Market Report: NNPC, SEEPCO Sign Agreement to Reduce Gas Flaring in Nigeria
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The Nigerian National Petroleum Corporation (NNPC) and Sterling Exploration and Energy Production Company (SEEPCO) have signed an agreement for the development and commercialization of gas from the Oil Mining Lease 143 to help reduce gas flaring in the country.
Alhaji Mele Kyari, Group Managing Director of NNPC, described the signing of the deal as a great milestone as well as a testament to NNPC’s commitment to facilitating the nation’s transformation into a gas-powered economy. He noted the deal would not only help reduce gas flaring and its environmental hazards but would also promote gas production and utilization in the domestic market.
Kyari also commended SEEPCO for its unwavering commitment to gas development and commercialization in the country, which has led to the establishment of a Special Purpose Vehicle that will help expand gas utilization in the country as a cleaner, cheaper and more reliable alternative form of energy. On his part, Tony Chukwueke, Chairman of SEEPCO, described the deal as an essential partnership that would help the company fulfil the pledge it made to support the efforts of the Nigerian government to eliminate gas flaring by monetizing it.
Adeleye Falade, General Manager, Production of Nigerian Liquified Natural Gas Limited (NLNG), announced that the company is set to achieve the production of 350,000 metric tons of Liquified Petroleum Gas (LPG) given its current production levels. According to him when the company started pushing LPG into the Nigerian gas market, the company was only producing
75,000 tons per annum, but in 2019, the company pushed 275,000 tons into the market indicating an exponential growth over a short period. On the NLNG Train 7, Falade reiterated that when completed, it will raise production capacity by 35% from the current 22 million tons to about 30 million tons per annum and will increase foreign direct investment by $7 billion in five years.
VAALCO Energy announced that it will begin acquiring and processing new 3D seismic data in the fourth quarter of 2020 together with planning for future drilling programs at the Etame Marin block offshore Gabon. Vaalco is committed to acquiring new proprietary 3D dual-azimuth seismic data over the entire Etame Marin block, which will be used to optimize and de-risk
future drilling locations as well as identify new locations with potential. The completion of the seismic acquisition is expected by year-end 2020 with processing to be fully completed by the fourth quarter of 2021. The estimated cost of both acquisition and processing of seismic data is
approximately $4 to $5 million net to VAALCO. It will be fully funded with cash on hand and cash from operations, while maintaining a strong production performance in the third quarter of 2020 with production estimated at 4,370 net barrels of oil per day (bpd) to VAALCO, at the
midpoint of guidance.
Nexans has signed a contract with Subsea 7 to design and manufacture 46Km of umbilicals for the Sangomar field, offshore Senegal. The umbilicals will provide vital hydraulic, control and instrumentation services for a stand-alone floating production storage and offloading facility and associated subsea infrastructure. Nexans will deliver 13,471 meters of dynamic umbilical to be installed from north to south.
Nexans will also provide 9,503 meters of main static umbilicals, 8,719 meters of production infield umbilicals, and 14,650 meters of injection infield umbilicals in the subsequent four phases of development. The Sangomar Field Development was discovered in 2014, located 2Km
below the seabed floor. The field spreads over 400Km2 in water depths of 700 to 1,400 meters.
The phased development includes the installation of a stand-alone floating production storage and offloading facility and subsea infrastructure that will be designed to facilitate subsequent development phases. These options include potential gas export to Senegal and future subsea tiebacks to other fields.
On October 1, oil prices fell as rising COVID-19 cases and further price pressure from a rise in Organization of the Petroleum Exporting Countries (OPEC) output last month dampened demand outlook, although losses were capped by renewed hopes for U.S. fiscal stimulus. The U.S. West Texas Intermediate crude futures were down 22 cents at $40, while Brent crude
futures fell 17 cents to $42.13 a barrel at 08:18 GMT. The U.S. Energy Information Administration’s weekly report showed a fall in crude stockpiles by 1.980 million barrels in the week ending September 25, against analysts’ expectations for a build of 1.57 million barrels.
Increasing oil supply from OPEC also weighed on the market, with output in September up 160,000 bpd from August. The rise was mainly due to higher supplies from Libya and Iran, both exempt from an oil supply pact between OPEC+ members and allies. Libya’s oil output has risen to 270,000 bpd as the OPEC member ramps up export activity following the easing of a blockade by eastern forces, “New Libyan barrels, and reports that Russia has been
overproducing had bulls on their heels earlier in the week. Reports that Saudi Arabia had increased exports in September by 500,000 bpd seemed to be the final straw,” said Bob Yawger, Director of Energy Futures at Mizuho.
OPEC members shipped out 18.2 million bpd in September, up from the 17.53 million bpd exported in August, data from IHS Markit Commodities at Sea showed, with Saudi Arabian exports returning to levels above 6.25 million bpd. Prices received some respite from progress in U.S. talks on a stimulus package, with the U.S. proposing a new stimulus package worth more than $1.5 trillion. Meanwhile, in Norway, a labor union said it would escalate offshore industrial action to four additional fields from October 4, after dozens of workers went on strike at the 470,000 bpd Johan Sverdrup oilfield. Sverdrup operator Equinor said it could maintain safe operations at the oilfield despite the strike.