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Strong demand is still expected from the booming petrochemicals sector. (Image source: Adobe Stock)

Oil 2024, the latest edition of the IEA’s annual medium-term market report, forecasts that growth in global demand for oil will slow in the coming years as energy transitions advance, with a major supply surplus emerging this decade

The report forecasts that global oil demand, which including biofuels averaged just over 102mn bpd in 2023, will level off near 106mn bpd per day towards the end of this decade, with growth in demand peaking before 2030.

Speaking at a press briefing, Dr Fatih Birol, IEA executive director, highlighted three major drivers of the slowdown:

1. – Transportation – The increasing penetration of electrical vehicles (EV)s. in China, Europe, USA and increasingly the emerging markets, currently accounting for more than one in five car sales. Dr Birol noted the increasing cost competitiveness of electrical cars in China, the driver of EV car penetration. Ongoing fuel efficiency improvements are also a factor;
2. – Electricity generation – Many of the oil producers in the Middle East and North Africa, who currently use a significant proportion of oil to generate electricity, are shifting to renewables or natural gas for electricity generation;
3. – China – Most importantly, the expected slowdown in China’s economic growth to around 4% from just over 6% a year, given the country has accounted for around 60% of demand growth in the last 10 years.

While strong demand growth is expected from fast-growing economies in Asia, as well as from the aviation and booming petrochemicals sectors, this will not be enough to offset the above factors.

Surge in production capacity

At the same time, a surge in non-OPEC global oil production capacity, led by the USA and other producers in the Americas, such as Argentina, Brazil, Canada and Guyana, is expected to outstrip demand growth between now and 2030, with non-OPEC producers expected to account for three quarters of the expected increase to 2030, or 4.6mn bpd. Saudi Arabia, the United Arab Emirates (UAE) and Iraq are expected to lead a 1.4 mn bpd rise in OPEC+ oil capacity.

Total supply capacity is forecast to rise by 6mn bpd to nearly 114mn bpd by 2030 – a staggering 8mn bpd above projected global demand, the report finds. There is also the prospect of OPEC+ rewinding production cuts from later this year. This would result in unprecedented levels of spare capacity over the forecast period, with major implications for oil markets – including for producer economies in OPEC and beyond, as well as for the US shale industry.

“Some producers are already making adjustments, with Saudi Arabia putting on hold planned oil capacity expansion to focus on gas, which is where we see the main demand this coming decade,” commented Toril Bosoni, the head of the IEA’s Oil Industry and Markets Division. at the press briefing.

“This report’s projections, based on the latest data, show a major supply surplus emerging this decade,” said Dr Birol, noting the consequences of an oversupply would be downward pressure on prices, with implications both for producers and consumers. “Oil companies may want to look at these supply and demand trends and make sure their business strategies and plans are in line with market realities,” he added.

According to the report, global refining capacity is on track to expand by 3.3mn bpd between 2023 and 2030, well below historical trends. However, this should be sufficient to meet demand for refined oil products during this period, given a concurrent surge in the supply of non-refined fuels such as biofuels and natural gas liquids (NGLs). This raises the prospect of refinery closures towards the end of the outlook period, as well as a slowdown in capacity growth in Asia after 2027.

The new engine power plant can run on natural gas and 25 vol% hydrogen blends. (Image source: Wartsila)

Addressing the just transition ideology of Africa, technology group Wärtsilä has introduced a purely hydrogen-ready engine power plant

Guided by the IEA World Energy Outlook 2023 that predicts hydrogen consumption to reach 51 mt by 2050, Wärtsilä's launch establishes the importance of an energy mix. Sustainable fuels like hydrogen and natural gas are significant to balance the fluctuating renewable energy sources. 

Wartsila has been working towards ensuring energy mix since the last few years, when it announced the conversion of the heavy fuel-operated Bel-Air power plant in Dakar to LNG

The new engine power plant can run on natural gas and 25 vol% hydrogen blends.

Addressing energy security

Anders Lindberg, president, Wärtsilä Energy, said, “We will not meet global climate goals or fully decarbonise our power systems without flexible, zero-carbon power generation, which can quickly ramp up and down to support intermittent wind and solar.

“We must be realistic that natural gas will play a part in our power systems for years to come. Our fuel flexible engines can use natural gas today to provide flexibility and balancing, enabling renewable power to thrive. They can then be converted to run on hydrogen when it becomes readily available: future-proofing the journey to net zero.

“This is a major milestone for us as a company, and the energy transition more generally, as our hydrogen-ready engines will enable the 100% renewable power systems of tomorrow.”

The Wärtsilä 31 engine platform that is the driving force behind the hydrogen-ready power plant is designed for instant operation, synchronising with the grid within 30 seconds from start command.

Having completed more than 1 million running hours, with over 1,000 MW installed capacity globally, the platform offers unparalleled load following capabilities and high part load efficiency. Its fuel flexibility is hence capable of meeting present challenges of energy security. 

With hydrogen catching up at a rapid pace in Africa, the Wärtsilä 31 engine is all set to hit the markets next year, followed by delivery services from 2026. 

Block 1 is considered one of the largest blocks in the entire Orange Basin. (Image source: Eco Atlantic)

Oil and gas exploration company, Eco (Atlantic) Oil & Gas Ltd's subsidiary Azinam South Africa Limited will farm-in into Block 1 offshore South Africa Orange Basin 

With a 75% acquisition of the block from Tosaco Energy, Eco will become operator of a new Exploration Right. 

