Nigeria National Petroleum Corporation (NNPC) is devising new ways to attract more funding for operators in Nigeria’s oil and gas industry to launch it into a new phase of exploration.
NNPC group managing director Dr. Maikanti Baru explained at the 36th Annual International Conference and Exhibitions of the Nigerian Association of Petroleum Explorationists in Lagos that operators have been grappling with funding challenges which have cut down investment in oil exploration, and that the corporation believed that attracting fresh funds to the industry would enable the country to achieve its target of raising reserves to 40 billion barrels by 2020. Dr. Baru stated that the corporation was willing to work with partners and the industry in that regard, adding that funds could be raised from the Nigerian Content Development Monitoring Board, Local Content Fund or from the Central Bank of Nigeria, seismic exploration support fund for seismic survey in underexplored areas of the country.
He suggested that a revolving special fund could be created for the country’s hydrocarbon exploration on a contributory funding basis. Additionally, Dr. Baru stated that the NNPC would be willing to support such structures and is ready to create a workable framework.
On Thursday, independent oil and gas exploration company, African Petroleum (AP) announced it will relinquish its interests in licenses SL-03-17 and SL-4A-17, where it holds a 100 percent interest, with immediate effect. The relinquishment of the licenses is a result of the decision to not commit to an ultra-deepwater drill program and follows a period of discussion with the Petroleum Directorate of Sierra Leone, during which the parties failed to agree on an extension to the licenses on suitable terms.
AP Chief Executive Officer, Jens Pace stated: “The relinquishment of the blocks is a result of the company’s election not to commit to drilling an ultra-deepwater well at this time, one that would set a world record water depth. Instead, we must focus our attention on areas where we see the best chances of value creation for our shareholders.”
He added that despite efforts to progress its technical work program and secure partners for the Sierra Leone blocks, the industry appetite does not currently exist for ultra-deepwater exploration in this part of the African margin.
“Although it is disappointing to walk away from a technically interesting area, the outcome relieves us of onerous future cost commitments associated with these assets which I believe is the right course of action for the company.”
The company’s Sierra Leone licenses cover a combined net acreage of 3,925km2 and are located to the south of Freetown, offshore Sierra Leone. On December 2, 2015, the company announced that it had entered into the First Extension Period on the SL-03 license. The expiry date of this first extension period was on April 23, 2017. In December 2017 African Petroleum entered into the second extension periods of the SL-03 and SL-4A-10 licenses. As a result of these agreements, the second extension period was supposed to expire on April 23, 2019, for SL-03 and on September 17, 2019, for SL-4A-10 if the subsidiary companies had committed to drill one exploration well in each license area before November 1, 2018.
On Thursday, oil prices dipped on reports that U.S. inventories swelled to their highest level since December 2017, adding to concerns about a global crude glut and worries of oversupply weighed on the market.
The U.S. West Texas Intermediate crude futures dropped 11c at $54.52 a barrel at 9:31 AM ET (14:31 GMT), while Brent crude futures edged forward 7c at $63.55. The U.S. Energy Information Administration (EIA) report for Wednesday showed a rise in crude oil inventories by 4.9 million barrels in the week ending November 16. This is the highest level since December 2017 and the increase was nearly double analysts’ expectations. The EIA report also stated that U.S. crude oil production also stayed at a record 11.7 million barrels per day (bpd).
Investors remain concerned that a global economic slowdown will dampen demand even as key producers mainly the U.S., Saudi Arabia and Russia continue to ramp up production. Iran’s exports have dropped by several hundred thousand bpd in November, suggesting that in newly imposed U.S. sanctions scared off many buyers. The Organization of the Petroleum Exporting Countries (OPEC) is worried about the emergence of a glut that could pull down prices further and is scrambling to reach an agreement with non-OPEC allies led by Russia to cut output levels.
OPEC hopes to push through such a deal when it meets in Vienna on December 6, although OPEC member Iran is expected to resist any voluntary reduction.