All posts tagged feature


Has the World Moved Beyond Peak Gasoline Demand for Light Vehicles?

PARTNER CONTENT/IHS MARKIT

GM’s aspirations to End Sales of Gasoline-Powered Light Vehicles by 2035 Latest Sign that Peak Gasoline Demand from Light Vehicles Has Already Come and Gone

Oil demand (gasoline and diesel) from Light Vehicles peaked in 2019

The recent announcement by GM that it aspires to phase out sales of oil-powered light vehicles (LVs) by 2035—part of a broader proposal to make the automaker a net-zero-carbon company—is a prominent signpost that oil demand from LVs has already peaked, according to a new analysis by Jim Burkhard and the IHS Markit Crude Oil Market Service.

IHS Markit places the global peak for oil demand (gasoline and diesel) from LVs in 2019 when said demand averaged 29.1Million barrels per day (MMBOPD). The peak in demand is due to the impact of rising vehicle fuel economy and emission standards, and as time goes by, from more sales of electric vehicles.

“The GM announcement is a notable signpost on the road to decarbonization of road transportation. It demonstrates growing acceptance of tighter vehicle emission standards and of the energy transition beginning to move at a faster pace. When it comes to oil demand from light vehicles, it’s the latest sign that the 2019 peak is permanent.” – Jim Burkhard, vice president, oil markets and mobility and energy future, IHS Markit

For the oil market, what matters is the amount of demand that will be displaced by electricity.

Previous IHS Markit research has projected that electric vehicles (including battery, plug-in hybrid and fuel cell electric) will comprise 60-80% of all new car sales in 2050 (compared to just 2.2% of new car sales in 2020, according to IHS Markit data).

Nevertheless, oil will still be the dominant energy source for transportation for years to come due to the sheer size of the global car fleet and the amount of time it takes for it to turn over.

In 2020, there were about 9.2Million light plug-in electric vehicles (PEVs) in the global light vehicle fleet. When you include 20,000 fuel cell electric vehicles, these vehicles displaced about 150,000 barrels per day (b/d) of oil consumption—less than 0.2% of world consumption. When you include electric city buses and two-wheelers, the amount of oil displaced by electric vehicles totals 370,000BOPD, or just 0.4% of world oil demand in 2020.

“By 2020 electricity use in road transportation had only displaced about 370,000BOPD of oil demand—0.4% of world oil consumption. But it is clear that this will rise. By 2025, as much as 1.5 MMBOPD of oil will be displaced.” – Jim Burkhard, vice president, oil markets and mobility and energy future, IHS Markit

The amount of oil displaced by electricity will continue to rise, led by growth in PEV sales. IHS Markit estimates that by 2025 light PEVs will displace about 0.9-1.1 MMBOPD of world oil demand. Adding in electric buses and two wheelers, oil displacement by electricity in road transport could hit 1.5 MMBOPD—the equivalent of 1.4% of what IHS Markit projects for total world oil demand in 2025.

That much displacement—while still relatively small—is significant in the sense that oil-powered LVs were the biggest source of aggregate oil demand growth from 2000 to 2019. Increased electrification, along with rising fuel economy and emissions standards, will play an important role in the plateau and then decline of world oil demand that IHS Markit expects to emerge at some point over the next 10-15 years in its base case outlook.

“The GM announcement is the latest piece in a much larger story. It’s further proof that, while the road ahead is still a long one when it comes to dislodging oil as the predominant transportation fuel, it is very much a one-way street and there is no turning back.” – Fellipe Balieiro, director, mobility and energy future, IHS Markit

 


Mercuria Wants a Share of the Suez Canal

By Mohammed Jetutu, in Cairo

Crude oil trader, Mercuria, has expressed interest in investing in the Suez Canal, the international maritime shipping lane that is a favourite of crude oil and natural gas exporters.

The 17-year-old company, with gross turnover of $116Billion and 368Million TOE (Total trading volume) in 2019, “wants to be involved in the area because it is geographically important and is one of the most promising economic regions in the world”, according to Mustafa Madbouli, Egypt’s Prime Minister.

The Suez Canal runs through Egypt, spanning north to south from the Mediterranean Sea to the Red Sea.

