Crude oil prices rose above $30 on Friday after indications that oil-producing partners of the Organisation of Petroleum Exporting Countries, also known as OPEC+, would hold a meeting on Monday.

Donald Trump, president of the United States, had said a production cut as high as 15 million barrels may be implemented.

He, however, did not indicate if the US would join in cutting production.

“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 million barrels, and maybe substantially more which, if it happens, will be great for the oil & gas industry,” he tweeted.

“Could be as high as 15 million barrels. Good (great) news for everyone.”

After Trump tweeted, the Kingdom of Saudi Arabia released a statement calling for an urgent meeting of OPEC+ and other countries to reach a “fair agreement”.

“The Kingdom of Saudi Arabia would like to draw attention to the efforts it has exerted during the past period to reach an agreement within OPEC + group to restore equilibrium in the oil market as it has garnered the support of as many as 22 countries within OPEC + group, but it was not possible to reach an agreement due to lack of consensus,” the statement published by Saudi press agency read.

“Today, the Kingdom calls for an urgent meeting for OPEC+ group and other countries, with the aim of reaching a fair agreement to restore the desired balance of oil markets.

“This invitation comes within the framework of the Kingdom’s constant efforts to support the global economy in this exceptional circumstance, and in appreciation of President Donald Trump of the United States of America’s request and the US friends’ request.”

Brent crude price had fallen below $30 after an OPEC meeting deadlock resulted in a price war between Saudi Arabia and Russia.

An audit carried out by the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown that the federal government through the Nigerian National Petroleum Corporation expended N722.3 billion on under-recovery.

Under-recovery is the cost incurred by the NNPC to keep petrol at the approved pump price of N145 per litre.

This was before the federal government reduced the pump price of petrol to N125 per litre.

According to the audit, Nigeria earned $32.63 billion from the oil and gas sector in 2018, a 55% increase on the $20.99 billion earned from the sector in 2017.

A breakdown of the 2018 revenue showed that company-level financial flows into government coffers were $16.6 billion, while flows from sales of federation crude oil and gas accounted for $16.billion.

The NEITI 2018 audit reconciled payments by seventy-one companies and the Nigeria Liquefied Natural Gas (NLNG) that met the materiality threshold set for the exercise. A total of eight government entities were also covered by the audit.

“Out of the $32.63 billion earned from the sector in 2018, the sum of $19.92 billion was transferred [directly] into the federation account, while $5.21 billion and $4.04 billion were transferred into the JV cash call account and Nigerian National Petroleum Corporation (NNPC) designated accounts respectively.

The report further disclosed that $2.10billion was transferred into third parties project financing accounts and $1.37billion were recorded as subnational transfers.

A total of 701 million barrels of crude oil were reported to have been produced in 2018, a slight increase of 1.5% when compared to 690 million barrels produced in 2017.

Total crude oil lifted for export and domestic sales was 701 million barrels.

Analysis of the total lifting in 2018 showed that 255.6 million barrels or 36% were lifted by NNPC on behalf of the federation, while companies lifted 445.5 million barrels or 64% of total liftings.

Further analysis showed that out of 255.6 million barrels lifted by NNPC in 2018, actual sales were 255.3 million barrels valued at $18.2 billion.

Out of the 255.6 million barrels lifted on behalf of the federation by NNPC, a total of 107.63 million barrels was recorded as domestic crude allocation (DCA) in 2018.

Of this figure, 94 million barrels or 87% of the DCA were utilized for direct sale direct purchase (DSDP), while the balance of 13.58 million barrels or 13% was delivered to the refineries.

The report also revealed that in 2018, the total crude oil losses due to theft and sabotage was 53.28 million barrels, an increase of 46.15% when compared to 16.824 million barrels recorded in 2017.

Similarly, the report put total products losses in 2018, due to pipeline breakages at 204,397.07 cubic meters.

On gas production, the NEITI 2018 oil and gas report revealed that the total gas production for the year under review was 2,909,143.69mmscf, while total gas utilization was 2,909,143.55 mmscf.

From the report, $307.20 million was realized from the sales of federation gas of 633.55 thousand metric tons in 2018.

