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BP Awards McDermott/Baker Hughes the Subsea Contract for Senegal’s LNG Development

Our first significant subsea EPCI project in West Africa”-McDermott

McDermott International, the New York listed subsea engineering contractor and Baker Hughes GE, the self-styled Full Stream oil and gas company, have been awarded subsea umbilicals, risers and flowlines (SURF) and subsea production system (SPS) equipment contracts by BP for the Greater Tortue Ahmeyim natural gas project, located offshore Mauritania and Senegal.

McDermott was awarded a substantial* engineering, procurement, construction and installation (EPCI) SURF contract. “The company “plans to use its upgraded Amazon vessel, DLV 2000, North Ocean 102 (NO 102) and third-party vessels to support installation scheduled to begin in late 2020”, the company says. The Amazon modifications are scheduled to be completed before the installation campaign begins and will include a multi-joint (hex) J-Lay system to handle the most challenging ultra-deepwater projects as well as the addition of a multi-joint facility, dual pipe loading cranes and additional power generation”. McDermott also says that the pipeline and riser structures it designs will be fabricated at its yard in Batam, Indonesia.

BHGE, on its own, declares that it is “demonstrating the benefits of early-engagement and collaboration – some of the key components of Subsea Connect – as well as bringing its expertise in deepwater, long-offset gas projects”. The company will provide five large-bore deepwater horizonal xmas trees (DHXTs), a 6-slot dual bore manifold, a pipeline end manifold, subsea distribution units (SDUs), three subsea isolation valves (SSIVs), diverless connections and subsea production control systems, specifically designed to enable the future integration of additional wells for the first phase of the development.

Tareq Kawash, McDermott’s Senior Vice President for Europe, Africa, Russia and Caspian testifies:  “This contract marks a number of firsts: our first significant subsea EPCI project in West Africa; the first project using our state of the art pipelay vessel Amazon; and our support of BP’s first entry into Senegal and Mauritania. This project is also of significant importance in support of our aspirations in this region,” said. “Our collaboration with BHGE allows us to offer BP an integrated approach that builds on our proven solutions. We look forward, along with BHGE, to deliver this landmark project to BP with the highest levels of safety and quality.”

“Together with McDermott, we will deliver the best-in-class solution to BP with cost-efficiency and industry-leading safety. These awards demonstrate the value of early-engagement, collaborative partnerships and holistic project planning, which are very much central to our new approach to subsea developments, Subsea Connect,” said Graham Gillies, BHGE’s Vice President, Subsea Production Systems & Services. “This major deepwater gas development is strategically important for Mauritania and Senegal’s domestic and global gas supply, and supports the industry’s drive for a more sustainable, lower carbon future.”

These latest awards follow an initial front-end engineering and design (FEED) phase, awarded in March 2018, during which BHGE and McDermott worked together to define the technology and equipment scope for a four-well development phase. Project management and engineering teams from BP, BHGE and McDermott will remain co-located at McDermott’s London offices for this next phase.

BHGE has also signed an agreement to become a “Country Partner” of Invest in Africa’s (IIA) Senegal chapter, of which BP is a founding member. The IIA helps local suppliers to connect with international oil and gas companies, increasing the opportunities for local businesses to support large-scale projects, and training African suppliers on core business skills and entrepreneurship.

Project Details
The initial subsea infrastructure connects the first four of 12 wells consolidated through production pipelines leading to a floating production, storage, and offloading (FPSO) vessel. From here liquids are removed and the export gas is transported via a pipeline to the floating liquid natural gas (FLNG) hub terminal where the gas is liquefied.

* – McDermott defines a substantial contract as between $500 million to $750 million. The contract award will be reflected in McDermott’s first quarter 2019 backlog.


Angola Returns, Nigeria Remains

Angola has furiously mended fences with International Oil Companies, creating new opportunities for a return to some robust deep-water exploratory activity.

But Nigeria has remained challenging for these same actors.

The difference is not entirely about government policies.

Geology has played a major role in making Angola a supplicant, and Nigeria, relatively aloof.

Until the raft of agreements with each of four majors: ExxonMobil, TOTAL, BP and ENI in the last one year, Angola was looking at a landscape of declining activities and a huge chance of production becoming a terribly small fraction of what it once was, over the coming decade.

