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Oranto Petroleum Invests $500m in South Sudan Oil Block

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  • Oranto Petroleum Invests $500m in South Sudan Oil Block

Nigeria’s Oranto Petroleum Limited has said it has signed oil sharing agreement with South Sudan covering the country’s Block B3, earmarking up to $500 million to explore the oil in the region.

In the first three years, Oranto said it would do airborne geophysical surveys in the 25,150-sq km block and assess existing data held by the government and former operators, among other activities.

“Oranto Petroleum will invest $500 million to develop South Sudan’s Block B3, launching a comprehensive exploration campaign starting immediately,” the oil company said in a statement, according to Oriental News.

Since its independence, South Sudan has relied on oil for all income a situation that has significantly compounded the ongoing political and economic instability, due to the fall in crude oil prices.

South Sudan got the lion’s share of the oil when it split from Sudan in July 2011, but its only export route is through Sudan, giving Khartoum leverage and leading to ongoing pricing disputes.

According to South Sudanese officials, production in the past reached as high as 350,000 bpd, but fell after a dispute with Sudan over fees for pumping South Sudan’s crude through Sudan’s export pipeline, which led South Sudan to halt oil production in 2012.

Oil production in South Sudan has, however, been affected by the conflict that erupted in 2013 after a political disagreement between President Salva Kiir and his then deputy, Riek Machar.

Even after restarting production, it never recovered to those levels, but it dropped to 245,000 barrels per day after the outbreak of the civil conflict hindered production in the oil-rich areas of the north.

“We believe the petroleum resources of Block B3 are vast. To reach our target of more than double current oil production, we need committed new entrants like Oranto,” South Sudan’s Minister of Petroleum, Ezekiel Lol Gatkuoth told reporters in the capital, Juba.

“The government is working hard to reinvigorate the petroleum industry in South Sudan by creating an enabling environment for International oil and gas companies to invest and operate. It is up to the oil companies to come in, explore and produce,” he added.

The block is highly prospective, with productive parts of the Muglad Basin to the northwest and estimated reserves in place of more than 3 billion barrels of oil. The block is categorized as low risk, high reward.

Under the EPSA, Oranto will be the technical operator and 90 per cent shareholder of the block, with Nilepet holding a 10 per cent stake.

“It’s an honor to formalize our entry into South Sudan with this EPSA,” said Chief Arthur Eze, founder and chairman of Oranto Petroleum.

“Our company is at the vanguard of African firms exploring and developing African assets. This is the beginning of a long-term collaboration with Nilepet, the people of South Sudan and our partners to bring to light the immense potential of Block B3. Oranto is committed to an aggressive exploration work programme that will benefit all stakeholders,” he added.

The 120,000-square kilometre Block B was reportedly split by the government into the B1, B2 and B3 blocks in 2012. In Block B3, Oranto would work alongside the B1 and B2 partners, which include Total.

South Sudan is an established, world-class petroleum producing region, whose territory includes a large part of the Cretaceous rift basin system that has proved petroliferous in Chad, Niger and Sudan.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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Barclays Bank

Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

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Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

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Gold Dips by 2 Percent on Better Than Expected Job Report

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  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

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