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Activating the Roadmap for Angola

By Gerard Kreeft

What can we anticipate in Angola for 2019 and beyond?

While optimism is in the air there is also a high degree of impatience. The strategy for determining the direction of Angola’s oil and gas industry—which is the piggy bank for economic diversification be that for basic education, housing, drink water and santitation, and stimulating the agricultural sector—must still be taken and implemented.

Oil and Gas Authority

Amadeu Correia de Azevedo, the Director of the Oil and Gas Authority, is quickly moving to assert it’s authority: originally the handover of Sonangol’s concessionaire role was scheduled to start in 2020; now that has moved up to January 2019 to ensure a timely handover.

The Authority is expected to be very busy from the outset:

  • Overseeing and Implementing the Gas Legislation
  • Monitoring and reviewing exploration plans and development plans
  • Encouraging new companies to participate in Angola’s oil and gas industry.

Certainly a key sign to watch are Angola’s production figures. The Authority’s immediate goal is to ensure that oil and gas production does not stagnate at the current level of 1.4MMBOPD,   but increase to at least 1.5MMBOPD as quickly as possible in order to send a  positive signal to the international investment community.

Less positive has been the news that Shell did not submit a bid for the former Cobalt Blocks. The reasoning: a difficult project and the company has better opportunities elsewhere. This highlights two major problems which the industry in Angola must face and solve:

  • Developing value propositions for current and new potential assets in Angola that will help stimulate production;
  • International companies face internally a strong debate where they will invest their exploration and development monies…and Angola is part of this competition.

Overseeing and Implementing the Gas Legislation

At the recent Africa Energy Summit organized by EnergyWise, Maria Figueiredo, Partner (Miranda Law Firm) explained the basis of the new gas legislation:

Oil companies are entitled to prospect, explore for, appraise, develop, produce, and sell natural gas either domestically or on the international market. Originally this was the monopoly of Sonangol.

Contractual terms and conditions can be agreed upon on a case by case basis.

Concessions and contracts may set periods and terms longer than those set typically for exploration of oil.

Deductible: costs incurred with development and production of associated gas and construction of relevant pipelines.

Present concession contracts for crude oil are subject to 70% Petroleum Transaction Tax (PTT), but gas projects are exempted.

Present concession contract costs not linked with exploration, development and production of crude oil not eligible for deduction for Petroleum Income Tax (PIT); for gas contracts costs linked with associated gas and non-associated gas in the context of a crude oil project become tax deductible for PIT.

For oil concessions the Petroleum Production Tax (PPT) is 20%, possibly reduced to 10%; PIT is 65.75% and for PSCs the PIT is 50%.

For gas projects the PTT is 5%; PIT is 25%, and possibly reduced to 15% for projects with certified with reserves greater than 2Tcf.

The gas legislation has been welcomed by the industry as a good start to incentivize a potential gas energy. As the industry moves forward it is anticipated that the necessary amendments and challenges will be addressed. Will the incentives extended to explore for natural gas be done at the expense of oil projects? Can the industry also anticipate that current and future oil agreements will also possibly be amended?

Nonetheless, as Qi Chen of Chiron AlkaTrans Technology outlined at Africa Energy, a gas roadmap should entail:

  • Long-term planning for gas development and Monetization
  • Guiding strategy document for national development in the gas sector
  • Well to wheel: reservoir to end users
  • Gas production, infrastructure, movement, and Monetization plants
  • Fit into the national energy development strategy

Monitoring and reviewing exploration and development plans

Speaking at the Energy Africa Summit, Ken Seymour, of African Oilfield Solutions(AOS) stated  that if project development was to move forward it is paramount that the following criteria be addressed:

  • Opening licencing systems with rapid churn of acreage;
  • Making data freely available;
  • All stakeholders must be aligned to solely profit from production of hydocarbons.

While exploration has been done in the pre-salt basins, the results to date have been left wanting…yet there is optimism that with additional geological modeling and exploration, hydrocarbons can be found. For example, Sebastian Kroczka, Industry Solutions Advisor, Halliburton, visualized the following:

  • Application of smart connectivity between subsurface and surface data from field/FPSO to the office with automated and optimized workflows;
  • Faster data visualization, data analytics, machine learning, pre-processing and data integration.

Angola’s largest cash cows, the offshore Blocks 15 and 17, are fast becoming  mature  and innovation is needed  to ensure that the life cycle of these projects can be extended. The majors involved here—BP, Chevron, ENI, ExxonMobil, Statoil and TOTAL, are interested in further developing their businesses and open to innovative ideas and business propositions, varying from  enhanced oil recovery to natural gas production.

