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Brent Oil Rises Above $106

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Brent crude was above 106
dollar a barrel last Thursday as global economic growth worries hurt demand.
The oil market has mostly escaped the recent selloff in risky assets, which was sparked by emerging markets turmoil and a mixed picture on global economic growth.
“Commodities have largely been unaffected by the emerging market turmoil so far.
Industrial metals are to be affected, while the energy market is getting support from the fact that the global economy presumably is back on the right track,” said Mark Keenan.
Keenan is head of commodities research in Asia at Societe Generale.
Brent crude was trading two cents higher at 106.27 dollars per barrel, having settled up 47 cents the session before.
U.S. crude rose 14 cents to 97.64 dollars a barrel, after closing up 19 cents.
The benchmark was supported as severe snow and ice storms in the Northeastern states boosted demand for heating fuels.
U.S. stocks of distillates fell 2.4 million barrels last week – more than expected.
Inventories of the fuels on the East Coast declined to their lowest level since April 2003 due to the continued cold spell, government data showed.
“While distillate stocks normally draw at this time of the year, since the start of the year they have done so at a greater-than-normal rate and from a particularly low base level,” Harry Tchilinguirian, said in a note.
Tchilinguirian is head of commodity markets at BNP Paribas.
Still, the country-wide drop in distillates should more be attributed to a rise in exports and a weekly decline in production than to cold weather, Tchilinguirian said.
Demand for jet fuel, however, could be hit with 2,880 flights cancelled on Wednesday throughout the U.S.
Oil markets were also supported by a pickup in the U.S. services sector in January, with steady strength in private-sector hiring.
Crude stocks at Cushing fell 1.6 million barrels to 40.3 million barrels last week, reflecting the start-up last month of TransCanada Corp’s 700,000 barrel-per-day Gulf Coast pipeline.
It had been expected to ease a glut at the Oklahoma storage hub.
Support for U.S. crude narrowed the gap to the international benchmark to 8.63 dollars per barrel on Thursday.
The spread touched 7.94 dollars per barrel on Wednesday, the narrowest since Oct. 10, before closing at 8.87 dollars per barrel.
The narrowing gap comes as many investors have pulled out of heavy speculation in the spread.
“We have seen a clear step back from the speculative community, including hedge funds, simply because they lost so much money on trading the spread.
“As a result, the spread is now more driven by fundamental factors, and this will keep volatility in the spread lower,” said Keenan, who expects the spread to narrow further.
“When you see a big increase in bets on either side of the current price, which usually suggests that the market will stay range bound.”

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This Tiny Country Could Become Europe’s Newest Oil Producer

