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M&P’s Production Drops in Gabon

By Njoroge Karoo

French junior Maurel & Prom says that its First Half (1H) 2017 oil production in Gabon stood at 24,705BOPDgross, operated, or 19,764BOPD(net) for M&P’s80% share.

This level was below the fields’ production capacity, which had been impacted by a strike that disrupted operations in Q1 2017. “The consequences of the strike continued into Q2 2017”, the company says.

All the fields concerned are in the Ezanga permit.

M&P is listed on Euronext and headquartered in Paris, but has more operations in Africa than anywhere else in the world. It has oil production assets in Nigeria as well as both exploration permits and production rights in Gabon.In Tanzania, the company has gas producing assets. In Nigeria it holds, for instance, roughly 22% of the shares of Seplat, a dual Nigeria and London listed junior.

South Sudanese Oilfield Engineers Complete Training in Ogbele

The first set of South Sudanese well production, oil and gas processing “Technical Assistance Training Programe” at Ogbele Production Facilities has ended.

The training lasted six months.
The four Engineers have returned home and the Niger Delta Exploration and Development (NDEP), the Nigerian company leading the assistance, expects the second batch of four Engineers to be in the country by mid-August 2017.

The programme is part implementation of the agreement between NDEP and Nile Petroleum Corporation (Nilepet), the South Sudanese state Hydrocarbon Company, to support the latter to monetize and commercialize all the gas resources in South Sudan as well as support it in production optimization and improved production in existing brown fields.

“We have exposed our business in Nigeria to human content development of South Sudanese”, declares Layiwola Fatona, NDEP’s Managing Director. “The next batch of engineers will participate in a more robust programe, as our 2017 Drilling campaign would have started with the mobilization of a rig in 2 weeks”.

Seplat Remains in the Red but Its Debt Portfolio Is …

Loss making Seplat Petroleum Development says it has successfully concluded a one year extension of its revolving credit facility (“RCF”) until 31 December 2018.

The company reported a loss after tax of $19.1Million for the first quarter of 2017, but its lenders have a positive appraisal of its possibilities.

Africa’s top homegrown E&P Firm says the current three year RCF was due to expire at the end of 2017. The facility now expires on 31 December 2018 and has been successfully amended to amortise the remaining outstanding principal balance of US$150 million in equal instalments over five quarters commencing Q4 2017. Overall, Seplat’s aggregate indebtedness under its Term Loan and RCF has reduced by US$365 million from its peak in Q1 2015 of US$1 billion to the current balance at the end of June 2017 of US$635 million, which is a significant deleveraging of the balance sheet particularly in exceptionally difficult trading conditions over the past 18 months.

The amended facility has been provided by Citibank N.A. London Branch, Citibank Nigeria Limited, The Mauritius Commercial Bank Plc, Natixis, Nedbank Limited London Branch, Nomura International Plc, FirstRand Bank Limited acting through its Rand Merchant Bank Division, Stanbic IBTC Bank Plc, The Standard Bank of South Africa Limited and Standard Chartered Bank.

Roger Brown, Seplat’s Chief Financial Officer, explains that the approval to extend “and strong demand within our core lending group, which saw around 30% over subscription, demonstrates Seplat’s strong underlying business fundamentals and is further testament to the strength of our relationship with our continuing and new lenders”.

The amended facility, and recent resumption of exports via the Forcados terminal, “will enable the business to rebuild cash on its balance sheet as we seek to strengthen our capital structure to ensure a strong platform for future growth”, Brown adds.

Three More Marginal Field Operators Reaching First Oil

By John Sanussi, in Warri

Century Energy E&P is on course of putting the Atala Marginal Field on stream; Excel E&P has now formally started to inject about 800Barrels of crude oil per day crude oil from Eremor field into the TransForcados system and sources at Millenium Oil and Gas say it has “less than” 60days to go to complete all the remaining hook up and commissioning facilities for the startup of the Oza field.

The licences to these fields were awarded by the Nigerian Government in 2003.

The Atala field is actually held by the Bayelsa Oil and Gas Company (one of the three state companies which won an asset in the 2003 marginal field round). Century is only a technical and financing partner, but its economic interest is higher than 50%. The field development project is funded by Eunisell Solutions, a service company which will realize its investment from the proceeds of the crude output.

