Niger Delta Militants Issue New Threat.
A militant group in Nigeria, which was responsible for a number of attacks on oil pipelines and related facilities within the country’s oil rich Niger Delta region last year has, after six months of relative calm in the area, threatened to begin committing similar acts again from the end of this month. According to an article published on the ‘oilprice.com’ website a statement was issued this week by a group calling itself the ‘New Delta Avengers’ and which read as follows; “We hereby declare ‘Operation Cripple Oil and Gas Production’ by any means available to us. The Federal Government and oil companies, local and multinationals, operating in Delta State are hereby put on notice that effective from midnight, June 30th, this year of upheavals 2017, there should be no more oil and gas operations in Delta State. Those who try our resolve shall be made a canon folder and used to show our determination. All members of the Joint Action Committee are hereby authorized to return to the trenches.” Until now government efforts to negotiate with some of these groups, and deal with the concerns of residents in the area had, as mentioned above, successfully brought relative calm to the Niger Delta for an extended period, and consequently allowed oil companies there to increase their output. The Nigeria Today newspaper quotes an NDA spokesperson claiming that the group’s decision to end the truce was taken due to the alleged “discriminative policies” of the state’s governor.
France & Egypt Strengthen Their Security Ties.
The French Foreign Minister, Jean-Yves Le Drian, said yesterday that his country and Egypt had a “common vision” towards combatting militants and stabilizing Libya. Le Drian met with a number senior Egyptian officials including President Sisi this week, and his trip to Cairo comes hot on the heels of France’s Defence Minister, Sylvie Goulard, who discussed closer security cooperation between the two countries on Monday. "Egypt is the central element for regional stability and when it sways the whole region sways. We cannot let the situation of instability that is benefiting terrorists and traffickers continue on Egypt's borders and at the gates of Europe continue," Le Drian said, adding that finding a political solution in Libya was one of his government’s top priorities.
Crude Prices Continue Slide After Surprise Rise In US Inventories – Libyan Oilfield Re-opens.
Brent has slid to its lowest level in months after the EIA reported a 3.29 mio barrel increase in US inventories against expectations for a 3.14 mio draw last week. Analysts suggest that this surprise jump was caused by a fall in refinery demand, and some shifting of crude stocks from the country’s strategic petroleum reserve into commercial stocks. Meanwhile Libya’s large Sharara oil field has re-opened after a 3-day shutdown caused by employees protesting over their working conditions. Sharara currently produces around 270,000 bpd. Some slightly better news for oil bulls comes from China which recorded a stronger than expected rise in both imports (including a 13% jump in crude orders) and exports last month, suggesting Chinese domestic demand remains relatively strong.
Nigerian CB Continues To Pump Liquidity Into Local FX Market.
Nigeria’s Central Bank injected US$190 mio into the local market via its various foreign exchange windows this week, which in turn has helped push USD/NGN down to its current level of 368.00 in the unofficial “kerb” market. A sizeable portion of this latest inflow was reportedly offered specifically to manufacturers, airlines as well as fuel and agricultural product importers. The CB has been providing liquidity via its various foreign exchange ‘windows’ on a weekly basis since February, and these interventions have thus far totaled around US$5 bio according to a recent CNBC report.
Kuwait’s Parliament Approves 2017/18 Budget.
Kuwaiti MPs yesterday passed the government’s budget proposal for the current fiscal year which also forecasts a deficit of up to US$26 bio, and is based on an average oil price of US$45 per barrel. The Minister of Finance, Anas Al Saleh, was quoted in the Kuwait Time saying that the government was planning to finance the shortfall via a “balanced strategy” including bonds.
Inflation In Egypt Begins To Ease.
Inflation in Egypt finally appears to be easing after the latest data release showed urban CPI in May had dipped to 29.70% against 31.50% the previous month, whilst core inflation dipped back to 30.57% against April’s 32.06%. Meanwhile Egypt’s Oil Ministry announced yesterday that it had reduced its outstanding arrears due to foreign oil companies by US$2.2 bio over the past 3 weeks.
S&P Downgrades Qatar Ratings.
S&P downgraded Qatar’s sovereign rating by 1 notch to AA- on Wednesday and amended its outlook to negative. The S&P statement said recent political developments were the primary driver behind the downgrade adding; “We believe this will exacerbate Qatar's external vulnerabilities and could put pressure on its economic growth and fiscal metrics. The negative CreditWatch encompasses numerous downside risks to the ratings as a consequence of recent events. At this stage, we note that there are numerous uncertainties regarding Qatar's response, the extent to which these measures will be imposed, and their longevity. We expect to review this and the potential impact on our projections as further details emerge and by our next scheduled review, on Aug 25th 2017.” Meanwhile a Bloomberg report this morning states that the ratings agency has also lowered its long-term rating on QNB from A+ to A, and placed CBQ, QIB and Doha Bank on negative watch.
Petrofac Wins Major EPC Contract In Oman.
UK based Petrofac has been awarded a 10-year engineering, procurement and construction management contract in Oman. This could also increase the firm’s chances of winning one of the potential packages linked to the Duqm refinery project.
Faithful + Gould Appointed Project Manager On Yas Bay Project.
The UK’s Faithful + Gould consultancy group have won a 4-year project-management services contract covering phase one of the US$3.2 bio Yas Bay development in Abu Dhabi.
IPIC Reports A Return To Profit.
The UAE’s International Petroleum Investment Company (which recently merged with Mubadala), reported a total net profit of US$403.8 mio during 2016 despite weak oil prices, versus a loss of US$2.6 bio in 2015. The firm’s return to profit was reportedly driven by lower feedstock costs, higher petrochemicals margins, and lower impairments.
Did you know that the world’s oldest weather report was discovered by archeologists on a calcite block in Egypt ? The 40-line description of a storm is believed to have been inscribed 3500 years ago.
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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