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Indies: What Would Africa Do Without Them?

By Toyin Akinosho

The concept of local content grew out of the concern that the oil industry operates as an enclave sector in most hydrocarbon resourced African economies.

But in those countries where the oil companies serve as part of the industrial pivot, there’s a good chance that the main actors are independents, not majors.

In most of Africa’s petrostates, it is the independents who commit more to local beneficiation of the molecules.

The story is that the majors once built and operated local refineries in some of these countries, but that the era has since gone.

Independents now demonstrate more commitment to serve as industrial partners.

Take Cameroon. The French operator Perenco developed the offshore Sanaga field and installed a gas processing plant, to feed the 216 MW Kribi Power Plant.  The company inaugurated a Floating Liquefied Natural Gas (FLNG) facility to export gas from the same field. True. But from this small project (1.2Million Tonnes Per Annum), it produces an annual volume of 30,000Tonnes of cooking gas (technically known as LPG), on the side, for the country.

In Gabon, it has been Perenco, not TOTAL, not Shell, that has beensupplying natural gas to power plants in Libreville and in Port-Gentil.

Victoria Oil &Gas, the tiny British gas producer, can be credited to have built the natural gas market for Douala, Cameroon’s main commercial city, from scratch. The company arrived the country in 2008, acquired the Logbagba marginal gas field, and started work, drilling gas wells and, “convincing factories and small industries to replace expensive diesel with natural gas for their power needs, constructing a gas supply network round the city, and drilling even more gas wells”, according to a report in the April 2018 edition of Africa Oil+Gas Report. The company, the magazine reported, “ambitiously set a target for a near tenfold increase from thirteen million standard cubic feet per day 13MMscf/d, in 2017, to 100MMscf/d by 2021”.

To ensure that gas resources were available for the anticipated expansion, VOG has been on an acquisitive mode for acreages. In 2016, it secured 75% interest in the Matanda block, a 1,235-sq km acreage adjacent to Logbaga. The Matanda field,  ”indicates the potential for more than 1Trillion cubic fet (Tcf) of recoverable gas across onshore sections of the block”, the company says.

THE METHANOL PLANT IN EQUATORIAL GUINEA is owned by two American independents, Marathon Oil and Noble Energy, as well as  the government parastatal  SONAGAS, the National Gas Company of Equatorial Guinea. The plant started production in 2001 and produces in excess of 1,000,000 metric tons of methanol per year, or just greater than 1% of the global market. It is fed with natural gas from the Marathon operated Alba field. Again, it is true that a significant volume of gas from Alba field is exported as LNG through the Equatorial Guinea LNG, but those same reservoirs feed the 155MW Malabo Gasfired Power Plant.

Now that Alba field is in decline, it is gas from Alen field, operated by another independent, Noble Energy, that Equatorial Guinea has turned to for replenishment.

In Ghana, about 120MMscf/d of natural gas from the Jubilee field, operated by the UK based Tullow Oil, has been a more reliable fuel for the country’s electricity plants than the gas exported from Nigeria by a company majorly owned by Shell and Chevron(and operated by the latter), which have been stuck at around 60MMscf/d for the past three years. The Italian giant, ENI, has just completed a gas supply system from the Sankofa field that will deliver 180MMscf/d, but it is important to note that the foundation for local supply of natural gas to electricity plants in West Africa’s second largest economy was laid by independents (Kosmos and Anadarko are Tullow’s partners).

In Gabon, it has been Perenco, not TOTAL, not Shell, that has been supplying natural gas to power plants in Libreville and in Port-Gentil. The gas is produced onshore, treated to specification and delivered at pressure through a 450 km, 36MMscf/d capacity gas pipeline across the country. It is a major contribution to national power needs and industrial development.

In Nigeria, Shell likes to claim the credit for helping to inaugurate the Gas to Power market, but the contribution of the majors to the country’s bourgeoning domestic gas industry is on the wane. Shell has divested its largest domestic-purpose gas processing plants. Seven Energy (now Savannah) and Oando have each been more daring in constructing midstream gas supply pipelines in the country than any major. Seplat, the London listed independent founded by Nigerians, now supplies close to 400MMscf/d of gas to the domestic market and the molecules are mainly used for electricity generation.

