All articles in the Farm in, Farm Out Section:


Shell Joins The North West African Rush

By Mohammed Jetutu, North Africa Correspondent

Royal Dutch Shell has joined other majors in the rush for hydrocarbon opportunities in the Northwest African segment of the Transform Margin.

The company signed two Production Sharing Contracts with the government of Mauritania, the only country so far in that geologic province, where crude oil has been produced.

The contracts are for the exploration and potential future production of hydrocarbons in the offshore blocks C-10 and C-19.
The two tracts are located offshore, in water depths ranging from 20 to 2,000 metres. The total area of two blocks is approximately 23,675 square kilometres. The new block C-10 consists of three previous blocks – C-10, C-28 and C-29.
BP, ExxonMobil TOTAL and ENI have taken positions in this part of the continent, mostly in Senegal and Mauritania. Chevron has interests in Morocco, which is in the northernmost flank of the margin.

Crude oil was discovered in Mauritania’s Chinguetti field in 2001 and brought on stream by Woodside in 2006. The rapidly depleted output forced out the Australian independent from the asset, barely a year after first oil.
But the point had been made; Mauritania was an oil producer,Senegal is the next country in the region to be an oil producer, that is if the development plan devised by Cairn Energy and Woodside comes to fruition, delivering 100,000BOPD, at peak from the SNE field, with 2023 as tentative date for first oil.

There has, however been only gas discoveries in the province, since the SNE field was discovered in 2014.
Shell, itself a net gas producer, will operate the exploration programme with a 90% interest. Société Mauritanienne des Hydrocarbures et de Patrimoine Minier, the national oil company of Mauritania, holds a 10%.

Following the customary government approvals of the contracts, Shell will set up an office in Nouakchott and begin exploration activities, starting with reprocessing and analysis of existing seismic data and acquisition of new data.

Shell and the government of Mauritania have agreed in a Memorandum of Understanding to jointly evaluate further offshore exploration opportunities, examine new ways of meeting the country’s domestic energy needs, and build capability in the energy sector.


TOTAL Exits South Sudan License Talks

•The Ministry of Petroleum of South Sudan has terminated negotiations with French international oil company TOTAL
•The French oil major has been working since 2013 with Tullow Oil and KUFPEC to enter a new petroleum agreement for blocks B1 and B2.
•The company formerly held an exploration agreement for Block B, which was split into three parts in 2012.

South Sudan’s Ministry of Petroleum announces that it has formally terminated negotiations with French international oil company TOTAL for exploration and production sharing agreements (EPSA) for oil licenses B1 and B2.

Prior to the country’s independence in 2011, TOTAL held a petroleum agreement for the 120,000-square kilometer Block B, but ceased activities in the area in 1985. In 2012 the government of South Sudan split the area into three licenses: B1, B2 and B3. Alongside Tullow Oil and the Kuwait Foreign Petroleum Exploration Company (KUFPEC), TOTAL has been negotiating with the Ministry of Petroleum for a new EPSA since February 2013. In 2017, the Ministry of Petroleum awarded the EPSA for Block B3 to Oranto Petroleum, as talks continued with TOTAL and partners on blocks B1 and B2.

Under Section 100 of the Petroleum Act of 2012, the Ministry of Petroleum is permitted to enter new petroleum contracts, at its discretion, with contractors that had concluded an EPSA with Sudan before secession. However, after more than five years of difficult negotiations, the parties have now reached a complete impasse. The Ministry of Petroleum of South Sudan has stated its willingness to proceed with the signing of a draft EPSA, but “TOTAL has insisted on an extremely long exploration period and on economic terms that are not viable for the government”, the Ministry says in a release.

“The Ministry of Petroleum regrets that negotiations with TOTAL have concluded with no deal, but looks forward to bringing new investors into talks for these licenses.” said Hon. Amb. Ezekiel Lol Gatkuoth, Minister of Petroleum. “South Sudan needs to move quickly to bring investment to blocks B1 and B2, and after a long period of talks Total has been unable to agree on economic terms and a timeline that work for the country. Without this cornerstone in place, the Ministry of Petroleum cannot continue to negotiate an EPSA with Total. We are keen to discuss the exploration of Blocks B1 and B2 with new parties.”