For most of the six weeks of 2021, it has been the preferred shipping route for LNG carriers heading from the United States to East Asia and looking to avoid a highly congested Panama Canal, according to Argue Media. Shippers are finding that the shorter journey offered by Suez offsets the toll they’ll have to pay by choosing the canal over rounding the Cape of Good Hope.

Mr. Madbouli held a meeting with the Egyptian officials of the company, including Majid Shenouda, CEO of Mercuria Egypt, over the terms of Mercuria’s proposed investment. The government side at the meeting included Tariq El-Molla, Minister of Oil and Mineral Wealth, Osama Rabei, Chairman of the Suez Canal Authority, and Yahya Zaki, Chairman of the Suez Canal Economic Authority.

Mercuria is proposing to invest $450Million in ship supply, marine waste collection and water purification, as well as shipping services in the Suez Canal area. The company executives told the government officials that Mercuria has a timeline for implementation of no more than 36 months.

Mr. El Molla, the petroleum minster, disclosed that Mercuria had been in contact with the Ministry for some time, and there are many aspects of cooperation, especially since the oil sector in Egypt has the infrastructure, human skills and experiences that can be hired to serve all proposed projects.

At the end of the meeting, the Prime Minister directed the completion of the negotiation process with Mercuria operates in more than 50 countries around the world, with fixed asset size of up to $2.8Billion, according to its website.

 


Financing Opportunity Opens for Miningrid Projects in Benin Republic

Companies seeking results-based finance for minigrid projects in Benin Republic can now apply for pre-qualification to the facility.

Pre-qualification for the Universal Energy Facility will close on 4 March 2021.

the Universal Energy Facility will disburse grant payments to deliver over 7,000 electricity connections based on a results-based incentive of $433 per connection.

The review of applications is expected to be completed by 19 April 2021

The Universal Energy Facility is a results-based financing facility managed by Sustainable Energy for All (SEforALL).

The Benin window of the facility is funded by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).

The opening of the facility in Benin is the next step in SEforALL’s push for catalysing faster progress on Sustainable Development Goal 7 (SDG7) through results-based financing.

The Benin window falls under the facility’s first set of countries, where it focuses on accelerating electricity connections through mini-grids. By tackling one of the most challenging energy technologies in its first phase, the Universal Energy Facility will demonstrate the effectiveness of results-based financing for making energy projects viable. In October 2020, the facility opened to support minigrid projects in Sierra Leone and Madagascar.

Pre-qualification for the Universal Energy Facility in Benin will close on 4 March 2021. The review of applications is expected to be completed by 19 April 2021,

To apply for the facility, please click here.

 


Gasoline to Start Flowing Out of Ogbele Refinery from 2nd Quarter 2021

By Macson Obojemuemoin

 The Nigerian independent, Niger Delta E&P, is anticipating the first flow of gasoline from its 11,000 Barrels of Oil Per Day (BOPD) refinery on the Ogbele field, in Rivers State, in the east of the country.

The three-train modular refinery has the capacity to produce a daily output of 600,000 Litres of gasoline, the most important petroleum product in the Nigerian market.

Gasoline is the fuel of road transportation. In the post COVID-19 world, it will be the most economically viable, of the major fractionation products of crude oil refineries around the globe.

The 600,000 Litre capacity at Ogbele, if delivered consistently at optimum, is easily around 30% of what the entire state owned NNPC produced, with input capacity of 445,000BOPD, in 2018, the latest year for which officially sanctioned data is available in the public domain.

The Nigerian Oil and Gas Industry Annual Report 2018, published by the Department of Petroleum Resources, reports that NNPC produced 2,043,070 litres of gasoline per day, making 745.7Million litres in the year.

NNPC’s entire in country gasoline production in 2018 was however about 4% of the entire imported volume of the product by the company, which came to 53.592Million litres a day. Clearly there’s significant opportunity in local production of gasoline.

There was no production at the state-owned refineries in the entire year 2020, due to ongoing rehabilitation work, NNPC states in its November 2020 report.

The Ogbele refinery project initially came on stream in 2012 as a 1,000BOPD capacity topping plant, producing 85,860 litres of diesel every day from 540BOPD of crude.

In late 2019, a second 5,000BOPD train was added.  With another 5,000BOPD train completed last October, the three train 11,000BOPD refinery with capacity to output Diesel, Marine Diesel, DPK, Naphtha and High Pour Fuel Oil was completed.