What’s more, while the only crude oil refinery outside of the NNPC operated sub performing refineries is owned by Niger Delta Petroleum. Now, two other small refineries are under construction by Nigerian independents. One is the 5,000BOPD Ibigwe Refinery, promoted by Waltersmith Petroman; the other is the 7,000BOPD OPAC Refinery, which is being developed by Pillar Oil and partners. Of course the largest refinery under construction in the country is the 650,000BOPD Dangote Refinery, but how do you classify Dangote Industries?

LONG BEFORE BG, THE DEFUNCT BRITISH GAS COMPANY, discovered large deposits of gas offshore Tanzania, the country had been growing a domestic gas market on the back of the onshore and shallow water reserves, estimated at around eight trillion cubic feet (8Tcf). This market was created and developed by small companies. Today, Orca Exploration, originally from Canada but now very Tanzanian; Paris based, Indonesian owned Maurel et Prom and the AIM and Oslo listed Wentworth Resources are, in partnership with the government, collectively responsible for Tanzania’s 160MMscf/d domestic gas industry, which is vibrant and growing.

 


King Kosmos Waves the Sceptre

By Moses Akin Aremu 

Kosmos Energy has taken the spotlight as the Western independent mostly associated with African frontier exploration.

The Dallas based independent didn’t get properly recognised for opening the Tano Basin offshore Ghana, even though it made the 2007 discovery on which Tullow Oil rode to world acclaim.

No one could ignore, however, its effort in the North West African margin.

Even when it comes up with dry holes back to back it is able to snatch victory from the jaws of defeat. The statement that its second phase of exploration offshore Mauritania and Senegal, “yielded the industry’s largest hydrocarbon discovery of the year at Yakaar-1”, masks the reality of three dry holes in that campaign, and the fact that the Yakaar-1 was the lone discovery.

The claim also conveniently hides the company’s frustration at not finding the sorely wanted oil reservoirs, outboard the gas that it had earlier encountered in the Tortue complex off those two countries in mid-2015.

Kosmos couches its disappointment in earth science speak. The campaign, it said, had provided “sub-surface data that will help us refine our understanding of how the petroleum systems offshore the two countries work”.

There are many influential entities who bet on Kosmos’ extraordinary ability to deliver on E&P projects, from exploration to production.

Gabriel Obiang Lima, Equatorial Guinea’s Minister for Hydrocarbons, is one, and we’d soon get to that.

BP is another.  The British major is so much a worshipful admirer of the geoscientific competencies of this sleek American independent, that its agreement with Kosmos has extended beyond the partnership in NW Africa. Now they work together in Cote D’Ivoire and are jointly seeking prospective tracts elsewhere on the continent.

BP’s philosophy is: Kosmos understands the geology of Africa. It gets to do the foundational basin analysis and maps the fairways. It determines where the leads are and comes up with the play concepts. It generates the prospect inventory. It then works up the well locations and drills.

If there is a discovery and two appraisals follow successfully, BP takes up the development phase.

 


In 24 Months, Nembe Creek Trunk Line Will Be Running Empty

Work is far advanced on alternatives to the “renowned” Bonny Terminal

Nigerian companies pumping crude oil into the Nembe Creek Trunk Line (NCTL) have advanced so much in progressing alternative routes that several sources are “so sure” that there will be hardly a drop of crude pumped into that line by June 2020.

The 97kilometre pipeline, with capacity to pump 150,000Barrels Per Day, is a favourite of oil thieves, who routinely hack into the line, creating as many as 24 illegal bunkering points that require constant plugging.

The facility starts from the Nembe Creek field in Oil Mining Lease (OML) 29, and ends at a manifold at the Cawthorne Channel field on OML 18. From here, crude is evacuated the short distance to the Bonny oil terminal.

Up to 600,000 BOPD of liquids can be evacuated from the end point at Cawthorne Channel.

Shell doesn’t pump its own crude into NCTL, but sends the liquid into the short line between Cawthorne Channel and the Bonny Terminal.

