Market Report: Tullow Oil Approves Sale of Assets to Panoro Energy

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.

EQUATORIAL GUINEA

Tullow Oil shareholders have approved the sale of its Equatorial Guinea assets to Panoro Energy. In February, Tullow agreed, subject to certain conditions, to sell its subsidiaries with assets in Equatorial Guinea and Gabon to Panoro for up to $180 million.

Tullow’s shareholders voted 99.98% in favor of the sale of Tullow Equatorial Guinea Limited (TEGL) to Panoro. TEGL holds a 14.25% non-operated working interest in Block G, which contains the Ceiba and Okume Complex assets offshore Equatorial Guinea. The resolution is the final condition for the completion of the agreement.

Panoro and Tullow will work on the final steps and expect completion in the coming weeks. Also, Panoro is continuing with the completion conditions related to its purchase of Tullow’s 10% working interest in the Dussafu Marin permit offshore Gabon, and will update shareholders in due course. Panoro will pay up to $105 million for the Equatorial Guinea transaction, up to $70 million for the Dussafu transaction and a further five-million-dollar consideration to be paid after both transactions have been completed.

NIGERIA

Minister of State for Petroleum Resources H.E. Timipre Sylvia presented a memo to the Federal Executive Council (FEC) for the approval of the sum of $1.5 billion for the immediate rehabilitation of the Port Harcourt refinery, the largest refinery in the country. The Minister noted that the rehabilitation of the refinery will be done in three phases of 18, 24 and 44 months.

The first, 18-month phase will take the refinery to a production of 90% of its capacity. The project was awarded to Italy’s Tecnimont SPA. H.E. Minister Sylvia also noted that maintenance of the refinery, which is a recurring challenge for refineries across the country, was elaborately discussed by the FEC, and an independent professional organization will be employed to manage the refinery after it has been rehabilitated to ensure it operates at optimum capacity.

Speaking at the 56th Annual Geosciences Society Group, Managing Director of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari, revealed that the discovery of crude oil in commercial quantities in Chad, Niger and the Central African Republic inspired the Corporation’s recent push to find oil in northern Nigeria, as well as the desire to increase the country’s reserves to 40 billion barrels from the current 36 billion barrels.

He stated that the NNPC has, over the last four years, expanded inland basin exploration activities covering Gongola, Benue, Bida and Sokoto basins, while data review is being done in preparation for exploration activities in the Anambra platform and the Dahomey basins. Kyari added that the Corporation was hopeful that it has made progress, especially with the recent discovery of commercial quantities of hydrocarbons in the Kolmani area of the Middle Benue Trough.

GLOBAL

On March 18, crude oil prices fell more than five percent, tumbling their most in a day since October, after a surge in new COVID-19 cases in Europe and the bloc’s continued challenge with vaccinations for the virus. The U.S. West Texas Intermediate crude futures settled down $4.60 at $60 per barrel, after falling to $59.48, its lowest since March 3, while Brent crude futures settled down $4.72, or seven percent, at $63.28, after a two-week low at $62.72.

The U.S Energy Information Administration’s report for March 17 showed that crude inventories increased by 2.4 million barrels in the week ending March 12, growing for four straight weeks after refineries in the South were forced to shut down due to severe cold weather.

Crude prices tumbled as the number of confirmed COVID-19 cases in Germany, the European Union’s largest country by population, jumped by over 17,000, the biggest daily rise since January 22, as seen from data from the Robert Koch Institute for infectious diseases. The surge in European cases and more pandemic-related restrictions suggested the impending third wave of COVID-19, on the back of a sluggish immunization program.

Also weighing on oil was the International Energy Agency’s prediction that it will take another two years for global oil demand to reach pre-pandemic levels. The sentiment was also hurt after a decision by India, the third-biggest oil importer after China and the United States, to cut its purchases from Saudi Arabia by about a quarter from May after Riyadh refused to let the OPEC+ alliance of oil producers raise output. New Delhi needs more oil supply, and at lower prices, too, to bring down Indian pump prices for fuel that have soared from nearly a year-long of OPEC+ cuts. Iran is already defying U.S. sanctions on its oil to export crude to China at deeply discounted prices, undermining OPEC+ cuts and the Islamic Republic could strike a deal with India, as well.

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