" /> Oil disruptions speeding up new world energy order | Hallmarknews
Published On: Sun, May 22nd, 2016

Oil disruptions speeding up new world energy order

By ADEBAYO OBAJEMU

The world’s oil market is rebalancing faster than expected due to several serious outages, including disruptions in Nigeria. But for now, there is enough oil in storage and excess capacity to keep prices from spiking.

“We’ve strung together an impressive number of outages and supply disruptions for the moment, but there’s every incentive in the dire straits the industry’s been in to get these barrels on line,” said John Kilduff, partner with Again Capital. Outages and supply disruptions in Canada, Nigeria, Venezuela, and other producing regions have reduced oil production by an estimated 3.8 million barrels a day.

There is also the potential for more production from Saudi Arabia, Iran and even the U.S. – if prices rise enough to enable America’s shale producers to restart some drilling. “Some of it’s temporary, and if it goes on long enough, there will be longer lasting implications,” said Michael Cohen, head of energy commodities research at Barclays. In Canada, an estimated 1.2 million barrels a day are offline due to forest fires in Alberta.

The uncontrolled fire, covering 704,000 acres, moved toward energy production facilities Tuesday, after jumping a fire break area=. Suncor shut down its base plant, and said it had not sustained any damage, while Enbridge’s Cheecham crude tank farm was less than a mile away from fire but fire fighters had the fire there under control, according to Reuters.

READ  Non Yoruba in S/West inaugurate forum, vow to take rightful place in zone's politics

“This is bad,” said Cohen, adding it’s the biggest disruption in North America since Hurricane Ike in 2008. “It looks like it’s getting worse before it gets any better…It’s hard to say. Is it two weeks? Is it four weeks? If it goes on for another two weeks we’re going to have some medium term implications for some of the projects up there.”

The industry had been hopeful the fires would be out and they would start sending workers back to their jobs just several days ago. “We had this big U-turn in events over the past 48 hours,” said Jackie Forrest, vice president energy research at Arc Financial Corp.

“It’s getting difficult to predict when this wild fire will be put out.” She said the fact it has moved north means it will take longer for the industry to restart oil sands production, now down by about 50 percent. Fires were reported at a worker camp, but Forrest said there was oversupply of camp space since they were built for the construction workers at the oil sands, not the smaller workforce that operates it.

The Canadian situation is different from other outages in that it is seen as a short-term problem, due to an act of nature, and while uncertain, the situations in Nigeria or Venezuela could be harder to predict. In Nigeria, militants have knocked oil production offline as the country struggles with the impact of lower oil prices on its economy.

READ  Don’t celebrate yet, agitation for restructuring not over- Uko warns presidency

“If Nigeria goes offline, it’s sticky. These armed militants are very intent on shutting down production. They have the capacity to do so,” said Helima Croft, head of commodities research at RBC Capital Markets. Croft said the government’s decision to prosecute the militants has resulted in increased activity.

Unknown attackers were reported to have blown up a gas pipeline owned by Italy’s ENI in Nigeria’s Niger Delta, the latest attack on an energy facility in the region. Nigerian oil production is now down about 800,000 barrels a day, and Croft said the outages could be prolonged.

“This is a decision they made to engage this confrontation. No one looks like they’re blinking yet,” she said.

“A small number of well-armed men in Nigeria can do significant damage to the energy sector.” Venezuela is another trouble spot, politically and economically. It is producing about 2.3 million barrels a day, but analysts see it as in a state of decline.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent posts

  • Nigeria lacks leaders with moral compass – Amb Keshi

    By Obinna Ezugwu Former Permanent Secretary, Ministry of Foreign Affairs, Ambassador Joe Keshi has decried what he called the lack of moral compass among Nigeria’s political elite, noting that poor leadership was the country’s biggest challenge. Keshi who bared his mind in a chat with BusinessHallmark in his Lagos home recently, regretted that virtually all […]

  • Non Yoruba in S/West inaugurate forum, vow to take rightful place in zone’s politics

    By Obinna Ezugwu Political and cultural leaders of various ethnic groups resident in the South West, Saturday last week at Ota, Ogun State, came together under the aegis of Non Yoruba Indigenes Empowerment Initiative, to seek ways of working together for a fair deal in the zone’s polity ahead of the 2019 general election. Various […]

  • Don’t celebrate yet, agitation for restructuring not over- Uko warns presidency

    By Obinna Ezugwu Founder, Igbo Youth Movement (IYM) and Secretary General, Eastern Consultative Assembly (ECA), Evang Elliot Uko has warned against any suggestion that the South East geopolitical zone has been “forcefully” and “violently” pacified as according to him, such is false. Evang Uko who is also the Deputy Secretary of Igbo Leaders of Thought […]

