The Honourable Minister of State for Petroleum, Chief Timipre Sylva announced that Nigeria is to peg its daily crude oil output at 1.412 million barrels per day (bpd) from the average 1.87mbpd. This follows from the historic 9.7 million bpd output cut agreed by the Organization of Petroleum Exporting Countries (OPEC+) on Sunday, 12th April 2020. The cut is effective from the 1st of May till the end of June 2020. Thereafter, Nigeria is set to peg output at 1.495 million bpd from July to December 2020.
From January 2021 to April 2022, crude output will go up to 1.579 million bpd. The Honourable Minister also stated that this is in addition to condensate production of between 360-460 KBOPD which are exempt from the OPEC curtailment. He expressed his optimism that the cuts will enable the rebalancing of the oil markets and the appropriate balancing of Nigeria’s 2020 budget which has been rebased at $30 per barrel.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari has assured Nigerians of fuel security during the Nations lockdown due to the novel Coronavirus. Dr. Kennie Obateru, NNPC Group General Manager, Group Public Affairs gave the assurances stating that Petroleum Products Marketing Company (PPMC) has maintained a steady supply of petroleum products across the country, adding that the company has enough products in its marine and land depots to last for the next two months.
The Managing Director of PPMC, Mr. Musa Lawan stated that PPMC has up to 2.53 billion litres in storage facilities in marine and inland depots, with more vessels carrying petroleum products en-route Nigeria. Finally, Nigerians were urged not to partake in panic buying or stockpiling of products because of the associated dangers and risks. Alhaji Kyari also said the Federal government has paid N200 billion to the power sector towards improving electricity supply to ensure that issues around power supply are addressed.
He disclosed this during a session with journalists after a meeting with Saleh Mamman, the Minister of Power, and Usman Mohammed, Managing Director of the Transmission Company of Nigeria (TCN). Hence, Nigerians will get better access to power during this lockdown period and going forward. Alhaji Kyari said there are issues around the power supply process and have discussed most of them and are working as a team to ensure that issues around payment and evacuation are resolved. Mr. Mohammed said the Minister has prevailed on the NNPC to assist in supplying gas to power plants to ensure a steady power supply going forward.
VAALCO Energy has completed the South East Etame 2H workover and released the drilling rig used in its highly successful 2019/2020 drilling program. The workover successfully restored 2,400 gross barrels of oil per day (BOPD), or 650 BOPD NRI to VAALCO, in line with the production level before the Electronic Submersible Pump (ESP) failed in early March 2020. Total Company production is approximately 20,000 gross BOPD or 5,400 BOPD NRI to VAALCO. Production for the first quarter of 2020 was 18,298 gross BOPD or 4,944 BOPD NRI to VAALCO.
During the first quarter of 2020, VAALCO had two liftings, one in January and one in February, but the next lifting for 85,000 barrels of oil that was scheduled for March was delayed to April 1st due to poor weather conditions. As a result, the sales volumes for the quarter were 294,000 barrels of oil, net to VAALCO as compared to 318,000 barrels for the fourth quarter of 2019, despite the higher production in the first quarter of 2020.
VAALCO released the Vantage rig on April 9, 2020 and does not currently expect to perform any additional workovers to better preserve cash flow in the current uncertain environment. Thus far, VAALCO’s operations have not been materially affected by the COVID-19 pandemic. The health and wellbeing of employees remain paramount, and as such, VAALCO continues to work with its regional partners to ensure the Company operates as safely as possible, applying best practice protocols as instructed by the respective governments.
On Thursday 16th April, oil prices were broadly stable after sharp losses in the previous session, with investors hoping that a big build-up in U.S. inventories may mean producers have little option but to deepen output cuts as the coronavirus pandemic ravages demand. The U.S. West Texas Intermediate (WTI) futures traded 1.9% higher at $20.25 a barrel at 9:45 AM ET (13:45 GMT), while Brent crude futures rose 1.4% to $28.08.
The Energy Information Administration (EIA) in its weekly report showed that U.S. crude oil inventories increased by 19.2 million barrels to 503.6 million barrels for the week ending April 10. U.S. crude oil inventories are about 6% above the five-year average for this time of year. But prices bounced back Thursday aided by the latest Monthly Oil Report from OPEC, which forecasts that global oil demand will fall by 6.85 million bpd in 2020.
This forecast will have contributed towards the formation of the OPEC+ deal, finalized on Sunday 12th April, which envisages production cuts of 9.7 million bpd in May and June, but then with the cuts tapering through the rest of 2020, 2021 and the first quarter of 2022. Still, as large as that drop is, it pales alongside Wednesday’s International Energy Agency prediction of a 9.3 million bpd drop in 2020.