OPEC set to prolong crude oil output cuts
Ejiofor Alike with agency reports
The Bonga oil field operated by Shell Nigeria Exploration and Production Company (SNEPCo) has produced about 702 million barrels of oil since its inauguration in 2005, and operated at more than 92 per cent availability in 2016, the Managing Director of SNEPCo, Mr. Bayo Ojulari, has said.
The production volumes came from the Bonga main field and Bonga Phases 2 and 3 that unlocked the nearby Bonga North West field in August 2014, and which has capacity for 65,000 barrels of oil equivalent per day.
This is coming as the Organisation of Petroleum Exporting Countries (OPEC) is set to extend production cuts for another nine months, as the oil producer group meets this week to debate how to tackle a global glut of crude oil.
Addressing journalists in Lagos on TuesdayÂ on the new lease of life of Bonga after a major turnaround maintenance which was completed in April, Ojulari said one of the highpoints of the turnaround was the engagement of about 65 Nigerian contractor and subcontractor companies, adding that over 1,000 people were involved, spread across worksites and vessels in the exercise described as the biggest in scope in the 12-year history of the asset.
â€œThe exercise stimulated growth of support industries vital to deep-water asset management. It provided a wider benefit to the Nigerian economy by boosting demand for a range of goods and services including offshore vessels and platforms, materials, floating hotel and helicopters,â€ he said
According to Ojulari, procuring materials from Original Equipment Manufacturers (OEMs) saved cost and ensured seamless delivery, and the project team sourced key equipment and carried out fabrications within Nigeria.
This innovation, he said, marked a turning point in SNEPCoâ€™s efforts to develop the capabilities of Nigerian companies in the provision of goods and services in deep-water oil and gas production.
OPECâ€™s de facto leader, Saudi Arabia, favours extending the output curbs by nine months rather than the initially planned six months, as it seeks to speed up market rebalancing and prevent oil prices from sliding back below $50 per barrel.
Oil prices initially fell one per cent yesterday after United States President Donald Trump proposed to sell half of the US Strategic Petroleum Reserve (SPR) in the next 10 years as well as to speed up Alaskan exploration.
However, the price later rose with Brent reversing losses earlier in the session, trading at $53.94 per barrel, while US crude traded at $51.23 per barrels, as expectations of an extension to OPEC-led supply cuts supported prices.
Trumpâ€™s proposal to sell half of the US strategic oil reserve is a strong indication of decreasing reliance on OPEC crude by the worldâ€™s biggest consumer.
Reuters reported that the US Strategic Petroleum Reserve, the worldâ€™s largest, holds about 688 million barrels of crude oil in heavily guarded underground caverns in Louisiana and Texas.
The US Congress created it in 1975 after the Arab oil embargo caused fears of long-term spikes in motor fuel prices that would harm the US economy.
The White House budget proposes to start selling SPR oil in fiscal 2018, which begins on October 1, 2017, with the sales being expected to generate $500 million in the first year.
Saudi Energy Minister, Khalid al-Falih, had won support from OPECâ€™s second-biggest and fastest-growing producer, Iraq, for a nine-month extension, and said he expected no objections from anyone else.
OPEC meets in Vienna tomorrow to consider whether to prolong the deal reached in December 2016 in which OPEC and 11 non-members, including Russia, agreed to cut output by about 1.8 million barrels per day (bpd) in the first half of 2017.
The decision pushed prices back above $50 per barrel, giving a fiscal boost to major oil producers. But it also spurred growth in the US shale industry, which is not participating in the output deal, thus slowing the marketâ€™s rebalancing.
Saudi Arabiaâ€™s Gulf ally Kuwait stated yesterday that not every OPEC member was on board for an extension to March 2018, but most delegates in Vienna said they expected a fairly painless meeting on Thursday.
Algerian Energy Minister, Noureddine Boutarfa, said yesterday that OPEC was discussing a possible nine-month extension, with curbs kept at the same level as under the groupâ€™s existing deal.
â€œRight now, we are talking about nine months,â€ Boutarfa told journalists soon after arriving in Vienna.