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Oil Prices Will Rise Again, Biden Warns Caribbean

May 17, 2016 Webmaster

United States (US) Vice-President Joe Biden has warned regional leaders that volatile oil prices will return. On this basis, he is urging them to use every opportunity to explore clean and alternative energy sources to bolster the prosperity of the Caribbean and Central America.

“This is a moment of opportunity to turn that progress into sustainable energy security that will endure when volatile oil prices return. And they will return,” Biden cautioned the heads of government during the US-Caribbean-Central American Energy Summit in Washington, DC, held earlier this month.

“The good news is that we’re at a nexus for transforming, with transformative opportunities here. Low oil prices mean more money this day is available for investment in new energy infrastructure,” said Biden.

“It’s equivalent to US$1 billion of stimulus just in the region [and] lower energy prices. Our abundance of natural gas provides a critical, clear transition fuel as we’re moving towards adopting renewable technologies.”

Biden said strengthening energy security was among the focus areas for himself and US President Barack Obama.

He noted that North America – Mexico, the US and Canada – is the epicentre of energy production in the world and pointed out that his country recently inaugurated a liquefied natural gas export terminal that has just sent its first cargo of gas to Latin America.

The US had also announced a deal to export natural gas to Jamaica during last year’s staging of the Summit.

“Here’s the truth. We want you to be energy secure so more people across this region can – your region can start businesses, connect to the Internet, generate opportunities, attract foreign investment, grow, grow. The more you grow, the more you prosper, the better off my country is. And it strengthens our security, as well as yours. And it opens up new opportunities for shared economic growth,” he said.

The Gleaner

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Paulwell Says Fuel Tax Will Impact Consumers Negatively

May 13, 2016 Webmaster

Former Energy Minister Phillip Paulwell says consumers who have been benefiting from reduced electricity rates from the Jamaica Public Service (JPS) over the last 12 months could see a hike in the cost of energy with the Government’s imposition of new taxes on heavy fuel oil and liquefied natural gas.

The JPS recently concluded work to convert its Bogue Power Plant in Montego Bay, St James, to dual-fuel capability.

United States-based New Fortress Energy is expected to bring liquefied natural gas into the island by August, at which point the newly converted Bogue power plant will begin to use the more environmentally friendly fuel.

Paulwell’s concerns came as he spoke with journalists yesterday at the end of Shaw’s opening contribution to the Budget Debate.

“Currently, the JPS does not pay taxes on heavy fuel oil. Government has now imposed a tax both on liquefied natural gas, which will arrive in August of this year, and on heavy fuel oil, so it means a significant increase in the price of electricity that has been trending down by almost 50 per cent over the last year.”

At the same time, Opposition Leader Portia Simpson Miller is taking the Government to task for “breaking its promise” by imposing new taxes to fund the tax-relief plan.

“All I can say is that they have broken their promise to the Jamaican people – no new tax – but, from all indication of what Minister Shaw said today (yesterday), it is the poor that will suffer,” she said.

Central Manchester MP Peter Bunting argued that the increased taxes would affect everyone, but have a more significant effect on those who earn under $600,000 per annum, and who will have to face increased transport and electricity costs.

He described the tax measures as regressive, noting that persons at the bottom of the society are being burdened to give relief to those earning at a higher level.

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Walter Molano | Shifting To A New Normal For Oil

May 6, 2016 Webmaster

Normal is not a homonym, but it could be. It means standardisation, but it also alludes to a range of typical occurrences.

In statistics, a normal distribution is a set of observations that occur around a mean. In common society, normal is an acceptable form of behaviour.

Whatever the case, it means a range of events that centre on an average. The problem with ‘normality’ is that averages move. For example, fashions change. Music styles evolve. Normal dress from a century ago is no longer acceptable.

The same occurs in markets. Shocks force occurrences to morph, leading to corresponding movements in price ranges. A few years ago, pundits began using the notion of ‘new normal’. This meant that the market had shifted to a different range that would now be considered typical. Three years ago, high commodities prices were considered normal. Last year, plunging commodity prices became the new normal.

However, we are again witnessing a movement to a different normality.

Most visible in oil sector

Last year’s massive reduction in commodity capex set the stage for an eventual spike in prices. The situation has been most visible in the oil sector. At the end of 2014, many Wall Street firms began cutting their oil forecasts, calling for a “new normal”.

They cited the slowdown of the Chinese economy and overproduction in the United States and the Middle East for their pessimistic outlook.

