Market Report: Senegal’s GTA Anticipates First Gas in 2023

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SENEGAL

Senegal’s Minister of Petroleum and Energy H.E. Sophie Gladima announced that the Grand Tortue Ahmeyim gas field development, straddling the offshore waters of Mauritania and Senegal, is expected to produce its first gas in 2023 following delays related to the COVID-19 pandemic. The two countries, BP Plc and Kosmos Energy Ltd. are collaborating on the $4.8 billion project set to produce 2.5 million tons of liquefied natural gas annually and 70 million cubic feet of natural gas a day in its first phase. It is to be equally shared between Senegal and Mauritania.

The delay from a planned 2022 start has denied Senegal much-needed oil and gas revenues as its economy seeks to recover from the impact of the pandemic, which pushed down its 2020 economic growth target to 0.7%. Between 2014 and 2017, reserves of more than 1 billion barrels of oil and 40,000 billion cubic feet of gas were found in Senegal — most of them shared with Mauritania, according to the International Monetary Fund. It has prompted Senegal to be hailed as one of the most promising new producers in the region and a possible future member of the Organization of Petroleum Exporting Countries (OPEC).

Senegal’s Sangomar project developed by Australia-based Woodside Energy, with an estimated production capacity of 75,000 to 100,000 barrels of oil per day (bpd), is also set to start production in 2023. The $4.2 billion project will receive 18% of its funding from state-owned oil company Petrosen. Another gas field, Yakaar-Teranga, a resource of 15 to 20 trillion cubic feet, is to start production in 2023 or 2024.

NIGERIA

The Nigerian National Petroleum Corporation (NNPC) has begun the process of diversifying its portfolio beyond oil assets to hedge against future crisis and align with the global energy transition. The Group Managing Director of the NNPC, Alhaji Mele Kyari, spoke at the virtual Gulf Intelligence Global UAE Energy Forum 2021 and said he does not see oil demand recovering to pre-COVID-19 levels until the end of 2022.

Alhaji Kyari stated that gas would provide a more stable revenue stream for the country, with Nigeria last year sealing a deal for the expansion of gas infrastructure with the NLNG train seven. He further stated that gas has proven to be a steady and reliable revenue stream even at the height of the COVID-19 last year. However, he assured that that peak oil demand is still years away, and investment is therefore required to meet Nigeria and Africa’s energy needs, while gas and renewables are likely to continue to increase their contribution to the global energy mix.

The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, stated that the much-anticipated Petroleum Industry Bill (PIB) will include provisions for lower taxes to sustain stable investments in the oil sector. This comes as the Senate President stated that the PIB will be a priority to the senate when it resumes sitting on the 26th of January 2021. Minister Sylva said if the Bill is passed successfully, it is expected to increase investment in the sector and allow for greater revenue to be generated by the sector to the Government.

GLOBAL

On January 14, crude oil prices were up despite new and extended lockdowns that promise to slow any oil demand rebound expected for 2021. The U.S. West Texas Intermediate crude futures were down 0.4% at $52.69 a barrel, while Brent crude futures were down 0.9% at $55.55 a barrel at 11 AM ET (16:00 GMT).

The U.S. Energy Information Administration’s weekly report for January 6 showed a draw of 3.247 million barrels for the week ending January 8, against analysts’ forecast for a bigger 2.266-million-barrel draw, but smaller than the previous week’s 8.010-million-barrel draw.

Oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook. Also giving prices a boost was a reported move by Saudi Arabia to cut crude supplies for February-loading for some Asian buyers by up to a quarter.

OPEC’s monthly report indicated that global oil stocks were now only 163 million barrels above their five-year average, which is the level used by the bloc as its benchmark. OPEC is currently pumping some 1.8 million bpd less than it expects to need to pump this year to keep the market balanced, leading to a gradual whittling down of those inventories – as evidenced by two bullish inventory reports from the U.S. last week. OPEC left its forecast for global demand this year unchanged at 95.9 million bpd.