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Acreage Renewal Issue Clears Up: Shell Announces International Tenders for Bonga SW Project

Partners in the Bonga South West Aparo field Development, in deep water off Nigeria, now have certainty that the licences of acreages hosting the fields will be renewed for a period covering the life of the project.

The field straddles Oil Mining Leases (OMLs) 118, 132 and 140.

That the government had not expressly given assurance on the renewal of these acreage licences, was a sticky point in the determination of release of bids for tender, leading to  Final Investment Decision on the $13Billion project.

With this issue cleared up with the Nigerian President Muhammadu Buhari, who is also the Minister for Petroleum Resources, the project promoters can go ahead with FEED, Technical and Commercial Bids and possibly Financial Sanction by the end of 2019.

Shell and its co-venturers have now invited prospective bidders to tender for the project.

“Following the Oil Mining Lease (OML) 118 Heads of Terms (HOT) agreement, we are pleased to announce the release of BSWA Invitation to Tender, where Nigerian and international companies on the agreed bid list are requested to bid for the various contract packages that make up engineering, procurement and construction of the BSWA project. This is an important step that will allow ourselves, government and investing parties to understand the cost of the project and if within expectation, take the project to a Final Investment Decision (FID)”, a statement from SNEPco, the Shell Nigeria subsidiary operating OML 118 said.

Development discussions around the Bonga South West Aparo project has been on the drawing board  before 2010. The field holds estimated recoverable reserves of over 650Million barrels (P1) and could deliver 150,000BOPD at peak (according to ExxonMobil ‘s 2017 annual report). If the Final Investment Decision is taken at the end of 2019 or early 2020, first oil could kick in by early 2023.

 


World Bank is Unimpressed with Mozambique’s Growth Prospects, despite the Gas Boom

The World Bank has continued to warn Mozambique about its debt-to-GDP ratio, despite the country’s creeping growth for the immediate term.

….And in spite of the looming gas boom.

The country’s debt-to-GDP ratio has increased by nearly 50 percentage points since 2013, reaching 102% last year, with interest payments rising from 2.6% of state revenue to 16.5%.

So the Bank’s increasingly higher growth forecast for the country: 2018 – 3.3% ; 2019 -3.5% and 2020 -4.1% does not mitigate the crippling debt challenges.

Two large sized LNG projects are to take Final Investment Decisions in Mozambique this year, and the country’s state hydrocarbon firm is looking for money to pay its share of the cost of investment, which will reach $50Billion at peak. (New details on the projects are in Africa Oil+Gas Report’s February 2019 edition).

Still the World Bank is not in a rush to declare Mozambique a well run economy.

“The deterioration of the depth to GDP ratio profile was accompanied by increasing deficits – with fiscal policy remaining unconstrained in a scenario of lower raw material prices and reduced growth – and was exacerbated by the inclusion in 2016 of previously undisclosed commercial debts,” the World Bank reports.

By the end of 2018, Mozambique was ranked in the debt sustainability index of the World Bank and International Monetary Fund as a country in debt stress, alongside countries like Zimbabwe, South Sudan, and Gambia.


WAIPEC: Confab Makers Pull in the African Muscle

By Fred Akanni

The Organisers of the West African International Petroleum Exhibition and Conference WAIPEC, delivered a second edition with a very Pan African feel over the course of two days last week.

The first of the nine panels of the conference featured Omar Mitha, Chief Executive of the Mozambican state hydrocarbon company Empresa Nacional de Hidrocarbonetos, or ENH; Ibrahima Diaby, CEO, PetrocI, which is Société Nationale d’Opérations Pétrolières de la Côte d’Ivoire; Michael Nkambo Mugerwa, General Manager, Uganda Refinery Holding Company Ltd, a subsidiary of the Uganda National Oil Company.
The second panel featured, among others, Elike Mawuli, Engineering Manager, Tullow Oil Ghana. It was the second time Tullow Oil was appearing at an oil and Gas conference held in Nigeria, in three years, but it’s a rare appearance all the same.

Even more remarkable, in other panels, there were Jereh Barrow, Petroleum Commissioner, Republic of Gambia, Andrew Adu, a commercial manager at Ghana National Gas Company, Carmena C. Yeke, General Counsel of the National Oil Company of Liberia NOCAL and Jessica Kyeyune, National Content Expert, Uganda National Oil Company (UNOC).

