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Tag: output

  • OPEC plans Russia meeting for output cut, says Kachikwu

    OPEC plans Russia meeting for output cut, says Kachikwu

    • Targets $50/bbl oil

    Minister of State for Petroleum Resources, Dr Ibe Kachikwu has said some members of the Organisation of Petroleum Exporting Countries (OPEC) are planning to meet other oil producers in Russia by March 20 for new talks on oil output freeze.

    Kachikwu who fielded questions from reporters in Abuja, expressed optimism that the meeting would spark a dramatic reaction in crude prices up to $50 per barrel (bbl).

    Nigeria has been pushing for action by OPEC because the slump in oil revenue has undercut its public finances and currency, leaving the government struggling to pay civil servants, Reuters said.

    He said: “We’re beginning to see the price of crude inch up very slowly. But if the meeting that we’re scheduling, it should happen in Russia, between the OPEC and non-OPEC producers, happens about March 20, we should see some dramatic price movement.

    “Both the Saudis and the Russians, everybody is coming back to the table. I think we’re very humbled today to accept that if we get to a price of $50, it will be celebrated. That’s a target that we have.”

    The Russian Energy Ministry said it was ready for talks but the date and venue had yet to be agreed. “Currently, various options about the venue and date for the meeting, where measures on oil market stabilisation due to be discussed, are being worked out,” it said in a statement.

    OPEC and Russia are still to persuade Iran to join the output cut deal.

  • IOCs’ divestment: Indigenous firms target 100,000bpd output

    The divestment of equity shares by the International Oil Companies (IOCs) has buoyed the resolve of indigenous oil firms to be active in the sector.

    At the moment, some indigenous firms are targeting between 90,000 and 100,000 barrels of oil per day (bpd) in the next five years, the Group Managing Director, Obijackson Group, Dr Ernest Azudialu-Obiejesi, has said.

    The Obijackson Group is an indigenous firm with interests spanning oil and gas, maritime, telecommunication, aviation, health, and electricity.

    The group owns Nestoil and Neconde Energy, the operator oil mining lease (OML) 42, which has a joint venture with the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

    Neconde bought the divested equity shares of Shell Petroleum Development Company (SPDC).

    Azudialu-Obiejesi said indigenous oil firms, such as  Seplat, Neconde, Nestoil,and Oando, are producing between 30,000 and 70,000 barrels of oil per day, adding that the firms are aiming at 100,000bpd and becoming big players in the industry.

    He said with the foreign-owned oil firms for offshore, the coast is clear for indigenous firms to increase their oil production, and further invest in other parts of Africa.

    He said: “The divestment of shares by IOCs has kick-started the growth of local oil companies. Now, many local operators produce between 30,000 and 70,000 barrels of crude oil per day. They have got the financial, technical, and managerial expertise to undertake big ticket transactions through which they would increase their production to 100,000bpd.’’

    He said when this happens, the indigenous operators would find it easier to go to countries, such as Ghana, Kenya and Angola, to buy oil fields and develop them.

    Azudialu-Obiejesi said the development could place indigenous oil firms in vantage position to become oil majors.

    “What does it take to become oil major? It is no other thing than the ability to invest, develop and explore oil in bigger fields where daily oil production is in excess of 100,000 barrels,” he added.

    According to him, the nation’s oil industry came into being over 50 years, and indigenous operators have garnered enough strength and experience to undertake bigger oil production. He noted that local oil companies were getting into the driving seat, following the decision of oil majors to dispose their fields or wells that are classified unproductive to companies.

    He said oil and gas business is global and no country or firm that wants to become a big player could afford to isolate itself.

    He said domestic operators were not only depending on the banks for funds but approaching financial institutions abroad for finance.

    The President, International Association of Energy Economics (IAEE), Prof Wunmi Iledare, said the indigenous oil firms have shown they could produce thousands of barrels of crude oil daily, in view of their capacity.

    He said the acquisition of oil mining leases, which were offered for sale by multinational oil fims, in the wake of  insecurity, had shown that the Nigerians could dominate oil production in the future, barring any unforeseen circumstances.

    Iledare, a Professor of Energy Economics at the University of Port Harcourt, said Seplat and other indigenous operators could execute major oil production.

