On Tuesday 23rd January, the Nigerian National Petroleum Corporation (NNPC) revealed that final decision on the investors for its three major refineries will be announced in January. NNPC launched a bidding process in 2016 to find partners to overhaul ailing refineries that produce very little petrol because of decades of mismanagement, leaving Nigeria reliant on imported oil products. The three existing refineries — in the cities of Port Harcourt, Warri and Kaduna — could add a total capacity of 450,000 barrels per day (bpd) when refurbished. The project requires an investment of $2 billion. Dr. Maikanti Baru, Group Managing Director of the NNPC, said, “We are pushing towards the final selection of our financiers and we expect that, when that is done, we’ll get the agreements and present them to our board, meeting this month, to secure their endorsement.” Baru has charged the board of one of its downstream companies, NNPC Retail limited to aggressively seek to the expand NNPC retail business beyond the shores of Nigeria by 2019 and increase its market share from 13% to 30%. Baru also revealed the corporation’s plans is to build more depots across the country, and that the new depots in addition to the corporation’s existing 23 depots nationwide would ease products supply and distribution in the country.
On Wednesday 24th January, the $16 billion Egina Floating Production Storage and Offloading (FPSO) vessel owned by Total Upstream Nigeria Limited (TUPNI) reached Nigeria from South Korea. Mr Nicolas Terraz, the Managing Director of the TUPNI, said the 330-metres long Egina FPSO is the largest FPSO ever installed in Nigeria. The FPSO is currently berthed at the newly built 500-metre FPSO integration quayside at Ladol Island in Lagos and would undergo the integration of six locally fabricated modules which would take place within the next six months. Terraz said this is a first for Nigeria and Africa and also a remarkable achievement in local content development in Nigeria.
São Tomé and Príncipe
On Tuesday 23rd January, Orlando Pontes the director of the National Oil Agency of São Tomé e Príncipe announced that a consortium made up of BP and Kosmos Energy was awarded the exploration right to two offshore oil blocks in Sao Tome and Principe’s Exclusive Economic Zone (EEZ). The two companies won blocks 10 and 13 in a restricted tender beating a second consortium of Portugal’s Galp Energia and Total. The National Oil Agency said negotiations will commence in the next few days with the consortium to sign the Oil and Gas Production Sharing Contract for the blocks. Sao Tome and Principe, a tiny island nation in Africa’s Gulf of Guinea, is surrounded by oil-rich neighbours Nigeria, Cameroon, Equatorial Guinea and Angola. Despite a lack of significant discoveries after several years of prospecting, the industry sees its waters as likely to yield oil eventually, and several firms are currently exploring. Its 129,000-square km EEZ is divided into 19 blocks. Kosmos Energy, which is active in other parts of West and Central Africa, acquired licenses to blocks 5, 6, 11 and 12 in 2015 and 2016. The national oil agency said it expected the firm to begin drilling in 2019 based on seismic results.
On Thursday 25th January, oil prices continued to climb and hit new three-year peaks as news of another weekly decline in U.S. crude inventories contributed to overall optimism over the rebalancing of the market. The U.S. West Texas Intermediate crude for March contract was up 67 cents at $66.28 barrel at 4:00 a.m. ET (08:00 GMT), while the ICE Futures Exchange in London Brent oil for March delivery was up 33 cents at $70.88 a barrel. The U.S Energy Information Administration weekly report for Wednesday 24th January showed a fall in crude oil inventories by 1.1 million barrels in the week ending January 19.
Oil prices were boosted after the International Monetary Fund on Monday revised its forecast for world economic growth to 3.9% for both 2018 and 2019, a 0.2% increase from its last update in October. Oil prices have been broadly underpinned by supply restrictions led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia. However, analysts and traders have recently warned that U.S. shale oil producers could ramp up production in the coming weeks as they look to take advantage of higher prices, potentially derailing an OPEC-led effort to curb excess supply. Russia and Saudi energy ministers, Alexander Novak and Khalid al-Falih, both said the markets were too focused on the swings in U.S. shale production, which represented only a modest portion of the global output.