WEST AFRICA ENERGY intelligence oil gas power Wednesday 14 February 2018 C002D5556 BUSINESS DAY POWER West Africa needs to brace up for power disruption trends finance people appointments Page 4 Ladipupo Jadesimi (right), chairman of LADOL, welcomes Hadizia Bala-Usman, managing director, Nigerian Ports Authority (NPA), to the grand reception for Egina FPSO vessel as she berthed for final integration at LADOL Free Zone, in Apapa Lagos. She is flanked by Nicolas Teraz (left), managing director, TOTAL E&P and Rowland Ewubare, group general manager, NAPIMS. Sasol completes $1bn wax plant expansion in South Africa Page 6 OPEC weekly basket price DAY PRICE 9/2/18 63.8 2/2/18 66.87 26/1/18 67.64 19/1/18 67.21 12/1/18 66.81 Source: OPEC Debrief Kuwait’s new ‘super light’ crude may threaten Nigeria’s Asian market FRANK UZUEGBUNAM About 29 percent of Nigeria’s crude oil exports end up in Asia, mostly India and Indonesia, and then other key demand hubs in China, Japan and South Korea. Nigeria and other West African crude oil exports to Asia particularly India and China hit about 2.2 million barrels per day (bpd) in September 2017. Nigerian market share of the Asian crude oil market may be threaten following the current testing of Kuwait’s new ‘super light’ crude in the Asian market. At least one Asian refiner has tested samples of the Kuwait’s new “Super Light” crude oil and found it suitable, sources said. The test run comes as stateowned Kuwait Petroleum Corp. prepares to launch its first new export grade in decades. A number of refiners in northeast and southeast Asia, a key destination for Kuwaiti crudes, showed their interest in testing the new grade, market sources said. Kuwait Oil Co. (KOC), stateowned upstream operator recently began operations at a new facility to produce light oil and gas from the West al-Rawdatain field, which will be combined with output from other fields for the country’s newest crude blend to be launched in April. KOC first discovered super light crude oil at the Sabriya field in 2005. After years of delays, KOC finally began production earlier this year from the field, along with the Umm al- Niga, and the West Rawdatain fields. KOC expects to produce 200,000 b/d of light oil. By 2020, the company expects to boost this by another 220,000 b/d. Crude from the fields will be blended to make KPC’s “Super Light” crude oil grade, which it hopes to start exporting from April. The crude grade will have an API gravity of 48 degrees, with 0.4 percent sulfur content. Traders were hopeful that the new grade could potentially put the brakes on the recent uptrend in light sour crude price differentials in the Middle East, while providing a new feedstock procurement option for Asian refiners that regularly need to run middle distillate-rich crude oil. Asia uses half the world’s oil and has become a hotspot for a price war among producers who are offering steep discounts to lock in buyers in the face of bulging global supplies.