The Minister of Petroleum will speak at the Africa Oil & Power conference in Cape Town on September 5-7 and anticipates strong interest from international companies in the licenses. Following this event, the minister invites potential investors to attend the South Sudan Oil & Power 2018 conference in Juba on November 21-22, to learn about the Ministry of Petroleum’s development plans for its exploration and production acreage.

Contact: Mr. Steven Puoch Riek Deng, Executive Director, Office of the Minister, Ministry of Petroleum | guancajen@gmail.com | +211 950 800 039 / +211 922 555 344


Ghana Will Auction Three Blocks in 2018

By John Mac Tontoh

Ghana has mapped out nine (9) oil blocks in its offshore western Basin, of which six (6) will be allocated in the next 12-18 months.

The country will, for the first time, allocate blocks through open public competitive tender. That historic licencing sale will involve only three blocks.

The government wants to allocate another two blocks through direct negotiations and reserve one (1) for the state hydrocarbon company Ghana National Petroleum Corporation (GNPC), to explore in partnership with its chosen strategic partner with the view to developing its technical capacity and becoming an Operator.

In order to progress the proposed lease sale, Boakye Agyarko, the Energy Minister, inaugurated a Licensing Rounds Bids Evaluation and Negotiation Committee last May.

Ghana is proposing the  bid round for the last quarter of 2018.

The country had, hitherto, allocated oil blocks only through direct negotiations.

The 2016 Petroleum Exploration and Production Act, however, encourages a regular transparent, open auction of hydrocarbon acreages.

“Preparations for allocating more oil blocks in accordance with the Petroleum Exploration and Production Act (Act 919) has been put in motion”, Boakye Agyarko, the Minister of Energy, said at the launch of the Committee

“The remaining three (3) that will not be allocated this year, will form the basis of our second bidding round next year later. We are determined to identity further prospects in the Eastern, Central and the onshore Voltain Basins, to increase the number of blocks available for allocation”, the Minister highlighted.

“This will put to test all the allocation mechanisms prescribed by the Petroleum Exploration and Production Act (Act 919) in order to examine the efficacy of these mechanisms and to address any challenges that may emerge in the application of the law”.

 

Fuller details of Ghana’s Asset Sale going forward can be accessed here.

 

 


After so much Struggle, Petrofac Leaves Tunisia

Petrofac has agreed the sale of its entire 45% interest in the Chergui asset in Tunisia to Perenco.

Although the British company, which combines the roles of oilfield service contractor with E&P operatorship, claims the sale was part of the “strategy to transition back to a capital light business model by divesting non-core assets”, anyone who has followed events in the North African country knows that Petrofac has struggled and fought off above ground challenges on Chergui.

Petrofac had threatened in September 2016 to shut down operations entirely and leave Tunisia, but the government reached a deal with protesters demanding jobs and development.

Tunisian Energy Minister Hela Cheikh Rouhou, at the time, said the production stoppage had been expected because protesters “had not respected the deal signed weeks before”.

Ms. Rouhou told Mosaique FM radio, a private broadcast platform in Tunis: “Unfortunately, trucks have been blocked several times to force Petrofac to close the field.”

Petrofac had looked to sell the asset for the past one year. But in its release, it deliberately understated the problem.
Petrofac said Thursday, June 28m 2018, that the “sale marks another milestone in the Group’s and follows the recent disposal of the JSD6000 offshore pipelaying vessel project”.

All Chergui employees will transfer to Perenco, an aggressive French company, as part of the transaction, which is expected to conclude before the end of 2018. Petrofac is expected to book a small gain on the transaction.

Chief Financial Officer Alastair Cochran said: “This transaction demonstrates we are delivering on our clear strategy of focusing on our core and reducing capital intensity.”

The operations supply around 13% of Tunisia’s domestic gas needs. 55% of the share at Chergui is held by ETAP, the state hydrocarbon company.


Oranto Petroleum Farms into Zambian Oil Blocks

Oranto Petroleum will hold a 90% stake and ZCCM Investment Holdings will control a 10% share, on behalf of the Zambian Government
Oranto Petroleum, the Nigerian founded minnow with Pan African ambitions, is farming into two exploration blocks located onshore Zambia. Blocks 17 and 27 represent Oranto’s first investment in the country.