Encouraging new companies to participate in Angola’s oil and gas industry

More regional international co-operation can lead to more increased activity.  For example at Energy Africa, Namcor presented its Kudu Gas to Power Project. An example of how a small dedicated gas project can be developed and monetized. A precedent for Angola and also a stimulus to establish more regional co-operation.

With the majors taking up more stakes in Nambia, additional co-operation will be sought. For example rig-sharing. A major exploration cost. With increased exploration in both Angola and Nambia time-sharing of rigs is one example of co-operation.

Certainly it should not be ruled out that new players will start to look at the regional developments in South-West Africa. New players can be engines of change and can help speed along new business developments.

Gerard Kreeft, MA (Carleton University, Ottawa, Ontario, Canada) is founder and owner of EnergyWise.  The company has since 2001 managed and implemented oil and gas conferences, seminars and master classes in Angola on an annual basis.

Mr. Kreeft wrote this specifically for Africa Oil+Gas Report and the piece was earlier published in the November 2019 edition of the magazine.


If You are in Oil and Gas, You Should Be Worried

The world of fossil fuel is about to change. It is changing uniquely. The world will demand far more energy than it is currently doing, while the energy mix changes.

There are people who don’t believe that the transition is happening.Concerns have risen around prospects of global warming. The Paris Climate Agreement aims to keep global average temperatures from rising by two degrees Celsius.

Flooding, melting ice….the ecosystem is changing and clean air that we take for granted in many places is now coming under very severe challenges in some areas.

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Why Ghana Fawns Over ExxonMobil

By Toyin Akinosho

Pamela Darwin, ExxonMobil’s Vice President for Africa, could not have hired a savvier manager for her company’s reputation in Ghana than Boakye Agyarko, the country’s Minister of Energy.

“We couldn’t have found a better partner”, he told President Nana Akufo- Addo, at a state house reception for the supermajor’s representatives, after a Petroleum Agreement had been inked with the Ghana National Petroleum Corporation (GNPC), for the Deepwater Tano Cape Three Points Block(DWT/CTP), last January.

The event was aired on prime time National Television.

“ExxonMobil is the largest, publicly listed oil company, with deep pockets, technical know-how, both of equipment and people”, Agyarko gushed. “It’s our good fortune that we found them as partners to work with”.
Ms. Darwin gaped all the while at the minister. “As you said, we…” she commented, when it was time to respond. She had so little else to say.

Ghana is clearly excited to have a major oil company join the race to find hydrocarbons in the country.
It is 11 years since the first sizeable commercial find was made in the waters offshore the old Gold Coast, West Africa’s second largest economy.

There have been three field development sanctions, and commissioning, since that discovery; a feat for both country and continent.

But the roaster of international and local companies operating in Ghana has read like a list of the junior explorers on the oil patch.

Apart from Italian player, ENI, every other operator is a minnow. Anadarko, a senior American independent which has a position in the acreage hosting the Jubilee field, is content to be a passive participant. Russian giant Lukoil made a minor discovery, but considered itself so unlucky it handed back its stake. Weeks after the GNPC agreement with ExxonMobil, Hess Corp, a sizeable American independent, sold its Ghanaian assets to Aker Energy, a smaller Norwegian explorer.
Even small sized Eco Atlantic, known better for its enthusiastic press releases about its Namibian operations than any ambitious work programme, has walked out.

Tullow Oil and its partners have delivered so consistently on the Jubilee and TEN Fields, with their 2017 output in excess of 150,000BOPD, that they mask the country’s real challenges in attracting passionate, highly capitalised opcos.

In the last five years it had seemed like Ghana was destined to work with companies with shallow pockets. The GNPC signed agreements with ERIN, a cash strapped company struggling with debt in Nigeria, its heartland; Sahara, which has so much on its plate, from electricity generation and distribution through crude oil trading, to a string of exploratory and producing acreages, that it scarcely pays heed to its E&P operatorships; Springfield, a Ghanaian minor with large ambition but little money to realise it; Britannia U, which has produced off and on from its small marginal field in Nigeria, a hardly applaud able performance. Meanwhile AGM, linked to AGM Gilbraltar, reportedly includes AGR, said to be one of the world’s most experienced deep-water drilling companies, as well as Minexco and MED Songhai Developers Limited. So the consortium’s main claim to a pedigree is AGR. But, look carefully, AGR has never been an operator. It’s a service company. The Group was renamed Petroleum Services Group and delisted from the Oslo Stock Exchange in 2014.

One company which could run ahead with the ball is Amni Petroleum. The Nigerian producer operates a string of oilfields in its home country, is involved in current drilling campaigns, and is activating a field development plan for a newly acquired acreage. But that said, can Amni drop all the $50Million required to drill a well to prove the highly prospective plays it claims it has in the Central Tano Block? Not at all. Amni is in the market for a well -heeled partner to deliver a work programme in Ghana.