  • Nigeria’s Debt Service ratio falls to 45%

    Nigeria has made significant improvement in its debt-service-to-revenue ratio as it dropped from 66 per cent to 45 per cent. This is coming on the back of improved revenue mobilisation from both domestic and foreign sources. The government has been aggressively driving its tax reform with the introduction of Voluntary Assets and Income Declaration Scheme […]

  • Banks’ NPLs reach 10-month high in Q3

    FELIX OLOYEDE Non-Performing Loans (NPLs) in the Nigerian banking industry hit 10-month in September, latest data from the the Nigeria Deposit Insurance Corporation (NDIC) has shown. The report quoted by CNBC states that NPLs in the Nigerian banking sector reached N2.42 trillion at the end of Q3 2017, which is 10-month record high. Muyiwa Oni, […]

  • OPEC Crude Output Drops to Six-Month Low

    Crude production from the Organization of Petroleum Exporting Countries dropped again in November to a six-month low. Total production fell 80,000 barrels a day to 32.47 million a day last month, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That was the lowest level since May, when output was 32.29 […]

  • Lagos revives abandoned waste to energy resourcing projects

    By ABATAN ADEWALE JOSEPH Lagos state government is exploring every available opportunity to ensure power supply in the state in view of the dwindling performance of the energy companies in the country. As the business and industrial hub of the economy, Lagos has suffered huge economic losses on account of poor power supply. Governor Akinwumi […]

  • FG appoints Abdul Zubair to replace suspended SEC DG

    The Securities and Exchange Commission (SEC) on Monday announced the appointment of Abdul Zubair as acting Director General. The commission while making the announcement, also reassured the investing public of continued stability of the Nigerian capital market following last week’s suspension of its Director General, Mounir Gwarzo. It would be recalled that Gwarzo was directed […]

  • Kano spends N9bn monthly on salary payment, says Ganduje

    The Kano State Governor, Dr. Abdullahi Ganduje, has said his administration spends N9 billion monthly on payment of workers’ salaries. He added that this effort was commendable in a period where most state governments have not been able to pay salaries as a result of the economic situation in the country. He spoke  in Kano state […]

  • FG’s Npower scheme derailing, faces imminent collapse – Investigation

    By AYOOLA OLAOLUWA The N-Power scheme, introduced by the Federal Government, as a social safety net to reduce the rate of graduate unemployment afflicting the country, is fast derailing from its original objective, and faces imminent collapse, Business Hallmark findings have revealed. While the Federal Government, particularly its major proponent, Vice President Yemi Osinbajo, had […]

  • Gwarzo: The many troubles of a regulator

      By FELIX OLOYEDE These are unpleasant times for Mounir Gwarzo, Chief Executive Office, of the Securities and Exchange Commission (SEC) as he was placed on suspension last week by a previously gun shy Minister of finance, Mrs. Kemi Adeosun. Gwarzo’s position as SEC boss became shaky as a nongovernmental organisation,   Centre for Anti-Corruption and […]

  • 2018 budget: High on hope, low on prospects

      .           Promises of growth and development may be unattainable The 2018 budget will go down in history as the most vilified and repudiated by the legislature that is supposed to give it a stamp of authority. Last week, the two chambers of the National Assembly took a perfunctory appraisal of the budget and consigned […]

  • Anxiety rises over health of banks

    …as recent Fitch downgrade poses new questions BY TESLIM SHITTA-BEY All may not be as well with Nigerian banks as the domestic regulator, Central Bank of Nigeria (CBN), would have many believe. Buried in a heap of poor quality loan assets in the guise of high none performing loans (NPL’s), a growing number of banks […]

  • Maina’s can of worms

    By OBINNA EZUGWU At the hearing conducted by the Hon. Aliyu Madaki-led House of Representatives adhoc committee investigating the reinstatement of former chairman of the Presidential Task Force on Pension Reforms, Abdulrasheed Maina into the federal civil service last week, Nigerians were treated to a show of childish buck-passing. One could draw a parallel between […]

  • Resurgent Equity market signals stronger economic recovery

    By OKEY ONYENWEAKU Investors in the Nigerian equity market have every reason to be happy as the year gradually winds down. Those of who invested early in the year and carefully mixed their portfolio based on the NSE 30 Index would have made a kill should the market close bullish. This is reflected in the […]

  • (Editorial) APGA, a future in jeopardy  

    The All Progressives Grand Alliance (APGA) fought a good fight to retain power in Anambra state last month. Should the result have been different, and it easily could have been, it would have marked the beginning of the end for the party. Power of incumbency, emotional attachment to APGA among the Igbo, rifts within the […]


Visit us on Google+