“The national gas reserve stood at 200.79tcf as at end of 2018. This is made up of 101.98 tcf of associated gas (AG) and 98.81 tcf of non-associated gas (NAG). With the 2018 annual gas production quantity, the gas reserves life index (RLI) was estimated at 92 years.”

“Employment in the oil and gas industry accounted for 19,820 employees, 0.03% of the total employment (69.54 million) in Nigeria. In aggregate, employment distribution in the industry was 18% (3,595) female and 82% (16,225) male” the report stated.

This is the 11th cycle of independent oil and gas industry audit exercise by NEITI.

It was conducted by Adeshile Adedeji & Co., (Chartered Accountants), an indigenous accounting and auditing firm.

The Nigerian National Petroleum Corporation (NNPC) and Department of Petroleum Resources (DPR) have published conflicting data on the petrol stock available in the country.

Assuring citizens of petrol availability in the country, Mele Kyari, the NNPC group managing director, said the current stock would last for 60 days.

“There is absolutely no scarcity anywhere; our supply is robust, we have fuel that will last this country even for 60-days if assuming we do not import any,” he told journalists in Abuja on Sunday.

“Of course people because of the pandemic, stay at home, may try to conserve fuel, there is no need to do this.

“Maintain your normal life, we have secured all assurances that trucks will be moving freely across the country throughout this period of difficulty and supply will be sustained.”

However, data published on the DPR website showed that the country’s depot stock would be sufficient for 24 days.

“As at 26th March 2020, the cumulative depot stock of PMS at the depots was 935,570,757 litres (combined PMS stock owned by PPMC, major and independent marketers) vis-à-vis 978,672,482 litres on 25th March 2020 indicating a decrease of depot PMS stock due to vessel discharges and truck out activities,” the depot stock section of the DPR website read.

“Applying the estimated daily national demand of 38,200,000 (thirty-eight million two hundred thousand) litres, available depot PMS stock of 935,570,757 litres is sufficient for 24 days.”

There are a total of 82 depots in the country and 54 depots had liftable petrol as of March 26.

The Nigerian National Petroleum Corporation in collaboration with 33 upstream oil companies have donated $30 million to help in the fight against coronavirus.

According to a statement released on Friday, the intervention which is estimated to be N11 billion would be used to provide medical consumables, deploy logistics and in-patient support and deliver medical infrastructure.

Mele Kyari, NNPC group managing director, was reported to have led the industry-wide initiative.

“To address the increasing demand for medical services, we are immediately providing medical consumables covering testing kits, medical protective suits and ambulances to the highly impacted areas across the federation,” the statement read.

“This will be followed, in the next few days, with the deployment of ventilators, beds and temporary intensive care facilities across the geopolitical zones of the federation.”

The companies that donated to the intervention initiative were listed as:

1. The Shell Group of Companies in Nigeria
2. The ExxonMobil Group of Companies in Nigeria
3. The Total Group of Companies in Nigeria
4. The Chevron Group of Companies in Nigeria
5. The Eni Group of Companies in Nigeria
6. Addax Petroleum
7. Aiteo Eastern Exploration and Production Limited
8. AMNI International Petroleum Development Company Limited
9. Dansaki Petroleum Limited
10. Elcrest Exploration and Production Nigeria Limited
11. Eroton Exploration & Production Company Limited
12. Energia Limited
13. First Exploration & Petroleum Development Company Limited
14. First Hydrocarbon Nigeria Limited
15. Frontier Oil Limited
16. Green Energy International Limited
17. Lekoil Nigeria Limited
18. Midwestern Oil & Gas Company Ltd
19. Newcross Exploration &Production Limited
20. Network Exploration & Production
21. Niger Delta Petroleum Resource Limited
22. Oando Oil Limited
23. Oriental Energy Resources Ltd
24. Pillar Oil Limited
25. Platform Petroleum Limited
26. SEPLAT Petroleum Development Company PLC
27. Shoreline Natural Resources
28. Suntrust Oil Company Nigeria Limited
29. Vertex Energy Limited
30. Waltersmith Petroman Oil Limited
31. Yinka Folawiyo Petroleum Limited
32. Sahara Energy Fields Limited
33. Belema Oil Producing Limited

Similar intervention between NNPC and its downstream partners will be unveiled

Nigeria has reduced the official selling price of its crude oil to entice buyers.

Reuters reports that the prices were adjusted before the May loading programmes were released on Monday.