All of which explain Mr. Agyarko’s excitement about having the world’s largest, publicly listed company showing up to take a position, especially in ultradeepwater, between 2,000 and 4000 metre water depth, of that country’s segment of the south Atlantic.

The story is that the discussions go back to April 30, 2015, when the former Minister of Petroleum and the Ghana National Petroleum Corporation (GNPC) entered into a Memorandum of Understanding (MoU) with the oil giant.
ExxonMobil’s January 18, 2018 signature with Ghana is certainly in sync with the current trend of Big Oil swooping on frontier acreages in Africa and taking exploration acreages, especially as certain smaller Western independents, who have dominated the frontier, have gone on the retreat.

But if we recall that ExxonMobil has been keen on getting into Ghana for close to a decade now, we realise that the story is far more complicated than a simple ‘Junior versus Big Oil’ issue.
Back in 2010, Ghanaian authorities were averse to negotiations between ExxonMobil and Kosmos Energy, involving the former’s proposed acquisition of Kosmos Energy’s stake in the Jubilee and nearby fields, for a reported value of $4Billion.
I recall attending sessions of the Offshore West Africa conference, back in 2009/2010, when ranking ExxonMobil managers from Nigeria, took advantage of the conference location in Accra, Ghana’s capital city, to push the case for their wish to win a tract in the country.

The negotiations failed under the weight of mistrust between the Ghanaian state and Kosmos Energy, over the relationship between EO, the local content partner in Jubilee and Kosmos.

But that was then; as the junior versus Big Oil theory goes, the majors, in those days, 2005-2014, generally moved in after the minnows had made the discoveries in the African frontier. (People cite TOTAL’s entry into Uganda and Kenya, as example of that tendency, but again, the matter is not as straightforward).

Nowadays, the majors go everywhere in the frontier: BP in Mauritania and Senegal; TOTAL in Uganda, Kenya, Cote d’Ivoire; ENI in Morocco, ExxonMobil in (both proven and unproven tracts) in Mozambique.

They are developing the biggest fields, charting the riskiest undrilled acreages.

Yes, this part of the story is not complicated. The majors are taking newer, larger swaths of African territory than they’ve done in a while.

However you look at it, Ghana considers itself fortunate to be part of this evolving story.

Aliko and the 40 Indians

By Toyin Akinosho

The welding shop on the refinery construction site is not local content compliant

I was allowed to gate crash into a party meant exclusively for CNN in the middle of May 2016.
It was a conducted tour of the site of the Dangote refinery, part of a quartet of industrial projects under construction on over 5,000 acres of reclaimed land, in the eastern flank of Lagos.

Our convoy drove on a recently piled sand filled road for over 90 minutes, stopping at points to take in the geography of what place had been earmarked for the Petrochemical complex, the Fertiliser plant, the receptor terminal of the gas pipeline from the Niger Delta fields; the jetty to which crude oil arrives the refinery and from which petroleum products leave it.

I should be grateful to my hosts, who filled in my name and my colleague’s at terribly short notice. The Dangote Industries management gave me as much access to market intelligence about the $12Billion project as they gave CNN. If there was any information that I missed, and the CNN gained, it was more to do with journalistic enterprise than opportunity.

I say this because, ordinarily, Dangote Industries doesn’t routinely respond to queries from local journalists. The big stories about the company’s projects are those that filter in from the multinational news organisations: Financial Times, Bloomberg and the likes of CNN.

As we were ushered into the welding shop on the fertiliser grounds that Saturday afternoon, I noticed that only two of the over 50 welders in that shop were Nigerians. This minority looked awkward to me and I could sense their anxiety.

One had an air about him that suggested he was probably a supervisor but lacking authority. The other stood in the far corner of the shop, his two hands loosely hanging by his sides. He couldn’t join the buzz of conversation around him because he evidently didn’t belong.
Every welder in that vast room, apart from these two, was clearly an expatriate from the Indian sub- continent. I had to take photographs.

“I thought that this was an operation to benefit the Nigerian workforce, among other things”, I said to Tony Chiejina, Dangote’s Public Affairs manager, who I had known for over 30 years. “How come that in the first place that we are encountering a large workforce on this tour, there are hardly any Nigerians?”

“The type of welding we’re doing here is rather far advanced”, Chiejina replied. “We had to look outwards”.

Chiejina’s response was clearly off the mark. The Nigerian hydrocarbon industry teems with skilled welding talent, at every stage of the welding hierarchy. I should know. I have reported, elsewhere in this medium, a quote by a facilities engineer who used to be my colleague at Chevron, the American oil major: “The guys who worked as welders on the Agbami (a $10Billiondeepwater field development project), are riding Okada (Motorcycle Taxis) in Port Harcourt now”, he had said. “There are just not enough projects to keep people employed”.

