Market Report: SNE field on track for first oil
Nigerian National Petroleum Corporation (NNPC) has reiterated its determination to establish two condensate refineries in the country within two years.
Dr. Maikanti Baru, the Group Managing Director, NNPC speaking at the ground breaking ceremony of Waltersmith’s 5,000 barrel per day (bpd) modular refinery said the refineries would be located in Imo and Delta States.
Dr. Baru said the corporation encourages the building of modular refineries especially in the oil-producing areas of the country to supplement the production of the major refineries. The Executive Secretary of Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, also said the board has 30 percent equity in the refinery as a way to encourage local investors’ participation in the industry and to take advantage of the funds provided by the NCDMB to build more modular refineries. The Chairman and Chief Executive Officer of Waltersmith Refining and Petrochemical Company Limited, Abdulrazaq Isa, said the company would in 18 months complete the building of the 5,000 bpd capacity refinery and would ultimately expand it to 30,000 bpd. Mr. Isa also said “Waltersmith would be in a position to contribute about 271 million litres of refined products (diesel, kerosene, HPFO and naphtha) annually to the Nigerian economy, serve as an import substitution for meeting domestic demand for foreign exchange from the country’s treasury to import these products.
The 5,000bpd refinery which we are breaking ground today is the first phase of a much larger development. Ultimately, we plan to increase the capacity to 30,000bpd to process additional products including petrol (PMS) and jet fuel. We have already executed a MoU with PCC of China towards the installation of the additional capacity within 3 years, after startup of the 5,000bpd modular refinery in December 2020”.
He commended the federal government and NNPC for encouraging and promoting indigenous participation in the entire value chain of the oil and gas industry.
On October 2 Fitch Solutions Macro Research stated in a new report that Senegal’s deepwater SNE field is on track for first oil in 2022.
The company stated that: “Key 2018 milestones include the submittal of the environmental and social impact assessment and the evaluation report outlining commerciality and FEED studies are about to be signed and submission and approval of the development and exploitation plan is expected before the end of 2018 with FID due in H2 2019”.
Fitch Solutions Macro Research said unlocking Senegal’s first oil field will “contribute greatly” to the expansion of the oil and gas industry in the frontier Mauritania-Senegal-Guinea-Bissau basin.
According to operator Cairn Energy, the SNE field, which the report confirms was the world’s largest oil discovery in 2014, covers an area of around 135 square miles. Cairn has successfully laid the foundation for a multi-phase development plan of the asset. Fitch Solutions Macro Research highlighted in the report that Phase 1 would target 240 million barrels via 26 subsea wells using an FPSO with gross production at 100,000 bpd. Phase 2 and 3 will aim to recover 130 million barrels and 120 million barrels respectively with an additional 32 to 34 wells. Phase 2 and 3 are anticipated to begin two to four years after Phase 1.
There are also sizeable nearby discoveries in the Sangomar Deep Block including the FAN series of wells which are all candidates for tieback to the SNE hub.
On Thursday, oil prices slipped from four-year highs a day after data pointed to the largest build in U.S. crude stockpiles since March 2017 and reports that Russia and Saudi Arabia reached a private agreement in September to increase oil output. The U.S. West Texas Intermediate crude futures for November delivery fell 0.82 percent at $75.78 a barrel at 10:24 AM ET (14:24 GMT), while Brent Oil Futures for December delivery also dropped 0.44 percent at $85.90 a barrel. The U.S. Energy Information Administration weekly report for Wednesday October, 3 showed a rise in crude inventories by about 8 million barrels in the week ending September 28.
Reuters reported that after the OPEC meeting in September 2018 where it decided not to raise output, its de facto leader Saudi Arabia struck a private deal to grow their oil production from September through December as crude closed in on $80 a barrel. The agreement came after the U.S. blamed OPEC for high crude prices and urged members to boost output to push down prices. Oil prices have been marching higher, hitting four-year highs this week amid expectations for tighter markets from November as the U.S. prepares to re-impose sanctions on Iran on Nov. 4, hitting the country’s oil exports. The impending loss of supply from Iran added to fears that OPEC and other major non-OPEC producers, including Russia, have little spare capacity to boost output in order to offset a shortfall in global supply.