Market Report: Nigeria Urges Marketers to Sell Fuel at Government Approved Prices 

The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Learn more about Gladius Commodities at www.gladiuscommodities.com.

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NIGERIA

The Group Managing Director of the Nigerian National Petroleum Company (NNPC), Alhaji Mele Kyari, stated that the loading of trucks at all its depots has commenced, helping clear the current scarcity experienced across the country. He added that there are 1.7 billion liters of petrol currently in stock. Kyari said that the additional fuel would relieve the situation, and neither the Federal Government nor NNPC has any plan to raise the pump price of petrol. He urged marketers to ensure that they sell petrol at the government approved price.

Additionally, speaking at the Nigerian International Energy Summit (NIES), Kyari stated that the company aims to be among the top five gas firms globally in the next ten years. In his keynote address titled ‘Changing Strategies for the Future of NNPC’, he stated that the NNPC is building gas super-highways to connect gas sources to existing and new markets. The growth of the gas business and low carbon-intensive oil remains the focus.

Nigeria and Equatorial Guinea have signed a Memorandum of Understanding (MoU) to supply gas from Nigerian offshore fields to the neighboring Equatorial Guinea Gas Processing Facility at Punta Europa. The pact is expected to unlock potential in the Gulf of Guinea wherein Nigeria’s abundant natural gas reserves compliment Equatorial Guinea’s Gas Processing and Liquefaction infrastructure.

Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, described the move as a way of meeting the imperatives of the “Decade of Gas” initiative in Nigeria. This collaboration will allow Nigeria’s stranded gas to access the global gas market within 18 to 24 months. H.E. Minister Sylva noted that the project, which envisions an offshore gas pipeline development, would create huge in-country local content opportunities for pipeline and other infrastructure service providers as well as accelerate royalty revenues that come from producing many gas fields that would have otherwise remained stranded.

GHANA/EQUATORIAL GUINEA/MAURITANIA/SENEGAL

Oil and gas company Kosmos announced that it expects to spend approximately $700 million in capital expenditures in 2022. The company will spend approximately $400 million of its budget on its base business in Ghana, Equatorial Guinea, and the Gulf of Mexico. The other $300 million will be spent on its assets in Mauritania and Senegal, mainly the Tortue Ahmeyim project. The base business capital expenditure (capex) includes maintenance capex for development drilling (approximately $250-$300 million), as well as integrity management.

In addition, Kosmos expects to spend approximately $100-150 million of growth capex to fund pre-investment for infrastructure supporting growth in the base business in 2023 and beyond (i.e., Jubilee Southeast and Winterfell). In Mauritania and Senegal, Kosmos expects to spend approximately $250 million on Tortue Phase 1, with an incremental $50 million on increased activity on Tortue Phase 2 and the BirAllah and Yakaar-Teranga hubs to advance the commercialization of substantial gas resources.

GLOBAL

On March 3, oil prices soared again as the Ukraine war triggered a dash for commodities that could be in short supply, while stock markets slipped as investors worried about higher inflation and slowing economic growth. The U.S. West Texas Intermediate crude futures hit a high of $116.57, while Brent crude contract was up $4.04 at $116.97 a barrel at 13:16 GMT.

The U.S. Energy Information Administration’s weekly report for March 2 showed a draw of 2.597 million barrels in the week ending February 25, against analysts’ forecasts of a predicted build of 2.748 million barrels. Crude price gains followed a fresh round of U.S. sanctions that targeted Russia’s oil refining sector, raising concerns that exports could be next. While wielding economic sanctions to try to make Russia call off its invasion of Ukraine, Washington has so far stopped short of targeting Russia’s oil and gas exports, weighing the impact on global oil markets and U.S. energy prices. Still, traders held off Russian oil products anyway. At least ten oil tankers failed to find buyers on Wednesday, market sources said.

The Organization of the Petroleum Exporting Countries and allies (OPEC+), which includes Russia, held a meeting on March 2 and decided to maintain an increase in output by 400,000 barrels per day. OPEC+ seemingly ignored surging prices, the invasion, and calls from some corners to increase supply. This was in reaction to fresh U.S. sanctions on the Russian oil refining sector.

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