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Sasol Seeks To Acquire More Upstream Assets in West Africa

Sasol is looking to acquire more upstream acreage in West Africa.

The company’s only operated upstream acreages outside South Africa are in Mozambique. It has equity in upstream acreage in Gabon and is involved in a midstream project in Nigeria.

Sasol says it has strong basin knowledge in West Africa and it is building on existing relationships, assets and capabilities on the continent. In the last few years, it has strengthened its skilled team for the purpose for acquisitions.

It is one of the 16 companies looking to get an acreage through Ghana’s ongoing bidding round.

The company says it has a structured West Africa basin screening process. It has identified acquisition targets and has assessed both sub-surface and above ground risks. Sasol is investigating low-cost entry into targeted infrastructure-led exploration opportunities.

Its model for value delivery is to acquire new production assets with exploration running room; invest in the early part of exploration life cycle and farm down for value and realise asset option value through active management.

This piece was originally published in the January 2019 edition of Africa Oil+Gas Report, released on January 21, 2019.

Rumours That Buhari Refuses To Renew Some Licences Are Exaggerated

The president isn’t a terrific economic manager, we agree, but this thing about licences is untrue..

The Africa Oil+Gas Report has been inundated with requests by its subscribers to confirm or repudiate stories flying around about the Nigerian President, Muhammadu  Buhari, using licence renewal as a tool either to deal with critics and the opposition or to pacify the States.

Our checks with sources in both the regulatory and executive arms of the Ministry of Petroleum Resources indicate that the President is not keen about anything about license allocations.

People in the ‘Villa’ and ministry officials may play games using the Presidency, but the man himself is not necessarily aware and the only acreage sanction he has personally appended to, has been the transfer of OPLs which used to make up OML 13, onshore eastern Nigeria, from private companies that won the three acreages in the 2007 bid round, back to NNPC, which claimed they were wrongly taken from it.

Africa Oil+Gas Report has published, in the last six editions of the last six months, stories which explicitly stated what expiring acreage licence was renewed or revoked.  Just to indicate that these rumours are all hot air: Elcrest Petroleum, which is on the list, has had its acreage (Oil Mining Lease (OML) 40), renewed for 20 years. Seplat’s OMLs 4, 38 and 41 are on the list of acreages that will purportedy not be renewed. But these licences are already renewed for the next 20 years.

Let’s take other examples on the list. The Government had, before June 2018, revoked the licence awarded to Alfred James for Oil Prospecting Lease (OPL) 302 as well as that for Sunlink for OPL 238.

It was clearly stated to Africa Oil+Gas Report, at that time, (and we have reported it) that Sunlink never paid signature bonus for OPL 238 since it was awarded in the early 1990s.

As for the Optimum Petroleum held OPL 310, a case concerning Ministerial consent for a company which bought 40% of the equity in the acreage has been in court since May 2018.

Buhari has not been a terrific manager of the economy, we agree, but this thing about licences is untrue.




German Indie Back to Exploration in  Egypt

The Egyptian Natural Gas Holding Company (EGAS) has finalised the award of a new licence it made to DEA in its 2018 Bid Round The East Damanhour exploration block (originally offered as Block 10) covers 1,418 square kilometres and is located west of the Disouq development leases, where DEA is the operator with a licence share of 100%.

Sameh Sabry, DEA’s General Manager in Egypt, says the block is located in DEA’s core region in the Onshore Nile Delta, “where we successfully explore the Messinian and Pliocene plays as operator since 2004”. The extensive knowledge and experience the company has gained over the years, the right set of skilled experts “and our nearby infrastructure will offer us very good conditions to continue this exploration efficiently”, Sabry adds.

“The proximity of DEA’s Disouq central processing plant and infrastructure provides us with an operational edge, which would enable accelerated development of any discovered volumes as well as considerable synergies and cost optimizations. In addition, the block offers significant potential in pre-Messinian structures, which is in line with our ambition to further grow in Egypt”, underlines Sameh Sabry.

