Market report: Oil sales set to pivot
Dr Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) urged partners involved in the Direct Sale Direct Purchase (DSDP) scheme to patronize the NNPC shipping subsidiary, NIDAS, in order to ensure its sustained profitability.
DSDP is a scheme by which NNPC sells crude oil directly to offshore refiners and receives product from same in return. Dr Baru was elated by the giant profitability strides recorded by NNPC/NIDAS no sooner than it launched into international freight business.
He encouraged them to redouble their efforts towards sustaining the current tempo which is in line with the profitability drive of the corporation. NIDAS Ltd Managing Director, Mr Lawal Sade, lauded Dr Baru for his support and efforts in revamping the company, which he said, had been moribund prior to his assumption of office.
Sade further stated that the company would work harder to sustain the tempo by engaging and soliciting the support of NNPC outfits and international partners towards improving the corporation’s bottom line.
Additionally, the Nigerian Maritime Administration and Safety Agency (NIMASA) announced it has achieved a level of success on the discussions around the migration from Free On Board (FOB) to Cost, Insurance and Freight (CIF) incoterms for crude oil sales. The agency added that this migration would enable indigenous ship-owners and the economy to benefit from the nation’s crude oil trades.
NIMASA said discussions were ongoing with the NNPC regarding the migration and believe that with time a breakthrough will be achieved to ensure that some Nigerian ship-owners get the right to lift our crude oil. NNPC has expressed its readiness in building additional Independent Power Plants (IPPs) in Abuja, Kaduna and Kano, which is expected to add 4,000 megawatts of power to stabilise the national grid.
NNPC would also construct a Fertiliser Project in Brass, Bayelsa State. The Gas and Power Investment Company (GPIC) was established as a subsidiary under the Gas and Power Directorate to enable the corporation to monetize the abundant gas resources in the Country for the benefit of the nation’s economy.
The Chief Financial Officer of NNPC and Chairman of the Board of GPIC, Mr. Isiaka Abdulrazaq stated the GPIC was a very strategic company through which the NNPC would create more value for the country, stressing that by the time the IPPs come on stream in Abuja, Kaduna and Kano, the Small Medium Enterprises (SMEs) in the areas would benefit from them.
On 5 March, Aker Energy, the operator of the Deepwater Tano Cape Three Points (DWT/CTP) block, reported that it has found oil in the Pecan South-1A well offshore Ghana.
The Pecan South-1A well was drilled south of the main Pecan field in the DWT/CTP block. Aker Energy is in the process of analysing the well results and will commence further drilling in order to verify the volume estimates.
These volumes will be an addition to the gross contingent resources (2C) from the existing discoveries in the area, previously estimated to 450 – 550 mmboe. The drillship Maersk Viking will drill a side-track well in Pecan South, before relocating to drill the third well in the on-going appraisal campaign, Pecan South East.
Based on the Pecan South result and pre-drill estimates of Pecan South East, Aker Energy estimates that the total volumes to be included in a Plan of Development (POD) have the potential to increase to between 600 – 1,000 mmboe.
Aker Energy sees further upsides in the area and has identified multiple well targets to be drilled as part of a greater area development after submission of the POD. Aker Energy is the operator of the DWT/CTP block with a 50% participating interest, LUKOIL (38 percent), the Ghana National Petroleum Corporation (GNPC) (10 percent) and Fueltrade (2 percent).
On 7 March, oil prices headed higher as analysts downplayed the chance of demand faltering in the U.S. despite a large build in stockpiles.
The U.S. West Texas Intermediate crude futures rose 65 cents at $56.87 a barrel at 8:38 AM ET (13:38 GMT), while Brent crude futures traded up 73 cents at $66.72. The U.S. Energy Information Administration (EIA) weekly report for 6 March showed a rise in crude inventories by 7.1 million barrels in the week ending March 1.
Despite the fact that the EIA’s data on U.S. stockpiles showed a surge in inventories last week, analyst’s attributed the jump to seasonality rather than a sign of weakness in demand. Oil has rallied more than 20 percent so far in 2019 on the back of production cuts of 1.2 million barrels per day (bpd) by OPEC.
At the same time, sanctions against OPEC members Venezuela and Iran are also constraining the global supply. OPEC is likely to push back their decision of whether or not to extend the output cut agreement to June from April.
Venezuela’s state-run oil firm PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil amid the sanctions. With regard to sanctions on Iran, countries that were granted waivers on oil imports are scrambling to extend them beyond May, when Washington intends to let them expire. Among those, India is seeking to keep imports of Iranian oil at the current level of about 300,000 bpd.