Market Report: NNPC focus on reducing harmful emissions

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

Nigerian National Petroleum Corporation (NNPC) said that the elimination of gas flare remains its priority, stressing that the move is in view of achieving a pollution-free environment to future generations of Nigerians.

The Group General Manager NNPC, Dr. Maikanti Baru urged members of staff to maintain the NNPC business culture of “working not to harm the people or the environment.” Speaking on the theme of this year’s World Environment Day, “Air Pollution”, Dr. Baru said NNPC had put in place a lot of measures to mitigate the impact of oil and gas exploration activities on the environment.

“As a corporate organization, NNPC is determined to reducing harmful emissions that can impact air quality and the well-being of God’s creatures in all aspects of our operations. We are committed to finding ways to fully commercialize our natural gas resources to eliminate gas flare in all existing future gas projects.” Dr. Baru noted that air pollution was a major issue in today’s industrial world that needed all hands to be on deck to tackle.

The Vice President (VP), Prof. Yemi Osinbajo, has said that the Liquefied Petroleum Gas (LPG), sub-sector can create two million direct and indirect jobs in Nigeria, while commissioning the Techno Oil LPG Cylinder Manufacturing Plant in Lekki, Lagos.

The VP said through a range of interventions and policy implementation, the federal government will significantly improve domestic and industrial utilisation of LPG in the country.

He stated: “The goal is to achieve five million metric tonnes (5,000,000 MT) of domestic, commercial and industrial LPG utilisation in 10 years. Specifically, for household cooking, we are targeting a 40 percent adoption rate (i.e. 13.8 million households) in 5 years, and 73 percent adoption in 10 years (33.3 million households).”

The VP noted some progress such as the implementation of the coordination reforms, including the creation of a dedicated project management office and the removal of 5 percent VAT from the domestic pricing of LPG, as a first step in giving domestic output an advantage against imported products.

He said that the development of a marketer cylinder owned model instead of the current consumer cylinder owned model will eliminate the consumers’ up-front purchase of LPG cylinders which, in some cases, are substandard, replacing it with a cylinder exchange, whereby the consumer only pays for the content.

CONGO

Lukoil announced it has concluded an agreement with New Age M12 Holdings Limited to acquire a 25 percent interest in the Marine XII license, in the Republic of Congo, for $800 million subject to approval by the government.

The license covers five discovered fields thought to contain 1.3 billion barrels of oil equivalent of proved and probable (2P) reserves. Two of these fields, Nene and Litchendjili, currently produce 28,000 barrels of oil and gas condensate per day and 1.7 million cubic meters per day of marketable gas.

The Marine XII license is based on a production sharing contract. Eni is the project’s operator with a 65 percent stake, while state company Société Nationale des Pétroles du Congo holds a 10 percent interest.

GLOBAL

On Thursday 13th June, oil prices surged as suspected attacks on tankers in the Gulf of Oman eclipsed the fact that OPEC cut its forecast for global demand and recognized “significant downside risks”. The U. S. West Texas Intermediate crude futures jumped $2.06 to $53.20 a barrel at 8:31 AM ET (12:31 GMT), while Brent crude futures soared $2.42 to $62.39.

The U.S. Energy Information Agency in its weekly report for Wednesday 12th June showed a rise in crude oil inventories by 2.21 million barrels in the week ending June 7, whereas the market had forecast a crude stockpile draw of 480,000 million barrels.

The reports of suspected attacks on two tankers near the Strait of Hormuz, a major strategic waterway through which a fifth of global oil consumption passes from Middle East producers, sent prices soaring. Coming after attacks on four tankers near the Persian Gulf in May, this has raised concerns over potential disruptions to oil flows.

Oil had its worst monthly performance of 2019 so far in May as traders shifted their focus from tightening supply (in the form of OPEC-led output cuts) to weakening demand, exacerbated by concerns that the ongoing trade dispute between the U.S. and China will dent the global economy.

In its monthly report released Thursday 13th June, OPEC cut its 2019 outlook for global demand growth from 1.21 million barrels per day (bpd) to 1.14 million bpd and noted that significant downside risks from escalating trade disputes spilling over to global demand growth remain. OPEC joined the U.S. Energy Information Agency, which also lowered its global demand forecast earlier this week.