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It is rather rare to see enthusiasm for completely new exploration projects in Europe. The overwhelming majority of OECD countries are either in terminal decline or are looking into ways how to ban exploration altogether. The less-appraised parts of Eastern Europe might still have some potential yet in the absence of oil majors such endeavors risk remaining a lifelong pipe dream. Still, the appearance of a new European frontier can rekindle upstream hopes (even if for a short period of time). Europe’s latest addition to the list of nations willing to tap into their prospective hydrocarbon resources is located in the southeast of the Old Continent, in Montenegro. The small ex-Yugoslav republic with just slightly more than 600 000 inhabitants has witnessed its first offshore well spudded on March 25, 2021. The 4118-5-1 wildcat was drilled in 100 meters of water to a total depth of 6525 meters, some 25km from the Montenegrin shore.
The first offshore Montenegrin well was spudded by the ENI-NOVATEK tandem, with the Italian major taking on the reins of operatorship. Given the geographic proximity, ENI’s interest in offshore Montenegro is quite understandable and was to be expected. In case of any discovery, ENI has the convenient option of accommodating prospective production within its system, the Italian shore is only 500km from the wildcat’s location. The first well is targeting an oil reservoir at depths of 6.5km, implying that the Italian major’s 120kbpd Taranto Refinery might be a safe backstop for any potential crude produced. Along with Total, ENI has been one of the most active drillers in the Mediterranean, marking suchsupergiant discoveries as the Egyptian Zohr or the Cypriot Calypso. Across the Adriatic from Montenegro, ENI has been developing the Aquila field offshore Brindisi,producing medium density crude of some 36° API.
The case for NOVATEK’s participation in an offshore project is much more peculiar, considering that the Russian gas producer has no assets in the Adriatic.Moreover, NOVATEK is on the US’ Sectoral Sanctions Identifications (SSI) List, meaning that equity investments and financing matters are substantially encumbered. Luckily for the Russian firm, offshore Montenegro does not fall under any of the three sanctioned areas, Russian deepwater, Arctic offshore, and shale. Domestically, NOVATEK is heavily focused on gas production on the Gydan peninsula and in the surrounding area, compelling it to seek new niches it can fill, new frontiers that could serve as bases for future growth. In a sense, NOVATEK needs to overgrow its LNG specialization and gain market-relevant competence in other segments, too.
NOVATEK’s first step into the foreign offshore segment took place in Lebanon where it landed two offshore blocks in a consortium with Total and ENI in 2018. In both cases NOVATEK did not lay claims to operatorship, focusing on building up key relationships with Europe’s leading drillers. It seems very likely that it is from the Lebanese joint experience that the Montenegrin drilling ambition branched out into a separate work track. Concurrently, although Montenegro is one of the hottest candidates for EU accession, Podgorica remains beyond the bounds of the European Union. For NOVATEK this is a great boon, as sanctions risk can be negotiated directly with the relevant national authorities, i.e. no involvement of Brussels is required.
Technically,the Montenegrin offshore area has already seen exploration drilling, though that was back in the SFRY (Socialist Federal Republic of Yugoslavia) times, in 1980. Although Yugoslavia was a socialist country with all its peculiarities, it was the US major Chevron that was the operator of drilling operations. The Jadran Juzni (Southern Adria) prospect turned out to wield signs of oil and gas systems which, however, were deemed non-commercial,effectively closing Chevron’s offshore endeavors in Yugoslavia. It needs to be pointed out that the current wildcat is farther off the Montenegrin coast the Jadran Juzni well was only 3km from shore. To carry out the drilling, the ENI-NOVATEK tandem contracted the Topaz Driller, a Panama-flagged jack-up drilling rig. The contract was clinched in July 2020, for drilling operations starting in Q1 2021 and taking up to 180 days.
Up to now the work progress of ENI-NOVATEK seems fairly solid. In late 2018 their contractor has carried out a comprehensive 3D seismic survey on the 4118-5 Block, then the summer of 2019 witnessed a string of hydrophysical and geophysical surveys on the prospects. Having completed this, it was assumed that the spudding of the first well would take place in 2020, however, the coronavirus-triggered chaos upended all plans and effectively delayed the wildcat into 2021. Most probably the Italo-Russian joint venture will drill 2 wildcats. Even if the first well turns out to be completely dry or non-commercial, the second well (expected to be spudded in May-June 2021) is targeting gas plays at lower depths, i.e. the first well’s fiasco does not automatically foreshadow the failure of the second well.
According to media reports, it will take ENI 4-5 months to finalize the drilling of the wildcat and assess the results. Nevertheless, Montenegro’s offshore zone might more activity coming up in the upcoming months. The Greek Energean holds 2 license blocks (4219-26 and 4218-30) and is expected to take a decision on whether it intends to proceed with drilling exploratory wells in its acreage. The data to assess the blocks’ resource bounty is already there, Energean carried out 3D seismic surveying on both blocks in 2019 already. The spark of interest towards its off shore zone might compel the Montenegrin authorities to expedite a 2nd offshore bidding round which would presumably cover the 7 remaining unallotted blocks. There is very little probability that Podgorica will be trying to auction off onshore blocks,especially considering their history of dry wells.
Katona is a contributor.

