PIA: We Discussed With Labour Extensively, No Job Will Be Lost – Sylva

 

The Minister of State for Petroleum Resources, Mr Timipre Sylva has assured that no job will be lost in the nation’s petroleum sector following the signing of the Petroleum Industry Bill into law.

President Muhammadu Buhari had on Monday signed the bill, thus providing a legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters.

Although there were fears in some quarters over the fate of workers in the petroleum sector, the minister says the move will instead create more jobs.

“We have already made provisions in the law to ensure that no job is lost in the oil industry as a result of the PIA,” the Minister said during an interview on Channels Television’s Politics Today on Wednesday.

“So, no job will be lost as a result of the Petroleum Industry Act. All jobs in the petroleum industry will be intact.

“That was already taken into account, we discussed with labour extensively in the process of drafting the bill.”

READ ALSO: Buhari Approves Committee To Implement Petroleum Industry Act Immediately

When asked about the benefits for the oil workers, the Minister said he believes the workers have more to gain since the government does not pay as much as the private sector.

The Minister of State for Petroleum Resources, Timipre Sylva addressed reporters in Abuja on August 17, 2021. Sodiq Adelakun/Channels Television
The Minister of State for Petroleum Resources, Timipre Sylva addressed reporters in Abuja on August 17, 2021. Sodiq Adelakun/Channels Television

 

While noting that the commercialisation of the Nigerian National Petroleum Corporation (NNPC) will be beneficial to the workers, Sylva explained that the move would not create any problem at all.

The Minister also reacted to funds accruable to the federation account by the national firm, noting that money will still be disbursed to the national account.

He, however, explained that NNPC will not be in charge of the federation crude, explaining that the Offstream Regulatory Commission will sell the crude and remit the money to the nation’s account.

Two days after the bill was signed, the President approved a committee to immediately commence the implementation of the Petroleum Industry Act (PIA).

The steering committee, which has 12 months for the assignment, is headed by the former Bayelsa State leader.

PIB: 3% Allocation Not Ideal Compensation For Host Communities, Says Rewane

 

Economist Bismarck Rewane has faulted the three percent allocated for oil-producing communities in the just-assented Petroleum Industry Bill 2021, saying it is not the ideal compensation.

The Senate and House of Representatives had passed the PIB on July 15 and 16 respectively with President Muhammadu Buhari signing the document a month after.

“Is the three percent the ideal, optimal compensation for the host communities? I will say, ‘No’ because I come from there but at the same time, what is more, important for the oil communities is the transparency of the money that is spent and the impact it has rather than having a tea party,” Rewane, the Managing Director of Financial Derivatives Company Limited, said during an interview on Channels Television’s Politics Today on Monday.

READ ALSO: PIB: 3% Too Small For Those Who Suffer Burden Of Producing Oil, Says Oyebode

In the bill, host communities in the Niger Delta are expected to benefit from three percent of an entity’s actual yearly operating expenditure of the preceding financial year in the upstream, midstream and downstream sectors.

All contributions will be deposited in a trust fund for host communities.

According to a draft of the PIB, the trust fund will enhance peace and cordial relationship between oil companies and host communities.

However, some southern leaders had advocated for the percentage to be increased.

 

Nigeria Signs Oil Deal To Unlock $10bn Investment

 

Indigenous Firms Plan To Increase Oil Output
File photo

 

Nigeria has signed an offshore oil deal with Shell, Exxon, Total and Eni, that the state says will generate millions, settle disputes and open the way to a $10 billion investment.

The “Execution of Oil Mining Lease (OML) 118 (Bonga) Agreements” was signed Tuesday by the local subsidiaries of the four oil majors and the Nigerian National Petroleum Corporation (NNPC).

Nigeria, Africa’s largest oil producer and exporter, has been hit hard by a combination of falling crude prices and the global pandemic.

“This marks a watershed in the administration of deepwater operations in Nigeria,” the NNPC said on Twitter.

“Over $10bn of investment will be unlocked as a result of this development.”

The offshore oil block OML 118 situated 120 kilometres (75 miles) off the coast includes Bonga, the largest deep-water project to commence production in Nigeria.

