The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Download the full report here. Learn more about Gladius Commodities at www.gladiuscommodities.com.
GHANA
London’s multinational oil and gas exploration company Tullow Oil announced high production so far in 2020 at the deep-water Jubilee and Tweneboa, Enyenra, Ntomme (TEN) fields offshore Ghana. In July and August, Jubilee averaged 90,000 barrels per day (bpd) and 50,000 bpd from the TEN offshore fields.
Factors boosting performance were increased gas offtake nominations from the Ghana National Gas Co.; approval from the Ministry of Energy to temporarily increase flaring; a higher than forecast facility uptime of more than 95% at both fields’ floating production storage and offloading units; and improved reliability/redundancy in Jubilee’s water injection facilities. At the start of August TEN’s Ntomme-09 production well came on stream, and this is currently delivering around 5,000 bpd. The drillship Maersk Venturer has departed, but tenders are underway for a rig to resume activity offshore Ghana in 2021.
NIGERIA
Nigeria’s state-owned hydrocarbon company Nigerian National Petroleum Corporation’s (NNPC) Group Managing Director, Alhaji Mele Kyari disclosed that Nigeria is holding talks to give up majority of its stake in all four moribund oil refineries.
The refineries located in Kaduna, Warri and Port Harcourt have worked only sporadically due to underinvestment, and NNPC in April shut them down to raise funding for their refurbishment.
Alhaji Kyari stated that giving up the majority and becoming a minority shareholder of the assets will allow for more scrutiny of shareholders and the refineries will be more efficient to operate. This comes as the Nigerian government – through the Petroleum Pricing Regulatory Authority – announced that it will no longer be releasing guiding price bands for the sale of petrol at filling stations. Hence, full deregulation – marketers will be allowed the freedom to fix prices based on oil market prices and other factors.
The Nigerian Maritime Administration and Safety Agency (NIMASA) revived efforts to change the terms of trade for the affreightment of Nigerian crude oil from Free on Board (FOB) to Cost Insurance and Freight (CIF). Dr. Bashir Jamoh, Director-General of NIMASA, disclosed this when he received delegates from the NNPC led by Sir Billy Okoye, the newly appointed Group General Manager, Crude Oil Marketing Division, of NNPC.
Dr. Jamoh said under FOB trade terms, Nigeria has no reasonable control over the delivery of its crude oil as regards carriage, insurance, and other ancillary services. However, under the CIF arrangement, the country maintains ample control over the distribution of its oil, which can be leveraged to enhance the competitive advantage of indigenous operators.
He also revealed that the agency was working towards the implementation of a National Maritime Security Strategy to improve security in Nigerian waters and reduce the cost of shipping, “A technical committee involving NIMASA, NNPC, and other stakeholders would be set up to develop a template for the desired change, with workable timelines,”addedDr. Jamoh as he appealed for more local content in the transportation of the country’s crude in line with the Cabotage regime.
LIBERIA
Regulators in Liberia have pre-qualified seven domestic firms to participate in the country’s current offshore oil and gas licensing round. Nine undrilled offshore blocks in the Harper basin are available in the bid round, which commenced in April and runs until February 2021.
The deadline for pre-qualification is 31 October 2020. Demus Exploration and Production, Jungle Energy Power, New Millennium Oil and Gas, Africa Oil and Gas, Green Petroleum, MAC-Africa Petroleum, and TSC Global have all qualified to participate. The list of pre-qualified Liberian companies will be submitted to qualified international bidders for possible partnerships in line with the country’s amended petroleum law.
Liberia has responded to the impact of the COVID-19 pandemic on the oil industry by adjusting bid evaluation criteria to lure investment. A previous requirement for qualifying firms to pay a signature bonus minimum of $8 million in one tranche has been waived.
There is no minimum requirement, companies can propose a signature bonus for each block for which they bid and negotiate a payment schedule with the government. The Liberia Petroleum Regulatory Authority (LPRA) has further relaxed a mandatory requirement for interested bidders to purchase 2D seismic data for the entire Harper basin.
Firms can license 2D seismic data for the blocks of interest. According to Archie Donmo, Director-General of LPRA, these modifications were made in response to the devastating impactof COVID-19 on oil prices and share prices of upstream firms. Liberia’s petroleum law sets aside a mandatory minimum of 5% equity interest for the government in all exploration and production agreements assigned to firms owned by Liberian citizens.
The LPRA will provide an update on Liberia’s ongoing licensing round at the Africa E&P Virtual Summit, to be held on 16-17 September. Along with the LPRA, Liberia’s state-owned oil firm Nocol, reservoir optimization firm Core Laboratories and sub-surface data company TGS will take part in a panel discussion at the conference.
GLOBAL
On Thursday, 10 September, oil prices fell back after a one-day reprieve as the first U.S. stockpile build in seven weeks pushed back into negative territory, encouraging concern about a sluggish recovery in fuel demand as COVID-19 cases continue to surge in many countries.
The U.S. West Texas Intermediate crude futures fell 24 cents to $37,81 a barrel at 04:17 GMT, while Brent crude futures dropped 17 cents to $40.62 a barrel. The U.S. Energy Information Administration’s (EIA) latest report for the week ending Friday, 4 September showed a rise in U.S. crude inventories by 2 million barrels, compared with analyst forecasts for a 1,3 million-barrel decrease.
The oil market is under pressure on the prospect of both subdued demand and rising supply. Yet, traders focused on the crude build amid concerns about refinery runs as the U.S. peak summer driving season draws to a close. Refinery utilization fell 5% last week, the second time in a week that it has fallen as much. The rising stockpiles come ahead of a meeting on 17 September, of the market monitoring panel of the Organization of the Petroleum Exporting Countries and allies (OPEC+), which in August has been withholding supply to reduce stockpiles but analysts say the meeting is likely to focus on compliance among members, rather than seek deeper cuts.
