Dr. Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) commended the success of deepwater field operations in Nigeria. Dr. Baru stated that oil production from deep-water acreages carried out through the production sharing contract accounts for 41% of Nigeria’s total oil production. Dr. Baru added that production will shoot up substantially if the Joint Ventures get the required investments. Dr. Baru noted that a new class of players, including small local independents with non-diversified portfolios and lean balance sheets but with a track record, could raise funds from international financiers because they contribute about 15% of national production and require substantial capital/funds for growth. Dr. Baru explained the importance of diversified players including local independents companies as opposed to International Oil Companies (IOCs).
On Monday 10th September, Ghana announced it has selected two Chinese companies to build the infrastructure needed to import Liquefied Natural Gas (LNG), resurrecting the $350 million Tema terminal project that would make Ghana the first in sub-Saharan Africa to buy LNG. Tema LNG, supported by Africa-focused private equity firm Helios Investment, signed deals with China Harbour Engineering Company to build onshore facilities and Jiangnan Shipyard for a floating storage and regasification unit (FSRU). The LNG Terminal will be completed in 18 months and LNG is expected to be sourced by Russian oil giant Rosneft, which has a 12-year deal to supply 1.7 million tonnes a year (mtpa) with Ghana National Petroleum Corporation (GNPC). In addition, a concession agreement was signed between the Ghana Ports and Harbours Authority (GPHA) and Tema LNG Terminal Company to allow for the siting and operation of the facility within the Tema port, which will deliver annual revenue in excess of $6 million to GPHA throughout the total concession period. The project cost estimate is in excess of $350 million, of which $200m would be spent directly in Ghana over the next 18 months. The Terminal will be transferred to the Ghanaian government (GNPC and GPHA) after 12 years.
On Thursday 13th September, crude oil prices declined after monthly data from the International Energy Agency (IEA) revealed production among the Organization of the Petroleum Exporting Countries (OPEC) members surged in August, pushing global inventories to a record high. The New York Mercantile Exchange crude futures for October delivery fell 2.5% to settle at $68.62 a barrel, while on London’s Intercontinental Exchange, Brent fell 1.7% to trade at $78.35 a barrel. The U.S. Energy Information Administration weekly report for Wednesday 12th September showed a fall in crude inventories by 5.296 million barrels for the week ending September 7, beating expectations for a draw of 1.300 million barrels. The large draw in crude supplies comes as imports fell by about 0.443 million barrels per day (bpd), while exports declined by 0.320 million bpd.
The IEA monthly report stated that daily crude-oil output from OPEC and Russia rose to a nine-month high in August to 32.63 million bpd, due to a rebound in Libya production and increases from Iraq, Nigeria and Saudi Arabia. Non- OPEC supply was also up 2.6 million bpd, led by U.S. production. However, increased sanctions from the U.S. against Iran have put pressure on the organization and could lead to market tightness. The financial sanctions against Iran will target the petroleum sector in November, when a global drop of crude supply is expected. OPEC agreed in June to raise output at a nominal increase of 1 million barrels a day (bpd) amid pressure from the U.S. to decrease prices.