Market Report: Gambia Blocks Show Potential
The Nigerian National Petroleum Corporation (NNPC) and its joint venture partner Chevron Nigeria Limited executed the second and final phase of a $1.7 billion alternative financing agreement for a project meant to increase crude oil production by about 39,000 barrels per day (bpd). The project is also expected to achieve an incremental peak gas production of about 283 million standard cubic feet per day (mmscfd). Dr. Maikanti Baru, the Group Managing Director of the NNPC stated that the project is about 92 percent completed and $780 million of the project cost is expected to be funded by a third-party. Upon completion, the facility will produce natural gas liquids and condensate extracted from the Sonam and Okan fields located in Oil Mining Leases 90 and 91 located in the Niger Delta. The project includes the completion of the Sonam non-associated gas well platform; drilling 7 wells in the Sonam field and the Okan 30E NAG well, completing a pipeline and Okan pig receiver platform, as well as the development of the associated facilities. Baru described the deal as a step in the right direction, saying it would grow the nation’s daily production capacity and support the strategic domestic gas-to-power aspirations while aligning with NNPC’s 12 Business Focus Areas.
At the second meeting of the National Council on Hydrocarbon held On Monday 20th November, Dr. Ibe Kachikwu, the Minister of State for Petroleum Resources said the Nigerian government is overhauling its oil and gas policies and will soon roll out a new national policy for the sector. Kachikwu said the new policy, which has been approved by the Federal Executive Council (FEC) will create a market driven oil and gas industry, maximise the production and processing of hydrocarbons and move the country away from oil as a source of income to oil as a fuel for economic growth. Also, a new fiscal policy for the sector has been developed and is awaiting FEC’s approval. Kachikwu said the policy will help move the country’s economy from oil to gas, extend gas penetration in the domestic market in order to facilitate the growth of the electric power, agricultural and industrial sectors, end commercialize gas flaring, address environmental issues, and provide an environment for increased private sector participation in the gas sector.
Australian oil and gas explorer, FAR Ltd said on Tuesday 21st November, that an independent audit of two of its offshore blocks (Samo and Bambo prospects) off the coast of Gambia found potential for a total of 1.1 billion barrels of oil. FAR said 926 million barrels could be obtained on a net basis in the A2 and A5 blocks in the Mauritania-Senegal-Guinea-Bissau (MSGB) Basin, in which it has an 80 percent stake. FAR released a statement saying operations are underway to prepare for drilling in late 2018. In the region, FAR also shares Senegal’s first oil development, the deepwater NE project, with Britain-listed Cairn Energy and Australia’s Woodside Petroleum. Production is expected to start by 2021.
On Thursday 23rd November, oil prices bounced higher, thus, erasing earlier losses as optimism that the market is rebalancing resurfaced in holiday-thinned trade. The U.S. West Texas Intermediate crude for January contract was up 18 cents at $58.20 a barrel at 09:50 AM ET (13:50 GMT), while the ICE Futures Exchange in London Brent oil for January delivery was steady at $63.29 a barrel. The U.S Energy Information Administration (EIA) weekly report for Wednesday 22nd November showed a fall in crude oil inventories by 1.9 million barrels in the week ending November 17, whereas market analysts’ expected a decline of 1.5 million barrels. Oil prices received additional support from growing signals that the Organization of Petroleum Exporting Countries (OPEC) and its allies will agree to prolong supply curbs beyond March when producers meet in Vienna on November 30. The deal to curb output is due to expire in March 2018 but Saudi Arabia has been lobbying oil ministers to agree to an additional nine-month extension. However, Maxim Oreshkina, Russia’s economy minister said Russia’s economic growth in October was negatively affected by a global deal between members of OPEC and Russia to curb crude oil production. But Alexander Novak, Russian Energy Minister said Russia would determine its position on extending the oil deal at the November 30th meeting.