“What remains are minor permitting issues and installation of sales line metres for evacuation purposes”, say sources familiar with the Atala field production procedures. 2,000 BOPD from two reservoirs, will be delivered into barges and ferried into an FSO for export. Offtaker is Monaco. Part of the cash flow from Atala-1 production is expected to fund the drilling of Atala-2.

Millenium’s partners on Oza field are Hardy Oil and Emerald Resources. The field’s Early Production Facility (EPF) and tie-in at SPDC’s Isimiri flowstation, Pipe laying of 27.5km of 3” inter well flowlines and 3” and 6” test and crude delivery pipelines from the Oza manifold to Isimiri flow station are all done. Well test on Oza-2 Short and Long strings gave results suggesting productions of as high as 1,500BOPD on Choke 22 (short-string) from the L9.0 sand and 10,000BOPD on Choke 20 (long-string) from the M2.1 sand. Production on both strings had low GOR (between 250scf/Bbl and 1,000scf/Bbl). Oza field’s production is the least certain of the three.

How the Taps Were Opened In Chevron’s Agbami’s Phase Three Project

Chevron’s Agbami Phase 3 project was kicked off in 2012 to maximize recovery of the Agbami field, Nigeria’s largest producing single hydrocarbon asset. The idea was to increase production and keep the Floating Production Storage and Offloading (FPSO) system full. That vision became a reality in 2016.

The project involved drilling new wells to drain a compartment of the field that was not part of the last two phases of development. Agbami field initially came on stream in 2008. The field hit had reached peak production of 250,000 barrels per day in August 2009, or four months ahead of schedule, but years later, natural decline had kept output between 230,000 and 240,000BOPD.

Company spokespersons say that timely decisions were critical to the success of the project. One such decision, made earlier on in the project- to purchase long lead equipment- was critical to enable the projects to meet the scheduled milestones. With this Deepwater project, some of the long lead items had lead time of almost three years. So the decision had to be made before all the details of the project were finalized. Another such decision was to acquire four dimensional (4D) seismic data, which helped the team locate the wells in optimal reservoir positions, resulting in production performance and reserve additions exceeding expectations.

“There was a very good synergy between the Agbami Phase 3 project team and the Deepwater based business subsea team”, company spokespersons say. “The Deepwater subsea team manages the African Inspiration Vessel, owned by the Nigerian contractor Marine Platforms, is a multipurpose vessel deployed in the Agbami field. This vessel was used to install several project equipment including the Subsea Trees, Manifold and Connection System. It was also used to commission and set up the subsea wells. The utilization of the African Inspiration Vessel contributed to significant cost savings for the project.

Chevron says that the Agbami Phase 3 project was executed below budget and ahead of schedule.
The project delivered an ambitious local content scope. “We manufactured the two production manifolds and the two suction piles 100% in Nigeria and this is a repeat of success we had right from the legacy time where we did exactly that, so we are again repeating that success”, Chevron spokespersons say. “Agbami Phase 3 project contributed towards Nigeria human capacity development through the use of Nigerian engineers; we have also now domesticated, in-country, the capacity to assemble and fabricate Deepwater subsea trees and manifolds in Nigeria”, the company men explain.

Agbami Phase three was a transnational project. “Everything literally happened across continents”, company officials point out. “We had the contractors/engineering team work in France as well as in Nigeria. We had the manufacturing of the flexible pipes occur in Malaysia; the Chevron core project team was here in Nigeria and we had some UTC support groups in Houston as well as in Australia. So again, it literally happened across continents which made it all the more interesting”.

Some of the aspects of the project that excited the Agbami team were the witnessing of technological components coming together. One highpoint, spokespersons note “was seeing everything come alive during the umbilical installation and onboarding and polar Onyx vessel and when all the wells were basically brought online and hydraulically operated from the FPSO; the new drill centers coming alive was a very major achievement for me on the project”.

Another testimony was that In Agbami Phase 3 project, “the Subsea Control Module (SCM) 150 which is the older module being used was obsolete and a new model SCM 615 was introduced. So we had to conduct two tests namely: Fill Coexistence Test and Backward Compatibility Test to check and ensure that the older model SCM Model 150 and 615 can co-exist and function together on the same pair of wire subsea”. The company says that “the success story in all this is the fact that we are able to complete the installation of all the four numbers flow lines and the Subsea Flying Leads (SFLs) and inflow umbilicals within time, incident and injury free”.

