African Energy Chamber urges OPEC to reach a deal on ending oil price war

…organization meets in Vienna on Thursday

Ben Eguzozie, with agency report

As member-countries of the petroleum producers’ group, OPEC and OPEC+ meet this Thursday April 9 in Vienna, Austria, to try to reach a deal on ending the current oil price war, the African Energy Chamber (AEC) has urged the body to reach a deal that will end the impasse.

Since OPEC failed to reach a deal on maintaining production cuts last month, major oil producers have been ramping up production to maintain and increase their market share. Increased supply came on top of a demand shock due to the COVID-19 pandemic, and sent oil prices to a historic 18-year low averaging $20.

Ahead of the Vienna meeting, the African Energy Chamber is urging OPEC and OPEC+ to work together and find a deal to restore market stability. The situation in Africa’s oil economies is dire and the continent needs a deal to ensure the continuity and survival of its industry, AEC notes.

Virtually all of Africa’s oil producing countries, including older producers, Nigeria and Angola, are so commodity-reliant that they are now most-hit by the current global demand shock.

Following the crash in oil prices, key projects awaiting final investment decision (FID) such as ExxonMobil’s Rovuma LNG in Mozambique have been delayed. The same is true of Nigeria’s $18 billion Brass LNG Ltd JV being undertaken by the Nigerian National Petroleum Corporation (NNPC), ChevronTexaco Corporation, ConocoPhillips subsidiary Phillips Oil Co. (Nigeria) Ltd., and Italy’s ENI SPA. The project is to construct a new LNG liquefaction plant in Brass, Bayelsa State, Nigeria’s central Niger Delta.

Other projects already on the move, such as Senegal’s Greater Tortue Ahmeyim, are seeing an extension of their timeline to provide for capex cuts.

More importantly, several drilling contracts have been terminated or cancelled, or simply won’t be happening. This is the case across the continent, especially for much-awaiting drilling operations like in The Gambia or Angola. On top of that, thousands of jobs could be lost in the African energy sector if the situation was to linger.

“The twin crisis of the COVID-19 country lockdowns and oil prices war has had a devastating effect for Africa and its producing countries and companies,” declared Nj Ayuk, executive chairman at the African Energy Chamber based in Johannesburg, South Africa.

Ayuk said: “this current prices’ war will have no winner. We urge OPEC and OPEC+ members, especially African producers, to support all efforts to reach a deal and bring the stability we need to see the end of the tunnel.”

While the Chamber truly believes that market forces have to work and shape the future of the industry, the situation has become too dire in Africa for the sector and governments to stay idle.

“Following our conversation with US producers, we believe there needs to be a bigger dialogue with shale producers in North America and OPEC members. This is the collaboration that the market needs to be stabilized and prevent future volatility,” Nj Ayuk concluded.