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Africa’s Luckiest Explorer Gets A New Director

Cairn Energy, which found commercial quantities of oil during a low price regime when other independents were encountering gas, has picked a new director to oversee its aggressive exploration programme.

Eric Hathon joins the company from Marathon Oil Corporation where he held the position of Director Conventional Exploration, based at the company’s Headquarters in Houston, USA.

Hathon succeeds Richard Heaton, currently Cairn’s Director of Exploration, who is retiring after 23 years service with the company. Heatonwill step down from his role following Cairn’s Annual General Meeting in May 2017. 
Following a handover period, Hathon will be responsible for leading all of Cairn’s future exploration activities, which has Nporth West Africa as a major heartland.
 
He will be a member of Cairn’s Senior Leadership team and will report directly to Simon Thomson, Chief Executive.
Hathon joined  Marathon Oil Corporation in 1991 as an Exploration Geologist. Since then he has worked in a number of senior international management roles covering North and South America, Europe, Middle East and Africa. 

In addition to exploration responsibilities, Eric has held asset management and international new venture roles with Marathon. He has a BSc in Geology from Michigan State University and an MSc and PhD in Geology from the University of Missouri.


Ugandan Locals Get 36% of Oil and Gas Contracts

The percentage of upstream oil and gas contracts awarded to Ugandan companies has leaped from 17% in 2009 to 36% in 2016, according to the country’s ministry of energy and minerals. “Some progress is being made”, Ibrahim Kasita, the spokesperson for the Ministry, told an oil and gas Local Content Conference in Kampala.
Mr. Kasita said that more than 1,000 local enterprises have been able to provide services such as logistics, transport and medical services.

Oil was found in commercial quantities in Uganda in 2006.
But activities that should lead to delivery of crude oil into a local refinery as well as export tankers have dragged. It is expected, however, that final investment decision will be made on the development plan for the entire Albert basin by the 4th quarter of 2017. First oil, then, would be expected by early 2021, as a 1,444km pipeline will have to be constructed, 500 wells are estimated to be drilled in the next 3-5 years, two central processing facilities will be installed and maintained, in-field (feeder) pipelines will be constructed, there will be oilfield crude storage tanks/facilities, waste management and treatment and logistical services.

“The country is in transition from the exploration to commercial phase of oil and gas development”, said Edwin Mucai, head of corporate and business banking at Stanbic Bank Uganda, which led the sponsorship of the conference. “To be relevant and competitive in the next phase of Uganda’s upstream development, local companies must take a long term view towards investments and plan a lot more strategically,”

Things have happened faster in the area of government policy, legislation and fostering of an enabling environment in the last three years than they have been in the seven years before them. The Petroleum (Exploration, Development and Production) Act and Petroleum (Refining, Conversion, Transmission and
Midstream Storage) Act were passed in 2013. The Public Finance Management (Amendment) Act, which handles petroleum revenue management, was passed in 2015. Regulations on operations, Health, Safety and Environment (HSE), National Content, Metering and Midstream storage were all promulgated between 2015 and 2016.

After more than five years of hand wringing over issues such as recoverable reserves and production
allowable, the government finally issued production licenses for nine oil fields in the Albertine Graben, Uganda’s only prospective basin. The government has also set up and operationalised the Ugandan National Oil Company, the Petroleum Authority of Uganda and Directorate of Petroleum.

Kasita told the conference that National Local Content regulations are firmly in place in Uganda and embedded within the Oil and Gas Policy, in the Production Sharing Agreements. “They are also in the up-stream and mid-stream laws that require oil firms to employ Ugandans and have ring-fenced certain activities for local service companies,” he explained.
121 exploration and appraisal wells have been drilled in the Albertine Graben to date, including 39 exploration wells and 82 appraisal wells.106 wells encountered Hydrocarbons.


Algeria Hosts North Africa To A Petroleum Gabfest

Over a four day period, more than 25,000 delegates are expected to participate in the 7th North Africa Petroleum Exhibition & Conference from 21st to 24th March 2017, at the Convention Center, Oran, Algeria.

North Africa’s largest international trade fair for the oil and gas industry is primarily dedicated to the Upstream, Midstream and Downstream sectors of the industry but suppliers of products, services and technologies around the oil and gas industry are not excluded from participating.

Would you like to meet with decision makers in QHSE, Finance, IT & Telecom, Services Maintenance, Tank Farm, Drilling, General Resources, Support Services, Civil Engineering, Constructions, Refining and Executives of the industry Oil and Gas industry, then be sure to register today at: http://napec-dz.com/NorthAfricaPetroleumExhibitionConference2017.html as this will be the ideal forum to increase your contacts and enrich your B2B customer base.


