Fitch Sees Brent At $45 Next YearNoble Energy will conduct refurbishment work on its Aseng floating production storage and offloading (FPSO) unit over a period of 10 days, with the objective of maintaining safety, reliability and productivity of the infrastructure, as well as complying with regulations of the ABS (leading U.S. offshore classification society). Intervention works will also be carried out in wells 5P and WI-1. Meanwhile, maintenance works will be conducted on the Zafiro, Jade and Serpentina infrastructures, with execution planning activities carried out ahead of well repairs on the Jade Platform by 2022, along with optimization of production and management of inactive wells. Serving as the country’s most prolific asset, the ExxonMobil-operated Zafiro field was producing 90,000 barrels per day (pre-COVID-19) via the Jade fixed production and drilling platform and Serpentina FPSO. Details of the 2021 Work and Budget Program follow an announcement by the Ministry of Mines and Hydrocarbons last week (https://bit.ly/3phvUbq) forecasting $1.1 billion in upcoming foreign direct investment into the oil and gas sector. As of October, total crude oil production in the country in 2020 stands at 35.15 million barrels, translating to an average daily production of 115,250 barrels per day. Total condensate production amounts to 9.48 million barrels, translating to an average daily production of 31,079 barrels of oil equivalent per day. The Ministry has set its sights on boosting hydrocarbon output by facilitating the influx of foreign capital and enabling operators to carry out capital-intensive E&P activities in 2021.
Equatorial Guinea Intensifies E&P Activities In 2021
Equatorial Guinea will see three exploration wells drilled in Trident Energy-operated Block G in 2021, along with refurbishment and well intervention works across other assets, according to the Ministry of Mines and Hydrocarbons.
Trident Energy will drill three wells in Block G in 2021 – each of which is expected to take 33 days to complete – with an estimated start date in April.
Located 15 km offshore Equatorial Guinea, Block G is home to the Ceiba and Okume fields, and is set to yield new development opportunities following the company’s acquisition of 4D seismic in the first quarter of 2020.
India: Gas Pipeline Blast Kills One, Destroys Houses In Gujarat
A blast at a gas pipeline in Gujarat killed one person and injured two others early on Tuesday, authorities said.
It was not immediately clear who ran the pipeline – state-run Oil and Natural Gas Corp (ONGC) denied media reports that it was the operator.
Local company Sabarmati Gas, partly-owned by Bharat Petroleum Corp, also said it was not involved.
The massive explosion destroyed two houses in a residential area near ONGC’s Kalol field in Gandhinagar district, trapping people under the debris, officials said.
Senior Gandhinagar official Kuldeep Arya told Reuters a gas leakage could have triggered the blast.
“ONGC confirms that this pipeline, where the accident took place, does not belong to ONGC,” its local office said.
It was supporting rescue officials on the ground, it added.
Ghana: PURC Launches Investigation Into Prepaid Meter Irregularities Faced By ECG Customers
The Public Utilities Regulatory Commission (PURC) has launched investigations into the irregularities being experienced by some customers of Electricity Company of Ghana (ECG).
In a statement signed by its Executive Secretary, Mami Dufie Ofori, the Commission assured the affected customers that it would take appropriate regulatory actions when investigations were completed.
The Commission reiterated its commitment in protecting the interest of consumers and utility service providers with the aim of achieving quality utility service.
It would be recalled that the Institute for Energy Security (IES), on Monday, expressed concerns about the challenges prepaid meter customers of ECG were facing and called on the Energy Minister to intervene to resolve the issues.
Reacting to the issue, Managing Director of ECG, Kwame Agyeman-Budu admitted that the system is experiencing some communication challenges.
According to him, he personally experienced the same challenges when he purchased electricity credit.
In view of that, he said his outfit had informed the pre-paid meter vendor and is working to rectify the anomaly.
He urged consumers to exercise patience, saying the system would be restored to ensure that no-one is shortchanged.
Source: www.energynewsafrica.com
Nigeria Commissions LPG Plant At Oredo (Photos)
Nigerian President Muhammadu Buhari has officially inaugurated Nigerian Petroleum Development Co.’s (NPDC) integrated gas handling facility at Oredo.
Located in Edo State’s OML 111, the facility will receive gas from the Oredo field and should halt flaring.
