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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”.

 

 


Nembe Creek Trunk Line in the Fourth Week of Shut In

By Joacim Otutu

 

The seven year old Nembe Creek Trunk Line is in its fourth week of outage since early June 2018.

The 48”, 97kilometre, 150,000Barrels Per Day capacity crude oil evacuation pipeline was shut in on June 7, 2018, after significant rupture was detected.

The Nigerian independent AITEO, who is co- owner and operator of the facility, has been working on repairs of the line since then. “But it doesn’t look that the mend would be completely effected before the middle of July 2018”, sources at the company disclose to Africa Oil+Gas Report.

The NTCL, built for around $0.5Billion and commissioned in 2011, was meant as a replacement for the old Nembe Creek Pipeline, which had been severally weakened by “crude theft points” installed by oil thieves.

But the “new” Nembe Creek Trunk Line (NCTL) itself has been a target of oil thieves and vandals since its being commissioned into use. AITEO purchased a 45% stake in NCTL from Shell in 2015.

 

The company says that vandalism of the line by oil thieves has “resulted in the NCTL being shut down for about 145 days and an approximate deferment of 50.386Million barrels of Crude Oil (Net) for the six injectors into the NCTL since AITEO took over the operatorship of the Trunk line in September 2015”. Just a month before the June 7 shut in, “there were a total of 24 illegal bunkering points identified along the NCTL”, of which the company had “successfully repaired 9 of these illegal bunkering points during May 2018 at a huge cost”.

The current outage is apparently caused by tampering that is in a much more industrial scale than the earlier bunkering points.


CWC Group Announces Nigeria’s Leading Oil & Gas Gathering to return to Abuja in July

News Release: Nigeria Oil & Gas Conference & Exhibition, 2 – 5 July 2018, ICC, Abuja, Nigeria

High level government participation in this year’s event is highly anticipated as the industry seeks intervention in the face of global challenges. The price of crude has dropped to record levels forcing many in the industry to cancel or suspend key projects and investments.

Commenting on this edition of NOG, Wemimo Oyelana, Vice President – Production, Africa, CWC Group stated: “Now in its 17th year, NOG has become an extraordinary event in the Nigerian and international energy calendars. It brings together policy makers, operating oil companies, technology innovators and local manufacturers in an open and free discussion and debate that has the potential for developing new strategies to drive the industry forward.”

Other expected key participants include Ministers of the Federal Republic, senators, senior government representatives from the Ministry of Petroleum Resources as well as NNPC and its subsidiaries. Also participating will be key players from international oil companies, independent producers, international and indigenous service providers and industry associations.

Industry leaders already confirmed include:
⦁ Dr Maikanti Baru, Group Managing Director, NNPC
⦁ H.E. Mohammad Sanusi Barkindo, Secretary General, OPEC
⦁ Mordecai Ladan, Director, Department of Petroleum Resources
⦁ Simbi Wabote, Executive Secretary, NCDMB
⦁ Bello Rabiu, Chief Operating Officer – Upstream, NNPC
⦁ Henry Ikem Obih, Chief Operating Officer – Downstream, NNPC
⦁ Anibor Kragha, Chief Operating Officer – Refineries, NNPC
⦁ Dafe S. Sejebor, Group General Manager, National Petroleum Investment Management Services

Dr Maikanti Baru, who recently announced the assurance of the NNPC to provide more support to indigenous companies in Nigeria’s Oil & Gas Industry, has fully pledged his support for the event.

NOG will provide delegates with the ability to learn how to develop innovative and profitable solutions to aid the development of Nigeria, something which Baru has urged private companies to do. The 4 day conference and exhibition will enable private sector companies to find opportunities to partner with the public sector which will aid the realisation of the Country’s economic goals.

Sessions throughout the conference will focus on issues such as the policies needed to enhance the Nigerian oil and gas industry’s competitive edge, the changes in legislation and policy that industry players want to see, as well as how the government is working with the industry to further develop policies.

About the CWC Group:
The CWC Group is a recognised world expert in the LNG, oil and gas, power and investment sectors, with particular expertise in emerging markets. We have a wealth of knowledge offering top-level strategic events around the world. We work closely with many governments, NOCs and international corporations to highlight the key issues and challenges facing the global energy industry and facilitate debate to find solutions. View the full CWC Portfolio of events.

Contact: Tori Wilson, Marketing Manager, vwilson@thecwcgroup.com


Mixed Grill in The Indies’ Camp

By Fred Akanni, Editor in Chief

Africa focused Western independents, listed in London, Toronto, Oslo and New York, have a mixture of experiences about projects they are pursuing on the continent.

While it’s true that the depressed crude oil price period of 2014 to 2017 hit them hard, and several of them were on the retreat from Africa, the overall investment narrative about this species is a lot more comprehensive.

For every Ophir Energy (who is harassed by government, spurned by partners and cold shouldered by financiers), there is a Kosmos Energy, (who is applauded by the market and hailed by government partners).

For every Tullow Oil that is counting both cost and listing its blessings to look on the bright side, there is an Africa Oil Corp. which is collecting a Landlord’s rent and is on an acquisition binge.

