Market Report: Oil prices lower
On Thursday Dr. Maikanti Baru, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), called for regulatory compliance among operators in the oil and gas industry to enhance growth within the sector. Dr. Baru identified non-compliance to regulations by operators in the oil and gas sector as one of the major factors hindering growth in the industry. He said that compliance with regulations would eliminate crisis in the industry and guarantee the long-term viability of the industry. Dr. Baru urged the Department of Petroleum Resources to ensure effective enforcement to achieve total compliance in the sector for growth and
Penspen, a leading global provider of engineering and project management announced that it has been awarded a contract to execute Phase I of the Front-End Engineering and Design (FEED) contract of the proposed gas pipeline between Nigeria and Morocco. The FEED contract for the 5,700 km gas pipeline was awarded by The Office National des Hydrocarbures et des Mines and the NNPC. The FEED Phase I consists of a detailed review of the feasibility study results and in-depth evaluation of the gas demand and supply study. At the end of the study, key detailed outcomes will help the client prepare for the second phase of the FEED, which is expected to lead to a final investment decision.
Ophir Energy Plc has received notification from the Equatorial Guinea Ministry of Mines and Hydrocarbons that the Block R Licence, which contains the Fortuna gas discovery, will not be extended following the expiry of the license on December 31, 2018.
Fortuna sits within the Block R licence, offshore Equatorial Guinea which is located in the south-eastern part of the Niger Delta complex. Ophir held an 80 percent operated interest in Block R.The company said that as a consequence of the license expiry, there would be an additional non-cash impairment of the asset, expected to be around $300 million. The Fortuna project entered FEED in July 2015. It has been working to find financing and make a final investment decision on the Fortuna FLNG project for a while now but has suffered a number of setbacks in the process. As previously reported, Equatorial Guinea authorities allegedly gave Ophir an ultimatum to either find financing by December and make the final investment decision for the long-stalled Fortuna FLNG project, or risk losing the acreage there. The Fortuna FLNG development also suffered a setback in Q1 2018 with the dissolution of OneLNG and the subsequent effective withdrawal of Schlumberger from the Fortuna project.
On Thursday, Aker Energy, the operator of the Deepwater Tano Cape Three Points (DWT/CTP) block announced that it is about to complete a successful drilling operation of the Pecan-4A appraisal well offshore Ghana. The well was drilled at the Pecan field in the DWT/CTP block approximately 166 kilometres southwest of Takoradi in Ghana, to a vertical depth of 4,870 meters in 2,667 meters of water. The DWT/CTP block offshore Ghana contains seven discoveries, of which Pecan is the main discovery. The main purpose of Pecan-4A appraisal well was to confirm Aker Energy’s understanding of the geology in the area and to identify deep oil- water contact in the Pecan reservoir and this was successfully proven. Based on existing subsurface data from seismic, wells drilled and an analysis of the Pecan-4A well result, the existing discoveries are estimated to contain gross contingent resources (2C) of 450 – 550 million barrels of oil equivalent (MMBOE). Aker Energy estimates that with the next two appraisal wells to be drilled, the total volumes to be included in a Plan of Development (POD) have the potential to increase to between 600 – 1,000 MMBOE. In addition, there are identified multiple well targets to be drilled as part of a greater area development after submission of the POD. Aker Energy’s partners are LUKOIL (38 percent), the Ghana National Petroleum Corporation (GNPC) (10 percent) and Fueltrade (2 percent).
On Thursday, oil prices were lower, giving back earlier gains as optimism over U.S.-China trade talks wore off. The U.S. West Texas Intermediate crude futures fell 38 cents, or 0.73 percent, to $51.98 at 6:04 AM ET (11:04 GMT), while Brent oil traded down 39 cents, or 0.63 percent, at $61.05. The U.S. Energy Information Administration for Wednesday showed a fall in crude inventories by 1.68 million barrels for the week ended Jan 4, about a third less than the 2.4 million-barrel draw forecasted by analysts.
OPEC key player – Saudi Arabia has vowed to “stabilise” the market and also provide support for oil prices. Saudi Energy Minister Khalid al-Falih said actions taking by the OPEC & its alliance were starting to bring the market back after a near 40 percent drop from 2018 highs. Falih said Saudi Arabia was pumping about 800,000 barrels less a day from the record high of 10.2 million barrels per day in November 2018. However, increases in OPEC cuts have done nothing to make a dent in U.S. oil supply, which rose by 2 million barrels per day (bpd) in 2018 to a world record 11.7 million bpd. Meanwhile, Iranian Oil Minister Bijan Zanganeh said he would not comply with the U.S. oil sanctions that were imposed in October 2018, believing the sanctions against Iran to be illegal.