“Scaling up utilisation of Nigeria’s abundant natural gas resources will help spur industrialisation”, Buhari said. He noted that 2020 was the country’s year of gas. The Oredo plant will be the largest onshore LPG plant in Nigeria targeting the domestic market.
Launching the plant moves Nigeria a “step closer to self-sufficiency and supports growth for small and medium sized enterprises. The Oredo plant will create hundreds of direct, and indirect, employment opportunities and will also support the ongoing drive for alternative auto fuel,” the president said.
Self sufficiency
The Oredo field will provide 200 million cubic feet per day of wet gas to the plant. It will produce around 84 mmscf per day of lean gas. The field produces around 10,000 barrels per day of oil.
The operator will export this gas to the local market via the Escravos Lagos Pipeline System (ELPS), producing a potential 367 MW of power. It will also produce 330 tonnes per day of LPG, 345 tonnes of propane and 2,600 barrels of condensate. The plant will meet 20% of Nigeria’s LPG demand. “This translates into a daily load out of 17 trucks of LPG and 22 trucks of propane,” Nigerian National Petroleum Corp.’s (NNPC) managing director Mele Kyari said. Kyari noted the importance of gas revenues during 2020, when oil prices plummeted. “This has given us the courage to pursue other projects,” he said. NPDC is a “leading supplier of gas” for the domestic market and is expected to be the country’s top producer of oil in two or three years, the NNPC official said. Local companies Network Oil and Gas carried out work on the project, while Loneb Resources Nigeria was a subcontractor for piping and structures. NPDC opted to go ahead with the plan in 2015. The company expects revenues from the plant to be around $200mn per year.VIDEO:
— NNPC Group (@NNPCgroup) December 22, 2020
GMD @MKKyari on the impact of today's Presidential Commissioning of #NPDC's #IGHF will have on the domestic gas market.
"Aside the #IGHF, all our remaining gas infrastructure projects (AKK, OB3 & ELPS 2 Pipelines) are on course and we shall deliver them to Nigerians." pic.twitter.com/zAO0fn4shR
Nigeria: Buhari Commissions NPDC’s Edo Integrated Gas Plant Today
President of the Republic of Nigeria, H.E. Muhammadu Buhari will officially unveil the Nigerian Petroleum Development Company’s (NPDC) Oredo Integrated Gas Handling Facility (IGHF) at Ologbo Edo State today.
Managing Director of NPDC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Mansur Sambo, disclosed that the company is now the largest supplier of natural gas to the domestic market, having contributed an additional 600 million standard cubic feet per day (mmscf/d) to the market.
Sambo said of about 1.7 million standard cubic feet per day (mmscf/d) supplied to the domestic market, NPDC and its partners supply about 1.1 billion, making the firm the largest gas supplier to the domestic market.
He pointed out that of the 1.1 billion, NPDC alone supplies about 650 million mmscf/d, adding: “As at today, NPDC is the largest gas supplier to the domestic market.”
He hinted that the Liquefied Natural Gas (LNG) unit was ready and would be commissioned by the President and appealed to the host community to continue to be hospitable to the workers at the gas facility, stressing that their presence in the community would boost its economic base.
On gas flaring, Sambo said the NPDC had drastically reduced the percentage of gas flared to a minimum level, noting that gas flaring was a necessary activity in the hydrocarbon processing industry.
“Without the flares, the plant will not breathe because it is just like the air we human beings breathe,” he added.
Ghana: GOIL Rolls Out National Give-Away Bonanza To Customers
Ghana’s leading indigenous Oil Marketing Company, GOIL has rolled out a nation-wide Give-Away bonanza to customers and patrons in all its over 400 service stations.
Under the program, customers who patronize GOIL’s Super XP RON 95 fuel and its additivated Diesel benefit from tantalizing gift items in all its 8 zones.
Some of the items being given out include Airtime credit, T-shirts, face towels, Dusters, Drinking Mugs, Corporate embossed sanitizers and nose masks as well as tissue boxes.
In one of such give-away bonanzas, the Managing Director and Group CEO of GOIL, Kwame Osei-Prempeh joined the South Zonal team to hand over gift items to customers at its PRESEC service stations.
Mr. Osei Prempeh handed over T. shirts, Drinking mugs and Face towels to customers and encouraged them to continue to patronize GOIL products because patrons will get double benefits of quality products and value for money.
The Zonal South Manager, Helen Kyeremateng urged customers to continue to patronize GOIL products such as the Super XP RON 95, its additivated Diesel, and trusted lubricants.
