MARKET REPORT: SENEGAL REACHES A FINAL INVESTMENT DECISION
Nigeria is set to focus its upstream work towards Natural Gas Liquids (NGLs) and natural gas in a bid to comply with the crude production quota obligation set by members of the Organization of Petroleum Exporting Countries (OPEC+).
This was disclosed by the Group General Manager of the Nigeria National Petroleum Corporation (NNPC) Alhaji Mele Kyari at the Atlantic Council Global Energy Forum in Abu Dhabi.
He mentioned that the quotas apply only to crude oil production and not condensate and the country would focus production to more gas-based reservoirs to grow production while maintaining a balance in the market. Nigeria was fully compliant with its quota of 1.77 million barrels per day (bpd) for December 2019 and was commended by The United Arab Emirates (UAE) Energy Minister Suhail al-Mazrouei at the forum. According to a report by OPEC, Nigeria’s crude oil production dipped by 95,000 bpd from November 2019 to December 2019.
Production stood at 1.570 million bpd in December 2019 which represents a significant decline from the 1.664 million bpd recorded in November 2019. OPEC’s latest oil market report showed that crude oil production averaged 29.44 million bpd in December, lower by 161,000 bpd, month on month in line with production cuts agreed to.
The UAE has reinstated its readiness to invest in Nigeria’s petroleum sector and to facilitate high-level bilateral opportunities to deepen the cooperation between both countries. This was reiterated by UAE Ambassador to Nigeria, Fahad Al Taffaq, on his visit with the minister of State for Petroleum Resources, Chief Timipre Sylva, in Abuja. Al Taffaq promised to facilitate opportunities that would see to the creation of new projects in the short, medium and long-term for the benefit of the two countries.
Sylva said that 2020 remained an important year for Nigeria as the federal government proposes marginal field and major bid rounds in the sector, and UAE has the financial strength to fully participate in the process. Marginal field refers to an oil field that may not produce enough net income to make it worth developing at a given time. However; should technical or economic conditions change, such a field may become a commercially viable field.
On Wednesday 14th January, Senegal announced it has reached a Final Investment Decision (FID) in the Rufisque Offshore, Sangomar Offshore, and Sangomar Deep Offshore (RSSD) Joint Venture (JV) shortly after authorities granted a 25-year Exploitation Authorization for the first phase of the offshore Sangomar Field Development.
The RSSD JV is looking forward to the first oil in the first quarter of 2023. Phase 1 of the development will target an estimated 2P recoverable oil reserves of 231 million barrels (mmbbls).
The JV partners hope to recover an estimated 500 mmbbls over the life of the field with the development also planning gas export to shore. Earlier, Woodside had announced the execution of the purchase contract for a Floating Production, Storage and Offloading (FPSO) facility, another critical milestone toward consolidating pre-production planning for the Sangomar field monetization.
The JV is made up of Cairn Energy’s subsidiary Capricorn Senegal (40%), Woodside Energy (35%), FAR (15%), and Senegal national oil company Petrosen (10%). Australia’s Woodside is the operator of the project.
On Thursday 16th January, oil prices rose on supported by optimism generated by the conclusion of the first phase of the trade deal between the U.S. and China. Brent was up 30 cents at $64.30 a barrel at 07:54 GMT, while U.S. crude was up 30 cents at $58.11 a barrel.
The U.S. Energy Information Administration week report showed a fall in crude inventories by 2.5 million barrels in the week ending Jan. 10, compared with analyst expectations of a drop of 500,000 barrels.
Also supporting oil prices was major political uncertainty in Russia following the en bloc resignation of the government in Moscow. The Russian crisis is an important one in oil since the country is the second-largest oil producer after the United States.
The International Energy Agency (IEA) in its latest monthly report showed that Iraq’s oil exports have doubled during the last decade to reach 4 million bpd, adding that Iraq’s fragile security situation may limit its plans to expand oil-production capacity in the medium-term, making it difficult for the global industry to meet rising demand in the second half of the decade. The IEA left its global demand forecast for this year unchanged, a day after OPEC cut its forecast by a modest 50,000 bpd.