Conversely, a long queue of deep-water projects snake around Nigeria’s Niger Delta basin, which has a thicker sedimentary fill than Angola’s Congo Basin.

Nigerian produces from a rich diversity of terrains; onshore land, onshore swamp, shallow water and deep-water, whereas Angolan production is 98% deep-water.

Nigeria hosts a diverse cast of producers; home-grown independents, the state hydrocarbon firm, a Europe based Chinese owned independent, an Indian producer, majors and super majors from Europe and America.

Angolan production relies almost entirely on the majors and super majors and, to a small extent, the operating subsidiary of the state hydrocarbon firm.

Angola’s decline in production fortunes didn’t start with the crash in crude oil prices.

Click here for the full story here.

Eq. Guinea: Ceiba Field Optimisation Remains Challenging

Oilfield production optimisation has proved a little more difficult than expected for Kosmos Energy in the Ceiba-Okume complex, offshore Equatorial Guinea, an asset which it purchased as operator in October 2017.

Average production in 2018 came to about 44,100BOPD, a less stellar performance than the prognosis in the company’s 2017 annual report.

Kosmos Energy had boasted, in that report, that it had increased production by over 3,000BOPD to 45,000BOPD in the last two months of 2017 and two months into 2018. But keeping the production uptick has proved difficult, otherwise the output should be a few thousand barrels per day north of 44,000BOPD.

The American independent had purchased the fields from compatriot Hess Corp. in October 2017 and had proposed a range of solutions to boost output, including waterflood, electric submersible pump (ESP) installation and in-fill drilling.

Kosmos also declared that there was a potential to double recovery factor in the two fields, “with about ~400Million barrels remaining”.


Train 7 Is Far Ahead of Bonga SWAP in Run For FID

The proposed Eight Million Tonne Per Annum LNG Plant in Eastern Nigeria, otherwise known as Train 7 of the NLNG Facility, is several miles closer to financial sanction than the Bonga South West Aparo deepwater oilfield project.

Barring any serious obstruction, the Tran 7 project is on course of taking Final Investment Decision by the last quarter of the year.

The BSWAP, on the other hand, is unlikely to get financial sanction until second quarter 2020. Shell’s announcement for tender for BSWAP three weeks ago, prompted speculation that the FID for the long drawn project was imminent and might be achieved before the end of the year. But industry insiders who have been involved in the major projects in Nigeria over the years see so many hoops that Shell and NNPC have to jump through, to reach commercial tender, which would provide the information to take the final investment decision.

Over 40 companies and consortia have submitted tenders for the six bid packages (including the FPSO, PFRI, SPM, Unbilicals, Rotating Equipment and Subsea Hardware). It would take some time for sorting out through the arguments that each of these companies /consortia are making in these packages, And as this the technical bid, it is where the main work of evaluation would be, for those who are assessing the best concept for delivering the project.

Conversely, the work of Train 7 is far advanced. Two consortia have been working on the FEED and are expected to deliver the FEED documents by the end of April and it is the consortium whose option is considered more optimal that would be awarded the contract to build. All other contracts to be awarded would be tied to the model suggested in the FEED by the winning consortium. It is likely that contract for construction could be awarded by early as the 3rd quarter of 2019.

Local Leaders Complain About Land Grab in Kenya’s Oil Rich Province

Political and community leaders in Turkana County, which holds Kenya’s commercially proven oil reserves, have reacted to the gazette notice of land acquisition by the country’s  National Land Commission.

The leaders, including such parliamentary leaders as, Senator Malachy Ekal, MPs James Lomenen and Daniel Epuyo and the governor of the country, Josphat Nanok have questioned the “quick” gazettement of land in oil fields in preparation for compulsory acquisition.

They say that community land issues were emotive and “ought to be handled in the right way that brings the community together to move on the same track with government plans and investors”.

