The Buzz: This Week in Africa

At the close of this week Brent Crude is trading at $53.44 per barrel, WTI at $50.19 per barrel and natural gas at $3.25 per million BTU (beginning of day 19 May 2017). Here are AOP’s top five stories from the last seven days.

Equatorial Guinea gains support for OPEC bid

Saudi Arabia has endorsed Equatorial Guinea’s bid to join the Organization of Petroleum Exporting Countries (OPEC). Validation from Saudi Arabia, the cartel’s largest and most influential member, is a crucial step for the African country’s successful entry into OPEC.

The support comes after Equatorial Guinea’s President Teodoro Obiang Nguema Mbasogo met with Saudi Arabia’s King Salman bin Abdulaziz in a state visit in Juba in early May. Equatorial Guinea has already demonstrated support for OPEC, as it was one of the non-member countries that agreed to reduce output in December in order to stabilize the oil markets.

South Africa to award shale licenses

South Africa could award the country’s first exploration licenses for shale gas by the end of September, according to a Reuters report.

The round was delayed after push-back from environmentalists, who say the plans could damage the semi-arid Karoo basin region, which is a home to rare animal species such as the mountain zebra. The companies who made applications for the basin include Royal Dutch Shell, Falcon Oil and Gas and Bundu Gas & Oil.

Oil prices fall on rising U.S. shale production

On Thursday 18th of May, oil prices fell due to the rising U.S. shale production despite the output cut by major producers to reduce global glut. U.S. crude was down 16 cents at $48.91 a barrel, while Brent 17 cents lower at $52.04 by 0837 GMT. The U.S. Energy Information Administration report for Wednesday 17th of May showed a weekly decline in crude oil inventories for the sixth time in a row by 1.8 million barrels in the week ending May 12. The decrease is below the expected drop of 2.3 million barrels, thus, showing that the efforts of major oil producers to rebalance global oil supply and demand are hampered by the increased production of U.S. shale. In November last year, OPEC/non-OPEC members, including Russia agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels. A final decision on whether or not to extend the deal beyond June will be taken on May 25.

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Kenya strives to become oil hub

Kenya Pipeline Company began construction on a SH 1.7 billion (USD $16.5 million) oil jetty this month in Kisumu, which is targeting the growing petroleum market in East Africa’s lake region, particularly in Kenya, Uganda, Rwanda, Burundi and Tanzania, according to the Daily Nation.

The project should increase throughput in Kismu by 1 billion liters per year in the project’s first phase. The completion of the jetty should take about six months to finish.

Nigeria signs $6 billion oil swap deal

Nigeria’s national oil company, the Nigerian National Petroleum Corporation, signed today a $6 billion deal to swap crude oil with 10 groups of oil trading firms. The deal will see Nigeria swap 330,000 barrels per day of crude oil for petrol and diesel.

The deal is come into effect July 1, 2017, according to Vangaurd, and comes as Nigeria, Africa’s largest oil and gas producer, still struggles with a lack of refining capacity.

Uganda moves forward with refinery, exploration licenses

After several delays on Uganda’s plans for a new oil refinery, the country’s Ministry of Energy said this week that it has narrowed the tender to develop the $2.5 billion refinery to two companies. After negotiations, the winner for development of the project should be announced by the end of 2017.

Additionally, the country announced plans to award three exploration licenses next month, after four companies were invited to begin negotiations for production sharing agreements in August 2016 — WalterSmithPetroman Oil Limited, Oranto Petroleum International, Niger Delta Petroleum Resources and Australia’s Armour Energy Limited, according to Reuters.