26 May

Daily Watch – OPEC exempts Nigeria from new cuts, PIGB scales step one

  • The Senate passed a long-awaited oil governance bill following its third and final reading, it said on its official Twitter feed on Thursday. The Petroleum Industry Governance Bill is part of proposed reforms that make up the sprawling Petroleum Industry Bill, aimed at overhauling the OPEC member’s energy industry. The PIB, which has been discussed for over a decade following several redrafts and is central to President Muhammadu Buhari’s reform plans, was broken up into separate parts including governance and fiscal issues to help speed up debate. “This Bill is not only for Nigerians but for our investors. We are proud of what has been done,” said Senate President Bukola Saraki after the governance bill was passed, according to a tweet on the upper house of parliament’s Twitter feed. Bills require the support of both legislative houses and the approval of the president before becoming law. The overarching PIB, of which the governance bill is one part, covers everything from an overhaul of the state oil company to taxes on upstream projects. Uncertainty over fiscal terms in the industry has held back billions of dollars of investment.
  • OPEC decided on Thursday to extend cuts in oil output by nine months to March 2018, delegates said, as the producer group battles a global glut of crude after seeing prices halve and revenues drop sharply in the past three years. The cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with OPEC from January. OPEC’s cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets. In December, OPEC agreed its first production cuts in a decade and the first joint cuts with non-OPEC, led by Russia, in 15 years. The two sides decided to remove about 1.8 million barrels per day from the market in the first half of 2017, equal to 2 percent of global production. Despite the output cut, OPEC kept exports fairly stable in the first half of 2017 as its members sold oil from stocks. Saudi Energy Minister Khalid al-Falih said before the meeting that Nigeria and Libya would still be excluded from cuts as their output remained curbed by unrest. OPEC has a self-imposed goal of bringing stocks down from a record high of 3 billion barrels to their five-year average of 2.7 billion. Africa’s third-biggest oil producer, Equatorial Guinea, was accepted as a new member, OPEC’s 14th and the sixth from Africa, an addition seen as an attempt to raise the continent’s influence and profile in the corridors of global oil production and pricing.
  • The FG wants to resolve a labour dispute between Exxon Mobil and unions. Unions have protested against the sacking of workers at Exxon and other foreign oil firms, staging several strikes since the start of the year. “We have reached out to the management to internally resolve the matter through reconciliation,” labour minister Chris Ngige told reporters after a cabinet meeting. “If that fails government will fully take over because even my counterpart the minister of petroleum had intervened but it failed,” he added. On Saturday a Nigerian labour union that had called for the shutdown of all Exxon Mobil in the Niger Delta said it had suspended a strike. Ngige said he had convened a meeting at which only Exxon’s representatives and not those of the PENGASSAN labour union had attended. The latest industrial action was in protest at the sacking of 150 workers in December, of which 82 were PENGASSAN members. Strikes by Exxon workers in Nigeria at the end of last year disrupted output, delaying loadings by weeks.
  • Labour unions at the Federal Airports Authority of Nigeria on Wednesday said that they lack confidence in the recent appointment of transaction advisers for the concession of the country’s four major airports – Lagos, Abuja, Kano and Port Harcourt. The unions, under the auspices of Air Transport Senior Staff Association of Nigeria and National Union of Air Transport Employees said that they would do everything legally possible to stop the planned concession of the airports by the federal government. A statement issued Wednesday also said that the unions had resolved to boycott a scheduled stakeholders meeting in Lagos. The unions maintain that one of the criteria for the appointment of transaction advisers on airport concession is to consult with the committee, which was not done; a major reason for the opposition to the planned concession.
  • South African consumer goods maker Tiger Brands said on Thursday half-year earnings rose 6.3 percent, buoyed by the grains division in its home market, but flagged a slowdown in the second half. Headline earnings per share came in at 1,036 cents for the six months to end-March from 974.6 cents a year ago, South Africa’s biggest consumer foods maker said in a statement. The company, which makes bread, breakfast cereals and energy drinks, said sales in its domestic business increased by 8 percent to 14.3 billion rand (₦416.25 billion), driven primarily by its grains division. Tiger Brands, which sold the bulk of its Nigerian business to Dangote Flour Mills last year, has also pulled back from East Africa as it conducts a strategic review of its operations. “The outlook for the balance of the year is particularly challenging, with volumes in the domestic market having significantly slowed in the second quarter, while a recovery on the balance of the continent is not imminent,” the company said in a statement.