US Shale Output Causes Angst For African Oil Producers

By Obafemi Oredein, Special to Hart Energy
July 22, 2013
US imports from African countries, including Algeria and Nigeria, have dropped.

The US shale oil revolution has increased production and helped keep oil prices from rising sharply, despite supply disruptions from other parts of the world.

But the North American shale success story isn’t good news for some African members of the Organization of Petroleum Exporting Countries (OPEC), especially Nigeria, Angola, and Algeria, and non-OPEC members such as Ghana and South Sudan.

The US, which a few years ago was the largest oil importer in the world, has drastically reduced its oil imports. The US posted the biggest increase in oil production in the world and the largest in US history in 2012 when production reached 8.9 MMb/d, up 13.9% from 2011, according to the BP Statistical Review of World Energy.

US output, adding to the world’s oil supply, has contributed to keeping oil prices from rising sharply in spite of supply disruptions from Nigeria, Iraq, Libya, South Sudan, and other key producers.

But Nigeria and Algeria, which produce light sweet crudes that are low in sulfur content and simple to refine, are already feeling the impact of the US oil boom. They are the most impacted in terms of reduced oil exports to the US and lower oil prices in the past year. These and other countries need high oil prices to support local spending.

US imports from Nigeria were more than halved to 403,000 b/d in March 2013, from 913,000 in March 2011, according to US Energy Information Administration (EIA). Also, the EIA said exports from Angola to the US from April 2011 to April 2012 dropped 38% to 4.8 MMbbl.

OPEC said in its annual report released in the first week of July 2013 that the price benchmark oil from some OPEC members fell in the past year because of the unexpected energy boom in the US, which is causing a revolution in global oil trade.

The average price of Algeria’s Saharan Blend on the spot market fell by 1.3% in 2012 to $111.49 a barrel, while Nigeria’s Bonny Light slipped 0.4% to average $113.66 a barrel, the report said.

“Shale oil has been identified as one of the most serious threats for African producers,” Nigeria’s Minister of Petroleum Resources Diezani Alison-Madueke said, adding that African producers could lose 25% of their oil revenue as they are edged out of the US market.

Nigeria and Algeria are suffering the worst effects from the North American oil boom since they produce a grade similar to shale oil, she said, stressing that shale oil is a “grave concern.”

“We risk a situation where, in the first place, we lose our oil market in America. But beyond that we also risk a situation where America, having satisfied itself with what it has, will also want to find a market outside. And that market may be a market that Nigeria is selling to,” said Omar Farouk, general manager of media relations at the Nigerian National Petroleum Corp. (NNPC).

Commenting on US shale oil on July 8, 2013 in Abuja, the Nigerian capital, Nigerian President Goodluck Jonathan said “Nigeria is known for oil. But today, many countries around the world have found oil. The recent discovery of shale oil and gas means that we can no longer depend solely on oil to drive the economy.”

During a five-day state visit to China at the beginning of July 2013, Jonathan met executives from SINOPEC, which is China’s largest refiner, according to a statement from his office in Abuja. But it was not clear whether the president succeeded in getting China to increase its oil imports from Nigeria.

Nigeria and other African producers that produce light sweet crude may not have big market in Asia, because several Asian refiners process heavy crude produced by OPEC members in the Persian Gulf, said an oil expert in Lagos.

Angola, which produces around 1.72 MMb/d of oil, is already looking for new markets for oil, according to its Oil Minister Jose Maria Botelho de Vasconcelos. Rising hydrocarbons production in the US, Angola’s second main export market after China, also poses a threat to Angola, where the oil sector accounts for 45% of GDP, 75% of government revenue and more than 90% of total exports.

Algeria produced about 1.87 MMb/d of oil in 2012 and the vast majority of Algerian oil exports, roughly 85%, are sent to North America and Europe. The US is the single largest destination; however, US imports of Algerian crude have declined over the last five years.

