Canada’s Africa Oil Corporation will double its Nigerian output and the size of its reserves there once it completes its deal for full ownership of Prime Oil next Tuesday, a senior company executive said. Africa Oil will increase to full ownership its shareholding in Dutch entity Prime Oil & Gas Coöperatief, whose main assets include indirect stakes in deep-water producing Nigerian fields operated by TotalEnergies “On closing of that deal we will significantly change the scale of our business, we will double production, we double reserves and significantly boost our liquidity position,” Oliver Quinn, chief commercial officer at Africa Oil told Reuters.
Meanwhile crude oil prices eased slightly in choppy trade on Thursday with Brent still below $70 under pressure from trade tariffs between the U.S., Canada, Mexico and China, and OPEC+ plans to raise output. Those factors and a larger than expected build in U.S. crude inventories had sent Brent as low as $68.33 on Wednesday, its weakest since December 2021. Brent futures were down 29 cents, or 0.4%, at $69.03 a barrel on Thursday while U.S. West Texas Intermediate crude futures eased 37 cents, or 0.6%, to $65.90. “The OPEC news of adding barrels next month, along with a Russian/Ukraine peace deal now looking more promising and a flip/flop of tariffs is keeping crude in a volatile trade,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Prices had fallen after the U.S. enacted tariff on Canadian and Mexican goods, including energy imports, at the same time major producers decided to raise output quotas for the first time since 2022. Oil recovered and stabilised somewhat after the U.S. said it will make automakers exempt from the 25% tariffs. A source familiar with the discussions said that U.S. President Donald Trump could eliminate the 10% tariff on Canadian energy imports, such as crude oil and gasoline, that comply with existing trade agreements. Downside risks on demand will likely be greater than supply side risks at this point with the additional oil coming from OPEC, said Scott Shelton, energy analyst at TP ICAP. “Spare capacity can offset supply losses, but there is no way to fix demand, which should flounder under the weight of sanctions and underperform,” Shelton added.
The OPEC+ producer group, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, decided on Monday to increase output for the first time since 2022.
One OPEC+ delegate, commenting on the market’s reaction to Monday’s decision, said the price drop looked overdone and hoped that the market was now on a “gradual recovery”. The retreat in prices after Monday’s news was then exacerbated on Wednesday by a rise in U.S. crude inventories, said ANZ’s Hynes. Crude stockpiles in the U.S., the world’s biggest oil consumer, rose more than expected last week, buoyed by seasonal refinery maintenance, while gasoline and distillate inventories fell because of a hike in exports, the Energy Information Administration said on Wednesday. Tariffs also remain in effect on U.S. imports of Mexican crude, a smaller supply stream than Canadian crude but an important one for U.S. refineries on the Gulf Coast. Meanwhile, Chinese officials have flagged that more stimulus is possible if economic growth slows, seeking to support consumption and cushion the impact of an escalating trade war with the U.S.
Once the deal is complete, Africa Oil expects to produce around 35,000 barrels per day, he said. “They are very significant value barrels because they have very low lifting cost of under $10, so the margin on the barrels is high and typically sell at premium to Brent,” said Quinn. With its partners, Africa Oil said an infill drilling campaign was planned this year to maintain output in mid-life fields. Besides Equatorial Guinea and Nigeria, the company is also present in Namibia’s prolific Orange Basin via a 40% stake in Impact Oil and Gas with exposure to the Venus discovery.
Operator TotalEnergies expects to take a final investment decision in 2026 and propel Namibia to becoming an oil exporter at the turn of the decade. “Our focus is to add to the cash generation machine, which runs through the decade while on the backend Namibia Venus comes on stream and then we have significant growth in that asset,” Quinn said.
