Market Report: Senegal and PetroNor Announce a Mutual Agreement
The Nigeria National Petroleum Corporation (NNPC) has announced a reduction in the price of ex-depot Premium Motor Spirits (PMS) from N113.28k per litre to 108.00k per litre across all its products loading facilities.
The Managing Director of the Petroleum Products Marketing Company (PPMC), Musa Lawan, disclosed that the new ex-depot price of PMS reflects the company’s marketing strategy, which aims to help make more sales while complying with the Products Pricing Regulatory Agency’s price template.
Mr. Lawan explained that the new prices will enable PPMC to boost its sales volumes from the billions of litres of petrol it had in storage while providing affordable prices to millions of customers.
NNPC has also released its Official Selling Prices for May, cutting values for all its grades. NNPC cut Qua Iboe’s price by 82¢/bl from April to a discount to North Sea Dated of $3.92/bl and cut the price of Forcados by 91¢/bl on the month to a discount of $3.91/bl to the benchmark.
It made 66¢/bl cuts to Bonny Light and Brass River, to discounts of $3.95/bl and $3.82/bl, respectively. Among the bigger streams, NNPC again priced Egina the highest at a $2.49/bl discount to Dated.
Equatorial Guinea has granted oil and gas companies two-year extensions on their exploration programs. The move is an effort to keep investments flowing into the nation’s energy industry amid a historic drop in oil demand and prices due to coronavirus. The outbreak, and lockdowns worldwide aimed at containing it, have slashed 30% from fuels demand and dragged global oil prices to 20-year lows.
Companies have cut billions from investment budgets and suspended projects. Last week, Minister of Mines and Hydrocarbons, H.E. Gabriel Obiang Lima, said that virtually all oil and gas projects and licensing rounds are on hold in the country as it braces for an extended oil downturn because of the pandemic.
Equatorial Guinea relies on oil and gas for around 90% of state revenue. Oil companies operating in Equatorial Guinea include Exxon Mobil, Marathon Oil Corp, Kosmos Energy, Noble Energy.
PetroNor and the Government of Senegal have announced that a mutual agreement was reached to suspend the Arbitration related to the Rufisque Offshore Profond and Senegal Offshore Sud Profond license areas for six months to reach a satisfactory outcome for all parties. The agreement to suspend the arbitration follows a period of progressive dialogue between the Company and relevant authorities.
On Thursday 7 May, oil prices steadied as data showed China’s crude imports returned, but market watchers expect gains to be capped by the glut in supplies as the coronavirus pandemic crushes global fuel demand.
The U.S. West Texas Intermediate crude futures traded 9.2% higher at $26.20 a barrel at 9:30 AM ET (13:30 GMT), while Brent crude contract rose 5.8% to $31.46. The U.S. Energy Information Administration in its weekly report for Wednesday 6 May showed a rise in crude oil inventories by 4.59 million barrels in the week ending May 1, which was less than the analyst’s forecasted 7.8 million-barrel rise, but the gain highlighted how much supply is being stored.
Prices were supported by data showing Chinese crude imports rose in April. According to Reuters calculations based on customs data for the first four months of 2020, imports climbed to 10.42 million barrels a day (bpd) in April from 9.68 million barrels in March.
Overall exports from China also rose against expectations of a sharp drop. Meanwhile, Saudi Arabia had increased its OSPs by $1.40 for its June Arab light crude to Asia, significantly reducing the price discounts it offers to its customers worldwide.
Oil prices were also being helped by production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies and in North America. OPEC and allied producers agreed to cut production from May 1 by circa 10 million bpd to stabilize prices amid the plunge in demand in economies ravaged by the coronavirus outbreak.
Also, as the world starts to ease lockdowns, oil demand recovery will likely be slow and timid. Traders are keeping a close watch on nuanced flows in the physical market to see how closely those are aligned to the futures.