All of GOIL’s over 400 service stations are taking turns to roll out the Giveaways during the yuletide.
In one of such give-away bonanzas, the Managing Director and Group CEO of GOIL, Kwame Osei-Prempeh joined the South Zonal team to hand over gift items to customers at its PRESEC service stations.
Mr. Osei Prempeh handed over T. shirts, Drinking mugs and Face towels to customers and encouraged them to continue to patronize GOIL products because patrons will get double benefits of quality products and value for money.
The Zonal South Manager, Helen Kyeremateng urged customers to continue to patronize GOIL products such as the Super XP RON 95, its additivated Diesel, and trusted lubricants.
All of GOIL’s over 400 service stations are taking turns to roll out the Giveaways during the yuletide.
Nigeria: Gencos Misrepresenting State of Power Sector-NERC
The Nigerian Electricity Regulatory Commission (NERC) has accused power Generation Companies (Gencos) of willfully painting a gloomy picture of the Nigerian Electricity Supply Industry (NESI), despite some remarkable progress in the last few years.
Speaking during an online forum, tagged: “The Power Dialogue,” organised by the Nigeria Electricity Hub, Commissioner, Legal, Licensing and Compliance, NERC, Mr. Dafe Akpeneye, noted that a number of investors were still angling to come into the sector despite the current constraints.
Akpeneye was reacting to a statement by the Executive Secretary, Association of Power Generation Companies (APGC), the umbrella body of all the Gencos, positing that members of the association are currently regretting investing in the sector since 2013 when the sector was privatised.
During the heated argument, the NERC chief said that the Gencos misrepresented facts when they said that in the last seven years, the sector had been backward with nothing to show by the power generators.
Akpeneye expressed shock at the Gencos’ representative’s comments, stressing that opportunities abound in the sector, which prompted Transcorp Power to recently acquire Afam Power in a deal that was sealed a few weeks ago.
“I am surprised with her (Ogaji’s) comments. As people who work in a sector that is, even though tiered, highly integrated, we should be careful with the message we give to the Nigerian public.
“Let’s be mindful that in this same sector that you are saying is gloomy, Transcorp which invested in the Ughelli plant just bought Afam in the midst of all the constraints and issues we are facing.
“There are Gencos that are waiting to still come on stream. The QIPP is still trying to come on board. Anyone can rebut me if I am wrong, but we have the largest power market in Africa,” he posited.
According to the NERC official, to say that it is all gloom and doom for the sector in the last seven years is a gross misrepresentation of facts.
Nigeria: Creation Of NNPC Limited Will Mark A Turning Point For Nigeria’s Oil & Gas Industry-Agunbiade“We have the demographics, the people. 210 million doing 5,000mw on a daily basis shows you that there’s a lot to be done. We have had misalignments, but that doesn’t take away the fact that the opportunities are still there and investors like Transcorp is taking another power plant. “They just sealed that deal a few weeks ago. Let’s be mindful of the representation we make. We should be mindful,” he cautioned. Earlier, the APGC chief executive said that 2021 could be worse for the power sector because there was nothing on the ground to point to that will markedly transform the power sector. “The situation has not been different from 2013 to date. It has been seven years of gloomy annual losses to the Gencos. Some of the investors have told me they regret investing in the Nigerian power sector. “It’s as if the power sector is cursed. I am quoting one of the investors. One of them called me and poured out his heart, how painful it is to invest in this sector. “For the Gencos, it’s not just 2020 that’s gloomy. From 2013 till date has been gloomy. In 2020, we have Covid-19 to blame, but for Gencos from 2013 to 2019, what did we blame it on? There was no Covid-19 for six years. It’s a seven-year gloomy anniversary. “We are not even sure 2021 will be a bright year because there’s nothing on the ground to show that 2021 is going to be better. That’s how bad it is,” she lamented.
GE Calls For Accelerated Deployment Of Renewables & Gas Power To Drive Impactful, Faster Decarbonisation
Building on its commitment to carbon neutrality in its operations by 2030 and announced intention to exit the new-build coal power market, GE (GE) today shared its position that the accelerated and strategic deployment of both renewable energy and gas power can make substantial progress in combatting climate change in the near-term, while securing a path to a lower-carbon emitting world in the future.