Bonga produced 90,000 barrels per day in February, below its maximum capacity of 225,000 bpd, and the new deal could lead to an expansion of the field’s capacity.

The agreement also brings “immediate income for government in the excess of $780 million”, NNPC head Mele Kyari said, and an opportunity to resolve a $9 billion which he did not specify,

Kyari said in a speech that he hoped the agreement would be an “opportunity for investors to see that this country is open for business.”

OPEC-member Nigeria draws only a fraction of oil and gas investments in Africa as it struggles with a reputation for inefficiency, corruption and high operating costs.

But officials hope a long-awaited Petroleum Industry Bill currently in the National Assembly will encourage more investment with amendments to regulations, royalties, and taxes.

AFP

FG To Begin Oil Production In Northeast, Says Petroleum Minister

 

The Minister of State for Petroleum Resources, Timipre Sylva, has revealed plans by the Federal Government to begin oil production in the northeast.

Sylva stated this during a recent interview on Channels Television’s Newsnight in Abuja, which aired on Monday.

“I have said it a few times that we have found oil in the northeast and we have started drilling activities in the Lake Chad Basin,” he said.

“I don’t know how the discovery of oil in the area will impact all the issues there but on our side, we believe that in a very short time, we will start production.”

The Minister also lamented that the COVID-19 pandemic has changed the world’s narrative, including the oil and gas industry.

He recalled that the recent meeting held by the Organisation of Petroleum Exporting Countries (OPEC) in which Nigeria is a member was held virtually, noting that such meetings were not envisaged before the COVID-19 era.

File photo of the Minister of State for Petroleum Resources, Timipre Sylva

 

Sylva also reacted to the piracy, oil bunkering and illegal refining in the oil-producing region, saying such activities had reduced when compared to what was obtained in the past.

READ ALSO: Despite Challenges, APC Remains Party To Beat In 2023 – Sylva

“Pipeline vandalisation is less than it used to be. Before now, we had less than 50 per cent production, I can assure you that pipeline vandalisation is less than it used to be. If you compare what happens now with what obtains in the past, I think it is less now.

“There is still a lot of piracy I understand, but the law enforcement agencies are dealing with it. We are looking at other ways of dealing with it and believe that in a very short time, we will be able to get the full handle on it,” he added.

Speaking on the gas conversion, the Minister explained that the policy was necessitated by the Federal Government issuing an alternative to Nigeria following the deregulation of oil that will lead to the rise in oil prices.

While noting that gas is a cleaner and more efficient fuel, the Minister regretted previous administrations had not developed the nation’s gas, stressing that Nigeria’s gas penetration is the lowest in Africa.

Dutch Court Orders Shell To Pay Nigerian Farmers Over Oil Spills

After 13 years of legal wrangling, an appeals court will rule on demands by Nigerian farmers for Anglo-Dutch giant Shell to clean up devastating oil spills in the Niger Delta and pay compensation
(ADRIAN DENNIS/AFP)

 

A Dutch court on Friday ordered Shell to pay compensation in a long-running case brought by four Nigerian farmers who accuse the oil giant of causing widespread pollution.

After 13 years of legal wrangling, an appeals court in The Hague ruled that Shell’s Nigerian branch must pay out for oil spills on land in two villages.

It also held the Anglo-Dutch parent company Royal Dutch Shell liable for installing new pipeline equipment to prevent further devastating spills in the Niger Delta region.

The case, backed by the Netherlands arm of environment group Friends of the Earth, has dragged on so long that two of the Nigerian farmers have died since it was first filed in 2008.

“The court ruled that Shell Nigeria is liable for the damage caused by the spills. Shell Nigeria is sentenced to compensate farmers for damages,” judge Sierd Schaafsma said.

 

The oil pollution lawsuit has been on for about 13 years, two of the Nigerian farmers have died since it was first filed.

 

The amount of damages would be determined later, the court said. It did not specify how many of the four farmers would receive compensation.

The farmers first sued Shell in 2008 over pollution in their villages Goi, Oruma and Ikot Ada Udo, in southeastern Nigeria.

A lower court in the Netherlands found in 2013 that Shell should pay compensation for one leak but that Shell’s parent company could not be held liable in a Dutch court for the actions of its Nigerian subsidiary.