Now that all the trains are running optimally, the Train 3 will fully convert all Naphtha to Premium Motor Spirit (Gasoline) at an average daily output of some 600,000 Litres.

 

 


Are NOCs Risking $400Billion in Oil Projects incompatible With the Energy..

PARTNER CONTENT/NRGI

Governments’ plans for oil sector endanger economies of resource-rich developing countries

One fifth of anticipated investments in the oil and gas sector by state-owned oil companies are economically unviable if global warming is to be kept within 2 degrees Centigrade, a new research has shown.

With the United States rejoining the global coalition to meet the objectives of the Paris climate agreement, oil producers face a moment of reckoning. Research published by the Natural Resource Governance Institute (NRGI) has identified that state-owned national oil companies (NOCs)—many in developing countries—are on a trajectory to spend billions on oil and gas projects that will only break even if the world fails to meet the Paris goals.

While the climate approaches of such multinational oil firms as BP and ExxonMobil are routinely scrutinized, “this is the first report quantifying the incompatibility of NOCs’ investment plans with the Paris agreement”, NRGI claims.

NOCs produce half of the world’s oil and gas and are responsible for 40 percent of the capital invested in the industry worldwide. Using market data, NRGI’s report, Risky Bet: National Oil Companies in the Energy Transition, estimates that NOCs could invest about $1.9 Trillion in the next ten years. Of this, about one fifth, or $400Billion, would not result in a profit if the energy transition proceeds in line with current climate commitments. If widespread carbon capture and storage technologies are not deployed, this figure would climb even higher.

“A huge amount of state investments in oil projects will likely only yield returns if global oil consumption is so high that the world exceeds its carbon emission targets,” says Patrick Heller, an NRGI advisor and one of the report’s co-authors.

“This risky spending has major implications for the economic futures of national oil companies’ home countries. State-owned oil companies in developing and emerging countries including Algeria, Mexico and Nigeria might collectively invest more than $365 billion in such high-cost projects—expenditures that could instead help alleviate poverty or diversify their oil-dependent economies.”

As an example, the researchers highlight the Nigeria National Petroleum Corporation. Almost half of the Nigerian NOC’s upcoming oil project spending—an amount that exceeds the government’s expenditures on education and health care—may fail to break even if the world makes rapid progress toward climate goals. Similarly, Colombia’s Ecopetrol could invest the equivalent of a fifth of its government’s total expenditures into oil and gas projects that will break even only if the world fails to meet its climate commitments.

“State oil companies’ expenditures are a highly uncertain gamble,” says David Manley, NRGI senior economic analyst and report co-author. “They could pay off, or they could pave the way for economic crises across the emerging and developing world and necessitate future bailouts that cost the public dearly.” The report notes that the governments of countries including Algeria, Angola and Azerbaijan are making particularly risky bets with public money.

“National oil companies will have a major influence on the success of the push for a managed decline in fossil fuel production worldwide,” says Heller. “Authorities in many producing countries risk pushing ahead with new investment regardless of what is economically and ecologically feasible, and the outcomes could be dire. If international oil companies and private investors make good on their stated ambitions to move away from hydrocarbons, state actors may be even more tempted to step in and fill the gap in oil production.”

The Risky Bet report is accompanied by a briefing that details the specific challenges facing NOCs in the Middle East and North Africa (MENA). Researchers found that while some MENA NOCs have access to large, cheaply developed reserves that will help them withstand a long-term decline, others face uncertainty in maintaining the production on which their economies have come to depend. The briefing suggests that NOCs and their governments across the region should adapt their strategies, become more efficient and accountable to citizens, and adopt fiscal practices that lead to economic resilience in a low-carbon future.


Polarcus Struggles to Breathe

Polarcus, the marine seismic exploration firm, is in provisional liquidation.

It is not having an easy time of it.

The Oslo listed company has spoken out recently about addressing long term financing structure following financial default, and has talked of lenders withdrawing support of ongoing vessel operations, which Is the heart of its business.

“The Board has continued to have regard to the developing financial position of the Company, including the events of default that have occurred, the enforcement action which resulted in the Vessel-owning companies being transferred to a company controlled by the Lenders, and the Lenders confirming their withdrawal of continuing support of the Vessels’ operations”, Polarcus says in the latest release.

