Viewpoint: West African crude output in decline

Spanish Market: Crude oil
24/12/21

Nigeria — Africa's largest oil producer — is likely to continue battling unplanned crude production outages in 2022, as international investments starts to wane.

Disruption to crude production infrastructure has been a long running issue for Nigeria, but the scale of the problem is worsening, and some buyers are losing trust in the country's supply reliability. Nigeria's output averaged 1.41mn b/d between January-November 2021, down from 1.63mn b/d over the same months in 2020.

Production from several of the country's key streams was affected by outages this year, including Qua Iboe, Bonny Light, Forcados, Brass River and Erha. And disruption at the Forcados, Bonny Light and Brass River terminals appeared set to continue into 2022. Shell declared force majeure at the Forcados terminal effective 21 December due to a malfunctioning barge blocking tanker access, and it is unclear how long the problem may persist. Although Shell lifted force majeure restrictions that followed a pipeline leakage at the Bonny Light terminal on 22 November, no cargoes have left between 21 November-21 December at least, perhaps indicating problems may not be resolved.

A pressure issue at Brass River has capped output for the light sweet stream throughout 2021, with no resolution on the cards for the near term.

Production outages in Nigeria have had a long-lasting effect with streams unable to recover to pre-shutdown output levels, and the country falling short of its monthly Opec+ production quotas throughout the year. Although state-owned NNPC managing director Mele Kyari said in November he expects the country's output to return to Opec+ quota levels by the end of 2021, it seems very unlikely as, according to Argus estimates, production remained 160,000 b/d below the output ceiling in November.

Nigeria's production issues might worsen, with some international investors signalling they could withdraw from the country. Shell chief executive Ben van Beurden said the firm is in talks with the Nigerian government after concluding its onshore oil position in the Niger delta is no longer worth the risk, because of persistent incidents of pipeline sabotage and crude theft. ExxonMobil is in talks with Nigerian oil firm Seplat Energy to sell its shallow-water assets in the country. The major is also in talks with Africa-focus independent Savannah Energy to sell its stake in the Doba oil project in Chad.

A lack of investment combined with a natural decline at maturing fields has also meant that crude output in Angola — Africa's second largest oil producer — continued to fall in 2021. And, although promising, the start-up of new projects in 2021 is unlikely to stem the country's production decline in 2022. The Angolan parliament approved a 2022 budget proposal assuming daily crude production average of 1.148mn b/d, which is 72,000 b/d below the 1.22mn b/d planned in the 2021 budget.

BP started production ahead of schedule at the Platina crude field in block 18, which will add 30,000 b/d. Production also began at the Clov 2 project in block 17, with output there forecast to peak at 40,000 b/d by mid-2022. Italy's integrated Eni began producing in September 2021 at the Cabaca North project, which feeds Olombendo output, and will add 15,000 b/d to production.

TotalEnergies said it has begun crude production at the Zinia phase 2 project offshore Angola, and output should reach 40,000 b/d by mid-2022. Chevron agreed to renew its concession for a further 20 years at block 0, which feeds into Angola's key streams Cabinda and Nemba.

Angola's crude output averaged 1.11mn b/d in January-November 2021, according to Argus estimates, down by 13pc compared with the same period in 2020, and by 20pc from January-November 2019. And similarly to Nigeria, Angola has failed to produce at Opec+ target levels throughout 2021.

By Andy Devine

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20/09/24

US Democrats defend Venezuela sanctions policy

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Citgo auction result delayed by last-minute motions

20/09/24

Citgo auction result delayed by last-minute motions

Houston, 20 September (Argus) — The US court-appointed special master who has been tasked with overseeing the auction of Venezuelan state-owned PdV's US refining subsidiary, Citgo, Robert Pincus, plans to object to a last-minute motion by the Venezuelan government to delay the sale process by four months. Caracas and PdV filed a motion on 17 September looking to pause the sale of Citgo, which is being auctioned off to settle debts owed by PdV. Pincus is also dealing with last-minute legal challenges outside of the Delaware courts overseeing the sale by "alter-ego" claimants looking to "circumvent" the sales process and "jump the line" for enforcing claims against PdV, he said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Libya blockade pushes European buyers to other crudes

20/09/24

Libya blockade pushes European buyers to other crudes

London, 20 September (Argus) — Libya is still exporting crude nearly a month after its eastern-based administration imposed a blockade on oil fields and terminals, but a significant reduction in loadings has prompted key European customers to turn to alternative grades. Libya exported around 389,000 b/d of crude in the 1-19 September period, according to Argus tracking data, a sharp drop from 932,000 b/d during the same period in August when Libya's pre-blockade crude output was close to 1mn b/d. Assuming Libya is keeping some crude for domestic refining and power generation, current production may now be closer to 500,000 b/d — up from previous Argus estimates of around 300,000 b/d . The September exports are largely occurring under state-owned NOC's crude-for-products programme. This potentially bypasses the central bank, which has been at the centre of the political impasse that sparked the blockade . Nearly half of Libyan loadings so far this month, or 189,000 b/d, have headed to Italy, according to Argus tracking. But Italy's Libyan intake averaged 329,000 b/d over January-August, so the country has sought alternatives to replace the shortfall this month. Two cargoes of Algeria's light sweet Saharan Blend amounting to 67,000 b/d arrived in Italy in the 1-19 September period, after no cargoes in August and just one in July. Exports of Caspian light sour CPC Blend to Italy have jumped to 561,000 b/d so far this month, up from 410,000 b/d over 1-19 August and 520,000 b/d over 1-19 July, according to port reports. Availability of CPC Blend was constrained in August by maintenance at Kazakhstan's 600,000 b/d Tengiz field. Around 92,000 b/d of Libyan crude headed for Spain in the first eight months of this year, but none has loaded for the country so far in September. Exports of CPC Blend to Spain rose to 96,000 b/d over 1-19 September, up on the 37,000 b/d shipped during the same periods in each of August and July. By Melissa Gurusinghe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Iraq’s Somo sells rare Qayara crude cargo in tender

20/09/24

Iraq’s Somo sells rare Qayara crude cargo in tender

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US court asked for third Citgo auction extension

19/09/24

US court asked for third Citgo auction extension

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