Chevron Nigeria Limited (CNL), operator of the Nigerian National Petroleum Corporation/CNL Joint Venture (NNPC/CNL JV), on Wednesday said it has put in place a two-week compulsory supervised quarantine for all personnel returning to work at its Escravos Operations during this period of the pandemic as one of the precautionary safeguards it initiated to prevent the spread of COVID-19 virus into its operations.

The CNL General Manager, Policy, Government and Public Affairs, Esimaje Brikinn, in a statement made available to Orient Energy Review said that Chevron Nigeria Limited has continued to operate safely, and without any Coronavirus (COVID-19) related incident in its operations.

Brikinn explained that the precautionary safeguard enables CNL to provide a controlled environment for very close monitoring of the personnel during the period of the supervised quarantine.

To make the safeguard effective, he said all personnel are first required to provide a comprehensive travel history before they are placed in the supervised quarantine.

 Reacting to speculations that CNL quarantined some of its staff suspected of having the  Coronavirus in a hotel in Warri, Delta State, Esimaje said that none of CNL’s  employees has contracted the COVID-19 virus.

He clarified that based on the Coronavirus directive issued by the Federal Government of Nigeria regarding sustained operations in the oil and gas industry, CNL entered into arrangements with some hotels and other facilities in Warri and Lagos where their staff on rotational duties will be accommodated, and their health status monitored to ensure that they do not have the COVID-19 virus before returning to work at its Escravos Operations.

According to him, the first group of personnel scheduled for quarantine were moved to the designated facilities on Friday, April 10, 2020 and other groups will follow based on the crew change schedule and the personnel will be required to strictly maintain social distancing protocols, personal hygiene, and use of appropriate personal protective equipment during the supervised quarantine period. 

“We are also working with the hotels and other facilities where the personnel will be placed, to ensure that the hotels and facilities maintain high levels of sanitation and follow strict adherence to all COVID-19 protocols,” he stated.

Esimaje declared that at the end of the two-week period, only those who are certified free of the COVID-19 virus shall be moved to Escravos and that anyone with suspected symptoms during the period will be subjected to further testing and subsequently transferred to government-designated hospitals for further handling in line with the government-approved protocols.

“Chevron continues to monitor the Coronavirus (COVID-19) outbreak around the world and has been utilising the guidance of local and international health authorities. We are regularly updating our workforce and will continue to adjust plans as appropriate as we receive more information.

“Our top priority is to ensure the wellbeing and safety of our workforce and their family members, and we are taking precautionary measures to reduce the risk of exposure,” he said.

Peace Obi

The global COVID-19 pandemic and the rapid drop in oil prices have combined to create unprecedented challenges for the energy industry.

A University of Houston Energy-led survey found that workers give their employers high marks for how they have handled the crisis but are far less optimistic about their job security and the future of the industry as a whole. Further gender and ethnic analysis also shows that women in energy are also impacted more than male counterparts.

UH Energy worked with Pink Petro, among other industry groups, to gather data from a cross section of energy workers. Data was collected from 408 energy workers via an online survey between March 25 and April 1. On average, participants had 16 years of work experience in the industry; 83% worked in the oil and gas sectors, with the remainder split between alternative energy and the power and utility sectors.

A summary of the overall findings found that:

53% said they felt insecure about their jobs due to the pandemic; 39% said they worried about paying their mortgage and other bills during the coming year.

46% said they are optimistic about the industry’s future; researchers said age or years of experience did not affect that, although people with children at home were slightly less likely to be optimistic about the industry.

83% of workers said their company had provided “fast and efficient technology” for working remotely. 71% said their supervisor worked effectively with employees to resolve conflicts between work and family life due to COVID-19.

37% reported that concern about the virus were affecting their sleep. That was especially true for people whose workload has increased due to the virus; people who struggled more with conflicts between work and family responsibilities and those worried about job security also reported problems sleeping. Poor sleep carries implications for workplace safety.

