LONDON: The first vessel that will pump and store oil for Angola’s 230,000 barrels per day (bpd) Kaombo project is en route to the West African nation, operator Total said.
The Kaombo oil block will produce its first oil this summer, Total said on Thursday. Once it is fully up and running, it will add roughly 14 percent to the OPEC member’s average 2017 output of 1.632 million bpd.
The Kaombo Norte floating production, storage and offloading (FPSO) vessel left Singapore earlier this week, Total said. It can pump 115,000 bpd, half the oil block’s eventual production.
The $16 billion offshore project will add a significant amount of oil to Africa’s number two exporter at a time when it is bound by output limits under a deal orchestrated by the Organization of the Petroleum Exporting Countries.
A source close to the project said the block was expected to pump roughly 100,000 bpd by August.
Another FPSO, Kaombo Sul, is still in Singapore.
OPEC is reducing output by roughly 1.2 million bpd as part of a deal with Russia and other producers that began in January 2017 and was extended until the end of 2018.
So far, Angola has complied comfortably, pumping even less than the maximum agreed. Last month, its output of 1.6 million bpd amounted to 194 percent of compliance with promised cuts of 78,000 bpd.
Declining production at mature fields has cut into Angola’s output, but the Kaombo addition could complicate efforts to maintain compliance.
Angola’s state oil company Sonangol has said production will be roughly steady this year, and the above-target cuts earlier in the year could keep its average compliance for the year within OPEC’s limits.
Longer term, Angola is expected to struggle just to maintain output, with the International Energy Agency (IEA) warning that only Venezuela will see a bigger drop in production over the next five years.
Angola’s oil production peaked at 1.9 million bpd in 2008, the IEA said, warning in its five-year outlook that capacity will drop by some 370,000 bpd by 2023 even with the new projects.
“Angola is expected to post the biggest slide in capacity after Venezuela as aging oil fields lose steam and foreign investors, faced with relatively uncompetitive prospects, lose enthusiasm,” the IEA said.
Angola to launch big oil block under shadow of OPEC cuts
Angola to launch big oil block under shadow of OPEC cuts
Global oil, gas shipping costs surge as Iran vows to close Strait of Hormuz
- Mideast-China VLCC rate exceeds $400,000/day
- Atlantic, Pacific LNG freight rates jump more than 40 percent
- South Korea maritime ministry tells shippers to refrain from operating in the Mideast
SINGAPORE: Global oil and gas shipping rates soared, with supertanker costs in the Middle East hitting all-time highs, as the US-Iran conflict intensified after Tehran targeted ships passing through the Strait of Hormuz, according to shipping data and industry sources on Tuesday.
Shipping through the Strait of Hormuz between Iran and Oman, which carries around one-fifth of oil consumed globally as well as large quantities of liquefied natural gas, has ground to a near halt after vessels in the area were hit as Iran retaliated to US and Israeli strikes.
The disruption and fears of prolonged closure have caused oil and European natural gas prices to jump, with Brent crude futures up nearly 10 percent this week as the conflict triggered multiple oil and gas shutdowns in the Middle East.
The benchmark freight rate for the very large crude carriers used to ship 2 million barrels of oil from the Middle East to China, also known as TD3, rose to an all-time high of W419 on the Worldscale industry measure used to calculate freight rates, on Monday, or $423,736 per day, LSEG data showed.
The rate doubled from Friday, extending gains from a six-year high last week, after the US and Israel attacked Iran and killed its Supreme Leader Ayatollah Khamenei on Saturday.
In retaliation, Iran has struck Gulf countries, prompting precautionary shutdowns at oil and gas facilities across the Middle East.
An Iranian Revolutionary Guards senior official said on Monday that the Strait of Hormuz is closed and Iran will fire on any ship trying to pass, Iranian media reported. The US military’s Central Command said the Strait is not closed despite the Iranian statements, Fox News reported.
LNG shipping rates jump
Still, daily freight rates for LNG tankers jumped more than 40 percent on Monday after Qatar halted its production.
Atlantic rates rose to $61,500 per day on Monday, up 43 percent, or $18,750, from Friday, according to Spark Commodities, a pricing assessment agency for LNG shipping.
Pacific rates rose to $41,000 per day, up 45 percent, or $12,750, from Friday.
Fraser Carson, principal analyst for global LNG at energy consultancy Wood Mackenzie, said spot daily LNG shipping rates could rise above $100,000 this week on tight supply.
“Vessel availability for the rest of March is considered weak as cargo operators try to work through the backlog created by weather disruptions during February,” he said.
“There will be very strong competition for any available vessels,” he added.
Until safe passage through the Strait of Hormuz can be assured, shipping will remain idle, Carson said.
An oil shipbroker who declined to be named due to company policy said it is very difficult to assess shipping rates in the Gulf as several shipowners have suspended operations indefinitely.
South Korean shipping firm Hyundai Glovis said on Tuesday it is preparing contingency plans including securing alternative routes and ports in response to the Middle East conflict.
South Korea’s maritime ministry has issued a notice to South Korean shippers with vessels sailing in the Middle East, asking them to refrain from business operations in the region, an official told Reuters on Tuesday.
The ministry is holding a meeting to discuss further safety measures following Iran’s threat to attack any ship passing through the Strait of Hormuz, the official added.
