•FG mobilises African nations to invest $2bn in energy projects
Chineme Okafor in Abuja with agency reports
Crude oil price yesterday headed for its biggest one-day drop in a month as a result of evidence of yet more growth in US crude supply
This is coming as the federal government has unveiled plans to mobilise other oil and gas producers in Africa on the platform of African Petroleum Producers Organisation (APPO) to raise up to $2 billion to finance energy projects across the continent.
Further weighing on oil markets is the trade dispute between the United States and China, which looks unlikely to end anytime soon and has increasingly impacted on the Chinese economy.
However, the price is still on course for its strongest January gain for 14 years.
The global benchmark, Brent crude oil was down $1.49 at $60.15 per barrel, down 2.5 per cent on the day in their largest one-day percentage fall since late December, while US futures fell $1.71 to $51.98 a barrel.
United States crude production, which hit a record 11.9 million barrels per day late last year, has undermined sentiment in the oil market, Reuters quoted oil traders as saying.
US energy companies last week increased the number of rigs looking for new oil for the first time since late December to 862, energy services firm Baker Hughes said on Friday.
Even with an uncertain outlook for demand and evidence of growing supply, the oil market has benefited this month from another round of production cuts by the Organisation of Petroleum Exporting Countries (OPEC) and its partners, as well as robust trade in physical barrels of crude led by China.
The price has risen by 12 percent so far in January, the largest increase in percentage terms in the first month of the year since 2005, when it gained 14 per cent.
Investors have added to their bets on a sustained rise in the oil price this month for the first time since September, according to data from the InterContinental Exchange.
But much of the demand outlook hinges on China and whether its refiners will continue to import crude at 2018’s breakneck pace.
Industrial companies in China reported a second monthly fall in earnings in December, despite the government’s efforts to support borrowing and investment.
Nigeria Mobilises African Nations to Invest $2bn in Energy Projects
Meanwhile, Nigeria will mobilise other oil and gas producers in Africa on the platform of African Petroleum Producers Organisation (APPO) to raise up to $2 billion to finance energy projects across the continent.
The Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, disclosed that the proposed fund would also support the push for deeper collaboration among Africa’s oil producers.
Kachikwu, who spoke at the second Nigerian International Petroleum Summit (NIPS) currently going on in Abuja, said member countries of APPO were already looking to expand the role of an existing financing body in the continent, and would rename it the African Energy Investment Corporation to drive its goals of financing continent-wide energy projects.
He said: “We are presently looking at expanding the role of a particular financing body we are going to be calling the African Energy Investment Corporation. The whole idea is to mobilise between $1 billion and $2 billion of resources to fund all the essentials necessary for us to properly collaborate,” said Kachikwu.
The minister added: “Today, most African countries are silos; everybody does their own thing–you build your own refineries, plants, gas turbines. If we could just cross the Rubicon and be able to extend hands of infrastructural relationship across Africa; build joint pipeline, plants and refineries; begin to protect the African market, we would have taken a huge step, not only in the development of Africa, but to the stabilisation of independent countries.”
“We have finished that meeting and signed on to resolutions that endorsed all the changes that we have suggested. We are now going to move on the implementation stages.”
He listed the challenges currently before the oil industry in the international oil market to include Shale oil, oil pricing, investment limitation, and the United States’ President, Mr. Donald Trump.
He noted that unless African countries get their policies, market place collaborative mechanisms, and infrastructure right, they would face a huge challenge in the competition for resources and capital to develop.
According to him, Nigeria has one of the best skillsets in the global petroleum industry, and should leverage this to help grow the petroleum industry in Africa.
“Our skillsets is unbelievable. Over 90 per cent of the oil majors’ workforce are Nigerians. This means that some of the best skill sets are here. One of the things I find going into the NNPC in 2015, was that every detail of capability that you need to run a global company sat in NNPC.
“They are very trained, very well exposed. We have issues in terms of policies, but in terms of skill sets, we are solid.
“We are hoping that with the collaborative spirit we are beginning to build, we would be able to export some of these to Africa; sit down with some of those countries coming into oil production for the first time; get some of our local participants and investors to begin to get into those countries and begin to take opportunities of what their blocks offer,” Kachikwu explained.
The Executive Secretary of the Nigerian Content Development Monitoring Board (NCDMB), Mr. Simbi Wabote, in his remarks at the summit, called on African oil producers to embrace local content in their operations as a means to guarantee development.
Wabote also advised foreign countries to stop accepting jobs meant for African countries and instead encourage the domestication of petroleum jobs in Africa.
In the same vein, the Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC), Dr. Maikanti Baru said Nigeria’s collaboration with Morocco to construct a gas pipeline that would traverse at least 15 West African countries and connect to existing gas lines in Europe was the kind of collaboration African oil producers should pursue.
Baru noted that the feasibility study for the trans-border gas line had been concluded, while the pre-Final Investment Decision (FID) as well as greenfield optimisation study are currently ongoing.
“This pipeline will help in the industrialisation of these countries. It will also meet the needs of consumers for heating and other uses. We see gas as a fuel to take Africa to the next level. New gas discoveries have been recorded offshore Senegal, Mauritania, Mozambique and are in various stages of development.
“Nigeria is also targeting to take FID on NLNG Train 7 this year. So African countries need to collaborate and trade among each other not only in terms of oil and gas but also in other key sectors so that the multiplier effect is seen across our various economies,” Baru said.