But in 2015 the Hague appeals court ruled that Dutch courts did indeed have jurisdiction in the case.

 

(FILES) In this file photograph taken on October 11, 2012, (L/R): four Nigerian farmers, Friday Alfred Akpan-Ikot Ada Udo and Eric Dooh, Nini Okey Uche of the Nigerian Embassy, lawyer Prince Chima Williams and farmers Chief Fidelis A. Oguru-Oruma and Alali Efanga pose at the law courts in The Hague.  (Photo by ROBIN UTRECHT / ANP / AFP)

 

Environmental damage

On Friday, the court ruled that Shell Nigeria must pay compensation for the leaks at Goi and Oruma.

“In the Uruma cases, Shell Nigeria and… Royal Dutch Shell are ordered to equip the pipeline with a leak detection system so that environmental damage can be limited in the future,” the court said.

Shell Nigeria should have shut down oil supplies on the day of the spill in the cases in Goi, it said.

The court said it needed more time to resolve the case of Ikot Ada Udo, saying that the leak was due to sabotage but it was not clear whether Shell could still be held liable for it, and for cleaning up.

“For the inhabitants of the Niger Delta it is crucial that their land is cleaned up and their lost crops and livelihoods are compensated by the guilty party: Shell,” Donald Pols of Friends of the Earth Netherlands said in a statement ahead of the case.

Shell has always blamed all of the spills on sabotage and said it has cleaned up with due care where pollution has occurred.

At a hearing last year lawyers for the farmers showed gushing and burning oil spills as well as villagers dragging their hands through water sources, their hands streaked with the substance afterward.

Nigeria was the world’s ninth-largest oil producer in 2018, pumping out volumes valued at some $43.6 billion (37 billion euros), or 3.8 percent of total global production.

In a separate case in the Netherlands, the widows of four Nigerian activists executed by the military regime in the 1990s have accused Shell of complicity in their deaths.

Shell also faces a landmark legal bid to force it to meet emissions targets in the Paris climate accords, brought by several environmental groups in the Netherlands led by Friends of the Earth in 2019.

Navy Arrests 24 Illegal Oil Bunkers In Ondo

A map of Ondo, a state in south-west Nigeria.

 

Men of the Nigerian Navy Forward Operating Base in Igbokoda, Ondo State have arrested 24 illegal oil bunkering Suspects in Abereke, a riverine community in the oil-producing Ilaje Local Government Area of Ondo State.

The Commanding Officer of the Naval Base, Captain Shuaib Ahmed who briefed journalists on Sunday said the suspects were arrested on January 12 by a patrol team at sea along Ondo-Lagos route offshore Mahin.

Ahmed said the patrol team apprehended the suspects with six boats containing thousands of litres of Automotive Gas Oil otherwise known as Diesel Oil, empty drums, empty GP tanks, pumping machines, outboard engines and generating sets.

He appealed to the general public, especially the communities where the base operates to assist in providing meaningful Information in curbing all forms of economic sabotage like crude oil theft, illegal bunkering and crimes such as kidnapping and piracy.

Speaking to Channels Television, two of the Suspects, Joseph Ayeni and Kayode Omotehinse confessed to committing the crime.

They regretted their actions and pleaded for forgiveness, saying they were driven into the crime due to unemployment.

Also, some residents of Abereke community who spoke to Channels Television condemned illegal bunkering.

They, however, appealed to the government to provide job opportunities for the youths to prevent them from getting involved in criminal activities.

France Sends Experts To Examine Ship Grounded Off Mauritius

An aerial view taken in Mauritius on August 17, 2020, shows the MV Wakashio bulk carrier, belonging to a Japanese company but Panamanian-flagged, that had run aground and broke into two parts near Blue Bay Marine Park. (Photo by – / AFP)

 

France is sending more experts to Mauritius Monday to help decide the fate of a grounded ship leaking oil into pristine waters off the coast of the Indian Ocean island.

France had already sent military planes, ships and equipment to help contain the oil spill, which also threatens the French island of La Reunion southwest of Mauritius.

