Market Report: Subsea 7 awarded contract on Jubilee field

Image: World Economic Forum

The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Download the full report here. Learn more about Gladius Commodities at www.gladiuscommodities.com.

Nigeria

The federal government plans to announce a policy that will require locally operating firms to refine at least 20 percent of the crude oil they produce in Nigeria.

This was announced by Dr. Ibe Kachikwu, Minister of State for Petroleum Resources, at a sod turning ceremony of a modular refinery being developed by Waltersmith Refining and Petrochemical Company Limited in Imo State, on October 8.

He added that government remained committed to completely revamping the nation’s four refineries in Port Harcourt, Warri and Kaduna by 2019, with a target of processing about 500,000 barrels per day (bpd).

On October 11, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, commended the leadership of the National Union of Petroleum and Natural Gas Workers (NUPENG), and the Petroleum and Natural Gas Senior Staff Association, for demonstrating uncommon commitment to the vision of NNPC management in ensuring a steady and uninterrupted supply of petroleum products across the country.

Dr. Baru made this commendation at the 4th Quadrennial Delegates’ Conference of the NUPENG, NNPC Group Executive Council in Abuja.

He expressed satisfaction that unionism at the NNPC has moved away from confrontation, strikes and threats of industrial actions to pragmatic consultations, and praised the oil workers for their courage to embrace change.

Ghana

UK engineering, construction, and services company Subsea 7 was awarded a contract by Tullow on the Jubilee field, offshore Ghana, in October.

The contract is worth between $50 million and $150 million.

The engineering, procurement, construction and installation (EPCI) contract was awarded under a consortium comprising Subsea 7 Volta Contractors and NOV Oil & Gas Services Ghana.

Subsea 7’s scope of work will include the installation of the Buoy Turret Loading (BTL) system from APL, a group within NOV Completion & Production Solutions, with associated suction piles and EPCI activities, including two offloading lines for the BTL and the additional hang-off platform and skid for the floating production storage and offloading unit, which is moored in water depths of 1,000m.

Much of the fabrication will be completed in Ghana, with offshore installation taking place in 2020.

Global

On Thursday, oil prices tumbled about 3 percent after another massive weekly build in U.S. crude stocks and the Organization of the Petroleum Exporting Countries’ (OPEC’s) suggestions the global market could be in a glut by next year, sending oil prices deeper into the red.

West Texas Intermediate crude futures was down 2.71% at $71.19, while Brent crude futures fell 2.85% at $80.72.

The U.S. Energy Information Administration weekly report for Wednesday October 10, showed a rise in crude oil inventories by 5.987 million barrels in the week ending October 5, compared to forecasts for a stockpile build of 2.62 million barrels.

Oil prices had slumped to the lowest levels in two weeks ahead of the report, as global stock markets tumbled and trader bearishness was increased by U.S. crude stockpiles rising more than expected.

Prices were also hit after OPEC cut its forecast for global demand growth for oil next year. In its monthly report, OPEC said it now expects global oil demand to grow by 1.54 million bpd, down 80,000 bpd from its last forecast, citing trade disputes and volatility in emerging markets.

OPEC also said several members raised their oil output in September to offset a drop in production from Iran, where U.S. sanctions are cutting into the country’s exports. Also, energy companies in the U.S. Gulf Coast of Mexico had turned off daily production of about 670,800 bpd of oil and 726 million cubic feet of natural gas, due to Hurricane Michael.

The Bureau of Safety and Environmental Enforcement stated that roughly 42 percent of daily crude output in the Gulf has been cut since October 9.