    Seplat and Oando showed capacity to play bigger roles in the industry through their acquisition of some of the big fields, and listing on the floors of London Stock Exchange.

  • Erha North boosts ExxonMobil’s oil output by 65,000bpd

    Erha North boosts ExxonMobil’s oil output by 65,000bpd

    Exxon Mobil Corporation’s subsidiary, Esso Exploration and Production Nigeria Limited, the operator of Erha deepwater development including the Erha field and Erha North satellite field, said it has started oil production Erha North Phase 2 project offshore Nigeria ahead of schedule and below budget.

    The Erha North Phase 2 project, according to the company, is estimated to develop an additional 165 million barrels from the currently producing Erha North field and peak production from the expansion is currently estimated at 65,000 barrels of oil per day (bpd), which will increase total Erha North field production to approximately 90,000 barrels per day.

    The Erha fields (Erha field and Erha North satellite field) are located in oil mining lease (OML) 133, formerly oil prospecting lease (OPL) 209. Before the coming on stream of the Erha North Phase 2, total production from the fields was 140,000 barrels a day. With the estimated 65,000 barrels of oil per day (bpd) from Erha North Phase 2, the total production from Erha development will be about 205,000bpd.

  • ‘Increased gas supply boosts output from Egbin Power’

    ‘Increased gas supply boosts output from Egbin Power’

    Improved gas supply to power stations has helped to substantially increase the power generation from Nigeria’s biggest power station, Egbin Plc, it was learnt.

    The Chief Executive Officer, Egbin Power Plc., Mr. Dallas Peavey told The Nation that the impressive electricity supply being experienced by consumers, especially in Lagos State and other surrounding states, is due to increased gas supply and huge investment in new and upgrade of power infrastructure by the owners of the company, Sahara Power Group and the Korea Electric Power Corporation (KEPCO).

    Peavey said Egbin generates and supplies over 1,100 megawatts (Mw) of electricity to the national grid and hopes to reach plant’s installed capacity of 1,320Mw or a little below it. He assured that if gas supply is sustained, the output from the power plant would not only be sustained, but well exceeded.

    He said the 1,100Mw generation was attained last month and the company is gradually exceeding it, adding that in no distant time, the company will be generating the plant’s 1320Mw installed capacity and that will be good news for electricity consumers.

    “We want to help the government to achieve its aspiration of providing stable power supply to Nigerians,” he said, adding that Egbin was generating below 500Mw when the private sector investors took over in November 2013.

    Peavey said after the current owners acquired Egbin, they commenced upgrade and replacement of obsolete and dysfunctional equipment and materials. “We have injected about N50 billion into Egbin post-privatisation. We have brought unprecedented innovation, professionalism, human capital development and new technology into the power plant,” he said.

    He continued: “For instance, the control panels installed when the plant was built has been removed and upgraded to state-of-the-art digital panels. The main rehabilitation occurred in the first quarter of 2015, when the company successfully rehabilitated the plant’s unit six steam turbine (ST06), which added 220Mw to the plant.

    “We also restored the capacity of some of the units that were working below capacity and other ancillary equipment and materials. I assure you with these developments, Egbin Power Plc is now equipped to generate power at its installed 1,320Mw capacity.

    “Remember that the management is working on further expansion of the plant to achieve its vision of attaining 2,670Mw by 2017 and total capacity of over 10,000Mw in the next decade, if the demand permits.”

  • NNPC targets 90% output from refineries

    NNPC targets 90% output from refineries

    With the ongoing rehabilitation of the refineries, the Nigerian National Petroleum Corporation (NNPC) said it expects to step up their refining output to 90 per cent of the installed capacities on the completion of the repairs.

    NNPC’s General Manager Services, Abubakar Muhammed stated this at the ongoing four days and 38th edition of the International conference and exhibitions of the Society of Petroleum Engineers (SPE)  in Lagos, themed “Natural Gas Development and Exploitation in an Emerging Economy: Strategies, Infrastructure and Policy Framework.” He said the nation’s four refineries would be operating at 90 per cent capacity after the completion of the ongoing turn around maintenance (TAM).

    Muhammed said out of the 90 per cent production capacity, about 40 per cent would be premium motor spirit (petrol) adding that additional refineries would be expected in the long and short term to increase the country’s refining capacity and domestic consumption. He said the Federal Government was committed to the refinery project, gas development and revival of gas infrastructure.

