Operators in the oil and gas industry say 2019 will be uncertain in many dimensions, both for country and industry, and that this year’s election results have the potential for disruption of oil and gas facilities.
They say prospects this year will depend on how the actors manage the unfolding uncertainties against emerging global realities, as deficit in refining will continue to hurt Nigeria in 2019.
According to them, there will be an election in the country, and for a new government it usually takes time to settle down.
The uncertainties over the Petroleum Industry Bill (PIB) will persist, as nobody knows how long it would take. This indicator provides an important signal to investors.
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The PIB, which would ensure the government could move forward with new fiscals and make oil and gas attractive for companies to invest, was stalled in November 2018 when President Muhammadu Buhari withheld assent. They hope that the document would be signed after the elections.
Victor Eromosele, CEO of ME Consulting Limited, says prospects in 2019 in oil and gas industry is really anybody’s guess even though the 200,000 barrels of crude from Egina field and Dangote Refinery would remain the industry’s bright spots.
Bank-Anthony Okoroafor, president, Petroleum Technology Association of Nigeria (PETAN), says oil price will hover around $60-70 per barrel in 2019, as top three producers, US, Russia and Saudi Arabia will continue to pump more. “Higher US crude supply to 12 million barrels per day, high production from Russia and Saudi would weaken the market.
“American high production has hurt demand for Nigeria crude oil. Saudi will not want to lose market share to other countries,” he states.
He says OPEC will not be able to maintain output cut in production as American production will make OPEC look weak.
“Slowing growth in China, India and Europe will slow down the demand for crude oil. China presently consumes 12% of global oil production. So any slow growth in China will impact global crude oil demand. Intensification of US-China trade war will affect china demand for crude oil.
“The heightened tension has diminished hopes of a near term resolution to the trade war. This is negative for global oil demand. The 10% us tariff on $200 billion of Chinese goods jumps to 25% at the start of 2019. US intend to slap tariffs on an additional $260 billion of Chinese exports if anticipated meeting in Jan 2019 does not go well. Generally, slower economic growth reduces the outlook for oil demand,” he says.
Abiodun Adesanya, former president of Nigerian Association of Petroleum Explorationists (NAPE), says there will be carry over of the 2018 challenges, which have created a lot of volatility in the oil and gas industry worldwide.
He states that this year’s election results have the potential for disruption of oil and gas facilities, especially if the Niger Delta militants did not see it favouring them.
He also notes that some level of drilling for oil in the North around Gombe and Bauchi trough may take place in the course of the year.