George Osahon Is New Chairman of Energia’s Board

George Osahon, former Director of Department of Petroleum Resources, has been elected Chairman of the Board of Energia, the Nigerian Independent.

He takes over from Albert Horsfall, the career detective and intelligence operative and founding Chairman of the Oil Mineral Producing Areas Development Commission (OMPADEC), the precursor of the Niger Delta Development Commission (NDDC).

Energia, operator of the Ebendo marginal field in Oil Mining Lease (OML) 56 in the western Niger Delta, was founded in 2001 by a group of Nigerian elite oil industry technical professionals, some of who provided technical services on the field development via the companies they own and run, in lieu of cash, for their equity investment. Mr. Osahon was in that founding team.

The Ebendo field has been producing since 2009 and at some point reached over 6,000BOPD in production. Its fortunes have, however dwindled in the last six months, producing 1,276BOPD in September 2016 (five months ago) according to NNPC’s latest figures.


Africa: Deal Flow Returns in Full In 2017

BP and TOTAL to finalise over $3Billion worth of acquisitions

Africa’s E&P deals, which sank into historic lows for most of 2016, picked up at the tail end of that year and have been on an upward trajectory in the first two months of 2017.

BP’s December 2016 deal with Komos in Northwest Africa involves $916Million if every condition is actualised. The British major is to acquire a 62% working interest, including operatorship, of Kosmos’ exploration blocks in Mauritania and a 32.49% effective working interest in Kosmos’ Senegal exploration blocks. BP will pay $162Million upfront, it will spend $221Million carrying Kosmos’ E&A activities in the blocks and $533Million in developing the gas field Tortue, discovered by Kosmos in 2014.

Rosneft, the Russian player, agreed to spend $1.125Billion to purchase a 30% interest in the theShorouk concession offshore Egypt, which contains the super-giant Zohr gas field, from the Italian firm ENI.

This followed BP’s November 2016 decision to grab10% interest in that sae Egyptian asset for $375MM.
So, whereas only $973MM had been spent on E&P deals in Africa between January and October 2016, BP alone was committed to spending $1.231Billion to farm into assets in Senegal, Mauritania and Egypt. And Rosneft is spending $1.125Billion.
The French major TOTAL started the new year by announcing its agreement with Tullow Oil to pay $900Million for 21.57% of Uganda’s Albert basin development project. This leaves Tullow with 11.73%.
In the space of two months, three European companies have committed to spend $3.316Billion to farm into assets in four countries.

Over 90% of this amount ($2.953Billion) is to acquire near term assets, comprising $553Million for the Tortue gas project in Mauritania, $1.5Billion for the Zohr development in Egypt and $900Million for the Albertine Basin oilfield development.
These purchases are expected to be concluded between the first and second quarters of 2017 with consent of the authorities in these countries.


Egypt’s New Found Energy Independence Will Be Short-lived

Egypt’s insatiable appetite for natural gas will ensure its return to importation of gas in the next six to seven years, according to an analysis of its ongoing projects, new fields and increasing gas demand.
The country became a net importer of the fluid in 2013 after production declines fostered the inability to fuel its power plants, industries and millions of households.
Then almost as dramatically as the shortage began, surplus arrived. Energy companies announced massive gas projects, found huge reserves and helped turn the tide.
The Egyptian ministry of Petroleum announced, late in 2016, a cessation of imported gas from the year 2018, as new projects come on stream to create a net surplus in supply.

Details of the transition from declining reserves to surplus to likely decline are published in the Volume 18, No2, 2017 edition of the Africa Oil+Gas Report


JOB OPENING: Nigerian Independent Seeks a Goal Oriented General Manager

A Nigerian E&P company is on the hunt for a goal oriented General Manager who will superintend its increase in production by 8,000BOPD in the short term.

The candidate must have at least 15 – 20 years of experience in a major exploration and producing company, with proven general abilities in all aspects of the business with deep knowledge in at least 3 of Drilling, Production engineering, Facilities engineering, Reservoir engineering and Production operations.

S/he must also possess evidence of good knowledge and experience in industry Environmental, Health and Safety issues, including good knowledge of regulatory affairs.

Please click here for details


Our Monthly Editions For 2017

The Africa Oil+Gas Report kickstarts its monthly editions for 2017 with a package focused on deepwater opportunities around the continent.

It’s a tradition that was established in 2004, when we evaluated 10 years of active deepwater foray in Africa.

Deepwater Annual 2017 is what we christen the January 2017 issue, released on January 22, 2017 as both e-copy and print issues distributed to our growing league of paid up subscribers around the world.

The February edition is themed Stepping On The Gas, and it features keenly observed narratives, maps and charts of the continent’s growing gas market, both internally and externally, offering both financing investors and technical solutions providers the tools to navigate the opportunity landscape.