One challenge that is common to most independents is that the new oil and gas reserves that were discovered in the heyday of the last boom have now reached development phase.

Our question remains: Are these independents still, as a group, the markers to where the opportunities lie in Africa?

Africa Oil+Gas Report’s 2018 edition of Independents’ Day, the magazine’s once-a -year review of activities of foreign independent companies operating in Africa, pays close attention to the results of these companies’ exploration ventures in little known basins on the continent, as well as details of plans for the near term. Our job is much more than presenting the general picture. It is to ensure that wherever you are on the planet, you get such a grasp of deal flow, operational plans, and short to mid-term strategies that provide you enough understanding of what’s going on around Africa’s hydrocarbon resources to make a profitable investment.

The Africa Oil+Gas Report -a monthly trade journal-is the primer of the hydrocarbon industry on the continent.

Find out in these pages.

 


FID Slips For Africa’s Big Four Oil Projects

By Toyin Akinosho

Two weeks to the end of 1st Half 2018 and the much advertised Final Investment Decisions (FIDs) have failed to materialise for four big African oilfield projects.

The $20Billion Ugandan Albert Basin project, (200,0000BOPD at peak), which was the most certain of the four to take FID, still has a number of conditions precedent to reach the financing close. Yet this was the project that was reported as likely to get the nod in the last quarter of 2017.

The sanction may happen in 2018, but we now know that project commissioning date will slip beyond 2020. CNOOC, the Chinese behemoth with 44% stake in the upstream development, said last week that start-up was unlikely before 2021. This project has been on the drawing board for nine years.

Two greenfield deepwater oil projects offshore Nigeria, Bonga South West Aparo (BSWAP) and Zabazaba, collectively billed for over $25Billion, look nowhere close to getting sanctioned anytime in the year.

It is now certain that an FID in 2018 cannot not work for the SNE field, offshore Senegal, located in 1,100metre Water Depth in the Rufisque, Sangomar and Sangomar Deep Blocks.


Full details of Financial Sanctions for large sized Projects in Africa are available in this link, as well as in the June 2018 edition of the Africa Oil+Gas Report.

 


TransForcados Pipeline Shut In For the 7th Day Running

The TransForcados Pipeline in Nigeria, blown up on May 7, 2018, had not been re-opened as of the afternoon of May 14, 2018, a full week after.
Over 15 oil fields, producing about 250,000BOPD through the pipeline, are shut in.
Shell pumps the roughly 50,000BOPD crude it currently produces in its operated Western Niger Delta fields (held in Joint Venture with NNPC, TOTAL and ENI) through the facility. The crude is exported out of the country from the Forcados Terminal.
So do the six Joint Ventures that NPDC has with Nigerian independents (Seplat, Shoreline Natural Resources, Neconde, Elcrest E&P, NDWestern and First Hydrocarbon Nigeria).
Crude oils from four marginal fields (Pillar operated Umuseti field, Energia operated Ebendo field, Platform operated Egbaoma field and Midwestern operated Umusadege field) are also pumped through this facility, although the marginal field operators have an alternative evacuation route, through the ENI operated Kwale to Brass pipeline.

Seplat declared, in its 1st Quarter 2018 report, that it had a ready alternative to TFP in case of extended outage, and it was working on a second alternative, expected to be commissioned by 3Q 2018. It wasn’t clear, however, as of Monday May 14, 2018, if the London listed firm had activated the alternative.


Aggressive Conoil Doubles Production, Aims For A Quadruple

By Fred Akanni, Editor-in –Chief, from Lagos

Conoil is finally implementing the plans it had on the drawing board as far back as five years ago: take its daily crude oil production higher than what it was at the peak 14 years ago.

The Nigerian independent is on a drilling and field development campaign as aggressive as the difficult environment can allow, but it has taken production from 12,000BOPD to 20,000BOPD in the last few months, and is on course to triple it within the next two years.
With field optimisation and new drilling, Conoil has increased its output in Oil Mining Lease (OML) 103 from less than 1,000BOPD to 1,500 BOPD and from 11,000OPD to 18,500 BOPD in OML 59.

Conoil has drilled 11 wells from 2014 to date, a time when majors and independents alike, in Nigeria, have been largely on a break from the rig site.

The company has about four wells still planned for 2018.

Conoil discovered the Ango field in OML 59 in 2012 and has drilled five development wells (Ango-2,3,4,5 &6) in the new field since 2014. It has drilled three (3) exploration and appraisal wells (Obodo-28, 29 and Ekokor-1) in OML 150, (formerly OPL2007) and two exploration and appraisal wells (Anim-1&2) in OML 153, formerly OPL290.

Conoil will be hooking up three wells- Ango-4, 5 and 6 -in OML 59 in the next several months, expecting to use them to top up the volume with 20,000BOPD.

In February 2018, the company made a discovery, with Toju Ejanla-1, in cretaceous sediments on the western flank of OML 103. The finding has far reaching geologic significance: it is located on the cusp of the Niger Delta and Benin Basins. 
Conoil is expanding its facilities to take care of anticipated surge in production.

