Tag: OPEC

OPEC could potentially face further loss of market share in early 2024 following the recent departure of Angola, weakening demand and rising output by non-OPEC producers, Reuters has said, based on its calculations.

It said OPEC’s production is set to slip below 27 million barrels per day (bpd) without Angola, good for less than 27 per cent of the total global supply of 102 million bpd. The last time the cartel saw its market share fall to that level was at the height of the Covid-19 pandemic when global oil demand fell by nearly 20 per cent.

Earlier in December, Angola officially announced its exit from OPEC over disagreements regarding its oil production quotas. Angola’s crude output clocked in at 1.15 million barrels per day in November, a sharp decline from 1.88 million barrels per day in 2017, one year after it joined OPEC, thanks in large part to under-investments in its aging, deepwater oil fields.

However, record shale production by the United States has cut into that deeply. U.S. oil output hit an all-time high of 13.1 million barrels per day in the current year mainly due to efficiency and productivity gains by drillers in a bid to combat low oil prices.

Read Also: OPEC’s oil output dips on low shipment from Nigeria, Iraq

Some analysts have forecast a slackening of United States oil output increase will slacken in the New Year, but many others view the estimates from the Energy Information Administration (EIA) as too conservative for 2024.

OPEC believes the market share loss might only be temporary. The group has predicted that the group’s global market share will come in at 40 per cent in 2045 largely due to non-OPEC output declining from the early 2030s.

OPEC has forecast global oil demand will hit 116 million barrels a day (bpd) by 2045, 6 million bpd higher than expected in last year’s report, driven by growth demand by India, China, India, Africa and the Middle East.

India has been tipped to replace China as the main driver of global oil demand growth thanks mainly to a rapidly expanding population. Further, the country’s transition to renewable energy is expected to be much slower than China’s with the country recently backing coal-fired electricity generation.

• ’Cartel not serving country’s interest’

Angola, a leading African oil producer said it would leave the Organisation of Petroleum Exporting Countries (OPEC). Angola’s resolve to quit the oil cartel membership which regulates production quotas for member countries, is not unconnected with Saudi Arabia’s push, the leading OPEC oil producer, that the oil producers group should subscribe to further output cuts to prop up oil prices. Angola’s Oil Minister, Diamantino Azevedo, said the Organisation of the Petroleum Exporting Countries no longer served the country’s interests. It joins other mid-sized producers, including  Ecuador and Qatar, which have left OPEC in the last decade.

“We feel that  Angola currently gains nothing by remaining in the organisation and, in defence of its interests, decided to leave,” Azevedo was quoted as saying in a presidency statement. Oil prices fell by nearly two per cent as analysts said the departure raised questions about OPEC’s unity. “Prices fell on concern of the unity of OPEC+ as a group, but there is no indication that more heavyweights within the alliance intend to follow the path of Angola,” UBS analyst Giovanni Staunovo said Angola, which joined OPEC in 2007, produces about 1.1 million barrels of oil per day, compared with 28 million bpd for the whole group. OPEC did not immediately reply to a request for comment. Three delegates from the group who spoke on condition of anonymity, said Angola’s decision to leave came as a surprise. The country has been unable to produce enough oil to meet its OPEC quota since 2019.

It has struggled to reverse falling output since hitting a peak of two million barrels per day in 2008 and expects to maintain current production into 2024, a senior government official said two months ago.

 Last month, Azevedo’s office protested against a decision by OPEC to cut its production quota for 2024, which could have curtailed any ability it might have to increase output.

Disagreements over African output quotas had earlier been in part, the cause of a delay to a meeting of the wider OPEC+ oil producer group. Oil and gas exports are Angola’s economic lifeblood, accounting for around 90 per cent of total exports, an over-reliance the government has been seeking to reduce after it was hit hard by the COVID-19 pandemic and lower global fuel prices.

Several oil majors and independents operate in the southern African nation, including TotalEnergies, Chevron, ExxonMobil and Azule Energy, a 50/50 venture between Eni and BP. Angola oil minister said yesterday, that its membership was not serving the country’s interests. The departure is unlikely to have a significant impact on oil supplies given Angola’s small percentage of total OPEC output, but the move raises questions about the unity of the group, analysts said.

Giovani Staunovo, UBS: “From an oil market supply perspective, the impact is minimal as oil production in Angola was on a downward trend and higher production would first require higher investments. “However, prices still fell on concern of the unity of OPEC+ as a group, but there is no indication that more heavyweights within the alliance intend to follow the path of Angola.” Bill Weatherburn, Capital Economics on his part said “Angola’s exit from OPEC is symbolic but won’t have a meaningful impact on OPEC’s market power or global oil supply. Angola is a relatively small oil producer and is likely to struggle to raise production much further, even if it is now free from OPEC quotas.”

