Market Report: Nigeria Reopens Fuel Depot
On Wednesday 4th October, Dr. Maikanti Baru, the Group Managing Director of Nigeria National Petroleum Corporation (NNPC) reopened the NNPC depot in the Apata area of Ibadan, Oyo State after years of inactivity. Baru stated that the reopening of the depot will ease the stress of transporting fuel from Lagos to Ibadan. The reopening of the depot has created an avenue for employment opportunities and socio-economic advancement. Baru also urged the Oyo State Governor, Abiola Ajimobi, to ensure the provision of adequate security for the various facilities at the depot. The Chairman of the Petroleum Tanker Drivers association, Suleiman Oladiti, commended the Federal Government for reopening the depot and other ones across the country. Oladiti said, “With the turnaround of the depots in Aba, Ejigbo, Lagos, Mosimi, Kano and now Ibadan, the government has set the pace for steady supply of oil across the country.”
One of Nigeria’s leading indigenous energy companies, Oando Plc and the Rivers State government are closing in on the completion of an 8.5 kilometers expansion of the natural gas distribution network in the Port Harcourt Franchise Area from the Above-Ground Installation, in Trans-Amadi, to BUA Sugar Refineries (BUA). Central Horizon Gas Company was nominated by both parties to execute the project by focusing on the rehabilitation, operation and expansion of the existing natural gas distribution network. The pipeline will boost BUA’s productivity, provide substantial cost-savings and open the state to a new wave of industrialization via natural gas utilization. Oando is also leading several long-term projects including a 400km South-West to North-West gas pipeline and a Central Processing Facility which will serve as the primary gas gathering and processing hub in the Niger Delta.
Subsea Integration Alliance has been awarded the contract for the upstream construction of the $2 billion Fortuna Floating Liquefied Natural Gas (FLNG) project and future inspection, repair and maintenance services offshore Equatorial Guinea. Subsea Integration Alliance is a partnership between Subsea 7 and OneSubsea, a Schlumberger company. The contract was awarded by Ophir Equatorial Guinea (Block R), a fully-owned subsidiary of UK-based oil and gas firm Ophir Energy and it is in range of $150 to 300 million. This covers engineering, procurement, construction, installation and commissioning of the subsea umbilicals, risers and flowlines and for the subsea production systems. The scope of the contract is to deliver 440 million standard cubic feet per day of gas through infrastructure made up of four wells (3 in the Fortuna field and the fourth in the underlying Viscata field) contained at an average water depth of 1,790m. Nick Cooper, Ophir’s Chief Executive Officer said, “The government is a key stakeholder in the Fortuna project and I am pleased that the local content requirements in these contracts will help to further develop the state of Equatorial Guinea. Fortuna West Africa’s first deepwater FLNG Project is expected to reach Final Investment Decision before the end of 2017.” The Fortuna FLNG project is located in the Block R license, about 140km west of Bioko Island. It will be Africa’s first deepwater independent FLNG project, with the first production forecast for 2020. The Fortuna field, which is located in water depths of 1,680 1,850m, is expected to have around 3.0 trillion cubic feet (Tcf) of LNG in a total of six commercial discoveries.
On Thursday 5th October, oil prices remained high as optimism dominated markets following news of a far larger-than-expected decline in U.S. stockpiles and the potential extension of output cuts by the Organization of Petroleum Exporting Countries (OPEC). The U.S. West Texas Intermediate crude for November contract was up 15 cents at $50.13 a barrel by 9:20 a.m. ET (13:20 GMT), while the ICE Futures Exchange in London Brent oil for November delivery increased by 39 cents at $56.19 a barrel. The U.S. Energy Information Administration (EIA) weekly report for Wednesday 4th October showed a fall in crude oil inventories by 6.023 million barrels in the week ending September 29. In May, OPEC and non-OPEC members led by Russia agreed to extend production cuts of 1.8 million barrels per day for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices. On Wednesday 4th October, Russian President Vladimir Putin at the Russia Energy week summit, said that in order to boost prices, OPEC and other producers, including Russia have pledged to extend the oil output cut till the end of 2018, instead of expiring in March 2018. Saudi Energy Minister, Khalid Al-Falih also said that deals between his country and Russia have helped stabilize crude prices and that global energy markets will be able to handle supplies of U.S. shale oil next year thanks to an increase in demand.