Shell (SHEL) Resumes Supply, Boosts Nigeria Crude Production
British oil and gas giant, Shell plc SHEL, confirmed that it has resumed the supply of crude oil to the state-owned refinery at Port Hartcourt, Nigeria. Shell has delivered 475,000 barrels of crude oil from its Bonny export terminal in southern Nigeria to the refinery.
The Port Hartcourt refinery is expected to resume operations in the first quarter of 2024, after undergoing renovation. The refinery is expected to process 60,000 barrels of oil per day (bpd) initially. The production will be increased later this year to the plant’s full capacity of 210,000 bpd. Shell stated that future supplies from their Bonny terminal would follow depending on the product’s demand.
The aforementioned refinery is one of the four refineries in the African nation that have been shut down for years. The government is looking to restart these production facilities to reduce the dependence on fuel imports. Nigeria is OPEC’s topmost crude oil producer in Africa.Yet, due to insufficient capacity at its refineries, the country had to turn to fuel imports. Despite having abundant crude oil deposits, most of the exploration and production activities in the country are carried out by Western companies.
Nigeria’s domestic fuel industry received a push from the private sector when the Dangote Refinery, owned by Africa’s richest man Aliko Dangote, finally started after years of delay. With a capacity of 650,000 bpd, the refinery is anticipated to meet 100% demand for all refined petroleum products in Nigeria. The total cost of the project was approximately $20 billion, up from the initially estimated range of $12-$14 billion.
Zacks Rank and Key Picks
Currently, SHEL holds a Zacks Rank #3 (Hold).
Investors might want to look at some better-ranked stocks in the energy sector, such as Oceaneering International OII, Energy Transfer LP ET and Harbour Energy HBRIY. While both Oceaneering International and Energy Transfer currently sport a Zacks Rank #1 (Strong Buy), Harbour Energy holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Oceaneering International is a market-leading supplier of offshore equipment and technology solutions to the energy industry. The company has projected an increase in free cash flows for 2024. The bright outlook is supported by the growing market demand for its mobile robotic forklifts and underride vehicles.
Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. Boasting a pipeline network extending more than 125,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.
Harbour Energy is a leading independent oil and gas company, primarily involved in upstream operations. The recently announced acquisition of Wintershall Dea asset portfolio is expected to increase HBRIY's estimated production. The company has also done well in reducing its debt in the past year.
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