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OB3-“We’d Complete Our Own Section By End of March”, Nestoil Declares

Ernest Azudialu-Obiejesi, Chairman and Chief Executive of the Obijackson Group, parent of Nestoil Ltd, says that mechanical completion of the Oben Obiafu-Obrikom pipeline, a part of which the company is constructing, will be done by the end of March 2019 “and pre-commissioning and finalcommissioning much later in the year”.
Azudialu-Obiejesi told Africa Oil+Gas Report in a wide ranging interview: “We are at the mostinteresting and exciting part of the job. In the next few weeks, when we announce its completion; it would be one of the most interesting engineering achievements in pipeline construction in Nigeria.We are trying to get 48” sized pipeline under the River-Niger from the eastern part across the otherpart of the Niger, some 1.8km on the other side of the river”.

The company explains that there’s a host of challenges delivering the job, a crucial east –west pipeline meant to deliver gas from the rich reserves in the east of the country to the large markets in the west. The pipeline will help create some sort of a gas grid for the country. “It is the sheer scale and size and complexity of the river crossing and also the fact that you have a
seasonal window to operate” that have made the construction work so onerous, Azudialu-Obiejesi explains. “Once the rain starts, you are unable to do any work in those areas and you find that you have huge equipment that can be submerged when the river overflows its bank. We also had security challenges. In January 2018, Nigeria’s security operatives killed one of the major militants in the Omoku area. Many Nigerians who may be aware of the project may not be aware that the main operating area of this militant and his associates was in Omoku and its environs, the same vicinity where a large percentage of Nestoil’s section resides.  That was a major challenge but we are glad to announce that the worst is over as far as this project is concerned”.

Kenya’s PIB Hands 25% of Revenue to Host Oil Counties, LGs

Kenya has addressed revenue-sharing issues and host community concerns in a new petroleum law signed by President Uhuru Kenyatta,

The Petroleum Exploration Development and Production Bill 2017 grants the NationalGovernment 75% of the revenue accruing to the state from crude oil and gas exploited in the country, while County Government takes 20% and the Local Community takes 5%.

The new law, signed on March 12, 2019, improves on a 2015 Bill, which would have cappedthe County and Community allocations on the basis of revenue inflows into the national coffers in the fiscal year. The country’s parliament is expected to review percentages within ten years to take into consideration any adjustments needed.

In some fuller details, the law says:
The profit derived from upstream petroleum operations shall be shared between the contractor and the National Government in accordance with the petroleum agreement.
The national government’s share of petroleum revenues before the imposition of taxes shall be deposited to a dedicated petroleum fund, and managed in accordance with the PublicFinance •Management Act, (No 18 of 20112), and any other relevant law.

The national government’s share of the profits sharing of C rived from upstream petroleum operations shall be apportioned between the national government, the county, government and the local community.
The county government’s share shall be equivalent to twenty percent of the national government’s share: Provided that the amount allocated in accordance with this subsection shall not exceed the amount allocated to the county government by Parliament in the financial year under consideration.

The local community’s share shall be equivalent to five percent of the Government’s shareand shall be payable to a trust fund managed by a board of trustees established by thecounty government in consultation with the local community:
Provided that the amount allocated in accordance with this subsection shall not exceed one-quarter of: the amount allocated to the county government by Parliament in the financial year under consideration.

The new petroleum law provides quite a comprehensive framework for contracting, exploring, developing and producing petroleum in the East African country. Full story in the March 2019 edition of the Africa Oil+Gas Report

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.


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