In a newly published paper expanding on its decades-long commitment to decarbonization titled “Accelerated Growth of Renewables and Gas Power Can Rapidly Change the Trajectory on Climate Change,” GE said neither power source will be sufficient alone; however, deployed in tandem, they can provide decarbonization at the pace and scale needed to help achieve substantial climate goals.
In addition, the paper outlines multiple technical pathways for gas power to achieve a lower-carbon generating footprint through the use of low and zero-carbon fuels—including hydrogen—as well as carbon capture utilization and sequestration (CCUS) technologies.
“Addressing climate change is an urgent global priority and one that we think we can do a better job of accelerating progress on—starting now—not decades from now,” said Scott Strazik, CEO of GE Gas Power. “We believe there are critical and meaningful roles for both gas power and renewable sources of energy to play, advancing global progress faster today with coal-to-gas switching while continuing to develop multiple pathways for low-to-zero carbon gas technologies in the future.”
To help meet urgent climate goals while at the same time increasing power demand across the globe, the report details the merits of gas-fired generation as a complement to support and accelerate renewable energy penetration:
• Gas is reliable, inexpensive, and doesn’t require a lot of land; the ideal complement to renewable energy.
• While renewable power is variable, gas power is dispatchable, dependable and flexible, available as much as 90% of the time.
• The near-term impact of coal-to-gas switching represents a fast and effective win for emissions reduction in many regions around the world. For example, since 2007, power sector CO2 emissions in the United States have dropped by about one third while total electricity generation has remained fairly constant. The CO2 emissions reduction attributed to coal-to-gas switching was greater than that from any other fuel source.
The position paper released today provides technology and market overviews of several sources of power generation including renewables, gas, coal and nuclear as well as technology breakthroughs needed to make battery storage more cost-competitive.
Ghana Gets 1000kW Floating Solar On Bui Dam Reservoir (Video)“With more than 125 years of experience across the electricity industry, GE is well-positioned alongside our customers to continue to lead the way and drive the future of energy,” said Vic Abate, GE Senior Vice President and Chief Technology Officer and former CEO of both GE’s Gas Power and Renewables businesses. “We’re prioritizing investment in technologies to cost-effectively scale renewables and to move toward net zero gas power with advances in hydrogen and carbon capture technologies. Together, the combination of renewables and gas can help lead an energy transition that enables us to achieve greater carbon emissions reductions faster compared to renewables alone.” GE Renewable Energy is continuing to invest in technology innovations that are driving down the cost of renewable energy, a key driver of the industry’s continued growth as noted in the whitepaper. The company recently announced that its Haliade-X offshore wind turbine, the most powerful turbine in operation today, will be uprated to 13 MW as part of the first two phases of the Dogger Bank offshore wind farm in the UK. GE’s gas turbine portfolio is built on an 80-year gas turbine technology heritage that is unparalleled in the power generation industry and GE’s HA gas turbine—the world’s most efficient gas turbine and fastest-growing fleet—has established several industry-firsts and secured two world records. GE also offers the industry’s most experienced gas turbine fleet in hydrogen and similar low-BTU fuel operations, with more than six million operating hours in decades of use across more than 75 gas turbines. GE continues to invest in research and development into hydrogen and carbon capture technologies in close partnership with GE’s Global Research Center—to help further advance a low or near-zero carbon footprint for gas power. GE’s Gas Power business has also signed several major customer strategic decarbonization programs including agreements with Uniper (https://invent.ge/34xuTnE) and the Long Ridge Energy Center (https://invent.ge/3rim6jh) in 2020. GE is pursuing multiple decarbonization pilot projects with customers throughout 2021 and 2022 for both hydrogen-fueled projects and carbon capture and sequestration technologies. Finally, GE Gas Power today announced it has joined the Carbon Capture Coalition, a nonpartisan collaboration of more than 80 businesses and organizations building federal policy support for economy-wide deployment of carbon capture, transport, use, removal and storage. Source: www.energynewsafrica.com
Ghana: ECG Must Resolve Pre-paid Challenges Quickly-IES
Energy think tank, Institute for Energy Security (IES), has charged Ghana’s southern electricity distribution company, ECG, to take immediate steps to resolve what it described as widespread challenges being experienced by its pre-paid customers.
In a statement issued and copied to energynewsafrica.com on Monday, December 21, 2020, IES noted that the more a customer buys power to be used, the more the customer owes the ECG, resulting in many homes and workplaces being disconnected.