TransForcados System (TFS) Is Back Up

By Toyin Akinosho, in Lagos

The TransForcados System, a crude oil export facility in Nigeria, is back on line.
Comprising a pipeline, a crude loading line and the terminal itself, the TFS had been out of operation for over 15 months, shutting out at least 200,000Barrels Per Day of Nigerian crude.

TFS came back on line sometime between May 15 and 20, 2017, but most companies involved have been mum about it, perhaps out of concern that it might again be put out of action.

The facility is the export thoroughfare for crude produced by one International company, Shell, and ten Nigerian independents: Seplat, Elcrest, Shoreline, Neconde, Shell Petroleum Development Company, Pan Ocean, NDWestern, Pillar, Midwestern, Energia and Platform.

Until it was shut down in February 2016, through a military grade dynamite of the undersea, six kilometre crude loading line, by gangs operating in the Niger Delta Basin, it was the only outlet for all the crude produced by six of these companies: Seplat, Elcrest, Shoreline, Neconde, Pan Ocean and NDWestern.

It was, however, only a secondary thoroughfare for crude produced by Pillar Oil, Midwestern, Energia and Platform Oil, which all have an alternative evacuation fare: in ENI (Agip) operated Kwale to Brass pipeline.
In the period that the shut- in lasted, however, four more companies –Seplat, Elcrest, Neconde and Shoreline-had commissioned alternative routes to market, all of them, through shipping operations.

The cost of shipping (barging crude into FPSOs) is however so high many companies say it is not sustainable. Elcrest, for example, was paying $15 on every barrel shipped through the operations. “It’s not sustainable”, says Abdulrazaq Isa, Chief Executive of Waltersmith, which has equity in NDWestern. He was responding to questions as to why NDWestern was not involved in barging.

Seplat, on its own, reported that the costs of barging would come down, once it becomes a routine route to export.
The latest crude oil producer in Nigeria has joined the cohort of companies pumping crude through the TFS. It is Excel E&P, and it has resumed injecting into the system. It’s not clear how much Excel is producing from its dual stringed Eremor marginal field, located at the current mouth of the Niger Delta basin, but Biodun Awosika, the company’s Chief Executive, confirms that the Technically Allowable volume that the Department of Petroleum Resources(DPR), the regulatory agency approved, was 900 Barrels of Oil Per Day.

The outage of the TFS is a symbolic event that suggested that the Nigerian state cannot secure the country’s petroleum infrastructure.

The facility came back up last November, nine months after the original blast, but it was immediately put out of action again.
Elcrest says it is currently producing 8,500BOPD gross (Net to Elcrest: 3,825BOPD) from Opuama-3 and anticipates production start-up from Opuama-1, which will pump up the volume, in due course.Fuller details of what other companies have been producing since the start are published in the June 2017 edition of the Africa Oil+Gas Report.

PIGB Creates Three Commercial Entities to Replace NNPC

Nigeria’s Petroleum Industry Governance Bill (PIGB) 2017 proposes the incorporation of three commercial entities including the Nigeria Petroleum Assets Management Company, National Petroleum Company and the Nigeria Petroleum Liability Management Company.

The bill, passed by the Senate, the Upper Chamber of Nigeria’s Bicameral House of Legislature, on May 25, 2017, seeks, among other things, to restructure the Nigeria National Petroleum Corporationby splitting the assets and liabilities of the corporation into two new commercial entities, namely the Nigeria Petroleum Assets Management Company and the National Petroleum Company which will result, mutatis mutandis, in the repeal of the Nigerian National Petroleum Corporation Act CAP N123, Laws of the Federation of Nigeria, 2004, Nigerian National Petroleum Corporation (Projects) Act CAP N124 Laws of the Federation of Nigeria, 2004 and Nigerian National Petroleum Corporation Amendment Act N123.

The Nigeria Petroleum Liabilities Management Company is proposed as a limited liability company that has the legal capacity to hold assets including shares in the Nigeria Petroleum Assets Management Company and the National Petroleum Company on behalf of the Government of the Federal Republic of Nigeria.

Funding of the Nigeria Petroleum Assets Management Company shall be by appropriation through the National Assembly for the initial capitalisation and subsequent financing of the company. The Federal Republic of Nigeria Appropriation Act 2016 provides for the funding of NNPC through appropriation.