“Oranto Petroleum is committed to an aggressive work programme to increase the level of prospectivity in one of the world’s last true frontier markets,” said Prince Arthur Eze, Chairman of Oranto Petroleum. “Our specialty at Oranto Petroleum is discovering the vast potential of Africa’s frontier oil and gas markets, and we are very pleased to add Zambia to our extensive portfolio. We are committed to developing Zambia into an oil and gas producing nation, as we have many times with other countries on the continent.”

The company’s widely distributed press release claims that Oranto Petroleum and its sister company Atlas Petroleum International, comprise the largest African independent by acreage, with active exploration and production programs across the continent, including Benin, Equatorial Guinea, Ghana, Liberia, Namibia, Nigeria, São Tomé and Príncipe, Senegal, South Sudan and Uganda.

Under the agreement, signed Thursday, June 28, 2018, Oranto Petroleum will hold a 90 percent stake and ZCCM Investment Holdings will control a 10 percent share, on behalf of the Zambian Government. The company will be required to conduct geological and geophysical studies for first two 2-year sub-periods.

Current operators in Zambia include Tullow Oil and Bowleven. Though only marginal finds have been discovered, the under-explored market shares basins with Tanzania to the northeast and Angola to the west — both of which have hosted mega oil and gas discoveries.


Sonangol Launches Mini Bid Round For Former Cobalt operated Tracts

Sonangol, the Angolan state-hydrocarbon company, has called for bids for its share in two offshore oil blocks, Blocks 21/09 and 20/11, which were formerly operated by Cobalt Energy, the American independent.

“For this purpose, there will be held data showrooms (data consultation sessions), from April 24 to June 29 this year, at the headquarters building of the national oil company, in Luanda”, the company says in a statement, “and from May 28 to June 1, in a place to be announced in Houston-Texas, United States of America, for sharing technical, legal and contractual information of the abovementioned blocks”.

Please see Sonangol’s full announcement in this link.

Cobalt’s announcement of the Cameia-1 discovery in Block 21/09 in February 2012, suggested that predictions of significant reservoirs below the salt layer in deepwater Kwanza Basin were not exaggerated. There were a string of other discoveries and Cobalt announced, by 2016, that there was as much as 750Million barrels of oil equivalent in those two licences.

But development of these discoveries have stalled largely due to challenges that Cobalt faced about the early local content partners in the licences.
An agreement for Cobalt to sell the licenses to Sonangol for $1.75 billion in 2016 fell through, and Sonangol declined to extend the licenses. Cobalt, which has filed for bankruptcy, took Sonangol to international arbitration over the dispute. In December 2017, few months after President Joao Lourenco took power, Sonangol announced it was settling with Cobalt for $500Million.

Sonangol holds a 30% stake in Block 20/11, BP holds a 30% stake and Cobalt International Energy held 40%; in Block 21/09, Sonangol holds a 40% stake and Cobalt holds 60%

What was formerly Cobalt Energy’s stakes have now become Sonangol’s, and are included in what is on offer.


Deepwater PSCs Will Take A Hit in New Nigerian Law

Companies operating Production Sharing Contracts PSCs, in Deepwater will lose significant revenue, when all the several bits of Nigeria’s Petroleum Industry Bill (PIB) are passed.

The current Nigerian legislative houses of assembly have been far more forthcoming in the last two years to pass the bill, than any government has done since the bill was first introduced in parliament in 2008.

The incumbent House of Senate broke the PIB into four pieces of legislation, for easier passage.

There is, in both the executive and the legislative arms of Nigerian government, far more increased optimism than ever, that the laws will be passed, even as national elections are less than a year from now.

Some of the most contentious parts of the legislation have been the increase in the state’s take in deepwater licences.

Stakeholders broadly expect that there will be some loss of between 20 and 30% in the overall receipts from crude oil production by companies who are operating licences that were signed in 1993, which had very lenient financing framework in favour of operators.

“Royalties that were either close to zero or zero in some cases would now have clear values. From the day the law is passed, new royalty targets take effect”.

Overall, for acreages in shallow water and onshore, Taxation and Royalties will be generally in the same band as in the extant law and will favour Nigerian independents over International Companies.

A Fuller explanation of several implications of the PIB can be found in this link


Nigeria Approves 14 of Shell’s 17 Renewal Applications

By Sully Manope, in Abuja

Nigeria’s Ministry of Petroleum has approved the recommendation by the Department of Petroleum Resources (DPR), to revoke three Oil Mining Leases (OMLs) operated by Shell Petroleum Development Company, a local arm of Shell, the Anglo Dutch major.