Pink Petro and the University of Houston’s Institute for Women’s, Gender and Sexuality studies also looked at provided answers that affect women and energy workers of color during the current crisis. The analysis found that:

Women in energy are more likely to experience work-family conflict during the COVID-19 crisis than men, but both women and men experience work-family conflict.

Women were less likely to report having access to employer provided backup care for childcare during COVID-19 than men.

Women in energy are more likely to experience stress that affects their ability to focus at work than men.

Hispanic and Asian American energy workers experienced significantly higher levels of work-family interface stress than their white and African American counterparts.

Asian Americans are much more significantly affected by travel restrictions than all other groups, and indicate to a larger extent that travel restrictions limit their ability to see loved ones and their ability to manage their personal and life issues.

Asian Americans report higher overall levels of stress than energy workers from other groups due to COVID-19.

“Building a sustainable, diverse and inclusive workforce is more important now than ever in a crisis. I am optimistic. We need to learn as much as we can from COVID-19 and this study provides recommendations for companies and leaders as they navigate this new normal, ” says Katie Mehnert, CEO of Pink Petro.

Despite the reduction of the official selling prices, 60 of Nigerian crude oil cargoes have remained unsold stood at Nigerian National Petroleum Corporation has said.

A glut of Nigerian and Angolan crude weighed on the market on Tuesday with demand from China slower than in the last few weeks, Reuters reports.

“It’s a buyer’s market right now,” one trader was quoted as saying, adding that nothing was shifting.

According to Reuters, the glut of unsold Nigerian oil was around 60 cargoes for April and May, and cargoes of Qua Iboe and Bonny Light crude continued to be offered at around dated Brent minus $3.

The Nigerian National Petroleum Corporation was reported in March to have cut its April official selling prices for Bonny Light and Qua Iboe, two of the nation’s major grades, by $5 per barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively.

Peace Obi with agency report

The impact of the production cut to the tone of 10 million barrels per day agreed upon by the OPEC+ at its virtual meeting last Thursday is beginning to be felt as oil prices rebound.

Oil prices rose overnight after the OPEC and its allies agreed to a 10% cut in output – the largest-ever reduction in production.

The production cut by the major oil-producing countries among others brought an end to a damaging price war between Saudi Arabia and Russia which has been exacerbated by a slump in demand caused by the coronavirus.

Global benchmark Brent crude was up 3.9% to $32.71 a barrel and US grade West Texas Intermediate up 6.1% to $24.15 a barrel.

Brent had fallen to a low of $22.58 a barrel – its lowest price for 18 years – as the stalling of factory activity, grounding of aircraft and absence of traffic on the roads cut demand by half.

Last night’s deal to cut 9.7 million barrels a day was agreed following a video conference between 23 nations.

US President Donald Trump personally thanked the leaders of both countries, King Salman and Vladimir Putin, in a tweet, hailing the “big oil deal”.

He added: “This will save hundreds of thousands of energy jobs in the United States… Great deal for all!”

Mr Trump had played a significant role by cutting a deal with Mexico for a smaller cut in its output by 100,000 barrels for two months.

The Mexican president, Andres Manuel Lopez Obrador, said the US president had agreed to compensate for Mexico’s smaller cut.

However, financial markets remain on edge as the lockdown and restriction of people’s movement continue affect demand for oil.

One analyst noted that the decline in oil demand is well ahead of the output cuts that have been agreed and that this will frustrate hopes of the price maintaining an upward momentum.

Further cuts may therefore be needed to bring supply and demand into equilibrium and make a lasting impression on the price.

Peace Obi 

Shell lifted a force majeure on exports of Nigeria’s Forcados crude oil after the pipeline transporting it reopened, the company said in a statement Monday.

The removal of force majeure followed the reopening of the Trans Forcados pipeline by operator Heritage Energy Operational Services Limited, a spokeswoman for the Shell Petroleum Development Company of Nigeria said.

Heritage Energy Operational Services Limited (HEOSL) shut down the facility on April 4, 2020. Following this, Shell Petroleum Development Company of Nigeria Limited (SPDC), operator of the SPDC Joint Venture, had declared a Force Majeure on the Forcados Oil Terminal Off-take Programme effective at about 5pm of April 6, 2020.

