Market Report: Production begins on Golar LNG FLNG Project in Cameroon
On Tuesday 13th March, the Nigerian National Petroleum Corporation Nigeria (NNPC) said it is pushing ahead with its goal to revive the nation’s ailing oil refineries and becoming a net exporter of petroleum products by the end of 2019. Mr Anibor O. Kragha, NNPC’s Chief Operating Officer of Refineries and Petrochemicals said the overhaul projects of the refineries will commence in the second quarter of 2018 and will run until the end of 2019. Kragha said the corporation was in the final stages of talks with consortiums including top traders, energy majors, and oil servicing companies to revamp the refineries in an effort to reduce the country’s reliance on imported fuel. Kragha also stated that from July 2018, Nigeria would begin lowering the top level of sulphur in diesel from 3000 to 50 parts per million (ppm), targeting a cut to 150 ppm by October 1, 2019.
On Wednesday 14th March, Dr. Ibe Kachikwu, the Minister of State for Petroleum Resources, said the modular refineries under construction in the oil-producing Niger Delta region of the country will halt illegal refining and save the environment and provide jobs for residents engaging in illegal bunkering. Kachikwu, however, pointed out that the small refineries will not lead to the country’s dependence on fuel importation as the modular refineries have no capacity to bridge existing supply gap. Modular refineries can refine between 300 to 30,000 barrels of oil per day (bpd) at a high cost. A 10,000 bpd refinery can cost up to $20 million dollars.
On Monday 12th March, Golar LNG announced it had started production at its floating Liquefied Natural Gas (FLNG) platform in Cameroon. Golar pioneered the conversion of aging LNG tankers into giant refrigerators capable of chilling gas into its liquid form at minus 162 Celsius. By starting up the pilot floating plant in Cameroon, Golar is removing uncertainty about the risks associated with squeezing equipment into a fraction of the space occupied by an LNG plant on land. Success in Cameroon could speed up Golar’s progress in its Equatorial Guinea Fortuna project, where a final investment decision on Fortuna FLNG was delayed after three Chinese banks pulled out last year. All of the 1.2 million tonnes annual output from the Cameroon project, the Hilli Episeyo, has been sold to Gazprom’s trading arm for eight years. The first cargo would be exported in early April using the Galicia Spirit LNG tanker, which Gazprom Marketing & Trading has moored off Cameroon.
Wood, a UK oilfield services provider has been awarded three contracts to perform subsea and flow assurance studies for Australian energy giant Woodside in Senegal, West Africa. These contracts were awarded in support of the proposed SNE Field Development in the Rufisque, Sangomar and Sangomar Deep Offshore blocks. The contracts cover three separate concept definition studies; a targeted flow assurance study to ensure robust and safe design, an engineering assessment to demonstrate the feasibility of a riser and umbilical system at potential floating production storage and offloading facilities, and a subsea flowlines study.
On Thursday 15th March, oil prices settled higher after the International Energy Agency (IEA) warned that oil demand could outstrip supply despite the ramp up in shale output. The U.S. West Texas Intermediate crude April contract was up 49 cents at $61.45 a barrel at 10:00 a.m. ET (14:00 GMT), the ICE Futures Exchange in London Brent oil for May delivery was up 42 cents at $65.31 a barrel.
The IEA increased its global demand growth outlook for 2018 by 100,000 barrels per day (bpd) to 1.5 million bpd. The Organization of the Petroleum Exporting Countries (OPEC) and Russia forecast was raised to 32.4 million bpd from 32.3 million bpd in February and their forecast for non-OPEC supply was unchanged at 1.8 million bpd. The IEA’s forecasts came a day after the OPEC monthly report predicted that non-OPEC producers would boost supply by 1.66 million bpd in 2018. The relentless increase in U.S. crude output, which hit another record in the week ending March 9 by climbing to 10.38 million bpd, up by more than 23% since mid-2016, continues to fuel concerns that OPEC will be unable to reduce the global supply glut, even with production curbs.