    According to him, the nation is expectant of the passage of the Petroleum Industry Bill (PIB) that would define the future of the country’s oil, gas production and power generation. “The PIB has been in the pipeline for 15 years. We are hopeful that the present legislature will address the bill,” he said.

    He stated that crude oil theft has been a major challenge in the country, adding that the criminal act has impacted on the average sale of government’s equity crude putting the cost to NNPC/joint venture at an average of about $600 million per month. This  comes at a time when the cash call budget has remained unattainable in the last few years, he added.

    “Management of funding is our most immediate challenge and innovative financing approach is currently being developed to address the issue. Another challenge is the development of shale oil in Nigeria’s largest market, United States; this has forced Nigeria to look for alternative market in Asia. Despite these challenges we are focusing on strategic realignment of our crude oil exports to sustainable markets,” he said.

    Muhammed said crude theft and pipeline vandalism has impacted on oil production in the last four years (2010 to 2014) from 2.4 million barrels per day in 2010 to about two million barrels per day in 2014. He noted that significant production interruption is now a regular feature in Nigeria’s production profile, adding that an average of 250,000 bpd was deferred.

    “At a price of $100 per barrel, this amounts to a loss of about $9.1 billion yearly. Crude theft from January to April 2015 stood at 39.3 million barrels or $3.9 billion at an average price of $97.9 per barrels. The solution lies with setting up of a critical infrastructure task force with accountability measures, and with a continuation of enlightenment, empowerment and enforcement of anti-sabotage laws. In a bid to address the current sub-optimal performance of domestic refineries, a new rehabilitation strategy has been adopted,” he added.

    The Managing Director, Total Exploration and Production Nigeria Limited, Elizabeth Proust said Nigeria has very tremendous gas reserve, adding that about 46 trillion standard cubic feet (tcf) of the reported 179 tcf of discovered gas, is currently developed or under-developed.

    Represented by the Deputy General Manager, Mr. Ahmadu Kida, Proust said that a joint effort by all stakeholders is needed to unlock the remaining 133 tcf of gas so that we can power the industry and boost the economy. According to her, more than 1,400 megawatts of Nigeria’s total power generation is fuelled by diesel, which costs three times the current domestic gas price.

    The Managing Director Seplat Petroleum Development Company Plc, Mr. Austin Avuru stressed the need for the nation to optimally harness its huge gas resources to meet the national aspirations. According to him, Nigeria needs to start looking for more gas, dwell on full gas utilisation and undertake reserve audits. He said for the country to generate 32 gigawatts of electricity, it would require 7.3 billion standard cubic feet (bscf) of gas. He said it was time for the country to start looking for more gas for domestic and commercial values. He said the country needs more reserves of gas and crude oil.

    The Chairman of SPE Nigeria Council Mr. Emeka Ene said that oil and gas plays important role in the economy of the country. He assured that all contributions of stakeholders at the conference would be submitted to the Federal Government for assessment.

  • Oil price fall: ‘OPEC won’t cut output’

    Oil price fall: ‘OPEC won’t cut output’

    Crude oil dropped to the lowest level in more than five years after the United Arab Emirates said the Organisation of Petroleum Exporting Countries (OPEC) won’t rein in production in response to the slump.

    OPEC will refrain from curbing output even if prices fall as low as $40 a barrel, U.A.E. Energy Minister Suhail Al-Mazrouei said. Prices have slipped about 20 per cent since OPEC decided against cutting production to tackle the glut at a Nov. 27 meeting. The group has pumped more than its output target of 30 million barrels a day for the last six months.

    Futures are poised to fall below half where they were six months ago, according to a Bloomberg survey. Oil slid into a bear market this year amid the highest U.S. production in three decades and slowing growth in global consumption.

    “The elements that brought us down this far haven’t changed,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “The move lower should extend downward. The bottom of this move isn’t in sight yet.”

    Brent for January settlement slipped 79 cents, or 1.3 percent, to end the session at $61.06 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since July 2009. The grade has fallen 45 per cent in 2014. Volume was four per cent above the 100-day average. The North Sea oil closed at a $5.15 a barrel premium to WTI, the most in six weeks.

