One of the major gains of the Organisation of Petrol Exporting Countries (OPEC)-Nigeria bilateral meeting last week is the signal of the strong dialogue and cooperation between the global petroleum body and Africa’s biggest producing oil producing country.

Such dialogue is reputed to be key for compliance with the OPEC global production cuts deal of April, to which all of OPEC’s African member countries have agreed to. Nigeria’s support to global market stability and energy cooperation is significant and gives confidence to operators and future investors seeking to do business in West Africa, report said.

“African producers and service companies are the hardest hit when there is volatility in the market. H.E. Mohammed Sanusi Barkindo and Dr Ayed S. Al-Qahtani leading these discussions sent a strong message that collaboration and sticking to the principles of a stable market is good for Nigeria, its producers and the economy at large,” the Petroleum Africa report quoted NJ Ayuk, Executive Chairman at the African Energy Chamber

“We continue to support the government of Nigeria and the country’s ministry of petroleum resources in their effort to improve the environment for investment and getting the industry to rebound post-Covid-19. We believe they are right in making this a priority and we welcome the bold initiatives by Nigeria’s leadership,” he stated.

The medium noted that Nigeria’s ongoing Marginal Fields Bidding Round was launched earlier this year and has already been met with significant success, reportedly attracting hundreds of bidders.

The round is expected to result in a new wave of local content development in Nigeria, a country already widely regarded as the most successful example of local content and capacity building across the continent.

By Chibisi Ohakah, Abuja

Nigeria has confessed that its highest crude oil production cost come from indigenous oil firms. It also stated that the deployment of expatriates was contributory to high production cost, as some companies produced crude oil for as high as $45/barrel.

Speaking during the Seplat Energy Seminar 2020 webinar, the Group Managing Director, Nigerian National Petroleum Corporation (NNP{C), Mele Kyari, last week, said the cost of the commodity had hovered around $43/barrel in about two weeks.

The Minister of State for Petroleum Resources, Timipre Sylva, who gave the opening remarks at the summit, stated that government had rolled out strategies to reduce oil production unit cost.

The NNPC boss had recently said that some oil firms in the country were producing at over $90 per barrel. The NNPC boss, however, pointed out that few companies such as Seplat would achieve the target of cutting down the production cost to $10/barrel by 2021. “When you come to the indigenous oil companies, and I have made an exception of Seplat and, of course, a few others, I can share with you that the highest cost of production that we have in this industry comes from companies operated by local oil firms. Unfortunately as it is, that is the reality,” he said.

He stressed that there was no way the country could sustain the current cost structure. “Some of our assets are producing oil in the excess of $45/barrel. It is simply not feasible in today’s circumstance. It simply means that probably you are subsidising the upstream, and, of course, nobody subsidises the upstream anywhere in the world. But that is what we are practically doing,” the NNPC boss said.

Kyari also stated that surprisingly, some multinational oil companies and partners of NNPC were also producing oil at completely unacceptable prices. He called for the enhancement of local skills in the sector, stressing that expatriates were so many in the industry and this often increased running cost.

He said there was a need to create adequate local skills in the Nigerian oil and gas sector. “Today, with all the best of our intentions, we still have significant inflow of expatriate skills and staff. This is not available in our industry; it is a very global industry. You cannot have all the skills but today you still need to work on this.

“So, by having local skills available you are able to reduce cost, you are also able to create wealth in communities where we work throughout the country and the continent. And this will contribute to economic growth, bringing down the cost of production and, of course, introducing more efficiency in our business,” he said.

By Chibisi Ohakah, Abuja

ADM Energy Plc, a natural resources investing company, has announced the appointment with REYL Group, an independent banking group providing financial advisory services and investment solutions to private and institutional clients, to support ADM with the development and financing of energy projects in Nigeria and West Africa, the company said in a statement last weekend.

REYL Group is a Geneva-based banking group that manages assets in excess of 13.5 billion Swiss francs. It will advise ADM on, inter alia, financing structures for future projects including the acquisition of the interest in OML113 from EER (Colobus) Nigeria Limited, announced on 24 February 2020, and any follow-on agreements with Trafigura Pte Ltd pursuant to the memorandum of understanding signed with Trafigura on 3 February 2020.

Under the terms of the MOU, it is the intention of ADM and Trafigura to create a strategic alliance where ADM will act as the sponsor for investment opportunities in the African energy sector which will be presented to Trafigura for consideration as a trading counterparty, or financing provider.

