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NIGERIA
The Nigerian National Petroleum Corporation (NNPC) and the Federal Government will begin sourcing funding of up to $1 billion for the next phase of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline, a major infrastructure pipeline of 614km, projected to cost around $2.8 billion. NNPC’s 15% contribution of the expected cost began the project in 2020 utilizing its funds, stating that the project would generate 3.6 gigawatts of power and support gas-based industries along the route.
The project will be funded under a debt-equity financing model, backed by a sovereign guarantee to be repaid through the pipeline transmission tariff. The Group Managing Director of the NNPC, Alhaji Mele Kyari when signing the Memorandum of Understanding on Gas Utilization regarding the pipeline, mentioned the economic enhancement and development that the NNPC-AKK Gas pipeline would provide. The NNPC and Government will be in negotiations for a mix of loans from Chinese and possibly European lenders.
The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva spoke to reporters in Abuja on the revoked licenses of some oilfields, including the Atala oilfield owned by Bayelsa state. Minister Sylva stated that the Government lost revenue in taxes, royalties, and other payments on the oilfields, which led to the revoked licenses. He explained that some conditions attached to ownership of any license, which includes optimal utilization of the asset, were not achieved. Also, for the government to generate revenue from royalties, taxes on production and other payments, it was necessary to allocate assets to owners who would create value and generate revenue.
MAURITANIA & SENEGAL
BP has awarded drilling contractor Valaris Limited a four-well contract offshore West Africa. The contract is to secure the VALARIS DS-12 drillship for an estimated 285-days offshore Mauritania and Senegal. The floater can operate in up to 12,000 feet of water and drill to 40,000 feet. Valaris expects the contract to commence in the first quarter of 2022.
GHANA
Eni announced a significant oil discovery on the Eban exploration prospect in CTP Block 4, offshore Ghana. Eni revealed that the Eban – 1X, which is the second well drilled in CTP Block 4, following the Akoma discovery, proved a single light oil column of approximately 262 feet in a thick sandstone reservoir interval of Cenomanian age, with hydrocarbons encountered down to 12,956 feet.
Production testing data at the well showed deliverability potential estimated at 5,000 barrels of oil per day, which is like the wells already in production at the nearby Sankofa Field. Due to its proximity to existing infrastructures, the new discovery can be fast-tracked to production with a subsea tie-in to the John Agyekum Kufuor FPSO. Preliminary estimates now place the potential of the Eban – Akoma complex between 500 and 700 million barrels of oil equivalent in place.
Eni estimated present hydrocarbon between the Sankofa field and the Eban – Akoma complex is now more than 1.1 billion barrels of oil equivalent. CTP Block 4 is operated by Eni, which holds a 42.469% interest on behalf of partners Vitol (33.975%), GNPC (10%), Woodfields (9.556%), and GNPC Explorco (4%). Eni has been present in Ghana since 2009 and currently has gross production of about 80,000 barrels of oil equivalent per day (bpd) from the country.
GLOBAL
On July 22, crude oil prices pushed higher, trading back above $70 a barrel, and helped by a broader market rally which has recently outweighed concerns about the impact on energy demand from the rise in global COVID-19 cases. The U.S. West Texas Intermediate crude futures were up $1.61 at $71.91 a barrel, while Brent crude futures finished traded up $1.56, or 2.2%, at $73.79. The U.S. Energy Information Administration’s weekly report for July 21, showed a build of just over 2 million barrels for the week ending July 16, halting eight weeks of declines.
The crude market has been very volatile recently. Members and allies of the Organization of Petroleum Exporting Countries (OPEC+) reached an agreement to boost supply by 400,000 bpd from August through December 2021. Analysts believe the latest OPEC+ agreement is supportive and could extend further into 2022, given that it reduces the risk of the broader deal falling apart and minimizes the likelihood of a price war. Investors also continue to monitor the progress made by Iran and other world powers to revive a 2015 nuclear deal that would lift U.S. sanctions on its crude supply.