The statement wondered whether it is the case that these customers, who have pre-financed the use of electricity at a later time, are having their electricity credits being converted to debits.
“In many cases, these pre-paid customers are being slapped with outrageous bills for electricity not consumed. They are compelled to pay for these unwarranted bills before they can be credited with any new power purchases and have electricity supplied,” IES alleged.
At this point, it takes field technicians of the ECG to go to homes and other outlets to reset meters before power can be restored. Many a time, it takes hours and days to have customers attended to and power restored.
“These challenges are cropping up at a time when the need for reliable and consistent power supply is paramount. During this season, the need for power is vital for purposes of security, productivity, events and more importantly, the Christmas and New Year when families will stay at home.”
The IES called on the Minister for Energy to, as a matter of urgency, direct the ECG to fix these challenges which are greatly inconveniencing legitimate customers of the ECG.
Managing Director of ECG, Mr Kwame Agyeman-Budu, reacting to the claims, admitted that the system is experiencing some communication challenges.
According to him, he personally experienced the same challenges when he purchased electricity credit.
In view of that, he said his outfit had informed the pre-paid meter vendor and is working to rectify the anomaly.
He urged consumers to exercise patience, saying the system would be restored to ensure that no-one is shortchanged.
Source: www.energynewsafrica.com
China’s Top Refiner Sees Oil Product Demand Peak By 2025
China’s largest refiner, Sinopec, expects domestic demand for oil products to peak by 2025 due to COVID impacts and the rise of electric vehicles, Argus has reported, citing Sinopec’s research think-tank as saying in its annual report.
“China’s oil products will enter a final growth phase before peaking in the next five years,” the Economics and Development Research Institute (EDRI) at Sinopec said, as carried by Argus.
According to the research institute, gasoline demand in China will likely peak in 2025, while demand for diesel could peak as soon as next year.
In 2020, Chinese oil product demand is seen down by 7 percent annually, EDRI said, as the pandemic cut consumption in China first.
Crude oil throughput at Chinese refineries, on the other hand, are expected to remain flat year over year in 2020, at around 13.4 million barrels per day (bpd), the think-tank forecasts.
Despite the expected imminent peak in domestic demand for oil products, refinery capacity in China is set to jump to nearly 20 million bpd by 2025, up from an estimated 17.83 million bpd in 2020, Sinopec’s forecasts cited by Argus showed.
China is already on track to surpass the United States as the world’s biggest oil refiner next year or the year after. Last year, refiners added some 1 million bpd to existing capacity, and there is another 1.4 million bpd of capacity under construction.
The new refinery capacity set to come online in China within the next five years will increase the oil product surplus in the country and lead to 30-percent growth in Chinese exports of refined petroleum products in 2025 compared to 2021, according to EDRI.
Surging Chinese oil product exports are set to put pressure on refiners elsewhere in Asia as the global refining industry is struggling with overcapacity. Refiners around the world have been announcing permanent closures of refinery capacity this year after the pandemic crushed fuel demand worldwide, and significant overcapacity still remains, the International Energy Agency (IEA) said last month.
Source: Oilprice.com
Nigeria: Oil Marketers Still Sell Fuel At N170 Per Litre Despite Reduction
Fuel consumers in Nigeria are still paying N170 per litre at the various filling stations despite the Federal Government’s decision to slash the price of the commodity to N162.44.
The Chairman of Major Oil Marketers Association of Nigeria (MOMAN), who also doubles as Managing Director of 11 Plc, Adetunji Oyebanji, reportedly told Vanguard, a local media outlet, that the reduction was not in the best interest of the downstream sector.
“We are completely in the dark as to how the price was arrived at, what the components are and other details that operators in the industry are expected to know and make meaningful business decisions.
“This uncertainty and policy somersaults would not augur well for the industry. We acknowledge that the times are hard but we need to think of the long-term sustainability of the industry. Without this investment, growth and new jobs would be a mirage. If my cost does not allow the reduction, we would not reduce the price. It can only work if marketers have finished their old stocks,’’ Osatuyi is quoted as saying.
“The government said it had deregulated. So, it is not possible to sell petrol at N162. If you ask anybody now in the industry, they will tell you the price at which they can sell is about N170 to N180,’’ he stated.
The Minister for Labour does not have the power to determine the price of petrol. Even the President can only do that if we go back to subsidy.”
