Market Report: NNPC to List on Nigerian Stock Exchange

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The weekly market report is provided by Gladius Commodities of Lagos, Nigeria. Learn more about Gladius Commodities at www.gladiuscommodities.com.

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NIGERIA

The Nigerian National Petroleum Company (NNPC) will fully become a limited liability company from 1 July 2022 and operations will comply with the Companies and Allied Matters Act of 2020. The Group Managing Director of NNPC, Alhaji Mele Kyari said that NNPC needs to become more efficient in its operations with new roles and targets for Nigeria’s oil and gas market. Alhaji Kyari announced the company’s growth targets, which include plans to increase gas production capacity to 8 billion cubic feet and become the world’s 5th largest natural gas producer. NNPC Ltd will be listed on the Nigerian Stock Exchange and advance Nigeria’s plans to leverage natural gas as a transitional energy source for energy security.

The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, has indicated that the Brass Liquified Natural Gas project might be revived, as Greenville NLG, a gas company, showed interest in the project. The project was conceived in 2003 and is expected to cost $20 billion. Speaking during an inspection of the project site in Twon Brass, Bayelsa State, with the management of Greenville, Minister Sylva stated that the Government was keen on completing the project because of its manifold economic benefits. The project, which has a Train 1-4 concept with a yearly projected capacity of 8.4 million metric tons, was initiated in 2005. “We want this project to pull through, this time, and we will do everything possible to ensure that the Final Investment Decision is taken as soon as possible.” H.E. Timipre Sylva added.

SENEGAL

Senegal’s primary downstream refinery (SAR) is undergoing major renovations to boost capacity by 20%. Despite four years of delays attributed to funding challenges, partners disputes and the COVID-19 pandemic, the facility’s upgrades – planned in 2018 – have resumed, ushering in a new era of downstream security in Senegal. Under these renovations, capacity will be increased to 1.5 million tons per annum, meeting 70-75% of the domestic market’s needs, additionally, building a new pre-flash unit and expanding the catalytic reformer.

SAR has operated in Dakar since 1961, first processing 600,000 tons per annum, 800,000 tons per annum in 1983 and then up to 1.2 million tons. Shareholder stakes involve national oil company, Petrosen at 46%, financial institution, Locafrique (34%), oil and gas firm Sahara Energy Resources (8.18%), TotalEnergies (6.82%) and oil and commodities trader ITOC (5%). In addition, Franco-American service company, TechnipFMC, and German technologies provider, SAP, have been onboarded to oversee the process and subsequent maintenance work. The facility now boasts a full digital command room from which to optimize processing.

Furthermore, in 2023 Woodside Energy’s much anticipated Sangomar field will come online, joined by BP and Kosmos Energy’s $4.8 billion Grand Tortue Ahmeyim project. Domestically produced oil and gas will skyrocket, and SAR’s next expansion goal is an ambitious 2.5 million tons per annum capacity, meeting Senegal’s 1.6 million tons domestic demand while fuelling national economic growth up to 5% and establishing a presence in regional Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry markets. The facility also looks to acquire a hydrocracker to treat crude oil with a higher concentration of sulphur to comply with global standards for cleaner, greener processing.

GLOBAL

On April 21, oil prices climbed as investors focused on the tight global supply as the Ukraine war continues and with Libyan protests disrupting output from the Organization of the Petroleum Exporting Countries member. The U.S. West Texas Intermediate (WTI) crude futures traded 1.6% higher at $103.79 a barrel, while the Brent crude futures rose 1.4% to $108.29 a barrel at 9:40 AM ET (13:40 GMT). The U.S. Energy Information Administration’s weekly report showed a draw of 8,020 million barrels for the week ended April 15. At 413l,7 million barrels, U.S. crude oil inventories are about 15% below the five-year average for this time of year.

Oil traders have disputed for weeks that Berlin and the rest of the European Union (EU) will be able to disengage with Russia, despite the West’s stand that the action is appropriate and in line with its sanctions against Moscow for the war in Ukraine. The EU is still weighing a ban on Russian oil, although nothing formal has been agreed. A few consumers appear to be taking matters into their own hands by going elsewhere for their crude, adding to the overall tightness of the global market. Bloomberg reported that Russian oil output averaged 10,11 million barrels of oil a day (bpd) from the start of this month to April 19, down from 11,01 million bpd in March.

The EU in partnership with the International Energy Agency has outlined several steps for its citizens to take to try and reduce the continent’s dependence on Russian energy, including turning down heating, lowering car speeds, and remote working. The announcement of these steps suggests that an immediate EU ban on the use of Russian oil is unlikely soon. Libya, a member of the OPEC, said it was losing more than 550,000 bpd of oil output to blockades at major fields and export terminals. OPEC+ has struggled to meet its output targets for months due to under-investment in global oil fields during the height of the coronavirus outbreak. The situation has worsened since the start of the Russian/Ukraine war and the consequent sanctions on Russia. Turning to the demand side, investors continue to monitor the COVID-19 outbreak and associated lockdowns in China as the country struggles to contain a surge in cases, including the first fatalities since the original outbreak.

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