Oil prices hit a more than two-year high yesterday after major producers said the global market was on its way toward rebalancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.
The November Brent crude futures contract was up $1.51, or 2.5 per cent, at $58.37 a barrel, its highest since July 2015.
United States (U.S.) West Texas Intermediate crude for November delivery rose $1.02, or two percent, to $51.68 a barrel, close to highs last seen in May.
“It’s all driven by the idea that the production cut is starting to work and the rebalance is underway,” said Gene McGillian, director of market research at Tradition Energy in New York.
Even as both contracts rallied, concerns about U.S. production growth weighed on WTI, widening the spread between the two, he said.
The discount of the WTI to Brent futures widened to $6.61, the widest since August 2015.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the beginning of this year, helping to lift oil prices by about 15 per cent in the past three months.
Meanwhile, the Nigerian Petroleum Development Company (NPDC), yesterday said it was working to grow its equity production from 180,000 barrels per day (bpd) to 300,000 bpd by 2018 and 400,000 bpd and 500,000 bpd in 2019 and 2020 respectively.
NPDC is a subsidiary of the Nigerian National Petroleum Corporation (NNPC).
Its Managing Director, Mr. Yusuf Matashi, who set this targets in Benin, said the planned increase in production was due to ongoing transformation in the firm.
Mr. Matashi said having attained the position of fifth largest exploration and production (E&P) firm in the Nigeria, the NPDC was poised to efficiently manage its portfolios to achieve the new target.
“The NPDC has 55 per cent equity in nine blocks of Oil Mining Lease (OML) 4, 26, 30, 34, 38, 40, 41, 42 and 55; Non-equity operations in three blocks of selected NNPC Joint Venture fields; 60 per cent participatory interest in four blocks of OMLs 60, 61, 62 and 63 and 100 per cent ownership of seven blocks of OMLs 11, 13, 64, 65, 66, 111 and 119. In a nutshell, the Company is involved in 29 concessions which comprises 22 OMLs and seven Oil Prospecting Leases,” General Manager, Group Public Affairs Division at NNPC, Mr. Ndu Ughamadu, quoted Matashi as saying in a statement yesterday.
He said the oil firm had varied interests in seven deepwater concessions and successfully executed a Global Memorandum of Understanding (GMoU) with communities in OMLs 30 and 34, adding that NPDC achieved a major feat by successfully drilling and completing five horizontal wells in nine months in OML 26, leading to production of an additional 7, 000 bpd.
The MD said NPDC had successfully turnaround OML 40 asset from 0 bpd to 12, 000 bpd which underlined the company’s rising profile as the seventh largest owner and operator of Floating Production Storage and Offloading (FPSO) in Nigeria, with FPSO Mystra having 1.03 million of crude producibility.
Mr. Matashi added that NPDC also carried out some intervention activities which led to the peak production of approximately 10,000 bpd in OML 65 in June, 2017.
He said the NPDC was the biggest and largest gas producer in the country and was also the highest supplier of gas to the domestic market.
“NPDC aggressive gas pursuit since 2009 has also raised the company’s profile as the highest single supplier of gas to the domestic market with an average of 700 million standard cubic feet per day. The Utorogu Non-Associated Gas 11 plant was also completed recently adding 150 mmscfd; the Oredo 2 gas plant also adds 100 mmscfd and the successful re-entry of Odidi which led to an addition of 40 mmscfd of gas indeed represents a major achievement for the company and a step forward to achieving NPDC’s aspiration to become a serious global player in the E & P industry,” Mr. Matashi averred.
The MD maintained that the NPDC as a responsible and responsive company had awarded scholarship to over 6,000 indigent members of its host communities which traversed host states, renovated and built block of classrooms, provided classroom furniture
Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.
The Iraqi government does not recognize the referendum and has called on foreign countries to stop importing Kurdish crude oil.
“If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” Commerzbank said in a note.
Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting in Vienna of the Joint Ministerial Monitoring Committee, said output curbs were helping to cut global crude inventories to their five-year average, OPEC’s stated target.
Russia’s energy minister said no decision on extending output curbs beyond the end of March was expected before January, although other ministers suggested such a decision could be taken before the end of this year.
Iran expects to maintain overall crude and condensate exports at around 2.6 million bpd for the rest of this year, a senior official from the country’s state oil company said.
The energy minister from the United Arab Emirates (UAE) said the country’s compliance with OPEC’s supply cuts was 100 per cent.
Nigeria is pumping below its agreed output cap, its oil minister, Ibe Kachikwu said.