Page 13 - MEOG Week 21

MEOG n r G MEOG
Signs of cautious optimism
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WORLd crude oil prices have continued to show signs of recovery over the last week. Brent crude prices have moved above $35 per barrel, while WTI is not far behind. Nevertheless, pro- ducers and investors remain cautious, owing to concerns about the impact of the coronavirus (COVId-19) pandemic.
Even so, they are also starting to plan for the post-crisis period. In several regions, they are exploring their options for expanding process- ing and transport infrastructure and are looking forward to a recovery in demand.
Africa mulls next steps
The coronavirus pandemic has continued to affect the fortunes of Africa’s two largest oil-pro- ducing countries.
Offshore Angola, at least five international oil companies (IOCs) have halted all drilling activity and are focusing on their existing assets, according to a Reuters report. As of press time, Total, Eni and Chevron had confirmed the sus- pension of their exploration and development drilling programmes, while ExxonMobil and BP had declined to comment.
Meanwhile, Nigeria’s government is showing some optimism about meeting its budget tar- gets this year, now that Brent crude prices have moved above the threshold of $35 per barrel. Officials in Abuja had initially based this year’s budget on the assumption that oil would average $57 per barrel, but they revised the figure down- wards after the pandemic (and surges in Rus- sian and Saudi production) wreaked havoc on world crude prices. Earlier this month, they were reported to be considering proposals to adopt an
even lower figure of $25 per barrel, but they are now hoping this will not be necessary.
Elsewhere in Africa, Tanzania’s government has reiterated its commitment to increasing domestic service companies’ participation in oil and gas projects. Tanzania is also joining Zambia in backing plans to expand the diameter of the Tazama pipeline.
Representatives of the Government of National Accord (GNA) in Tripoli have criti- cised Khalifa Haftar’s Libyan National Army (LNA) for the ongoing blockade of the coun- try’s oil infrastructure. The GNA has started to made progress in its military campaign against the LNA, but it will probably have a hard time restarting production at major oilfields such as El-Feel and Sharara.
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asian noC under pressure
The last of Southeast Asia’s state-owned upstream heavyweights has bowed to the pres- sure of lower oil prices, announcing plans to slash its spending while warning that short-term production will fall.
Malaysian national oil company (NOC) Pet- ronas said on May 22 that it would cut its 2020 capital expenditure budget by 21% from an initial estimate of MYR50bn ($11.46bn). The announcement came around two and a half months after the company insisted that the oil price crash would not derail its upstream spend- ing plans.
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