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Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

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Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigeria Adds 17 Deep Offshore Blocks to 2024 Oil Licensing Round

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The Federal Government of Nigeria announced on Tuesday the addition of 17 deep offshore oil blocks to the 2024 Licensing Round for oil fields.

This significant expansion is aimed at enhancing the nation’s crude oil production capacity and attracting more foreign and local investment.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, disclosed this development during a pre-bid conference held in Lagos.

Komolafe said the decision was part of the commission’s ongoing efforts to derive maximum value from Nigeria’s abundant oil and gas reserves.

“In pursuit of the commission’s commitment to derive value from the country’s abundant oil and gas reserves and increase production, the commission has been working assiduously with multi-client companies to undertake more exploratory activities to acquire more data to foster and encourage further investment in the Nigerian upstream sector,” Komolafe stated.

The new additions come on the heels of recent bids for 12 oil blocks and seven deep offshore assets in the 2024 marginal fields bid round.

This follows the earlier 2022/23 mini-bid round that saw some deep offshore blocks put up for offer.

The Federal Government’s proactive approach signals its determination to capitalize on the country’s hydrocarbon resources.

Komolafe noted that additional data acquired on deep offshore blocks facilitated this expansion. “As a result of additional data acquired in respect of deep offshore blocks, the commission has added 17 deep offshore blocks to the 2024 Licensing Round. Further details on the blocks can be found on the bid portal,” he added.

To accommodate the expanded opportunities, the NUPRC has adjusted the 2024 Licensing Round schedule. The registration and submission of pre-qualification documents, initially set to close on June 25, 2024, has been extended to July 5, 2024.

The data access, purchase, evaluation, and bid preparation phase will commence on July 8, 2024, and close on November 29, 2024, as initially planned.

Komolafe also highlighted the importance of ensuring equitable participation and transparency in the bidding process.

To this end, the commission has sought and received approval from President Bola Tinubu, who also serves as the petroleum minister, to implement attractive fiscal regimes and minimize entry fees for both licensing rounds.

A cap has been placed on the signature bonus payable for the award of the acreages to promote a level playing field for all bidders.

“Since the criteria for the award of the oil blocks are now much more attractive than they initially were during the 2022/23 Mini Bid Round, it is in the interest of equity and fair play to give all investors the same opportunity to bid for the assets,” Komolafe asserted.

Furthermore, the NUPRC announced that the pre-qualified applicants from the 2022/23 Mini Bid Round would not need to undergo a new pre-qualification process for the 2024 Licensing Round. Their technical submissions remain valid, and they are encouraged to re-submit new commercial bids to benefit from the revised, more attractive criteria.

These applicants are also free to bid for the newly offered blocks in the 2024 Licensing Round.

The Federal Government’s expanded licensing round presents a lucrative opportunity for investors to participate in Nigeria’s burgeoning oil and gas sector. With the introduction of these 17 new deep offshore blocks, Nigeria aims to solidify its position as a leading oil producer on the global stage and stimulate economic growth through strategic energy sector investments.

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Brent Crude Falls to $84.12, WTI Rises to $80.19

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In a cautious market, oil prices showed mixed movements in Asian trade on Tuesday.

Global benchmark Brent crude oil, against which Nigerian oil is priced, experienced a slight decline of 13 cents, or 0.15%, to settle at $84.12 per barrel.

Meanwhile, U.S. West Texas Intermediate (WTI) crude oil saw a modest increase of 14 cents, or 0.17% to $80.19 per barrel.

The recent fluctuations come after both benchmarks posted significant gains of around 2% on Monday, marking their highest closing prices since April.

The market’s attention has now shifted back to fundamental factors, which have exhibited signs of softness for some time.

Francisco Blanch, a commodity and derivatives strategist at Bank of America, noted in a client note that global crude oil inventories and refined product storage in key locations such as the United States and Singapore remain elevated.

“The oil market shifted its focus back to fundamentals, which have been soft for some time,” Blanch stated, highlighting the broader concerns about global demand growth.