AITEO, Eroton and Newcross, three Nigerian independents which evacuate their crude through the NCTL, lose as much as 40% of the crude routinely to oil theft, sources tell Africa Oil+Gas Report. They have each been working assiduously on alternatives, with Eroton reportedly being ahead of others, to install alternative pipelines that evacuate their crude to FPSOs on the Atlantic.

“The famous Bonny Terminal looks like is about to lose its relevance after several decades”, sources tell Africa Oil+Gas Report. NCTL was reopened on July 8, 2018, a full month after the latest shut in for repairs.

This story was earlier published in the July 2018 edition of the Africa Oil+Gas Report monthly.

 


Egina Rams into MT Jazi and Zion on Its Way Out

By Sully Manope

The Nigerian owners of two petroleum product vessels are compiling estimates of damages after the Egina Floating Production Storage and Offloading (FPSO} Vessel rammed into them at the Lagos Harbour.

The FPSO was beginning its journey from Lagos to the Egina oilfield offshore Akwa Ibom, in the country’s south east, on August 26, 2018, when its tow lines parted.

MT Jazi and MT Zion, were docked at the harbour, waiting for cargoes of product supplies, when the collision happened. The impact threw off a crew member from MT Zion into the water, but he swam into safety. Divers in the Egina FPSO quickly moved to restore the tow lines and guide the ship back to course.

The Egina FPSO has since arrived on the field on August 29, but the case of the collision is in arbitration in Lagos where, officials of Samsung Heavy Industries, operators of the FPSO, reported the incident at the Nigerian Maritime Administration and Safety Agency.

 


Seplat Output Drops Quarter on Quarter

Seplat Petroleum’s oil and gas production experienced a slight reduction from first quarter to second quarter 2018, largely on account of shut ins caused by leakages in the Trans Forcados Pipeline.

Gross liquid output dropped from 61,150BOPD in 1Q 2018 to 52,262BOPD in the 2Q.

Gross daily Gas Production was 351MMscf/d in 1Q, declining to 337MMscf/d in 2Q 2018.

In equity terms, Seplat produced 27,306BOPD of hydrocarbon liquids and 158MMscf/d of natural gas in 1Q , but these had declined to 23,266BOPD and 152MMscf/d in the 2nd Quarter.

The reason was the disparity in the length of time that actual production took place.

Production in Q1 stood at 82% with average reconciliation losses of 7.3%; but by the end of the first half, the company reported production uptime in the period was 76% while reconciliation losses were around 8%.

There was, in an instance, two weeks of production shut in during the second quarter, whereas the highest number of days of shut in during the first quarter was four days.

Seplat has concluded plans to move into alternative evacuation facility whenever the TransForcados line is shut in, but could not execute those plans in the period under review.

Although 1H 2018 equity production averages at 25,286BOPD (Liquids) and 155MMscf/d, the company needs to keep an eye on its “working interest production guidance (before reconciliation losses) for FY 2018”, which is 24,000 to 29,000BOPD and 148 to 158MMscf/d.

This “equates to 48,000 to 55,000 BOEPD and is predicated on there being no further prolonged force majeure event”, Seplat itself says.
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Energy Transition of Various Speeds

By Gerard Kreeft
In September 2015 the rig count in Angola was a robust 22; by June of 2018 this decreased to 4 rigs!

Is this the new reality?

Will $80 per barrel of oil help move the rig activity to new levels? The rig count is a vibrant sign how well the oil and gas industry is faring…at least that was the thinking before the Paris Climate Agreement of 2015. Lower oil prices have not helped buttress the case for the oil and gas community. Instead there is a growing public perception that all oil and gas assets should be viewed as ‘Stranded Assets”.

In Europe there are concrete plans to shut down natural gas operations. Witness Europe’s oldest gas field – Groningen-which within the next decade will be shut down. While scares of further earthquakes was a main driver to making this decision for the Government of the Netherlands, it is also a wake-up call for Exxon-Mobil and Shell the co-owners of this historic field. Once a cash cow it has become a stranded asset.

Yet in a country like Angola the gas age is now beginning: new exploration is being done to ensure that natural gas can be used as a fuel of choice to help expand the country’s industrial base. Putting together such a roadmap will require time, effort, strategy and implementation. Perhaps for the next 20-25 years. And perhaps the use of natural gas is also symbolic for more African countries.

