Market Report: Oil prices continue to fall
On Tuesday, Dr. Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), commended Saudi Arabia’s recent decision to cut crude oil production by one million barrels per day (bpd) from December 2018.
Speaking at a Global Business Leader’s Panel Session at the 21st Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), Dr. Baru stated that the move would significantly stabilize the energy market. He noted that, given Nigeria’s production constraints, it is important that the oil price does not fall below $70 and that NNPC would deploy cutting-edge technology to enhance its operations and maximize value across its businesses value-chain. Dr. Baru added that the corporation was working towards utilizing technology for early detection of pipeline vandalized spots and quick response systems which would significantly save costs, reduce potential fatalities and safeguard the environment. Dr. Baru further added that, in its efforts to survive in the long run, NNPC would require strong investment and commitment to technological research and development.
Dr. Baru expressed that the corporation is set to control more than 14 percent local market share of fuel supply in Nigeria. He stated that NNPC currently holds a 14 percent market share of the downstream sector and has expanded its retail outlets to achieve its objectives.
Dr. Baru added that the NNPC has recently completed the rehabilitation and restoration of the vandalized 36” and 42” QIT and 48” Forcados Oil Terminal (FOT) Export pipelines leading to the resumption of production operations. He stated that the NNPC is expanding and integrating gas pipeline network systems to meet the unprecedented domestic gas demand and that significant progress has been recorded in the execution of key on-going gas pipeline infrastructure projects (ELPS II, OB3).
He assured that the ongoing transformation is not only limited to the downstream sector but that the NNPC has kick-started the process of rebranding some critical midstream entities (NGC, NGMC, NGPTC, GPIC and NOFS), not only creating new logos for these companies but repositioning them for global competitiveness in line with the 12 Business Focus Areas of the administration. Dr. Baru strongly believes with all these, the NNPC will impact positively on the Nigerian economy in view of the role of the sector as the number one foreign exchange earner for the country.
Australian oil company FAR Limited was granted a license to test-drill Gambia’s prospective oil well blocks A2 and A5, and has received a further six-month extension to do a thorough evaluation of the SAMO-1 results. The statement came after FAR and Petronas announced that their first test-drill on SAMO-1 failed, triggering huge slump on the companies’ shares. The oil and gas explorers drilled the wireline logging at SAMO-1 up to the total depth of 3,240m. The drilling, which took almost three weeks, between October and November 2018, was unsuccessful. The offshore drilling started on October 22 to November 9, 2018. The geological assessments of the drilled well have indicated the presence of all the key components of Hydrocarbons but the preliminary results of the drilling did not find any oil and gas deposits at this specific location, thereby indicating an unsuccessful well. The Ministry of Petroleum and Energy in collaboration with Gambia National Petroleum Company – GNPC will continue to support FAR and its joint venture partners in their exploration efforts. The Ministry has been tasked to continue to provide regular information on exploration activities in due course.
On Thursday November 15, oil prices continued to fall as data revealed crude inventories have been rising more than expected. The U.S. West Texas Intermediate for December delivery traded 0.6 percent higher at $56.77 per barrel at 1:08 AM ET (05:08 GMT), while Brent Oil Futures for January 2019 delivery gained 0.6 percent at $67.04 a barrel. The U.S. Energy Information Administration data for Wednesday November 14, showed a rise in crude oil inventories by 10.27 million barrels in the week ending November 9, compared to analyst expectations of a build of just 3.2 million barrels.
OPEC stated that its partners were discussing a 1.4 million barrels per day (bpd) cut in output and is scheduled to meet on December 6 in Vienna for its policy-setting meeting. OPEC is expected to agree on cuts of around 1 million bpd or more from its current production of above 33 million bpd. Total U.S. crude production now stands at a record 11.7 million bpd, making the nation the world’s biggest oil producer ahead of Russia and Saudi Arabia.