    The European benchmark will slide to as low as $50 a barrel in 2015, according to the median in a Bloomberg survey of 17 analysts, down from the $115.71 a barrel high for the year on June 19. The grade has already collapsed 47 per cent since then and needs to fall further before producers clear the current glut, said five out of six respondents who gave a reason.

    OPEC will stand by its decision not to cut output, the U.A.E.’s Al-Mazrouei told Bloomberg at a conference in Dubai. The group will wait at least three months before considering an emergency meeting to discuss output again, he said.  

    “We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei said. “The market will stabilise itself.”

    OPEC pumped 30.05 million barrels a day in November, according to data from analysts and media organisations compiled by the group in a report Dec. 10. That’s 1.73 million barrels a day more crude than the world needs from the exporters in the first quarter, according to its own estimates.

    “We have a global supply glut and economic conditions in Europe and China continue to worsen so prices will remain under pressure,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. “I don’t know where the bottom will be.”

    The group decided last month to keep output unchanged to protect OPEC’s market share, even if it has a negative effect on crude prices, the official Kuwait News Agency reported yesterday, citing Oil Minister Ali al-Omair.

    “We’ve got an epic battle of the wills,” Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania, said by phone. “The Saudis, Kuwaitis and the rest of that bloc are showing no sign of backing down.”

    An increase of about six million barrels a day in non-OPEC supply, from countries including the U.S. and Russia, together with speculation in oil markets, triggered the recent drop in prices, OPEC Secretary-General Abdalla El-Badri said yesterday at the Dubai conference.

    “It’s not logical nor fair to ask OPEC to reduce their production and not ask the other producers to stop their expected growth in supply,” Mazrouei said yesterday on Twitter.

    The U.S. pumped 9.12 million barrels a day in the period week Dec. 5, the most in weekly Energy Information Administration started in 1983.

    The gain came as horizontal drilling and hydraulic fracturing unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.

    “It appears at least that OPEC is willing to let things sink until the other side bails,” Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts, said by phone.

    Futures gained earlier on signs that Libyan and Nigerian output will decline.

    Libya declared force majeure, which excuses a supplier from meeting its delivery commitments because of events beyond its control, at the ports of Es Sider and Ras Lanuf, NOC said in a statement on its website Dec. 13. Output will be halted at some oil fields because of armed clashes nearby, it said.

    Nigerian oil workers’ unions Pengassan and Nupeng, who are demanding changes to the country’s oil industry, instructed members to stop all work at facilities including oil platforms and export terminals.

    Libya and Nigeria together produced 2.76 million barrels a day of crude oil last month, according to Bloomberg estimates.

    The African countries were among eight OPEC members who supported an output cut on Nov. 27, according to five people briefed on the meeting.

  • Reserves may hit $60b on rising oil output

    Reserves may hit $60b on rising oil output

    • Naira records best week

    FOREIGN reserves, which stood at $36.39 billion on August 7, last year, is expected to hit $60 billion as oil production soars.

    Crude oil production spiked to an all-time high of 2.7 million barrel per day (mbpd) on July 25, 2012, the first time in 50 years. This peak represented an increase of 28.57 per cent from the year-to-date average of 2.11 mbpd.

    In the Financial Derivatives Company (FDC) Economic Report for August, its Managing Director, Bismark Rewane, said at an average production level of 2.7 million barrels production per day (mbpd), there will be 10.7 per cent increase in government revenue to N946.97 billion.

    He estimated a 9.12 per cent rise in forex inflows to $4.02 billion, and reserves accretion to $60 billion, covering over 10 months of import cover, adding that the Central Bank of Nigeria (CBN) may allow the naira to appreciate sharply to N145 to a dollar, to compensate for the substantial increase in oil revenue.

    “The combined effect of the relative peace in the Niger Delta region, and the likely passage of the Petroleum Industry Bill (PIB), would result in an increase in oil production above the current trend of 2.1mbpd on average, in the short run,” he said.

    In another development, the naira strengthened a fourth day last Friday to complete its best one-week performance since August after oil companies sold dollars to meet local expenses.

    The currency rose 0.1 per cent to N157.45 per dollar according to data compiled by Bloomberg. It gained 0.7 per cent last week, it’s best performance since the five days through August 17.