Certainly it is chauvinism of the worst sort to believe that Africa should be following the route that Europe is taking. What to do? A simple proposition. An Energy Transition of Various Speeds. This requires an explanation.

The Good Old Days!

In the good old days when everyone accepted that RRR(Reserve Replacement Ratio) was a parameter to reflect the upstream status of an oil company…it also was assumed that mid-stream and downstream were in capable hands. An essential tool to define the concept of the ‘Integrated Oil Company‘.

RRR was a sign that Upstream reflected a robust industry and reflected well upon the mid-stream and downstream assets: 100% replacement on an annual basis was seen as the norm (see Figure). Yet because reserves are calculated in fossil units, any attempt for the majors to engage in renewable energy, be that solar or wind would be a complete waste of shareholder value given that these reserves cannot be added to the reserve total. It is little wonder that any RRR calculation is hard to find in the financial reporting of the majors.

Post-Paris this has changed and therefore the concept of an ‘integrated oil company’ has vanished…With the oil and gas sector unwilling to think about converting  their ‘fossil –based reserves to energy units’ the oil companies have missed a big opportunity to be an active player in the Energy Transition…for example if an oil company had participated in the North Sea Offshore Wind Consortium, this could have created the equivalent of 500,000BOE reserves (100GW energy) …Nonetheless time has passed on and the oil and gas sector has chosen to ignore such an opportunity.

The result is that in spite of the higher oil prices, the oil majors will, in the coming period, face a crisis of their own making: a splitting up of their upstream/mid-stream/downstream assets and seek consolidation to maintain some sense of value. Upstream will remain in place but will have fewer and bigger players. The same with mid-stream and downstream. Throwing RRR overboard is the most visible sign that the majors will be consolidating their entire energy value chain. This could become very ugly!

For example it would not be surprising if Shell were to rid itself of its upstream assets and becoming a gas player(mid-stream) a business they understand and do well…and given the necessity of having natural gas in an energy transition they are well positioned to do this…downstream perhaps also a merger of like-minded company units.

And swirling in the background the independents will continue to have a key role in exploration and in the mid-stream and downstream sectors…to feed the majors …then we come back to the service industry…if the above consolidation does take place…this will also have its toll on the drillers and service providers.

Back to the Future
What would the Energy Transition look like in Europe?

In 2007 Europe consumed 408 BCM of natural gas (McKinsey). In the period 2005-2014 gas consumption in the EU-28 had decreased by a quarter or 124 BCM.

Various factors have contributed to this: the economic and financial crisis; the impact of policy measures around energy efficiency and renewable energy; and competition with coal. For the future various demand forecasts exist: from a low of 425 to a high of 550 BCM in 2024 .

Yet the overarching new development will be the development of the Hydrogen economy. Two examples:


The H21 Leeds City Gate Project

The H21 Leeds City Gate Project provides the world, for the first time, a concrete example of how a Hydrogen Economy could work, both in technical and financial terms and be feasible..

The UK gas industry is over 200 years old and for its first 150 years, gas used was locally manufactured town gas which contained circa 50% hydrogen with smaller amounts of carbon monoxide and methane. With the ascent of natural gas the UK underwent a nationwide gas conversion programme in the 1960’s and 1970’s, converting 40Million appliances. Over 80% of UK households now use this gas network.

A hydrogen conversion programme would follow a similar process to the original town gas to natural gas conversion, so successfully undertaken then. The process will involve minimal disruption for the customer and require no large modifications to their property.

The H21 project has shown:
⦁Gas network has the right capacity for such a conversion;
⦁Can be converted incrementally with minimum disruption to customers;
⦁Minimum new energy infrastructure will be required compared to alternatives;
⦁Existing heat demands for Leeds can be met with ‘steam methane reforming’ and salt cavern storage;

Availability of low-cost bulk hydrogen in a gas network could revolutionize the potential for hydrogen vehicles, and via fuel cells, support a decentralised model of combined heat and power and localised power generation.

