Saudi Aramco sets April propane price at $230 a tonne

DUBAI - Saudi Arabia’s state oil giant Aramco has set its April propane price at $230 a tonne, down from $430 a tonne in March, the company said yesterday.

Aramco has set April butane at $240 a tonne, down from $480 a tonne in March.

The prices provides a benchmark against which Middle East sales of liquefied petroleum gas (LPG) to Asia are gauged.

Meanwhile, collapsing oil prices are costing some OPEC members not only lost revenue when they most need it to tackle the coronavirus crisis, but also market share they may never recoup.

OPEC producers such as Nigeria, Angola, Algeria and Venezuela cannot compete with the lower costs of erstwhile allies Saudi Arabia and Russia, who are flooding the market.

The Republic of Congo’s Oil minister wrote to OPEC secretary-general Mohammad Barkindo last month asking for urgent talks to help to keep some members from sliding into recession.

But while desperate for OPEC+, the Organisation of the Petroleum Exporting

Countries plus Russia, to ride to the rescue, Africa’s oil producers have little leverage.

“They have no power,” one Nigerian oil industry source told Reuters. “All they can do is ask.” Although non-OPEC nations such as Britain, Norway and the United States all have relatively high-cost production, their diversified economies mean they are not dependent on oil.

As well as hitting already tight budgets, the oil price drop had led oil majors to cut billions from spending plans.

The longer-term impact for these nations’ comparatively costly fields could be far more painful.

“Companies are reviewing their whole portfolios on a daily basis,” said Roderick Bruce, principal research analyst for Africa at IHS Markit, which forecasts final investment decisions on the continent could hit historic lows this year.

“They (African countries) are in a very difficult position,” Bruce added, citing their higher production costs.

In Nigeria, for instance, production is forecast to fall by 35 percent without offshore field investments. Across Africa, Rystad estimates delayed spending could mean 200, 000 barrels per day (bpd) drop in expected output by 2025.

“The discipline that’s going to be introduced will be a shock to the system,” said Alex Vines, head of the Africa Programme at British think-tank Chatham House. “This is really different terrain, and these are very vulnerable economies,” Vines added.