    Oil companies, including the Nigerian National Petroleum Corporation (NNPC), are the second-biggest source of dollars after the Central Bank of Nigeria, which offers foreign currency at auctions on Mondays and Wednesdays to maintain exchange-rate stability.

    “The naira strengthened on the back of foreign-exchange sales from oil companies last week, expected dollar sales from the NNPC and to a lesser extent, some modest foreign-capital inflows,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Limited. in London, said in an e- mail. “It is likely that dollar-naira will drift higher once the NNPC effect dissipates this week.”

    The apex bank sold $237 million at an April three auction, compared with $300 million at the previous sale on March 27. It didn’t hold an offer on April one, because of a public holiday.

    Borrowing costs on Nigeria’s local-currency debt due January, 2022, rose six basis points, or 0.06 percentage point, to 10.89 per cent, according to last week’s prices compiled by the Financial Markets Dealers Association.

    Yields on Nigeria’s $500 million of Eurobonds due January 2021 declined three basis points to 4.33 percent today

     

     

  • Nigeria raises OPEC’s December output to 30.37m bpd

    Nigeria raises OPEC’s December output to 30.37m bpd

    Increased oil production from Nigeria contributed to raising the Organisation of Petroleum Exporting Countries’ (OPEC’s) December 2012 output to an average of 30.37 million barrels per day (mbpd), indicating a decline of 0.46 mbpd from 30.83 mbpd recorded in November, report has shown.

    OPEC, in its January 2013 monthly oil market report, said secondary sources revealed that total OPEC crude oil production averaged 30.37 mb/d in December showing a decline of 0.46 mb/d over the previous month.

    “Crude oil output saw an increase from Nigeria and Angola while production fell in Saudi Arabia, Iraq, and Iran,” the report said.

    According to the report, preliminary data indicates that global oil supply dropped 0.10 mb/d in December 2012 compared to the previous month. The decline in OPEC crude oil production in December impacted the global oil output which was partially offset by the increase in non-OPEC supply. The share of OPEC crude oil in global production declined slightly to 33.6 percent in December. The estimate is based on preliminary data for non-OPEC supply, estimates for OPEC natural gas liquids (NGLs) and OPEC crude production from secondary sources.

    The market report said that in 2013, non-OPEC supply is forecast to increase by 0.93 mbpd over the previous year to average 53.92 mbpd. The current supply expectation indicates an upward revision of 85,000 bpd to total non-OPEC supply, while anticipated growth was revised up by 30,000 bpd from a month earlier. The upward revision to total non-OPEC supply was due to the carry-over of some of the revisions introduced to the 2012 supply estimates, as well as to various updates to individual supply profiles. On a quarterly basis, non-OPEC supply is expected to average 53.84 mbpd, 53.61 mbpd, 53.91 mbpd and 54.49 mbpd, respectively.

    The reports also noted that global fiscal uncertainties still persist. It said: “For the past weeks, the outcome of negotiations in the US to avoid the ‘fiscal cliff’ – a term that describes the automatic spending cuts and tax increases set to take place at the beginning of 2013 – has been a major uncertainty hanging over the United States economy. Despite recent data showing an improvement in the country’s economy, the lack of clarity about the outcome of these talks over the past months led to a deceleration in business spending and investments at the end of the year, as well as a decline in consumer confidence.”

    On world oil demand, the report said: “World economic turbulence has affected oil demand in the past few years. Nevertheless, its effect on this year’s oil demand is not expected to be as sharp as last year, but instead considerably milder. As in the previous year, oil demand will grow in 2013, but not without some degree of uncertainty. The US economy is seen to achieve 2.0 percent growth, leading to more stable oil consumption.

    “The Euro-zone was able to somewhat contain its unknown fate of uncertainty. The spill-over effect on other economies will certainly be felt, especially in China. Given the positive momentum in some Organisation of Economic Cooperation and Development (OECD) economies, China’s exports and investments are picking up and showing better results. The OECD region will consume less oil than last year; however, the decline will be reduced by almost a half.

    “The non-OECD region will consume about one million barrels per day more than last year. It is worth noting that some parts of the non-OECD region will experience less economic prosperity than anticipated. Their demand will grow, but at a slightly slower pace than last year. The transportation and industrial sectors will consume most of the oil this year, and most of the growth will be related to both industries.”