…As Nigeria’s crude oil production rises by 9% – NNPC***
Organization of the Petroleum Exporting Countries (OPEC) and
Russia agreed to cut oil production by 1.2 million barrels a day during their
5th meeting held on December 7 in Vienna.
The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 million barrels a day (2.5%), and 0.4 million barrels a day (2.0%), respectively.
The decision came just days after the U.S. President Donald Trump called on OPEC to maintain production at the same level.
“Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!,” Trump said in a Tweet.
Commenting on the decision, Iranian President Hassan Rouhani said that ”despite the American’s efforts to interfere in OPEC affairs and attempting to disrupt the balance, with the resistance of member countries and the Islamic Republic of Iran and Mr Zanganeh, their plots were foiled, marking another failure for them.”
Iran, which has been faced with U.S. sanctions, is believed
to have been exempt from making the cuts.
Impact of the Decision on the Tanker Market
OPEC-led production reduction is being announced at the time when the tanker market is finally exiting from the doldrums. “Against the backdrop of this uncertainty (or maybe because of it), the tanker market is holding up fairly well.
However, a significant cut in exports will test the strength of the market in the coming months,” Poten and Partners said in a weekly report. As explained earlier by CEO of Tsakos Energy Navigation (TEN) and Chairman of INTERTANKO, Nikolas Tsakos, ”the market right now has learned to live with the cap.”
Commenting on the anticipated OPEC cut before the decision was announced, Tsakos said in a conference call that it was good for the market that three major producers of oil are outside the OPEC or independent of OPEC, those being the United States, Saudi Arabia and Russia.
Since these three countries make up almost 35% of oil production, the impact of OPEC cuts is expected to be somewhat lessened. However, Tsakos believes that a large daily cut of about one million barrel per day would help the market normalize in the long-term.
The U.S. in particular is gaining an ever more important role in the market as last week it became a net oil exporter for the first time in 75 years. Another milestone for the country was achieved earlier this year, when the U.S. became the largest crude oil producer in the world, surpassing Russia and Saudi Arabia, data from IEA shows.
“Overall we see an oversupplied oil market. Cutting into a surplus of oil will not have a massive effect on tankers,” Peter Sand, Chief Shipping Analyst at BIMCO told World Maritime News.
Sand added that based on the information from large
middle eastern oil producers there are not enough buyers for the level of
production right now. According to Poten, for the large tanker market, OPEC
output decisions continue to be very important, both physically and
In the meantime, Nigeria’s crude oil daily production recorded an upward swing of about 2.09million barrels in 2018, translating to a 9 per cent increment, compared with the 2017 average daily production of 1.86million barrels.
Pitched against the low-level daily crude oil production in 2016 and what obtains now, Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Dr. Maikanti Baru, said the nation had maintained a line of consistent year-on-year improvement.
For the crude oil increment and other milestones recorded by NNPC in the outgone 2018, Dr. Baru, who made the submission in a comprehensive end of year message to staff of the corporation, touted the new business models his team has emplaced in the national oil company’s old and new business entitles as raison d’être for the giant strides.
A release today in Abuja by NNPC Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, said the Nigerian Petroleum Development Company (NPDC), Nigerian Gas Company (NGC), Petroleum Products Marketing Company (PPMC), Duke Oil, NIDAS and Integrated Data Services Limited (IDSL), were among the re-engineered companies listed by the NNPC GMD in his statement.
Ughamadu said Dr. Baru singled out NPDC, the corporation’s Upstream flagship company, as the major contributor to the Industry’s success story in 2018, expressing enthusiasm on the 52 per cent daily crude oil production growth by the company vis-à-vis its 2017 performance.
Dr. Baru in the end-of-year statement explained that the average production from NPDC’s operated assets alone grew from an average of 108,000 of oil per day (bod) in 2017 to 165,000bod in 2018, describing the feat as the strongest production growth within the Oil Industry in recent times, even as he added that it was worth being celebrated.
The GMD said NPDC’s equity production share which stands at 172,000bod, representing about 8 per cent of national daily production, was no less impressive, saying the desired results are outcomes of initiatives his Management team emplaced, among which, he noted, are the Asset Management Tea (AMT) structure, Strategic Financing, Units Autonomy and security architecture framework.
Of the Industry milestones in the outgone year, Dr. Baru described the 200,000bop addition which the Egina Floating Production Storage and Offloading (FPSO), completed and sailed away to location in August last year, added to nation’s daily production, even as he disclosed that the project achieved First Oil at 11.20pm on 29th December, 2018.
In end-of-year statement, the release by the NNPC spokesman stated the NNPC GMD relayed to staff, a save of $1.7billion dollars by NNPC, with corporation’s Joint Venture (JV) partners over a five-year tenor repayment plan, saying already the corporation has defrayed $1.5billion of the arrears.
Dr. Baru made the promise that NNPC would stick to the Repayment Agreement with the JV Partners while transiting to self-funding IJV modes with the corporations partners, saying that tiding up the Cash Call issues has led to increased commitment and enthusiasm to invest in Nigerian Oil and Gas Industry even as it has also boosted NNPC’s credit profile internationally.
Dr. Baru concluded the achievements of NNPC in the Upstream sector by listing other milestones achieved by his team to include: reduction in contracting cycle for Upstream Operations to nine months from an average of 24, even as the corporation targets a six months cycle; lowering of production cost from $27/barrel to $22/barrel; and improving on the security situation in the Niger Delta through constructive engagement and dialogue with relevant stakeholders.