North Sea Wind Power Hub
In 2017, four transmission system operators (TenneT Netherlands, TenneT Germany, Energinet and Gasunie) formed the North Sea Wind Power Hub. The hub partners are to study and investigate the possible development of a large-scale, sustainable European energy supply system in the North Sea.
The collaboration is a key step towards the realization of a North Sea Wind Power Hub which will make a major contribution towards achieving the objectives of the Paris climate agreement (COP21). In order to achieve the climate targets for Europe alone, approx. 230 gigawatts (GW) of offshore wind energy capacity needs to be developed, of which 180 GW in the North Sea. 

What are the lessons that can be learned for the Energy Transition for Africa?
⦁Renewables both wind and solar should continue to be part of the energy mix;
⦁Natural gas can continue to be an important transit fuel for residential and industry purposes;
⦁With the anticipated tsunami in the various part of the Energy Value Chain countries could face increased competition because of scarce resources, i.e. fewer oil and gas companies in the upstream/midstream/downstream sectors.
⦁Likewise in the service sector: for example the state of the drilling industry. The sector’s players are in various states of bankruptcy, chapter 11, or re-organization. Will there be any drillers left to drill the wells?
⦁How should National Oil Companies prepare for the Energy Transition?

Gerard Kreeft is CEO of Energywise, a Knowledge production company which organizes conferences and consults in the Gulf of Guinea and the North Sea


Savannah Inks Early Crude Production Deal with the Republic of Niger

British explorer bound to submit a pre-feasibility study to the authorities

Savannah Petroleum has signed “a legally binding Memorandum of Understanding” with the Government of the Republic of Niger.

The MOU affirms both Parties’ commitment to the realisation of a proposed early production scheme (“EPS”) utilising crude oil resources associated with Savannah’s recent discoveries in the R3 portion of the R3/R4 Production Sharing Contract area in the Agadem Rift Basin (“ARB”) of South East Niger. The MOU further binds both parties to work together towards the realisation of the EPS and contains specific provisions relating to the actions each Party undertakes to conduct as well as setting out the key timelines associated with the project.

The EPS is intended to be domestic focused, with oil produced from Savannah Niger’s R3 area discoveries expected to be sold at the Société de Raffinage de Zinder (“SORAZ”) refinery, which is connected to the ARB via the third party owned 463km Agadem-Zinder crude oil transportation pipeline.

As part of the MOU, the Republic of Niger has confirmed its intention to, inter alia:

• Facilitate the conclusion of a crude oil marketing agreement between Savannah Niger, the local subsidiary of Savannah Petroleum and SORAZ.
• Facilitate the conclusion of an infrastructure access agreement between Savannah Niger and the owner of third party crude oil processing and transportation infrastructure, subject to confirmation of the compatibility of the proposed crude oil Savannah Niger intends to include in the EPS and those crude oils currently being processed and transported though this infrastructure (to be confirmed following Savannah’s planned well testing programme).

As part of the MOU, Savannah has undertaken to, inter alia:
• Submit a pre-feasibility study to the Republic of Niger within 90 days of the signature of the MOU in relation to the discovered crude oil resources in the R3 area anticipated to be included in the EPS;
• Submit an application to the Republic of Niger for the issuance of an Exclusive Exploitation Authorisation within 90 days of finalisation of commercial documentation between Savannah Niger, SORAZ and the third-party infrastructure owner.

Savannah intends to announce further details in relation to the EPS and the Company’s planned well testing campaign in due course.

Foumakoye Gado, Niger Minister of Energy and Petroleum, said:
“We are very pleased with the success Savannah has achieved in its exploration drilling campaign to date, with three discoveries from its first three wells. As a Government, we are keen to see that these and future discoveries commence production as soon as possible, given the positive contribution to economic growth, tax revenues and our local communities that they have the potential to deliver. We are committed to provide Savannah with all reasonable assistance to enable this to happen. We continue to hope that Savannah’s experiences will serve as a positive advertisement for our Government’s pro-FDI approach and would strongly encourage others to come and invest in Niger, both in oil and gas and other sectors.”

