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Chevron Has Drilled 22 of 36 Wells In The $1.2Billion Deal

Chevron Nigeria has concluded slightly less than two thirds of the drilling funded by a consortium of Nigerian and international lenders, led by Standard Chartered Bank and UBA.

The $1.2Billion transaction, signed in September 2015, was projected to fund 36 wells with a projected peak incremental production of 41, 000 barrels of crude oil per day and 127Million standard cubic feet of gas per day (MMscf/d) “in the years ahead”, according to a statement by the Nigerian National Petroleum Corporation (NNPC), the senior partner in the NNPC/Chevron JV, of which Chevron is the operator.

16 of the 22 wells drilled so far are in the swamp, in the Gbokoda field in Oil Mining Lease (OML) 49 and were drilled by the rig OES Respect. The remaining six wells, drilled in shallow water, were drilled by Shelf Drilling’s Trident 8, on the Okan field, in OML 90.

It is not clear how much of the incremental production has been achieved by the activity. “The package is projected to generate between $2 and $5Billion of incremental revenues to the Nigerian government over the life of the project, subject to prevailing oil price in the upcoming years”, the NNPC statement had said.


TOTAL Takes Hold of East African E&P

Confirms our prognosis that the Majors are reclaiming the African E&P Frontier

With its $7.45Billion purchase of Maersk Oil, TOTAL has taken over the majority of the 2 Billion barrels sized undeveloped discoveries in East Africa.
Maersk holds 50% of the undeveloped discoveries in Kenya, which have been estimated at 750Million barrels. This sale comes less than eight months after TOTAL purchased 22% of the assets about to be developed in Uganda, fetching it 55% in the upstream part of the entire Uganda basin development project.

This means that TOTAL will be funding the majority share in expenses on the two pipelines that will export crude from Uganda (Hoima –Tanga) and Kenya (Lockhichar to Lamu).

The deal with Maersk is expected to close in 1Q 2018, subject to the consent of the Kenyan authorties. Maersk Oil’s parent, AP Moller-Maersk will receive $4.95bn in the form of Total shares, representing a 3.75% stake in the French major, and Total will also assume $2.5Billion of Maersk Oil’s debt.

TOTAL’s purchase of Maersk Oil, follows Shell’s 28 month old takeover of BG and confirms Africa Oil+Gas Report’s analysis of the retreat of independents from Africa’s E&P frontier, where the majors are extending their footprints.


Fortuna Gets A Dedicated Offtaker, FDI Imminent

Gunvor Group has been nominated as the preferred LNG Buyer for offtake from the Fortuna FLNG project by the Equatorial Guinea authorities, Ophir Energy the operator and OneLNG, its investment partner.

Ophir Energy says that the commodity buyer is committed to take the full contract capacity of the Gandria FLNG vessel of 2.2 MMTPA which will be purchased on a Brent-linked, Free on Board (“FOB”) basis for a 10 year term.

“All parties have agreed the principal commercial terms subject to finalising a Sale and Purchase Agreement (“SPA”) for the offtake ahead of the Final Investment Decision (“FID”) on the Fortuna FLNG project”, