The Group Managing Director of NNPC, Dr Maikanti Baru, on Monday 15th May announced that the NNPC will resume oil exploration in the Chad basin of Borno state. This will occur in six weeks based on military assurance of adequate security, relative peace and keeping the Boko Haram sect in the North East sub-region at bay. Nigeria lost 3.8 trillion naira in 2016 due to pipeline vandalism and oil theft in the Niger Delta. On Wednesday 17th May, the Minister of State for Petroleum Resources Dr Ibe Kachikwu, disclosed at the Rainoil 20th anniversary lecture in Lagos that the revenue lost to vandalism last year could fund 30 per cent of Nigeria’s 2017 budget. Kachikwu stated that a number of oil marketers stopped importing Premium Motor Spirit (PMS) due to its rising cost (above $52 per barrel) and the NNPC has since then been the major importer of petroleum products. Therefore, as measures to sustain the supply of petroleum products, NNPC is currently at the final stage of signing a $6 billion deal with local and international traders to swap about 330,000 barrels per day (bpd) of crude oil for imported petrol and diesel. Four out of the ten groups of companies have signed the product supply contracts to be effective from 1st of July, while other companies are expected to sign the deals by Friday 19th May.
The Federal Government of Nigeria signed two bilateral agreements with Morocco on Monday 15th of May for a gas pipeline and fertilizer project. The Memorandum of Understanding signed by the Nigerian National Petroleum Corporation (NNPC) and the Office National des Hydrocarbures et des Mines (ONHYM) specified equal partnership in governance, management and financing of the project within two years of signing the agreement. The MOU was to determine the modalities of undertaking a feasibility study and a Front-End Engineering and Design (FEED) study relating to a gas pipeline from Nigeria to Morocco. Also, invitation was extended to third party countries interested in the project. The second bilateral agreement was for fertilizer initiatives which are in two phases. Phase 1 to be initiated eight weeks after signing the agreement involves supplying a cargo of phosphate to Nigeria for the recovery of 11 blending plants which will produce 1.3 million tonnes of fertilizer. Phase 2 involves the maximisation of local fertilizer production by creating a basic platform for chemical products; strengthen local distribution channels by securing the Nigerian market’s fertilizer supply for competitive prices. This beneficial collaboration will provide expertise and knowledge in this field covering the entire agricultural value chain in Nigeria. It will also put in place low cost fertilizing solutions, create job opportunities, enable exportation of fertilizers to other parts of Africa and provide easy access to the necessary quantity of fertilizer needed by farmers.
Tullow Oil plans to boost output at its Tweneboa, Enyenra, Ntomme (TEN) field by resuming drilling next year once the maritime dispute between Ghana and the Cote d’Ivoire is resolved. Tullow Ghana managing director, Charles Darku told shareholders on Wednesday 17th May that drilling of the new well will increase production to 80,000 barrels per day (bpd) from its current expected 50,000 bpd. Ghana filed a suit at the International Tribunal for the Law of the Sea in 2014 to resolve a dispute with Côte d’Ivoire over their border in waters close to the oil fields after 10 bilateral meetings failed to find a solution. A year later, the Tribunal gave an interim ruling that Ghana could continue developing offshore projects in the disputed area but it imposed a ban on new drilling. The International Tribunal for the Law of the Sea is set to rule on the maritime border dispute in late 2017. Darku said since no wells could be drilled until after the ruling, Tullow was managing the existing wells in a prudent and sustainable manner. He said Tullow would seek additional reserves to extend production life while investing in new exploration opportunities beyond Jubilee and TEN. He said the next phase of the project would involve modifications to the turret systems for long-term spread-moored operations, adding that detailed planning for the works is ongoing with government and joint venture partners to take the final decisions within the first half of 2017. Work is expected to be carried out in the second half of 2017 with an anticipated shutdown of up to 12 weeks.
On Thursday 18th of May, oil prices fell due to the rising U.S. shale production despite the output cut by major producers to reduce global glut. U.S. crude was down 16 cents at $48.91 a barrel, while Brent 17 cents lower at $52.04 by 0837 GMT. The U.S. Energy Information Administration report for Wednesday 17th of May showed a weekly decline in crude oil inventories for the sixth time in a row by 1.8 million barrels in the week ending May 12. The decrease is below the expected drop of 2.3 million barrels, thus, showing that the efforts of major oil producers to rebalance global oil supply and demand are hampered by the increased production of U.S. shale. In November last year, OPEC/non-OPEC members, including Russia agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels. A final decision on whether or not to extend the deal beyond June will be taken on May 25.