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Ali Al-Riyami, former marketing director general at Oman’s energy ministry said “This shows that there is no consensus within OPEC itself and this was for some time now. There will be consequences no doubt about it, but I don’t think others will follow. In my opinion there was no need to take this step, it could’ve been resolved in a better way without sending any negative messages to the market. Anyhow I don’t think this will have significant impact on the oil market or price.”

James Davis, FGE said “While leaving OPEC is the first step to change, unless Angola makes radical changes to its fiscal system, it will still struggle to incentivise investment and grow output.” Ole Hansen, Saxo Bank said “The producer has increasingly been showing discontent with the OPEC+ production straitjacket and favouritism towards Middle East producers.”

Raad Alkadiri, Eurasia Group said “It is a sign of Luanda’s dissatisfaction over OPEC’s reallocation of production baselines and its sense that it has more upside than is being acknowledged. It doesn’t help OPEC’s efforts to project cohesion, but in production terms it will probably have marginal impact, given investment challenges in Angola. The bigger thing to watch for is whether other African OPEC members are tempted to follow suit. Even then, the real impact on balances will depend on investment, but the optics for OPEC will not be good.” Reuters

Oil cartel, Organisation of Petroleum Exporting Countries (OPEC’s) crude oil production dipped in November for the first monthly decline since July as Nigeria and Iraq saw lower shipments, it was gathered yesterday.

OPEC produced 27.81 million barrels per day (bpd) of crude last month, a drop of 90,000 bpd compared to October, the Reuters survey of OPEC sources, consultants, and vessel-tracking companies showed.

In the three months before November, OPEC’s oil output was either flat or rising as growing supply from African members and Iran largely offset lower output elsewhere.

In November, Iran, which is exempted from the OPEC+ cuts, further increased its output to a five-year high, according to the Reuters survey.

Oil production from the 10 OPEC producers part of the OPEC+ pact declined by 130,000 bpd in November from October, with Saudi Arabia and the other Middle Eastern producers keeping strong compliance with their announced cuts and extra voluntary reductions, per the survey.

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Early next year, OPEC’s oil production is expected to further decline after the OPEC+ alliance agreed extra cuts for the first quarter of 2024.

Overall, the announcements after last week’s meeting were underwhelming and failed to convince the market that OPEC+ hasn’t had disagreements over cuts and quotas leading to the meeting, as became evident from the lack of a group-wide cut.

The OPEC+ group is ready to take additional measures and deepen the oil production cuts in the first quarter of 2024 to avoid volatility and speculation on the market, Russia’s Deputy Prime Minister Alexander Novak said earlier this week.

Novak’s comments on Tuesday follow remarks from Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman, who told Bloomberg on Monday that the OPEC+ production cuts could extend beyond March 2024 if the market requires it. The minister also criticized commentators for failing to understand the output deal.

The Organisation of Petroleum Exporting Countries and its allies (OPEC+), are in a dilemma on how to resolve quota disputes for African countries.

 The affected nations, including Nigeria, Angola snd Congo, have expressed displeasure over the volume, or production quota being considered for them in 2024.

The rising disagreement has forced OPEC+ members’ meeting slated for the weekend, November 25 to be precise, to be moved backward by five days to November 30. 

The Nation gathered that the major oil producers’ group’s talks were pushed back from this weekend so as to allow the cartel resolve complaints from Nigeria and other members from Africa, who are unhappy with revised production limits.

Saudi Arabia and its oil allies, it was learned, “are once again struggling with a dispute over output quotas for African members, forcing the group to delay,” what a source tagged, “a critical meeting.” 

Nigeria is ramping up its production targets ahead of a pivotal OPEC+ meeting set to decide on matters, including how much oil Africa’s biggest crude producer should aim to pump next year. Nigeria was producing 1.7 million barrels per day of crude and condensates as of November. 17 and expects to hit 1.8 million bpd by the end of the year, Olufemi Soneye, the Chief Corporate Communications Officer, Nigerian National Petroleum Company Limited (NNPCL), said.

The country intends to ramp up its crude and condensate output to about two million bpd by the end of the first quarter of 2024, he said, adding that the aim is to reach 2.5 million bpd in the next couple of years.

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However, the OPEC and its allies, a group known as OPEC+, delayed an upcoming ministerial meeting until November 30.