The chief executive officer of ADM, Osamede Okhomina, “The agreement with REYL Group’s Structured Finance team will help support ADM as we progress our strategy to increase the Company’s oil and gas reserves and production through the acquisition of undervalued assets. We have identified several investment opportunities and look forward to progressing any potential deals with the support of REYL Structured Finance and Trafigura.”

By Chibisi Ohakah, Abuja

Savannah Energy has reported its 2019 reported card, showing a $16.9 million of gas sales and $0.9 million of liquids sales in 2019. Production in Nigeria reached 17,200 barrels of oil equivalent per day on a full year basis, up from 13,000 boepd in the previous year, Energy Voice reported last weekend.

“We completed the Nigerian asset acquisition in November 2019, which transformed Savannah into a highly cash flow generative full cycle energy company,” the medium quoted Savannah’s CEO, Andrew Knott. “Since acquiring the Nigerian assets, we have made significant strides in terms of operational and financial progress, as seen with the strong production figures and robust cash collections in H1 2020.”

The company is “poised to capitalise on the numerous opportunities that our asset portfolio in Nigeria and Niger presents us with.” In the first half of 2020, Savannah collected $82.1mn of cash. In the same period of 2019, this was $55.3mn. Gas dominated production, accounting for 89% of the total 21,300 boepd average.

The report said the company’s gas production hit a record of 177 million cubic feet (5.01 million cubic metres) per day on May 30. The same month, on May 23, gas supplied to customers of Accugas provided 11.5% of Nigeria’s power generation.

Accugas, Savannah’s midstream unit, signed a gas sales agreement in January with Sahara Group’s First Independent Power Ltd (FIPL). Savannah will supply gas to the Afam power plant for five years. Accugas and FIPL are working on third-party infrastructure, which will allow gas to flow to the plant.

In June, Accugas signed a deal with a new industrial customer. The company did not disclose its name but said it would cover 5 mmcf per day for five years. Accugas is also working on a project to expand supplies within an industrial hub near its existing pipelines.

“In Nigeria, via Accugas, Savannah currently supplies more than 10% of Nigeria’s power sector,” said Savannah’s Knott. The executive said the company was on track for more gas sales agreements this year. On investments, the company estimates spending in 2020 at up to $45 million. It has cash of $54 million as of the end of June. It also has net debt of $457 million. Savannah expects revenues this year to pass $200 million.

SP Angel’s Sam Wahab noted that Savannah was now a “highly cash flow generative full cycle entity. Strong production figures and robust cash collections in H1 2020 further supports management’s strategy and we would not be surprised to see further near-term acquisitions made by Savannah in the region.”

Energy Voice said the company’s first focus was in Niger, where it has drilled a handful of discoveries in the Agadem Rift Basin. The company said work was continuing there, with plans to begin installing an early production system (EPS) within the next 18 months. This is contingent on market conditions and financing.

Knott said the EPS plan, on R3 East, was intended to bolster cash flow. The company will “consider future drilling in our bank of 146 exploration targets over the course of the coming years,” the report said.

By Chibisi Ohakah, Abuja

A Rystad Energy analysis has said that the upcoming partial return of curtailed OPEC+ oil production from August will create a new four-month supply glut of around 170 million barrels.

Petroleum Africa reported last weekend that Rystad Energy analysis is based on the assumption that oil demand will not rebound as quickly as previously thought due to the persistent expansion of the Covid-19 pandemic in key markets, or what we call a mild second wave of the virus.
The report said that after the first five months of 2020, which all registered excess global oil production compared to market demand, June was a month when global stocks saw some relief of 2.2 million barrels per day (bpd) of implied oil inventory draws. July, the last month of OPEC+’s record 9.7 million bpd output curtailment commitment, is also set to end with demand surprisingly exceeding supply by 1.9 million bpd.

But with the mild second wave already hitting several countries, we scale back our total liquids (crude, condensate, NGLs, other liquids, and refinery gains) demand recovery expectations in the short-term. Between August and October, total liquids demand levels will stay flat at around 90.5 million bpd, before rising to 92.9 million bpd in November and 94.6 million bpd in December.

The medium said that unlike demand, global oil supply is set for a mini growth rally after reaching an astonishing low of 86.4 million bpd in June and an expected 88.2 million bpd in July. The planned output increase from the OPEC+ alliance and the reactivation of other global shut-in production is forecast to push supply to 91.2 million bpd in August, 92.5 million bpd in September, 92.9 million bpd in October and 93.3 million bpd in November, before closing at 93.4 million bpd in December.

