- Pan Ocean’s Amukpe Pipeline to Boost Nigeria’s Crude Exports by 160,000bpd
Pan Ocean’s Amukpe-Escravos Pipeline Project (AEPP) in Delta State, which is scheduled to come on stream before the end of the third quarter of 2017, will boost Nigeria’s crude oil exports by 160,000 barrels per day and also serve as an alternative to the much troubled Trans Forcados Pipeline (TFP) for oil companies operating in the western Niger Delta, the company has said.
The Senior Pipeline Engineer and Project Lead of AEPP, Mr. John Okusolubo, said in a statement Wednesday that the objective of the pipeline project was to provide Pan Ocean Joint Venture and other producers such as Seplat Petroleum Development Company Plc, Nigerian Petroleum Development Company (NPDC), Conoil, Sahara, and others an alternative export pipeline route to the existing TFP that had been a casualty of militant attacks.
Okusolubo said: “The primary objective of AEPP is to ensure that there is no disruption to crude oil export like the scenario we experienced on the TFP over the past 16 months where there was a total collapse of crude export.
“Nigeria’s experience and history have shown that it is not wise to be highly dependent on a particular source that is why we have AEPP as an alternative to TFP which has been our major means of exporting crude oil as a joint venture (JV) partner.”
According to him, the construction of the AEPP entails the use of continuous Horizontal Directional Drilling (HDD) method to install the entire pipeline length for the purpose of security from the act of vandalism, which is prevalent in the area.
He stated that the AEPP is going to be a major export line that will give the opportunity for other injectors who may also be stalled by the erratic vandalism of the TFP to join in the transport of crude to Escravos.
“This great achievement means Pan Ocean has an alternative line to export its crude and has also created an opportunity for others who have been using TFP to also export their crude without disruption. This project will help the country to continue to flow their crude and keep the economy alive,” he added.
Attacks on oil and gas facilities by the Niger Delta militants have severely impacted exploration, production, and export of crude oil from the region.
Oil companies operating in the region have either cut back on their production or in some cases stopped production over attacks on their facilities.
The Trans Forcados Pipeline has a daily capacity of 240,000 bpd, with average daily flows ranging between 200,000 bpd and 240,000 bpd.
Amid its shutdown, Nigeria’s crude oil production fell from 2 million bpd to as low as 1.27 million bpd, losing its position as Africa’s number one crude oil producer and falling behind Angola several times over the past year.
Pan Ocean, operator of the NNPC-Pan Ocean Joint Venture had responded to this threat, by awarding a contract for the construction of Amukpe-Escravos Pipelines Project (AEPP) to Fenog Nigeria Limited, an indigenous company in 2011.
The contract, which involved installation of 20-inch pipelines across the 67 kilometres route, will have the capacity to handle 160,000 barrels of oil per day (BOPD) with remote manifolds to accommodate third parties’ crude oil evacuation to the Escravos Tank farm.
FG Agencies Agree on Oil Revenue Management
Meanwhile, key agencies of the federal government have agreed to partner in oil revenue savings and promotion of better attitude to public office.
They are Nigeria Extractive Industries Transparency Initiative (NEITI), Nigeria Sovereign Investment Authority (NSIA) and National Orientation Agency (NOA).
A statement by NEITI’s Director of Communications, Dr. Orji Ogbonnaya Orji, Wednesday said in Abuja that the agencies reached the agreement at separate meetings with NEITI Executive Secretary, Mr. Waziri Adio.
According to Adio, the meetings are focused on exploring areas of inter-agency mutual cooperation.
He explained that while NSIA managed the Sovereign Wealth Fund (SWF) derived from extractive revenues, NOA led the national campaign for attitudinal change and ethical values in the country.
At the meeting with the management of NSIA, the NEITI executive secretary expressed regrets that “the nation’s paltry oil savings defeated the rationale for having such savings in the first place”.
“Nigeria does not have enough oil savings to finance even the fifth of a year’s budget at the federal level, not to talk of having enough for investments or for the future generation,” he lamented.
Adio said the occasional paper recently released by NEITI, largely focused on the “Case for a Robust Oil Saving Fund for Nigeria”.
He added that in the publication, NEITI drew public attention to the fact that Nigeria failed to save enough oil revenues when oil prices were quite high in order to sustain economic activities.
“From the paper also problematic is the level of consumption relative to non-oil exports. Nigeria typically responds to high oil prices with equally high but manifestly unsustainable level of consumption.
“The absence of sufficient savings left Nigeria severely exposed when the price of oil, Nigeria’s main source of government revenues and foreign exchange, started to plunge in 2014,” Adio said.
He said the researched publication largely touched on the work of NSIA and the managers of Nigeria Sovereign Wealth Fund.