The three additional experts will be tasked with helping the Mauritian government determine what to do with the wreck, which has split in two, Sebastien Lecornu, minister for France’s overseas territories, told Franceinfo on Monday.

France was in favour of an “environmental approach and protection of biodiversity, and particularly the coast of La Reunion,” he said.

An aerial view taken in Mauritius on August 17, 2020, shows the MV Wakashio bulk carrier, belonging to a Japanese company but Panamanian-flagged, that had run aground and broke into two parts near Blue Bay Marine Park. (Photo by – / AFP)

 

Possibilities include sinking part of the ship in the open sea, which “is clearly not our preferred solution”, or to tow the wreck elsewhere and destroy it, which would require “more time”, the minister said.

No oil deposits have yet reached Reunion, he added.

The Japanese bulk carrier MV Wakashio ran aground on a coral reef off the southeastern coast of Mauritius on July 25 and began oozing oil more than a week later, threatening a protected marine park with mangrove forests and endangered species.

Officials said over the weekend that the ship had broken in two.

Mauritius declared an environmental emergency and salvage crews raced against the clock to pump the remaining 3,000 tonnes of oil off the stricken vessel.

After visiting Mauritius, Lecornu returned to La Reunion late Sunday and said he believed the clean-up would involve “at least 10 months of work”.

AFP

Pirates Kidnap Nine Nigerians On Norwegian Oil Ship

 

Pirates attacked a Norwegian vessel off the coast of Nigeria on Thursday and kidnapped nine Nigerian nationals onboard, the ship’s Norwegian owner BW Offshore said.

The Sendje Berge, an offshore support vessel for the oil and gas industry, came under attack at 0320 GMT, BW Offshore said in a filing to the Oslo stock exchange.

There has been no news on the nine Nigerians since they were taken, but nobody remaining on board the ship had been hurt, according to the statement.

At the time of the attack, the Sendje Berge was working at the Okwori oilfield on behalf of China’s Addax Petroleum.

The Gulf of Guinea, which includes the Nigerian coast, has in recent years been the scene of a growing number of attacks by pirates who loot ships or kidnap crews or passengers for ransom.

Venezuela’s Oil Production Sinks To Lowest Output In 77 Years

(FILES) In this file photo taken on April 30, 2009, the slogan (Venezuela now, it’s for all) was painted in front of an oil refinery in the Venezuelan city of Moron. Thomas COEX / AFP

 

 

Crisis-wracked Venezuela’s relentless fall in oil production sunk to a new low in May, according to OPEC figures, a milestone in a decade of decline for the once-proud petroleum powerhouse.

Venezuela — heavily dependant on income from oil exports — produced just 570,000 barrels of oil a day, a drop of 54,000 bpd compared to one month earlier in April, according to Organization of the Petroleum Exporting Countries figures out Wednesday.

The OPEC number was also 162,000 bpd lower than official Venezuelan statistics.

Venezuela’s oil production peaked in 1970 at 3.7 million bpd, and even 12 years ago state oil company PDVSA — once among the world’s top five oil enterprises — was producing 3.2 million bpd.

Not counting a December 2002-March 2003 oil workers strike, the current output is the lowest since 1943, when Venezuela had a population of barely four million, compared to 30 million today.

Experts blame the production drop on government mismanagement, corruption, and failure over many years to invest in infrastructure upgrades and maintenance.

These problems have been amplified by US sanctions aimed at starving President Nicolas Maduro’s regime of a major source of funds in a bid to force him from power.

Between 2004 and 2015, Venezuelan oil exports raked in $750 billion, and the country had more than $42 billion in international reserves — now down to just $6.4 billion, according to the Central Bank.

Venezuela’s economy has been devastated by six years of recession, and it is experiencing the world’s highest inflation rate — all before the COVID-19 pandemic even struck.

On April 24, Venezuelan crude prices plunged to $9.90 a barrel — its lowest in two decades, although it rebounded to $13.45 by May 1. The oil ministry has not published any figures since.

According to oil information firm S&P Global Platts, Venezuela was forced to scale back production in recent weeks due to storage limitations and a lack of light oil to process its heavy crude.

