Page 10 - AfrOil Week 19 2020

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It has also said it would shut down some existing wells, resulting in 125,000 bpd being taken off the market in May and 100,000 bpd in June. This will mark an increase from the 24,000 bpd that the company shut in during April.
And Pioneer Natural Resources, a lead- ing Permian Basin independent, now expects to produce on average 198,000-208,000 bpd, about 7,000 bpd below previous guidance. The company is among those that have warned there could be additional reductions in output if world crude oil prices remain lower for longer.
Even with the cuts that are being made,
producers remain concerned about spare storage capacity running out as demand remains depressed globally owing to numer- ous countries’ ongoing lockdowns. Indeed, Hess announced in its first-quarter results that it had chartered three very large crude carriers (VLCCs) to store 2mn barrels each during May, June and July of Bakken crude production that is expected to be sold in the fourth quarter.
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PIPELINES & TRANSPORT
Work on EACOP could begin next April
TANZANIA
CONSTRUCTION work on the East Africa Crude Oil Pipeline (EACOP) may begin in April of next year, according to Tanzanian Energy Minister Medard Kalemani.
Speaking to members of Tanzania’s National Assembly on May 8, Kalemani stated that Uganda and Tanzania would be able to start work on the pipeline once they had finalised a set of key agreements – namely, host govern- ment agreements (HGAs), a land lease agree- ment (LLA), a ports agreement (PA) and a shareholders’ agreement (ShA). The two coun- tries hope to wrap up talks on the accords in the near future, he said.
Over the next year, he added, Tanzania’s government will focus on completing these agreements and on compensating the parties that will be affected by construction. Dar es Salaam’s proposed budget for the 2020/2021 fiscal year allocates TZS1bn ($432,100) for such compensation.
In the meantime, he noted, Uganda and Tan- zania have yet to make a final investment deci- sion (FID) on the EACOP project. They have completed environmental impact assessment (EIA) studies and have held consultations with communities along the proposed pipeline route,
he said.
The minister did not say when the parties
might reach the FID stage.
Tanzania and Uganda had originally hoped
to begin work on EACOP in 2017 and bring it on stream in 2020. But they postponed the FID, partly because they were not able to reach agree- ment easily on transportation tariffs or on cer- tain provisions of the HGAs and ShA.
Another factor that led to delays was the Ugandan government’s dispute with Tullow Oil (UK/Ireland) over the tax consequences of a planned farm-out deal, under which Total (France) would have acquired part of the former company’s stakes in EACOP and in several oil- fields near Lake Albert.
That deal collapsed last year, forcing Tullow to restart negotiations with Total. The compa- nies were finally able to strike a deal in late April. As a result, Tullow is now set to sell 100% of its stakes in the aforementioned assets to Total.
Uganda and Tanzania hope to build EACOP along a 1,445-km route from Hoima, a city near the Lake Albert oilfields, to Tanga, a port on the shore of the Indian Ocean. The link will eventu- ally allow Uganda to export crude at the rate of 216,000 barrels per day (bpd).™
PERFORMANCE
Nigeria still facing backlog of unsold crude
NIGERIA
NIGERIA is reportedly still struggling to reduce its backlog of unsold crude oil cargoes, and it may continue to do so despite its latest round of price cuts.
According to trading sources, Nigerian National Petroleum Corp. (NNPC) was still seeking buyers for 30 of its 65 May-loading car- goes as of late April. This is an unusually high share of the total for the end of the month, and
Nigerian authorities appear to be concerned that the figure is not likely to diminish in the near future.
Accordingly, officials in Abuja have announced further cuts, in the hope that making Nigerian oil cheaper will make it more attrac-
tive. Last week, they took steps that brought
prices for Bonny Light and other Nigerian crude grades down to around $10 per barrel. 
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w w w . N E W S B A S E . c o m Week 19 13•May•2020