Forcados exports were set at roughly 245,000 barrels per day (bpd) in May and 283,000 bpd in April.

Peace Obi with agency report

United States, Canada and other G20 nations are backing the OPEC+ group of countries in a broad effort to reduce global oil supply and restore stability to the oil and gas markets. But Mexico reportedly refused to commit to its share of cuts agreed by OPEC+ during its virtual meeting last weekend.

According to the production cuts agreed by OPEC members, Russia and other members of the Declaration of Cooperation, Mexico has been asked to cut 400,000 barrels per day from May to June. Mexico, though, has refused, as President Andrés Manuel López Obrador is pushing the national oil company, Pemex, to revive the country’s economy and energy sector.

A report said the overall agreement is now in jeopardy, with Saudi Arabia saying the OPEC+ deal, which cuts a total of 10 million barrels of oil per day from the market, is contingent on Mexico’s participation. Mexico has agreed to cut just 100,000 barrels of oil per day. There are reports that President Donald Trump has agreed for the United States to potentially shoulder the rest of Mexico’s needed cuts. Negotiations with Mexico are set to continue on Saturday.

An agreement, reached Friday during a virtual meeting of the G20 energy ministers, will see G20 members coordinate efforts to stem the hemorrhaging of the oil and gas sector, as well as create a task force to monitor actions moving forward. A statement released by the G20, however, does not include a specific amount G20 members will cut from daily production. Previously, OPEC+ had said they would push G20 members to cut an additional 5 million barrels of oil per day. Though the United States did not agree to regulating a set production cut for American shale, it expects to see a reduction of at least 2 million barrels per day. Russia and Saudi Arabia had been set on US participation in production cuts to end their own oil price war, which started in March, but Saudi Arabia said they also recognized the limitations for US and Canada in regulating oil cuts on producers because of legal constraints.

“Without sufficient and stable investment to develop and maintain energy infrastructure, our collective energy security is at risk,” said Prince Abdel Abdulaziz bin Salman, the Saudi energy minister, at the virtual meeting.

“We have already started to see this playing out along the supply chain, as companies experience economic pain, capital expenditures are cut, and jobs are lost. … Our global energy systems, from producers to consumers, is in uncharted territory and it is our responsibility to find the path forward.”

The G20 has not released set obligations or numbers for the production cuts by country. Still, backing the agreement is a radical shift for Western nations, which have avoided dealings with OPEC and have historically shown strong animosity to the group. In the past, the United States has even threatened to pass bills such as the No Oil Producing and Exporting Cartels Act, which could see the United States sue OPEC members for price fixing.

But in a shocking about-face in recent weeks, as the oil and gas crisis threatened the United States’ own energy security, President Donald Trump has urged OPEC and Russia to reach a deal, seeming to alternate between cajoling and threatening the two global powers to strike an agreement on cuts.

The OPEC++ deal came after OPEC, Russia and other members of the Declaration of Cooperation agreed Thursday — after a marathon meeting — to the largest production cuts in the history of OPEC. The OPEC+ group agreed to eliminate 10 million barrels of crude per day for an initial two-month period to save a glutted oil market. The deal sees Russia and Saudi Arabia absorbing the brunt of the cuts, each agreeing to cut 2.5 million barrels per day.

Except for Saudi Arabia and Russia, the baseline for cutting production is taken from October 2018 production levels, with each nation in OPEC+ expected to cut 23% of daily production from this baseline.

Chibisi Ohakah

…Cut from OPEC members will lower to 8mbd from July to December and then lower to 6mbd from January 2021 to April 2022.

The Energy International Agency (EIA) has said that global demand for oil and gas has decreased by about 30%, from over 100 million barrels per day to under 85 million barrels per day.

This followed the realization also that 40% of the world’s population are currently indoors to stem the spread of COVID-19.

EIA stated that the overall production cut from Organisation of Petroleum Exporting Countries (OPEC+) will lower to 8 million barrels per day from July to December and then lower to 6 million barrels per day from January 2021 to April 2022, this will follow an initial two-month period, running from May to June.

