Market Report: Victoria Oil & Gas and Aksa Energy connect to power Cameroon

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NIGERIA

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari, during a courtesy visit by the Ambassador of the Republic of Turkey to Nigeria, Mr. Melih Uluren, disclosed Turkey’s interest to extend Nigeria’s trade relations beyond crude oil.

Alhaji Kyari promised to build on the existing trade relations with Turkish Petroleum, adding: “We are looking forward to greater cooperation between NNPC and Turkish Petroleum such that we find businesses in other areas like infrastructure development that both countries will be interested in promoting to the benefit of both countries.” The Ambassador of Turkey to Nigeria said his country was eager to deepen economic ties with Nigeria.

Eland Oil & Gas PLC announced it has achieved the first production from the Early Production Facility (EPF) at the Gbetiokun oilfield. The Gbetiokun field has proven and probable reserves of 82.2 million barrels of oil equivalent and it is the second to be brought online within Eland’s OML 40 license in Nigeria.

Eland said first oil came via EPF on July 31 and, in line with expectations, initial gross production is due to rise to 12,000 barrels of oil per day (bpd) from the Gbetiokun-1 and Gbetiokun-3 wells over the next seven days. The EPF has a nominal capacity of 22,000 bpd which allows for the addition of more wells to be drilled over the coming 12 to 18 months.

Presently, crude oil produced will be taken via tankers from Gbetiokun to an injection point at the main OML 40 export pipeline. Elsewhere in OML 40, Eland is developing the Opuama field which produced 6.5million barrels in 2018.

The firm is also planning operations at the Amobe prospect, a large, clearly defined structure which has an estimated 78 million barrels of resources with operations scheduled to begin in 2019.

CAMEROON

On Monday 29th July, Gaz du Cameroun (GDC), a wholly-owned subsidiary of Victoria Oil & Gas (VOG) signed a non-binding term sheet with Aksa Enerji Uretim (Aksa Energy) to supply up to 25 million standard cubic feet per day of gas for the latter’s proposed power station.

The 150MW power station will be built in Douala, Cameroon near the Bekoko substation, which is close to GDC’s existing gas pipeline network. Earlier this month, Cameroon Minister of Water Resources and Energy, on behalf of the government of the Republic of Cameroon, signed a Memorandum of Understanding (MoU) with Aksa Energy to develop the power plant project.

VOG CEO Ahmet Dik stated: “Considerable progress has been made in our gas-to-power strategy, as evidenced by the term sheet signed with Aksa Energy, one of the largest global independent power producers. Upon commencement, which is planned for late 2020, production levels would dwarf the current level of gas sales and propel VOG into a profitable trajectory of growth which has always been our aim.”

Completion of the term sheet is subject to government approvals and the signing of a Power Purchase Agreement (PPA) by Aksa Energy with Eneo Cameroon (ENEO) or Sonatrel. Some of the key commercial terms between Aksa Energy and GDC include a gas price of $6.75 per metric million British thermal units for a term of 25 years, with an option to extend for an additional five years and 70 percent take or pay component.

With an operational base in the port city of Douala, Gaz du Cameroun is a fully integrated producer and distributor of onshore gas.

GLOBAL

On Thursday, August 1, oil prices fell almost 7 percent as the U.S. threatened to put an additional 10 percent tariff on China. The U.S. West Texas Intermediate crude was down $3.92 at $54.66 per barrel by 1:50 PM ET (17:50 GMT), while Brent slumped $3.64 at $61.41.

The U.S. Energy Information Administration (EIA) in its weekly report stated that crude inventories fell 8.5 million barrels in the week ending July 26, compared to analysts’ expectations for a decrease of 2.6 million barrels.

Oil’s recent rally had been strongly supported by expectations that the Federal Reserve would take more aggressive action to stave off the risks of a global economic slowdown.

The slowdown has raised concerns that demand for oil will decline given economic weakness worldwide. The U.S. said it will on September 1 put a small additional tariff of 10 percent on the remaining $300 billion worth of goods and products coming in from China.

Crude oil futures had tumbled earlier after a 25-basis-point cut on Wednesday, July 31 by the Federal Reserve; thereby disappointing speculators eager for a reduction twice as large from the central bank. The dollar also jumped, giving investors more reason to bail out of a five-day oil rally.

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