Page 11 - NorthAmOil Week 27 2022

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Barkindo: Downstream factors

play key role in oil price volatility

MOHAMMAD Sanusi Barkindo, the late sec- This decline occurred despite the addition of
retary-general of OPEC, said just hours before new capacity in the Middle East, China, Africa
his death that capacity constraints in the down- and India, and it occurred because refining
stream sector were making a more significant capacity actually dropped among member states
contribution to the volatility of world crude oil of the Organisation for Economic Co-operation
prices than many market observers realise. and Development (OECD) for the third year in
Speaking to the Nigerian newspaper Van- a row in 2021, he explained.
guard, Barkindo noted that upstream opera- “Comparing the pre-pandemic year of 2019
tors were all too often blamed for fluctuations to 2021, OECD refining capacity fell by a sig-
in prices. Producers have become “a favourite nificant 1.5mn [bpd], or 3.3%,” he said. “Given
scapegoat for the current market conditions,” the global refining squeeze at the moment, the
he remarked. construction of the Dangote Refinery in Lagos,
This focus on upstream operations overlooks with its capacity of around 650,000 barrels per
the constraints created in other parts of the value day, is a huge step in the direction of addressing
chain, he said. not only Nigeria’s longer-term demand but sig-
“[This] discounts the current capacity chal- nificantly improving the capacity outlook of the
lenges that also plague the downstream, espe- global downstream sector.” ™
cially with regard to transportation of fuel,” he
said. “Refinery closures in recent years, coupled
with a number of untimely accidents at impor-
tant regional refineries, have curtailed supplies
and helped create the energy market volatility of
recent months.”
Barkindo said he had referred to this point
in his keynote speech at the Nigeria Oil & Gas
Conference & Exhibition (NOG) on July 5. He
also stressed that the constraint on the down-
stream sector was a global phenomenon that
was not being addressed in a consistent way in
every region.
Overall, he stated, worldwide refining
capacity dropped by more than 330,000 bar-
rels per day (bpd) in 2021 “and remained below
pre-pandemic levels last year, despite the robust
global economic rebound.” Barkindo said refinery closures and accidents had made prices volatile (File Photo)

PROJECTS & COMPANIES
Freeport LNG says early October

is its target date for partial restart

FREEPORT LNG, the owner and operator of a October was the target date for restarting gas
gas liquefaction plant and LNG export terminal liquefaction. “Currently, it is estimated that the
on Quintana Island on the Texas coast, has said resumption of partial liquefaction operations
it is on track to resume partial operations early will be early October 2022,” she commented.
in the fourth quarter of this year. The spokeswoman confirmed that Freeport
A spokeswoman for the company said in LNG was still aiming to resume operations at
a statement emailed to LNG Prime that early full steam by the end of the year.

Week 27 07•July•2022 www. NEWSBASE .com P11