Page 11 - AfrOil Week 19 2020

AfrOil PERFORMANCE AfrOil
REGIONAL
US-BASED Kosmos Energy has reported that the coronavirus (COVID-19) outbreak had a limited effect on its operational performance in Africa during the first quarter of 2020.
In a statement detailing its first-quarter earnings, Kosmos said that the pandemic had not had any impact at all on oil output in Ghana and Equatorial Guinea. The company is a share- holder in the Deepwater Tano and West Cape Three Points blocks offshore Ghana and is par- ticipating in the development of the Ceiba and Okume fields offshore Equatorial Guinea. (It also owns stakes in two other Equatoguinean blocks but has yet to wrap up exploration work there.)
In Ghana, the statement noted, the com- pany’s net share of production came to 26,500 barrels per day (bpd), slightly above than the forecast level, in the first three months of the year. Kosmos also lifted one cargo of Ghanaian oil during the same period and expects to load a total of 10 cargoes in 2020. Its full-year net production is on track to average 27,000-29,000 bpd, in line with previous forecasts.
Production levels in Equatorial Guinea were likewise unaffected by the pandemic in the first quarter. Kosmos’ share of production averaged 11,600 bpd in the January-March period, and the company is still on track to extract 11,000- 13,000 bpd of oil and to lift four and a half car- goes this year.
Conditions are markedly different at Greater Tortue/Ahmeyim, an offshore block that strad- dles the maritime border between Senegal and Mauritania. According to Kosmos’ statement, the coronavirus pandemic has disrupted the
planned installation of breakwater facilities, thereby pushing the target date for starting pro- duction back by 12 months. In turn, this delay has led operator BP and its partners to reduce budgeted spending and to scale back activity at the block this year.
“[The] remaining project capex [will now be] spread over 2021, 2022 and 2023,” Kosmos added.
The company has been less successful at dodging the pandemic in the US Gulf of Mexico of late, according to the first-quarter report. Pro- duction levels are likely to remain in the lower part of the 24,000-28,000 barrels of oil equiv- alent per day (boepd) guidance range for that region, assuming that the shut-ins that followed the spread of the virus continue through the end of May, Kosmos said. ™
Kosmos has stakes in four Equatoguinean blocks (Image: Kosmos Energy)
 This put these grades at a discount of nearly $4.00 to Brent crude, which was trading under $15 per barrel at that time. (Brent has since moved up to nearly $30 per barrel). It also put the price at a level below the reference rate of $20 per barrel cited in the Nigerian federal govern- ment’s budget.
Price cuts may not be enough to make Bonny Light, Qua Iboe and other Nigerian grades attractive to buyers in Europe, where refiners are usually keen to secure steady deliveries of light sweet crude that yields high percentages of gasoline and diesel. Two trading sources told Bloomberg that global energy demand was still so low because of the coronavirus (COVID-19) pandemic that refiners might not be interested in Nigerian crude even if it cost only $10 per barrel.
In the meantime, buyers’ lack of interest in Nigerian oil is sure to have a negative effect on the country’s economy this year. Hadiza Bala Usman, the managing director of the Nigerian Ports Authority (NPA), said that the slow- ing pace of crude exports was likely to cut the amount of revenue that the federal government collects from seaports to sink by 75% by the end of this year.
Oil accounted for fully 78% of the export cargo that passed through Nigeria’s ports in 2019, Usman said.
“Nigerian crude shipment is tied to expor- tation, and it contributes the highest revenue of the ports,” she explained. “This underscores the importance of diversification of the economy through non-oil exports in order to reverse the trend.” ™
Kosmos Energy describes pandemic’s impact on African oil production
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