A frequent contributor at oil and gas conferences in Nigeria is Juliette Twumasi-Anokye who was, as far back as seven years ago, the face of Local Content in Ghana, around the time that the Petroleum Commission, the country’s upstream regulator, was being built from scratch.
Now a private legal practitioner, Twumasi-Anokye moderated a panel on Service providers, but she was also a persistent contributor from the floor.

The conversations, as they involved several intra African challenges, were much broader in scope than the regular exchanges that have marked petroleum conferences in Nigeria and which have made oil summits become so repetitive, especially in the context of no new sanctions of upstream projects. The Pan continental aura of the WAIPEC conference made the topic of regional collaboration and regional content, as a step up from national content, less abstract to imagine and therefore, to tackle.

For PETAN, the Nigerian engineering contractors group which organises WAIPEC, a Pan African confab is a product of enlightened self-interest. If you have succeeded as a contractor iin the Nigerian sector, where new projects are dwindling, why not look in the neighbourhood for new opportunities?

Still, it is not always easy to pull off a successful regional hydrocarbon conference of this type in Nigeria.
An example of such difficulty was the failure of the organisers of the Offshore West Africa Conference, (OWA), now defunct, to run, despite its name, anything but a Nigeria-centric conference, whenever it held in Nigeria.

Another example was the Nigerian International Petroleum Summit, which ended earlier this week. A session of African energy ministers opened the summit, true, but the Pan African discourse suggested by that session did not flow through the veins of the summit, anywhere close to what WAIPEC did. Reason; it was high level, one session engagement.

What WAIPEC did was to ensure that not a single panel/session was an entirely Nigerian session. It was clearly a tough call; moderators and the audience had to keep reminding themselves that the Panels were of a mixed constituency.


Woodmac Lines Up, Again, Behind the PDP Candidate

Four years ago Wood McKenzie, the global firm of oil industry analysts, “predicted” that a victory by Goodluck Jonathan, then Nigerian president and candidate of the Peoples Democratic Party, “would be the least disruptive for the oil sector”.

As another Nigerian Presidential election looms, the British firm has circulated a briefing in which it weighs the chances of the two top candidates, in the country’s sixth general elections in 20 years.

This time, Woodmac isn’t discussing the election outcome in terms of the oil industry, even though that is where its primary subscribers are in Nigeria.

Rather, it talks politics all the way.

“Incumbent presidents in Nigeria had an unblemished election record until Buhari’s triumph in 2015”, the company writes in the briefing. “Another win for the challenger cannot be ruled out, especially since Buhari’s presidency has been lacklustre and dogged by ill-health”.

Woodmac describes Atiku as Buhari’s “more dynamic and liberal opponent”, and goes to argue that the PDP candidate is “focused on the economy and jobs”, issues which “will resonate with Nigeria’s younger generation”. It then asks: “Will they turn out in sufficient numbers”? The briefing contends that Buhari’s trump card is his reputation for incorruptibility and tighter fiscal oversight and “he can be sure of support from his northern heartlands and from conservatives, but he may lose votes in the central states where Abubakar is from; while the south will remain a PDP stronghold”.

ONE SIGNIFICANT PART OF THE BRIEFING IS where Woodmac says that its sister company Verisk Maplecroft “predicts that Buhari has only a 45% chance of success, so the election result could be very close. Indeed, if the result is not clear cut, tension and uncertainty is likely. Civil unrest is a risk, particularly if the fairness of the election is disputed. This would be uncharted territory”.

Unlike this year’s, Woodmac’s 2015 briefing focused so directly on the oil industry and it turned out to be close to prescient. “A victory by the opposition APC would be the most uncertain scenario for the oil sector, both from a security and legislative perspective,” it said. “An APC victory would also finally kill off the PIB, and could well herald major changes to how oil revenue is managed “.

The security and legislative “predictions” came to pass.

 


‘We Are a Faith Based Company’-Platform Petroleum’s Bosses

For the second consecutive time, Dumo Lulu-Briggs turned his speech into a form of Christian sermon.

He did it in December 2017. He repeated it in December 2018.