In the midst of this absence of projects, a huge construction site like Dangote’s will have just about any homegrown welder it wants. And yet it has chosen to go abroad to source this mostly rudimentary skill set.

Unsatisfied with the response of the company’s official spokesperson, I took my query to his boss. Mansur Ahmed is the Dangote Group’s director in charge of stakeholder relations and corporate communications. When I asked him about the overwhelming number of Indian welders and the clear negligible number of their Nigerian counterparts, he admitted he had noticed. He didn’t attempt to bullshit. He merely shook his head to my query. I understood.

The Dangote Group has been accused of not involving Nigerian owned engineering service companies in the construction of its mammoth industrial complex. Such charges have been dismissed by company consultants who argue that the country lacks enough capacity in the requisite areas.

“Refinery construction is based on licensed patented technology”, said Jide Soyode, technical advisor to Aliko Dangote, founder and proprietor of the Dangote Group. He was re-affirming the statement already attributed to him elsewhere in the Nigerian business media. “So, how much of this technology exists in Nigeria? The last time such was done in Nigeria was 30 years ago and it was not done by any Nigerian company,” he told me, repeating what he said in Vanguard, a local newspaper.

In late October 2017, I ran into Simbi Wabote, executive secretary of the Nigerian Content Development Monitoring Board, NCDMB, the regulatory agency set up to monitor compliance of local content in the oil industry.

I knew that he and members of his board had been conducted on a tour of the Dangote Industrial complex, as recently as August 2017, so I asked him if he saw what I saw at the welding shop. He responded in the affirmative.
Wasn’t he distressed? I pressed.

“The complex is situated in a Free Trade Zone”, Wabote told me, so the NCDMB can’t act on that clear case of poor compliance with the National Content legislation. The NCDMB board discovered on the tour that Dangote Industries was ignorant of the availability of certain technologies that have been domiciled in the country. “We told them there were at least four coating plants”, Wabote said. “They didn’t know about that”.

Was Dangote feigning ignorance of some of the engineering capacity domiciled in-country?
PETAN, an umbrella group of Nigerian oil service engineering contractors, continuously campaigns against being shut out of the jobs in the Dangote industrial complex. “There are many components of a refinery”, Bank Anthony Okoroafor, PETAN chairman, has been quoted as saying. “There is a tank farm that would have several storage tanks; we have storage tanks for crude, and storage tanks for finished products. They would have pipelines. There are pipelines instrumentations, civil engineering works, metering, and all these components can be done by PETAN companies”.

I try to separate the claims and counter-claims between Mr. Soyode and PETAN regarding services available in country,from the symbolism of what I witnessed in the welding shop that afternoon in May 2016. The point is, whether or not you engage Nigerian service providers, it is not the most optimal thing to do, in a third world country of 180Million people with over 40% unemployment, to import welders from Asia for a job as basic as welding.

Dangote Industries has talked up its commitment to building technically honed Nigerian workforce.It has made noises about sending Nigerian engineers to India for training in batches of 50. For these engineers, it says there will be classroom training for one month, and on the job training for one year, which involves working with real time experts in the industry everyday. In a presentation to the Nigerian Vice President months before my visit, the company said it was engaging 7,500 people in direct and indirect jobs and will have 60,000 contractors and 10,000 service providers on site during the project stage of the refinery construction.
Given what I saw, I wonder what to believe.

This article was first published in the November/December 2017 edition of the Africa Oil+Gas Report, and launched at the 35th conference of the Nigerian Association of Petroleum Explorationists (NAPE).

Africa: The Liberal Electricity Market Is In Tatters

By Toyin Akinosho

..or perhaps it is struggling hard to take off

When Egypt signed a contract with Siemens, the German engineering firm, for delivery of 14,400MW capacity gas fired power plants in the space of four years, a putter of applause went up around the world.

One West African commentator noted that President Abdel Fattah El Sisi had tackled his country’s energy crisis with military fervour.
Siemens itself commended the head of state for choosing not to prolong Egyptians’ suffering by “starting a negotiation and tendering process that could have lasted for two or three years with nothing being developed.”

Within 12 months of the agreement, the first two of the 24 large gas turbines had been mounted on their bases in BeniSuef, a small town located some 115km south of Cairo. The rest of the project was rapidly on course for commissioning by 2019. This single but sizeable order will immediately increase Egypt’s power supply capacity by 50%, to 42,000MW.