The price cut was agreed at a recent meeting between the organised labour, including the Nigerian Labour Congress (NLC), Trade Union Congress (TUC) and the Federal Government.
Source: www.energynewsafrica.com
Nigeria: Panic As Petrol Tanker Explodes In Ibadan
A petrol tanker loaded with an unspecified volume of fuel has exploded in Nigeria causing heavy vehicular traffic in the West African nation.
The explosion occurred at the Iyaganku area of Ibadan, the Oyo State capital.
According to media report, the tanker fell close to a petrol station on Friday, afternoon and eventually exploded, thereby causing panic among road users and residents of the area.
There were no casualties.
Roads leading to the scene of the explosion were said to have been cordoned off causing gridlock along the Dugbe, Ring Road, and Iyaganku areas in the state capital.
An eyewitness, who identified himself as Suraj Adewale, said the tanker fell around 12noon but it eventually caught fire about two hours later.
The Oyo State Sector Commander of the Federal Road Safety Corps, Uche Chukwura, confirmed the incident to our correspondent on the telephone.
The sector commander said, “A tanker fell this afternoon and it eventually caught fire. Our men are there to control the traffic.”
Ghana: Fuel Prices To Remain Stable For Rest Of December
The Institute for Energy Security (IES) has predicted that fuel prices on the Ghanaian market will remain stable from now to the end of 2020.
The International Benchmark, Brent crude, sold at U.S$51.15 on Friday December 18, 2020, while WTI is trading at U.S$48.10.
According to IES, data analysed by its Economic Desk from the Foreign Exchange (Forex) market showed that the Ghanaian cedi lost its stability marginally against the U.S. dollar by 0.52 percent, trading at an average price of GH¢5.79 to the U.S. dollar over the period.
A statement issued by IES for the second pricing window said owing to the 7.06 percent increase in prices of International Benchmark- Brent crude, the 7.5 percent increase in prices of gasoline, the 9.3 percent increase in gasoline prices and the 0.52 percent decline of the local currency against the U.S. dollar, it foresees fuel on the domestic market remaining stable as “we go into the 2020 end of year festivities.”
REVIEW OF DECEMBER FIRST PRICING-WINDOW
Local Fuel Market Performance
For the period under review, fuel prices remained largely stable. Prices of petroleum products within the first Pricing-window of December 2020 saw majority of Oil Marketing Companies (OMCs) maintaining prices of Gasoline and Gasoil at the pump with some few of them increasing their prices in response to international developments. The current national average price of fuel per litre at the pump is pegged at GH₵ 4.57
For this Pricing-window, Zen Petroleum, Benab Oil, Petrosol and Frimps Oil sold the lowest price per litre of Gasoline and Gasoil at the pump according to IES Market-Scan.
World Oil Market
Brent crude price within the period experienced an increase of 7.06% in average price with the commodity being sold at $48.82 per barrel mark from the previous window’s average price of $45.49 per barrel mark. The increase in the average price of the commodity over the period is as a result of the strong demand for oil in Asia particularly. Also, the approval of vaccines against the pandemic in UK and Canada and other jurisdictions sent Brent Crude prices above the $50 mark. On Thursday, 10th December 2020, Brent closed trading at $50.25, the highest since the early days of March this year.
Finished products prices as monitored on Standard and Poor’s global Platts platform showed commensurate increases in the prices of Gasoline and Gasoil on the global fuel market within the period. Gasoline saw a 7.5% increase in prices closing the period at $415.32 per metric tonne from an earlier price of $385.27 per metric tonne. Gasoil prices also appreciated by 9.3% closing trading at the end of the period at $396.68 per metric tonne from a previous price of $362.89 per metric tonne.
Local Forex
Data analysed by the IES Economic Desk from the Foreign Exchange (Forex) market shows the Cedi lost its stability marginally against the U.S. Dollar by 0.52% trading at an average price of Gh¢5.79 to the U.S. Dollar over the period.
PROJECTIONS FOR DECEMBER 2020 SECOND PRICING-WINDOW
Owing to the 7.06% increase in prices of International Benchmark- Brent crude, the 7.5% increase in prices of Gasoline, the 9.3% increase in Gasoline prices and the 0.52% decline of the local currency against the U.S. Dollar; the Institute for Energy Security (IES) projects prices of fuel on the domestic market remaining stable as we go into the 2020 end of year festivities.
