By Sebastine Obasi, with agency report
THE Organisation of the Petroleum Exporting Countries, OPEC, said that oil price will rise gradually to $80 a barrel in 2020 as supply growth outside the group weakens, a slower recovery than several member nations have said they need.
The average selling price of OPEC’s crude is expected to rise by about $5 annually to 2020 from $55 this year.
“It’s much harder for OPEC to lift prices” after the revolution of U.S. shale oil, said Bjarne Schieldrop, Oslo-based chief commodities analyst, which forecasts Brent crude at $73 by the end of the decade. “Eighty dollars by 2020 is pretty close to consensus view.”
The price of crude has tumbled more than 50 percent in the past year as OPEC followed Saudi Arabia’s strategy of defending its share of the global market against competitors like U.S. shale oil. While OPEC and the International Energy Agency, IEA, expect growth in global supply to slow as low prices bite, Goldman Sachs Group Incorporated predicts that a persistent glut will keep crude low for the next 15 years.
Production from nations outside OPEC is expected to be at 58.2 million barrels a day in 2017, 1 million lower than previously forecast by OPEC. “The impact low prices is most apparent on tight oil, which is more price reactive than other liquids sources. Supply reductions in U.S. and Canada from 2014 to 2016 are clearly revealed,” Goldman Sachs said. While demand from China, Russia and OPEC members will grow more slowly than forecast a year ago, developing nations with still account for the bulk of the expansion.
High onshore tax: The predictions come as the Chairperson of Famfa Oil Limited, Mrs. Folorunso Alakija, said that Nigeria’s 85 percent tax on onshore crude oil production is dissuading local investors from taking over assets from international oil companies, IOCs.
Famfa had sought to acquire stakes in onshore oil fields, but was deterred by high tax regime. Onshore producers pay 30 percent corporate tax and 55 percent tax on petroleum profit, while offshore producers who bought stakes in the 1990s are exempted from corporate tax and pay 50 percent profit tax.
“The 85 percent that those who are onshore have to pay is going to be too high for indigenous companies to be able to stand on their own two feet,” said Alakija, who has a fortune of $1.8 billion, according to an estimate by Forbes magazine.
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