The chairman of the board of directors of Platform Petroleum, a Nigerian independent, preached about the goodness of the Lord at the Company’s end of year party, held in a swank venue on the edge of the Atlantic Ocean on Victoria Island, the hub of Nigerian commerce.

Choosing two examples of creation of masterpieces of the arts, he explained that evil and good derive from the same sources. Two images of the same person were used to create the Jesus and the Judas in Leonardo da Vinci’s The Last Supper, Mr. Lulu-Briggs told his attentive audience, most of whom were staff, contractors, and employees of affiliates of the company. Likewise, he pointed out, the critically acclaimed praise song: Amazing Grace, was created by the captain of a slave ship, while transporting hordes of the human cargo.

Asked why Mr Lulu-Briggs, a second generation upstream oil and gas entrepreneur, was always delving into Christianity in what was meant to be the Chairman’s address, Austin Avuru, who is deputy chairman of the company’s board of directors, replies: “We are a faith based company”. He explains that Platform Petroleum started production of hydrocarbons from a geologically challenged marginal field, Egbaoma, close to 12 years ago and was currently averaging 3,500 barrels of oil per day (BOPD). “We’ve built a midstream company operating a profitable pipeline out of this resource; we have commissioned a gas plant even if there are issues, our CSR is robust, and we have paid dividends timeously. We have always wondered how we’ve weathered the storms and the point is: if it’s not God, what is?”

The end of year party was itself prefaced by a Thanksgiving Service at a Catholic Church.

In his address, Osa Owieadolor, a career Petroleum Engineer who is Managing Director of the company, spoke enthusiastically of the Mid-Weekly Prayer Session, held at the headquarters every Wednesday.

A high point of the parley was the enthusiastic response of the audience to saxophone performance by BJ Sax, a widely travelled, award winning musician, who belts out popular Christian Pentecostal praise songs on his alto saxophone. Everyone danced, of course.

 


Eroton Successfully Refinances Its RBL Debt with GTB

The Nigerian independent Eroton Exploration and Production Company Limited has successfully refinanced the facility it took from Guarantee Trust Bank to purchase the 45% of Oil Mining Lease (OML) 18 in the eastern Niger Delta.

Eroton produces around 40,000BOPD from that asset, which it took over as operator in September 2015. The state hydrocarbon company NNPC is 55% Joint Venture partner.

With a final repayment of $398Million, the RBL has been repaid in full and replaced by a new reserves based lending facility with Guarantee Trust Bank (the “GT Bank RBL”) for the same principal amount, with the following notable advantages to the operator of OML 18.

  • The original RBL had a repayment date in mid-2021, while the GT Bank RBL has a late-2025 repayment date, consequently reducing quarterly repayments and freeing cashflow (in excess of $80Million per year until mid-2021) for further drilling and development.
  • The debt service reserve account (DSRA) requirement under the GT Bank RBL is reduced to two future quarterly repayments which combined with the lower quarterly repayment amounts means that only approximately $50Million is required in the DSRA compared with more than $100 million previously.

The refinanced interest rate is marginally higher at approximately 11% (versus 10% previously).

 


TOTAL looks to Final Investment Decision on Preowei in 2019

By Moses Akin Aremu, in Uyo

TOTAL is working up the Preowei structure in the vicinity of the Egina Field, which is about fully coming on stream sometime this week.

The Preowei accumulation, located north eastwards, was discovered in 2005.

“A great upside potential nearby (Egina) still needs to be developed and we are studying in particular Preowei discovery tie-back to the Egina FPSO,” TOTAL officials say. “An investment decision is scheduled for 2019”, they add,

Preowei is expected to produce around 70,000BOEPD at peak. The field will be developed as a tie back to the Egina FPSO, the largest deepwater floater that TOTAL ever deployed.

The aggressive French major began to talk up the possibility of producing Preowei in December 2017 when, after drilling Preowei-3, it reported an addition of approximately 80 to 100 Million barrels of oil (MMbo) to the full field contingent recoverable resources, bringing them to 140 to 200MMbo.

The Preowei-3 well, drilled to a final depth of 3,235 meters, encountered approximately 50 metres net of high-quality oil-bearing sandstone reservoirs, in line with expectations. The well confirmed previous results from the Preowei-1B and Preowei-2 wells, which encountered approximately 55 metres of oil-bearing sandstone reservoir.