Yet even if Venezuela were pumping at capacity, oil prices are at their lowest in years due to a huge drop in global demand, a result of worldwide economic crisis unleashed by the COVID-19 pandemic.

– ‘Trump’s knee on our neck’ –

Up to 2018, Venezuela was sending 500,000 bpd to the United States alone, and received in return 120,000 bpd of light oil, diluents and fuel-producing supplies.

Sanctions, however, have forced Venezuela, which used to refine enough oil for its own needs, to turn to allies such as US nemesis Iran to alleviate a desperate gasoline shortage.

All this is “sharpening Venezuela’s cycle of recession,” said economist Jose Manuel Puente, from the Public Policy Center at the Institute of Higher Education Administration (IESA).

Venezuela is heading for a seventh straight year of recession, during which time its economic growth has halved.

Making matters worse, Venezuela is selling the little oil it exports “at a loss” due to the global price drop and the dealings it must operate to work around US sanctions, said Puente.

The country “is on the brink of collapse,” he said.

Central Bank advisor Carlos Mendoza Potella is critical of the government’s policies, but says US sanctions played a major role in the oil industry’s demise.

“They’re strangling us, we’ve got (President Donald) Trump’s knee on our neck,” said Mendoza Potella.

Even without sanctions, though, he doesn’t see a future with oil as a “driver of development” due to the high costs in extracting Venezuelan crude.

Venezuela has the world’s largest proven crude reserves, but “that serves no purpose” if you can’t extract and sell it at a profit.

Puente believes the sector cannot recover without private investment.

“Alone we can’t do it. We don’t have the technology, or the financial and human resources,” he said.

The latest drop in production coincides with a flare-up of tensions between Maduro and opposition leader Juan Guaido, who declared himself acting president 18 months ago, earning recognition from more than 50 countries.

Although the two agreed to cooperate to help fight the novel coronavirus, they have since clashed over upcoming legislative elections, which the opposition plans to boycott.

Puente says there is no chance of an economic bailout without a political transition plan that would likely require Maduro to cede power.

“We have no alternative, either we do it or we’ll continue un the cycle of disaster,” he said.

AFP

Why Oil Prices Could Soon Skyrocket – UAE Energy Minister

 In this file photo taken on November 29, 2016, the logo of OPEC is pictured at the OPEC headquarters on the eve of the 171th meeting of the Organization of the Petroleum Exporting Countries in Vienna, Austria. JOE KLAMAR / AFP
In this file photo taken on November 29, 2016, the logo of OPEC is pictured at the OPEC headquarters on the eve of the 171st meeting of the Organization of the Petroleum Exporting Countries in Vienna, Austria. JOE KLAMAR / AFP

 

UAE Energy Minister Suheil al-Mazrouei said on Monday current low oil and gas prices are unsustainable and warned that if they last longer, it could lead to energy shocks.

Mazrouei said that “very good signs” of rising demand for oil have been seen in China and India, two of the world’s biggest crude consumers, and to some degree in Europe.

“This environment of low oil and gas prices, I don’t think it’s sustainable,” the minister said in a virtual interview hosted by the US-UAE Business Council.

Mazrouei said that if low oil prices persist for a long period, some of the current high-cost producers will drop out leaving a supply gap, pushing prices higher.

“We need someone to fill in that gap, otherwise we are going to have shocks in… prices and the last thing we want is to have shocks,” he said.

“We need to have stability and to have a reasonable and fair price.”

Brent crude crashed to multi-year lows under $20 a barrel and WTI (for May delivery) sank into negative territory in April for the first time in history  as demand slumped due to coronavirus lockdowns and a global supply glut.

The two benchmarks have recovered to around $40 a barrel after the OPEC+ producers alliance agreed to record production cuts of 9.7 million barrels per day in April, effective for two months starting May.

Earlier this month, the alliance extended the historic cuts through July as governments around the world ease unprecedented lockdowns in many countries.

Mazrouei said that although oil consumption has dropped to 2013 levels “we think things will go back to normal within one or two years.”

“Unless we have a second wave of Covid-19, I think we will see a demand recovery at a pace that is adequate to the cut we have done as… OPEC+, provided other producers do not rush and over-produce,” Mazrouei said.

