Market Report: Maersk Drilling Secures Long-term Contract at TEN and Jubilee fields offshore Ghana

The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Download the full report here. Learn more about Gladius Commodities at www.gladiuscommodities.com.

GHANA

Maersk Drilling has received a Conditional Letter of Award from Tullow Ghana Ltd. for the provision of the ultra-deepwater drillship Maersk Venturer and additional services for a development drilling campaign at the TEN and Jubilee fields offshore Ghana. The duration of the final contract is around four years with expected commencement in Q2 2021.

The estimated value of the final contract is approximately $370 million, excluding the value of the additional services provided and performance bonuses. The operation will be supported by local partner Rigworld. The final contract has a progressive day rate structure for the full duration of the contract. However, after the initial period of 18 months, the contract has a provision to shift to a market-linked day rate structure. The final contract is conditional upon certain regulatory conditions being met. Maersk Drilling will publish an announcement upon conclusion of a final contract.

“We’re delighted to get this opportunity to secure a long-term contract for Maersk Venturer, as Tullow once again shows confidence in Maersk Drilling’s ability to deliver stable and highly efficient operations to their major development projects in Ghana,” said Jørn Madsen, CEO of Maersk Drilling. “This also means that we will be able to continue our work with the Ghanaian community and local suppliers who have previously contributed to our West African operations.”

Maersk Venturer is a high-specification 7th generation drillship delivered in 2014. It is currently warm stacked in Las Palmas, Spain, after finishing a campaign in Ghana for Tullow in 2020.

NIGERIA

The Minister of State for Petroleum Resources H.E. Timipre Sylva performed the ground-breaking ceremony of an Energy Infrastructure Park being developed in partnership with the Nigerian Content Development and Monitoring Board (NCDMB) at Okpoama, Brass Local Government Area, Bayelsa State.

The Minister also performed commissioning ceremonies of three Corporate Social Responsibility projects for the people of the Okpoama Kingdom. These projects include the Okpoama Cottage Hospital, Iseleama Health Center and Okpoama Community Water Works. At the event, Minister Sylva noted that one initiative to curb restiveness in the Niger Delta region is to create jobs and opportunities for the youth. He further added that part of his mandate is to collaborate with players in the private sector to establish oil and gas facilities, including modular refineries, which would ensure value addition to crude oil and product self-sufficiency, create jobs in-country and curb pipeline vandalism. In his remarks, the Executive Secretary of NCDMB, Engr. Simbi Wabote, listed the various elements of the Energy Park project to include a 2,000-barrel per day modular refinery, power plant and jetty.

Speaking at the first quarter 2021 Public Lecture Series of Usman Dan-Fodio University, Group Managing Director of the Nigerian National Petroleum Corporation, Alhaji Mele Kyari, implored African leaders to leverage emerging technologies and innovation to curtail energy poverty facing the continent.

Alhaji Kyari said that African governments and institutions must rise to the occasion and leverage technology and innovation to support energy sufficiency, industrialization, job creation and economic growth. He stated that oil will remain very much relevant in the current and future global energy mix. However, as the transition to cleaner energy gains momentum, especially across developed countries, oil companies must continuously improve operational efficiency and reduce their costs to remain relevant.

GLOBAL

On February 4, crude oil prices climbed, buoyed by expectations that the Organization of Petroleum Exporting Countries and their allies’ (OPEC+) commitment to cut output will contribute to tighter global supplies of crude. The U.S. West Texas Intermediate crude futures were up 0.1% at $55.77 a barrel, after closing Wednesday at the highest level in more than a year, while Brent crude futures were down 0.3% at $58.53 a barrel, having earlier hit their highest since February last year.  

The U.S. Energy Information Administration, in its weekly report for February 3, showed crude inventories detailing a draw of 994,000 barrels for the week ending January 29, against analysts’ expectation of 446,000 barrels. This means that crude oil stockpiles are now at their lowest levels since March 2020.

OPEC+ decided at a meeting on February 3 to extend its current policy of curbing its supply of crude. OPEC instigated deep supply cuts for many months to try and keep the oil market in balance given the severe hit to demand caused by the year-long coronavirus pandemic.

The OPEC+ Joint Technical Committee meeting was positive, with the group expecting commercial stocks in Organization for Economic Co-operation and Development countries to fall below the five-year average before June 2021. Meanwhile, prices are struggling to break through key resistance levels, with Brent, particularly, falling back from the $60/barrel level. Although the rollout of vaccines should support global oil demand over the coming months and allow oil prices to rise further.

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