Part of the recurrent and capital expenditure components of the Appropriation Act 2016 which shall be received by the Nigeria Petroleum Assets Management Company from the NNPC budget aforesaid shall be adequate to provide for the financing of the establishment of the Nigeria Petroleum Assets Management Company. Therefore, no further financial requirements are needed for the establishment of the Nigeria Petroleum Assets Management Company.

New PIGB “Strengthens” DPR, Repeals PPRA

The Petroleum Industry Governance Bill 2017, passed by the Nigerian Senate on May 25, 2017,proposesthe establishment of the Nigeria Petroleum Regulatory Commission, which is a more independent and enlarged version of the existing Department of Petroleum Resources.

“The intendment of the Bill is to rationalise and merge two existing agencies including the Department of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency and will result, mutatis mutandis, in the repeal of the Petroleum Products Pricing Regulatory Agency (Establishment) Act, CAP P43, Laws of the Federation of Nigeria, 2004”.

The new Commission will be funded by appropriation through the National Assembly. The Federal Republic of Nigeria Appropriation Act 2016 provides for the funding through appropriation of the Department of Petroleum Resources of the Ministry of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency.

“The recurrent and capital expenditure components of the Appropriation Act 2016 (Nigeria’s 2016 Budget) aforesaid are more than adequate to provide for the finance of the establishment of the Nigeria Petroleum Regulatory Commission”, the bill says. “Therefore, no further financial requirements are needed for the establishment of the Commission”.

West African Ventures Not Affected By STG’s Liquidation

Sea Trucks Group (STG) Limited has gone into provisional liquidation, but its subsidiaries are not subject to insolvency proceedings, according to FTI Consulting, the firm handling the Liquidation.

“The management team remain in control of operations and it is business as usual for the Group”, FTI declared in a statement. “The provisional liquidation of the Company has no impact on the operations of the Group”. This is quite an odd sort of liquidation.

STG is an international group of companies offering offshore installation, accommodation and marine support services to the oil and gas industry worldwide. One of its key subsidiaries is the Nigerian based West African Ventures, which has always claimed to be an indigenous company. WAV’s corporate headquarters are in Lagos. It has a Marine Support Base and shipyard in Warri and Dry-dock and Fabrication facilities in Onne Oil and Gas Free Zone, in the east of the country.

The Eastern Caribbean Supreme Court in the High Court of Justice British Virgin Islands appointed, on May 5, 2017, Chad Griffin of FTI Consulting LLP and Ian Morton of FTI Consulting (BVI) Limited as Joint Provisional Liquidators. A statement by FTI notes that “the appointment is only to the Company, being the group holding company”. The underlying operating/asset owning companies (the “Subsidiaries”) are not subject to insolvency proceedings.

Griffin, Joint Provisional Liquidator of the Company, commented: “The Provisional Liquidation will provide stability and Court protection, to create a platform to maximise value. We will be working closely with the Group’s directors and management team to understand the affairs of the Company.”

Chevron’s Deepwater Production Overwhelms Its Shelf/Onshore Output

Chevron’s net daily production in the Niger Delta’s shallow water and onshore acreages averaged 56,000 barrels of crude oil, from 27 fields in 2016. This is less than half of the 148,000BOPD the company averaged (net) in two fields the deepwater in the same year.

Chevron Nigeria’s main provider is Agbami field, from which the American major had a net output of 120,000BOPD. The company averaged 28,000BOPD (net) from the Usan field, also in deepwater. But Agbami’s gross average for the year was 238,000BOPD, clearly the continent’s largest gusher of oil.

The dominance of deepwater production mirrors the country’s crude production profile in the last 10 years. In 2005, Chevron was operating about the same volume it does now, with nary a drop of oil from deepwater.
What Chevron is producing in abundance, on the shelf, is natural gas. In 2016, the company averaged, on a net basis, 142Million cubic feet of natural gas, most of it for the domestic gas market. It produced, for export, 4,000 barrels of LPG every day.

Chevron says it is continuing its efforts to monetize total potentially recoverable natural gas resources of approximately 17 trillion cubic feet in the Escravos area through a combination of domestic and export sales and use as fuel in company operations. That is close to 10% of Nigeria’s estimated natural gas reserves of 192Tcf. The company is the operator of the Escravos Gas Plant (EGP) with a total processing capacity of 680Million cubic feet per day of natural gas and an LPG and condensate export capacity of 58,000 barrels per day.

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