The Nigerian National Petroleum Corporation (NNPC) has been the sole importer of petroleum products since January 2017. Oil marketers halted fuel importation due to the current lack of profitability, the shortage of foreign exchange in the country and high crude prices. This has resulted in the inactivity of 198 private depots and tank farms across the country which is now threatening downstream investments of about NGN 4 trillion.
Shell Petroleum Development Company (SPDC) has reopened the Trans-Forcados crude export pipeline after months of repairs from being shut down after militants bombed the subsea facility. However, Shell has not removed the force majeure placed on the facility but is doing a skeletal loading test-run on the pipeline before it resumes full lifting.
Indonesia has indicated interest in purchasing more crude oil directly from Nigeria instead of through a third party to meets the country’s rising energy needs. Currently, Indonesia procures energy supplies from Nigeria and Saudi Arabia to balance its daily consumption rate of 1.4 million barrels per day (bpd) with the country producing 900,000 bpd. On Wednesday 31st of May, the Indonesian Ambassador to Nigeria, Mr Harry Purwanto visited the Group Managing Director of NNPC, Dr Maikanti Baru, in Abuja. Baru welcomed the development and said the NNPC is looking forward to working with Indonesia on implementing the kerosene substitution program whereby Liquefied
Petroleum Gas (LPG) will be the primary domestic fuel in both countries. He also said the corporation will be interested in partnering with Indonesia in areas of bio-fuels production to expand the nation’s energy mix. Russia has also shown interest in the Nigerian petroleum industry. Russia’s Energy Minister, Alexander Novak extended an invitation to the Minister of State for Petroleum Resources,
Dr. Ibe Kachikwu to visit Russia in October for the next Gas Exporting Countries Forum Ministerial Meeting for preliminary technical talks to explore areas of mutual interest in their respective petroleum industries.
Operations have commenced in the first pure exploration well off the coast of Senegal by FAR Limited since its major discovery in 2014. The Australian energy company said the well is being drilled into the South Fan Prospect that FAR assesses and the prospect is said to contain an estimate of 134 million barrels of recoverable oil. The well will be drilled to an estimated total depth of 5,317 meters in a water depth of 2,139 meters. FAR Managing Director, Cath Norman said in a statement that “The FAN South-1 target represents an opportunity for FAR to add to the growing inventory of oil discoveries offshore Senegal and the wider Mauritania, Senegal, Guinea-Bissau Basin, clearly one of the world’s explorations hot spots”. The reservoir offshore Senegal was counted among the largest in the world and by the estimates of the companies involved, more than 1.5 billion barrels of oil may be in basins off the coast of Senegal. On top of a debt-free quarter, FAR was over-subscribed for a placement of 1 billion shares, generating around $60 billion in capital to be used towards drilling funds, evaluation and pre-development programs off the coast of Senegal, including potentially the acquisition of further assets off the Gambian coast.
On Thursday 1st of June, U.S. oil initially showed fluctuation, then quickly recovered and extended gains in North American trade, as expectations of the U.S. administration’s decision regarding withdrawing from the Paris Climate Agreement overshadowed recent fears of a global supply glut. The New York Mercantile Exchange Crude oil for July delivery grew by 1.26% at $48.93 a barrel by 11:10 AM ET (15:10GMT) while on the ICE Futures Exchange in London, Brent oil for August delivery traded up 0.85%, at $51.19 by 11:12 AM ET (15:12 GMT).
On Wednesday 31st of May, American Petroleum Institute (API) data showed a fall in U.S. crude stockpiles of 8.67 million barrels. OPEC /non-OPEC members, including Russia, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) from January to June until the end of March 2018. This has led to an increase in May output and the first monthly increase for the year, due to higher supply from Nigeria and Libya, the two OPEC states exempted from the deal. Overall OPEC output rose from 250,000 bpd to 32.22 million bpd. Thus far, the production cut agreement has had little impact on global inventory levels as a result of the constant rise in U.S shale oil output to counteract the 1.8 million barrel per day production cut agreement.