4,000KM SOUTHWARDS IN GHANA, incidents of Dumsor (long period of darkness interspersed with short periods of light) ended and power cuts became less frequent when a 210MW diesel fired power barge arrived the country’s waters in November 2015. It was the first of two power ships ordered from Turkey. Ghanaians have been paying for slightly more stable electricity.

There are parallels between Egypt and Ghana’s ways of tackling the power outage challenge.
Read more

Majors Reclaim E&P Lead in Africa’s Frontier

European and American majors have returned to dominate the African frontier, seeking to establish new heartlands.
They are taking back the initiative from the small to large independents, who have mostly been responsible for new discoveries and development in basins outside Nigeria and Angola for the past 15 years.

In the last 12 months, Tullow, Kosmos, Apache and some of their peers have taken a back seat, as TOTAL, ExxonMobil, ENI and BP reclaim the African E&P landscape.

ExxonMobil has drilled a wildcat in Liberia, ENI has taken positions in Cote d’Ivoire, BP has bet on Senegal and Mauritania and TOTAL has grabbed a Senegalese asset that once belonged to a very junior company.

And that’s just the exploration part of things.

Find out in these pages.

The 2017 edition of Independents’ Day, this 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.

Africa’s E&P Hotspots, 2016-2025

By Toyin Akinosho

When Duncan Clarke, moderator of the Africa Hydrocarbon Arguments at the Africa Oil Week conference in Cape Town, asked me what I thought would be Africa’s E&P hotspots in the next 10 years, it was the face of Luca Bertelli that flashed in my mind.

Bertelli, Chief Exploration officer for the Italian giant, ENI, has brought a lot of cheer to the conference every year since 2014.

Through his presentations, you get a sense that ENI is getting everything right; with the drill bit, with offtake agreements, with farm downs, with budgets, and with timing around discovery to market, at a time when just about everyone else is complaining.

So my response to Duncan Clarke could have been: “To know where the hotspots would be is to follow where ENI is taking positions”.

Instead, I uttered: “What out for Northwest..”

Five Assets That Drain the Economy

By Austin Avuru

There’s too much profuse discussion on burning issues in Nigeria where the large proportion of discussants do not have the facts, or do not understand the details of the issues and are just guided by sentiments.

In the end the general public may be goaded by the one shouting the loudest than those with the most detailed analysis.

So what are the critical issues in the discourse about asset sales?
It is generally accepted by everyone today that the sharp drop in foreign exchange earnings occasioned by drop in oil price and reduction in production volume have led to a very strong supply/demand imbalance for foreign exchange. The result has been that over the past six months our naira exchange rate has gone into a tail spin. The real problem is not so much exchange rate but the volatility: the instability over a terribly short period of time. If the US dollar to Naira exchange were 500 and remains within a five percent band over a long period of time, it is better for business and economic planning than to have a 200 Naira to a dollar exchange rate today which plunges to 350 to a dollar in the next week owing to demand pressure.

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Change the Direction of Nigerian Crude

By Layi Fatona

Nigeria will be better off without the current model, adopted by all the oil companies, of “Near or Almost Total Export” of its entire daily Oil and a substantial quantity of gas production.

There remains no better way to develop a people, than domestic-oriented policies. Even China, in its new five year plan, is calculating on higher contribution of domestic consumption to its GDP

The Department of Petroleum Resources,the country’s regulatory agency, puts Nigeria’s total export of crude oil between 2010 and 2013 at 3.266 Billion barrels and gas exports by NLNG (during the same period) at 4.203 trillion cubic feet (Tcf) compared to only 1.393 Tcf of total volume internally used in-country.

In my simple calculation or deduction, that is enough crude to keep 10 Refineries, each with an installed capacity of 250,000 Barrels of oil per day (all working at full capacity) all-together refining some 875Million barrels per year for some four to five years – Non Stop!

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How NAPE Got Its Groove On

By Moses Akin Aremu

Prefects of the Patch: How a group of earth scientists became the key policy think-tank for the Nigerian oil industry

From the podium in the banquet hall of L’Hotel Eko Meridien, on the edge of the Atlantic in the east of Lagos, a passionate appeal went out to the Nigerian government a quarter century ago.

Laide Adegbola (then) president of the Nigerian Association of Petroleum Explorationists (NAPE), an organisation of geoscientists working napein the petroleum industry, requested Jibril Aminu, the (then) Petroleum Minister to administer “policies that would unleash the entrepreneurial energy of Nigerians and mobilise domestic venture capital for active Exploration and Exploitation of our Petroleum Resources.”

Exactly 10 months after Adegbola’s exhortation, the Nigerian Government delivered 12 new concessions in the Niger Delta to 11 indigenous exploration and production (E&P) companies. The event was sometime in mid-1990.

