Market Report: Nigeria to Explore Crude Oil Sales to Africa Markets
On Tuesday 18th of July, the Nigerian National Petroleum Corporation (NNPC) Research and Development (RD) department partnered with United States-based Halliburton Corporation to identify viable crude oil in the Chad basin using a new technique known as the Neftex solution. NNPC Group General Manager, RD, Dr Bola Afolabi stated that this new technique will be able to pinpoint the exact exploration locations for drilling of commercial oil in the basins and this would occur over the course of 18 months. Afolabi said the Halliburton Neftex solution would provide a geophysical mapping structure and aid to identify prolific basins in Nigeria. The Group Managing Director (GMD) of the NNPC, Dr Maikanti Baru, said at the 6th Sustainability in the Extractive Industries’ (SITEI) conference in Abuja, on Wednesday 19th July that Nigeria’s crude oil production has risen to 2.2million barrels per day (bpd). Baru said the Nigerian Petroleum Development Company (NPDC) had already increased production from 15,000 to 210,000 thousand bpd as of June 2017 and has attributed this growth to the peace in the Niger Delta.
Baru also stated that the NNPC aims to increase and sustain the country’s oil reserves from 2.5 to 3 million bpd in the next few years. Also speaking at the same conference, the Minister of State for Petroleum, Dr Ibe Kachikwu announced that Nigeria would explore crude oil sale possibilities to the African markets. Kachikwu said there is difficulty capturing the American and European market as demand is fast declining, thus leaving the African and Asian markets. Therefore, the African market must be captured in terms of contract awards, whether in crude, investment or other formulations and this would be discussed at the 19th conference of the African oil producers to be held in the week of 24th July. Kachikwu also said that Nigeria must endeavour to reduce production costs to about $15 per barrel through the implementation of the new National Fiscal Policy and cost reduction initiatives. This will help in developing the country’s oil capacity to be competitive in the continent and also ensure majority of the volumes of oil and gas demands of the continent come from her oil fields.
The governments of Equatorial Guinea and Cameroon have signed an MOU that officially identified the two adjoining gas discoveries (Yolanda gas discovery and Yoyo gas recovery respectively) in their maritime border area as a single entity and have agreed to develop it together. Equatorial Guinea Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima said: “Our partners in Cameroon share our ambition to rapidly bring the Yoyo-Yolanda field to production and to maximize the value from our nations’ abundant resources. I am excited about a fast track approach on this project.” Yoyo-Yolanda fields were found in 2007 and the blocks are operated by Noble Energy EG Ltd. and Noble Energy Cameroon Ltd. Both governments have entered a data exchange agreement and are to begin discussions on the unitization of the Yoyo-Yolanda gas field.
Yolanda is located in 896 meters of water approximately 50 km east of Bioko Island. The initial I-3 well was drilled in 2007 to a total depth of 2,890 meters and tested with flow rates of 371 bpd condensate and 36 mcf/d natural gas. Yoyo, situated to the east of Yolanda across the Cameroon border, is located in 528 meters water depth. The YoYo-1 well (also drilled in 2007) is tested with flow rates of 330 bpd condensate and 31 mcf/d gas.
On Thursday 20th of July, oil prices remained steady after its previous gains when falling U.S. crude inventories lifted. The U.S. West Texas Intermediate crude for August delivery was up 23 cents at $47.55 a barrel at 08:00 ET, while the ICE Futures Exchange in London Brent oil for September delivery added 28 cents at $49.98 a barrel. The U.S. Energy Information Administration (EIA) weekly report for Wednesday 19th July showed a fall in crude oil production by 4.7 million barrels in the week ending July 14. Oil prices have been under pressure in recent weeks due to the steady increase in U.S. shale output despite production cuts by OPEC and non-OPEC members. OPEC/non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018. Thus far, the production cut agreement has had little impact on global inventory levels as U.S. shale output and supply from producers that are exempt from the OPEC deal (Libya and Nigeria) continues to increase. A joint ministerial monitoring committee meeting in Russia has been scheduled for July 24th in St. Petersburg for OPEC/non-OPEC members to discuss the current situation in oil markets.