The official selling prices for Bonny Light and Qua Iboe were cut by $5 a barrel to dated Brent minus $3.29 and minus $3.10 per barrel.

The May loading programmes were higher than those released for April.

There will also be two cargoes each of Usan and Yoho, five cargoes each of Brass River and Agbami, six of Egina and four Amenam.

Oil price dropped to a record low after a market glut caused by the coronavirus outbreak and a price war between Saudi Arabia and Russia.

Speaking a roundtable organised by the Central Bank of Nigeria (CBN), Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation (NNPC), said Nigeria had 50 cargoes of crude oil that have not found landing.

“As at today with the Nigerian crude, we have 50 cargoes that have not found landing; it means the traders have purchased it but they don’t know how to take it,” he said.

He also said 12 cargoes of liquefied petroleum gas (LPG) cargos got stranded globally because they had no hub due to abrupt collapse in demand associated specifically with coronavirus.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) says the federal government has granted 66 filling stations waivers to lift and supply fuel to border communities.

Chinedu Okoronkwo, IPMAN president, told NAN on Monday that the ban was lifted after engagements between oil marketers and the Nigeria Customs Service.

The government had, on November 6, 2019, directed that petroleum products should not be supplied to filling stations within 20 kilometres of the border.

Border towns had previously been identified as smuggling routes for refined petroleum products.

“Our engagement with the Customs management is beginning to yield fruit. 66 filling stations have been released which is good,” he said.

“The Customs have looked at the activities of these stations and it is in line with their expectations which led to the suspension of the ban.”

The IPMAN president disclosed that oil marketers were making plans to deploy modern technology in running their businesses to curb smuggling and diversion of products.

On the compliance of independent marketers with the new fuel price of N125 per litre, he said market forces would force them to comply.

“Some marketers bought the product at the old price and we have made our request to the government in this regard,” Okoronkwo said.

“What the government has done to reduce the fuel pump price due to the crash in crude oil prices globally is commendable and is of benefit to Nigerians.”

He, however, appealed to the government to find ways to mitigate the losses recorded by marketers following the reduction of the price from N145 per litre to N125 per litre.

The Nigerian National Petroleum Corporation (NNPC) says the fuel pumps at its retail stations will be adjusted to N125 for each litre of petrol on Thursday.

Mele Kyari, NNPC group managing director, said the adjustment is in compliance with the directive given by Timipre Sylva, the minister of state for petroleum resources.

“In compliance with the directives of the honourable minister of state for petroleum resources on PMS pricing, the corporation has reviewed its ex-coastal, ex-depot and NNPC retail pump prices accordingly,” the statement read.

“Effective March 19, 2020, NNPC ex-coastal price for PMS has been reviewed downwards from N117.6/litre to N99.44/litre while the ex-depot price is reduced from N133.28/litre to N113.28/litre.

“These reductions will, therefore, translate to N125/litre retail pump price.”

Kyari said the immediate adjustment will come at a cost to the corporation, however, “NNPC is delighted to effect this massive reduction of N20/litre for the benefit of all Nigerians”.

“Accordingly, all NNPC retail stations nationwide have been directed to change the retail pump price to N125/litre.”

Addressing journalists at the end of the federal executive council meeting on Thursday, Sylva had said President Muhammadu Buhari approved that Nigerians should benefit from the reduction in the price of PMS which is a direct effect of the crash in global crude oil prices.

The move is also a step in the direction of deregulating the downstream sector as petrol retail price will be adjusted any development in the global oil market.

Crude oil price dropped as a result of reduced oil demand as economies shut down to curb the spread of coronavirus.

Crude oil prices dropped to $30 per barrel on Monday amidst an ongoing coronavirus outbreak and price war between Saudi Arabia and Russia.

This is the lowest point in more than four years as investors fear that a global recession is imminent.

At 2:30pm on Monday, Brent crude, which is the global benchmark of crude oil, was trading at $30.23 while US West Texas Intermediate traded at $29.05 per barrel.

Commodity-dependent economies like Nigeria will be affected as revenue projections and budgets would have to be cut.