It was the first time in the country’s 107 years of oil search that Nigerians themselves would gain so many footholds as leaseholders in the upstream sector of the oil industry. The awards immediately increased the number of domestic lease operators from 2 to 13.

By 2000, four such companies were collectively producing 135,000 barrels of oil per day, a 7000% jump from the volume on the day of Adegbola’s speech. The share of Nigerian independents in the national production was 7%. But this was gross production, which meant that the equity share could be as low as 4%.

In August 2015, that share of production, on equity terms, was 12%, or roughly 260,000BOPD.

Many more Nigerian companies are battering at the door, with mixed successes. But everywhere from Escravos swamp to the Calabar flank, there is pressure from the Nigerian professional to get more than a toehold in the oil industry.

No organisation has fought that battle, and won more handsomely, if slowly, than NAPE.

It is easy to assume that Adegbola’s plea, as NAPE President, influenced the minister to grant those licences to Nigerian operators.

The reality is that the idea had lingered in the air for a long while before Adegbola came calling.

What is more, the minister himself had a personal agenda.

“When I first arrived at the Petroleum Ministry”, Aminu told a press conference in 1990, at the launch of the Indigenous Push, codename for encouraging Nigerian private sector participation in the oil industry, “I found that only one Nigerian-owned company was producing anything near I ,000BOPD. Even then it was a Government owned company.” Such a situation, he argued “was unacceptable.” Aminu decided to invite Nigerian businessmen, who had proved successful in other spheres of endeavour, to come into the oil industry by operating leases. He gave such businessmen discretionary awards and thereafter held a bidding round at which he specially looked out for Nigerian companies interested in lease holding.

Still, there is no doubt that Aminu’s indigenisation policies was in sync with NAPE’s sustained campaign for the integration of the petroleum industry into the mainstream Nigerian economy. It is a brave and odd battle, given the background of the organisation. To understand the oddity and the sense of bravura, we must go back to the beginning.

The body called NAPE came into being as the Lagos Society of Geologists and Geophysicists 40 years ago. It was the idea of a gentleman named Akomeno Oteri, who felt it was desirable to have such a professional society for furthering both social and technical interaction among professional colleagues. The idea was developed after he attended one of the monthly meetings of the Society of Exploration Geophysicists in Dallas, United States.

The first meeting of the Lagos Society of Geologists and Geophysicists attracted 10 individuals, some of whom were not even interested in the whole idea.

“We were looking to have a body which specialised in discussing current ideas in soft rock geology.” recalls Chamberlain Oyibo, who succeeded Oteri as president of the body. Oyibo went on to become the Group Managing Director of the largest oil company in the country, the state owned NNPC. He is the only former NAPE president to have held that position.  “Most of the founding members were already members of the Nigerian Mining and Geoscientists, which was then made up mostly of mining engineers and professors of hard rock geology. We felt there was need for periodic meetings to discuss the most current thinking on sedimentology, petroleum geology, litho- and biostratigraphy, and the like.”

Although part of the mandate for the Lagos Society of Geologists and Geophysicists was to improve the quality of professional education for its members, the meetings then were held after work, in the private residences of members as they, being mostly low to middle ranking earth scientists, could not request their companies to grant them the time to meet during work hours.

Some of the most memorable meetings were held over fresh fish pepper soup (a choice Nigerian delicacy) served by Mrs Oyibo, who unofficially became the first “associate member” and “matron” of this burgeoning petroleum club.

Oteri, who then was working for Mobil (now ExxonMobil), recalls wondering, how that American company could even have allowed him the few hours, to run the society’s functions. Oyibo was working for Texaco. In those days, Shell would not allow any of their geoscientists to participate, at least openly.

Today, some of the distinguishing feature of NAPE is that it has had seven Shell (or former Shell) employees as president.

Ebi Omatsola, Laide Adegbola, Precious Omuku, Yomi Fisher, Promise Egele and Emmanuel Enu were all serving Shell staff when they were presidents of NAPE. Layi Fatona is the only former Shell employee who wasn’t at Shell when he became NAPE President.

NAPE has grown in leaps and bounds, buoyed by funds from oil companies — who are invariably multinational — and had been careful from birth, not to espouse views in public that would be seen as sharply at variance with the policies of its sponsors. But then over time, the membership composition has become mixed: the low –to- middle ranked earth scientists of the early days became management cadres and then became industry icons of their own. A good number of them have left the mainstream oil companies. Geoscientists running companies outside the exclusive league of multinationals have come on board. NAPE is composed of 7,000 individual geoscientists and 100 supporting corporate members, the largest professional association in Africa’s largest oil industry. The association organises a technical school every summer, at which petroleum geoscientists learn new tools of oil search. NAPE has become an affiliate of the American Association of Petroleum Geologists (AAPG). Its annual conference has become a huge event, attracting the cream of the industry, other professions and the country’s leadership. The conference entails four days of technical sessions and four days of exhibition involving scores of companies, spread out over several square metres of space. There is a lot of networking: with lawyers, engineers, bankers and investor types, attending the conference for no more profound reason than that it helps them gain a foothold in Nigeria’s premium industry. Now NAPE is so self assured that it takes its own logo very seriously: “Our ideas find oil.”

