At the beginning of this week Brent Crude is trading at $69.68 per barrel, WTI at $64.21 per barrel and natural gas at $3.13 per million BTU (beginning of day 15 January 2018). Here are AOP’s top five stories from the last seven days.
Oil Nears $70, Industry Cautiously Optimistic
The extension of oil production cuts by the Organization of the Petroleum Exporting Countries and key non-member countries seems to be paying off, with oil hovering at just under $70 per barrel on Monday — just below a three-year-high when oil reached $70 per barrel last week.
Traders and analysts are predicting a tighter market, citing the OPEC production cuts and geopolitical risk. Bank of America Merrill Lynch, for example, upgraded its 2018 Brent forecast to $64 per barrel from $56 per barrel on Monday.
Still, there are continued risks for the market, including rising shale production in the United States. The US rig count climbed by 10 last week, the largest increase since June 2017, bringing the total count to 752, according to a Baker Hughes report.
Tullow Oil’s Exploration Program Ramps Up
Africa-focused independent Tullow Oil is ramping up its exploration program, acquiring new exploration licenses in Africa and South America after making a concerted effort to reduce its debts in the last year, according to the Financial Times.
“We are getting back to exploration, which we are good at, but still with a focus on cost control,” said the company’s CEO Paul McDade to the Times.
The company also plans more development drilling offshore Ghana and the Ivory Coast. The company’s trading statement, released last week, showed Tullow generating $500 million of free cash flow in 2017 with net debt expected to fall by $1.3 billion.
Kenya Embraces Natural Gas
Kenya, which has been aggressively pursuing solutions to the country’s demand for power generation, will also incorporate natural gas into the country’s energy mix. Currently, Kenya’s power supply is dominated by renewable resources, mostly geothermal, hydropower and wind, though the government has opted to build its first natural gas-fired power plant in Mombassa, according to Buisness Daily.
A research report released by BMI noted Kenya’s imports of gas, as well as potential domestic gas production, could dramatically improve the country’s access to electricity.
“The introduction of LNG into the country’s energy mix and the potential expansion of domestic gas production could be key to meeting growing demand for energy amid the country’s ambitious target to increase connectivity,” the report said.
Gas Pipeline Explodes in Nigeria
The Nigerian National Petroleum Corporation announced last week an explosion on a major gas pipeline, which supplies gas for about one-sixth of the country’s power sector and to the West Africa Gas Pipeline System.
However, the NNPC also said the explosion did not affect gas supply. The explosion followed restoration of the Escravos-Lagos Pipeline System near Okada.
Rwanda, Mauritius Snag Renewables Funding
The Abu Dhabi Fund for Development and the International Renewable Energy Agency have loaned $25 million for two PV solar projects slated for Mauritius and Rwanda, according to ESI Africa. The projects are being financed through the IRENA/ADFD Project Facility, which was created in 2013 to further renewable energy projects in developing countries.
The solar projects are slated to bring electricity access to low-income communities.