Category: Power

The Minister of State for Petroleum, Timipre Sylva, said the Federal Government aims to transform Nigeria into a gas-powered economy by 2030 to address challenges around power generation through gas-powered plants.

He said natural gas is a key resource for energy transition and that it has all the credentials to support Nigeria to meet its commitment in line with the United Nations’ 17 Sustainable Development Goals (SDGs).

The minister disclosed this in Abuja at the 2022 Public Lecture under the theme, ‘Inclusive Energy Transition: Key Issues, Investment Opportunities and Barriers Towards Achieving the Decade of Gas Initiative in Nigeria’.

“At present, only gas can meet all three priorities simultaneously. This puts Nigeria with approximately 206.53 trillion cubic feet of proven gas valued at over $803.4 trillion and a potential upside of 600TCF of gas, the most extensive in Africa, and in the top 10 globally.

“It is so fittingly themed because Nigeria has already made a strong commitment to embracing this transition, pledging to significantly reduce its greenhouse gas emissions under the Paris Agreement on Climate Change and establishing the National Council on Climate Change (NCCC), which will have the power to make policies and decisions on all matters relating to climate change in Nigeria,” the minister said.

He continued: “This is in addition to a commitment to attain net-zero by 2060. Nigeria is one of the world’s last energy frontiers, a nation brimming with enormous opportunities.

“As a nation, we are following a transition pathway that combines technology, investment, business strategies and government policy that will enable Nigeria to transition from its current energy system to a low-carbon energy system with natural gas playing a pivotal role over the next generation, between now and 2060.

“The growth of our gas reserves is a critical lever to achieving the Federal Government’s ‘Decade of Gas Initiative’, which is aimed at transforming Nigeria to a gas-powered economy by 2030.”

In her address, the Chairman, of the Nigerian Society of Engineers (NSE) Bwari Branch, Halimat Adediran, called on the government to make concerted efforts to migrate the country from an energy-importing nation to an energy-exporting one.

She said: “The Petroleum Industry Act (PIA) is a game-changer for us as a people and all stakeholders. But some of us are still oblivious of its enormous opportunities. The PIA elicited several comments and inquiries from potential investors and other stakeholders in Nigeria and abroad.

“The total domestic gas demand requirement (DGDR) in Nigeria stands at 4.482 billion standard cubics per day. More so, Nigeria cannot continue to depend solely on crude oil for its foreign exchange earnings after the COVID-19 pandemic clearly showed us the grave limitations of this as witnessed by the recession our economy suffered due to our total reliance on crude oil.”

TotalEnergies has reaffirmed its commitment to clean energy even as it rebrands its lubricants.

As a major player in lubricants globally, TotalEnergies designs and sells high-performance products for the automotive, industrial, and maritime sectors.

Speaking at the launch of the lubricant yesterday, Managing Director, TotalEnergies, Dr Seye Samba, said new colours, new labels and a more ergonomic design, are what consumers will find in the market.

Dr Samba said: “We are a leading global manufacturer and marketer of lubricants, with 42 production sites around the world. Here in Nigeria, we have our lubricant and bitumen blending plants in Lagos and Koko, Delta State.

“We have lubricant storage plants in all parts of the country as well as employees that are committed to providing energy that is more affordable, cleaner and more reliable as well as accessible to as many people as possible.”

In addition to new design, he said the lubricants division contributes to the company’s ambition to offer cleaner energy, adding that a reduction in the weight of cans will prevent the emission of 9,500 tons of CO2 equivalent each year owing to raw materials savings.

With these new cans, he said consumers can identify the product they need at a glance, due to the color coding.

“The colour codes show platinum for top-tier, silver for mid-tier and bronze for entry range products. Buyers can then zoom in on the product they need by checking the new label, which is much clearer and easier to read”, he added.

There are indications that about 79 million tonnes per annum (MMTPA) of additional Liquefied Natural Gas will see the final investment decision (FID) this year.

While Africa may not witness significant growth in LNG projects in the course of the year, projections by a global research body, Wood Mackenzie for the year 2022, noted that 33 MMTPA volume of FIDs is expected in North America, 16 MMTPA in Qatar, and 20 MMTPA in Russia.

Wood Mackenzie noted that LNG projects would continue seeing plenty of momentum as LNG prices are expected to be structurally higher and oil indexation on the rise.

The analyst expects 79 million tonnes per annum (MMTPA) of additional LNG to take the final investment decision (FID) over the next two years, including 33 MMTPA in North America, 16 MMTPA in Qatar, and 20 MMTPA in Russia.

According to the company’s projections, while oil indexation in long-term LNG contracts has been on a declining trend for the past 10 years, 2022 would be a turning point for LNG oil-indexed contracts, with the level of indexation firmly on the rise.

It noted that while Asian LNG spot prices are expected to average close to $15/mmbtu over the next five years, the current level of oil indexation (and oil prices) would result in a $7/mmbtu yearly average discount over spot LNG.