Tullow in a Drawn out Farm Down in Uganda

Prospect Mojido, in Nairobi

Tullow and its partners in Uganda, TOTAL and CNOOC Ltd, are still working with the Government of Uganda to finalise the farm-down which the British operator initiated in late 2016.

It has thus been over two years since Tullow has been trying to divest ~22% of the total equity of the three acreages currently under development in the country.

TOTAL first announced the divestment in the first week of January 2017, in a release in which the French major declared it was prepared “to pay  $900Million for 21.57%” of Uganda’s Albert basin development project. This was to leave Tullow with 11.73%.

Two months later, the Chinese behemoth, CNOOC stepped in to claim its right of first refusal.

In the event, the Chinese and the French agreed to share the 21.57% that Tullow was divesting.

The sticky point has been the Ugandan government.

With Kampala, nothing gets done in a hurry.

“It is now expected to complete in the first half of 2019,” Tullow says in its latest operational update.

Don’t bet on it.

The last time Tullow divested some of its shares (66% then) in Uganda’s acreages, it ended up in a significant court case, over withholding tax to the Government.

“It’s best to be patient with Uganda, to be sure you’re doing what the government wants”, says John Imohimin, an Africa upstream analyst based in Cairo. “You can’t be too slow”.


Ophir Waits on Malabo For Fortuna Block Extension

Ophir Energy is hoping that the Equatorial Guinea authorities would grant its request to extend the Block R licence, despite the government’s earlier pronouncement that it could replace the company with other investors.

Block R, offshore Rio Muni Basin, hosts the Fortuna Field, which Ophir has hoped to monetise by installing a Floating LNG.

The company “announces that it is still awaiting a response from the Equatorial Guinea Ministry of Mines and Hydrocarbons (‘MMH’) with regards to its request for an extension of the Block R licence”, the London listed explorer says in a statement.

For more than three years, Ophir has struggled, fruitlessly, to raise the money for installing the Floater, despite announcing that most of the 2.2Million Tons Per Annum of LNG had found an offtaker.

After the mighty Schlumberger pulled out of the OneLNG joint venture with Golar LNG Partners for the project, Gabriel Lima Obiang, the Equatoguinean Minister of Mines and Hydrocarbons (MMH), noted that the government could bring in some other investors to the project to replace Ophir. He referenced the expiration of the Block licence at the end of 2018.

Ophir’s most recent statement, released December 31, 2018, however says: “We continue to engage with the MMH as well as potential investors in the Fortuna Development.  We expect to receive further communication from the MMH in January concerning either the lapse of the licence or the terms of any extension and will update shareholders as soon as the situation is clarified.

“The Board remains focused on implementing the strategy outlined in its announcement on 13 September and is proactively evaluating the options available to the Company to maximise value for shareholders for the rest of the portfolio”.


16 Companies, Including BP, Exxon and TOTAL, Apply For Five Ghanaian Acreages

Sixteen (16) companies, including five majors, submitted a total of sixty applications for the five acreages on offer in Ghana’s First Licencing Round.

The Ministry of Energy (MoE) describes these companies as “high calibre companies with proven track records”, and sees their interest as “a vote of confidence in the Ghanaian economy”.

The applications, opened publicly Friday, December 21, are for prequalification for Expression of Interest (Eol) for competitive bidding for three Blocks (GH_WB_02, GH_WB_03 and GH_WB_04) in the Western Basin and direct negotiations in respect of two Blocks (GH_WB_0S and GH_WB_06), all offshore the Republic of Ghana.

Two of the applications were invalidated as they were for Block GH_WB_01 which has been reserved for the Ghana National Petroleum Corporation (GNPC).

“In line with this, fifty eight (58) valid applications will be considered for the next stage of the process”, the Ministry says.

The applicants include ENI, Cairn, Harmony Oil and Gas Corporation, ExxonMobiL, CNOOC, Qatar Petroleum, BP, VITOL, Global Petroleum Group, Aker Energy, FIRST E&P, Kosmos, Sasol and Equinor.