The OPEC+ group will meet again on 10 June 2020 to discuss further action, if arises.

At the just-concluded OPEC meeting virtual meeting, the oil body said that despite establishing the largest cut in its history, the OPEC+ deal was not enough on its own to bring stability to the oil price.

Brent was down by four per cent at market close on Thursday after the details of the meeting were announced, losing pace from a nearly 11 per cent rally earlier in the day.

That oil prices fell after the announcement of a 10 million barrel per day cut from the market shows exactly how glutted the oil market is, and that further action was necessary to bring some semblance of stability.

The IEA, which called for the G20 meeting of energy ministers argued the market conditions were too much for OPEC+ alone to handle.

“The extreme volatility we are seeing in oil market is detrimental to the global economy at a time when we can least afford it,” said Dr Fatih Birol, Executive Director of the IEA.

“Today’s oil crisis is a systematic shock that threatens global economic and financial stability. It requires a global answer.

That is why the G20 can be an indispensable forum for decisive leadership when it is urgently required,” he added.

Brent crude was averaging $55.70/barrel in February, but, with an oil price war and the impacts of COVID-19, both Brent and WTI have reached their lowest level in years, with Brent hitting $22.76 per barrel in March, its lowest price since November 2002.

As demand for oil, as well as the price of oil, has declined, storage capacity is also reaching its limits. In just a few weeks, analysts predict oil production may be shut-in due to a lack of global storage capacity.

Chibisi Ohakah

The Group Managing Director of Nigerian National Petroleum Corporation, (NNPC), Mele Kyari has explained that Federal Government’s support for private refinery initiatives is part of the strategies to return Nigeria to being a net exporter of petrol.

Kyari who warned that security of supply cannot be guaranteed with external resources said the government has a number of initiatives to ensure that Nigeria’s energy needs are met.

The GMD in an interview with a national newspaper recently said FG’s condensate refinery initiatives are estimated to produce about a combined capacity of 200,000 barrels of condensate. Adding that he was optimistic that this in addition to Dangote 650, 000 barrels per day and our would guarantee energy security for the country.

The GMD who described FG’s interest in the Dangote refinery as being ‘for very strategic national reasons’ said the major problem with dependency on importation of petroleum products is that anything can happen along the value chain. 

He said, “Whenever you have a situation where you become a net importer of petroleum, you are in trouble, you know anything can happen along the value chain as long as you are far away from the source of supply.

“So the coming on the table of the Dangote refinery and very many other refinery initiatives will first of all guarantee that this country returns to a net exporter of petroleum in the short term. What that will do is to guarantee security of supply such that we don’t rely on external resources and sources to get our energy needs satisfied. So we see the Dangote refinery as an opportunity, and there are many other opportunities.

Speaking about other initiatives by the government, Kyari said, “Also, we are doing something about what we call a condensate refinery. What that means is that the condensate resources we have which are very easy to convert to fuel, not like a typical refinery but it does work very quickly.

“It can put you on the deck and then we can also convert up to 90 per cent of the feedstock into for instance the light petroleum products. We have gotten commitments by one of our partners to take FID in June or July, so that we know that we are doing that because it is almost like the off-the-shelf kind of arrangement.

“But it is something that you can get into work in two years. So we have four other initiatives of that nature, combined capacity of probably getting 200,000 barrels of condensate. 

“The combination of that with the Dangote 650, 000 barrels per day and our refineries that we are fixing can guarantee energy security for the country.

“Once you have that combo of opportunities, you will see Nigeria becoming a net exporter of gasoline (petrol) to the West African countries, the whole of Africa within our view and probably reverse the flow of products. 

“Because it comes from Europe not because Europe is the source of petroleum but because the processing facilities are there and once you see this market dynamics the only thing that is going to reverse is freight. And you can see the flow of petroleum products coming from Nigeria even into Europe, that is possible within a short term,” Kyari said.

