" /> 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  Shareholders call for sack of Oando Management as crisis worsens

“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  November 18 poll: Gov. Willie Obiano’s mother of all battles

“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

  • Nigerian media needs to be more entrepreneurial, says UK multimedia expert

    Dan Mason is a British media consultant and trainer, who has spent the last nine years training journalists around the globe on digital communication and social media. The Leicester-born managing consultant of Dan Mason Media, who recently clocked 60, was managing editor, Newsquest, London, former editor, Birmingham Post and Coventry Newspapers all in the United […]

  • Post recession: Prices tumble, but demand stagnates

    JOHNMARK UKOKO Few weeks after the Director General of National Bureau of Statistics (NBS) , DR Yemi Kalejaiye, announced that the country has exited recession, the prices of many brands have begun to fall, while some brands have yet to reduce their prices. Investigations conducted by BusinessHallmark showed that, many brands which jerked up their […]

  • Intels threatens NPA over termination of its multi-billion naira contract

       FUNSO OLOJO The Nigerian Ports Authority (NPA) and its long standing business partner, Intels Nigeria Limited, are now locked in a fierce battle of wit over the cancellation of its multi-billion naira contract. The war of attrition between the two business partners was triggered by the October 10th letter addressed to the Oil and […]

  • Shareholders call for sack of Oando Management as crisis worsens

    OKEY ONYENWEAKU These are tough times for local oil and gas giant, Oando Nigeria Plc and not many of its shareholders are smiling. The company has been embroiled in a series of crisis over the last three years and each predicament appears to have been worse than the previous one. The company’s shareholders have shown […]

  • November 18 poll: Gov. Willie Obiano’s mother of all battles

    By OBINNA EZUGWU A few days ago, a picture that told what many believe to be the story of Gov. Willie Obiano’s nearly four years stewardship in Anambra State trended online. It was a picture of a large shoe worn by a tiny leg. The large shoe was labelled Obi’s big shoe, and the tiny […]

  • Ballooning debt threatens Nigeria’s feeble growth

    By Okey Onyenweaku Nigeria’s ballooning debt profile has again caught the attention of International financial agencies, as the country’s budget deficit continues escalate. The International Monetary fund (IMF) a few days ago in Washington D. C in the United States of America, USA, expressed concern over Nigeria’s and other oil producing country’s rising domestic and […]

  • Editorial (Anti-corruption: The President moral burden)

    Recent developments in the government point clearly that the anti corruption policy, which had been the mantra of President Buhari both for his election as well as legitimacy, is unraveling. For a government that has made so much political capital of fighting corruption to now be enmeshed in very serious cases of corruption, abuse of […]

  • NNPC: President Buhari’s house of corruption

    NNPC in public consciousness is synonymous with corruption, Adebayo Obajemu takes a look at the series of landmark corruption allegations that define the oil giant KPMG in its report on corruption in NNPC gave a damning verdict. As far as the 41-page report is concerned, the NNPC is a cesspool of monumental corruption and fraud. […]

  • Nigeria has reached breaking point – Awolowo- Dosumu

    Nigeria’s former Ambassador to the Netherlands and daughter of the late sage, Chief Obafemi Awolowo, Dr. (Mrs) Tokunbo Awolowo-Dosunmu has noted that it would be unwise for the government to continue to ignore calls for the restructuring of Nigeria as according to her, it was the only way to put the country on the right […]

  • Plantain chips and moneymaking

    By DANIEL ZUBAIR It is estimated that about 70 million people in West and Central Africa derive more than 25% of their carbohydrates from plantains, making the staple food one of the most important sources of food energy throughout the African lowland humid forest zone. Nigeria is one of the largest banana and Plantain growing […]

  • Anti corruption: IGP Idris in the dock

    By OBINNA EZUGWU In June 2016, seven Deputy Inspectors General (DIGs), including Danazumi Doma who was in charge of Finance and Administration; Sotonye Wakama who was in charge of Operations; Mamman Tsafe, who was in charge of Logistics and Supplies; Kakwe Tsatso of Criminal Investigations and Intelligence; Hashimu Argungu, Training; Jubril Adeniji, Research and Planning; […]

  • Withdraw soldiers from the South, address unresolved national questions, ILT charges Buhari

    By OBINNA EZUGWU Rising from its plenary meeting in Enugu on Monday, Igbo Leaders of Thought (ILT) condemned in its entirety, the deployment of soldiers in the South East zone in the name of Operation Python Dance 11 and the resultant humiliation and loss of lives, particularly in Abia State. It, therefore, called on the President […]

  • Nigeria spends $400m annually on pesticides – NSPRI

    The Executive Director, Nigerian Stored Products Research Institute, Prof. Olufemi Peters, has said Nigerian farmers and agro-based companies spend $400m annually on pesticides. He also said that improper pesticide use had caused millions of people to frequently fall sick across the country. He spoke during NSPRI training workshop on ‘the use of inert atmosphere silos […]

  • 200 Chinese investors to invest in Nigeria

    FELIX OLOYEDE No fewer than 200 Chinese mining companies have declared interest to invest in Nigeria’s mining sector. Business Hallmark gathered that the Minister of State in the Ministry of Mines and Steel Development, Bawa Abubakar, in September, led Nigeria’s delegation to the China Mining Conference in China. During the conference, Nigeria and China organised […]

  • Leasing Industry Targets Nigerian Healthcare Development

      By FELIX OLOYEDE The Equipment Leasing Association of Nigeria (ELAN), has moved to further contribute to the healthcare sector in Nigeria in line with its developmental role. The move is aimed at enhancing development contributing to the repositioning of the sector targeted at meeting the huge infrastructure and other challenges affecting the sector. The […]

  • Banks to commence N26bn Agric SME fund disbursement this quarter

    FELIX OLOYEDE Deposit money Banks (DMBs) will begin the disbursement of the N26 billion intervention fund set aside for the development of the agricultural Small and Medium Enterprises (SMEs) before the year runs out. The fund would be disbursed to Agric SMEs as entity contribution and the disbursing lenders would also provide mentorship and hand-holdin […]


Visit us on Google+