Oil Price Slumps to $70 Per Barrel as US Crude Inventories Jump Unexpectedly

•  NNPC, Chinese consortium to finalise funding terms for 614km gas line

Chineme Okafor in Abuja and Ejiofor Alike in Lagos with agency reports

Crude oil prices dropped by more than $2 per barrel wednesday after data showed United States crude stockpiles jumped last week, compounding worries about a weaker global economic growth outlook.

This is coming as the Nigerian National Petroleum Corporation (NNPC) and a Chinese consortium have reportedly met in Dubai, United Arab Emirate, as part of the ongoing efforts to finalise the funding terms for the 614 kilometres Ajaokuta-Kaduna-Kano (AKK) pipeline project.

The global benchmark Brent crude futures were down to $1.96 a barrel at $70.50 per barrel after the contract had earlier touched $70.40 a barrel.

The United States West Texas Intermediate crude futures fell $2.22 to $64.82 per barrel.
US crude inventories rose unexpectedly last week , climbing 6.8 million barrels in spite of refinery crude oil runs hitting a record high, the Energy Information Administration’s data showed.

Crude oil stocks at the Cushing, Oklahoma, delivery hub for US crude futures rose to 1.6 million barrels.
Investors are concerned about the world economy as trade disputes between the United States and its major trading partners escalate.

World trade volume growth peaked in January, and since then has nearly halved to less than three per cent by May, according to the Netherlands Bureau for Economic Policy Analysis.

The US and China have been locked in a trade battle for months, a dispute that threatens to curb economic activity in both countries.

Reuters reported that Chinese oil importers now appear to be shying away from buying US crude oil as they fear Beijing may decide to add the commodity to its tariff list.

According to agency reports, not a single tanker has loaded crude oil from the US bound for China since the start of August.

Meanwhile, the NNPC and a Chinese consortium have met in Dubai, United Arab Emirate, to work towards finalising the term sheet for financing the 614 kilometres Ajaokuta-Kaduna-Kano (AKK) pipeline project.

A statement by the NNPC Group General Manager, Public Affairs, Mr. Ndu Ughamadu, stated that the corporation Group Managing Director, Dr. Maikanti Baru, met with the consortium comprising the Bank of China and Sinosure.

Ughamadu explained that Baru had to cut short his holy pilgrimage trip to Saudi Arabia to attend the Dubai meeting with the Chinese consortium.

According to Ughamadu, Baru reiterated the need for both parties to ensure speedy conclusion on the details of the agreement towards its full execution which would happen when President Muhammadu Buhari visits China next month.
He said Buhari is scheduled to attend the Forum of China-Africa Cooperation (FOCAC) summit taking place between September 1 and 4 in the Chinese capital, Beijing, and that the AKK project would be top on his agenda for discussion with the Chinese.

The NNPC had earlier clarified that the execution of the AKK gas pipeline project has largely progressed under the original concept of 100 per cent contractor financing model. It noted that this was contrary to some media report of a possible resort to proceed of gas tariffs as new means of funding because of purported collapse of negotiation with Chinese lenders.

The corporation also noted that the successful conclusion of the contractor financing terms would pave way for a ground-breaking ceremony for the project which would take place after the conclusion of the front-end activities.
It said it had concluded the vital Front End Engineering Design (FEED) and Environmental Impact Assessment (EIA) report, while work on the detailed engineering design was nearing conclusion.

Upon completion within a projected 24-month window, the NNPC stated that the AKK gas pipeline would enable connectivity between the East, West and North, which is currently non-existent.

The statement explained this would also enable gas supply and utilisation to key commercial centres in the northern corridor of Nigeria with the attendant positive spin-off on power generation and industrial growth