However, they seemed to have forgotten the natural depletion aspects of commodities. Oilfields, mines and farms are not eternal. Production decays as the resources are depleted. Oilfields run dry. Mineral deposits are depleted. Nutrients are taken out of the soil. That is why commodity producers constantly need to plough capital into exploring for new mineral deposits and replenishing farms. This makes the sector extremely capital intensive.

Each commodity product has a different decay schedule. Offshore oilfields, for example, have a natural depletion rate of about 20 per cent per year. Meanwhile, some onshore fields have an annual depletion rate of only two per cent. Analysts estimate that the average annual global depletion rate for the oil sector is about 4.5 per cent.

It takes time

The problem is that the oil industry slashed capex by US$380 billion since 2014, reaching half of total sector capital investment in 2016. This means that oil production will decline at some point, with the effect accelerating in the years to come. The typical gestation period for a new oil project is about seven years, from the start of exploration to full production.

It takes time to do the necessary seismic surveys. Most of the new oilfields are in remote areas, which require the construction of facilities for workers. Heavy equipment needs to be deployed. Plus, transportation infrastructure – including roads, pipelines and ports – needs to be put in place in order to bring the products to market.

Oil, as well as most of the other commodity products, cannot be switched on and off. They require a great deal of time and capital to bring them to market.

Unfortunately, the decline is already materialising. The net decline in United States oil production is estimated at about 600,000 barrels per day (bpd) in 2016 and another 400,000 bpd in Latin America.

At the same time, the global economy is growing at a pace of about two per cent y/y. Hence, total demand should rise by about a million bpd. As a result, the two million bpd glut that was estimated at the end of last year will evaporate in 2016. This should bring oil prices to a more neutral equilibrium price of about US$60 per barrel before the end of the year.

However, it also means that oil prices will continue to move higher in 2017 and beyond.

Until we see a meaningful increase in capex, output will continue to decline. Therefore, we can expect prices to overshoot on the upside.

The results of this scenario are a boom for oil-producing countries, such as Venezuela. With annual oil exports of about 640 million barrels, an oil price of about US$50 to US$60 will allow Venezuela to produce annual exports of about US$32 to US$38 billion.

Venezuela and PDVSA’s annual bond debt service is about US$9 billion, giving the country between US$23 billion to US$29 billion to pay for imports. This is more than twice the minimum import levels that are estimated to sustain the economy.

As a result, the government will not need to recur to its supplemental liquid and non-liquid assets, such as international reserves, gold holdings, offshore refineries and PetroCaribe, to meet their external obligations.

Of course, other large oil-producing countries, such as Russia, Mexico, Nigeria and Angola will also benefit from the looming changes in the international oil markets.

Therefore, we are now moving the parameters for a ‘new normal’ that will be much more conducive for the emerging world.

Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC.

wmolano@bcpsecurities.com

The Gleaner

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World Bank Raises 2016 Oil Price Forecast

April 27, 2016 Webmaster

Amid improving market sentiment and a weakening dollar, the World Bank is raising its 2016 forecast for crude oil prices to $41 per barrel from $37 per barrel in its latest April 2016 Commodity Markets Outlook, as an oversupply in markets is expected to recede.

The crude oil market rebounded from a low of $25 per barrel in mid-January to $40 per barrel in April following production disruptions in Iraq and Nigeria and a decline in non-Organization of the Petroleum Exporting Countries (OPEC) production, mainly US shale.

A proposed production freeze by major producers failed to materialise at a meeting in mid-April, the World Bank said in a release.

“We expect slightly higher prices for energy commodities over the course of the year as markets rebalance after a period of oversupply,” said John Baffes, senior economist and lead author of the April 2016 Commodity Markets Outlook.

“Still, energy prices could fall further if OPEC increases production significantly and non-OPEC production does not fall as fast as expected,” he added.

All main commodity indices tracked by the World Bank are expected to decline in 2016 from the year before due to persistently elevated supplies, and in the case of industrial commodities – which include energy, metals, and agricultural raw materials – weak growth prospects in emerging market and developing economies.

Energy prices, including oil, natural gas and coal, are due to fall 19.3 per cent in 2016 from the previous year, a more gradual drop than the 24.7 per cent slide forecast in January. Non-energy commodities, such as metals and minerals, agriculture and fertilisers, are due to decline 5.1 per cent this year, a downward revision from the 3.7 per cent drop forecast in January, the World Bank said.