The Board “remains focused on pursuing a restructuring of its indebtedness and maintaining the underlying business as a going concern. Discussions between the Company and its creditors, including the Secured Creditors, remain ongoing”.

Polarcus says that in order to “effect a restructuring and to maximize value for all creditors, the Company filed an application with the Grand Court of the Cayman Islands seeking the appointment of Soft Touch Provisional Liquidators over the Company, with a specific mandate to work alongside the Board to pursue a restructuring in the interests of all creditors”

On 8 February 2021, David Griffin and Andrew Morrison of Suite 3212, 53 Market Street, Camana Bay, Grand Cayman KY1-1203, Cayman Islands and Lisa Rickelton of 200 Aldersgate St, Barbican, London EC1A 4HD were appointed as Joint Provisional Liquidators by an order of the Court.

The Joint Provisional Liquidators are specifically authorized by the Court to take all necessary steps to develop and propose a restructuring of the Company’s financial indebtedness with a view to making a compromise or arrangement with the Company’s creditors or any class thereof. The JPLs intend to discuss and consult with the Board wherever practicable throughout their tenure acting as agent for and on behalf of the Company, and to work alongside the Board in pursuing a restructuring and in ensuring that returns to creditors are maximized.

“The Board retains all powers of management conferred on it by the Order, subject to the appropriate and necessary oversight and monitoring of the Joint Provisional Liquidators as regards the exercise of such powers. The Board and the boards of directors of the Company’s subsidiary entities will continue, working alongside the JPLs as appropriate, to engage with the creditors, employees, other stakeholders and third parties in relation to the business and operations of the Polarcus group”.

 


Gbite Falade is Niger Delta’s New CEO

Niger Delta Exploration & Production PLC (NDEP Group) has announced the appointment of a new Chief Executive Officer (CEO) – Managing Director with effect from 10th February 2021.

Adegbite (’Gbite) Falade will join the company, bringing along some Twenty-five years of impactful and successful career across multiple sectors and continents in the energy Industry, according to a statement by Ladi Jadesinmi, NDEP’s Chairman of the board.

NDEP is a fully Integrated Energy Company which operates the 12,000Barrels of Oil Per Day (BOPD) Ogbele Marginal field, Nigeria’s first officially designated marginal field, in eastern Niger Delta basin. It runs an 11,000BOPD capacity three train modular crude oil refinery as well as a 100Million standard cubic feet per day gas processing plant, which delivers gas to the NLNG system.

“Gbite will succeed the pioneer Managing Director – Layi Fatona (Ph.D.)- who in an Interim position, had supported the running of the affairs of the company from October 2019”, Mr. Jadesinmi’s statement added.

“A First Class B.Sc. Electrical & Electronics Engineering (1995) degree graduate of the University of Ibadan, and a 200B MBA graduate of the Warwick Business School, Coventry, UK; Gbite has in the past Fourteen (14) Years, served in various Senior Executive positions in Oil, Gas, Power, and Services Sectors. With responsibilities for Engineering, Operations, Project Execution, Commercial, Client and Stakeholder Management, Strategy and Enterprise Development.

“He was previously the MD and Group COO at OilServ Group of companies based in Port Harcourt.  Prior to his last assignment, he served variously, as GM-Portfolio Development, Chief Operating Officer (COO), at Oando Energy Resources„ and Executive Director at Oando Gas and Power. He was also Petroleum Economics Discipline & Portfolio Lead for Shell EP, Africa Region”.

With the nimble and proven Technical management team, the chairman concludes: “a young but competent operating workforce and a matured Board of Directors, Gbite will be charged with leading the company, in a well charted and structured manner, to deliver the continuation and indeed enhancement of our historical steady growth”.

“We are confident that our position as Nigeria’s No-1fully Integrated Energy Company will remain, unchallenged and preserved for quite some time yet”.

 

 

 


Sapura’s Not Going Down with Seadrill

Malaysian driller Sapura Energy Berhad has declared that its joint venture with Seadrill, namely Sapura Navegacao Maritima SA (SNM), is not impacted by the recent Chapter 11 cases filed by several Seadrill subsidiaries operating in Asia.

