
A Joe Biden´s presidency and its impact on Nigeria’s oil

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Around the World
Analysts forecast when Nigeria’s Bonny Light could hit $50
Economies are opening up, however, the recovery is gradual and will take some time for oil prices to hit pre-COVID-19 levels.

Published
9 months agoon

After months of dwindling demand and fluctuations in crude oil prices, which had crashed below $0 at a point, oil has now witnessed a resurgence in the last six days. Also, most countries are carefully reopening their economies after weeks of global lockdown.
As the world slowly moves towards resuming normal economic activities, oil industry players will be focused on how quickly things get back to shape. An uptick in economic activities signified by a return of public transportation, air travel, and reopening of factories will brighten the light at the end of the tunnel for oil prices. Some international oil experts have however argued that oil prices could only witness a surge later this year. According to them, an average of $35-40 per barrel might be possible by the end of the year.
For instance, a Norwegian consultancy firm Rystad Energy had stated that about $100 billion is expected to be cut in 2020 from E&P budgets, and that would, no doubt, be a negative development. The firm warned that if oil prices stayed below $30 per barrel in 2021, the total cut could reach $150 billion.
Rating agency Moody is a bit more optimistic, expecting a bounce in oil prices, but only in the medium term.
According to berry commodities group, oil prices in the long term will range from $50 to $70 per barrel. In the short term, Moody is less optimistic and sees the effects of CAPEX cuts trickling down from E&P companies to oilfield service companies (OFS).
How oil firms trim costs
Already, the ICCs are adjusting to the oil price crisis. For instance, last week, the Dutch-British oil and gas major Shell announced the reduction of its underlying operating costs by $3-4 billion per annum over the next 12 months compared to 2019 levels. It also announced a reduction of cash capital expenditure to $20 billion or below for 2020, from a planned level of around $25 billion.
In its own case, French oil major Total has also cut organic CAPEX by more than $3 billion, while planning savings of $800 million on operating costs in 2020 from $300 million announced earlier, along with a suspension of its buyback program.
Unlike the American supermajor ExxonMobil whose further cuts are in the pipeline, ConocoPhillips has started to cut its 2020 capital program by approximately 10% or $700 million, while Chevron targets $2 billion in cost savings. The IOCs aren’t the only ones suffering; with a financial crash in US shale, Canadian shutdowns, and of course, the OPEC deal.
Oil prices surge …
The oil futures in the New York exchange, which once traded below $0, was around $24 per barrel in Asian trading on Friday. This represents a 20% increase this week. Also, the Brent crude, which is around $30.15 per barrel, has had a 15% price increase in the last week. Nigeria’s Bonny Light also stands at N24.93, an increase of 10.16% as at Friday afternoon.
It was reported earlier that Saudi Arabia’s oil giant Aramco raised the price for all its crude oil grades to all regions for June, in a move that many analysts see as the start of demand recovery. This also hints that OPEC+ has started to cut production with the aim to stabilize the market.
READ ALSO: Another devaluation looms as Naira depreciates at 5 years forwards market, now N570 to $1
But has the rebound come to stay?
Oil experts have described the surge as a welcome development driven by some factors. Director, Centre for Petroleum, Energy Economics and Law, Prof. Adeola Adenikinju, told Nairametrics in an exclusive interview that the development is hinged on a combination of demand and supply factors.
According to him, the reopening of global economies is bringing increased demand for energy services, thereby driving up oil demand. In addition, the cut in oil supply by OPEC+ members has also lowered excess demand in the market, as the global oil inventory figures have also shown some tentative positive signs.
On whether the surge has come to stay or not, he said, “If the rally would be sustained is still uncertain. This is because the fundamentals of the market have not changed significantly. Economies are opening up, however, the recovery is gradual and will take some time for economic activities to resume to pre-COVID-19 levels.
“There is uncertainty around the V-shaped recovery that has been predicted in some circles. In particular, the major source of global demand for oil, transportation, in particular, air transportation, is still largely under lockdown. International travels, tourism, etc., will not remain the same again, even when the vaccine is found.”
Adenikinju, who is also an associate of Delphi Ventura, US-based petroleum and energy-based consultancy firm, added that the daily commuting for work would also not remain the same, as employers accept the reality of working from home, and online meetings take centre stage.
READ MORE: FG to further revise 2020 budget oil benchmark to $20 per barrel
If the surge continues, the oil experts expect the price of Nigeria crude oil, the Bonny light, to stay above $35 for Q3 and Q4, 2020. “It will pick up to mid-$40s or low $50s in 2021. However, Nigeria may not be able to fully take advantage of the increase because of production cuts that OPEC+ would need to maintain to sustain the market.
“Moreover, at higher prices, many of the shale oil producers would come back to the market and drive supply. Nigeria will also continue to face competition in its traditional market from other global suppliers, and reduce demand as some countries are using the Covid-19 pandemic to restructure their economies away from fossil fuels to renewable energy.
“The smart thing for Nigeria is to accept the reality that it will not be business as usual and find a way of increasing domestic value addition of its petroleum sector locally. We need to reduce costs of governance, and open up the economy for greater domestic and foreign investments,” he added.
Meanwhile, another oil expert, Chief Operating Officer, Oando Energy Resources, Ainojie Irune, urged stakeholders and Nigerians to stay optimistic, even as they see some casualties along the way to a rebound.
READ MORE: IATA raises alarm over excessive charges on Nigerian airlines, others
In an interview on CNN’s ‘First Move’ with Julia Chatterley, he explained that while most oil producers are currently battling with costs that they have very little control over, it is important for all to stay optimistic. He gave reasons why the surge could be sustained:
“We’re seeing an uptick in the price, we are seeing the decision by OPEC to cut 10 million barrels come in to realise the intention of OPEC; they’ve taken that huge step. But more importantly, the Government is stepping in to ensure that Independents like ourselves are engaged in conversations to ensure that process of survival, which is indeed a process for us, unknown as well, is managed jointly, to see that it takes the least amount of time to see a recovery.”
Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]