Peace Obi

The African Development Bank Group on Wednesday announced the creation of the COVID-19 Response Facility to assist regional member countries in fighting the pandemic.

The Facility is the latest measure taken by the Bank to respond to the pandemic and will be the institution’s primary channel for its efforts to address the crisis. It provides up to $10 billion to governments and the private sector.

The President of the African Development Bank Group, Akinwumi Adesina said the package took into account the fiscal challenges that many African countries are facing.

“Africa is facing enormous fiscal challenges to respond to the coronavirus pandemic effectively. The African Development Bank Group is deploying its full weight of emergency response support to assist Africa at this critical time. We must protect lives. This Facility will help African countries to fast-track their efforts to contain the rapid spread of COVID-19,” Adesina said, commending the Board of Directors for its unwavering support.

The Facility entails $5.5 billion for sovereign operations in African Development Bank countries, and $3.1 billion for sovereign and regional operations for countries under the African Development Fund, the Bank Group’s concessional arm that caters to fragile countries. An additional $1.35 billion will be devoted to private sector operations.

Commenting on the Facility, Acting Senior Vice-President Swazi Tshabalala said: “The setting up of the Facility required a collective effort and courage by all our staff, Board of Directors and our shareholders.”

Two weeks ago, the Bank launched a record-breaking $3 billion Fight COVID-19 Social Bond, the world’s largest US dollar-denominated social bond ever on the international capital market. Last week, the Board of Directors also approved a $2 million grant for the World Health Organization for its efforts on the continent. 

“These are extraordinary times, and we must take bold and decisive actions to save and protect millions of lives in Africa. We are in a race to save lives. No country will be left behind,” Adesina said.

Peace Obi

…..As Mexico expresses reservation over deal

In an effort to stem the unprecedented fall in oil price occasioned by coronavirus outbreak across the globe, OPEC and its allies on Thursday reached a deal to cut global oil production by 10 million barrels per day.

The deal was reached as oil ministers from OPEC and non-OPEC oil producers held a virtual meeting on Thursday.

However, Mexico, a non-OPEC member has expressed reservations about the length of the agreement.

The 10 million barrels per day production cut will be for the months of May and June, the biggest organized crude oil production cut since the landmark ‘Declaration of Cooperation’ of December 10, 2016.

The OPEC Secretary-General Mohammad Sanusi Barkindo in his remarks noted that the oil industry has in recent times experienced an incredible contraction both in oil and prices and demand as a result of the COVID-19 pandemic.

Barkindo said, “Only one month ago at the meetings in Vienna, expected 2020 global GDP growth was 2.4%.  Today, it is a negative 1.1%.  It is incredible to think that the global contraction is far greater than that for the Great Recession of 2008-2009.”

He noted that no sector of the economy has been spared by the unprecedented situation. “For the oil market, it has completely up-ended market supply and demand fundamentals since we last met on 6 March. Our industry is haemorrhaging; no one has been able to stem the bleeding.”

“The outlook for non-OPEC supply growth in 2020 has also fallen by over 1.5 mb/d, although this is nowhere near the drop for oil demand.

“The OPEC Reference Basket has fallen from $52.7/b in March 2020 to below $20/b in early April, a decline of around 70%.  We are all now seeing significant less revenue coming into our treasuries.

“This evidently has major consequences, with the limits of the market being tested on many fronts.

“We are likely to see further breaches in logistical capacity, ships, pipelines, terminals and processing units.  And it is clear that available storage capacity is quickly filling up.

Thursday’s emergency OPEC virtual meeting held sequel to the resident Donald Trump’s pressure on Saudi Arabia and Russia to consider productions cuts as the impact of the coronavirus weigh heavily on economies, especially the oil industry.

Trump hinted that Dozens of US oil companies were facing bankruptcy due to the collapse in oil prices, stressing that could lead worldwide layoffs in the oil industry.

“The numbers are so low that there will be layoffs all over the world, there will be certainly layoffs in this country and we don’t want that to happen,” Trump said.

OPEC+ next meeting will be on June 10, 2020.

Peace Obi