This investment is most evident in countries such as Nigeria, South Africa, Morocco and Angola, the ARA said in a statement after the conclusion of its annual event in Cape Town this week.Besides, US President Donald Trump has again urged OPEC to increase oil supply, saying prices were “getting too high,” after WTI crude futures have hovered near $60/b for the past two weeks.

“Very important that OPEC increase the flow of Oil,” Trump said Thursday on Twitter. “World Markets are fragile, price of Oil getting too high. Thank you!”The tweet comes as US Secretary of State Michael Pompeo is scheduled to meet Thursday morning in Washington with officials from OPEC’s top two oil producers: Saudi Prince Khalid Bin Salman and Iraqi Speaker of Parliament Mohammad Halbousi.

It was Trump’s 12th tweet about oil prices since becoming president.The WTI Crude dropped by 0.57 per cent to $58.84; Brent dropped to $66.58 while Nigeria’s Bonny Light dropped by 0.29 per cent to $68.24 as at 4:38pm local time.Indeed, Africa’s population and economic output is set to boom in the coming decades, supporting energy demand, while elsewhere in the world energy demand is maturing.

Large refining projects include the 650,000 b/d Dangote refinery in Nigeria, which is expected to start up in late 2022, along with a big push in the Egyptian and Algerian refining sector, the ARA noted.Besides refining, a lot of capital has been invested in logistics, distribution, storage terminals, import facilities and retail marketing, the refining association said.

Delegates and speakers at the conference stressed the critical need to create the right regulatory structures that will satisfy the massive requirement for finance to meet Africa’s growing oil demand.Some analysts are particularly bullish on the continent’s oil retail and storage sector, saying population growth will support rising demand, but they remain wary of how government policies could blunt this effect.

“The main challenge is the government’s potential ability to damage the sector through subsidies or poor regulation. Subsidies have generally reduced, and we support this move,” Standard Bank’s head of oil and gas for Southern Africa, Paul Eardley-Taylor, said.“The continent as a whole has struggled to keep up with the rest of the world in terms of refining capacity. Delays to projects and the lack of committed financing have stifled progress in the past, but the investment environment now looks more favourable”, the statement read.

Historically one of the leading oil majors in Africa, Total pumped 654,000 barrels daily (b/d) of oil equivalent from its sub-Saharan acreage in 2017, most of which came from its Angolan deepwater fields off West Africa.

This year, Total expects rising flows from Kaombo Norte in Angola, Egina in Nigeria, and the Ichthys field off northwest Australia, to boost production by a further nine per cent.

The oil firm had earlier this month, said it will be responsible for 23 per cent of the total crude oil Nigeria produces daily when its 200,000 b/d Egina Floating Production Storage and Offloading (FPSO) oil platform fully comes on stream, Managing Director, Total, Nicolas Terraz, said at the recently-concluded second edition of the Nigeria International Petroleum Summit (NIPS) in Abuja.

Despite a number of recent project start-ups in West Africa, Total is still “fighting the decline” in its existing upstream portfolio in the region, and expects output to slip at least in the short term, Breuillac said on the sidelines of the IP Week event in London.

Total’s strategy in the region for the coming two years is to focus on short cycle projects that are tie-backs to existing facilities, he said.

“We have a lot of marginal developments in West Africa, which are very profitable because they don’t need big infrastructure investment, you need just to drill — drilling costs have gone down very significantly in the last four years — and tie back,” Breuillac said.

Total is outpacing its oil major peers in terms of upstream growth with a raft of new projects, helped by efforts to hold decline rates at around three per cent. The company expects to grow its production by nine per cent this year after hitting record levels in 2018, supported by a number of major new LNG and oil projects.

The company also expects the planned startup of Iara 1 field off Brazil, Kaombo South in Angola, Culzean in the UK, and Norway’s giant Johan Sverdrup project to support its sector-leading production growth in 2019.

Breuillac said any return to output growth from West Africa would depend on future exploration success in the region. The company, which made a “significant” gas condensate discovery offshore South Africa earlier this month, is planning exploration drilling off Senegal, Mauritania, and Namibia this year.

In the short-term, however, Breuillac said Total’s deepwater production growth will be fueled by its acreage off Brazil, and in the U.S. Gulf of Mexico.

Total is also upbeat over current and future exploration in the Perdido area on the Mexican side of the US Gulf and offshore Guyana, he said.

