On Wednesday February 27, Dr. Maikanti Baru, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), called on investors to utilize the over $48 billion investment opportunities available in the upcoming capital projects within Nigeria’s oil and gas industry. Dr. Baru said the continent’s energy outlook was positive amid difficult operating and economic headwinds. He explained that over 41 billion barrels of oil and 319 trillion cubic feet (tcf) of gas were yet to be discovered in sub- Saharan Africa alone, while between 2008 and 2017, exploratory success in the sub-region was at least 45%. He added that there has been a surge in the capital expenditure (CAPEX) across Africa’s oil and gas sector, with close to $194 billion earmarked to be spent between 2018 and 2025 on 93 upcoming oil and gas fields in Africa.
Dr. Baru observed that 23.8% of the CAPEX in Africa would be spent in Mozambique, 11.3% in Angola and around 29.2% would be spent in Tanzania, Senegal, Mauritania, Uganda, Egypt, Algeria and Kenya combined. He noted that with over 14 oil producing countries, Africa currently accounts for 7.5% (126.5 billion barrels of crude oil) and 7.1% (488 tcf of gas) of global proven oil and gas reserves respectively. He maintained that in terms of production, the continent accounted for 8.7% of global oil production and 6.1% of global gas production, even as it consumed 4 million barrels of oil per day (bpd) and 13.7 billion cubic standard feet of gas per day. Dr. Baru observed that the NNPC’s Frontier Exploration Service was currently drilling the Kolmani River- 2 Well, where a desktop estimate revealed that about 400 billion cubic feet of gas is expected to be encountered. He stressed that several new frontiers for exploration opportunities abound in Nigeria, even as offshore discoveries in the country have mostly been limited to between 1,000 – 1,500m of water depth.
On Monday February 25, MODEC, Inc. announced that its subsidiary, MODEC International Inc., had been awarded a contract by Woodside Energy (Senegal) B.V., as Operator of the SNE Field Development, for a Floating Production Storage and Offloading (FPSO) vessel for Senegalese waters.
Under the contract, MODEC will perform Front-End Engineering Design for the FPSO and, subject to a final investment decision on the project in 2019, will be responsible for the supply, charter and operations of the FPSO. The SNE deep-water oil field is expected to be Senegal’s first offshore oil development.
The field is located within the Sangomar Deep Offshore permit area, approximately 100km south of Dakar, Senegal. The FPSO will be designed to produce around 100,000 bpd with first oil production targeted in 2022. The FPSO will be moored in water depths of approximately 800m.
In recent years, numerous offshore oil fields have been discovered in West Africa, and MODEC considers this as one of its most important core regions. MODEC currently operates three FPSOs in Ghana and Côte d’Ivoire and has supplied another seven floating production facilities, such as FPSO / FSO / Tension Leg Platform which have been installed in Angola, Cameroon, Equatorial Guinea, Gabon and Nigeria.
The SNE field is held by Woodside Energy (Senegal) B.V. (35%) as Operator, Cairn Energy Senegal (40%), FAR Limited (15%) and PETROSEN (10%) under a Production Sharing Contract (PSC).
On Thursday February 28, oil prices edged down in Asia amid signs of surging U.S. crude oil production. The U.S. West Texas Intermediate crude futures for April delivery on the New York Mercantile Exchange tacked on 17c to $57.12 a barrel at 9:10 AM ET (14:10 GMT), while Brent oil for May delivery was at $66.52 a barrel.
The U.S. Energy Information Administration’s weekly report for Wednesday, February 27, showed a fall in crude oil inventories by 8.65 million barrels in the week ending February 22, compared to forecasts for a build of 2.84 million.
It was the first U.S. crude stockpile drop in six weeks, coming after the production cuts by OPEC. Oil prices were dragged down by the fact that U.S. crude oil production continues to rise. It has risen by more than 2 million bpd over the last year, to an unprecedented 12.1 million bpd, according to EIA data released this week.
However, oil markets remain relatively well supported by supply cuts by OPEC and its allies agreed late 2018 to reduce output by 1.2 million bpd to prop up prices. But, the EIA expects the rise in U.S. output will more than offset the barrels taken off the market.
Additionally, the weaker-than-expected Chinese Purchasing Manager’s Index data also weighed on oil prices. Data on Thursday showed that the official Purchasing Manager’s fell in February. It is the latest sign that China’s economy is still losing steam after last year’s growth cooled to a nearly 30-year low.