The company is paying close attention to bottomline. “Egina will significantly boost the Group’s production and cash flow from 2019 onwards, and benefit from our strong cost reduction efforts in Nigeria where we have reduced our operating costs by 40% over the last four years,” a company statement says.


Egina To Start Pumping This Week

TOTAL expects to start up production from the Egina field, offshore Nigeria before the end of this week, most likely by January 3, 2019.

It is official.

The company’s second large deepwater oil project to be commissioned in Africa in the space of six months, the field will produce, at plateau, about 200,000 barrels of oil per day, a figure higher than 10% of Nigeria’s production.

It is however scheduled to start around 170,000BOPD.

The first Egina production well was opened on the South loop on December 29, 2018.

The field is located under 1,600 meters of water, 150 kilometres off the south eastern coast of Nigeria.

TOTAL says that the Floating Production Storage and Offloading (FPSO) unit used to develop the field is the largest one it has ever built. This project has also involved a record level of local contractors. “Six of the eighteen modules on the FPSO were built and integrated locally, and 77% of hours spent on the project were worked locally”, TOTAL officials explain, adding that start-up has been achieved at a significant cost below the initial budget, “due in particular to excellent drilling performance where the drilling time per well has been reduced by 30%”.

Initially discovered in 2003, the Egina field is the second development in production on the Oil Mining Lease (OML) 130 following the Akpo field which started-up in 2009. The Preowei field

is another large discovery made on this prolific block for which an investment decision is

scheduled for 2019.

TOTAL Upstream Nigeria Limited operates OML 130 with a 24% interest, in partnership with

Nigerian National Petroleum Corporation (NNPC), South Atlantic Petroleum – SAPETRO

(15%), CNOOC Limited (45%) and Petrobras Oil and Gas BV (16%).


2019: There Will Be A Ooomph, if not A Bang

There should be a faster tempo of upstream activity on the continent in 2019, if crude oil price stops heading downhill.

We expect increased drilling (exploratory and infill), increased seismic coverage (exclusive and multi-client) and a significant upturn in field optimisation.

The big new projects may not all start to happen as we have anticipated, but the creep that attended 2018 should turn to a mild rush.

If there is one thing that 2018 taught us, here in the newsrooms of the 17 year old Africa Oil-Gas Report, it is that the price of crude oil doesn’t have the be-all and end-all effect on final investment decisions of major hydrocarbon projects in Africa.

This time last year, we wrote that a $60-65 per barrel regime was good enough for a number of large projects, held up since the price crash of 2014, to reach financial close. The prices held firm, even did better than anticipated, yet the projects didn’t happen. Governments and other circumstances, more than anything else, cramp the syle.

Government’s interest and preparedness affected the pace of two large projects in Nigeria; a large deepwater oil project as well as the largest LNG project on the continent.

That said, let us turn the pages of the December 2018 edition of Africa Oil+Gas Report and look at a number of intended projects and activity. Our theme is Who is doing what and where in 2019: and it compiles short summaries of bid rounds, exploratory activity, field development work,  and financial sanctions, all over, from Algeria to Zambia.

Click here for your copy.

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions. Published by the Festac News Press Limited since November 2001, AOGR is a paid subscription based monthly, hardcopy and pdf publication delivered around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are +2347062420127, +234803652979, +2348023902519.

 See you on 2019.

-Editor

 

 

 

 


Cairn Targets First Oil From Senegal in 2022

Cairn Energy hopes to do everything required on the SNE Field off Senegal, to reach first oil by 2022.

The London listed explorer has commenced Front-End Engineering and Design (FEED) activities on the first phase of the field development, it has announced.

FEED will entail various studies and activities to finalise budget, schedule and technical definition for the SNE Field development aimed at the Joint Venture reaching a Final Investment Decision (FID) in mid-2019, Cairn tweeted.

Phase 1 of the development will target an estimated 230Million barrels of oil resources from 11 producing wells, 10 water injectors and 2 gas injectors. This phase will primarily target the lower, less complex reservoirs. The FPSO is expected to have a capacity of around 90,000Barrels per day of liquids in Phase 1, with first oil production targeted in 2022.

© 2019 Festac News Press Ltd..