Around the World
Donald Trump and Joe Biden clash over plans to lift travel ban on UK, EU, Brazil
Joe Biden’s incoming administration has dismissed plans by President Donald Trump to lift the coronavirus-related travel bans for non-American citizens.

Published
17 hours agoon
January 19, 2021
The incoming administration of President-elect Joe Biden has dismissed plans by the outgoing President, Donald Trump to lift the coronavirus-related travel bans for non-American citizens arriving from the European Union, the U.K. and Brazil, which means the curbs will stay in effect.
This follows the announcement from Trump in the White House on Monday that the bans could be lifted because of the administration’s last week’s decision to require international travellers to present either the results of a negative recent coronavirus test or evidence that they had already recovered from the disease. The change would go into effect starting Jan. 26, six days after Biden takes office.
However, the announcement by Donald Trump was rejected as Joe Biden’s Spokeswoman, Jen Psaki, in a tweet post, disclosed that the incoming administration plans to block the outgoing US President’s move according to a report from Bloomberg.
READ: Twitter drops 8.5% in early trading over President Trump ban
What Joe Biden’s spokeswoman is saying
- Psaki in her statement, tweeted, “On the advice of our medical team, the Administration does not intend to lift these restrictions on 1/26. In fact, we plan to strengthen public health measures around international travel in order to further mitigate the spread of COVID-19.’’
She said that with the worsening pandemic and more contagious variant emerging globally, this is not the time to be lifting restrictions on international travel.
READ: Suspending Trump was the right decision but sets dangerous precedent – Twitter CEO
What President Donald Trump has said
Trump, in a White House announcement, had pointed out that the international travel restrictions could be eased safely.
- Trump in a proclamation said, “This action is the best way to continue protecting Americans from Covid-19 while enabling travel to resume safely. Under his plan, travel bans would remain in place for China and Iran, the White House said, citing their “lack of cooperation” with the U.S. in fighting the virus.’’
The recent decision by the Centers for Disease Control and Prevention to require a negative Covid-19 test for people arriving in the U.S. from other countries was not directly linked to the travel ban but was seen as a way to impose safety restrictions that would allow for a resumption of travel.
Despite the surge in Covid-19 infections, experts conclude that allowing people into this country from other nations wouldn’t pose a significant risk, especially with new testing requirements.
READ: US Capitol complex temporarily shut down
What you should know
- It can be recalled that President Donald Trump had initially announced the restrictions on March 11 in the early days of the pandemic on nearly all non-US citizens who had travelled to 28 EU countries, China and Iran, as part of the bid to curb the spread of the virus.
- Brazil was later included in the travel ban on May 25 and applies to any foreign nationals who had been in any of those nations within the previous 14 days.
Around the World
US Capitol complex temporarily shut down
The US Capitol complex was shut down temporarily on Monday as a precautionary measure after a small fire broke out nearby.

