Page 6 - LatAmOil Week 24

LatAmOil COMMENTARY LatAmOil

NRG: Looking beyond the crisis

Oil prices have found support on signs of recovering fuel demand and compliance with OPEC+ cuts

COMMENTARY WELCOME to the sixth edition of NewsBase’s costs of as much as $93 per barrel.
Roundup Global (NRG), in which our team of Kyari also drew attention to NNPC’s person-
international editors provide you with a snap- nel costs, which he described as the highest in
shot of some of the key issues affecting their the world. The company is currently devoting
regional beats. Get the NRG Oil & Gas Editor’s 50% of its cash flow to human resources, he said
Picks to your inbox every week for free. Just click during the webinar.
here. Concerns about cost have also emerged in
Oil benchmarks have lost ground over the Mozambique. According to audits ordered by
past week, with Brent dipping back under $40 the Mozambican government in 2019, South
per barrel amid growing fears of a second coro- Africa’s Sasol appears to have overstated its
navirus (COVID-19) wave following a fresh recoverable costs for operations in Inhambane
outbreak in Beijing. But prices have also been State by around $100mn. This indicates that the
supported by signs of recovering fuel demand company may have skimped on tax payments
and OPEC+ producers complying with agreed for 2017 and 2018, according to the state press
production cuts. agency.
With market conditions changing so rapidly, In North Africa, Algeria is working to adapt
the main focus of governments and companies its natural gas marketing strategy to take account
remains their short-term response. But some of increased competition.
are also beginning to look ahead to a post-cri- Mohamed Arkab, the Minister of Energy,
sis world, adopting new strategies for cleaner stated last week that the national oil company
energy, drawing up plans to build up import (NOC) Sonatrach was determined to “remain
capacity and signing off on new upstream the preferred supplier” of gas to Europe. Exist-
investments. ing pipeline connections will help the company
achieve this goal, he said.
Cost containment in Africa Meanwhile, both Liberia and Nigeria are
Africa’s largest oil producer has turned the spot- addressing issues related to local content. The
light on cost containment. Liberia Petroleum Regulatory Authority (LPRA)
Mele Kyari, the head of state-owned Nigerian is encouraging domestic operators to participate
National Petroleum Corp. (NNPC), said during in the country’s first offshore licensing round,
a webinar last week that his company was work- while the Nigerian Content Development and
ing to reduce its production costs to $10 per bar- Monitoring Board (NCDMB) is promoting local
rel or less, down from the current estimated level investment in the oil-refining industry.
of $21 per barrel.
One reason why NNPC is struggling, he If you’d like to read more about the key events shaping
asserted, is that it is facing an “impossible” situa- Africa’s oil and gas sector then please click here for
tion in which some of its partners are reporting NewsBase’s AfrOil Monitor.

P6 www. NEWSBASE .com Week 24 18•June•2020