COST PROBLEM

According to a March 2016 International Monetary Fund (IMF) working paper titledCaribbean Energy: Macro-related Challenges, the single most important cost problem is the region’s heavy dependence on expensive, imported fossil fuels.

As in the United States, the cost of using petroleum to produce electricity is several times higher than alternative fuels, it said.

Excluding Haiti, biomass represents around 11 per cent of Caribbean energy supply, mostly concentrated in Jamaica, the paper said.

It noted that Jamaica is the second-largest electricity consumer, after Trinidad and Tobago, with aggregate consumption of three billion kilowatt hours in 2012. That represents 32 per cent of total regional electricity consumption, excluding Trinidad and Tobago.

The IMF estimated that the net benefit to Jamaica from a decline in oil prices as a per cent of gross domestic product was four per cent.

Gleaner

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Has oil bottomed out?

March 29, 2016 Webmaster

ANGRA DOS REIS, Brazil —Â In this September 22, 2010 file photo, workers stand by the construction of Petrobras oil platforms in the BrasFels shipyard in Angra dos Reis, Brazil. Brazil’s State-run oil company reported on Monday a record quarterly loss due to a large reduction in some of its assets amid lower oil prices.

Energy stocks and energy-related bonds have had a rough ride over the past year and a half after outperforming considerably over the last decade.

The reason for the decline was simple: the sharp decline in oil prices from over US$100 a barrel to just above US$40 currently.

WTI crude, which was at a high of US$96 in June 2014, is currently trading at US$40 a barrel for a 58 per cent drop, while Brent crude which traded as high as US$107.75 in June 2014 fell 62 per cent to be trading around the US$41 level.

The slide began due to significantly increased supply of US oil production, as hydraulic fracturing was able to retrieve oil from previously difficult to get at locations, as a result of improved drilling technologies. The combination of high oil prices and low interest rates, emanating from Central Banks’ accommodative monetary policies, made such projects economically viable. Consequently, US oil production increased 80 per cent from 2008 through 2014, according to one estimate.

Crude oil inventories in storage at Cushing, Oklahoma, the largest storage hub in the US, increased from 20 million barrels in the middle of 2014 to just below 70 million presently. In addition, on the demand side, slower growth in demand from China seemingly played a significant role in prices declining.

Finally, there was quite a bit of feeling that the high price of oil merely reflected trading and speculation, and that the whole situation would unravel at some point as fundamentals declined. In this case, the catalyst was OPEC’s strategy to increase production in an already oversupplied market to protect market share and ultimately force production cuts from non-OPEC sources as the price plunge continued.

Oil prices fell in excess of 30 per cent in 2014, 40 per cent in 2015, and by mid-February 2016 had plunged by a further 30 per cent, trading in the mid-20s, but have since rallied some 50 per cent to around US$40 a barrel currently. So what’s next for oil? While it’s difficult to predict the future, a continued recovery or at least stability in oil prices, should persist as supply and demand dynamics come back into balance.

Oil slumped to a 12-year low this year on protracted excess supply concerns before rising on speculation that stronger demand and falling US output, coupled with talks of a production freeze between OPEC and Russia, would ease the global surplus. Additionally, there’s the potential for supply shocks in the future after energy companies from Chevron Corp to BP Plc cut billions of US dollars in spending amid the price crash, according to the International Energy Agency (IEA).

Support for oil on the demand side should come from the observation that oil demand tends to go up over time. Global demand for oil, according to an economic estimate, increased from 75.9 million barrels per day in 2000 to 94.2 million barrels per day in 2015 and is expected to rise to 95.6 million in 2016.

The IEA recently expressed the view that oil prices had reached their bottom, given recent developments on the supply side of the equation in particular and improving outlook on the demand side.

OPEC also is apparently anticipating average oil prices of US$50.00 for 2016. It has become increasingly apparent that given the difference fracking has made in increasing available supply to the United States, we will not see US$100 a barrel for a long time — perhaps never again as we begin a slow but likely definite transition to cleaner fuels.

As oil prices continue to rise, look out for more lucrative buying opportunities in some still beaten-down energy assets — but as usual be sure to consult with your investment advisor to ensure that your selections are right for you.

Jamaica Observer

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JPS Gets Green Light To Build 190MW Plant

March 29, 2016 Webmaster

The oil-fired JPS power plant in Old Harbour Bay, St Catherine is to be replaced with a gas-fired plant.

Jamaica Public Service Company (JPS) says the National Environment and Planning Agency (NEPA) has approved the construction of the 190-megawatt gas-fired power plant at Old Harbour Bay, St Catherine.

