Market Report: BP finds natural gas reservoirs in offshore Senegal and Mauritania.

The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Download the full report here. Learn more about Gladius Commodities at www.gladiuscommodities.com

NIGERIA

The Nigeria Liquefied Natural Gas (NLNG) has signed the first Basic 20-year term of Gas Supply Agreements (GSAs) for the NLNG Train 7. The agreements were signed with the company’s Joint Venture (JV) partners for the supply of feed-gas to the Train 7 plant in Bonny, Rivers state.

These agreements will boost the federal government’s revenue by $9 billion and generate about 10,000 direct jobs and 40,000 indirect jobs in the country. The company also signed the second Basic 10-year term of GSAs for its Trains 1, 2 and 3. The GSAs bring NLNG closer to taking Final Investment Decisions (FIDs), which signals the commencement of the project expected to increase the company’s production by 35% and improve competitiveness in the global market upon completion.

Alhaji Mele Kyari, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), announced that with the agreement in place, the FID on the project would be taken next week. Osagie Okunbor, managing director of Shell, has urged the partners to look beyond Train 7, adding that it was time to move into action. Patrick Olinma, managing director of Total, has also committed the company to make gas available to NLNG and to carrying out other major projects in the country, such as the Egina Project.

Tony Attah, managing director of NLNG, said the supply of gas would help to consolidate Nigeria’s position on the global NLNG market. However, he called for more action to be taken to get the country to ‘fly on the wing of gas’ in the face of the changing global energy dynamics, adding that NLNG was ready to build more trains if the gas-producing companies could supply the gas needed. NLNG’s JV partners are Shell Petroleum Development Company of Nigeria (SPDC), Total Exploration and Production of Nigeria (TEPNG), Nigerian Agip Oil Company Limited (NAOC) and Oando PLC.

SENEGAL/MAURITANIA

BP has found high-quality natural gas reservoirs in all three wells it has recently drilled offshore Senegal and Mauritania. BP and its partner Kosmos Energy have drilled three appraisal wells this year namely – GTA-1, Yakaar-2, and Orca-1 – targeted nine hydrocarbon-bearing zones and encountered gas in high-quality reservoirs in all of them.

BP and Kosmos announced a major gas discovery in the Orca-1 appraisal well offshore Mauritania in the BirAllah area.

The Orca-1 was drilled in Mauritania’s C8 block with gas found in the original five sand targeted and a deeper zone.

Orca-1 holds around 1.3 billion barrels of oil equivalent (boe) of recoverable resources. According to BP, the Yakaar-2 and Orca-1 discoveries could lead to a new development in Yakaar-Teranga in Senegal and the Bir Allah/Orca area in Southern Mauritania.
BP is working with Kosmos Energy on the blocks and development plans. Mauritania’s Société Mauritanienne Des Hydrocarbures et de Patrimoine Minier (SMHPM) and Senegal’s Petrosen are also involved in their respective countries and the Tortue LNG plan.

GLOBAL

On Thursday 19th December, crude futures hit three-month highs after the Energy Information Administration (EIA) showed in its weekly report that U.S. crude inventories had dropped. The U.S. West Texas Intermediate (WTI) crude futures were up 30 cents at $61.15 per barrel by 1:44 PM ET (18:44 GMT), while Brent crude futures climbed 33 cents to $66.50.

The U.S. EIA weekly report showed a fall in crude oil inventories by 1.085 million barrels for the week ending December 13, against analysts’ expectation for a drop of about 1.3 million barrels. Oil prices are now set to record its third consecutive week of gains. Deeper output cuts by major producers and the phase one trade deal agreed between China and the U.S. were cited to be a tailwind for the markets.

The deal between the world’s two largest economies has improved the global economic outlook, lifted the prospect for higher energy demand in 2020 and underpinned oil prices. Just the week before, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers including Russia agreed to deepen production cuts by a further 500,000 barrels per day (bpd) from Jan. 1 on top of previous reductions of 1.2 million bpd.