The value of Algeria’s oil and gas exports fell by 9% in the first four months of 2013 compared to the same period in 2012 due to lower global crude oil prices, according to government figures published in a report by the country’s APS news agency.

Algeria’s Finance Minister Karim Djoudi said lower oil revenue, due to the US shale oil revolution, could force the government to cut domestic spending and delay some projects if crude oil prices keep falling.

“Emerging markets like India and China have been growing, and they have absorbed a large part of Angolan exports,” said Botelho de Vasconcelos.

Rising US oil production would have negative impacts on several African countries, especially if oil prices keep falling. These countries include Liberia, Uganda, and Kenya, which have discovered oil but have not started production. Oil investors in these countries may be discouraged. Exploration may slow down, pushing forward production time. Moreover, oil revenues expected by these countries may be lower than earlier expected, affecting their development programs.

Oil revenue earnings of OPEC and non-OPEC African oil producers and several other oil producers may be impacted further if China is successful in making the needed technological advances to tap its shale oil deposits, pumping more oil into the global market.

OPEC has promised to launch a study of the impact US shale oil production is having on its members, OPEC’s Secretary General Abdalla Salem El-Badri said.

But ultimately it is up to OPEC members affected by shale oil output to seek out new markets on their own, El-Badri added.

The EIA has predicted the US will pump 11.1 MMb/d by 2020, surpassing Saudi Arabia, the world’s top oil exporter.

http://www.epmag.com/Production/US-Shale-Output-Angst-African-Oil-Producers_119261?utm_source=sp&utm_medium=em&utm_campaign=6610151-July%2025,%202013&utm_term=EP%20Buzz%20July%2025%202013%20Auto%20(1)&utm_content=578623&spMailingID=6610151&spUserID=MTc3Nzg5ODEzMwS2&spJobID=79843461&spReportId=Nzk4NDM0NjES1

God Bless America. I Luvs this article. I pray that the 11 MMbpd will materialise ASAP so that we can look inward like Singapore and UAE.

amAZEing: God Bless America. I Luvs this article. I pray that the 11 MMbpd will materialise ASAP so that we can look inward like Singapore and UAE.

or break this damn country up

That tomorrow whose coming we all feared has now finally arrived and is knocking at the door! We had more than forty years to prepare for it, but are we ready to confront the challenges it brings to us?

Britain's reserves of shale gas are much larger than previously thought, it has emerged as the Government announced major investment in extracting the energy source.

New geological data from the British Geological Survey shows much more shale gas could be extracted from under the UK - as much as double earlier estimates at one site.

There is now thought to be as much as 1,300 trillion cubic feet at the Bowland site in Lancashire.

The findings were highlighted by Treasury Chief Secretary Danny Alexander when he announced a £100bn Government infrastructure package aimed at boosting sluggish economic growth.

Tax breaks and fast-track permits for controversial shale gas exploration were at the centre of the announcement.

Mr Alexander said: "Today this news from the Geological Society confirms the huge potential that shale gas has for the UK."

The measures would "kick-start the industry in a way that protects the environment and supports communities," he added.

Exploiting the natural resource is highly controversial as critics say the process of fracking - fracturing rock with high-pressure liquid to release the gas - can cause earthquakes, pollute water supplies, blight the countryside and affect house prices.

But ministers believe the experience of the United States shows it could boost tax revenues, create jobs, reduce energy imports and drive down household bills.

Danny Alexander is unveiling the controversial measures

Setting out details of the latest round of capital spending in a Commons statement, Mr Alexander told MPs the Treasury will now move quickly - consulting on a tax break and publishing detailed planning guidance within the next three weeks.

It paves the way for the Environment Agency to offer permits for fracking projects more quickly and to set them to defined timetables in a further bid to encourage firms to invest.

There will also be protection offered for communities affected - with each receiving at least £100,000 in benefits for each well and no less than 1% of the overall revenues.