Andrew Knott, CEO of Savannah Petroleum, said:
“Our Niger project team is highly focused around the delivery of: (1) near-term production and cashflows from existing and future discoveries in the R3 area; and (2) further material reserve adds through our ongoing exploration and appraisal drilling program. The signature of the MOU provides a clear pathway in relation to our first objective and is a major milestone. In relation to the second objective, Savannah benefits from the large bank of drill-ready exploration prospects that our technical team has mapped within our PSC areas.

We believe the vast majority of these prospects have similar risk profiles to the ones we have already successfully drilled, and we therefore look forward with confidence to the results of the wells still to come in the campaign. It is an exciting period for Savannah and our stakeholders and I look forward to providing further updates as our Niger project progresses over the course of the coming months.

I would like to again thank the Government of Niger for their continued support of our project. We look forward to working with them and our other project stakeholders to making the EPS a reality and starting production and sales from our R3 licence in Niger.

I also look forward with confidence to the completion of the Seven Energy transaction this quarter, and expect to provide further announcements in relation to this shortly.”


The 230,000BOPD Kaombo Project Comes Onstream in Angola

TOTAL has started up production of Kaombo, currently the biggest deep offshore development in Angola, located on Block 32, 260 kilometers off the coast of Luanda. 
 
Kaombo Norte, the first Floating Production Storage and Offloading (FPSO) unit, has been successfully brought on stream and will produce an estimated 115,000 barrels of oil per day, while the second one, Kaombo Sul, is expected to start up next year. The overall production will reach an estimated 230,000 barrels of oil per day at peak and the associated gas will be exported to the Angola LNG plant.

A total of 59 wells will be connected to the two FPSOs, both of which are converted Very Large Crude Carriers, through one of the world’s largest subsea networks.

Together, they will develop the resources of six different fields (Gengibre, Gindungo, Caril, Canela, Mostarda and Louro) over an area of 800 square kilometers in the central and southern part of the block.
 
The Kaombo development will monetise an estimated 650 million barrels of reserves and “contribute to TOTAL’s’s growing production and cashflow in Africa,” stated Arnaud Breuillac, the company’s President Exploration & Production at TOTAL. “It will account for 15% of the country’s oil production. 

TOTAL operates Block 32 with a 30% participating interest, along with Sonangol P&P (30%), Sonangol Sinopec International 32 Limited (20%), Esso Exploration & Production Angola (Overseas) Limited (15%) and Galp Energia Overseas Block 32 B.V. (5%)


Nigerian Operator Highlights Possible Involvement of Security Forces in Crude Oil Theft

Indigenous producer emphasises the “weight of allegations with which Admiral Suleiman has been publicly confronted”.

By Fred Akanni, Editor in Chief

AITEO’s response to allegations that it had masterminded protests by oil community groups against the Joint Task Force in the Niger Delta, is one of the rare instances in which a high profile E&P company has called out the Nigerian security forces for likely complicity in the scourge.

Defending itself against charges by the JTF commander, Rear Admiral Apochi Suleiman, the Nigerian indigenous operator, in a 1,000-word statement, pointedly asks whether it was “correct that the security forces are now offering protection/escort services to those allegedly responsible for oil thefts?”

And then it follows up: “How is it that vessel movement of the oil thieves occurs unnoticed in the region despite heightened activity in large scale illegal bunkering?”

The JTF is comprised of personnel from the Nigerian Navy, Army, Police, Nigeria Security and Civil Defence Corps and Custom Service. The JTF commander had accused AITEO of masterminding the protests against the task force in an interview with ThisDay, an influential Nigerian newspaper. A group named Niger Delta Oil Monitoring Group also, in a statement, accused AITEO of sponsoring the June 1 Abuja protest “to frustrate Rear Admiral Suleiman from consolidating on his successful curbing of oil theft in the Niger Delta”.

When asked about AITEO’s statement, the JTF responded to our enquiries with a curt reply: “Go to the Defence headquarters for official details”. But our enquiries at the Defence headquarters were not replied.

Insinuations about complicity of security forces in the theft of crude oil in the region has always been made, in media reports, in the work of researchers, and in declamations of civil society organisations.

