The Buzz: This Week in Africa
At the close of this week Brent Crude is trading at $56.93 per barrel, WTI at $53.93 per barrel and natural gas at $3.31 per million BTU (beginning of day January 6, 2017). Here are AOP’s top five stories from the last seven days.
Oil prices up at start of 2017
Oil and gas prices kept up a slow but steady increase at the end of 2016 and into 2017, with Brent oil closing at an 18-month high on January 6. In fact, oil claimed its highest annual gain since 2009, after OPEC members and 11 non-OPEC countries agreed to reduce production in November. Brent crude for March settlement gained 0.5 percent to $57.10 per barrel on the London-based ICE Futures Europe Exchange, marking Brent’s highest close since July 17, 2015, reported Bloomberg.
However, even as prices gained, experts began questioning how long the OPEC-brokered deal would hold, and how effectively the reductions in oil production can be monitored. Baker Hughes also reported another week of increases to the number of oil and gas rigs in the United States, bringing the total of active rigs in the US to 665. The United States, which has not agreed to reduce production, is at its highest active rig count in a year, with 11 straight weeks of increases reported.
Nigeria’s NNPC awards contracts
The Nigerian National Petroleum Corporation awarded crude oil term contracts to 39 companies for 2017, including 18 Nigerian firms, 11 international traders, five foreign refineries, three national oil companies and two NNPC trading arms, according to This Day. The contracts are to run from January 1, 2017 for twelve consecutive circles of oil allocation. The companies were selected from more than 220 bids, as companies sought to purchase and lift Nigerian crude in 2017. The contracts are all for 32,000 barrels per day, with the exception of the deal with Duke Oil Ltd., which is for 90,000 barrels per day.
Companies that won the bid include: Oando, Sahara Energy, MRS Oil and Gas, AA Rano, Bono, Trafigura, ENOC Trading, BP Trading, TOTAL Trading, UCL Petroenergy, Mocho, Tevier Petroleum, Heritage Oil, Levene Energy and Glencore.
Nigeria aims to boost refining capacity to 2.6 million barrels per day
Nigeria plans to drastically increase its refining capacity from a nominal 445,000 barrels per day to 2.62 million barrels per day, in a bid to become self-sufficient in the oil and gas industry, according to a report by The Guardian.
Nigeria’s Department of Petroleum Resources has granted licenses to 22 private firms to establish refineries, which should produce 1.97 million barrels per day of refined product in a long-term strategy. Bids have already been submitted by nine companies for the location of new refineries within the complexes that house Nigeria’s three existing refineries.
African Development Bank backs hydropower in Kenya
The African Development Bank’s Sustainable Energy Fund for Africa (SEFA) approved a USD $992,000 grant for a community-owned hydropower project in Meru, Kenya, according to Business Daily Africa. The 7.8 MW power project is unique in that the community ownership will have returns accruing to members of the Mutunguru community. The $95-million Sustainable Energy Fund is funded by the governments of Denmark, the United Kingdom, the United States and Italy.
Shell Lawsuit could be tried in London
Nigerian communities in the country’s oil-rich Delta region are fighting to have their lawsuit against Royal Dutch Shell be heard in the United Kingdom, not Nigeria, as they say Nigerian courts are not fit to hear the case against Shell subsidiary Shell Petroleum Development Company of Nigeria, according to CNBC Africa. Shell, however, claims the case should be heard in Nigeria. The case is in regard to two pipeline leaks in 2008. Whether or not the case is accepted in the UK should be known in just a few short weeks, and, if it is accepted, legal experts predict it could attract more cases against multinationals.