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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.

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BP’s Gas Success in Egypt Makes Oil Look Uncool.

By Toyin Akinosho

Britain’s top hydrocarbon company is aiming to dump its oilfields in Egypt, as its recent string of successes in natural gas, aided by the country’s competitive local prices, makes oil properties relatively uncool.

Competitors have been invited to scrutinise BP’s data, a prelude to purchasing the major’s stake in Gulf of Suez Oil Company (GUPCO), the company’s 50+ year old joint venture with the Egyptian General Petroleum Corporation (EGPC).

Egypt is paying at least $5 for every thousand cubic feet –in new projects-to E&P companies who pump gas into its national grid, the largest domestic gas market in Africa.

While payments had been a struggle in the past, the government has recently been in haste to clear the backlog.

BP has found itself right in the centre of Egypt’s gas boom, even though its oil output is 15% of the country’s total production.

BP holds 10% of ENI operated Shorouk concession offshore Egypt, which includes the giant Zohr gas field. The company itself operates the Atoll field, of which it announced the start of gas production from the project’s Phase One last February. Both Zohr (which came on line December 2017) and Atoll collectively produce 700MMscf/d.

BP’s Net production in Nile Delta increases sixfold from 50,000BOEPD in 2016 to over 300,000BOEPD in 2020; 90% of that is natural gas.


Ghana Launches Petroleum Register

Ghana has launched a Petroleum Register in accordance with the provisions of the new Petroleum Exploration and Production Law (Act 919, passed in late 2016).

The Petroleum Register is an online platform (www.ghanapetroleumregister.com) of a Public Register that hosts Petroleum Agreements and contracts ratified by Parliament as well as Petroleum Permits, Certificates, Authorisations, Approvals and Consents.

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Nestoil Wants To Sell Down In Neconde/OML 42

Nestoil, the oil service firm owned by Nigerian businessman Ernest Azudialu, is reportedly angling to sell part of its equity in the Neconde Special Purpose Vehicle SPV.

As such, it will be farming down in its partnership in the Oil Mining Lease (OML) 42, located in the Western Niger Delta.

Nestoil holds 80% of Neconde. What is particularly curious about the story is that Nestoil was the prime mover of the creation of the Neconde SPV, which took over Shell/TOTAL/ENI’s 45% stake in the acreage in 2012. The majority 55% is held by NNPC, the state hydrocarbon company.

Creating value from the asset takeover has been an epic struggle. While Neconde paid $585Million to buy the 45%, it has found it difficult to reach and stay on an optimum output, at an optimum price, to pay back debts and fund a sorely needed expansion. First the NPDC, the ineffectual E&P subsidiary of the state hydrocarbon company NNPC was imposed to operate the asset and that meant a low production (less than 20,000BOPD) for over three years.

It was inside that time frame that the crude oil price collapsed. And just when the prices were about to climb back up, Niger Delta militants bombed the crude evacuation facility, forcing the terminal to shut in for 16 months between February 2016 to June 2017. Out of the $585Million paid for the stake, the consortium partners (Nestoil, Yinka Folawiyo and KOV) paid $435MM as equity and collectively raised $150Million as debt. What’s not clear is how much of the $435Million equity payment was raised as debt by the members of the SPV.

What are you buying?

OML 42 was producing around ……..Details here


Aminex On Course of Farming Out Ntorya Gas Field In Tanzania

Aminex Corp, the London listed junior who is a leading gas producer in Tanzania, has revealed discussions with Eclipse Investments regarding a possible farm out of part of its interest in the Ntorya Appraisal Area.

Eclipse is a wholly-owned subsidiary of the Zubair Corporation and is Aminex’ largest shareholder. The Zubair Corporation is one of Oman’s leading business groups.

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Africa Oil Grabs 25% of Impact O&G

Canadian minnow, Africa Oil Corp., has completed buying about a quarter of the equity in Impact Oil and Gas Limited, a private UK company with exploration assets in South and West Africa.

Africa Oil issued 13,946,545 common shares in its capital to Helios Natural Resources 2 Limited and invested $15 million in shares and warrants of Impact. Now Africa Oil owns an approximate 25.2% equity interest in Impact.

Africa Oil Corp. holds assets in Kenya and Ethiopia, including the South Lokichar Basin (25% working interest in Blocks 10BB and 13T), where the Company and its Joint Venture Partners are undertaking activities aimed at sanctioning development. The Company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm.

What’s Africa Oil Buying Into?

Impact Oil and Gas acquired its first asset, the Tugela South Exploration Right, offshore South Africa in 2011 and has subsequently expanded its asset base across the offshore margins of South and West Africa. It has since partnered with ExxonMobil and Statoil (South Africa), CNOOC (AGC – between Senegal and Guinea Bissau) and TOTAL (Namibia and South Africa). It is currently seeking a partner in its Gabonese assets. The company’s current portfolio covers a combined area of over 90,000 km² (gross).

Pillar Four Securities LLP acted as financial advisor and Pareto Securities acted as strategic advisor to Africa Oil in connection with the transactions described herein.

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