But as the work of journalism around this issue has hardly resulted in smoking gun evidence, and the other agencies are very much external actors, the default mode had been to dismiss their recurring finger pointing. On the contrary, AITEO is a significant participant in Nigeria’s crude oil production, with nameplate output capacity (90,000BOPD), which is over 4% of the country’s total export, so its statement about the security forces is hard to ignore.

“We are one of the biggest victims of oil theft in the country”, the company laments.

AITEO operates the Nembe Creek Trunk Line NCTL, a crude export pipeline with capacity to pump 200,000 Barrels of Oil Per Day throughout its 97km length, starting from Nembe Creek, to a manifold at the Cawthorne Channel field on OML 18. From here, crude is evacuated the short distance to the Bonny oil terminal. NCTL is clearly one of the four largest crude oil to export pipelines in Nigeria.

The company’s statement revisits the key challenges faced by operators in the Niger Delta and reiterates the facts of huge losses of revenue that otherwise would have accrued to the Nigerian Government, which is struggling with a large debt burden and borrowing billions of dollars to finance its budget.

  • In December 2016 alone, the company explains, 45.46% of AITEO’s total net crude injected into the NCTL was lost on the basis of crude oil theft “resulting in significant pressure reductions on the trunk line, theft points identification as well as illegal refineries, and corroborated by several Joint Investigative visits constituted by various regulatory bodies and the applicable host community”.
  • “Third party interference with the line has often resulted in oil leaks which ultimately culminate in shutting down the NCTL to undertake emergency repairs. This in itself has resulted in the NCTL being shut down for about 145 days and an approximate deferment of 50.386 million barrels of Crude Oil (Net) for the 6 injectors into the NCTL since Aiteo took over the operatorship of the Trunk line in September 2015”.
  • As recently as May 1, 2018 there were a total of 24 illegal bunkering points identified along the NCTL. AITEO has successfully repaired 9 of these illegal bunkering points during May 2018 at a huge cost to the company. These illegal bunkering points also contribute to the huge losses on the volumes injected across the NCTL by the six OMLs and the volumes actually received at Bonny Terminal.
  • Due to the continued vandalism of the NCTL and resulting oil theft, AITEO has written to the Federal Government, through the Chief of Army Staff, General TY Buratai on two occasions (April 17 and 23, 2018), requesting the involvement of the Armed Forces in reinforcing existing security arrangements to the pipeline as the incessant security breaches were resulting in losses amounting to billions of Naira for the country. “We have made similar efforts to various other arms of the security apparatus of the country”.

But the sting in the tail is the drawing out of the head of the security forces tasked with ensuring the safety of lives and property in the Niger-Delta.

AITEO had, in the June 6 2018 statement, declared; “any attempt by the embattled Admiral Suleiman to suggest AITEO’s involvement in the activities of those who undertook the protest or indeed any other related activity is a distraction designed to fail. It does not, in any way, detract from the weight of allegations with which Admiral Suleiman has been publicly confronted”.


Tullow Oil Ordered To Pay $254Million To Seadrill

Tullow Oil has responded in the media to a judgment in the English Commercial Court case brought against its wholly owned subsidiary Tullow Ghana Limited by Seadrill Ghana Operations Limited.

“The Hon. Mr Justice Teare has ruled that Tullow was not entitled to terminate its West Leo rig contract with Seadrill on 4 December 2016 by invoking the contract’s force majeure provisions and as such requires Tullow to pay Seadrill a contractual termination fee and other standby fees that accrued in the 60 days prior to termination of the contract.

“These fees amount to approximately $254Million. Tullow expects to be required to pay these fees within the next 14 days (from July 3, 2018) with Tullow being liable for a net amount of approximately $140 million, which compares with the provision of $128Million made in the 2017 Annual Report and Accounts”, Tullow says in a statement.

The company declares it is “disappointed with the decision and maintains the view that it was right to terminate the West Leo contract for force majeure. Tullow will now examine its options, including seeking leave to appeal the judgment”.

“As disclosed in the Group’s recent trading statement, Kosmos is disputing separately, through an arbitration against Tullow with the International Chamber of Commerce, its share of the liability (c. 20%) of any costs related to the use of the West Leo rig beyond 1 October 2016. The arbitration tribunal’s decision is expected shortly”.

 

 

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