“We can see that deepwater is expanding beyond West Africa for Total with a very strong pool of development in Brazil and in the US Gulf of Mexico,” he said.

Total has said it plans to keep its annual production growth above five per cent for 2017-2022.

Developing countries across the world will push demand for oil to about 130 million barrels per day (mbpd) by 2040, BP’s 2019 Energy Outlook, which accessed the future of fossil fuel, has said.

Indeed, the report noted that although the use of fossil fuel is projected to decline due to the push for alternative energy, but demand would significantly be driven by increases in prosperity in the developing world.The outlook, which considered a number of factors, noted that improving standard of living in places like India, China, and other Asian countries would require ‘more energy’ to allow the growth to continue to improve.

“Growth in global energy demand is broad-based across all the main sectors of the global economy. Differing trends in how energy is used and consumed in these sectors has an important bearing on the energy transition,” the report noted.For the demand to be met, the report noted that significant level of investment would be required for there to be sufficient supplies.

“If future investment was limited to developing existing fields and there was no investment in new production areas, global production would decline at an average rate of around 4.5 per cent per annum (based on IEA’s estimates), implying global oil supply would be only around 35mbpd in 2040.

“Closing the gap between this supply profile and any of the demand scenarios in the outlook would require many trillions of dollars of investment over the next 20 years,” the report continued.However the outlook is a concern to the Paris climate goals, which intend to drastically reduce the use of hydrocarbon to preserve the environment, BP noted that emissions from energy use will continue to edge up, increasing by almost 10 per cent by 2040, rather than falling substantially.

While BP’s was optimistic about demand for fossil fuels, a similarly report released earlier in the week by McKinsey insisted that global demand could stop rising in the 2030s, after more than a century of sustained growth.Similarly, a global think-tank, Rystad Energy, said improved market conditions and lower well costs have been projected to increase exploration and production activities after years of budget cuts.

Just last week, the Nigerian National Petroleum Corporation (NNPC), and its production sharing contracting (PSC) partners for the development of the Bonga Main and Bonga South West fields in OML 118 signed agreement that will add about two billion barrels of crude oil to the nation’s output.

The pact is expected to fast track Nigeria’s aspiration to unlock over 10 billion barrels of deep-water oil reserves.The development followed a recent flag-off of well drilling activities at Kolmani River Well, in the Gongola Basin, Gombe State, in efforts to boost the nation’s oil reserves to 40 billion barrels, and daily production to 3mbpd.

The report by Rystad Energy, said: “Renewed optimism in exploration activities is anticipated in 2019, with operators from various segments aiming for multiple high-impact campaigns – both onshore and offshore – in essentially all corners of the world.”

Nigerian unit of French oil major, Total, said on December 29, 2018, it commenced production from the Egina field, located in around 1,600 meters of water depths, 150 kilometers off the coast of Nigeria.

In a statement from Total on Wednesday, the oil firm said at plateau, the Egina field will produce 200,000 barrels of oil per day, which represents about 10 per cent of Nigeria’s production.

The Floating Production Storage and Offloading (FPSO) unit used to develop the giant Egina field is the largest Total has ever built. This project has also involved a record level of local contractors.

Six of the 18 modules on the FPSO were built and integrated locally, and 77 per cent of hours spent on the project were worked locally, the statement explained. Startup has been achieved close to 10 per cent below the initial budget, which represents more than $1billion of capital expenditure (CAPEX) savings, due in particular to excellent drilling performance where the drilling time per well had been reduced by 30 per cent.

“Total is proud to deliver a project of this size under the initial budget, and to contribute to the development of Nigeria’s oil and gas sector by generating employment as well as building industrial capability. Egina will significantly boost the Group’s production and cash flow from 2019 onwards, and benefit from our strong cost reduction efforts in Nigeria, where we have reduced our operating costs by 40 per cent over the last four years,” President Exploration and Production at Total, Arnaud Breuillac, was quoted as saying.

He added: “Furthermore, some upside potential nearby remains to be developed, and we are studying in particular Preowei discovery tie-back to the Egina FPSO.”Initially discovered in 2003, the Egina field is the second development in production on the Oil Mining Lease (OML) 130, following the Akpo field, which started-up in 2009. The Preowei field is another large discovery made on this prolific block for which an investment decision is scheduled for 2019.

Total Upstream Nigeria Limited operates OML 130 with a 24 per cent interest, in partnership with the Nigerian National Petroleum Corporation (NNPC); South Atlantic Petroleum – SAPETRO Limited (15 per cent); CNOOC E&P Nigeria Limited, a wholly owned subsidiary of CNOOC Limited (45 per cent); and Petrobras Oil and Gas BV (16 per cent).