Dr. Baru revealed that in the frontier basins, NNPC has intensified explorations activities in the Benue Trough, with the expected spudding of Kolmani River Well 2 on 19th January, 2019.
He explained that activities would resume in the Chad Basin as soon as there is a greenlight on the security situation in the enclave.
In the Midstream, the NNPC GMD stated that in 2018, Nigeria achieved an average national daily gas production of 7.90bscf, translating to 3 per cent above the 2017 average daily gas production of 7.67bscf.
He said out of the 7.90bscf produced in 2018, an average of 3.32bscfd (42%) was supplied to the Export market, 2.5bscfd (32%) for Reinjection/Fuel Gas, 1.3bscfd (16%) was supplied to the domestic market and about 783mmscfd (10%) was flared.
The GMD stated that out of the 1.3bscfd supplied to the domestic market, an average of 71mmscfd went to the Power Sector, while 470mmscfd was supplied to the Industries and the balance of 69mmscf delivered to the West African Market through the West African Gas Pipeline (WAGP).
Dr. Baru said NNPC would bridge the medium-term domestic gas supply deficit by 2020 through the corporation’s Seven Critical Gas Development Projects (&CGDPS), adding that a reputable Project Management consulting firm is collaborating with an NNPC team to achieve accelerated implementation of the projects.
He assured that full implementation of the project would boost domestic gas supply from about 1.5bscf/d to 5bscf/d by 2020, with a corresponding 500 per cent increase in power generation and stimulation of gas-based industrialization.
Dr. Baru said all existing power plants in the country now had a permanent gas supply pipeline infrastructure, even as he stressed that the corporation would continue to expand and integrate its gas pipeline network system to meet increasing domestic gas demand.
He listed key gas pipeline infrastructure projects on which, he noted, significant progress had been made in their execution to include: Escravos-Lagos Pipeline System (ELPS II), Obiafu/Obrikom-Oben (OB3), Odidi-Warri Expansion Pipeline (OWEP), Trans Nigeria Pipeline Project (TNGP) – Ajaokuta-Kaduan-Kano (AKK) Pipeline, Trans Nigeria Pipeline Project (TNGP) and Nigeria-Morocco Gas Pipeline (NGMP) Project.
In the Midstream Refinery Sub-sector, Dr. Baru regretted that the nation’s three refineries had not undergone Turn Around Maintenance (TAM) for an aggregate of 42 years combined.
Despite the challenge, he explained that major rehabilitation works were carried out in all the three refineries, saying, WRPC has its Distribution Control System (DCS) successfully upgraded, PHRC had major interventions in Fluid Catalytic Cracking Unit (FCCU) and Power Plant Unit (PPU) fixed, while KRPC was undergoing major repairs of its FCCU, Catalytic Reforming Unit (CRU) and Crude Distillation Unit 2 (CDU2).
He noted that efforts were afoot to get the original builders of the refineries to carry out TAM on them after securing favourable private funding for the exercise.
In the Downstream Sector, Dr. Baru noted that even though 2018 was riddled with some supply shortages, he was delighted that the corporation rose to the occasion with the support of President Muhammadu Buhari and the resilience and hard work of NNPC staff, saying as at today, there is fuel availability in the nook and cranny of the country.
“…It gladdens my heart to hear the positive comments made by motorists and filling-station owners during my routine checks on some filling stations at the eve of Chrismas”, Dr. Baru stated.
The GMD disclosed that NNPC imported a total of 15,874,734.82 MT of Premium Motor Spirit (PMS) otherwise called petrol through the DSDP and the NFSF arrangement in 2018, representing 62% increase over the 2017 supplies of 9,807,264.61MT, saying that as at today, the national oil company has 2.98 Billion litres, equivalent to over 59 days sufficiency at 50 Million litres daily evacuation rate.
Dr. said the corporation’s depots had been resuscitated and put to use through decanting of over 140 Million litres of PMS nationwide, explaining that systems 2B and 2E pipelines supplying petroleum products to South West, South-South and South East Regions have been resuscitated.
GMD assured that NNPC was on track in respect of the corporation’s Twelve (12) key Business Focus Areas (BUFA), and the vision of President Buhari to improving the status of oil and gas infrastructure through ensuring products availability to support national economic recovery and growth.
He lauded the contribution of the corporation’s Downstream outfit, NNPC retail, saying it played a significant role in ensuring continuous supply of petroleum products to Nigerians through its Mega, Affiliates and Leased stations.
Dr. Baru touted the company’s sale of 1.2 billion litres of petroleum products in 2018 as against 1.1 billion litres in 2017, representing a 7% increase.
He said the feat was achieved through an addition of 40 new Affiliate and Leased stations, which he said, brought the company’s network to 618 stations nationwide.
He enthused NNPC Retail had transformed from loss making to profitability.
“We are currently planning for a better performance and achievement in 2019 especially with the continuous innovations and creativity in the downstream sector and the performance bond signed by all the relevant heads of our operating units. Continuous improvement as one of the principles of World Class Organizations is going to remain our key word in 2019. 2018 was empirically better than 2017, we believe, plan and strive to achieve a better performance come 2019, by God’s Grace”, Dr. Baru concluded in his end-of-year statement.
Vanguard with additional report from The Citizen