“OPEC’s experiment to increase production from August could backfire as we are still nowhere near out of the woods yet in terms of oil demand. The overall liquids market will flip back into a mini-supply glut and a swing into deficit will not happen again until December 2020,” Petroleum Africa quoted Bjornar Tonhaugen, Rystad Energy’s head of oil market research.

Nevertheless, the total surplus of about 170 million oil barrels that will be created between August and November is only a fraction of the 1.4 billion-barrel stock overhang that was built up in the first five months of 2020. This historic inventory build-up will still act as a soft brake on price increases when demand rebounds.

On the supply side, the US provided a much-needed supply-side buoy. “We made major revisions to both our historical and future output projections. Based on preliminary reporting from most of the big oil-producing states and satellite data that give us insights into frac activity, we now believe that oil production (crude and condensate) reached a bottom of 10.4 million bpd in May 2020.

“While oil production in the US will rise from now and until September, we have revised down our growth expectations due to low frac activity and natural decline. Production is estimated to bounce back toward the 11 million to 11.2 million bpd range and then degrade towards 10.7 million bpd again in 4Q20 and 1Q21 as the current activity level is insufficient to offset the natural base decline.

“In addition, we revised down Iraqi oil production by about 200,000 bpd as the country makes good on its promise to make up for past missed OPEC+ compliance. Country-wide production will drop to 3.8 million bpd in Jul-20, we forecast, compared to our initial view that its output would struggle to get below the 4 million bpd barrier. We expect to see Iraq oil production capped below 4 million bpd through October but then will see output gradually increase again.

“We doubt that the market can take the additional production volumes from OPEC+ from August without negative consequences for oil prices, as the new glut will likely cancel some of the gains that led Brent to post Covid-19 highs of about $44 this month,” Tonhaugen concludes.

Our balances suggest that OPEC+’ tapering plans to year-end may need to be put on hold if the goal is to sustain the oil price recovery. This can of course still happen, perhaps already in a month, as OPEC’s market monitoring committee will be reassessing the market on a monthly basis.

By Chibisi Ohakah, Abuja

  …Blames Covid-19, global oil low demand
World Oil has reported that the disastrous collapse in crude prices bled Exxon Mobil’s production division, while Covid-19 lockdowns strangled demand for everything from jet fuel to plastic wrap, hobbling the company’s sprawling refining and chemical units.

The report said that Exxon’s woes are emblematic of the broader threats menacing the petroleum industry in what is turning out to be the deepest crisis of its 161-year history.

International titans that raked in record-breaking profits during the first decade of the century have now been reduced to widespread job cuts, belt tightening and heavy borrowing to cover dividends and other outlays.

“Exxon’s 26-cents per-share loss was better than the 64-cent average loss from analysts in a Bloomberg survey,” World Oil said. Last Friday, Chevron Corporation posted its worst quarterly loss in at least three decades and warned that the pandemic may continue to drag on earnings.

It was a downstream disaster, as the worst-ever crude crash came at a vulnerable time for Exxon because it had just embarked on an aggressive, multibillion-dollar rebuilding program.

Two straight quarterly losses, combined with almost $15 billion in annual dividend commitments, will translate into what Goldman Sachs Group Inc. analysts warned will be an unprecedented debt load, World Oil said.

It said that after slashing $10 billion in capital spending and freezing dividends, Chief Executive officer, Darren Woods may be running out of levers to pull. The company is cutting between 5% and 10% of its U.S. employees that are subject to performance evaluations, people familiar with the matter told Bloomberg News in June.

By Chibisi Ohakah, Abuja

The Federal Government has rolled strategies to strengthen the nation’s oil and gas industry as it grapples with the impact of the COVID-19 pandemic on the sector and the global economy.

The Minister of State for Petroleum Resources, Timipre Sylva disclosed this on Thursday at the Seplat Petroleum Development Company Plc virtual summit to mark its 10th anniversary.

Speaking at the inaugural summit with the theme, “Business Sustainability and Strategic Leadership in Africa, Sylva noted that the impact of the pandemic had resulted in production uncertainties, decline in crude oil demand, investment deferment and cancellation. Adding that the left government with huge revenue losses, employment and taxes.

