Page 10 - AfrOil Week 20 2020

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NIGERIA
THE head of a Kenyan fuel trading company has talked up the advantages of using Kisumu, a port on Lake Victoria, as a starting point for deliver- ies of fuel to Uganda and Tanzania.
Edward Odero, the director of Tricon Inter- national, noted last week that most Kenyan trad- ers use tanker trucks to ship their products from
Kisumu, one of the endpoints of the Kenya Pipe-
line Co. (KPC) system, to customers in Tanzania
and Uganda. This method contributes to heavy
traffic on the roads that connect these countries,
and in turn, the congestion contributes to the spread of the coronavirus (COVID-19) pan- demic, he said. 
These expectations have helped to widen the price gap between domestically produced gaso- line and imported gasoline. As a result, Brazilian importers are showing considerably less interest in bringing fuel into the country in June or July.
If you’d like to read more about the key events shaping Latin America’s oil and gas sector then please click here for NewsBase’s LatAmOil Monitor.
Middle Eastern cutbacks
This week focuses on what might be a surpris- ing development in the oil market: the dramatic response of OPEC+ to the oil price crash by its embarking on an unparalleled programme of production cutbacks. The depth of these cuts was such that the secretary-general of OPEC expressed confidence that the worst of the oil crisis could be over. A month on from the nadir of the oil price, this is a striking view.
A second theme is the evaluation of two recent developments in the gas market. With the ripples of the oil market crash now spreading to its gas counterparts, Qatar may have to choose between curbing LNG output and risking a mar- ket share battle that hurts gas prices. Although it has an edge over rival LNG producers, it may have no choice but to cut output.
At the same time, rival moves for energy rights involving Turkey, Greece and Cyprus are afoot in the Eastern Mediterranean and Black Sea; these moves include the EastMed pipeline deal sailing through a Greek parliamentary committee.
The notable first action of the new govern- ment in Iraq will no doubt test its mettle and attract interest as the likely forerunner of other major decisions.
Flashpoints involving Iran and the US, and the Gulf of Aden, feature, as do the woes of the iconic American University of Beirut, for so long a beacon of sanity and hope in this trou- bled region.
If you’d like to read more about the key events shaping the Middle East’s oil and gas sector, then please click here for NewsBase’s MEOG Monitor.
Historic lows for North American rigs
The active US oil and gas rig count has fallen to an all-time low for the second consecutive week. In the week up to May 15, the total rig count dropped by 35 to 339, according to the latest data from oilfield services firm Baker Hughes. This comes after active US rigs had decreased to a previous all-time low of 374 the previous week.
The previous record-low was 404 rigs, recorded in May 2016 during the last downturn. Records of rig counts begin in the 1940s.
The collapse has been rapid, with the US rig count standing at 987 a year ago, declining somewhat to 796 at the start of 2020 and remain- ing relatively steady until mid-March, when it was still at 792. The oil rig count stands at 258 as of May 15, having slumped from 683 on March 13. The gas rig count has shown a much more modest decline from 107 to 79 over that period, illustrating the toll on oil-focused producers in particular.
Rig counts in Canada have also fallen to a record low, dropping to 23 in the week up to May 15. The oil rig count has stood at just seven for three consecutive weeks, and has been in single figures since the start of April. It is worth noting that rig counts typically drop in Canada in the spring as snow melts, forcing a lot of activity to stop. Nonetheless, the severity of this downturn has exacerbated the situation. For comparison, during the last downturn the lowest Canadian rig count was 36, recorded in May 2016.
There is concern that the bottom of the market has not yet been reached, and more rig cuts will follow. However, in better news for the industry, there appears to be little sign of West Texas Intermediate (WTI) prices going negative again as the June contract comes up for expiry on May 19. As of press time, WTI had jumped to around $32.5 per barrel – its highest level in around two months. This is being attributed to output cuts and early signs of a gradual recovery in demand for fuel.
If you’d like to read more about the key events shaping the North American oil and gas sector, then please click here for NewsBase’s NorthAmOil Monitor. ™
“ oil and gas
PIPELINES & TRANSPORT
Kenyan fuel trader touts rail and barge route for fuel shipments
The active US
rig count has fallen to an all-time low for the second consecutive week
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w w w . N E W S B A S E . c o m Week 20 20•May•2020