The remaining 25% will be transfered by Tosaco to a newly formed South African entity with a broad-based black economic empowerment (B-BBEE) rating, OrangeBasin Oil and Gas (Proprietary) Limited.

From Mopane to Venus wells, Block 1 is surrounded by rich discoveries. In March, Sintana Energy reported the third consecutive discovery of light oil in the Mopane complex

A triangular-shaped block in the Orange Basin, Block 1 runs along Namibia and South Africa by an area of 19,929 sq km. The eastern side of the block is approximately 174 km off the South African shoreline, reaching out some 263 km west into deepwater in the Orange Basin. 

Over the next three years, Eco, along with its in-house exploration team, will complete the interpretation and analysis of the already acquired 2D and 3D seismic data from the block. 

Strategic play

On the other hand, following the AJ-1 oil discovery post Gazania-1 drilling in 2022, the company has submitted all the documentation and environmental audits to the Petroleum Agency of South Africa to give up 50% of working interest offshore Block 2B in South Africa. Early this year, Eco transferred some of its interests in Block 3B/4B to Africa Oil Corp as well.

Colin Kinley, co-founder and chief operating officer of Eco Atlantic, said, "The Orange Basin continues to prove to be one of the newest and most prolific plays in the world and is running similar statistics to our Guyana play. Following completion of this farm-in, Eco will have one of the largest blocks in the entire Orange Basin. This is a strategic play for Eco that we have worked on over the past year, focusing on both oil and gas potential, and where we believe there are significant near-shore prospective gas resources. There are inboard gas discoveries on the block, Kudu to the North, and multiple discoveries in the Ibhubesi field to the South. With the reach of the block some 250km out into the Atlantic, this puts the West end of the Block into highly prospective opportunities for oil being just South and on trend with Shell's Graff discovery and Galp's Mopane discoveries, and North of our 3B/4B Block oil targets recently farmed out to TotalEnergies and QatarEnergy."

Preliminary evaluation indicated rise in Hibiscus gross recoverable reserves. (Image source: Adobe Stock)

BW Energy announced a substantial oil discovery on the northern flank of the Hibiscus field, post conclusion of the drilling and logging of the DHIBM-7P pilot well

The oil is with good reservoir quality and a material uplift to the Hibiscus area. 

Preliminary evaluation indicated rise in Hibiscus gross recoverable reserves (mid-case) of approximately 8-12 mn bopd. Gross production from the Dussafu licence is approximately 23,200 barrels of oil per day, amounting to a total gross production of approximately 2.14 mn barrels of oil

The well will be completed as a development well later in 2024.

First Gamba-Dentale accumulation in Hibiscus 

The DHIBM-7P development adds to BW Energy's previous find in DHBSM-2P pilot well which too revealed good prospects

The DHIBM-7P pilot was drilled from the MaBoMo production platform to a total depth of 3,941 metres.

Drilled by the Borr Norve jack-up rig the target area is located approximately 1.5 kms north-northwest of the MaBoMo. 

Notably, the hydrocarbon column extends across the boundary between the Gamba and the underlying Dentale formation.

This is the first example of a common Gamba-Dentale hydrocarbon accumulation in Hibiscus Field.

The current operation in Dussafu is to complete the development well (DHBSM-2H) in the northern flank of the Hibiscus South field that was recently successfully appraised.

The acquisition increases Afentra's interest in Block 3/05 to 30%, and that in Block 3/05A to 21.33%. (Image source: Adobe Stock)

Afentra has completed the Azule acquisition offshore Angola with a 12% non-operating interest in Block 3/05, and 16% non-operating interest in Block 3/05A

This increases Afentra's interest in Block 3/05 to 30%, and that in Block 3/05A to 21.33%.

Well on schedule post government approval, this is a major development for the company since the sale and purchase agreement between Azule Energy Angola Production B.V. and Afentra (Angola) Ltd was announced last year on 19 July.

The acquisition makes Afentra the owner of a total 480,000 bbls of crude oil stock. 

Combined gross production for the first four months of 2024 has averaged 23,000bopd (Net: ~6,800, bopd).

With 45 interventions planned over two campaigns, Afentra will continue its light well intervention programme that began during 2023, continues into 2024. 

The next sale of crude oil cargo (~450,000 bbls) is planned in June.

Focus on production optimisation

Afentra CEO Paul McDade, who has always appreciated the investment environment of Angola, said, “The completion of the Azule Acquisition is the final step in the complex process of acquiring a material equity position in both Block 3/05 (30%) and Block 3/05A (21.33%) through three separate transactions. We have now achieved our first goal of having significant exposure to these world-class production and near-term development assets. The next step, working closely with our Joint Venture partners, is to deliver the full potential of these assets for the benefit of all of our stakeholders while also reducing the carbon footprint of the assets. As with the previous two transactions the acquisition structure ensures that Afentra benefits from the net cash flow from the assets while working through the completion process, significantly reducing the cash payment at completion. I would like to thank Azule, ANPG and all the other parties involved for their pragmatism and support through this complex process. The Block 3/05 asset continues to perform strongly following the successful implementation of an ongoing work programme designed to optimise production from the existing wells. The completion of this transaction presents a strong growth platform for Afentra to capitalise on further compelling opportunities in Angola as well as in target markets in West Africa as we seek to build Afentra into a leading African focused independent.”

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