In a clarification to Bursa Malaysia, the country’s Stock Exchange, Sapura  states the Chapter 11 filing by Seadrill, which is an internationally renown Scandinavian drilling company, does not involve Sapura or entities related to the corporate structure of the joint venture, stressing  that the filing has no financial impact on Sapura Energy’s business plans and financial strength.

Sapura Navegacao Maritima SA (SNM) is the only joint venture between Sapura Energy and Seadrill.

Headquartered in Rio de Janeiro, SNM is one of the leading subsea services operators in the Brazilian market, with a fleet of submarine service vessels providing support, installation and flexible pipe laying expertise to clients in the region.

The company has a workforce of more than a thousand professionals, from 21 different nationalities. SEB’s clarification was in response to a media report linking Seadrill’s Chapter 11 filing of its Asian units, to the Brazil-based SNM. In the clarification, SEB also explained that the filing has no effect on its contracts with Petrobras, which forms the main revenue for SNM; and does not trigger any cross default for the joint venture’s business financing.


NNPC Records 54% Increase in Trading Surplus for November 2020

By Kish Onwunali, in Abuja

The Nigerian National Petroleum Corporation (NNPC) has announced a trading surplus of ₦13.43Billion (or $35.4Million) for the month of November 2020, up by 54% when compared to the ₦8.71Billion ($22.9Million) surplus recorded in October 2020.

The November 2020 edition of the NNPC Monthly Financial and Operations Report (MFOR) indicates that export sales of crude oil and gas for the month stood at $108.84Million, a 70.33% increase over the value of sales for the previous month. Crude oil export sales contributed $73.09Million (67.15%) of the dollar transactions compared with $12.38Million contribution in the previous month; while the export gas sales amounted to $35.75Million in the month.

The total crude oil and gas export for the period of November 2019 to November 2020 stood at $2.89Billion.

The trading surplus or trading deficit is derived by the deduction of the expenditure profile from the revenue in the period under review.

The MFOR November 2020 report notes that NNPC Group’s operating revenue, compared with October 2020 earnings, decreased slightly by 0.02% or ₦0.09Billion ($236, 842) to stand at ₦423.08Billion ($1.113Billion).

Expenditure for the month decreased by 1.16% or N4.81Billion (12.6Million) to stand at N409.65Billion ($1.07Billion), leading to the ₦13.43Billion ($35.4Million) trading surplus.

Overall, expenditure as a proportion of revenue was 0.97 in November 2020 as against 0.98 in October 2020.

The 54% increase in trading surplus in the November 2020 MFOR is primarily ascribed to the substantial decrease in expenditure from the Nigeria Gas Company (NGC) due to cost reduction in overheads, coupled with 38% reduction in NNPC Corporate Headquarters deficit. In addition, the NNPC Group’s surplus was bolstered by the noticeable improved profits for additional engineering services rendered by the Nigerian Engineering and Technical Company (NETCO) and increased revenue from import activities posted by Duke Oil Incorporated. “These healthy performances dominated the positions of all other NNPC subsidiaries to record the Group surplus”, says the press release.

 


Egypt Will Launch Another Bid Round Before March 2021

By Toyin Akinosho

State-owned Egyptian General Petroleum Corporation (EGPC) and Egyptian Natural Gas Holding Company (EGAS) will launch a new oil and gas exploration tender before the end of February 2021.

The tender will include offshore blocks in the Mediterranean and Nile Delta, as well as onshore areas in the Western Desert and Eastern Desert, according to Tarek El Molla, the country’s flambouyant Minister of Petroleum.

The lease sale announcement is coming barely six weeks after Mr. El Molla signed nine new agreements worth more than $1Billion with six international and Egyptian companies to explore and produce oil and natural gas in parts of the Mediterranean and Red Sea. The agreements are for the drilling of 17 new exploration wells.

El Molla said in January that three additional agreements were pending approval in the near future. The total of 12 deals targets the drilling of 23 wells in nine regions in the Mediterranean and three regions in the Red Sea, with a minimum total investment of $1.4Billion.

Egypt is a perennial organizer of lease sales. It is the largest producer and the biggest domestic consumer of natural gas in Africa. But its record in crude oil production is shabby, despite its persistent bid rounds. Last year, it produced an average of 600,000Barrels of Oil Per Day, the lowest in 40 years.

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