Market Report: Gas production fuels developments within industry

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On Monday 15 April, Dr. Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) at the 12th International Conference of the Nigerian Association for Energy Economics (NAEE), disclosed that the national average daily crude oil production stood at about 2.019 million barrels in 2018. 

Dr. Baru explained that the volume of crude produced translated to an increase of 9 percent above the 2017 average of 1.86 million barrels. This is a significant improvement from the unimpressive production level recorded on his assumption of office in July 2016. 

On nationwide fuel supply, the corporation established a petroleum products task force that helped it achieve a steady supply of products across the country. Dr. Baru said a total of 1.2 billion liters was sold in 2018, representing a 7 percent increase as against 1.1 billion liters in 2017. 

On gas supply in 2018, he said that the national average daily gas production stood at 7.90bscf representing an increase of 3 percent above 2017’s average daily gas production of 7.67bscf.
The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, visited the ERHA Floating, Production, Storage and Offloading (FPSO) operated by ExxonMobil Nigeria. His visitation to the FPSO was to provoke the nation’s Oil Production Fields to ramp up crude production and unlock gas in line with the Gas Revolution Agenda of the 7 Big Wins. 

Dr. Kachikwu urged the operators to not only focus on the profitability of the firm but also on giving back to society.
He commended the crew on behalf of the Federal Government of Nigeria for their sacrifice, urgency of attention and value addition while conveying President Muhammadu Buhari’s commitment to the welfare of those on the production fields. 

Dr. Kachikwu referenced the community engagement drive of the organization evidenced by the peace and harmony seen in operating areas.
He further noted that the ERHA field is located in Oil Mining Lease (OML) 133, and ExxonMobil Nigeria holds a 56.25 percent participating interest, while Shell Nigeria Exploration and Production Company holds the remaining 43.75 percent share.
The FPSO has about 2.2 million barrels of storage capacity making it one of the largest of its kind globally.


On Wednesday 17 April, Keppel Offshore & Marine’s subsidiary (Keppel Shipyard) received the Final Notice to Proceed (FNTP) from Gimi MS Corporation, a subsidiary of Golar LNG, to start full conversion works for the Gimi Floating Liquefaction Vessel (FLNG) project.
Keppel said that the total contract is worth $947 million. Keppel Shipyard’s scope of work in the conversion of a Moss Liquefied Natural Gas (LNG) carrier into an FLNG vessel includes the design, detailed engineering, and procurement of the marine systems, as well as conversion-related construction services.
The company stated the FLNG will be customized for work on the 20-year BP’s Greater Tortue Ahmeyim contract offshore West Africa, and delivery of the vessel is expected in 1H 2022. 

Keppel Shipyard will once again engage Black & Veatch, its partner for the conversion of the Hilli Episeyo, to provide design, procurement and commissioning support services for the topsides, as well as the liquefaction process, utilizing its PRICO technology. 

When completed, the Gimi FLNG will be stationed at a near shore hub located on the Mauritania and Senegal maritime border and is expected to begin production in 2022 as part of the first phase of the Greater Tortue Ahmeyim project. 

The Gimi FLNG is designed to produce an average of approximately 2.5 million tons of LNG per annum.


On Thursday 18 April, oil prices held steady as a drop in crude exports from OPEC’s de facto leader, Saudi Arabia, and a draw in U.S. oil inventories supported prices, while a strengthening dollar kept futures in check.
The U.S. West Texas Intermediate futures traded at $63.80 at 1:35 AM ET (05:35 GMT), while Brent futures was unchanged at $71.61. 

The U.S. Energy Information Administration in its weekly report showed a fall in crude stockpiles by 1.4 million barrels in the week ending April 12, higher than the 1.2 million-barrel drop forecast by the market.
Oil prices have been supported so far this year by an agreement reached by OPEC and its allies to reduce their oil output by 1.2 million barrels per day (bpd).
In June 2019, they will decide whether to continue to curb their production; although, recent reports suggested that Russia is reluctant to extend the current production cut agreement. 

The oil market is also supported by the steady economic growth in China. 

Its economy grew by 6.4 percent in the first quarter, whereas analysts had expected growth to slow to 6.3 percent. Meanwhile, U.S. sanctions on OPEC members Venezuela and Iran were also cited as a tailwind for oil prices. 

Traders are also closely monitoring developments in trade talks between China and the U.S. The two sides are aiming for an early May announcement on a trade agreement.

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