Published
2 days agoon
January 18, 2021
The US Capitol complex was shut down temporarily for about an hour on Monday as a precautionary measure after a small fire broke out nearby, highlighting the security concerns that are being raised days before the inauguration of President-elect Joe Biden.
The security concerns and the lockdown follows the January 6 attack on the US Capital by supporters of the outgoing US President, Donald Trump, after his encouragement and inciting comments, calling the Presidential election a fraud without any proof of evidence.
READ: President Trump says he won’t attend Joe Biden’s inauguration
Some of them even called for the death of the US Vice President, Mike Pence for presiding over the certification of Joe Biden’s November election victory.
While making the disclosure in a statement, the Capitol Police said that the lockdown has been lifted and the nearby fire contained.
The Acting Chief of the Capitol Police had said that the complex which comprises of the Capitol, its grounds and several buildings were shut down as a precautionary measure.
READ: US Supreme court dismisses Texas bid to overturn presidential election results
The US Secret Service in a tweet post on its official Twitter handle said, “Out of an abundance of caution the U.S. Capitol complex was temporarily shutdown. There is no threat to the public.’’
The city’s fire department in its tweet post said that firefighters put out a fire outside near the Capitol complex.
The fire department said, “There were no injuries. This accounts for smoke that many have seen.”
READ: Huawei accuses the United States of hacking
What you should know
- President-elect, Joe Biden is expected to be sworn in at the US Capitol on Wednesday amid an unprecedented cordon of security, with strict physical distancing measures in place due to threats of violent attacks in Washington and the rising cases of coronavirus infections.
- Donald Trump, who is just fresh from a historic second impeachment from the congress had said he would not attend, although his deputy, Vice President Mike Pence, had given an indication that he would attend.
Appointments
Joe Biden appoints Nigerian-born Funmi Olorunnipa Badejo as Counsel
Nigerian-American, Funmi Olorunnipa Badejo has been appointed as a member of the office of the White House Counsel.

Published
5 days agoon
January 15, 2021
U.S President-elect, Joe Biden, announced the appointment of Nigerian-American Funmi Olorunnipa Badejo as a member of the office of the White House Counsel, to serve as an Associate Counsel.
He announced it this week in a statement seen on his transition website.
A part of the statement reads:
- “The Counsels are experienced and accomplished individuals, have a wide range of knowledge from various fields and will be ready to get to work on day one.”
What you should know about Funmi Badejo
- Funmi Olorunnipa Badejo, before the announcement, was General Counsel of the House Select Subcommittee on the Coronavirus Crisis, chaired by House Majority Whip, James E. Clyburn.
- Other government roles she has served include serving as Counsel for Policy to the Assistant Attorney General in the Civil Division of the U.S. Department of Justice, Ethics Counsel at the White House Counsel’s Office, and Attorney Advisor at the Administrative Conference of the United States during the Obama-Biden administration.
- She started her career as an associate with the law firm of Manatt, Phelps & Phillips, LLP and was also a Legal Counsel at Palantir Technologies Inc.
- She is a graduate of Political Science from the University of Florida, with a Master of Public Administration (MPA) from Harvard University and holds a Law Doctorate from the University of California School of Law.
- She becomes the 3rd Nigerian American to be appointed under the Biden Government.
Biden’s transition committee said the new Counsels would work under the direction of White House Counsel, Dana Remus, and “help restore faith in the rule of law and the accountability of government institutions.”
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