He explained that NEITI’s decision to alert the nation on the need to save for the rainy day was informed by the need for the country to prepare adequately for frequent price volatility, “depletion of non-renewable resources and for future generation”.
Earlier, the Managing Director of NSIA, Dr. Uche Orji, commended NEITI for taking the initiative to produce the paper, adding that it helped NSIA to tell its own story in an independent manner.
According to him, “NEITI has a voice that resonates with policy makers and its other stakeholders. We found the publication exceptional and commendable.”
The NSIA boss said the report was produced without the inputs of his agency.
He described the recommendations in the publication as very succinct and apt.
“We are here to ask for closer collaboration between the NSIA and NEITI in the discharge of our individual mandates while working together for the common good of our country,’’ he added.
The NSIA managing director briefed the NEITI management on what his agency had achieved so far, the prospects of on-going projects and unfolding challenges.
He further explained that the NSIA established frameworks for good corporate governance, risk management, transparency, and accountability, adding that the solid governance structure had attracted credible partners, notable investors, and private equity funds.
He disclosed that the Nigeria Governors’ Forum (NGE), which initially opposed its mandate, is one of its greatest supporters at the moment.
“The $250 million we invested in 2016 came from the state governments’ share of the NLNG dividend,” Orji hinted.
Meanwhile, NEITI and NOA are to establish an effective platform for collaboration, especially in information sharing, public education, and enlightenment.
The Director-General, Dr. Garba Abari, announced this when NEITI’s executive secretary visited his office.
Abari announced that 813 offices of NOA would be made available to NEITI as a platform for dissemination of the organisation’s reports to all nooks and crannies of Nigeria.
Oil Dips from Near Three-year High
Oil prices dipped modestly on Thursday but still held close to their highest in almost three years, supported by drawdowns in U.S. inventories and accelerating German economic activity.
Doubts about the future of the 2015 Iran nuclear deal that could end U.S. sanctions on Iranian crude exports also helped prices.
Brent dipped 18 cents, or 0.24%, to $75.01 a barrel by 1055 GMT, after earlier rising to $75.78. U.S. crude slipped 17 cents, or 0.23%, to $72.91 a barrel, after hitting a session high of $73.61 earlier.
Both benchmarks had hit their highest since October 2018 on Wednesday before slightly paring back gains.
“The narrative is unchanged: the bounce in Western-world commuting and leisure activity fuels oil demand and drains oil supplies,” Norbert Rücker, head of economics at Julius Baer, wrote in a note.
Further stoking expectations of a European fuel demand recovery, data from Germany showed the largest upward leap in retail conditions since German reunification more than three decades ago.
Across the Atlantic, U.S. crude inventories dropped to their lowest since March 2020, official data showed. U.S. gasoline stocks also posted a surprise draw.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+ that meets on July 1, have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made, two OPEC+ sources said on Tuesday.
“Given the good sentiment and robust demand, OPEC+ is likely to find it easy next week to announce a further increase in production, at least for August, without jeopardising the upswing enjoyed by the oil price,” Commerzbank analysts wrote.
They said “the currently positive general tenor on the oil market” was driving prices up.
Brent has gained more than 45% this year on the OPEC+ supply cuts and recovering demand. Some industry executives have talked of crude returning to $100 for the first time since 2014.
Iran said on Wednesday the United States had agreed to remove all sanctions on Iran’s oil and shipping but Washington said “nothing is agreed until everything is agreed” in talks to revive the 2015 Iran nuclear deal.
South Sudan Launches First-Ever Oil and Gas Licensing Round
South Sudan’s Ministry of Petroleum (MoP) officially launched the country’s first-ever oil and gas licensing round in Juba on Wednesday; Hosted by the MoP and attended by industry executives and international stakeholders, the event signifies an historic moment in the country’s budding oil and gas sector; The launch precedes the country’s highly anticipated national energy conference, South Sudan Oil & Power 2021, organized by Energy, Capital & Power and taking place at the Crown Hotel in Juba on the 29th-30th June.
South Sudan’s Ministry of Petroleum (MoP) officially launched the country’s first-ever oil and gas licensing round in an inaugural event on Wednesday in Juba. Focused on accelerating exploration and production at new and existing blocks, and promoting the country as a competitive investment destination, the event signified an historic moment in the country’s competitive oil and gas sector.
The event was officially launched by Hon. Puot Kang Chol, Minister of Petroleum, where presentations were given by Hon. Awow Daniel Chuang, Undersecretary, MoP and Hon. Athian Ding Athian, Minister of Finance and Economic Planning, with closing remarks by H.E. James Wani Igga, Vice-President and VP of the Economic Cluster, TGNU. With emphasis placed on political improvements, the improved legal framework, and the ongoing acquisition of new data, the launch has reaffirmed the country’s commitment to advancing the sector.
