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$5 billion in funding for joint venture projects with foreign oil companies

Nigeria’s draft 2009 budget includes $5 billion in funding for joint venture projects with foreign oil companies, President Umaru Yar’Adua told parliament on Tuesday. Funding shortfalls at state-run oil company NNPC, which operates joint ventures with firms including Shell,  ExxonMobil, Chevron and Total, have limited oil output from Nigeria.  Nigeria expects federal government revenues of 1.778 trillion naira ($15 billion) in 2009, down from 2.59 trillion originally projected in the 2008 budget.

Nigeria plans to contribute $5 billion to joint oil ventures with international companies next year, President Umaru Yar’Adua said. That estimate is based on an oil price of $45 a barrel, down from $53.83 a barrel for this year’s budget, Yar’Adua said today in a speech to parliament. Nigeria holds a majority stake in five ventures run by Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA, which pump most of the country’s oil. The government reduced its oil production forecast for next year to 2.29 million barrels a day from 2.45 million barrels a day this year, Yar’Adua said.

The production assumption “is optimistic, given the likelihood of further OPEC output cuts, as well as Nigeria’s own production difficulties,” Richard Segal, an analyst at London- based UBA Capital, said in a note to clients.  The 2009 production level of 2.29 million barrels a day, as stipulated by the budget, is higher than the quota currently assigned to Nigeria by the Organization of Petroleum Exporting Countries. OPEC reduced the nation’s output quota by 113,000 barrels a day as of Nov. 1 to about 2.05 million barrels a day. The country’s actual crude production averaged 1.92 million barrels a day during October, according to Bloomberg estimates. Sabotage of oil installations, hijackings of supply vessels and kidnappings of oil workers in the Niger Delta, which produces almost all Nigeria’s crude, have escalated since 2006, cutting more than 20 percent of exports. Nigeria depends on oil exports for more than 80 percent of government revenue and 95 percent of foreign income, according to the petroleum ministry. Oil traded as low as $47.36 a barrel in New York today, down 65 percent from its July record.

 
Other Oil News:
Japan’s imports of UAE crude oil reached 26.6 million barrels during last October, representing 22.4 percent of the country’s total imports of crude oil.
According to a statistical report released by Japanese Ministry of Economy, Trade ‘&’ industry, Saudi Arabia emerged as Japan’s largest crude supplier during October with 38 million barrels, followed by the UAE, Iran, Qatar and Kuwait respectively.
The report said that Japan’s crude imports dropped during that month to 118.9 million barrels, 66.5 percent of which were supplied by Arab countries. – Emirates News Agency, WAM

>>  Tehran, Dec. 3 (Xinhua) — Iran has inked the contract to build a refinery-petrochemical complex in Malaysia, Iran’s satellite Press TV reported Wednesday.
“The contract was signed Tuesday in Malaysian capital of Kuala Lumpur between Iran’s Hampa Engineering Corporation and a Malaysian firm,” the report said.
The refinery-petrochemical complex, which will manufacture gas-oil, gasoline, jet fuel, liquified natural gas(LNG) and petrochemical raw materials, will be constructed in the Malaysian state of Terengganu over a period of six years and will reportedly cost more than 6 billion U.S. dollars, it added.
Malaysia, on the other hand, will invest 5 to 6 billion dollars in Iran’s gas fields according to the cooperation memoranda of understanding (MoU)s that the two sides signed in Tehran on Monday.

>> After the fall in the price of oil from $90 to about $55 in recent weeks, members of Opec are under renewed pressure to agree on a united strategy.  Oil traders were bracing themselves for a further sharp drop in the price of crude today after Opec deferred a decision on fresh production curbs amid rifts among its members over adherence to existing agreed cuts in output. Before agreeing to new restrictions, Gulf states, led by Saudi Arabia and Kuwait, were demanding proof that fellow members of the Organisation of Petroleum Exporting Countries were meeting their share of existing production cutbacks of two million barrels a day. A further cut in Opec’s crude output of one to 1.5 million barrels a day is still likely to be settled at the cartel’s December 17 meeting. Ahead of that, however, this weekend Saudi Arabia was demanding full compliance with present quotas by all Opec members.

 “We are very concerned about over-production,” Abdullah al-Attiyah, the Qatari Oil Minister, said. Mohammad al-Olaim, the Kuwaiti Oil Minister, said: “Market conditions require us to be 100 per cent compliant.”  Delegates at Opec’s weekend meeting in Cairo identified Iran and Venezuela, perennial price hawks who have urged steeper production cuts, as prime suspects over flouting production limits. Venezuela denied the charge, while Iran made no comment. Data for Petrologistics, a consultancy, estimated that Iran’s production would have fallen by 80,000 barrels a day last month, much less than the 199,000 barrels that it was due to cut. Opec’s priority for its next meeting will be to find a way to put a floor under the collapsing price of oil, which has tumbled by about $90 in recent weeks to about $55 a barrel as an emerging global recession has hit demand and led to traders betting on still further falls in the world’s appetite for crude. World oil demand is expected to contract this year for the first time in 25 years. In a landmark move, Saudi Arabia this weekend identified what it saw as a “fair price” for crude, at $75 a barrel - a level that analysts said for the moment was far beyond Opec’s ability to deliver. Yet this goal will serve, nevertheless, as a key reference point for traders when crude demand begins to revive from its present, recession-driven slump. In the meantime, Saudi Arabia’s price objective will set the stage for further output curbs as soon as next month.

Tags: Cairo, Chevron, exxonmobil, Iran, Nigeria's draft 2009 budget, nnpc, OPEC members, President Umaru Yar'Adua, shell, Venezuela