Market Report: NNPC and Tecnimont sign $1.5 billion Port Harcourt Rehabilitation Contract

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NIGERIA

The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) Alhaji Mele Kyari was at the historic sign-off of the engineering procurement and construction (EPC) contract for the $1.5 billion rehabilitation of the Port Harcourt refinery. NNPC and Tecnimont SpA, an Italian engineering company signed the EPC contract. The Managing Director of Port Harcourt refinery company (PHRC), Mr Ahmed Dikko signed for the refinery and Mr David Pellizola VP, Sub-Saharan Africa signed for Tecnimont SpA. The GMD confirmed it is following the operation of Transparency Accountability and Performance Excellence. The timeline for the first phase is to be completed in 18 months which will take the refinery to 90% capacity. The Minister of State of Petroleum Resources, Chief Timipre Sylva said the challenges causing underdevelopment in the Nigerian Oil and Gas sector are set to be resolved by the passage of the Petroleum Industry Bill (PIB), which is expected to be passed in a few months. Chief Sylva said he believes that getting gas pricing right is one thing that can enable growth in the sector as the country focuses on gas. Once the PIB is passed, the NNPC will be charged to conclude project development agreements with PSC contractors within two months to unlock PSC gas to the domestic market.

GHANA

Maersk Drilling has extended its contract with Tullow Oil for its Maersk Venturer drillship off Ghana. The contract came after the previously agreed upon conditional letter of award and includes the provision of the ultra-deepwater drillship and additional services for a development drilling campaign at the TEN and Jubilee fields, offshore Ghana. The contract began in April 2021 with an estimated duration of around four years. Maersk announced three days after Tullow reported it had started a multi-well drilling campaign using the Maersk Venturer. Maersk Venturer is a seventh generation drillship delivered in 2014. It is currently operating at the Jubilee field offshore Ghana. The estimated contract value for Maersk Drilling is approximately $370 million, excluding additional services provided and potential performance bonuses.

GLOBAL

On Thursday, 8 April, crude oil prices were down as an unexpected build in U.S. gasoline stocks raised concerns about weakening demand for crude in the world’s biggest oil consumer alongside rising stockpiles. They were also weakened by worries of the continued rapid spread of Covid-19 in India and South America, casting a shadow over the global demand outlook. The U.S. West Texas Intermediate (WTI) crude futures were down 0.9% at $59.24 a barrel, while Brent crude futures were down 0.6% at $62.80 a barrel at 10:30 AM ET (14:30 GMT). The U.S. Energy Information Administration (EIA) report for Wednesday, 7 April, showed a draw of 3.522 million barrels, against analysts’ forecast of a 1.436 million barrel draw and the 876,000 barrel draw reported for the previous week. Crude has maintained a narrow range of $60 a barrel since mid-March as investors weigh the roll-out of vaccines and increased economic activity against the rise in Covid-19 in some countries. The gradual increases in supply agreed by The Organization of Petroleum Exporting Countries and its allies (OPEC+) last week has been one of the main reasons why prices have been unable to hold above $60 this week. OPEC+ agreed to reintroduce more than two million barrels a day for the next three months. Russia reportedly increased its output from average March levels in the first few days of April indicating an increase in global crude oil supply. Iranian supply could also increase as talks on reviving a nuclear deal with the U.S. and other countries continue and raise the possibility that some sanctions changed.

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