“Government is determined to use a transparent process as specified by law to shortlist companies that have the capacity and will qualify based on prescribed criteria” said Mohammed Amin Adam, the country’s Deputy Minister of Energy.

“We will collaborate and partner with them to explore and exploit the resource for our mutual benefit and most importantly the benefit of the Ghanaian people” said Lawrence Apaalse, Chairman of the Licensing Round Committee.



Africa Energy Completes Farm in to South African Block

Africa Energy Corp. has received governmental approval and closed the previously announced transactions to acquire an effective 4.9% interest in the Exploration Right for Block 11B/12B offshore South Africa.

The company will thus partner with French major TOTAL, Qatar Petroleum and Canadian Natural Resources to, among other things, spud the Brulpadda-1AX well, scheduled for late December 2018

Africa Energy holds 49% of the shares in Main Street 1549 Proprietary Limited (“Main Street 1549”), which has closed separate farmin transactions with TOTAL E&P South Africa BV, a wholly-owned subsidiary of TOTAL SA, and CNR International (South Africa) Limited (“CNRI”), a wholly-owned subsidiary of Canadian Natural Resources Limited, to acquire 5% from each for an aggregate 10% participating interest in Block 11B/12B (4.9% net to Africa Energy).

Block 11B/12B is located in the Outeniqua Basin approximately 175 kilometers off the southern coast of South Africa. The block covers an area of 18,734 square kilometers with water depths ranging from 200 to 2,000 meters.  After closing, Total, as operator, will have a 45% interest in Block 11B/12B, while Qatar Petroleum and CNRI will have 25% and 20% interests, respectively.

The Brulpadda-1AX exploration well will be drilled in 1,432 meters of water by the Odfjell Deepsea Stavanger semi-submersible rig to a total depth of 3,420 meters subsea. The well will test the oil potential in a mid-Cretaceous aged deep marine fan sandstone system within stratigraphic closure. Drilling and evaluation of the well is expected to take approximately 85 days


BP Clears Its Anxieties About Angola

By Toyin Akinosho

BP’s two agreements with Angola’s Sonangol for Platina and Greater Plutionio, have put an end to the British major’s concerns around the government’s thinking about foreign investment in the country.

Up until these agreements were signed in mid-December 2018, the perception was that Angola was undecided whether to extend the licences on which BP’s current production and future operations rely.

One of the agreements was to progress to final investment decision the development of the Platina field in deepwater Block 18. The second was to extend the production licence for the BP-operated Greater Plutonio project on Block 18 to 2032, subject to government approval, and for Sonangol, the state oil company to take an 8% equity interest in the block.

Platina would be BP’s first new operated development in Angola since the PSVM project in Block 31 began production in 2013. It would be the second phase of development in Block 18 – the Greater Plutonio project started up in 2007.

The agreements were signed by Carlos Saturnino, Chairman of the Board of Directors of Sonangol and Bob Dudley, BP group chief executive.

BP’s anxieties about its future in Angola, allayed by these agreements, were captured by a statement by Jasper Peij’s. the company’s VP Africa Exploration, in an interview early in 2018, in which he explained:

“In Angola, you’ve gone through a period where it no longer makes sense to invest because you’re too close to the end of the contract. I think the country has a choice to make. Do they extend the PSCs and then, therefore, reinvigorate investment, or do they want to do this themselves?”

But Sonangol’s Saturnino said on December 17: “These agreements are a positive sign of the work being done by Sonangol and the Angolan government to generate more investment in our oil industry and take us a big step closer toward increasing production from Block 18.  BP has been a key partner for Sonangol and Angola for many years, having contributed to the development of the oil and gas industry through its operated and partner-operated blocks, and we look forward to continuing to work together in the years to come.”

Bob Dudley responded: “The signing of these agreements is a major step towards new investments for BP’s business in Angola, extending production from Greater Plutonio and boosting the nation’s oil output. BP is proud to be a partner with Angola and the signing of these agreements is a major step towards further realising the potential of Angola’s natural resources.”