 

By: Viktor Katona

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‘NCDMB’ll Not Invest In Businesses With Competitive Private Players’

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The Nigerian Content Development and Monitoring Board (NCDMB), has said that it only partners with strategic policies and projects that are promoted by the Federal Government and would not invest in oil and gas businesses that have competitive private players.
The Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, made the clarification recently when he hosted members of the Women in Energy Oil and Gas (WEOG) Nigeria, led by their President, Dr. Oladunni Owo at the Board’s liaison office in Abuja.
He clarified that the Board would not invest in competitive business areas because such investments would compromise its morale position as a regulatory agency.
“Our role is to act as a catalyst of strategic government policies and programmes and we exit once those businesses become successful,” he added.
He also stated that NCDMB is a regulatory agency and not an interventionist organisation and would not get involved in programmes outside its mandate.
According to him, in line with the Board’s vision to serve as a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors, the NCDMB has partnered with investors in modular refineries, manufacturing of LPG cylinders, LPG Depots, gas processing facilities, lube oil production plant, and a methanol plant using gas as feed stock.
Speaking further, Wabote listed some policies introduced by the Board to support women in the oil and gas industry to include the inauguration of the Diversity Sectorial Working Group in the Nigerian Content Consultative Forum (NCCF) and the creation of the Women in Oil and Gas Product in the Nigerian Content Intervention Fund (NCI Fund).
He explained that the Bank of Industry (BoI) is responsible for managing the NCI Fund, assessing applications and disbursing loans to approved companies.
He said “the NCI Fund is one of the most successful loan schemes. About 98 percent of the borrowers are paying back because we go through a very rigorous process”.
Dwelling on the Project 100 Initiative of the Board, the Executive Secretary stated that it was designed to nurture 100 wholly owned oil and gas service providers in a competitive and sustainable way through targeted interventions, into larger scale players that create high impact.

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Firm Concludes Tourism Training For Bonny Youths

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As part of its vision to make Bonny Island, its operational, a tourist haven, Bonny-Dubai Vision, the Nigeria Liquefied Natural Gas Limited (NLNG), has concluded a 2-week intensive and hands-on training on tourism business and entrepreneurship for some Bonny youths in partnership with Goge Africa.
The training equipped the youths with skills to enable them to function as tour guides and champions of tourism, especially in the areas of cultural and eco-tourism. The trainees will use existing tourist attractions/landmarks to promote the tourism potentials of Bonny Island.
In her remarks, NLNG’s General Manager, External Relations and Sustainable Development, Mrs. Eyono Fatayi-Williams, said the trainees are expected to create and drive businesses that will draw tourists to the Island. She remarked that the capacity-building initiative would deliver dividends inthe future when the Company’s vision of Bonny-Dubai would have become a reality.
“The Bonny-Dubai Vision is a strategic development intervention by NLNG that seeks to make Bonny a major international investment destination by the year 2040. We aim to diversify the Island’s economy, especially with Bonny’s rich potential from its unique history, culture, and traditions, from reliance on oil and gas activities to other areas such as tourism.
“To make this goal a reality, we are currently finalizing the Bonny Tourism Masterplan, which will detail the step-by-step activities that will bring the vision alive. These activities include the deepening of eco-tourism at the Finima Nature Park and alignment with Bonny Kingdom and community stakeholders. Other activities include engagements with community, local and foreign investors on tourism opportunities in Bonny and the rebuilding of the Bonny Consulate building, a significant landmark that will serve as the hub for tourist activities on the Island,” she stated.
Mrs Fatayi-Williams added that NLNG intends to create a tribe of committed Bonny ambassadors who will market Bonny to the outside world.She expressed confidence in the ability of Goge Africa to provide the needed experience and expertise to encourage innovation and maximise Bonny’s existing opportunities.
Bonny Island, a historical trade hub in Rivers State, is home to NLNG’s sponsored Finima Nature Park, a 1,000 hectares land of freshwater swamp forest. The park was designated an internationally acclaimed centre for Wetland Education and became a Wetlands Link International member in 2019.
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