Currently it has two platforms (Aunty Julie and Mr. P) and it is building two platforms, including a Mobile Offshore Production Unit (MOPU, in the United States, which will be deployed on OML150 and OML 153.


Madu, Anyala FID Delayed……..

The Nigerian independent, First E&P finalised the acquisition of three dimensional (3D) seismic data on Oil Mining Leases (OMLs) 83 and 85.
These are the very acreages it has an agreement with Schlumberger to jointly develop, but the Final Investment Decision is unlikely to be taken before June 2018 for the development of the properties, which include Anyala (OML 83) and Madu (OML 85) fields in shallow water off the East Central Nigeria Delta. One key reason for the delay: Schlumberger and First E&P don’t see timing the same way. “There has been misalignment between the two partners on several milestones”, a source at the Nigerian National Petroleum Corporation (NNPC) explains.
Taking FID anytime after June 2018 means at least a full year after the NNPC, First E&P and Schlumberger signed a tripartite agreement for development of those two fields.
Project FID was supposed to have been taken by December 2017, with first oil expected by 2019. That is not going to happen now.
Under the agreement, Schlumberger will contribute the required services in kind and capital for the project development until first oil. The joint project team will leverage the technical expertise of Schlumberger and the extensive local knowledge of the partners. The project is to be developed with an existing FPSO and is designed to add 50,000 Bbls of oil per day and 120 MMscf of gas per day.


Oil Theft Caps Seplat Output Below 65KBD

Seplat Petroleum could easily have produced much higher than 65,000BOPD, on average, even from its assets in Western Niger Delta (WND) alone, but for perennial crude oil theft in 2018.
The company announced a gross Liquid hydrocarbon output of 61,150BOPD for first quarter 2018 from Oil Mining Leases (OMLs) 4, 38, 41 and the Umuseti field, in the Western Niger Delta, as well as OML53, in the Eastern Niger Delta.
Excluded is production in OML 55, also in the east, which, like the Umuseti field, it doesn’t operate.

“Production uptime in Q1 stood at 82%”, the company says in its first quarterly report. The 18% downtime is the result of perennial outage of the TransForcados Pipeline. due to leaks brought on by crude oil theft related vandalism. For specific periods in January, February and March, the pipeline was savaged.

Seplat says in the report that the Amukpe to Escravos pipeline, its main alternative to the TransForcados, “is expected to be commissioned and operational in Q3 2018”.
Vandals hacked into the TFP in very late December 2017, leading to outage in the first two days of January. Incidents happened in early February 2018, causing a four day outage from February 3 to 7. Outages occurred twice in March; first around March 7 and the second at the end of the month.
Seplat production in OMLs 4, 38 and 41, have been known to surge to 70,000BOPD, at optimum during the period.
The company also delivered 351MMscf/d of gas on average during the period, far more natural gas volumes than it ever had and which would have been even much more if not for those outages.


Eland Not Ready For Ubima Development

Nigerian authorities are lenient about the entire marginal field exercise

AIM Listed Eland Oil and Gas is not ready for development work on Ubima field, located onshore eastern Nigeria.
The company farmed into the asset as a 40% technical and financing partner to All Grace Energy Ltd., holder of the field, as far back as 2014.

It was two years after All Grace Energy was awarded the field by the Nigerian authorities, on a discretionary basis, outside of the process of a bid round.

The Ubima field is covered with three dimensional (3D) seismic data. Shell, the former operator, had drilled four wells on the structure. It would seem that its development would be easy.

But Eland had struggled as a going concern for the past five years. Even in the year it purchased equity in Ubima, it recorded a loss of over $10Million.

Today, Eland is back in the black, but it is not in a hurry to take Ubima to first oil. The company says the scheduling for evaluation and production of Ubima 1 is planned for 2018, with full field development being scheduled for 2019. The exact details of the development will be subject to the results obtained from the Ubima-1 re-entry.

“Work is currently on-going with pipeline surveys to both evacuation opportunities to the south through the Bonny Oil Terminal and to the north east through Brass River Oil Terminal”, Eland says in its full year 2017 report. “We expect to finalise these studies prior to completing the Ubima-1 re-entry”.

Eland cannot commit adequate time and resources to Ubima just yet because (1) it is busy with an aggressive development drilling campaign on OML 40 and (2), there are still cash flow issues, even with the seeming success of OML 40 (where it now produces in excess of 20,000BOPD from as low as 3,000BOPD three years ago).

In April 2018, Eland is continuing with drilling of with Opuama-9 and 10. “Further drilling activity on OML 40 is being considered for the Gbetiokun field development with the re-entry and completion of Gbetiokun-1 and the drilling of Gbetiokun-3 also potentially within 2018, subject to the various regulatory approvals being in place”.

Eland is also planning an exploration well on the Amobe prospect, to potentially be drilled in late 2018 or 2019, in the same acreage. “This large, robust, structure is similar to Opuama in structural style, shows structural closure over a vertical interval of 5,000 feet, and is located less than seven kilometres from the Opuama Flow Station. Best estimate prospective resources are assessed by NSAI at 78 MMstb, with very high upside potential”.

There is really no space for Ubima development here.

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