Oil Production Rises As 225,000bpd Bonga Field Begins Operations
Royal Dutch oil giant, Shell, said it has resumed oil production at its 225,000 barrels per day (bpd) Bonga Floating Production Storage and Offloading (FPSO) field in Nigeria’s deep-waters.
According to the company, the repair of Bonga will ensure sustained production and reduce unscheduled production deferments. This was disclosed in the company’s first quarter 2017 financial results.
The report revealed that Shell netted an income of 2.2 billion dollars and was expecting to generate $10 billion in cash flow from the delivery of some of its new projects by 2018.
Shell is also involved in a new deep-water project known as the 13.5 billion dollars Zabazaba Deepwater project located in Oil Prospecting Lease (OPL) 245.
The net profit, it said, doubled in the first three months of 2017, as rebounding oil prices and refining gains helped boost its revenue.
According to the report, Shell generated a cash flow of $9.5 billion in the quarter, up 13 fold from a year earlier and the strongest among some of its rivals in the industry.
“We saw notable improvements in upstream and chemicals, which benefited from improved operational performance and better market conditions”, Shell’s Chief Executive, Ben van Beurden, stated in the report.
Shell, with operations in more than 70 countries, is Nigeria’s oldest oil producing partner, holding various joint venture and production sharing arrangements with the Nigerian National Petroleum Corporation (NNPC) and other foreign oil companies.
OPEC, Non-OPEC To Consider Extending Supply Cut By 9 Months
Meanwhile, the organisation of petroleum exporting countries (OPEC) and non-member oil producers are considering extending a global supply cut for nine months or more to avoid a price-sapping output increase in the first quarter of 2018, when demand is expected to be weak.
OPEC, Russia and other producers agreed last year to curb production by 1.8 million barrels per day for six months from Jan. 1.
Oil prices have gained support but global inventories remain high, pulling crude “LCOcI” back below 50 dollars per barrel and putting pressure on OPEC to extend the cuts through the rest of 2017.
Production from countries not participating in the deal, such as the United States, has also been rising, keeping crude below the 60 dollars level that OPEC kingpin, Saudi Arabia and others would like to see.
A sources said OPEC countries, including core Gulf members are discussing internally whether an extension of nine months or longer is needed to give the market more time to rebalance.
One industry source familiar with the talks said there had been discussions about extending curbs until the end of the first quarter of 2018, when crude demand should be seasonally weak.
“To increase production in those months may have a negative impact (on prices). So we may ask for an extension until the end of Q1 of 2018”, the source said.
An OPEC source said other ideas and scenarios could be discussed, adding that core Gulf OPEC producers had talked about an extension beyond six months.
Another OPEC source said it would be tough to get a consensus on prolonging curbs for more than six months but “anything can happen”.
A third source said an extension of up to one year could be an option.
Saudi Energy Minister, Khalid al-Falih, said on Monday that the OPEC-led production cut could be extended beyond 2017.
“Based on consultations that I’ve had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond”, Falih said at an industry event in Kuala Lumpur.
Russian Energy Minister Alexander Novak on Monday backed extending oil output curbs, saying it would help speed up a return to a healthier market.
Novak did not mention for how long he thought curbs should be prolonged.
OPEC officials generally believe the agreement is helping to bring the market closer to balance and that it should be extended into the second half of this year.