Already, President Muhammadu Buhari has appointed a committee to review the impact of the coronavirus outbreak and  fall in crude oil prices on the economy,

The committee comprises of Godwin Emefiele, governor of the Central Bank of Nigeria (CBN); Zainab Ahmed, the minister of finance, budget and national planning; Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation (NNPC); Clement Agba, the minister of state for budget and national planning.

Zainab Ahmed has already said the 2020 budget and its projections will be cut and the committee will determine to what extent the cut would be.

Goldman Sachs had previously warned that Brent crude price could drop as low as $20 per barrel over the next few weeks.

After Russia failed to consent to additional cuts proposed by the Organisation of Petroleum Exporting Countries (OPEC) and in response, Saudi Arabia, the world’s largest crude oil producer, announced that it would offer discounts on every barrel of crude oil bought.

Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation (NNPC), says Nigeria would be out of business if the price of crude oil drops as low as $22.

Kyari was speaking on Wednesday at a consultative roundtable meeting organised by the Central Bank of Nigeria (CBN).

The roundtable was themed “Going for Growth 2.0”.

He explained that about 12 cargoes of liquefied petroleum gas (LPG) cargos got stranded globally because they had no hub due to abrupt collapse in demand associated specifically with coronavirus.

“It has also hit other sectors from the production stage which is the liquid crude,” NAN quoted him to have said.

“As at today with the Nigerian crude, we have 50 cargoes that have not found landing; it means the traders have purchased it but they don’t know how to take it.”

“Iraq dropped its price by five dollars and Saudi Arabia by eight dollars in some locations. So, when your crude oil sells at $30 and you’re dropping it by eight dollars, it means that in the market, you’re selling it at $22.

“This is a huge problem that can be accommodated in some production environment like in Saudi Arabia.

“Today, the best of our production system is $15 to $17 a barrel, there are many countries whose cost of production is $30 and we’re one of them. So, when the price now goes to $22 and we’re producing at 30 dollars, that means we’re out of business.”

Kyari said reality began to dawn on the country after the oil market slump on Monday.

He said that when the oil market collapsed, everything would collapse completely adding that oil was the only commodity whereby when the price goes up, beneficiaries would panic.

In her remarks, Zainab Ahmed, the minister for finance, budget and national planning, said the market slump is a wake-up call for the country to “look towards a life without oil”.

Crude oil prices recorded its biggest single-day drop since the Gulf War in 1991, losing 31.5% on Sunday.

This type of drop only occurred on January 17, 1991, after the Gulf War began.

As of 7:30am on Monday, Brent crude, which is the global benchmark for crude oil was trading at $33.40 per barrel while US West Texas Intermediate was trading at $29.91.

Goldman Sachs warned on Sunday that Brent crude price could drop as low as $20 per barrel over the next few weeks.

Saudi Arabia, the world’s largest crude oil producer, has also sent a notification to customers that it would begin to offer discounts on every barrel of crude oil bought.

Saudi Aramco, the Arab country’s national oil company, said it would offer discounts between $4 and $8 per barrel, offering Asian countries a discount of $6 per barrel.

Arab News reports that the biggest discounts are being offered to buyers in northwest Europe and the US.

There are also reports that the country plans to increase its daily output to 10 million barrels per day.

IT ALL STARTED WITH CORONAVIRUS

Oil price began to dip after the coronavirus in China.

China, which is one of the world’s largest buyers of crude oil had to partially shut down its economy to control the spread of the virus and in turn, reduced its demand for crude oil.

The Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) held a meeting on Friday with OPEC proposing additional production cuts of up to 1.5 million barrels to combat the risk posed to the market by the coronavirus outbreak.

They proposed that the cuts take effect from April till December 2020.

The current production cuts would expire in March

However, talks collapsed as Russia refused to agree to the cuts. Both parties, however, agreed to monitor the situation.

NIGERIA’S 2020 OIL REVENUE REDUCES BY ALMOST HALF

The oil revenue and budgets of oil-dependent countries like Nigeria will be greatly affected.

Nigeria had set its crude oil budget benchmark at $57 per barrel with a projected oil revenue of N2.64 trillion.

With the current drop in oil prices, Nigeria’s projected revenue from crude oil has been slashed by almost half.

Zainab Ahmed, the minister of finance, budget and national planning, has already admitted to a need to review the 2020 budget.

Saudi Aramco’s valuation has also dropped by $400 billion.