The WTI futures contract, the New York commodities markets’ benchmark, and its European counterpart Brent Crude both fell more than six percent on the day.

High global oil production compared to demand was the top reason for Friday’s selling, while the outlook for a weakening world economy led investors to conclude that growth would not be strong enough to soak up the surplus.

“The truth of the matter remains that rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets,” said Lukman Otunuga, a research analyst at FXTM.

With a December OPEC meeting not expected to make a major dent in production levels, WTI now had scope to fall to $50 “in the near term”, he said.

In late European trading, WTI held just over $51 and Brent around $59.

Some analysts said US President Donald Trump had much to do with falling oil prices.

– Some say it’s Trump –
“Although most analysts claim that this has to do with supply overhang and increased production from Russia and Saudi Arabia, the bottom line is that the US President keeps pushing for lower prices,” said Fiona Cincotta, senior market analyst at City Index trading group.

“While this is the case it will be difficult to see a return to oil at a higher level unless oil cartel OPEC decides on a major output cut at its next meeting on December 6.”

The pound dropped versus the dollar, a day after spiking on news that Britain and the EU had struck a draft deal over ties post Brexit.

That came ahead of a weekend summit in Brussels to sign off on an overall package on the UK’s exit from the European Union in March.

Elsewhere, the euro dropped as data monitoring company IHS Markit said business growth in the 19-nation eurozone pulled back in November to its slowest rate in nearly four years, as exports weakened.

– Stocks mixed –
Eurozone stock markets, meanwhile, recoverd to show mild gains by the close but London ended lower as weak energy prices weighed.

On Wall Street, the Dow index was also under pressure with shares in energy companies feeling the pain from lower oil prices and investors weighing headwinds facing the global economy.

“US stocks are lower in early action following yesterday’s Thanksgiving holiday break, with the energy sector seeing some pressure as crude oil prices are continuing a tumble, while European political uncertainty remains and China/US trade worries are lingering ahead of next week’s G-20 summit,” analysts at Charles Schwab summed up market sentiment.

Earlier, Asian stock markets had already plunged into the red.

Chinese shares led the downward charge as Shanghai slumped by more than two percent, with the tech sector hit hard by a Wall Street Journal report that Washington is urging its allies to avoid using equipment from Chinese telecoms giant Huawei.

Worsening trade tensions between the United States and China have shattered confidence on global trading floors.

“China wants to make a deal. If we can make a deal, we will,” Trump said, ahead of crunch talks with his Chinese counterpart Xi Jinping at the G20 in Argentina next week.

The world’s top two economies have been locked in a trade war since the summer, with the US imposing punitive tariffs on Chinese goods worth $250 billion per year. In retaliation, China imposed tariffs on $110 billion of US goods.

Washington has threatened to toughen measures even further if the issue is not resolved before January.

– Key figures around 1640 GMT –
Oil – Brent Crude: DOWN $3.78 at $58.82 per barrel

Oil – West Texas Intermediate: DOWN $3.42 at $51.21

Pound/dollar: DOWN at $1.2808 from $1.2866 at 1700 GMT Thursday

Euro/dollar: DOWN at $1.1340 from $1.1400

Dollar/yen: DOWN at 112.87 yen from 113.00 yen

London – FTSE 100: DOWN 0.1 percent at 6,952.86 points (close)

Frankfurt – DAX 30: UP 0.5 percent at 11,192.69 (close)

Paris – CAC 40: UP 0.2 percent at 4,946.95 (close)

EURO STOXX 50: UP 0.3 percent at 3,137.21

New York – Dow: DOWN 0.3 percent at 24,404.46

Tokyo – Nikkei 225: Closed Friday for holiday

Hong Kong – Hang Seng: DOWN 0.4 percent at 25,927.68 points (close)

Shanghai – Composite: DOWN 2.5 percent at 2,579.48 points (close)

The 15-member cartel pumped 33.31 million barrels daily in the month under review, up by 390,000 barrels per day from September and the highest by the group since December 2016.

OPEC agreed in June to pump more oil after pressure from U.S. President, Donald Trump, to curb rising prices and make up for an expected shortfall in Iranian exports.

Oil hit a four-year high of $86.74 a barrel on October 3 but has since eased to $76 as concerns over tight output faded.