    They had been expected at the meeting to extend or deepen output cuts in 2024, with oil prices falling considerably in recent weeks over demand concerns and burgeoning supply. According to OPEC+ sources, OPEC members Angola, Congo and Nigeria are struggling to agree on output levels and hence possible reductions ahead of the meeting originally set for November 26.

    OPEC+ negotiations over production quotas have often been difficult in the past. This dilemma is borne out of the fact that oil production tends to vary month-by-month, making it difficult to fix  a permanent production target, so the higher a production reference level a country can negotiate, the less it actually has to cut to comply with its targets.

    In a June OPEC+ meeting, the three African producers were given lower targets after years of failing to meet the previous ones. Nigeria saw its 2024 target reduced to 1.38 million bpd from 1.74 million previously, but it will be allowed a higher production target of 1.58 million bpd if three independent consultancies can confirm its capacity to produce at this level.

Senate President Godswill Akpabio yesterday said with careful planning and execution, Nigeria can meet this year’s crude oil production quota that the Organisation of Petroleum Exporting Countries (OPEC) has given it.

Akpabio spoke at the Independent Petroleum Producers Group/Oil Producers Trade Section (IPPG-OPTS) capacity building for National Assembly in Abuja.

Akpabio, who was represented at the event by Senate Upstream Committee Chairman, Etang William, said: “Last month, our crude oil output hit 1.35million barrels per day and 14 per cent higher than the figure for August, the highest figure since the year began. Consistent and determination efforts by the Federal Government yielded this dividend, which has given us hope that with careful planning and execution, we will hit the OPEC quota for Nigeria, which stands at 1.8million barrels per day.’’

Read Also: OPEC: Nigeria is second largest producer in Africa

He urged the workshop to discuss what was required to resolve the issues.

    House Committee Upstream Chairman, Hon. Hassan Ado Dogowa, who represented him, urged the workshop recommend how best to support the industry and correct some perception about the industry.

    In his remarks, IPPF chairman, Abdulrazak Isah, noted that investor uncertainty, a core

    element of the ongoing reforms, persists and this is further exacerbated by the global energy transition drive and the insecurity in the Niger Delta with the resultant effect being a significant drop in the nation’s production output.

    According to him, consequently, Nigeria suffers untold collapse in revenue accruable from its vast hydrocarbon resources.

    He said it has therefore become imperative for us as an industry to ensure the immediate ramping up of oil and gas production to shore up the nation’s revenue base and generate the much needed foreign exchange for the attainment of macroeconomic stability.

Minister of State for Petroleum Resources (Oil) Sen Heineken Lokpobiri yesterday urged stakeholders in the oil and gas industry to come up with home-grown solutions tackling low productivity challenges to meet the 2023 Organisation of Petroleum Exporting Countries (OPEC) production quota for Nigeria.

He spoke at the Third International Conference on Hydrocarbon Science & Technology, (ICHST) in Abuja.

The Petroleum Training Institute (PTI) Effrun, Delta State organised the conference with theme: “The future of the oil and gas industry: Opportunities, challenges and development.”

He tasked them to come up with relevant solutions for addressing the challenges of insecurity, oil theft and low productivity.

Nigeria’s oil production hovers around 1.4 million barrels per day (mb/d), inclusive of condensate it is 1.7mb/d while OPEC gave the country the leverage of producing 1.8mb/d.

Lokpobiri, however, said: “And I think that my own expectation at the end  of this particular conference is for us to be able to come up with some homegrown solutions to address our problems in the petroleum industry.

“You will agree with me that in Nigeria today we have so many problems bedevilling the oil industry: begining with pipeline vandalization, oil theft, low productivity, we can’t even meet our OPEC quota. And I can go on an go on.”

According to the Minister, who also urged all the agencies and parastatals in the ministry to partner to evolve the relevant technology needed to address the industry challenges, their solutions must be peculiarly different from the ones required in the Middle East.

He urged the experts to present original ideas that are relevant to tackling the country’s oil and gas challenges instead of rehashing the academic documents presented elsewhere.

The minister said, “As a ministry, our expectation is that all the agencies in the ministry, PTI, PTDF, NNPC, NUPRC, NMDPRA and all the parastatals will be able collaborate going forward, will be able to evolve the relevant technology that we need to address our local oil production oil production problems, our local gas production problems.

“Nobody will come here and find solution to our problem and the solution you to the problem in the Middle East may not be the solution to the problem here.

“And that is why from time to time, it is important that you the experts come together and therefore share ideas on we can address our problems in the industry.

“My expectation is that at the end of this two day conference, we will be able to have document that is implementable not academic.

