Barkindo Blames COVID-19 Uncertainties for 14% Drop in Oil Price

•NNPC, NCDMB, others sign share subscription deal on $670m Brass fertiliser

By Emmanuel Addeh

The organisation of Petroleum Exporting Countries (OPEC) Secretary-General, Dr. Sanusi Barkindo, yesterday attributed the persisting uncertainties over the COVID-19 pandemic to the 14 per cent decline in oil price in recent weeks.

Barkindo said at the 50th Meeting of OPEC’s Joint Technical Committee (JTC) that although the last month came with many positive developments, the decline in the price of the commodity from a high of $70 to the $60 territory was a reminder that the market still remained fragile.

He listed the positives to include the passage of more than $20 trillion worth of economic stimulus around the world, administration of approximately 550 million vaccinations worldwide and upgrading of global growth forecasts by some central banks.

He mentioned the recent revision of OPEC’s global GDP growth forecast to 5.1 per cent for 2021, compared with the previous 4.8 per cent last month and the upgrade of world oil demand by 5.9 mb/d during the year as some other signs of recovery.

However, Barkindo stated that the month also saw some unexpected builds in crude and product inventories, but praised the rigorous conformity levels with OPEC’s voluntary adjustments in production which acted as a stabilising influence in the market.

According to him, the coronavirus variants are the reason that many nations are re-implementing lockdown measures to curb more mutations and stop the pandemic from wrecking more devastating effects.

He said: “These uncertainties related to COVID-19 and demand recovery have contributed to the 14 per cent decline in oil prices seen in recent weeks, which oscillated from the low 60’s to above $69/b then back to lower levels, including a touch of contango in the front month.

“It is always prudent to strike the right balance between the market fundamentals and the expectations that usually runs ahead of the curve.”

Barkindo added that the industry is playing and will continue to play a critical role in helping the world become vaccinated, stressing that the undertaking is estimated to require between eight to 10 billion syringes.

“These are often plastic, single-use and specialised syringes-essential products produced by petroleum. Transportation fuel will be critical in logistics to disseminate the vaccines throughout the globe. Life-saving and personal protective equipment continues to come from petroleum products,” he stated.

In this context, the OPEC helmsman explained that a stable oil market is essential at this hour of need and urged members to contribute to it.

He said the analysis that the JTC committee provided remained vital in ensuring a stable market.

NNPC, NCDMB, Others Sign Share Subscription Deal on $670m Brass Fertiliser

Meanwhile, the Nigerian National Petroleum Corporation (NNPC), Nigerian Content Development and Monitoring Board (NCDMB), Brass Fertiliser and Petrochemical Company Limited as well as DSV Engineering yesterday signed two agreements in their push for the construction of the 10,000 tonnes per day methanol plant.

A statement from the NCDMB stated that the deal which was signed in Abuja also involved the production of a 500 million standard cubic feet per day gas processing plant in Odeama, Brass in Bayelsa State.

While the Executive Secretary of NCDMB, Mr. Simbi Wabote, signed for the board; the Chief Operating Officer, Gas & Power, NNPC, Mr. Usman Yusuf; and the Managing Director of BFPCL, Mr. Ben Okoye, signed for their respective companies.

The Final Investment Decision (FID) for the construction was signed in January with the commitment of an equity investment of $670m.

Accordingly, the first deal means that NCDMB has subscribed to the terms and conditions contained in the company’s share subscription agreement while the second confirmed the allotment of 18 per cent of the authorised share capital of the BFPC to NCDMB.

Speaking at the event, Yusuf said the project is in tandem with the recent declaration of a decade of gas and would help to correct the current anomaly whereby 100 per cent of the nation’s methanol needs are currently imported.

He maintained that gas was becoming increasingly important to Nigeria’s sustainability and would also play a key role in the energy transition, adding that the two Methanol projects would help Nigeria to save foreign exchange and significantly enhance local production.

The NNPC chieftain congratulated the NCDMB for supporting the methanol projects, which would create a gas hub, petrochemical industry fertiliser plants and condensate refinery and expressed delight that the funding for the critical project was being sourced in-country.

In his remarks, Wabote highlighted the need for indigenous institutions and companies to initiate projects that would create in-country value and employment opportunities for young Nigerians.

He said that the Nigerian oil and gas industry cannot continue to wait for only international operating oil and gas companies to introduce projects, stressing that creating job opportunities for young Nigerians was the best strategy to curtail restiveness and insecurity in the polity.

Wabote said the 10,000 tonnes/day methanol plant will upon completion position Nigeria as one of the top 10 producers of methanol.

“The opportunities provided by this project in jobs creation, gas utilisation and local availability of methanol for primary and secondary users are massive and we are excited to serve as a catalyst for the realisation of the project,” he added.

He disclosed that the project would create 15,000 jobs during the construction stage and an additional 5, 000 jobs during the operations phase, saying that methanol can serve as a key chemical agent in pharmaceutical and agro-chemical industries.

Managing Director of BFPCL, Okoye stated that methanol can be used to produce 67 items that are used in households daily, adding that the company had acquired 600 hectares of land and aspires to attract other entities to the Brass free zone.