NAPE’s quest for an oil industry that would benefit the larger economy is the result of many strands of ideas, but the one event that put this issue firmly on the organisation’s agenda was the 10th anniversary of the association and the 3rd annual conference held in 1985.

There, in his keynote address to the conference, Duimo Itsuelli, then Managing Director of Phillips Oil, worried about the dearth of indigenous entrepreneurship in the industry and wondered why there could not be seismic exploration companies, seismic processing companies, drilling companies, biostratigraphy interpretation companies, even marginal field producing companies owned and operated by Nigerians. Itsueli looked around the Banquet Hall of the (same) Eko Hotel and remarked: “There are Nigerians now, who have been working for multinationals for 20 to 30 years; and some of them have worked in different corners and terrains, nay geological conditions of this earth. They have the appropriate experience, they have the knowledge. In these men and women, we already have technology transfer.”

The issues addressed by Itsueli’s paper featured largely in the NAPE President’s opening address the following year, 1986. There, in the same hall where Itsueli spoke, Bayo Akinpelu, then President, called for incentives for “Nigerian entrepreneurs to participate meaningfully in petroleum exploration” and offered that “NAPE would be most willing to participate in the formulating a blue print in that regard.”

Between 1986 and 1988, Presidents Dan Ndefo and Steve Okolo fashioned out a framework for a NAPE Foundation, floated to fund NAPE programmes, ranging from educational assistance to Universities, through sponsorships of NAPE summer schools, to scholarships for outstanding geology students. But the core issue of the development of local (E&P) business for the Nigerian petroleum industry remained staunchly on the front burner.

Then the dam broke.

In 1989, the Department of Petroleum Resources, the industry regulator, invited a paper from NAPE for a seminar on Statutory Control of the Oil industry in Nigeria.

In that paper, NAPE outlined a roadmap for the country to maximally benefit from the industry. Such a route, NAPE urged, would benefit multinationals that provide much of the investment funds and the technical know how as well the Nigerian people, whose resources are being exploited; it would challenge and squeeze the most value out of Nigeria’s own petroleum professionals and reward all stakeholders.

The Paper called for:

• Reduction in license renewal cycles and rationalisation of license fees

• Initiation and enforcement of unitisation as a precondition for field development where there are straddle structures.

• Gradual and phased withdrawal of government participation

• Removal of control and administrative overlap between the Department of petroleum resources and JVs (NAPIMS)

• Centralisation of Data archives to international standards and commercialisation of distribution.

• Participation of indigenous companies in the upstream end of the industry

These issues seem mainstream today, but they were revolutionary at the time, 27 years ago. In fact, to hear NAPE enthusiasts tell it: “it was our groundbreaking paper.” And it upped NAPE’s status from just another professional both to an influential advisor of government on policy issues.

“By then we had become an engine room,” says Lai Fatona, Managing Director of Niger Delta Resources and a former president of NAPE, “not just for Government Policies, but also for the industry.” It was Fatona who, then, as a member of NAPE’s executive committee, delivered that paper, in the year of Adegbola’s presidency.

What has helped NAPE thus far,” argued Tayo Ogunjemilusi, a former Vice President of the association,” is that the key administrators in the Ministry of Petroleum Resources are NAPE people anyway.”

In 1991, NAPE instituted a Pre-Conference workshop during which ideas that could help improve Government’s policies in the upstream sector of the oil industry would be canvassed.

Communiqués at this workshop were, until recently, routinely adopted by Government.

NAPE continuously adapts its style of organising the workshops to the changing dynamics of the country’s governance. In 1999, the year the country became a democracy, the discussion segment of the Pre-conference workshop was peopled by the relevant members of the National Assembly, Nigeria’s bicameral house of legislature. The session was chaired by the chairman of the Senate committee on Petroleum Resources. Among the panelists were the chair of the House of Representatives Committee on Petroleum Resources. When, at the formal opening of the conference on the following day, the communique was handed over to Jackson Gaius Obaseki, the Group Managing Director of the NNPC, who was representing President Olusegun Obasanjo, he simply lifted it up in the air and declared “This communique will be implemented, if we all agree to keep faith with it.”