Wednesday 14 February 2018 02 BUSINESS DAY C002D5556 WEST AFRICA Outlook Nigeria to receive big boost in energy investment in 2018 HOPE MOSES-ASHIKE AO2 LAW has released the maiden edition of its 2018 Energy outlook for the Nigerian power, oil and gas industry. The report which reviewed and gave key insights into happenings in the industry for year 2017 also provided investment and policy forecasts in 2018. The 2018 energy outlook predicts the rise in energy investment. It also predicted that the divestment of IOCs will create great opportunities for indigenous oil companies and advised the government on the need for policy stability especially in the power sector. According to Oyeyemi Oke, Practice Partner, Energy, AO2 LAW, “close to 80 percent of Nigeria’s energy supply could be met if backed by enabling strategies and policies. He explained that from the research for the report, different policies and reforms in the energy sector led to the breakthrough in 2017 and has created the fertile ground for the expectations of 2018.” The report enumerated a number of key policies that shaped the sectors in 2017. One of them was the release of the “7 Big Ghana: Prospects of oil discovery in Voltarian basin promising President Akufo- Addo in his State of the Nation address in Parliament said the prospects of oil discovery in Voltarian basin is promising. It is for the reason that he, last year, directed the state-owned oil development company, the Ghana National Petroleum Corporation (GNPC), to pay particular attention to this potential. “It is good to hear that the directive appears to be yielding dividends, as GNPC, from the results of its pilot survey in the Voltaian basin, has established the presence of a working petroleum system. I hope that, eventually, there will be something big for us to cheer about,” President Akufo-Addo said. Meanwhile, Tullow Oil plc, the independent oil and gas exploration and production group, says the TEN fields have functioned steadily above 70,000 barrels of oil per day (bopd) in the last three months, indicating a strong production performance. “This strong performance was as a result of production and water injection optimisation which continues to be effective,” the oil firm said in a statement yesterday. Announcing its full year Wins”, a policy document which highlights the government’s short and medium-term priorities to grow Nigeria’s oil and gas industry between 2015 and 2019. It also analyzed briefly the importance of the Petroleum Industry Governance Bill and its strategic importance. results for the year ended 31 December 2017 in London, Tullow said production from the 11 wells drilled so far, indicated reserves estimates for both Ntomme and Enyenra to be in line with previous guidance. Tullow expects 2018 Oyeyemi further stressed the importance of finding lasting solutions to the liquidity challenges in the power sector, one which already led to the introduction of the Power Sector Recovery Programme in Q2 of 2017. He said “The PRSP is a policy document on operational, governance and financial interventions to be implemented by the Federal Government of Nigeria over the next five years to restore the financial viability of Nigeria’s power sector, improve transparency and service delivery and “reset” the NESI for future growth”. The report also addressed the key expectations for the energy sector in 2018 and gives strong prospects for growth in anticipation of renegotiation of product sharing contracts (PSCs), more alternative funding arrangements, increase in private investments and other expected policy implementation in both power and oil and gas. gross oil production from the TEN fields to average 64,000 bopd. Similarly, the TEN fields performed well in 2017 with gross production exceeding initial guidance, averaging 56,000 bopd. Gary Thompson, Tullow’s Executive Vice President for West Africa, said: “I have been particularly pleased by the performance of the TEN fields, with production exceeding 70,000 bopd for the last three months, especially given the delays on completing the development wells which resulted from the ITLOS drilling moratorium.” Brief Algeria: Sonatrach to invest $56bn from 2018 to 2022 Algerian state energy firm Sonatrach will invest $56 billion from 2018 to 2022, Abdelmoumen Ould Kaddour, its chief executive said. “We will give more details very soon,” Kaddour said after launching a new gas pipeline pumping from southwestern fields including Reggane North, Touat and Timimoun with capacity of 8.8 billion cubic metres a year. “We are so proud of this project because it has been constructed 100 percent by Algerian firms,” Kaddour said. OPEC member Algeria has been hit hard by a slump in world oil prices and struggled to attract energy investment to help develop new fields and increase oil existing production. Algeria is a major gas supplier to Europe. In December, Sonatrach said it planned to work more closely with France’s Total on offshore, petrochemical, solar energy and shale exploration projects after settling disputes over profit-sharing on oil and gas contracts. Algeria remains dependent on oil and gas earnings, which provide 60 percent of the state budget, and Sonatrach’s performance is key to the health of the economy. Libya: Oil production hits post-Gadhafi high Total oil production from Libya in January was close to 1 million barrels per day on average for its highest level in more than five years, industry data show. Libyan oil production had faltered in the years since the downfall of the regime of Moammar Gadhafi in 2011, nearly grinding to a halt as a result of simmering civil conflict. Economists at the Organization of Petroleum Exporting Countries, of which Libya is a member, reported production last year averaged 817,000 barrels per day, far less than its pre-Gadhafi levels of around 1.5 million bpd. Market fundamentals and data reporting group Genscape said its monitoring found Libya produced about 1.08 million bpd in January, the country’s highest level since July 2013. “Based on radiant heat signatures, the fields appeared to operate relatively consistently, which has historically been a struggle for Libya,” the group reported.