The Office of Utilities Regulation and the Electricity Sector Enterprise Team have also given formal approval of the power purchase agreement for the new facility, the power utility said.

JPS President and CEO Kelly Tomblin said the utility was now finalising details of the project with equipment supplier General Electric Corp, and engineering procurement and construction company Power China. The latter company has been contracted to build the plant.

The arrangements for the project are to be finalised within the next two weeks.

JPS’ disclosure of the project approval follows its weekend announcement, via a posting on its website, that it had finalised an agreement with New Fortress Energy to supply the Old Harbour plant with natural gas.

“We are now at an advanced stage in relation to closing the financing of the project, which we expect to be completed by the end of April,” said the JPS chief executive.

New Fortress is also the utility’s gas supply partner for the power plant at Bogue in Montego Bay.

The Old Harbour plant will be a brand new facility. Once built, JPS plans to dismantle the current oil-fired plant at Old Harbour and return the site to brownfield status.

“We anticipate that this new power plant will be generating electricity at below 13 US cents per kWh when it comes on line, which is remarkable, given the necessity to build new infrastructure and bear the transportation and other logistic costs,” Kelly said.

The timelines for the project were laid out during last November’s public consultations on the environmental impact assessment report.

JPS said yesterday that there are no changes to the timeline for site preparation for the liquefied natural gas plant, which is scheduled to begin in the first quarter of 2016, giving the utility just days to hit that deadline.

Construction will begin by the second quarter and the plant’s commissioning is expected by July 2018.

JPS entered into a memorandum of understanding in December 2015 with a Chinese company, now identified as Power China to build the 190, megawatt plant.

The Chinese company replaced the Spanish engineering and renewable energy firm Abengoa, which filed for bankruptcy protection just days after striking a deal with JPS.

The Jamaican utility reaffirmed on Wednesday that the 190MW project is expected to cost around US$300 million.

The gas component, which includes development of a terminal and pipelines to the JPS plant, is a separate project to be undertaken by New Fortress. The arrangement is similar to that agreed for the Bogue plant.

JPS also already had dealings with General Electric, which is converting the diesel-fired Bogue plant to a combined cycle operation to burn either diesel or LNG.

The conversion is costing JPS US$22.74 million or about $2.7 billion, and is scheduled to wrap up by midyear.

Gleaner

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Trinidad Confronting Major Shock From Fall In Oil Prices — IMF

March 21, 2016 Webmaster

Trinidad & Tobago is confronting a major shock with the sharp fall in energy prices that accelerated early this year.

In a statement following the conclusion of a mission from the International Monetary Fund earlier this year, head of the IMF mission Elie Canetti said that based on available information, including that of job losses and continued supply-side constraints in the energy sector, Trinidad’s economy is expected to contract one per cent this year.

The mission also said that declines in energy-based revenues will constrain the government’s ability to act as an engine of growth.

Still: “With substantial financial buffers and low, albeit rising levels of public debt, Trinidad and Tobago is not in a crisis. Nonetheless, in recent years, taking into account the size of energy revenue windfalls, the country has under-saved and underinvested in its future,” the IMF said.

“As a consequence, the imbalances that are now starting to build up could lead the country to uncomfortable levels of debt and external financial cushions absent further action. The new Government agrees that policy adjustments are needed.”

The fund noted that in the half-year since they took office, the Keith Rowley-led administration has already taken “some difficult but necessary steps”, such as widening the value tax base, cutting fuel subsidies, and cutting the number of ministries.

BUDGET DEFICIT

Despite these measures, the IMF said it projects a 2016 Budget deficit at some 11 per cent of GDP. However, if asset sales were to be counted as revenue rather than financing, the deficit would be equivalent to about five per cent of GDP, it said.

“Continued projected deficits of this size call for further fiscal consolidation, perhaps of around 6 per cent of GDP over the next few years,” said the multilateral agency.

Trinidad has agreed to conduct a wide-ranging expenditure review, and will seek the assistance of the World Bank to rationalise and reverse the unsustainable increases in spending on transfers and subsidies over the last several years.

“We support the Government’s intent to conduct a national dialogue on fuel subsidies with a view to phasing them out over time,” said the fund. “The country’s external situation has been very challenging. Against a backdrop of foreign exchange shortages that have intensified since the beginning of 2015, the recent sharp falls in energy prices are further reducing the available supply.”

