Dr. Maikanti Baru, the Group MD of the Nigerian National Petroleum Corporation (NNPC) disclosed on March 19 that the corporation is considering extending the ongoing Ajaokuta-Kaduna-Kano (AKK) gas pipeline across the Sahara to Algeria, North Africa.
NNPC also stated that it was achieving satisfactory progress with oil exploration activities at the Kolmani River II well, noting that so far, the corporation had drilled 6,700 feet in the well. Dr. Baru explained that the decision to extend the AKK gas pipeline to Algeria was in furtherance of its African integration drive and also in line with plans to extend the West African Gas Pipeline to Morocco. Dr. Baru noted that the target for the Kolmani River well was 14,200 feet, stating, however, that the depth could be longer depending on findings.
He added that President Muhammadu Buhari should be commended for the progress being made on the drilling of the well, stating that prospecting for oil and gas in Kolmani River-II well was one of the recent forays of the government into inland exploration in parts of the country.
NNPC has stated that the oil industry would achieve the 2.3 million barrels per day (mbpd) production volume-target for the 2019 budget, assuring that measures have been placed to attain the set target. Dr. Baru stated that with improved security in oil bearing communities as a result of sustainable community partnership, the industry was confident of attaining the production target. Although the country had a production capacity of over 2.5 mbpd, the unfortunate security situations of the past in areas of operation made it difficult to achieve desired production targets. Dr. Baru explained that the production target of 2.3 mbpd was a combination of liquid hydrocarbon production comprising of crude oil and condensate, noting that the OPEC quota only covers crude oil production.
He further explained that with Nigeria’s condensate production currently oscillating between 400,000 to 600,000 barrels per day (bpd), the country was in a good position to attain the overall production benchmark. Dr. Baru said the corporation was working assiduously with other relevant agencies to ensure the attainment of the 2019 budget assumptions contained in the 2019 – 2021 Medium Term Expenditure Framework.
BW Energy Gabon (BWE), a subsidiary of BW Offshore, has announced the signing of an agreement with Gabon Oil Company (GOC) for the acquisition of a 10 percent interest in the Dussafu production sharing contract Bottom of Form.
The transaction is subject to the fulfilment of certain conditions precedents – including approval from the government of Gabon – and involves a payment by GOC of $28.5 million, representing a reimbursement equivalent to 10 percent of development and production costs from April 2017 and to-date. BWE is the operator of the Dussafu license.
GOC’s interest is expected to be retroactive from the date of first oil and GOC would assume 10 percent of historical costs as authorized by the government of Gabon. BW Offshore, in a statement said: “GOC will contribute to cash calls for the development and production of the field and adhere to the joint operating agreement and lifting arrangements that are currently in force between the contracting parties.”
BWE’s interest is expected to be reduced to 81.67 percent and Panoro would continue to hold 8.33 percent. Tullow Oil Gabon has exercised its back-in right to the Dussafu license.
Once the transaction is completed, the interests of BWE, Panoro, GOC and Tullow in the production sharing contract would be 73.5 percent, 7.5 percent, nine percent and 10 percent respectively.
In February 2017, Panoro Energy signed a definitive sale and purchase agreement with BW Energy Gabon to sell 25 percent working interest in Dassafu production sharing contract in Gabon for a cash consideration of $12 million.
On Thursday, March, 21 oil prices pulled back slightly from 2019 highs as a strong upward rally took a pause amid competing arguments for future price direction. The United States (U.S.) West Texas Intermediate crude futures lost 12 cents at $60.11 a barrel at 9:57 AM ET (13:57 GMT), while Brent crude futures traded down 22 cents at $68.28.
The U.S. Energy Information Administration’s weekly report for Wednesday, March 20 showed a fall in crude oil inventories by 9.6 million barrels from the week ending March 15. Analysts had expected a 300,000-barrel build.
Crude prices have risen almost a third so far this year, supported by supply cuts among the OPEC and its allies including Russia, as well as by sanctions enacted against Iran and Venezuela by the U.S. Sanctions in the U.S are also disrupting supply.
ANZ bank said: “Venezuelan exports to the U.S. have finally dried up after the sanctions were placed on them by the U.S. administration earlier this year.”
Iranian oil exports have also slumped.
The U.S. aims to cut Iran’s crude exports by about 20 percent to below one mbpd from May by requiring importing countries to reduce purchases to avoid U.S. sanctions.
The OPEC cuts and sanctions have also tightened supply within the U.S. Crude oil production in the U.S. has returned to its record of 12.1 mbpd, making America the world’s biggest producer ahead of Russia and Saudi Arabia.