]]> http://bartonheyman.com/nigeria-update-nnpc-others-silent-over-united-states-courts-6-59-billion-gas-contract-fine/ Tue, 23 Oct 2018 10:24:48 +0000 http://bartonheyman.com/?p=5663 […]]]> The Ministry of Petroleum Resources, the Department of Petroleum Resources (DPR), and the Nigerian National Petroleum Corporation (NNPC), are yet to take a position after a United States court gave a $6.59 billion default decision against the Federal Government. The sanction was for the parties thwarting a gas deal involving British firm, Process & Industrial Development Limited (P&ID).

The gas processing and production agreement reached between Nigeria’s Petroleum Ministry and the P&ID was halted after the British company accused Nigeria of failing to keep its own end of the bargain.
Under the terms of the contractual agreement, P&ID was to construct an accelerated gas development project to be located in Cross Rivers State.

The Federal Government was to source for natural gas from oil mining leases (OMLs) 123, and 67, operated by Addax Petroleum and supply to P&ID to refine into fuel suitable for power generation in the country.
Initial volume was about 150 million standard cubic feet (mscf) of gas per day, and eventually ramped up to about 400mscf under a 20-year period.

While the government agencies connected with the deal maintain a deadly silence industry stakeholders have expressed varied opinions on the matter, which once again reinforces Nigeria’s disregard for sanctity of contracts.
The Chairman, Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor, said if the requisite regulatory framework was on ground, the issues around the deal could have been addressed.

He said: “All these issues would have been resolved if we had our Petroleum Industry Bill covering governance, fiscal administration and host community passed and signed into law. We will have all the gas fiscal terms properly addressed, and there would no more be ambiguities.”

He argued that as long as Nigeria continues to operate the industry with the archaic Petroleum Act that does not address gas terms, these issues will continue to haunt the industry.
Okoroafor added: “Fiscal terms must not be left for different interpretations by different people. I do not have the full details of this transaction to be able to comment on who is right or wrong, but we should as a country learn to honour the sanctity of contracts.”

P&ID had alleged that after signing the agreement, the government reneged on its obligation after it opened negotiation with the Cross River State Government for allocation of land for the project.

P&ID said the failure to construct the pipeline system to supply the gas frustrated the construction of the gas project, thereby depriving it the potential benefits expected from the 20 years’ worth of gas supplies.
When The Guardian reached the spokesperson for the NNPC, Ndu Ughamadu, he did not reply to a mail and multiple phone calls made to him.

But P&ID had said attempts to settle out-of-court with the federal government failed, which was why in August 2012, it served the Nigerian Government a Request for Arbitration.

Government on its part, argued before the Tribunal that: “The failure of P&ID to acquire the site and build Gas Processing Facilities was a fundamental breach, and that no gas could be delivered until this has been done.”
But the tribunal ruled that the Nigerian Government’s obligations under Article 6B were not conditional upon P &ID having constructed the gas processing facilities.

In July 2015, the Tribunal found that Nigeria had repudiated its obligations under the GSPA, and that P&ID had been entitled to accept the repudiation and claim damages for breach.

On December 23, 2015, the government asked for the award to be set aside. That was after earlier committing that the arbitration’s decision shall be final and binding upon parties.

Hence, on February 10, 2016, the application was dismissed, paving way for the hearing on July 22 to 24, 2016, to determine the damages.

In the Tribunal’s opinion, the damage suffered by P&ID was the loss of net income the company would have received if government had kept its side of the contract.

Two members of the three-man Tribunal, Lord Hoffmann, and Anthony Evans, held that P&ID’s expenditure and income should have been about $6.597 billion if the contract was respected by the Nigerian Government.
The spokesperson for the Ministry of Petroleum Resources, Alibi Idang, did not comment on the issue. He said the Ministry’s head of legal affairs was also not available for comment.

The spokesperson for DPR, Paul Osu, also declined to comment. But a top source at the Department said the DPR was not consulted when the deal was struck, and therefore cannot take a position now, as the contract was reached by act of military fiat.

A Professor of Petroleum Economics and Policy Research, and Director, Energy Information Division of the Centre for Energy Studies, Prof. Omowumi Iledare, said it will not be right to say the Nigerian Government does not know what to do about the situation, noting that it may choose not to take action now for reasons best known to it.

Owing to the nature of the gas deal, he said the anticipated regulatory reform would ensure more transparency and accountability in the running of the industry.

