Page 8 - AfrOil Week 17 2020

AfrOil PERFORMANCE AfrOil
 Most of the Republic of Congo’s oil production comes from fields operated by the French major Total. As of April 28, those fields were still yield- ing around 190,000 bpd.
The country agreed to the OPEC+ deal because it has a strong interest in stabilising world crude markets. It is heavily dependent on its oil industry, which accounts for about 65% of
GDP, generates 85% of all revenues and makes up more than 90% of exports.
Officials in Brazzaville said last week that the decline in oil prices was the main factor driv- ing its forecast of a 9% shrinkage in the econ- omy in 2020. Previously they had said that they expected the economy to expand by 1.2% this year. ™
POLICY
NNPC releases updated OSP list, moots plans for production cuts
NIGERIA
NIGERIAN National Petroleum Corp. (NNPC) published an updated list of its official selling prices (OSPs) for crude oil on April 28, follow- ing a delay. The state-owned company usually makes its OSPs public between the 15th and 25th day of each month but was slow to do so in April.
The list indicates that NNPC has cut the official values of all grades of Nigerian crude, thereby deepening their discount to North Sea Dated prices. The company brought Bonny Light prices down by $0.66 per barrel, increas- ing the discount to $3.95. It also cut Qua Iboe and Escravos by $0.82 and $0.96 respectively, bringing these grades’ price discounts up to $3.10 and $2.74.
For other grades, the price reductions ranged from $0.35 per barrel for Amenam to $3.53 for Eremor. Usan, Ima, Eremor, Akpo and Agbami now carry the highest discounts, as their OSP has been set at $4.00 below North Sea Dated, while Okwuibome carries the lowest discount, at $0.59.
The price cuts, which will see some grades of Nigerian crude selling for less than $10 per barrel in May, came as no surprise. Nigeria has had trouble finding buyers for its production in recent months, and it does not have the onshore storage capacity to move surplus barrels into tank farms and other facilities. As a result, Reu- ters reported in late March that the country was still trying to find buyers for at least 50 cargoes of April- and May-loading oil. (The news agency did say earlier this week, though, that the num- ber of unsold cargoes had dropped to around 36.)
Production negotiations
NNPC did not explain the reasons for the delay in the release of OSPs. Trading and industry sources told Reuters earlier this week that NNPC was behind schedule because of questions about how exactly to ensure Nigeria’s compliance with the production cuts mandated by the lat- est OPEC+ deal. The Nigerian government is
still negotiating with domestic operators and international oil companies (IOCs) on how to allocate the reductions, they said.
“NNPC is working out the cuts for the inter- national oil companies. That’s why the pro- gramme for June and OSP for May is yet to come out,” one trading source said.
According to a source inside a major IOC working in Nigeria, the government has dis- cussed several different options for curbing output. These options range from applying cuts to fields that are not operated by joint ventures between NNPC and foreign partners to apply- ing blanket cuts, with all operators reducing yields by the same percentage, he told Reuters.
Choosing among these different methods is proving difficult, the source added. “This hasn’t been done before,” he remarked.
A second trading source noted that Nigeria had already made changes in its May oil export programme and would probably reduce output in June, as stipulated by the OPEC+ agreement. “May cargoes will get delayed and new June cargoes may be relatively few,” he told the news agency. ™
Nigeria is still seeking buyers for about 36 cargoes (Photo: File)
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w w w . N E W S B A S E . c o m Week 17 29•April•2020