Light sweet crude rises to $43.35 a barrel

• EU harps on diversification of Nigeria’s South-South economy.

The price of Nigeria’s blend of crude oil – Light, sweet crude for June delivery rose by 71 cents yesterday, or 1.7 per cent, to $43.35 a barrel on the New York Mercantile Exchange, while Brent, the global benchmark, was up by 70 cents, or 1.6 per cent, to $45.18 a barrel in ICE Futures Europe.

The rise has been attributed to weaker dollar, but there were concerns that persistent market oversupply are expected to put a cap on gains.

Meanwhile, the European Union (EU) has stressed the need for the diversification of Nigeria’s South-South economy within the oil and gas sector.

U.S. oil prices have risen by more than 60 per cent from a 13-year low reached in February on expectations that production would decline in the U.S. and elsewhere and that demand would remain robust.

The volatile crude oil prices have affected the earnings of major oil and gas companies around the world.

For instance, British Petroleum recorded a 79 per cent slide in earnings, due to uncertainty in crude oil prices.

BP reported that its underlying replacement cost profit — the oil industry standard, which excludes non-operational items and the value of oil inventories — dropped to $532 million from $2.58 billion in the first quarter of 2015. Though that’s quite a precipitous decline, the result was about $100 million better than analysts had forecast.

In recent years, much of the profitability of major oil producers like BP has come from high oil prices. Because of the lower oil price environment, they have sought to keep a lid on costs.

BP said Tuesday it had reduced cash costs by $4.6 billion over 2014 levels and cut organic capital expenditure to $3.9 billion in the first quarter from $4.4 billion a year earlier.

The EU Head of Delegation to Nigeria and the Economic Community of West African States (ECOWAS), Michel Arrion, said on Monday at a meeting organised by the Rivers Entrepreneurs and Investments forum in Port Harcourt, Rivers State, said that in addition to the oil and gas business, the South South region needs to explore other potentials.

He stated: “So, making the oil and gas market work better, improving the framework, having a good PIB, fixing the problem of gas, petrochemicals, working on the infrastructure in the oil and gas sector, working on the ports, developing it further, for me, are some element for relaunching the economy of the region. Consider diversifying within the oil and gas sector,” he said.

Arrion believed that the region could consider diversification in the areas of petrochemical, refinery, the value chain or the fertiliser that is made out of gas.