US Oil Bounces After Crash But Stocks Suffer Big Losses

(FILES) This file photo taken on September 20, 2019 shows employees of Aramco oil company working in Saudi Arabia’s Abqaiq oil processing plant. Fayez Nureldine / AFP.

 

US crude prices bounced Tuesday but were unable to keep in positive territory, a day after crashing below $0 for the first time owing to crippled demand and a storage glut, while the commodity rout sent equities sharply lower.

Investors have also been spooked by US reports that North Korean leader Kim Jong Un had undergone cardiovascular surgery earlier this month and was in “grave danger”.

West Texas Intermediate for May delivery rose to $1.10 a barrel in early trade after diving to an unprecedented low of -$37.63 in New York as the pandemic brings the global economy, transport and factory activity to a halt. However, it later eased back -$4.52.

The sell-off in May futures came because the contract expires later Tuesday, meaning traders needed to find buyers to take physical possession of the oil — a job made near-impossible as storage becomes scarce.

However, focus is now on the June contract, which had trading volumes more than 30 times higher. That rose towards $21 a barrel, from $20.43 on Monday.

Brent crude, the international benchmark, was changing hands at $22.97 for June delivery, down about 10 percent from Monday.

READ ALSO: Trump To Suspend Immigration Due To Coronavirus

The collapse in WTI “was driven by a precipitous drop in demand caused by the market expectation that the US lockdown could continue into May”, said Tai Hui at JP Morgan Asset Management.

“This isn’t surprising, given flights are grounded and people are driving much less for work and leisure. If the economic reopening takes longer than expected, we could see pressure further out in the futures curve.”

He added that firms were still churning out oil because stopping output “is not feasible for some producers since it could permanently damage their oil fields. Hence, giving their oil away for one month could still make sense in the long run.”

Oil markets have been ravaged this year after the pandemic was compounded by a price war between Saudi Arabia and Russia.

While the two have drawn a line under the dispute and agreed with other top producers to slash output by almost 10 million barrels a day, that is not enough to offset the lack of demand.

Equity markets were deep in the red, having enjoyed a healthy couple of weeks thanks to massive stimulus measures and signs of an easing in the rate of new infections globally.

Tokyo ended two percent lower, while Hong Kong shed 2.2 percent and Sydney dropped 2.5 percent with Mumbai more than three percent lower.

Shanghai sank 0.9 percent while Seoul was down a similar amount and Taipei retreated 2.8 percent.

Singapore, Jakarta and Bangkok lost more than one percent, and there were also big losses in Wellington and Manila.

In early trade, London, Paris and Frankfurt tumbled.

– ‘Grave danger’ –

The losses came despite signs that the virus, which has infected almost 2.5 million people and killed 170,000, is easing as global lockdowns begin to take effect, allowing some countries to slowly return to normality.

Analysts warned the drop in stocks could be an indication that the recent surge may have been too much too quick and another sell-off is possible.

Adding to pressure on markets were the reports about Kim Jong Un.

CNN cited a US official saying Washington was “monitoring intelligence” that the leader was in “grave danger after a surgery”. The report did not specify what the intelligence was.

“If the North Korean news proves to be correct, the region is set for a period of uncertainty,” said OANDA’s Jeffrey Halley.

“Kim Jong-un was its leader for life, and he had weeded out a goodly number of potential rivals already. That leaves a nuclear-armed North Korea with giant armed forces facing a potentially messy succession process. China will also want to have its input into the process, forcefully if necessary.”

The flight to safety was reflected in currency markets, where the dollar soared against high-yielding, riskier units.

The Australian and New Zealand dollars and the South Korean won were all down almost one percent, while the Russian ruble sank more than two percent.

– Key figures around 0810 GMT –

West Texas Intermediate: UP at -$4.52 from -$37.63 per barrel

Brent North Sea crude: DOWN at $22.97 from $25.57 per barrel

Tokyo – Nikkei 225: DOWN 2.0 percent at 19,280.78 (close)

Hong Kong – Hang Seng: DOWN 2.2 percent at 23,793.55 (close)

Shanghai – Composite: DOWN 0.9 percent at 2,827.01 (close)

London – FTSE 100: DOWN 1.8 percent at 5,710.69

Euro/dollar: DOWN at $1.0835 from $1.0863 at 2045 GMT

Dollar/yen: DOWN at 107.38 yen from 107.67 yen

Pound/dollar: DOWN at $1.2408 from $1.2435

Euro/pound: DOWN at 87.31 pence from 87.34 pence

New York – Dow: DOWN 2.4 percent at 23,650.44 (close).