Such a disclosure helps NAPE admirers to confirm their own feeling of achievement. Asks Fatona: “Has there been anything we have talked about as a Pre Conference theme, that has not remained a prominent issue for Government and Industry?”

The Challenges Ahead

NAPE’s influence with Government does not automatically translate to a cure-all for the challenges facing the oil industry. As Nigeria lacks an industrial base, the integration of the oil industry with the mainstream economy becomes impossible after a point. Nor has the association gotten anywhere close to sensitising industry operators into having a comprehensive scheme for producing high quality geoscience graduates from the Universities. 80% of geoscientists who graduated between 1995 and 2015 didn’t make it to the oil industry, according to a random survey by the Committee for the Development of Geoscientists. Although the study and practice of geology and geophysics transcend oil and gas and solid mineral exploration, the reality is that these sectors are the ones that are regularly overwhelmed by applicants. As such, even while they have no control over the matter, umbrella organisations like NAPE and NMGS find themselves challenged to do something about the escalating unemployment.

“There is need for more Nigerian involvement in the petroleum sector,” says Oyibo. “But the industry cannot exactly be Nigerianised. Nothing is being made here. We don’t have a technological base. We don’t have the industrial background. When they were building Aladja Steel complex, we said make line pipes so that at least we can use that to build pipelines..”

In spite of the aggressive localization effort since the Local Content Act was passed by parliament five years ago, the oil industry is still generally like an offshore industry. The crude oil is almost entirely exported. Most Nigerian service companies have to have foreign partners. “Statoil came from a developing oil producing country. Norway makes ships. We are asking foreigners to come and invest and we want to dictate. Yes. But we know the industry is going to remain foreign,” Oyibo maintains.

NAPE’s dominance of the Nigerian Independent space

NAPE’s rank and file members have benefitted from the direction of localization that the oil industry has headed in, even if they worked hard for it. Five of the top twenty indigenous oil and gas producing companies in Nigeria-the so called league of Nigerian independents-are either being run, or were built from scratch, by geoscientists who themselves were at one time presidents of NAPE. The most symbolic is Conoil, the first midsized independent Nigerian owned oil company operating its own fields. The founding managing director was Ebi Omatsola, Africa’s leading exploration thinker who so happened to have been a president of NAPE. Conoil was the only one of the Nigerian companies granted leases in 1990/1991 to take its acreage to first oil. In spite of its challenges over the years, it still produces over 7,500BOPD.

Niger Delta Petroleum, headed by Layi Fatona, (NAPE President 1993/94) is the most integrated of all Nigerian E&P companies, and the only one running a privately owned crude oil refinery in the country. Officially, NDPR is the first indigenous marginal field holder and has produced the Ogbele field uninterrupted for 10 years.

Amni Petroleum, of which Tunde Afolabi (NAPE President 1998/1999) is both Managing Director and Chairman, was awarded the Oil Prospecting Lease (OPL) 237 in 1994 and has produced the Ima field since1996. In July 2015, the company’s net production from the combined Ima and Okoro fields was ~10,000BOPD.

The smallest asset run by a former President of NAPE is the Assaramatoru field, operated  by Prime Energy, of which Chambers Oyibo, one of the founders of NAPE is Chief Executive. It is producing around 2,000BOPD. The marginal field was awarded in 2003 and is one of the eight fields from that award that have reached first oil.

The Ebendo field onshore Western Niger Delta is  operated by Energia Limited, founded largely by George Osahon who, in 2013, held both the positions of Director of the Department of Petroleum Resources DPR, the industry regulator, and President of NAPE. Ebendo is the second largest producing marginal field of the class of 2003, delivering in excess of 5,500BOPD.

THE LARGEST INDEPENDENT, home grown oil and gas E&P company in Africa is headed by Austin Avuru (NAPE President 2005/2006) who, at 57, is the youngest former NAPE president to run a company of that size. Avuru led Platform Petroleum, a marginal field producer, to form an integrated joint venture with Shebah Petroleum, operator of the Oil Mining Lease (OML) 108 in 2009. The Special Purpose Vehicle, named Seplat, was later joined and funded by French explorer Maurel et Prom (M&P) to purchase the Shell operated OMLs 4, 38 and 41, which collectively produce in excess of 72,000Barrels of Oil today. Seplat has grown both organically and by acquisition of more acreages and equity; it purchased 40% of Pillar Oil (a marginal field producer doing about 3,000BOPD) and acquired the 40% owned by Chevron in OML 53 as well as significant holding in OML 55. (These two purchases are being challenged in court). Seplat is in final stages of consummating an agreement over OML 25 with NNPC. Its operated 280MMscf/d of gas from Oben and Sapele fields makes Seplat the largest, private indigenous player in the Nigerian domestic gas market.


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