During the recent visit, the mission met with government officials, banks, and private-sector representatives to assess the foreign exchange market. The fund noted that the current shortage appears to be driven by business uncertainty but also speculative trades.

“While it is appropriate that the central bank paused in its interest rate hiking cycle in January, there is little scope, as the bank agrees, to cut interest rates, at least until shortages of foreign exchange are ameliorated,” the IMF said.

Gleaner

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Oil Price Appears To Have ‘Bottomed Out’, Says Energy Agency

March 15, 2016 Webmaster

The organisation that represents major oil-consuming nations said Friday that signs of a market that has “bottomed out” are emerging.

US crude prices jumped to a high for the year. Brent crude, used as a global benchmark, hit a high for the year Tuesday and rose one per cent Friday.

Energy companies have been shutting down rigs and laying off thousands of workers as oil prices plunged to around US$30 per barrel, from well over US$100 per barrel just two years ago.

A broad retreat by the energy sector played out again last Friday on both fronts.

The number of oil and natural gas rigs active in the US fell for the 12th consecutive week, according to Baker Hughes on Friday, to 480. That’s the lowest level in decades, and perhaps the fewest since the earliest days of the oil drilling industry.

And Texas driller Anadarko Petroleum Corp. said that it would cut 1,000 workers, 17 per cent of its work force.

The pain at Anadarko and other energy companies may finally be translating into a reduction of a massive and global oversupply of oil, the International Energy Agency said Friday.

OPEC production tumbled by 90,000 barrels a day last month, the IEA said. US production that had surged due to new drilling technology, is expected to fall by almost 530,000 barrels a day this year, according to the IEA.

The Paris organisation, however, said that the recovery in crude prices in recent days from multiyear lows does not mean that there will be a significant and sustained rebound in the short-term. There have been sharp declines in demand, particularly in the United States and China, it said.

China, the world’s second-largest oil consumer, is attempting to quell anxiety over a slowing economy and labour unrest. Earlier this month, it cut its growth expectations for the year.

Goldman Sachs said last Friday that production is unlikely to increase in the US until 2017, and that prices could volatile in the next few months.

Analysts with Goldman said that if US drillers ramp up production with any rise in oil prices, “we believe a self-defeating rally in oil prices/equities could result.”

The report buoyed stocks of energy companies last Friday, making the sector the second-best performer on the Standard & Poor’s 500 index.

In the energy markets on Friday, US crude added 66 cents, or 1.7 per cent, to US$38.50 per barrel on the New York Mercantile Exchange. Brent crude, which is used to price international oils, gained 34 cents, or 0.8 per cent, to US$40.39 a barrel and natural gas gained 3.4 cents to US$1.822 per 1,000 cubic feet.

Gleaner

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Jamaica To Do Its Share Of Climate Change Mitigation

March 3, 2016 Webmaster

Jamaica is to reduce greenhouse gas emissions by the equivalent of 1.1 million metric tons of carbon dioxide per year by 2030 as part of its global commitment to take climate change mitigation action.

To bring this about, the island – as reflected in its nine-page Intended Nationally Determined Contributions (INDCs) document to the United Nations Framework Convention on Climate Change – has undertaken to implement energy policies that ensure that the island uses energy wisely and aggressively to pursue opportunities for conservation and efficiency has a modernised and expanded energy infrastructure that enhances energy-generation capacity and ensures that energy supplies are safely, reliably, and affordably transported to homes, communities, and the productive sectors on a sustainable basis, and achieves its energy resource potential through the development of renewable energy sources by increasing their share in its primary energy mix of 20 per cent by 2030.

Such policies are also to ensure that government agencies and ministries are models and leaders in energy conservation and environmental stewardship and that the island has a well-defined and established governance, institutional, legal, and regulatory framework.

Private Industry Support

Fully implemented energy polices need, too, to ensure that private industry embraces “efficiency and ecological stewardship to advance international competitiveness and to move towards a green economy”, the document said.

Realising Nationally Determined Contributions is essential if the target of the climate deal, brokered in Paris in December, is to be reached.

That agreement – to which Jamaica is a party – looks to hold “the increase in the global average temperatures to well below two degrees above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels”.

New Activities

It is against this background that Jamaica is continuing its own mitigation efforts.

“Certain new activities have started up again under the memorandum of understanding we had with the Americans, for example, particularly around natural gas, that will allow us to have much more efficient plants …” a source from the Ministry of Water, Land, Environment, and Climate Change told The Gleaner at the start of the year.