AFP

OPEC Puts Heads Together Over Oil Output Cuts

 

Top oil producers started a crucial meeting on Thursday to discuss a possible cut in output after a collapse in demand due to the coronavirus and a Saudi-Russian price war caused the market to crash.

The video conference meeting began shortly after 1440 GMT between OPEC, its OPEC+ allies including Russia and other key non-members.

Oil prices rose sharply as the meeting opened, extending earlier big gains, but then fell back again later to post more modest gains as nervous traders took profits in volatile business.

The meeting is seen as the best chance of providing support to prices which have been wallowing near two-decade lows.

Experts warn that without concerted action the commodity risks a steep sell-off.

Last week US President Donald Trump claimed Russia and Saudi Arabia would step back from their stand-off and agree to slash output.

Then OPEC kingpin Saudi Arabia called for an urgent meeting of producers “to try to reach a fair deal” to “stabilise the oil market” following a phone call between its Crown Prince Mohammed bin Salman and Trump.

Thursday’s meeting intends to conclude an agreement to cut production by between 10 and 15 million barrels per day, Kuwait’s Oil Minister Khaled al-Fadhel said in an interview with the Kuwaiti Al-Rai daily published Thursday.

Late Wednesday a spokesman for the Russian energy ministry told the TASS agency that Moscow was “prepared to cut 1.6 million barrels a day”, which would be the equivalent of 14 percent of Russia’s production in the first quarter of 2020.

Kremlin spokesman Dmitri Peskov in a press briefing on Thursday declined to give details, only saying Russia was in favour of “coordinated action to stabilise the global oil market”.

– Global standstill –

“The extraordinary producing-countries meeting is the only hope on the horizon for the market that could prevent a total price collapse,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

Saudi Arabia will on Friday host a separate virtual gathering of energy ministers from the G20 group of major economies in a similar bid to ensure “market stability”.

Oil prices have slumped since the beginning of the year as the COVID-19 pandemic sends large parts of the planet into lockdown and brings the global economy to a virtual standstill.

Compounding the problem, Riyadh and Moscow have both ramped up output in a bid to hold on to market share and undercut US shale producers.

– Search for consensus –

“Saudi Arabia and Russia have been extremely clear that they will cut production if — and only if — other major oil producers join in as well,” said SEB oil analyst, Bjarne Schieldrop.

However, there are worries about the participation of US producers.

The US is battling to breathe new life into its shale industry, which has transformed the nation into the world’s top producer, but which cannot sustain its high cost base as prices collapse.

Yet its oil sector appears reluctant to trim production, having extracted a near-record 13 million barrels per day in the final week of March. This fell to 12.4 million bpd last week.

At the same time, the global supply glut — already weighing on oil markets before the new coronavirus crisis — has stretched oil storage capacity to its limits, forcing many producers to scale back output.

Trump on Wednesday told reporters that he wanted to save jobs.

“Obviously for many years I used to think OPEC was very unfair… I hated OPEC… But somewhere along the line that broke down and went the opposite way,” he said.

Ten oil-producing nations from outside the wider OPEC+ alliance, including the United States, have been asked to take part in Thursday’s meeting, Russian news agency TASS reported.

Canada, Britain, Norway, Brazil, Argentina, Colombia, Egypt, Indonesia, and Trinidad and Tobago have also been invited.

Norway’s oil ministry confirmed in a statement Thursday that it was taking part in the meeting as an “observer”.

The International Energy Agency warned Monday that the world is set for its first annual decline in oil consumption in more than a decade because of the coronavirus pandemic.

The outbreak has shut down large swathes of the global economy, including key sectors such as air travel, manufacturing and retail.

The global oil glut could reach 25 million bpd in April, according to Rystad Energy.

AFP