According to the Minister, the FG had embarked on a number of strategies to cushion the effect of the COVID-19 on the economy. He listed the strategies to include curtailment of crude oil production, aggressive capital allocation to priority projects, placement of Industry-wide core cost curtailment measures, and diversification.

“Through the Nigerian National production corporation we have rolled out strategies to achieve $10 per barrel unit operating cost.” Adding that to ensure cost discipline, the FG had also adopted downward renegotiation of all contracts and other business obligations.

Sylva stated that government embarked on diversification of portfolio to non-oil businesses to cushion the effect of future crash in crude oil prices.

“We have declared this year 2020 as “the year of Gas” and have commenced the National Gas Expansion Programme (NGEP).

“On Jan. 16, we inaugurated an Inter-agency Committee saddled with the responsibility of coordinating our concerted efforts to ensure the penetration of domestic utilisation of LPG, encourage auto Liquefied Petroleum Gas, Compressed Natural Gas and Liquefied Natural Gas for the domestic market.

“This will drastically reduce the massive outflow of the nation’s foreign exchange currently being expended in the importation of Premium Motor Spirit (PMS),” he said.

Commending Seplat on its 10th year anniversary, Sylva described the independent oil producing company’s achievements as phenomenal and remarkable successes, adding that Seplat has recorded some key achievements in 10 years

He “It is worthy to note here that Seplat was awarded some assets based on the Federal Government’s aspiration to develop indigenous capacity in the Nigerian oil and gas sector about 10 years ago. Over the past 10 years, Seplat has recorded monumental achievements and has grown to become a leading independent upstream oil and gas company in Nigeria..

“One is successful acquisition of Shell Petroleum Development Company (SPDC) and Chevron Nigeria Limited (CNL), divestment assets and appointment as operator, operated nine drilling rigs, two swamp drilling badges and seven land drilling rigs and attained peak activity of eight drilling rigs in 2014.”

“They also increased daily crude oil production from approximately 14,000 barrels in 2010 to the current level of about 60,000 barrels within the first three years and sustained the average production, Seplat also increased Oben gas and processing capacity from 90 million scuffs to 465 million scuffs.

“Seplat is today a leading gas supplier to the domestic gas market with about 350 million scuffs supplied to the domestic market daily, this has contributed to the growth, the nation’s power development capacity and support the government diversification agenda. Seplat is currently operating and managing three flow stations and have achieved quite a bit, These achievements are commendable and need to be emulated by other indigenous oil and gas companies.”

Speaking also, the GMD of NNPC, Mallam Mele Kyari said, “Seplat is one of our efficient partners, this is reflected in the growth and achievement they have attained within the last 10 years.” Stating that the “key element of this business is the cost of production and a combination of this has made them one of our most cherished partners in this business, NNPC GMD said.

By Peace Obi

An indigenous oil service company, Ezion Geber Energy, has been appointed to officially represent Norwegian firm Connector Subsea Solutions (CSS) contracted to support current offshore projects in Nigeria.

Announcing the collaboration yesterday the Norwegian company said it contract with minimum three-year duration will help support current offshore Nigeria projects and enable growth across all pipeline repair product lines.

Connector Subsea Solutions chief executive officer, Ivar Hanson, said his company is excited about the Nigerian deal, and have secured what he described as “equally exciting partnership.”

“Nigeria is the largest oil and gas producer in Africa, and although we have secured and delivered some landmark projects for the major operators in this region, we are keen to ensure continued local expertise, communication and support, despite the challenges of COVID-19.

Ezion Gerber is the perfect partner for us in this regard,” Africa Oil Review quoted the CSS boss
Established in 2015 with its headquarters in Lagos, Ezion-Geber Energy offers engineering, procurement, construction and installation services that include oil and gas pipeline inspection, maintenance and repair.

The press agency noted that the Nigerian business has a strong focus and track record on safety, quality and a drive to ensure “Right First Time” operation, which is strongly aligned with Connector Subsea Solutions which specialises in providing reliable solutions to complex deepwater challenges.

By Chibisi Ohakah, Abuja

Nigerian National Petroleum Corporation (NNPC) has signed, on behalf of Nigeria, a $1.5 billion prepayment deal led by Standard Chartered and backed by oil traders Vitol Group and Matrix Energy, Reuter reported on Tuesday.

