Oil Prices Head for $100 as Bonny Light Sells for $95

*FG, others embark on joint probe of SEPCOL FPSO explosion
*10 crew members still missing

Emmanuel Addeh in Abuja

Oil prices continued their surge yesterday, sending one of Nigeria’s most valued grades, Bonny Light to $95 and Algeria’s Sahara Blend to $97.48, in an obvious push towards the $100 mark.

The increase represented a 3.70 per cent for the Nigerian grade and 4.29 per cent for the North African grade, the highest level they have attained since 2014.

This is coming as the federal government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in collaboration with other relevant stakeholders, yesterday embarked on a Joint Investigation Visit (JIV) to the facility of the Shebah Exploration & Production Company Limited (SEPCOL), which exploded on Wednesday morning.

The Floating Production Storage and Offloading (FPSO), Trinity Spirit, located at Ukpokiti field in Oil Mining Lease (OML) 108 in Warri, Delta State, was engulfed by fire during the incident, with 10 members of the crew still missing.

Other grades of Nigeria’s oil, which experienced a significant rise were the Brass River, which was selling for $94.13, an addition of 3.53 per cent and Qua Iboe, which hit $94.13 as at 6 pm Nigerian time.

Nigeria’s most popular oil and the country’s benchmark, Brent Crude was going for $93.27, a rise of 2.87 per cent while the United States crude benchmark settled at $93.27 a barrel.
This is happening for the first time since October 2014 due to ongoing supply worries and as frigid weather cascades across the US.

The latest rally was attributed to growing concerns that extended cold weather could hit production in the US, exacerbating the tightness in world crude markets.
The market was also watching developments between Russia and the West over the former’s aggressive posture towards Ukraine.

Crude benchmarks have been pointing upward for weeks on expectations that supply would tighten further even after the Organisation of Petroleum Exporting Countries and other producers (OPEC+) stuck to planned moderate output increases.

Demand remains on the upswing, with the Omicron coronavirus variant only temporarily denting consumption in major economies in recent times.

OPEC and allies led by Russia, known as OPEC+, during the week agreed to stick to a monthly increase of 400,000 barrels per day (bpd) in output despite pressure from consumers to raise supplies more quickly.

In addition, Goldman Sachs has forecast Brent topping $100 a barrel in the third quarter, but that might come even earlier though insinuations are rife that OPEC+ may consider a faster unwinding of its production cuts.

Several OPEC members, like Nigeria, are struggling to pump more despite prices being at seven-year highs, with the country unable to meet expected levels due to sabotage, waning upstream infrastructure and outright theft.

Nigeria was unable to meet its oil production allocation by OPEC in January, as it was only able to pump 1.46 million barrels per day of the expected 1.683 million bpd for the month.
Moreover, the Group Managing Director, Nigerian National Petroleum Company (NNPC), Mr Mele Kyari, had said that NNPC’s joint venture partners were unable to restart oil wells shut down in the heat of the COVID-19 pandemic. His promise of a 1.8 million barrels target by December 2021 had earlier faltered.

The surge in the price of Bonny Light indicates that Nigeria now has as much as $33 above the $62 per barrel 2022 budget benchmark.
The budget was based on the production of 1.8 million barrels per day, including about 400,000 barrels of condensate that Nigeria produces daily.

Ironically, Nigeria’s external reserve at the weekend fell below the $40 billion thresholds it had maintained in over three months. This was according to data from the Central Bank of Nigeria (CBN).
The reserve had endured a continuous decline in recent months, owing to the intervention of the apex bank in the official FX market and sustained forex crunch in the economy.

Notably, the reserve level had fallen to $39.98 billion as of Thursday, February 3, 2022.
Despite the rising oil prices, the country’s excess crude account had been depleted, while the foreign reserve dipped by $481.4 million in January 2022, following a $66.17 million decline recorded in December 2021.

The federal government had explained recently that the fund depleted from $72.4 million to $35milion in a space of one year, despite crude oil averaging higher than Nigeria’s benchmark for the year.
FG, Others Embark on Joint Probe of SEPCOL FPSO Explosion

Meanwhile, the NUPRC, in collaboration with other relevant stakeholders yesterday embarked on a Joint Investigation Visit (JIV) to the facility of SEPCOL, which exploded on Wednesday morning.
The FPSO, Trinity Spirit, located at Ukpokiti field (OML 108) in Warri, Delta State, was engulfed by fire during the incident.

In a statement issued yesterday by the NUPRC, providing an update, the commission said the fire had been successfully extinguished.
“The commission will commence JIV with relevant stakeholders immediately in line with our regulatory oversight function for upstream operations.

“The commission will further deploy its incident management strategy while also ensuring that the removal of the FPSO is carried out professionally to prevent an escalation of the incident.
“The commission will continue to ensure that all safety and environmental measures are strictly adhered to in the management of the incident,” the statement said.

Similarly, a release signed by the Chief Executive Officer, SEPCOL (in receivership), Mr Ikemefuna Okafor, owners of the vessel, confirmed that the JIV with relevant stakeholders and experts was fixed for yesterday (Saturday).

The vessel with a capacity to process up to 22,000 barrels of oil per day, inject up to 40,000 barrels of water per day and store 2 million barrels of oil, had exploded and sunk at the Ukpokiti Terminal, around Excravos.

THISDAY checks showed that the huge facility, TRINITY SPIRIT, was built in 1976 (46 years ago).
The asset is owned by SEPCOL, which in 2004 acquired all of 40 per cent of ConocoPhillips’ equity interest in OML 108.

The vessel had broken into two and partially submerged but there was no evidence of spilled crude, sources said, adding that there could have been problems with the vessel’s boilers, which they said kept no more than 20,000 barrels of crude.

An update provided yesterday by the company confirmed that the fire had been extinguished, while the search for the whereabouts of the crew on board was ongoing.

“The management of Shebah Exploration & Production Company Limited (SEPCOL) in receivership, hereby provides an update on the explosion and subsequent fire that engulfed the FPSO Trinity Spirit located at the Ukpokiti Terminal, in the early hours of Wednesday, February 2, 2022.

“We have been working with the relevant authorities and stakeholders to contain the situation and an investigation has been launched to establish the cause of the explosion.

“We can confirm that the fire burnt out completely as of Thursday afternoon, February 3, 2022, and this has enabled closer inspection of the vessel. With this development, a Joint Investigation Visit (JIV) has been scheduled for Saturday, February 5, 2022, with the relevant authorities, stakeholders, and expert organisations.

“Currently, there are still no reported fatalities, and we continue prioritising investigations concerning establishing the whereabouts, safety, and security of the 10 crew members who were on board the vessel before the incident,” the statement explained.