According to the don, if the right institutional framework is not in place, all ad-hoc approaches in terms of policy-making, will not take the country anywhere, as they will not favourably impact the economy.
He added: “We need good institutional framework; unless we want to continue converting our national wealth to individuals.”

Speaking on the sideline of the 2018 Nigerian Gas Association’s (NGA) Conference and exhibition in Abuja, Ewing, represented by his Director Downstream Gas, Sanjay Narasimhalu, said there was need for deliberate exploration for non-associated gas to support the Nigeria Gas Master Plan, with a focus on high liquid yield non-associated gas resources to optimise the gas development project economics.He said through investments in gathering and processing of associated gas, routine flaring has been reduced by over 90 per cent from 2008 to 2017 in the firm’s operations.

Ewing called on stakeholders in the gas industry to support and enable the willing seller – willing buyer gas pricing model, to ensure the viability of the sector.He said privatisation of the various value chain sectors is critical to untangle the bottlenecks in the industry.He stressed that for Nigeria to move towards a gas economy, there must be “deliberate exploration for non-associated gas to support the Nigeria Gas Master Plan, with a focus on high liquid yield non-associated gas resources to optimise the gas development project economics.

Ewing noted that CNL has contributed immensely to the Nigerian government’s gas master plan through the various gas projects it has embarked on and that the company is the highest contributor of high quality gas to the domestic market in Nigeria since 2015.“CNL is optimistic about the future of oil and gas business in Nigeria. We have been making significant investments in the country for over 50 years and expect to do so for many more years to come,” he said.

While identifying that overall Gas-To-Power value chain is unfortunately highly integrated, the MD said suboptimal and investor confidence remains low in the sector. On joint Venture gas monetization, Ewing said there have been continuous efforts to monetize recoverable natural gas resources of approximately 17 trillion cubic feet in the Escravos area through a combination of domestic and export sales and use as fuel in company operations.

“The company is the operator of the Escravos Gas Plant (EGP) with a total processing capacity of 680 million cubic feet per day of natural gas and LPG and condensate export capacity of 58,000 barrels per day,” he said.

To untangle other bottle necks in the sector, Ewing said, there was need to use industry standards, technology/instrumentation and processes to monitor and manage gas flows and gas qualityHe called for development and communication of strategy for legacy payments for gas sold to the domestic power market, adding government needed to enact fiscal terms that encourage the development of small to mid-sized assets/reservoirs as well as non-associated gas fields.

Meanwhile the Chairman, House of Representatives Committee on Gas Resources, Fred Agbedi has applauded the Global Memorandum of Understanding (GMoU), the Community engagement strategy adopted by the NNPC/Chevron Joint Venture as a panacea for peace in the Niger Delta region.Agbedi, represented by Ayebide Fatiede noted that the GMoU model has proven that peace and harmonious relations with Niger Delta communities is possible and practicable.

Agbedi insisted that the cause of restiveness among the youths in the area is anger occasioned by neglect and insensitivity of the government to the plights of the people.Similarly, the event saw Chevron wining a Special Recognition Award for its role in the Nigeria Gas Association (NGA) and the Nigeria gas industry.

OPEC in its monthly report, said world oil demand would increase by 1.36 million barrels per day (bpd) next year, marking a decline of 50,000 bpd from its previous estimate.

The group also cut the estimate for demand in 2019 for its own crude by another 300,000 bpd from last month to 31.8 million bpd, which in turn marks a decline of 900,000 bpd from the projection for 2018.

OPEC said its own production rose by 132,000 bpd in September to 32.76 million bpd, the highest according to the monthly report since August 2017.Saudi Arabia and Libya increased output last month by 108,000 bpd and 103,000 bpd respectively, more than offsetting the 150,000-bpd decline from Iran to 3.447 million bpd, as reported by secondary sources.

The oil cartel said Iran told the group its oil output had fallen by just 51,000 bpd to 3.775 million bpd.The group, led by Saudi Arabia, has pledged to increase output to compensate for the loss of any Iranian supply to U.S. sanctions that come into force next month.OPEC cut its forecast for growth in non-OPEC oil supply in 2019 by 30,000 bpd to 2.12 million bpd.

Details of the June 2018 edition of the monthly NNPC Financial and Operations Report showed that crude oil exports contributed $274.95 million, translating to 66.08 per cent of the dollar transactions compared with the $244.72 million contribution of the previous month.

Similarly, the document said exported gas raked in at 141.12 million.