The 17 acreages that Shell submitted for renewal purposes were: OMLs 11, 17, 20, 21, 22, 23, 25, 27, 28 31, 32, 33, 35, 36, 43, 45 and 46. The properties were due to expire in 2019.

The acreages revoked include OMLs 31, 33 and 36.

Licences for 13 of the remaining 14 leases were renewed but the DPR proposed that OML 11 be split into three because it is too large (2,800sq km). Those renewed have a new lease of life for another 20 years.

Shell will have a new OML 11, which is one of the three tracts carved out from the old OML 11, but it can apply for only one of the remaining two, according to ranking sources at the Ministry of Petroleum Resources in Abuja.

In other words, the DPR expects Shell to re-apply for the “new” acreages carved out of OML 11, either in sum or in parts, but ministry sources say that the company is unlikely to be re-awarded all the three. Shell had not re-applied as of April 17, 2018.

The old OML 11 was actually under a Shell divestment programme when the AngloDutch giant applied for its renewal; Shell is talking with Transcorp, a Nigerian company which is scouting for $1Billion to pay for 45% of OMLs 11 &17. It is not clear how that transaction will work under the government’s “split it to three acreages” instruction.

Other interests, including a company named Robo Michael, claiming to be championing a community cause, have laid claim to those parts of the old OML 11 which lie in Ogoniland, a piece of territory where Shell had been refused access by the communities for upwards of 23 years. Bodo, Bodo West and Yorla fields, all in Ogoniland, are in the south of the old OML 11. It’s not clear where they would be, when the government concludes the split.

But a renewal of OML 11 licence, either in wholesale or in pieces, improves the investment climate around the asset.

Transcorp has struggled, without success, to raise money to purchase the 45% because of the nearness of the licence expiry date.


Nigerian Bid Round May Not Happen Until After 2019 Elections

By Fred Akanni, Editor in Chief

President Muhammadu Buhari is not predisposed to assenting to a bid round, for now, sources at the Nigerian Ministry of Petroleum have suggested.

He hasn’t said a word about the several lease sale proposals on his table.

]Nigeria’s last bid round was in 2007, which means that the Presidencies of Umar Yar’adua, and Goodluck Jonathan did not conduct any lease sale, but the Goodluck Jonathan administration executed a number of discretionary marginal bid round awards, especially two (Ubima and Otakikpo) fields in the country’s east.

To its credit, the Buhari administration hasn’t agreed to a single discretionary award.

Between 40 and 50 marginal fields-undeveloped discoveries which have lain fallow in acreages operated by Shell, TOTAL ExxonMobil, Chevron and ENI for over 13 years- are expected to be up for grabs. Aspects of the proposed regulations of the bid round indicate that interested investors will be required to pay $50,000 each for a Report which include “details of their shareholding structure, names of their directors, track record in the oil and gas sector, audited financial statements, partnership and/or collaboration with indigenous firms, and financial resources to bid and pay for the oil acreages”. After the report is approved, bidders will also pay $15,000 each as data mining fees to enable them gain access to the relevant data on the acreages that will be placed on offer”.

Mr. Muhammadu Buhari, elected on an anti-corruption platform in 2015, reportedly sees issues such as hydrocarbon lease sale, electricity tariff increase, deregulation of petroleum product prices and willing buyer-willing seller natural gas prices, as avenues where the elite take advantage of the poor, who he sees himself as representing. Some of the country’s most vocal economic analysts have described the president’s stance as inflexible. Indeed, most of the areas where the President has disallowed free market laws of economics have been in the crucial energy sector.


Why SEPLAT Wants In On Addax Sale

By Sully Manope

Seplat Petroleum is interested in acquiring Addax Petroleum’s Oil Mining Lease (OML) 124, onshore Eastern Nigeria and it is willing to move, once there is certainty that Sinopec, the parent company, is divesting the company’s assets in Nigeria and Gabon, as variously reported.

Seplat has been proactive enough to call BNP Paribas, the bank that reportedly had the mandate to dispose of the assets, to find out if it could indeed proceed to purchase.

→   Read the rest of this entry

© 2018 Festac News Press Ltd..