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The Federal Government has provisionally awarded tenders to develop 57 of its marginal oilfields, which could net the government $500 million in signature bonuses. The Department of Petroleum Resources sent out provisional award letters requesting payment within 45 days to secure the awards, which companies can for the first time pay in either dollars or naira.
Marginal fields are smaller oil blocks typically developed by indigenous companies. Nigeria is looking to produce from the fields to bolster state finances and increase local participation in the oil sector, which provides the bulk of the nation’s foreign exchange. The 57 fields in the current auction were launched in June 2020 and are part of the first marginal field round in nearly 20 years.
The Group Managing Director of the Nigerian National Petroleum Corporation Alhaji Mele Kyari has called for a legislative framework with clear physical terms to enable the nation to tap the full potential of its gas resources in the nations deep-water acreages.
The call was made at a one-day public hearing on “Inclusion of Gas Terms in Production Sharing Contracts (PSCs)” organized by the House of Representatives Joint Committee on Gas Resources, Petroleum Resources (Upstream and Downstream). Kyari noted the need for investor clarity on fiscal terms for them to commit capital for gas development projects. He stated that a functional framework providing a clear picture of how investors can recoup the capital on investment and make gains is needed as captured in the Petroleum Industry Bill (PIB) for gas utilization. He expressed hope that the PIB would help resolve issues of fiscal terms in the PSCs as the current contracts mainly concerned crude oil production and not gas. Additionally, Kyari identified a good physical environment and pricing as two key conditions to issues of gas terms inclusion in the PSCs.
Also speaking at the public hearing, the Minister of State for Petroleum Resources, H.E. Timipre Sylva, has committed to the usage of gas by automobile owners in the country. Minister Sylva stated that a task force to achieve this would be inaugurated very shortly. The task force is to sit over and deliberate the details of how to implement the program. In terms of domestic or household gas, the Minister added that the country is also pushing for the distribution of domestic gas outside the cities and into rural areas.
Tullow Oil Plc noted that it hopes to accelerate debt repayments after crude prices climbed to a one-year high. Tullow saddled with $2.4 billion of net debt, and is among oil firms buoyed by the recent surge in prices as demand gradually recovers from 2020’s unprecedented slump. Tullow’s shares have jumped more than 80% this year as the company starts to turn its back on a tough period of drilling setbacks, management departures, collapsing prices and mounting borrowings. Chief Executive Officer Rahul Dhir, who took over July 2020, is putting the explorer’s west Africa assets at the core of an investment plan aimed at cutting costs and shoring up the balance sheet. Dhir suggested that debt repayments could be quickened by ramping up drilling in west Africa and adding a rig if crude prices remain strong. The company has already planned four wells in Ghana from April.
On March 11, crude oil prices strengthened, largely due to signs of an improving economic outlook, a ramped-up vaccination program and a sharp decline in U.S. gasoline stocks. The United States (U.S) West Texas Intermediate crude futures settled up $1.58 at $66.02, after hitting a high of $66.08, while Brent crude futures traded up $1.71 at $69.61 at 2:43 PM ET (19:43 GMT). The U.S. Energy Information Administration in its weekly report for March 10, showed that crude inventories rose 13.798 million barrels in the week ending March 5, against analysts’ expectations for a build of 816,000 barrels. The prior week’s build was 21.5 million barrels, even higher than the 19.2-million-barrel increase seen during the week to April 10, 2020, when oil demand cratered amid the COVID-19 outbreak.
Biden’s $1.9 trillion stimulus, one of the largest economic rescue packages in U.S. history, put a firm floor under crude prices that fell more than 3% in the first two days of the week. The correction was driven by concerns that the rally in oil since the end of October may be getting ahead of itself, with gains of as much as 85% over the past four months.
Oil traders cast all such concerns aside, sending crude up in an overnight post-settlement trade in Asia. The rally extended on Thursday during the European hours and continued into the U.S. session as the president prepared to sign the bill. The rebound in oil over the past two days came despite government data indicating U.S. crude output was recovering faster than refining after last month’s storm-related outages in Texas. Meanwhile, the Organization of the Petroleum Exporting Countries said in a monthly report that demand will rise by 5.89 million barrels per day in 2021, or 6.5%, up slightly from last month. But the group cut its forecasts for the first half.