“Oil licensing is a proof of stability and progress in South Sudan. These blocks are part of a vision for lasting peace in the country and we want to open up the energy sector for investment. The Ministry of Petroleum has identified new exploration blocks with potential hydrocarbons for investors, operators, and other parties. We are inviting genuine investors and as mentioned in our Petroleum Act, we will try our best to be transparent,” stated Hon. Puot Kuang Chol.
“It is high time for us to help maximize the natural resources we have, and I applaud the MoP for what they are doing. The oil industry has had its ups and downs, but it is about time that these resources benefit the community, and everyone gets their rightful entitlement of the development that is taking place in South Sudan,” stated Hon.. Athian Ding Athian.
The newly launched licensing round aims to attract international investors and partners to help expand South Sudan’s exploration initiatives. Built against a backdrop of peace and stability, the new licensing round aims to attract investors, while ensuring sustainable developments and community benefits.
“Certainly, one can say with confidence that South Sudan is doing well in maintaining peace and implementing peace agreements. For the first time we can really promote investment. The country needs to rigorously enforce transparency and good governance. We need accountability to improve. I am glad that with this new licensing round, the whole country will benefit,” stated H.E. James Wani Igga.
Additionally, the launch meticulously outlined the licensing process and schedule, providing insight into new and available blocks, technical capabilities and data. By detailing crucial analytical data and information to assist operators and investors, the launch emphasized that South Sudan is officially open for business, and accordingly, is welcoming investors to its competitive sector.
“Most of the areas being licensed had previously not been explored properly in terms of seismic data due to complications from the war. In 2019, we contracted PETROTECH to help with the data. The absence of data previously made it difficult to conduct licensing rounds, however, this licensing round today allows South Sudan to conduct a transparent tendering process with trustworthy data that is available,” stated Hon. Awow Daniel Chuang.
According to the MoP, the Ministry will use stringent criteria in its facilitation of the bid evaluation and investor selection process. With the offered blocks falling between longitudes 25 and 36 and between latitudes 4 and 11, and the size of blocks ranging between 4,000 and 25,000km², the licensing round is expected to be highly competitive. Additionally, the MoP is emphasizing the role of Nilepet in facilitating growth across the industry.
“If you look at the producing blocks today, the percentage of Nilepet has gone to 10% equity. We want investors but we also want to promote the capacity of Nilepet as the national oil company,” continued Hon. Puot Kang Chol.
The newly launched licensing round will be expanded on at the South Sudan Oil & Power (SSOP) 2021 conference, organized by Energy Capital & Power and endorsed by the Ministry of Petroleum. The Ministry will unpack the exploration of new blocks, existing blocks and will explain how it will further explore already producing areas.
Taking place at the Crown Hotel in Juba on the 29th-30th June, SSOP 2021 is expected to drive investment, promote engagement, and accelerate growth within South Sudan’s oil and gas sector.
Brent Crude Oil Crosses $75 Per Barrel as Global Demand Recovers
Crude oil prices sustained bullish runs amid rising demand for global oil and likely delay in Iranian crude supply to global oil market.
Brent crude oil, global benchmark for Nigerian oil, rose above $75 a barrel for the first time since 2019 on Tuesday as global investors remained bullish across the board.
Brent crude rose 26 cents or 0.4 percent to $75.16 a barrel as of 7 am Nigerian time on Tuesday.
The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.
“The market sentiment stays strong with improved outlook for global demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities, adding that a rally in Asian stock markets is also helping boost risk appetite among investors.
Global shares extended their recovery on Tuesday, with Asian markets bouncing from four-weeks lows as investor focus on economic growth partly offset worries about the U.S. Federal Reserve raising rates sooner than expected.
BofA Global Research raised its Brent crude price forecasts for this year and next, saying that tighter oil supply and recovering demand could push oil briefly to $100 per barrel in 2022.
Investors are looking to weekly U.S. inventory data as crude oil stockpiles have fallen for four weeks, said Toshitaka Tazawa, analyst at commodities broker Fujitomi Co.
U.S. crude stocks were expected to drop for the fifth consecutive week, while distillate and gasoline were seen rising last week, a preliminary Reuters poll showed on Monday.
“The oil prices are expected to hold a firm tone amid expectations that fuel demand will pick up quickly along with economic recovery in Europe and the United States,” Tazawa said.
The price gap between the world’s two most actively traded oil contracts narrowed to its lowest in more than seven months, demonstrating that U.S. oil output is still in the COVID-19 doldrums with the market likely to remain undersupplied.
Negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.
Raisi on Monday backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting U.S. President Joe Biden, even if Washington removed all sanctions.
“The lower probability of Iranian crude oil returning to the market due to the new hardline president is also supporting the market,” Fujitomi’s Tazawa said.
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