Market Report: Tullow Acquires Stake in Ivory Coast Blocks
On Wednesday 11th October, Dr. Maikanti Baru, the Group Managing Director, Nigeria National Petroleum Corporation (NNPC) announced at the Petroleum and Natural Gas Senior Staff Association of Nigeria Triennial Retreat/Synergy workshop that he had engaged investors to establish a refinery in Akwa Ibom State which is geographically well-positioned. Baru said “The investors have been coming to us and I have seen one that is quite promising. It is in this light that I encouraged these investors to come and see the state government and discuss.” Although Akwa Ibom was not the investors’ preferred location, Baru managed to convince them to consider the location and also to leverage the state’s deep coastline. Baru also called upon the Akwa Ibom State Government to explore partnership opportunities provided by investors towards establishing the refinery in the state. The Nigerian Gas Processing and Transportation Company, a subsidiary of the NNPC received a feasibility study by AXXELA Limited (formerly known as Oando Gas & Power Limited) regarding the building of an Escravos–Lagos Pipeline System-Ibadan-Ilorin-Jebba (EIIJ) pipeline network across the Western and Central states of Nigeria. The study was compiled by a US-based agency, Worley Parsons and supported by counterpart funding from the United States Trade and Development Authority. During the handover ceremony, Engr. Saidu Mohammed, NNPC Group Executive Director and Chief Operating Officer, Gas & Power said “This is a project we defined a long time ago and one we wish to implement. Now, it’s key we don’t lose sight of the low-hanging fruits, as we seek to provide gas to the country in keeping with the national plan.” The pipeline project is part of the Nigeria Gas Master Plan to improve power generation and distribution to major cities within Nigeria’s South Western region. The pipeline is expected to commence in Ibadan, Oyo and run through the towns of Osogbo, Ogbomoso, Ilorin, Ado-Ekiti, and terminate in Jebba, Kwara State.
On Thursday 12th October, Tullow Oil Plc announced that it has acquired a 90% stake in four onshore blocks in Ivory Coast, with the remaining 10% held by Petroci, the national oil company of Côte d’Ivoire. The onshore blocks cover 5,035 square kilometres and are located on the coast, mostly to the west of Abidjan. Tullow believes that this acreage will complement the Group’s existing exploration portfolio as the blocks are located in a proven petroleum system, indicated by multiple oil seeps and past-production from the Eboinda Oil Sands. Paul Mcdade, Tullow’s Chief Executive Officer, stated “I am very pleased to have signed the licenses for these blocks and look forward to exploring again in Côte d’Ivoire. We have a long history in Côte d’Ivoire having been in the country since 1997 and I am excited about the potential that these blocks, with their proven petroleum system, offer.” Ivory Coast, which produces 8,000 barrels of oil and 200 million cubic feet of gas daily, is trying to jumpstart its oil industry just as other countries in West Africa such as Senegal are making large new finds and attracting oil majors. If commercial discoveries are made, the maturity of Côte d’Ivoire’s oil industry proposes a relatively short and low-cost path to production.
On Thursday 12th October, oil prices went down after three consecutive sessions of gains after data from the U.S. Energy Information Administration (EIA) showed a fall in domestic crude stockpiles. The U.S. West Texas Intermediate crude for November contract was down 92 cents at $50.38 a barrel at 11:05 a.m. ET (15:05 GMT), while the ICE Futures Exchange in London Brent oil for December delivery fell by 82 cents at $56.12 a barrel. The EIA weekly report for Wednesday 11th October showed a fall in crude oil inventories by 2.75 million barrels in the week ending October 6. Market analysts’ expected a decline of around 1.99 million barrels, while the American Petroleum Institute late Wednesday reported an unexpected supply-increase of 3.1 million barrels. The EIA report also showed a rise in gasoline inventories by 2.5 million barrels, compared to expectations for a decline of 480,000 barrels. On Monday 9th October, Saudi Arabia announced plans to cut monthly exports in November as part of ongoing efforts led by OPEC with other producers, including Russia, to curb oversupply and stabilize prices by cutting output in a deal which is due to expire in March 2018.