The gazette notice dated Friday, February 8, 2019, stated  that “In pursuance of section 107 (5) and 162 (2) of the Land Act, 2012 the National Land Commission on behalf of the Ministry of Petroleum and Mining, State Department of Petroleum gives notice that the government intends to acquire the land depicted by and falling within the following co-ordinates in Turkana County for upstream development”. It added that “Plans depicting the land may be inspected during working hours at the office of the National Land Commission, Ardhi House, Third Floor, Room 305, 1st Ngong Avenue Nairobi. Notice of inquiry will be published in the Kenya Gazette as per section 112(1) of the Land Act, 2012.”

But Messrs Ekal, Lomenen Epuyo and Nanok say that due process hasn’t been followed in the lead up to the gazette notice, adding that the county government and the community were not informed of the move even though issues concerning community land were in court

“There is a need to resolve the issues now before the targets of 2021 oil export plans are pushed forward. Unfortunately, these are not issues that can be overlooked,” said Mr Nanok.

Mr Lomenen, the MP, was reported by Business Daily, Kenya’s top financial daily, as saying there was  a scramble for Turkana. “We want to make it clear that the land is communal. No one has mandate to gazette it without the county government’s nod.”


MODEC Gets the FEED Contract for Senegal’s First Oil Development

MODEC, the Japanese supplier of Floating Production solutions, has been awarded the front-end engineering design (FEED) contract for the SNE Field Development floating production storage and offloading (FPSO) facility, offshore Senegal.

The FPSO is expected to have a capacity of around 100,000 Barrels of Oil Per Day, with first oil targeted in 2022.

“Following FEED, and subject to necessary government and joint venture approvals, it is anticipated further contracts will be awarded to MODEC to supply, charter and operate the FPSO facility”, Woodside Energy says in a release.

The SNE Field is located in the Rufisque, Sangomar and Sangomar Deep Blocks, which cover a combined area of 7,490km² within the Senegalese portion of the Mauritania-Senegal-Guinea Bissau (MSGB) Basin.

 “Securing an FPSO facility is a significant step for the joint venture and will allow the project team to complete the technical and commercial activities required to support a final investment decision, targeted for mid-2019,” says Woodside CEO Peter Coleman.

The FPSO FEED contract award follows the subsea FEED scope awarded to Subsea Integration Alliance in December 2018. The development concept is a stand-alone FPSO facility with 23 subsea wells and supporting subsea infrastructure. The FPSO will be designed to allow for the integration of subsequent SNE development phases, including gas export to shore and future subsea tie-backs from other reservoirs and fields. Phase 1 of the development will target an estimated 230 MMbbls of oil resources (P50 gross) from 11 producing wells, 10 water injectors and two (2) gas injectors.

Over 500 Landowners Affected in Kenya’s Crude Export Right of Way

The Kenyan government has published a gazette giving notice to land owners along the right of way of the planned crude oil export pipeline to the coast of Lamu.

The action is the latest in the series of actions leading up to final sanction of a 140,000Barrels of Oil Per Day oilfield development project, expected in late 2019.

A 750km pipeline is to be constructed, starting from oilfields in the South Lokichar Basin in the Turkana Country in the north of Kenya to the port town of Lamu on the Indian Ocean.

The government gazette notice dated Friday, February 8, 2019, stated  that “In pursuance of section 107 (5) and 162 (2) of the Land Act, 2012 the National Land Commission on behalf of the Ministry of Petroleum and Mining, State Department of Petroleum gives notice that the government intends to acquire the land depicted by and falling within the following co-ordinates in Turkana County for upstream development”. The notice said that “Plans depicting the land may be inspected during working hours at the office of the National Land Commission, Ardhi House, Third Floor, Room 305, 1st Ngong Avenue Nairobi. Notice of inquiry will be published in the Kenya Gazette as per section 112(1) of the Land Act, 2012.”

But the notice only indicated the right of way land in the upstream part of the project, i.e, the oilfields involved: Amosing, Ngamia and Twiga oil fields. It says nothing of the rest of the export route.

Crude oil was discovered in commercial quantities for the first time in Kenya in April 2012, by the British oil minor Tullow Oil. The company and its co-venturers TOTAL and Africa Oil, in concert with the Kenyan Government, have contracted  WorleyParsons and Wood Group, to come up with the Front End Engineering and Design (FEED) for the project.  The first phase will involve 60,000 barrels a day of oil and the second phase will add 80,000BOPD.  Project cost may reach $5Billion.

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.

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