Signed:
Fritz Moses
Research Analyst, IES
Africa Must Support Minister Diamantino To Succeed As OPEC President
The election of Angola to the rotating presidency of the conference of ministers of OPEC has thrust Minister Diamantino Pedro Azevedo, Minister of Mineral Resources, Petroleum and Gas of Angola to the forefront of efforts to stabilize global oil markets in 2021.
The assumption of the Presidency of OPEC by H.E Diamantino could not have come at a more defining period for the organization and the global economy at large.
It comes at a time, when the world is hoping to turn the corner away from a COVID-19 pandemic that has had a devastating effect on the global oil market and the global economy throughout 2020.
Average Brent oil prices for 2020, currently stand at approximately USD 49, compared to U.SD 64 in 2019 and U.SD 71 in 2018 per barrel. The 31% drop on average from last year in the price of oil per barrel, represents a significant challenge for all OPEC members, especially those, whose revenues are heavily dependent on the oil sector like Angola.
Despite COVID-19, multiple lockdowns and the resulting drop in economic activity globally, being primarily responsible for the significant drop in oil prices, the Russo-Saudi oil price war of March 2020 was certainly also a major source of market instability.
The task at OPEC, of ensuring, that global oil markets stabilize in 2021 and lead to a recovery in global prices has now fallen on the shoulders of Diamantino, who has built a reputation in recent years of being an effective manager and enforcer of reform of Angola’s oil and gas sector.
“We are very confident, that Minister Diamantino will employ the same fervor, that he used to reform Angola’s oil sector, when steering OPEC towards achieving much needed global oil market stability,” said Sergio Pugliese, President of the African Energy Chamber in Angola.
“Price and market stability is good for OPEC’s members and for the Angola too”, Mr. Pugliese continued.
Despite OPEC’s quota of global daily oil production dipping to below 50% of global output in recent years, especially due to the significant increase in shale production in the United States of America, the organization continues to hold major sway, with its OPEC+ alliance.
The OPEC+ alliance consist of the 13 OPEC members and 10 of the world’s major non-OPEC oil-exporting nations, who have come together with the sole aim of ensuring market stability and maximum revenue returns for oil producing countries.
Similar to many other oil producing nations in OPEC, Angola’s economic growth for 2020 will be negative.
The World Bank’s forecast currently stands at negative 4%. It is therefore in Angola and Africa’s interest, for the African Energy sector to give Minister Diamantino all the necessary backing and support, to ensure that oil markets stabilize and lead to a steady increase in prices in 2021. This will lead to a direct increase in government’s revenue and its ability to deliver on much needed jobs for Angola’s youth.
Fifty years since its foundation, OPEC continues to have challenges that hamper its effective operation. The growth in unconventional oil production through recent technological advancements is one such challenge.
In 2009, after a nearly forty-year decline in U.S. crude oil production, shale and sand-based oil extraction helped ramp up output. New technologies have allowed American producers to tap into previously trapped oil at decreasing cost, leading the United States to become the world’s largest oil producer in recent years. A decade later, U.S. production levels are almost double, which has taken OPEC by surprise.
Spending In Africa’s Upstream Sector Down By US$14 Billon, Assets Value Hit By US$200 Billion FallThe increase of oil production by non-OPEC members like the U.S, reduces the ability of Angola and other OPEC members to push for higher oil prices. Pressure from western lobby groups to Fast-track decarbonisation and kill the oil industry globally under the guise of saving the planet is another such threat, which will demand a coordinated response from oil producers. In the absence of OPEC, and the coordination amongst its members, countries like Angola are likely to suffer more from the diktat of the market. One does not have to look far, to see how the absence of an organization like OPEC has led to African coffee producers being left at the mercy of global coffee markets. Angola, once a major coffee producer and exporter, with a total output of 230,000 tons has seen its coffee growing industry nearly disappear. Angola currently produces just over 8,000 tons of coffee per year. Given the importance of Agriculture as a job creator, it would have helped Angola, had the coffee industry had an organization like OPEC to protect its interests. The Angolan and African energy sector must support Minister Diamantino through his tenure, to ensure market stability in 2021. It is in Africa’s interest, and it is good for job creation in Angola. As we reflect on these points, we should perhaps remind some of the dissenting voices of the old and wise African proverb, “If you want to go fast, go alone. If you want to go far, go together,’’ said the President of the African Energy Chamber in Angola.