March 2017 will witness the release of The African Independent Annual, our yearly take on the emerging African Independent company. This species of the African business entity has evolved in significant ways since its earliest incarnation in the 1970s.

The African Independent, like Angola’s Somoil, Nigeria’s Seplator Ethiopia’s Southwest Energy, is not the same as an Independent focused on Africa, like Cairn or Tullow. Because we don’t want to get it twisted, we have a separate edition, coming up in May, entitled Independents’ Day, which looks at the fortunes of the Kosmos, the Anadarkos, the Tullows, the Cairns, the Perencos, all such Western and non Western independents focused on Africa, in the past year.

Our April edition is the inaugural PETROLEUM PEOPLE issue. It’s an edition we are very proud of.

Each of our 12 editions in the year contains, apart from the main feature, our increasingly fine-tuned intelligence data, that enable our subscribers stay ahead of the competition.

Click here for fuller disclosure of the year’s offerings as well as our media pack.
Editor


Nigeria is one of the Highest Cost Producers of Crude-Draft Policy

By Toyin Akinosho

..Contradicts Minister’s Statement at Davos 2016

The draft Petroleum Policy for Nigeria, which is currently being debated by stakeholders, has delivered a verdict that has been subject of whispers in the boardrooms until now.

“Nigeria is one of the highest cost of extraction oil provinces in the world, estimated at $29/bbl, “says the 115page document on its 15th page.

“Nigeria has to substantially reduce the costs of production if the country is to be competitive in the modern low oil price world, and if it is to have anything more than a bare minimum government take,” the draft advises.

According to the document, Nigeria is only less expensive, as a cost per barrel producer, than Brazil and UK, in a 12 country ranking that includes Saudi Arabia, Iran, Iraq, Russia, Indonesia, Norway, US Non Shale, US Shale, Canada and Venezuela.

The cost ranking, pulled out of a U Cube analysis by Rystad Energy, the Norwegian consulting firm, doesn’t indicate whether this was an average of a basket that includes crudes from deepwater, shallow water and onshore terrains. Which is significant, especially as it features different figures for US Shale:$23.35/bbl and US Non Shale: $20.99/bbl.

What it does, however, is that it breaks down the cost structure for Nigeria as follows: Gross taxes: $4.11, Capital Spending: $13.10; Production costs: $8.81 and Admin/transport costs: $2.97.

This statement on cost by the Petroleum Policy Team at the Ministry of Petroleum contradicts the Minister of State’s January 2016 statement that Nigeria would still make profit if crude oil prices averaged $20/bbl.

Mr. IbeKachikwu caused a stir around the oil industry in the country when, at a meeting a year ago in Davos Switzerland, he declared that cost of producing a barrel of crude oil onshore Nigeria was less than $13.

“The deep off-shore projects, obviously we are putting on hold, given the fact that the returns on those, would not match the prices today,” Kachikwu said at the World Economic Forum. “Everybody is sort of coming back on land so this is time to put a lot of investments on ground, put a lot of incentives on ground, make everybody return on ground, where in fact our average cost of production is about $13 per barrel. So we need more on that, bringing those numbers down from $13 to somewhere $10. Obviously we won’t get the Saudi figures of about $6 or $7, but we can get it much lower,” he said.

His remarks made industry analysts scramble for their fiscal modeling templates, and not a few shook their heads in horror. Now Mr. Kachikwu’s ministry is passing round a document which declares that the average cost of extraction in the country is $29/bbl.


GE Will Build Its Calabar Plant, In Spite of Delays on Bonga South West

By Fred Akanni, in Lagos

General Electric (GE) says it will go ahead and complete construction of its Calabar Manufacturing Facility despite the fact that Bonga South West-Aparo (BSWAP), the deepwater oilfield project for which it was primarily conceived, has been put on hold.

Ado Oseragbaje, President and CEO of GE Oil and Gas Subsaharan Africa, acknowledges that the non-taking of Final Investment Decision (FID) on BSWAP, has “challenged” the plans for a Manufacturing facility in Calabar.

He would not mention BSWAP by name but he says: “It is true that we had big ambitions from the oil and gas perspective but with some of the delays that some of our customers are facing, that kind of challenged the project”.

“Having said that, overall, we are an industrial company and one of the things we are already doing is ensuring that the facility will be able to support the different GE businesses”.

“Let’s say that the whole thing was initially going to be 1000sqm and if oil and gas was initially supposed to use 600sqm but if they can’t, can we redeploy some of the space to power services or to transportation. We are committed to making that huge investment and it is still ongoing. Our contractor is still working on site”.

Oseragbaje won’t disclose a timeline to the inauguration “but there is a project team that is responsible for delivering the project on time and on budget. Overall, in our long term strategy for Nigeria, the Calabar facility is part of our thinking both as GE and the oil and gas division”.

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