Environmentalists expressed concern at the plans. Lawrence Carter, energy campaigner at Greenpeace, said: "The idea that shale gas is going to get the economy moving again is groundless.
"There's a huge difference between the amount of gas in the ground and how much fracking companies will be able to commercially extract.

"Even if they do manage to get some gas out, the fracking industry's own research reveals that production wouldn't reach meaningful levels until well into the next decade."

He said Greenpeace had recorded a senior member of Cuadrilla, which is pursuing shale drilling in Lancashire and has hotly opposed plans for exploration at Balcombe, West Sussex, admitting it would have an insignificant impact on energy bills.

Friends of the Earth energy campaigner Tony Bosworth added: "Shale gas is not the solution to the UK's energy challenges. Its potential has been hugely over-hyped and there's little evidence it will drive down fuel prices."

The statement by the Lib Dem Chief Secretary to the Treasury comes a day after Chancellor George Osborne announced plans to slice a further £11.5bn off other Whitehall spending in 2015/16 - as poor growth forced him to extend austerity measures beyond the next general election.

In an interview with Sky News ahead of Mr Alexander's announcement, Mr Osborne said that it was essential for Britain to make the most of its natural energy resources.

He said: "We want cheaper energy. We have gas under the ground in this country and we have a way of getting it out.

"This country can't be left behind by the rest of the world. Just saying no to a gas revolution that is taking place in places like the US and China would be a massive mistake."

But Labour's shadow energy minister Tom Greatrex said the fracking move was premature.

"Announcing community benefits and tax breaks before we know how much shale gas is actually recoverable, or before anyone even has a licence to extract it, looks like a desperate attempt to draw attention away from the Government's cuts to infrastructure investment in the spending review and its abject failure to get the economy growing," he said.

The Government's latest infrastructure investment also includes funds for projects such as new road and rail capacity, science facilities and nuclear power




invezz.com/news/commodities/3469-uk...

America's self-reliance on oil is a recipe for excruciating poverty in Nigeria, as the country's rulers have for decades wasted billions of oil dollars on frivolity.
The worst is that the ruling elites will not change their ways of creaming-off the remaining money through bogus contracts and outright stealing.

Nigeria and Algeria are suffering the worst effects from the North American oil boom since they produce a grade similar to shale oil, she said, stressing that shale oil is a “grave concern.”

“grave concern.”? for who? the elites? or the population?

DivideUs:

or break this damn country up

and whats so funny in what he posted??

that is what u get when a country cannot think properly on how to expand its income.

Saw a similar news on bloomberg last year!

I think the Nigerian politicians see the impending doom of the country's economy and are too lazy to diversify, opening new grounds to earn foreign exchange, and that's why they loot the treasury with reckless abandon!!! They want to still remain bouyant and relevant even when the nation isn't earning a dime!!

But little do they know that no ammount of money can save them from the caos that would ensue from an eventual complete colapse of the nation's economy.

We still have time to preempt such chaotic situation, but the people who ought to be truely alarmed and champion the drive for real macroeconomic changes are too busy debating how to bed minors and perpertuating themselves in office, and hounding state governors!!

God help us.

Horus:

“grave concern.”? for who? the elites? or the population?

For all concerned.
Low capital expenditure,
Massive retrenchment in all sectors to cut down on recurrent expenditure.
Paycuts,
Low patronage and sales for the market woman cos of lower spending power of the workforce,
It just goes on and on...

Naija is on the high way to.....doom!

I pity the lazy creek dwellers more

Good for nothing leaders africa has.

Dark greyish shale
www.yahoo-mail.com.ng/unit-dark-greyish-shale

Not only shale, recent big discoveries in Australia and off the Gulf of Mexico bigger than Saudi reserves, meaning more oil all over, therefore fall in prices and income for oil producers; including Nigeria - maybe this would force Nigerian economy to diversify and become less dependent on oil money, therefore less reason for resource control, in-fighting and name calling.

whr are ol these pple shouting "divide us" because of some chemicals,

the day the oil finishes is the day nigeria wil become united