional Pride in Customs”.

Comptroller Comfort Senas Ukpanah hails from Mbio-Oku Ikot odung, Ikono Local Government Area of Akwa-Ibom State, Nigeria, and she is a graduate of Chemistry from the University of Calabar.

She was enlisted into the Nigeria Customs Service as a Cadet Officer in 1990 and had her basic training at the Nigeria Customs Service Training College, Ikeja, in 1991. She rose through different ranks and became a full Comptroller in 2022.

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