Market Report: H.E. Chief Timipre Sylva to Lead the Nigerian Delegation at AEW 2021
The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, is set to lead the Nigerian delegation at the upcoming African Energy Week 2021 to be held in Cape Town, South Africa, showcasing the nation’s readiness to enhance its position as one of Africa’s top oil and gas producers. With the recent passing of the Petroleum Industry Act 2021, Nigeria has created an enabling environment for investment, with tax and royalty reductions coupled with transparent legislature paving the way for an influx of foreign capital in the sector, as well as completely reforming the NNPC, ensuring transparency and productivity is at the forefront of the corporation’s activities. The discussion around this will be at the forefront of the agenda for the delegation.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari said NNPC will no longer continue the Autogas project and other gas utilization projects. The Auto-gas program was aimed at delivering at least one million vehicle conversions by the end of 2021. Alhaji Kyari noted that NNPC intends to focus more on gas monetization and utilization, bringing up gas-based industries and creating many other opportunities to utilize LPG and all resources of energy that are not within the liquids framework. The Central Bank of Nigeria Governor disclosed that six companies received about $94 million (N39.2 billion) to speed up the Federal Government’s mass Autogas conversion project.
Ivory Coast President Alassane Ouattara and Eni CEO Claudio Descalzi had a meeting to discuss the progress of Eni’s activities in the country following the giant offshore oil discovery of Baleine 1-X. Eni announced in September the major oil discovery in block CI-101, in its first exploration well drilled in the country. The Baleine-1x well was drilled with the Saipem 10,000 drillship. At the meeting, Eni CEO and President Ouattara discussed Baleine’s appraisal and fast-track development plans.
According to Eni, President Ouattara highlighted his strong political will to support investments and a fast time-to-market through an effective collaboration from his government. The discovery, which took place 20 years after the last commercial discovery in the area, opens a new exploration concept in a mature basin. Eni said “Baleine’s potential is estimated more than 2 billion barrels of oil in place and about 2.4 trillion cubic feet of associated gas. Its significant gas volumes will contribute to power generation in Ivory Coast, strengthening the country’s role as a regional energy hub.” Eni also added that President Ouattara and Descalzi had discussed how to deliver a net-zero carbon development project, complementing oil and gas with renewables and other decarbonization initiatives. They also discussed ways to boost local content development, facilitating the participation of local people and businesses in Eni’s industrial activities through the transfer of skills and knowledge and the reinforcement of communities’ skills assets. To enhance capabilities and human resources, Eni Corporate University and Ecole Supérieure du Pétrole et de l’Energie will collaborate too.
On October 7, oil futures rebounded as the market deemed it unlikely that the United States would release emergency crude reserves or ban exports reducing tight supplies and contain runaway fuel prices and inflation. The U.S. West Texas Intermediate crude futures settled up 87 cents at $78.30 per barrel, while Brent crude futures finished up 87 cents at $81.95. The U.S. Energy Information Administration’s (EIA) weekly report for October 6 showed a rise in crude stockpiles by 2.35 million barrels in the week ending October 1, following through with the 4.58-million build in the previous week. Aside from the reported build in crude, the EIA raised its production estimates for U.S. crude to 11.3 million barrels per day (bpd) from a previous 11.1 million daily.
Oil markets have been on a steady rise due to tight supplies worldwide as demand recovered more quickly than expected from the COVID-19 pandemic in big import markets like China. The Organization of Petroleum Exporting Countries and allies (OPEC+) agreed to raise output gradually, sending crude prices to multi-year highs. Top producers and the International Energy Agency believe crude demand could rise by anywhere from 150,000 to 500,000 bpd in the coming months as users of natural gas switch to oil due to high gas prices.
Weighing on the market also were comments from U.S. Energy Secretary Jennifer Granholm, who said that the administration is considering tapping its Strategic Petroleum Reserve (SPR) to cool a surge in gasoline supply and price crisis. The U.S. Congress has also agreed on periodic sales from the SPR to raise government revenue. Exports of U.S. crude oil have been unfettered since Congress lifted federal shipment restrictions in 2015, with the country sending out anywhere between 2.0 to 3.0 million bpd to China and other locations.