The Nigerian National Petroleum Corporation (NNPC) has regained complete access to the crude oil pipeline that supplies the Kaduna, Warri and Port Harcourt refineries after years of inactivity owing to vandalism. The NNPC also has plans to adopt a new model for commercialising gas resources, whereby Exploration and Production companies might be allowed to only produce gas but not process it. Meanwhile, Shell’s Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Limited (SPDC), has temporarily shut down its 180,000 barrels per day (bpd) Trans Niger pipeline due to a leakage. However, the NNPC announced on Monday 24th of July that the force majeure was due to a militant attack on the pipeline in Ogoniland. Earlier in June, the SPDC declared a force majeure on the Nembe Creek trunkline by operator Aiteo, leaving the only other export route for Bonny Light (Trans Niger Pipeline) and i ts closure has effectively shut exportation of Bonny Light crude. NNPC’s Group Managing Director, Dr Maikanti Baru said this infraction has reduced production by 150,000 bpd while Nigeria is still recovering its crude oil output. A joint investigation is ongoing to determine the cause of the leak and pipeline repairs. On Wednesday 26th of July, the Ministry of Petroleum Resources said the new National Petroleum Policy will increase investment and development in the country’s Oil & Gas sector. The policy articulated the vision of the Federal Government for improving the petroleum sector. The Minister of State for Petroleum, Dr Ibe Kachikwu described the 100-page document as very comprehensive on all aspects of the oil industry adding that the Ministry is working on refining crude in Nigeria. The Director of Press in the ministry, Mr Idang Alibi stated that the set goals and strategies in the new policy will provide and promote a level playing field for state-owned enterprises and the private operators in the sector. The policy defines the Federal Government strategy on Nigeria’s oil resources such as medium to long-term targets for oil reserves growth, utilisation and strategies to be pursued to ensure the successful implementation of the policy in accordance with Nigeria’s national socio-economic development priorities, fundamental reforms to improve the operational efficiency and performance of NNPC, strategies to develop resources in the upstream sub-sector, development of the midstream operations, and downstream subsectors of the industry. The policy will be periodically reviewed and updated to ensure consistency in government policy objectives at all times.
Tullow Oil Plc has planned to drill more wells off Ghana once a ruling on a border dispute is out of the way. However, Ghana and Ivory Coast have failed to agree over their maritime boundary, therefore, frustrating offshore oil and gas pumping projects. The International Tribunal for the Law of the Sea (ITLOS) will rule on the matter in September so as to make way for an expansion of Tullow’s Tweneboa- Enyenra-Ntomme (TEN) project. On Wednesday 26th July, Tullow CEO, Paul McDade said “We were aware of the dispute before we initiated the overall TEN project. Ourselves and our partners and the Ghana government took some legal advice from various experts globally around the likely outcome, we don’t expect any material change”. In Ghana, Tullow and its partners continue to work with the government to update their plan for the offshore Jubilee full field development which they have refined to cut capital costs given current oil prices. They expected to re-submit the plan with approval later in the year, to allow drilling to begin in 2018. A 4D seismic survey over the area should help optimize the location of the wells and assist ongoing reservoir management. The partners are processing a rig tender to allow a resumption of drilling of the remaining TEN wells around the end of the year, subject to the outcome of the ITLOS decision on the maritime boundary between Ghana and Côte d’Ivoire. Completion of these wells should allow the TEN fields to increase daily production to the FPSO’s design capacity of 80,000 bpd.
On Thursday 27th of July, oil retreated from eight-week highs after gains on a larger-than expected fall in U.S. crude stocks. The U.S. West Texas Intermediate crude for September contract was down 37 cents at $48.38 a barrel at 8:10AM ET (12:10 GMT), while the ICE Futures Exchange in London Brent oil for September delivery shed 37 cents at $50.60 a barrel. The U.S. Energy Information Administration (EIA) weekly report for Wednesday 26th July showed a fall in crude oil production by 7.2 million barrels in the week ending July 21.
Oil prices have been under pressure in recent weeks due to the steady increase in U.S. shale output despite production cuts by OPEC and non-OPEC members. OPEC/non-OPEC producers extended a deal to cut 1.8 million bpd in supply until March 2018. Thus far, the production cut agreement has had little impact on global inventory levels as U.S. shale output and supply from producers that are exempt from the OPEC deal (Libya and Nigeria) continues to increase. A joint ministerial monitoring committee (JMMC) met in Russia on Monday 24th of July in St. Petersburg to review market conditions and examine any proposals related to their pact to cut output. Libya was exempted from the cut as their production would not be more than 1 million bpd due to the state of the country, however, Nigeria has been told to cap production at 1.8 million. OPEC Secretary-General Mohammad Barkindo has said that Nigeria has no intention of going beyond its oil production target of 1.8 million bpd until the end of March 2018.