Discovered in 1999, the Platina field, in water depth of approximately 1,300 metres, is planned to be developed as a subsea tie-back to the existing Greater Plutonio floating production, storage and offloading vessel (FPSO). The final investment decision for the development is anticipated in the second quarter of 2019 with first oil then expected in late 2021/early 2022. The production licence extension will enable later life production from the Greater Plutonio fields as well as the future output expected from Platina.

BP and Sonangol also signed two further memoranda of understanding (MOUs) regarding potential further access and exploration offshore Angola and co-operation in a planned new products and crude terminal and storage facility in Angola.

Under one MOU the companies agreed to progress discussions for further exploration activities in Blocks 31 and 18, to enter discussions for Blocks 46 and 47, and to explore options in Block 18/15.

The second MOU enables them to enter discussions regarding financing and construction of the planned terminal and storage facility at Barra do Dande in Bengo province, approximately 30 kilometres north of Luanda.


Wentworth Walks Out of Mozambique

Wentworth Resources has announced it will be leaving Mozambique by the end of April 2019.

The Norwegian explorer, listed on London’s AIM, says it would relinquish the Tembo block, its only asset in the country, close its Maputo office “and shut down activities in the Muxara and Palma camps concurrently”.

The Tembo Block, spread over an area of approximately 2,500 km2, in northeastern Mozambique, is operated by Wentworth Resources (85%) with Empresa Nacional de Hidrocarbonetos (“ENH”; 15%) as a partner.

“The relinquishment of the Tembo block will release the Company from any further appraisal work programme obligations with no material costs foreseen ahead of relinquishment”.

The Tembo gas discovery was made exactly five years ago and since Wentworth had received a go ahead for its appraisal in 2016, it had struggled to find a farm in partner to fund the programme.

“It is anticipated that the Company’s Intangible Assets which are attributable to the Tembo appraisal licence will be written down in full in the current financial year 2018”.


So Much Uncertainty about Savannah Petroleum

By Prospect Mojido

Savannah Petroleum had not concluded its takeover of Seven Energy’s assets in Nigeria as of December 14, 2018, less than three weeks to the end of the year.

After signing off on the deals regarding the gas for oil swap with Frontier Oil Limited and the buy-out of minority shareholders in Universal Energy Resources Limited, Savanah has not proceeded as quickly to close out the entire transaction.

Frontier Oil is the holder of the Uquo field, whose gas reserves underpinned Seven Energy’s main gas supply business in the domestic market. Universal Energy, a producer of a marginal oil field in eastern Nigeria, was partly owned by Seven Energy.

Savannah claims it is “seeking certain further amendments to the terms of the Transaction, which the Board considers to be in Savannah’s immediate commercial interests and are expected to significantly enhance the Company’s competitive position in Nigeria”.

The transaction, initiated 13 months ago, has thus dragged out for much longer than initially contemplated.

But such lack of clarity has characterised Savannah Petroleum’s overall activity, whether in the business area or in technical operations.

The five discoveries the company claims to have made in Niger Republic are not exactly all discoveries, geologically speaking. Savannah’s own technical field reports show that the crude oil encountered were reported in largely the same reservoir units, suggesting that most of the wells have been appraisals, not new discoveries. The last well, Zomo 1, described like the rest as a “discovery”, encountered oil only in the E1 unit, the same unit in which Eridal-1 encountered oil. And Savanah’s own record shows that the reservoir is less developed in Zomo-1 and yet it says Zomo is a discovery. Once you move to other wells and compare, you find generally more or less the same pattern.

Now it is on the basis of these “significant” discoveries that Savannah submitted a prefeasibility study for Early Production Scheme, to the Niger Republic’s authorities. The deal with the government includes that the government would facilitate a crude oil marketing agreement between Savanah and Soraz Refinery, which has the capacity to process no more than 20,000BOPD and all that capacity is already taken up by supply from the CNPC. With other operators, Niger has the capacity to produce far in excess of the 20,000BOPD it processes at Soraz, but there is no evacuation infrastructure in place. The published agreement between Savannah and the Nigerien government does not allude to this inadequacy.





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