Market Report: Nigeria Reduces Crude Oil Production Price
On Monday 5th March, the Nigerian National Petroleum Corporation (NNPC) announced that it has brought down the cost of producing a barrel of crude oil to $20, and is targeting to lower it further to $15 per barrel. Dr. Maikanti Baru, the Group Managing Director of the NNPC disclosed this at the opening ceremony of the 2018 Technology Innovation Expo organized by the Ministry of Science and Technology. Also speaking at the 2018 Oloibiri Lecture Series and Energy Forum organized by the Society of Petroleum Engineers, Baru said Nigeria is currently losing N868 million daily to gas flaring. Baru disclosed that oil and gas firms operating in the country are currently flaring 700 million standard cubic feet (SCF) of gas per day which is capable of generating an equivalent of 5,000 megawatts of electricity per day. Baru, however, disclosed that efforts and massive investments had been made by the NNPC to ensure that all the thermal power plants in the country are connected to permanent gas supply pipelines. Baru said the NNPC had invested in the massive revamp of the country’s pipeline network, a development which had helped improve gas supply to critical sectors of the economy, and which also helped bring down the volume of gas flared by oil and gas companies from 2.5 billion SCF per day to the current level of 700 million SCF per day. Baru also stated that the corporation was extending its local content to the recently approved 614 kilometers 40-inch Ajaokuta-Kaduna-Kano (AKK) Gas pipeline project estimated to cost about $2.8 billion, by ensuring the pipes for the construction were sourced from pipe mills in adherence to the Nigerian Content Law.
Petronas a Malaysian oil and gas firm has made a deep-water oil and gas discovery in Gabon through its subsidiary PC Gabon Upstream (PCGUSA) after drilling the Boudji-1 exploration well in Block F14 (Likuale). PCGUSA had intersected 90m of gross high- quality hydrocarbon-bearing pre-salt sands while drilling the exploration well in water depths of 2,800m. Datuk Mohd Anuar Taib, Petronas executive vice president & upstream CEO said: “The discovery in Gabon is an encouraging development for Petronas, as we continue to pursue growth activities beyond Malaysia, in line with the strategy to expand our core oil and gas business by growing our resource base. Aside from boosting Gabon’s oil and gas industry, this discovery will also spur further growth activities in the region, and complements our achievements towards building a significant deep-water portfolio globally”. Petronas plans to carry out an assessment alongside the Gabon Ministry of Petroleum & Hydrocarbons to further establish the commerciality of the resource volume.
On Thursday 8th March, oil prices turned lower on as traders were still digesting the previous session’s downbeat U.S. supply data amid sustained fears over a global trade war. The U.S. West Texas Intermediate crude April contract was down 37 cents at $60.80 a barrel at 09:55 a.m. ET (12:55 GMT), the ICE Futures Exchange in London Brent oil for April delivery was down 45 cents at $63.89 a barrel. The U.S Energy Information Administration weekly report for Wednesday 7th February showed a rise in crude oil inventories by 2.408 million barrels in the week ending March 2, whereas analysts expected a gain of 2.723 million barrels.
The International Energy Agency earlier in the week upwardly revised U.S. oil output growth, stating the country would be producing a total of nearly 17 million barrels per day (bpd) in 2023. U.S. crude oil production has already surpassed that of top exporter Saudi Arabia to 10.28 million bpd. The Organization of the Petroleum Exporting Countries (OPEC), along with some non-OPEC members led by Russia, agreed in December to extend oil output cuts until the end of 2018 to curb supply glut.