Market Report: Maersk Wins Tullow Ghana Contract
On Tuesday 2nd January, Dr. Ibe Kachikwu, Minister of State for Petroleum Resources, and petroleum marketers held a crucial meeting at the headquarters of the Nigerian National Petroleum Corporation (NNPC) in Abuja to consider the re-involvement of private sector operators in the importation of petroleum products. The corporation currently imports 100 percent of petroleum products into the country as against an earlier arrangement of 60-40 percent government, private sector participation. Kachikwu said the President Muhammadu Buhari had ordered the setup of an ad-hoc committee to engage the Federal Government on the best way to bring back oil marketers to import the products in order to meet the daily consumption requirement in the country, and also to find a long-term solution. Members of the committee will include the Minister of State for Petroleum Resources, the Group Managing Director of the NNPC, most of the parastatals in the ministry, Depot and Petroleum Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria and labour unions.
On Wednesday 3rd of January, Dr. Maikanti Baru, Group Managing Director of the NNPC ordered an immediate assessment of the damage caused by a fire on the Escravos to Lagos Pipeline (ELP), a natural gas pipeline which supplies gas from Escravos region of the Niger Delta area to Lagos. The pipeline also supplies gas to power plants in the South West, in addition to feeding the West Africa Gas Pipeline System. The incineration of the ELP, which was built in 1989, was suspected to have been caused by a bushfire on Tuesday 2nd January, at Abakila, Ondo State. The shutting down of the pipeline will affect gas supply to customers in Ondo, Ogun and Lagos State with the subsequent shutdown of the following power plants with a combined generating capacity of 1,143MW: Egbin, Lagos, Olorunshogo, PEL Olorunshogo, Ogun, Paras Power Plant, Ogun and Omotosho plant, Ondo State.
Tullow Ghana Ltd has awarded Maersk Drilling a four-year contract for the deep-water drillship Maersk Venturer. The contract was signed in December 2017 and is expected to commence in February 2018. The contract also covers the development drilling on the Jubilee and TEN fields offshore Ghana. Lars Ostergaard, Chief Commercial Officer of Maersk Drilling said “I am very pleased that Maersk Drilling will be mobilising another deepwater rig for this significant job in a strategically important region. It is our first contract with Tullow Ghana and it is a testament to our successful operational track record in Ghana. We are firmly committed to supporting Tullow Ghana’s business through safe and efficient drilling operations”. Maersk Rigworld Ghana, Maersk Drilling’s joint venture with Rigworld International Services, will be providing local services in connection with the operation and thereby drive local job creation and competency development. The joint venture has expanded the range of locally available goods and services significantly since the partnership was founded in 2015, and will further expand its network of local suppliers over the course of the new contract.
On Thursday 4th January, oil prices continued to climb to multi-year highs, amid ongoing tensions in Iran and as traders were eyeing the release of U.S. crude inventory data due later in the day. The U.S. West Texas Intermediate crude for February contract was up 26 cents at $61.89 barrel at 04:00 AM ET (08:00 GMT), while the ICE Futures Exchange in London Brent oil for March delivery was up 0.18 cents at $68.00 a barrel. The U.S Energy Information Administration weekly report for Thursday 4th January showed a fall in crude oil inventories by 7.419 million barrels in the week ending December 29, whereas market analysts’ expected a crude-stock draw of 5.148 million barrels, while the American Petroleum Institute late Wednesday 3rd January reported a supply draw of 4.992 million barrels. The report also showed that gasoline inventories increased by 4.813 million barrels, compared to expectations for a build of 2.182 million barrels, while distillate stockpiles rose by 8.899 million barrels, compared to forecasts for an increase of 0.477 million. Oil prices remained supported amid Iranian protests, marking the biggest challenge to the country’s clerical leadership since 2009. Iran’s Revolutionary Guards deployed forces to three provinces to put down the anti-government protests. So far the unrest has had little impact on Iranian oil production with experts suggesting that, beyond worker strikes, the country’s oil resources are located far from where protests are currently taking place.