The deal called, Project Eagle, was also backed by African Export Import Bank (Afrexim) and United Bank for Africa. According to the details, Vitol and Matrix will each get 15,000 barrels per day (bpd) of crude as repayment over five years, starting this August. Nigeria’s crude production is nearly 2 million bpd.

Officials said the deal is expected to provide Nigeria with much-needed cash after its finances were hit by the oil price crash in April as COVID-19 lockdowns denied oil exporting countries fruitful businesses.

Reuters said Nigerian trader, Matrix confirmed its participation in the deal. Vitol, held as world’s biggest independent oil trader, declined to comment. The agency further said a spokesman for Standard Chartered declined to comment. “Afrexim did not have an immediate comment,” Reuters said.

The national oil company as well as UBA reportedly refused to comment on the deal. Prepayments with traders are widely used in commodity finance as banks consider them to be one of the more secure forms of lending in countries viewed as risky.

For trading firms such as Vitol, these loans are ideal for securing long-term supplies and boosting razor-thin margins. NNPC has been trying to raise cash through prepayments with traders for years.

However, the firm’s opaque finances and costly gasoline subsidies have made it tough for it to secure private financing on attractive terms. Nigeria announced the end of subsidies earlier this year.

NNPC will use a large portion of the money to pay taxes owed by its subsidiary NPDC, the sources said. The remainder will go towards operational expenses and capital expenditure.

By Chibisi Ohakah, Abuja

Seplat Petroleum Development Company Plc, has announced a change in the drivers’ seat as cash revenue for the six months ended June 30, 2020 stood at $234 million despite the lower oil prices and demand occasioned by Covid19.

The company recorded a reserve increase to $343 million despite lower revenues, for the period in review. The leading Nigerian independent energy company is listed on both the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE).

According to the results released yesterday that the NSE and LSE, company’s full-year capex of $120 million ($86m already invested) would also include two gas wells and related infrastructure.

Seplat’s outgoing chief executive officer, Mr Austin Avuru, said the company has put up a good performance despite the unprecedented Covid19 pandemic which devastated business at all levels since March 2020.

“Our continued resilience is possible as a result of our financial strength, our careful management of risk and our prudent approach to capital allocation. Unlike many in our industry, we were able to protect our 2019 dividend and increase our capital investment to ensure continued growth,” he said.

Seplat’s oil hedging strategy and gas revenues, according to Avuru, have continued to protect the business from price volatility, with the Company achieving substantial cost reductions from its suppliers while managing own costs even more carefully in this challenging period.

“Thanks to the excellent relationships we have with our government partners and supply chain, our Nigerian Petroleum Development Company (NPDC) receivables have fallen and we are managing our payments equitably. The cash position is also robust because our careful management of debt has ensured that the majority of obligations mature in 2022 and 2023. We are operating within our covenants on all our lines of debt,” the erstwhile Seplat CEO said.

On Seplat’s efforts to reduce the impact of Coronavirus, Avuru said the company has provided medical and food assistance where needed in the host communities, and will continue to do whatever we can to support those upon whom we depend for our business.

The report card was Avuru’s last as he handed over to Roger Brown, the incoming CEO. Highlights of the financials include: Cash increased to $343 million despite lower revenues, $29 million 2019 dividend, and $86 million capex. Net debt is steady at $457 million with most maturities after 2021. 

By Chibisi Ohakah, Abuja

The Federal Government of Nigeria recently announced the commencement of its 2020 marginal fields bid rounds.

The regulatory agency – Department of Petroleum Resources, DPR within whose purview the coordination of the exercise falls, disclosed that a total of 57 fields are on offer.

According to the DPR, the bid round exercise is open to indigenous companies and investors interested in participating in exploration and production (E&P) business in Nigeria.

The regulatory agency said that the fields are located on land, swamp and shallow offshore terrains.

“The Department of Petroleum Resources, DPR on behalf of the Federal Government of Nigeria is pleased to announce the commencement of 2020 Marginal Field Bid Round exercise.

“The Bid Round exercise is open to indigenous companies and investors interested in participating in Exploration and Production (E&P) business in Nigeria, DPR stated.

Inviting interested investors to participate in the ongoing bid round, the DPR Director, Engr Sarki Auwalu said: “Interested parties are invited to visit the DPR dedicated portal for the exercise; marginal.dpr.gov.ng to access the Guidelines for the Award and Operations of Marginal Fields in Nigeria, 2020, and the requirements for participation,” DPR stated.

