Market Report: NNPC & Lukoil Signs MoU
The Nigerian National Petroleum Corporation (NNPC) and Lukoil signed a Memorandum of Understanding (MoU) to enable Nigeria and Russia to develop government-backed commercial relationships and partnerships.
The Group Managing Director of NNPC, Alhaji Mele Kyari and Vagit Alekperov, President of Lukoil, signed the MoU, which involves cooperation in deep offshore exploration, production, trading and refining of oil in Nigeria. With the signing of the MoU, NNPC and Lukoil would work together in upstream operations and revamp Nigeria’s refineries. Eni announced that gas and condensate production from the Obiafu 41 discovery, Niger Delta, has started.
The discovery contains approximately 28 billion cubic meters of gas and 60 million barrels of condensate. The gas from this discovery will be channeled to the domestic market to feed the power sector. At the end of ramp-up, production will reach a capacity of about 3 million cubic meters of gas and 3,000 barrels of condensate per day.
The gas from this discovery will be processed at the Eni-operated Ob-Ob plant, and then sent to the Okpai Power Plant, also operated by Eni. Okpai is Nigeria’s first independent power plant and one of the most efficient ones in the country.
It currently has an installed capacity of 500 Megawatts and an upgrade is underway which will double its capacity to 1 Gigawatt. Once the upgrade is completed, Eni will generate 20 percent of the entire national electricity production, establishing itself as the leading electricity producer in the country.
FAR Gambia Ltd, a wholly-owned subsidiary of FAR Ltd, has completed detailed geotechnical studies incorporating the Samo-1 well results and data. FAR has also assessed significant hydrocarbon resource potential in its two blocks (Blocks A2 and A5) offshore the Gambia. Both blocks covering 2,682km2 are adjacent to and on-trend with FAR’s world-class SNE oil field. Block A2 and A5 are located within the rapidly emerging and prolific Mauritania-Senegal-Gambia-Bissau-Conakry (‘MSGBC’) Basin. FAR has a 50 percent working interest and is the Operator of the two licenses.
McDermott International, Inc. has won a subcontract to fabricate the subsea production system (SPS) for the Greater Tortue Ahmeyim (GTA) natural gas project located offshore Mauritania and Senegal.
The value of the SPS fabrication subcontract ranges from $1 – $50 million. Fabrication will start at the McDermott Batam facility in the third quarter of 2019 and concluded the third quarter of 2020.
Earlier in 2019, McDermott received another GTA contract with Baker Hughes Co. from BP plc to fabricate both the SPS and Subsea, Umbilicals, Risers, and Flowlines (SURF). GTA will produce and process gas from an ultra-deepwater subsea system and mid-water floating, production, storage and offloading (FPSO) vessel and transfer the gas to a floating liquefied natural gas (LNG) near the Mauritania-Senegal border. BP said the project will provide approximately 2.5 million tons per annum of LNG for global export and domestic use in the West African countries.
On Thursday 24th October, crude oil prices rose to their highest in over three weeks building on sharp gains caused by a surprise draw in U.S. stockpiles. The U.S. West Texas Intermediate crude futures settled up 26 cents at $56.23 a barrel, while Brent settled up 50 cents at $61.87. The U.S. Energy Information Administration for Wednesday 23rd October showed a fall in crude stockpiles by 1.7 million barrels, compared with analysts’ expectations for a 2.2-million-barrel build.
A report from Reuters released on Wednesday 23rd October supported crude oil prices; hinting at the likelihood of OPEC and its members may consider deeper cuts at the meeting set for December. Almost a year ago, OPEC and non-OPEC members led by Russia agreed to cut production output by 1.2 million barrels per day, and are due to review their output deal in December.
Russian officials have been instrumental in downplaying the need for further cuts, pointing to the problems of U.S. shale producers. Analysts have speculated also that energy prices could take a hit if the first phase of the U.S.-China deal doesn’t get implemented.