Market report: Nigeria’s proven gas reserves rise to 202 tcf

Image: Ventures Africa

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 announced on October 23 that the approval for the construction of the Ikwe-Onna modular Refinery, to be located in Ikwe, Onna Local Council of Akwa Ibom State. The refinery project under the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, will be a flagship for modular refineries in the country. The modular refinery will be sited on 50.1 hectares of land and on completion will produce about 5,000 barrels of oil per day (bpd) as a start-up, which will be increased up to 20,000 bpd in the medium-term and 100,000 bpd in the long-term.

The Nigerian National Petroleum Corporation (NNPC) revealed that Nigeria’s current proven gas reserve has risen to 202 trillion cubic feet (tcf) from the initial figure of 199 tcf and its unproven gas reserves are about 600 tcf.

This was disclosed by the Group Managing Director of NNPC, Dr. Maikanti Baru, who also revealed that on the average, Nigeria’s current gas production is in the region of 8.5 billion standard cubic feet per day. Dr. Baru said the country had significantly increased domestic gas supply and reformed the commercial framework for gas by reviewing the domestic gas price to export parity, as well as developed standard gas supply agreements. He reiterated that the NNPC has developed a clear-cut strategy for growing gas supply to meet the unprecedented growth in domestic gas demand by completing its short-term gas supply projects and increasing supply from its subsidiary – the 
Nigerian Petroleum Development Company Oredo, Utorogu and Odidi re-entry projects

GAMBIA

FAR Limited announced that it has started drilling the Samo-1 exploration well in block A2, offshore Gambia. The Stena Drillmax arrived on site on October 21, and after standard pre-drill operations, the well was successfully spudded.

The Samo-1 well will be drilled in 1,000m of water depth to a planned depth of approximately 3,100m. The Samo Prospect has two key reservoir intervals and is assessed to contain a combined prospective resource of 825 million barrels of oil. Drilling will be followed by wireline logging.

Good quality reservoirs have been interpreted from 3D seismic data at both levels at the proposed Samo-1 well location and the well is being drilled near the crest of the structure. FAR is the operator with a 40 percent interest in blocks A2 and A5.

“This is a very exciting time for FAR as we embark on our first exploration drilling program since the 11 successful wells drilled in neighboring Senegal. The Samo-1 well is the first well to be drilled offshore Gambia for 40 years and because of this it is attracting wide international attention,” FAR Managing Director, Cath Norman said.

GLOBAL

On October 25 oil prices traded lower amid sharp selloffs in global stock markets. The U.S. West Texas Intermediate Crude Oil Futures for December delivery lost 0.7% to trade at $66.38 per barrel at 1:38 AM ET (05:38 GMT), while Brent Oil Futures for December delivery traded 0.7 percent lower at $75.72 a barrel. The U.S. Energy Information Administration weekly report for October 24 showed an increase in crude stockpiles by 6.3 million barrels in the week ending October 19, compared with analyst expectations for an increase of 3.7 million barrels. The U.S. stockpiles have also risen for the fifth consecutive week, hitting a record high of 11.2 million bpd.

Oil prices rose after OPEC signaled it may have to return to production cuts as global inventories begin climbing. Saudi Energy Minister, Khalid Al-Falih said that there could be a need for intervention to reduce oil stockpiles after increases in recent months, adding that intervention might be required to return to the stability reached after “tireless efforts during the past year and a half.” Despite rising stocks, oil marketers are concerned about the impact of U.S. sanctions on Iranian crude exports, which kick in from November 4. Bowing to pressure from Washington, Chinese oil majors Sinopec and China National Petroleum Corporation have yet to buy any oil from Iran for November because of concerns that sanctions violations could hurt their operations. China is Iran’s biggest oil customer. Halting oil Iranian imports means that China’s many refiners will have to seek alternative supplies.