“Inevitably, demand for long-term contracts will increase, pushing oil indexation levels up,” WoodMac said.

According to the body, contracting requirements remain different across the next 10 years, adding that through to 2025, limited uncontracted supply availability is fuelling concerns regarding the security of supply, pushing oil-indexed levels up.

Beyond 2025, price upside would be kept in check by the increased availability of uncontracted supply from Qatar and Russia, uncertainties about long-term demand from legacy northeast Asia buyers, and competitive Henry Hub plus contracts, the body said.

Vice president at Wood Mackenzie, Valery Chow said: “2021 saw the return of contracting activity to its highest levels over the last five years. Asia accounted for 85% of global contracts signed, with China leading the pack.

“We expect LNG contracting activity to remain strong in 2022. Chinese buyers are again expected to lead the way and account for most of the new long-term contracts signed. On the other hand, we expect more muted activity from Japanese buyers. Despite high spot prices, long-term contracting for Japan is anticipated to continue softening in the face of energy transition uncertainties and greater confidence in the trading capabilities of the major buyers.

“Hybrid and Henry Hub-linked contracts are expected to remain in vogue in 2022 due to the price benefits of Henry Hub contracts and availability of new US supply. In contrast, we expect few long-term JKM-linked deals as buyers remain fearful of the associated price volatility.”

The body listed weather dynamics and the timing of Nord Stream 2 start-up as the key determinants of gas prices in 2022, noting that at current levels of Russian exports and considering normal weather conditions, European storage inventories would get below 15 billion cubic metres (bcm) by the end of March, a record low.

It stated further that prices would eventually come down as the winter is through, but requirements to refill storage facilities would be high, some 20-25 bcm more than last year.

Wood Mackenzie added that the commissioning of Nord Stream two might well be the only option to refill storage and avoid a repeat of last year’s winter crisis.

Vice president at the firm, Massimo Di Odoardo said: “But things could get a lot worse. A cold winter could add up to 10 bcm of additional gas demand, pushing storage inventories to zero before the end of March. And the commissioning of Nord Stream 2 could be stopped altogether if tensions between Russia and Ukraine escalate, as the German government has recently warned.

“Normal winter weather and visibility on Nord Stream 2 commissioning would push prices down, although demand for storage (and high carbon prices) will maintain prices above US$15 per metric million British thermal units (mmbtu). But a cold winter and continued uncertainty about commissioning of Nord Stream 2 could see prices doubling, again.”

Source: The Guardians 

(Bloomberg) –Oil rebounded from one of its biggest ever daily drops as traders assessed the risks to global demand from the Omicron variant of Covid-19 and the potential response by OPEC and its allies.

Brent rallied as much as 5.2%, climbing along with West Texas Intermediate. The World Health Organization warned the new strain could have severe consequences, while South Africa has said it appears to be more infectious, but with mild symptoms.

OPEC and its allies have already moved technical meetings in order to give themselves time to review the rout on Friday. The group is scheduled to gather later this week and decide on its output plan for January, with a pause in supply hikes on the cards, according to Morgan Stanley.

While the fundamental driver of oil’s eye-watering selloff on Friday was the emergence of Omicron, by the end of the day everything from technical selling to options markets was contriving to push the market lower. Still, analysts from Goldman Sachs to Energy Aspects said that the move was overdone and traders are now waiting to see how severe the variant’s impact will be.

“Clearly there are fears that this could have a considerable impact on demand,” said Carsten Fritsch an analyst at Commerzbank AG. “That said, Friday’s price slide was excessive.”

The Organization of Petroleum Exporting Countries and its allies will discuss the market situation and any relevant necessary steps, Russia’s Deputy Prime Minister Alexander Novak said Monday. The group postponed a ministerial meeting to get more information about current events, including the new Covid strain, he said.

OPEC will likely take a cautious stance when it gathers this week, according to Vitol Group, the world’s biggest independent oil trader. There’s also set to be more flight cancellations this week as a result of the variant, Mike Muller, the company’s head of Asia said.

Prices:

• Brent for January settlement rose 4.1% to $75.67 a barrel at 10:33 a.m. in London.
• Earlier on Monday, prices rose as much as 5.2% in intraday trade after ending 11.6% lower on Friday.
• WTI for January delivery climbed 4.6% to $71.28 a barrel.

As a result of Friday’s slump, oil market volatility has blown out. One gauge of price fluctuations climbed to its highest level since May 2020. That also accompanied a surge in trading volumes as prices retreated on Friday.

The selloff wasn’t just concentrated on the front end of the oil curve either. Brent for December 2022 shed almost $8 on Friday, and had clawed back about $2.70 of that loss on Monday. The level of backwardation — a bullish structure indicating tight supply — in the futures curve also fell sharply.

“The price move was dramatic throughout the whole curve,” said Keshav Lohiya, founder of Oilytics. “Scale buying deferred Bent structure is a good risk-reward trade here as we believe backwardation is here to stay.”

Source: World oil news