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Meanwhile, the Minister of State for Petroleum Resources (Gas), Hon. Ekperikpe Ekpo, noted that the Nigerian Liquefied Natural Gas (NLNG) has been operating below its installed capacity despite the country’s gas reserve.

He said although the ongoing Train 7 project ought to have raised NLNG capacity by 35%, the domestic gas market remains grossly untapped.

“It is well known that our NLNG plant currently operating below capacity due to gas supply, which is ironical giving our proven gas reserves.

“In fact, the ongoing train 7 project should increase the NLNG capacity by approximately 35% to further expand our opportunity for gas producers.

“Despite this our domestic gas market remains grossly under-tapped with the infrastructural and pricing issues being the major challenges,” said the Minister of Petroleum Resources (Gas).

He attributed the challenges to infrastructural and pricing issues.

Ekpo however revealed that the ministry under his watch has already identified the areas of challenges and it is already addressing them.

He said in order to optimize the gas resources, his office is reviewing all the various policy initiatives that the different stakeholders proposed.

In his welcome address, Principal & Chief Executive Officer of the PTI, Dr. Henry Ademowale noted that the conference is a testament to the institute’s unwavering commitment to this vision – a crucible where innovative ideas take shape and practical solutions are unearthed.

He acknowledged the pioneering research conducted by the PTI, which has substantially influenced our discussions.

He added that PTI’s development of economic models for gas investment spanning the upstream, midstream, and downstream sectors, as well as their creation of the Modified Unit Technical Cost Model for oil and gas investment, ensures precise determination of the cost to produce a standard cubic foot of gas.

According to him, these achievements underscore PTI’s dedication to innovative and environmentally responsible hydrocarbon resource utilization.

Adebiwale added that PTI’s collaborative research with the Nigerian National Petroleum Corporation Research and Development Division (NNPC RTI) has resulted in steps towards efficient storage system for Compressed Natural Gas (CNG) in Powered Tricycles.

He said this pioneering initiative marks a substantial stride towards sustainable energy solutions and cleaner transportation methods.

The principal said “Our strides in research and innovation have also yielded remarkable results. Most notably, we’ve secured a patent for the ‘Method of Improving the Rheological Properties of Potassium-Based Bentonite Clay’ under Nigerian Patent No NG/P/2020/200, as duly registered with the Nigerian Patents and Designs Registry. Additionally, we’ve made significant advancements in the development of a bio-catalyst production process derived from animal waste, which has also been successfully patented.

“These innovations reflect our steadfast dedication to sustainable and eco-friendly practices, serving as a testament to our unwavering commitment to pioneering research and development.”

The Organisation of the Petroleum Exporting Countries (OPEC) has confirmed that Nigeria’s oil production increased to 1.18 million barrels per day (bpd) in August 2023 – up from 1.08 million barrels in July.

In its monthly oil market report released yesterday, the oil cartel said Nigeria fell behind Libya on the list of Africa’s largest crude oil producers.

OPEC said the country’s output performance was based on direct communication covering last month.

Although the 100,000 barrels increase pushed Nigeria up from its previous third place to the second position and was not enough to displace Libya, it, however, closed the gap between the West African country and the North African nation.

Data released by the organisation showed that Libya increased its crude oil level from 1.17 million bpd to 1.92 million bpd to retain the number one spot.

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Others on the top five list are Angola, Algeria, and Congo – retaining the third, fourth, and fifth positions. The three countries reported a decline in their crude oil output in August, according to OPEC.

Angola produced 1.12 million bpd in the review month, recording a decrease in its output when compared with July’s production figure of 1.14 million bdp.

The oil cartel said Algeria’s output level fell to 939,000 bpd, in contrast with the previous month’s 955,000 barrels. Also, Congo recorded the same fate – closing last month with 272,000 bdp against July’s 282,000 barrels.

OPEC secondary sources reported that the 13 OPEC members produced a combined 27.45 million bpd in the month under review, with Iran, Nigeria and Iraq contributing largely.

“According to secondary sources, total OPEC-13 crude oil production averaged 27.45 mb/d in August 2023, higher by 113 tb/d m-o-m,” OPEC said.

“Crude oil output increased mainly in IR Iran, Nigeria and Iraq, while production in Saudi Arabia, Angola and Venezuela decreased.”

Meanwhile, contrary to the report by OPEC, Mele Kyari, the group chief executive officer (GCEO) of Nigerian National Petroleum Company (NNPC) Limited said Nigeria produced 1.67 million bpd in August, inclusive of condensate.

Nigeria’s oil output (including condensate) was 1.29 million bpd in July, while the figure stood at 1.48 million bpd in June.