Market Report: NNPC to work with National Assembly for petroleum legislation

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 Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari has expressed the determination of the Federal Government to work with the National Assembly to pass the petroleum legislation. The petroleum legislation is considered capable of providing a win-win scenario for all players in the Oil and Gas Industry.

Alhaji Kyari explained that for Nigeria to make the most of the Oil and Gas Industry, passage of the petroleum legislation was imperative as the bill has the prospect to guarantee a robust fiscal regime, protect the environment, ensure development of host communities, ensure proper alignment with other sectors and encourage investors to expand their investments in Nigeria.

Also, the GMD assured that the NNPC was working round the clock to ensure energy security for the nation, revealing that the Abuja-Kaduna-Kano pipeline (AKK) would be delivered to promote the growth of petrochemical companies in the country.

He also assured that the domestic gas obligation would be delivered, stating that there are a lot of ongoing gas projects that upon completion would deliver huge value for the national economy. Alhaji Kyari assured investors that the Federal Government had put in place efficient security strategies to mitigate security concerns around oil and gas installations in the country.

SENEGAL

Senegal’s oil minister, Mahamadou Makhtar Cisse announced a delayed launch of the oil and gas licensing round as a result of delays in contract document finalization. The oil and gas licensing round was scheduled for Wednesday, 9th October but has been moved to November 4, 2019.

There are two large fields in Senegal currently being developed – Australia’s Woodside Energy is developing the SNE field and BP the Greater Tortue Ahmeyim project. Woodside’s general manager for Senegal reiterated that the company expected to take a Final Investment Decision (FID) on phase one of the SNE field by December 2019, and propose to commercialize the first oil in 2022.

This project requires an estimated capital expenditure of around $3 billion. Geraud Moussarie, BP’s Senegal country manager, said their Mauritania-Senegal offshore discovery, which has already reached FID. The new licensing round will be open for six months and will seek developers for ten to twelve offshore fields, Mamadou Faye, Managing Director of Petrosen told Reuters.

He said some of the new oil production would be sold and refined locally by Societe Africaine de Raffinage (SAR)- Senegal’s refinery. The refinery will be upgraded to process up to 1.6 million tonnes of oil a year from its current circa 1.2 million tonnes – a project expected to cost $70 million.

SAR eventually plans to reach a capacity of 2.5 to 3 million tonnes a year. Faye said the state was also considering building a second larger refinery capable of refining complex crudes at a cost of billions of dollars.

GLOBAL

On Thursday 10th October, oil prices edged higher after the Organization of Petroleum Exporting Countries (OPEC) leaves 2020 oil-demand growth forecast unchanged, cuts non-OPEC supply projections The U.S. West Texas Intermediate crude prices rose 96 cents at $53.55 per barrel, while Brent crude rose 78 cents at $59.10.

The U.S. Energy Information Administration weekly report for Wednesday 9th October showed a rise in crude inventories by about 2.9 million barrels for the week ending October 4, against analysts’ expectation of a rise of 1.4 million barrels.

Oil prices jumped toward the close of the trading session after it was reported that the United States and China could announce a limited trade deal, averting a further escalation in trade tensions.

Prices were also aided by OPEC upholding its forecast for global oil demand in 2020 while indicating it expects supply from non-OPEC sources to grow slightly less than previously thought. OPEC, Russia and other producers, an alliance known as OPEC+ have since January 2019 implemented a deal to cut oil output by 1.2 million barrels per day to support the market.

The pact runs to March 2020; however, the producers are to meet on December 5-6 to set policy. Crude prices were also supported by reports that Russia and Saudi Arabia will sign more than $2 billion worth of deals and discuss the OPEC+ oil output agreement during President Vladimir Putin’s visit to Saudi Arabia in the coming weeks.