Tag Archives: Mafumeira Sul field

Angola gains from Nigeria’s misfortunes (Argus)

The outlook for Nigerian crude production has darkened in 2016, as an ongoing campaign of attacks on the country’s oil infrastructure that has severely disrupted exports and deterred regular customers allows Angola to emerge as challenger for the title of Africa’s largest oil producer.

Indian demand for July-loading Angolan crude reached 280,000 b/d, easily the highest level so far this year, as Angola benefits from the uncertainties associated with purchases of Nigerian crude.

Nigerian crude production fell to 1.37mn b/d in May, according to the IEA, its lowest in nearly three decades. Output has since rebounded, to as high as 1.9mn b/d. But key grades Bonny Light, Brass River, Escravos and Forcados all remain affected by sabotage-related incidents. Qua Iboe, the country’s flagship export grade, also continues to suffer from operational problems that have prompted operator ExxonMobil to declare force majeure twice since May.

Illustrating the scale of the problem confronting producers in Nigeria, Shell lifted force majeure on Bonny Light in mid-July but just four days later said it had shut the Trans Niger Pipeline (TNP), one of the grade’s main arteries, because of a leak at Gio in Ogoniland, thought to have been caused by thieves.

The IMF, in its World Economic Outlook for July, forecast the Nigerian economy would shrink by 1.8pc this year as a result of oil supply disruptions, power shortages, limited access to foreign currency and weak investor confidence. So the need to secure customers for Nigeria’s increasingly unreliable crude exports is as important as ever for the Abuja government.

Indian demand has proven remarkably resilient in the face of the Nigerian loading disruptions, and despite rising Indian purchases of crude from Angola and elsewhere. India’s strong economic growth is boosting gasoline, diesel and petrochemical feedstocks consumption. Indian products exports are also rising, as refiners expand to meet extra demand. Crude runs have risen to a record 4.9mn b/d this year.

But India has diversified its crude slate — much of the country’s new refining capacity is designed to handle heavier, cheaper, grades from the Mideast Gulf and Latin America, intensifying competition for exporters to the subcontinent. Nigeria can take nothing for granted. In May, India sourced just 250,000 b/d of its crude from there, down from 420,000 b/d the previous month.

Renewed interest from North American buyers could help offset any easing in Asia-Pacific demand for west African crude. US demand had slowed to just a trickle in the past few years, as the US tight-oil boom dramatically reduced the country’s import requirements. Now that trend is in reverse.

European interest in Nigerian crude has been slow, easing to less than 700,000 b/d in January-April, compared with over 900,000 b/d during the same period a year earlier. By contrast, shipments of Nigerian crude to the US are rising, with weekly imports topping 275,000 b/d five times since May, and exceeding 350,000 b/d between 25 June and 8 July. US imports of Angolan crude reached 323,000 b/d in early July, the second highest weekly level since October 2013.

In Canada and on the US Gulf coast, heavier Angolan grades such as Dalia and Hungo are used for blending with light sweet domestic grades. Dalia has also sailed to the US west coast for the first time in three years, with Valero taking a partial cargo to its 170,000 b/d Benicia refinery in California in June.

Phillips 66 took a 1mn bl cargo of Nemba crude to its 250,000 b/d Bayway, New Jersey, refinery in July, the first shipment of the light sweet Angolan grade to the US Atlantic coast in more than a year. This partly reflects tighter supply and relative price strength of US domestic grades like Bakken, and rising concerns about the reliability of Nigerian crude.

But Angola remains heavily dependent on Chinese demand, which may start to cool off. Chinese state-controlled trading company Unipec re-offered August cargoes towards the end of the monthly trading cycle. Demand from China’s smaller so-called teakettle refiners drove total Chinese crude imports to 8mn b/d in February-April, but their import requirements have since started to shrink.

The teakettles appear to have overbought crude in the first half of the year. Many made purchases hoping to supply fellow teakettle plants without import quotas, but have struggled to find buyers. Their storage tanks are nearing capacity and this will probably reduce additional short-term crude purchases by the teakettle sector.

Ghana emerges jubilant

Ghana’s TEN project is the main addition to the pool of west African crude so far this year. The offshore field was brought on stream in July and the first cargo is scheduled to load in August. TEN will have an annualised production rate of 23,000 b/d this year, and will reach its 80,000 b/d capacity in 2017 when Ghana’s total output could approach 200,000 b/d, putting it in the same league as Gabon, which re-joined Opec on 1 July.

Problems with the floating production, storage and offloading (FPSO) vessel’s turret at Ghana’s flagship 120,000 b/d capacity Jubilee field led to a shutdown in April that lasted longer than expected. But June production averaged 90,000 b/d and this level is expected to be maintained for the rest of this year. The light sweet Ghanaian grade has shrugged off concerns relating to the loading problems earlier this year, with China and Taiwan snapping up August cargoes at at strong levels — premiums to North Sea Dated of 30-50¢/bl.

Other major upstream developments in west Africa due to be realised in the coming months include Chevron’s 110,000 b/d Mafumeira Sul project offshore Angola, which could raise the country’s total output to more than the 1.9mn b/d Nigeria is currently producing. Previously due on stream in the first half of 2016, Mafumeira Sul has been pushed back. All four platforms have been installed, with hook-up and commissioning ongoing and first production now expected later this year.

Nigerian officials have indicated Shell’s 250,000 b/d Forcados crude stream could return in the coming month, once repairs to the export pipeline have been completed. But until serious talks between the government and the Niger delta militants get underway, targeted attacks on oil installations will continue to hamper the recovery of Nigeria’s crude output.

Full story from Argus here.

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