Types of Oil Production Licenses

There are two types of licenses issued to oil producers in Nigeria which are Oil Prospecting License (OPL) and Oil Mining License (OML). The validity periods for the licenses ranges from 5 to 20 years respectively.

The Federal Government of Nigeria is vested with the sole responsibility to control petroleum (crude oil) resources and only permits their exploitation under the licenses as earlier stated. This it does in accordance with the Petroleum Act of 1969.

Upon fulfillment of the stipulated guidelines and criteria, the FG allocates acreages (Licenses) to operators in such areas deemed to have potential for petroleum accumulation and at the discretion of the Minister of Petroleum Resources.

In other words, the allocation of licences for exploration of oil to investors is based on the fulfillment of a set of criteria usually made known to interested investors at the time such blocks are open for bidding.

It must be noted that the FG reserves the right to participate in the operations of any block and to determine the type of contractual arrangements between the Allotee(s) and the Government.

 Difference between OPL and OML

Oil Prospecting License (OPL)

An OPL confers exclusive rights of surface and subsurface exploration for the production of petroleum in an area not more than 2590 km2. (1000 m2) in size. Oil Prospecting License is granted in inland basins for an initial period of 3 years with the option of renewal for a maximum period of 2 years.

However, the exploration period for deep water blocks and frontier basins is 10 years. It is broken into two 5-year periods which automatically roll over unless otherwise withdrawn due to non-performance.

Note that an OML is granted upon confirmation of potential for commercial production of petroleum from the License. 

Oil Mining Lease (OML)

This category of licenses is given to organization(s) that fulfilled the work commitment according to Petroleum (Drilling and Production) Regulations of 1969. It is granted upon confirmation of potential for commercial production of petroleum from the License.

The OML grants exclusive rights to explore, win, produce and carry away petroleum from the relevant area.

The regulation size is 1295 km2. (500 m2) and the specified duration is 20 years. Only the holder of an OPL is entitled to apply for conversion of Oil Prospecting License to an Oil Mining lease, through the Department of Petroleum Resources (DPR) for approval.

The production of 25,000 barrels per day is required as the minimum production level (commercial quantity) for conversion of a deep offshore OPL to an OML. However, for other areas, a production level of 10,000 barrels per day is required.

It is also important to note that an OML is granted upon confirmation of potential for commercial production of petroleum from the License. Only the holder of an OPL is entitled to apply for conversion of Oil Prospecting License to an Oil Mining lease, through the Department of Petroleum Resources (DPR) for approval.

By Peace Obi

Oil demand for the rest this year may continue to fall by as much as 3.7 million barrels per day (Mb/d), Outlook released by global research body, Rystad Energy, backed the projections with the second wave of Coronavirus pandemic, saying the development would stall demand.

Like Rystad Energy, the Organization of the Petroleum Exporting Countries (OPEC), had earlier in the month, revised world oil demand in 2020 to an estimated drop of 8.9Mb/d (bpd), adjusting it up by 0.1Mb/d against last month’s projection.

This comes as OPEC+ agreed to ease output cuts. The cartel had agreed on a 9.7Mb/d, but the cuts are slated to expire at the end of July, which is likely to reduce from 9.7Mb/d to 7.7Mb/d.

Reopening of economies in Europe and other parts of the world had triggered an increase in oil demand, but increases in the number of coronavirus cases in other large oil consumers, including the United States, Brazil, and India are projected to offset those European increases, according to Rystad.

In the Rystad report, oil demand would lower by 3.77Mb/d lower for the remainder of 2020, compared to the above base-case scenario, if full lockdowns are re-implemented globally due to increases in the coronavirus.

According to the group, when a second wave causes widespread full lockdowns, oil demand will not be as hampered as it was back in April when the virus first shocked the oil markets. This, Rystad suggests, is because the world is now armed with better information with which it could implement more targeted lockdowns and handle increased infections. Also at play is the fact that the economy simply cannot handle another “economic meltdown”.

The group expects oil demand to average 90.27Mb/d in July; 90.67Mb/d in August; September, and October; 937Mb/d in November; and 94.77Mb/d in December. This compares to oil demand of more than 997Mb/d last year.

Rystad stated that full-year 2020 oil demand would average 89.77Mb/d, with 2021 demand averaging 97.17Mb/d still under the 2019 average.

According to the body, oil demand may not snap back until the end of 2022, when it sees aviation activity as fully recovered.

Agency Report