Market Report: Modular Refineries In Nigeria Move Ahead
On Tuesday 24th April, Dr. Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), disclosed that the NNPC is securing funding for the completion of a new head office of the Nigerian Petroleum Development Company (NPDC), one of the flagship upstream subsidiary companies of NNPC. Dr. Baru made this disclosure while leading NPDC’s board members on an inspection tour of the new office building in Benin, Edo State. Baru, who described the new head office building as world-class, stated that work on the project has reached completion of about 92% and will continue once the necessary approvals for the project’s re-design have been sought from relevant authorities. Assuring that the project will be completed as soon as possible, Baru stressed that most of what is now left borders around Information and Communication Technology (ICT) facility installations, which he stated are a very vital component for an upstream operator like the NPDC.
On Wednesday 25th April, Dr. Ibe Kachikwu, the Minister of State for Petroleum Resources, disclosed that two modular refineries will be completed and commissioned by December 2018. This was stated during the inspection of the ongoing construction of a modular refinery by Omsa Pillar Astex Company Limited (OPAC Modular Refinery) in Kwale, Delta State. The soon to be completed modular refineries, located in Rivers and Delta states, are among the 38 that were granted licenses to be constructed and operated in the Niger Delta region. Kachikwu reiterated that the Federal Government’s resolve to establish modular refineries was part of a long-term plan to end Nigeria’s importation of petroleum products, as well as to discourage illegal oil bunkering activities in the Niger Delta . The minister expressed the team’s commitment to providing support and evaluating the performance of the on-going construction to ensure that it was in line with the Buhari administration’s vision of encouraging local production of petroleum products. Kachikwu explained that the commissioning of the two modular refineries, which has reached advanced construction stages, would send the right signals to other investors who had doubted the Federal Government’s commitment to invest in the construction of more modular refineries.
A new oil prospect offshore Gabon has been discovered by Australia-based Woodside Petroleum, a prominent player in Africa’s oil and gas exploration activities. Woodside, in its first quarter, reported that the Boudji-1 exploration well in the Likuale (F14) Block1 intersected a 90-metre gross oil and gas column in high-quality hydrocarbon-bearing pre-salt sands. Woodside added that it is conducting a technical assessment of the oil and gas discovery. The Ivela-1 exploration well in the Luna Muetse (E13) Block was completed during that quarter. The well found a 78-metre gross oil column, with further assessment being underway. The Boudji-1 reached a total depth of 5,440 metres and the Ivela-1 reached a total depth of 5,487 metres. In March 2018, PC Gabon Upstream S.A. (PCGUSA), the subsidiary of the state-run oil company in Malaysia Petronas, discovered new oil and gas from the Boudji-1 exploration well in Block F14 (Likuale) in South Gabon. Petronas holds a majority of 50 percent stake in the block, with Woodside and Gabonese government holding 30 percent and 20 percent respectively. Following African governments’ ambitious plans to encourage and discover new oil and gas exploration wells throughout the continent, Woodside, along with other international oil and gas majors, have expressed interest in exploring Africa’s oil and gas prospects. In March 2018, Woodside awarded engineering contracts to the oilfield services provider Wood for Senegal oilfields. Speaking about exploring new oil and gas fields in Africa, Woodside stated that it aims to support African governments in developing important deep-water oil and gas projects.
On Thursday 26th April, oil prices rose, staying within sight of their highest levels in more than three years as concerns about supply disruptions in key oil-producing nations provided support. The US West Texas Intermediate crude futures rose by 9 cents to $68.14 a barrel by 4:00 AM ET (0800GMT), while Brent crude futures rose by 17 cents to $74.18 a barrel. The U.S Energy Information Administration (EIA) weekly report for Wednesday 25th April showed a rise in crude oil inventories by 2.2 million barrels in the week ending April 20th to 429.74 million barrels, while domestic output, driven by shale extraction, climbed by 46,000 barrels per day (bpd) to 10.59 million bpd.
Venezuela, OPEC’s biggest producer in Latin America has been dealing with declining output thereby supporting the rise in oil prices. Venezuela’s crude production has fallen from almost 2.5 million bpd in early 2016 to around 1.5 million bpd presently due to political and economic turmoil. The OPEC deal to cut crude output by 1.8 million bpd to boost oil prices began in January 2017 and is set to expire at the end of 2018 with Saudi Arabia’s de-facto leader pushing for the cuts to extend into 2019. However, the underlying sentiment in the oil market remained positive amid ongoing investor expectations that OPEC-led supply cuts would continue to rid the market of excess supplies.