Data from the first quarter of the year indicated a deceleration in global oil demand growth to 890,000 barrels per day year-on-year, with further slowing likely in the second quarter.

Also, according to the country’s statistics bureau, China’s oil refinery output fell by 1.8% year-on-year in May due to planned maintenance and higher crude costs.

Market participants are also keenly watching for further indications on interest rates and U.S. demand trends, with several U.S. Federal Reserve representatives scheduled to speak later on Tuesday.

Despite the mixed signals, some analysts remain optimistic about the impact of OPEC+ supply cuts.

Patricio Valdivieso, vice president and global lead of crude trading analysis at Rystad Energy, said, “The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025.”

Valdivieso further noted the disconnect between OPEC+’s demand outlook and those of other agencies, making it challenging to adopt a fully bearish stance on the market.

This sentiment has been reinforced by recent investor behavior, with hedge funds and other money managers purchasing the equivalent of 80 million barrels in key petroleum futures and options contracts over the week ending June 11.

Support for the market has also come from a rebound in refining margins, particularly in Europe and Asia.

Sparta Commodities analyst Neil Crosby pointed out that refining margins at a typical complex refinery in Singapore averaged $3.60 a barrel for June so far, up from $2.66 a barrel in May.

As the market navigates these dynamics, the cautious optimism among investors and analysts suggests a period of continued volatility and adjustment, with fundamental factors and policy decisions playing pivotal roles in shaping future price movements.

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Nigerian Oil Theft Escalates to 400,000 Barrels a Day, Exposing Systemic Corruption

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A recent report has revealed that Nigeria’s daily oil losses surged to 400,000 barrels as efforts to curb crude oil theft remain ineffective.

This escalation from 100,000 barrels per day in 2013 underscores the severe and worsening challenge facing the nation’s oil sector.

The report, produced by the public policy firm Nextier, is the result of several months of in-depth investigation.

It reveals a complex web of sophisticated networks involving powerful actors, foreign buyers, security personnel, transporters, and government officials.

This elaborate system facilitates the large-scale theft of crude oil, which has been a significant drain on Nigeria’s economy.

From 2009 to 2021, Nigeria lost 643 million barrels of crude oil, valued at $48 billion, due to theft. This loss represents more than half of the nation’s national debt as of 2021.

The situation has also severely impacted Nigeria’s ability to meet its OPEC quotas, which have dwindled from 2.5 million barrels per day in 2010 to just 1.38 million barrels per day.

The report, authored by Ben Nwosu, an associate consultant at Nextier, and Ndu Nwokolo, a managing partner at Nextier, paints a grim picture of the local dynamics fueling this crisis.

It highlights the involvement of multiple small-scale artisanal actors, who are often supported by local political and security forces. These local actors contribute to the creation of underground economies, further complicating efforts to curb theft.

Environmental hazards are another grave concern. Illegal refining processes, characterized by uncontrolled heat and poorly designed condensation units, have led to numerous explosions. Between 2021 and 2023 alone, these operations resulted in 285 deaths.

Despite these dangers, illegal refineries continue to thrive due to economic necessity and systemic corruption.

Nigeria’s four refineries, which have a combined capacity of 445,000 barrels per day, are currently operating at only 6,000 barrels per day due to mismanagement and corruption.

This shortfall forces the country to rely heavily on imported refined products, further exacerbating the situation.

Massive corruption in oil importation and subsidies has led to billions of naira being unaccounted for between 2016 and 2019.

Moreover, the government’s inability to support modular refineries has perpetuated reliance on illegal operations.

Security forces are often implicated in the theft, providing protection for a fee. Although recent measures, such as the destruction of illegal refineries, have offered temporary relief, these efforts have been short-lived.

New illegal operations quickly emerge, perpetuating the cycle of theft and corruption.

The authors of the report emphasize that addressing this complex issue requires more than punitive measures. They call for a comprehensive approach that tackles the root causes, including the need for effective governance and economic opportunities for affected communities.

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