“Natural gas generation, generally speaking, can be made to respond very well to changes in demand … . For example, if you have a solar plant and production dips, it is relatively easy for you to ramp up the production of electricity from a natural gas plant,” the source added.

There are also other efforts afoot.

“Recognising that energy is not just electricity, it is also transport, some of the work we will be doing in respect of sector planning will involve a closer look at transportation and transportation efficiency and how we can reduce the amount of oil consumed there,” the source noted.

Further, to achieve 20 per cent renewables in the island’s energy mix, the source said, “You can increase the amount of renewables or decrease the amount of other fuels in the mix. There, you are talking efficiency measures and the Government is looking at efficiency in a number of respects.”

The Gleaner

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Nigeria backs efforts to ‘stabilise’ oil market

February 25, 2016 Webmaster

RIYADH, Saudi Arabia (AFP) — The Nigerian and Saudi leaders yesterday supported efforts to stabilise the oil market but Africa’s top producer did not commit to a production freeze.

After talks in the Saudi capital Riyadh, Nigeria’s President Muhammadu Buhari and Saudi King Salman “committed themselves to doing all that is possible to stabilise the market and rebound the oil price,” Buhari’s office said in a statement.

Buhari was in Riyadh a week after Saudi Arabia, Russia, Venezuela and Qatar agreed at talks in Doha to freeze production at January levels in a bid to stem the dramatic fall in oil prices.

The agreement is conditional on other major producers joining in, as oil heavyweights seek to ensure others not to take advantage of output limits to win market share.

The statement after yesterday’s talks made no mention of Nigeria joining the freeze but analysts say the OPEC member is likely to eventually support the move.

The official

Saudi Press Agency also reported that talks between Prince Abdulaziz bin Salman, the Saudi deputy oil minister, and his Nigerian counterpart, junior oil minister Emmanuel Ibe Kachikwu, focused on “the best way for (market) stability” and “the cooperation of producing countries inside and outside OPEC” to achieve this.

Saudi Arabia and its gulf allies in the Organisation of Petroleum Exporting Countries had been refusing to limit or reduce production, leading to a supply glut that has seen prices fall by 70 per cent since mid-2014.

Poorer OPEC members, including Nigeria, have been hard hit by the price drop but even the wealthy Gulf states have been forced to adopt austerity measures to cope with falling oil revenues.

“I wouldn’t be surprised to see them voice their support to the freeze agreed in Doha,” Abhishek Deshpande, lead oil market analyst at Natixis in London, said of Nigeria.

But he said that unless Iraq and Iran also commit to limit production such talks “carry very little weight”.

The two countries are OPEC’s second- and third-largest producers.

Iran, returning to world markets as sanctions are lifted under its nuclear deal, has insisted on boosting production to pre-sanctions levels.

“Some neighbouring countries have increased their production over the years to 10 million barrels per day and export this amount, then say let’s all freeze our oil production,” Oil Minister Bijan Zanganeh said yesterday.

“They freeze production at 10 million bpd and we freeze at 1 million bpd. This is a very funny joke.”

Saxo Bank analyst Christopher Dembik told

AFP that Nigeria’s position is “a bit ambiguous,” supporting the mooted freeze but at the same time wanting to increase its production to respond to domestic market needs.

Nigeria could be crucial

“In the longer term, there is no reason why the country won’t align itself with the position of Saudi Arabia and Russia,” Dembik said.

Nigeria and Saudi Arabia would also discuss their position towards Iran and Iraq, he added.

“Nigeria could have a crucial role in this respect because of its measured position” that Iran and Iraq should elevate their production before envisaging freezes, Dembik said.

“It is probable, then, that Nigeria meanwhile establishes a bridge for negotiations, notably between Riyadh and Tehran.”

According to OPEC’s Monthly Oil Market Report, Iraq produces about 4.4 million barrels a day, followed by Iran at more than 2.9 million.

Saudi Arabia’s output is close to 10.1 million barrels a day, according to January data.

Kachikwu, who is head of Nigeria’s state-run oil firm, also discussed joint oil and gas investments during his meeting with Abdulaziz, SPA reported.

Oil prices nudged higher Tuesday as the two OPEC members met.

US benchmark West Texas Intermediate crude for delivery in April was up one cent at US$33.40 a barrel. Brent North Sea crude for April rose 18 cents to US$34.87 compared with Monday’s close.

After the Saudi visit, the Nigerian delegation was to travel to Qatar for more oil talks.

Jamaica Observer

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