Market Report: Panoro Energy announces cuts in planned Capex offshore Gabon

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NIGERIA

The Federal Government has directed the Nigerian National Petroleum Corporation (NNPC) to reduce the pump price of petrol from N145 to N125. This was to reflect the current crash in the global price of crude oil. President Muhammadu Buhari approved the price reduction after the Minister of State, Petroleum Resources, Mr. Timipre Sylva briefed him and made a presentation to the Federal Executive Council.

He added that the pump prices of diesel and kerosene would also be reduced and that NNPC would roll out all the new prices soon.The Group Managing Director (GMD), NNPC, Alhaji Mele Kyari has appointed 68 new senior managers to fill in the vacancies and other prior
vacancies of 36 top management staff at General Manager and Group General Manager ranks due to early retirement.

All the six geopolitical zones were proportionately accommodated with at least 11 positions to each zone. For the first time in the history of NNPC, the GMD has delivered a promotion exercise reflecting the diversity and ethnic mix of Nigeria. Another commendable feature of the exercise was the elevation of women into the ranks of leadership. More women than ever will now occupy the ranks of General Manager and Group General
Manager.

A few of the names occupying the new roles are Yemi Adetunji – Chief Operating Officers (COO) Upstream; Laura Ndupu – COO Downstream; Roland Ewubare – Business Development in a renamed Directorate of Ventures and Business Development; Musa Lawan – MD PPMC; Bala Wunti – GGM NAPIMS; Inuwa Waya – MD NNPC Shipping; Lawal Sade – MD Duke Oil / Trading; Dr. Salihu – MD Gas and Power Investment Company; Seyi Omotowa – MD NGC Warri; Ada Oyetunde – MD of Nigerian Pipeline and Storage Company. A new position of Chief Innovation Officer is also created to replace the Research and Development Division with the role deployed to a senior female officer.

GABON

Panoro Energy announced it will cut its planned Capex offshore Gabon this year by 40% to soften the impact of the recent oil price collapse. The Dussafu joint venture, led by BW Energy, has decided to temporarily postpone the start of the Ruche Phase 1 development process until
conditions improve.

Currently, four wells (DTM-2H, DTM-3H, DTM-4H and DTM-5H) are producing into the FPSO BW Adolo at a gross rate of 20,000 b/d. The DTM-6H well, approaching the end of drilling and completion operations, will come onstream by June 2020.

To limit the spread of the COVID-19 virus, international travel restrictions currently in place are limiting movements of essential personnel, subcontractors, and equipment to and from Gabon. These and the increasing global restrictions will likely impact the planned timing of the DTM-7H well and the subsequent firm exploration well. As a precaution, the Dussafu partners have decided not to exercise options for additional exploration wells.

GLOBAL

On Thursday 19th March, oil markets headed higher, rebounding after Wednesday’s hefty losses saw prices tumble to multi-year lows.

However, gains are likely only temporary as the measures introduced to combat the coronavirus pandemic are likely to have a drastic impact
on global demand. The U.S. crude futures traded 10% higher at $22.92 a barrel at 09:25 AM ET (13:25 GMT), while Brent crude futures rose 4.3% to $25.91.

The U.S. Energy Information Administration (EIA) weekly report for Wednesday 18th March showed a rise in crude inventories by two million barrels for the week ending March 13. Analysts said gains were likely to be temporary, as tumbling demand due to the
coronavirus outbreak was compounded by the collapse of a deal on supply curbs between OPEC and other producers.

Saudi Arabia who kicked off a price war with Russia that sent prices into a tailspin is planning to keep pumping at a record rate of 12.3 million barrels per day (bpd) for months. U.S. senators on Wednesday upped the pressure on Saudi Arabia and Russia to stop the price war and
held talks with the kingdom’s envoy to Washington.

They urged President Donald Trump to impose an embargo on oil from the two countries.
Algeria’s energy minister said on Wednesday there were “positive signals” from China, the world’s biggest crude importer, in its efforts to control the spread of the coronavirus.

But analysts have still been slashing growth forecasts for China, where the disease erupted, to the lowest levels in decades. Meanwhile, the spread of the virus elsewhere is showing no sign of abating, with governments resorting to lockdown in a bid to contain the disease, hammering economies and raising prospects for a global recession.

Also helping oil prices push higher was the European Central Bank’s €750 billion ($820 billion) program to purchase securities to support European economies. This is the latest in a global effort by central banks to stave off a severe economic slowdown. However, a recession
seems likely, with the coronavirus pandemic starting to disrupt the U.S. labour market. according to Bloomberg, some relief for the oil markets could come from the United States buying crude oil for the Strategic Petroleum Reserve (SPR) within the next two weeks.

The move, which could total 77 million barrels of crude, aims to replenish the SPR by taking advantage of low oil prices while providing some much-needed
support for the local oil industry which has suffered a substantial blow by the latest oil price crash, especially in the shale patch.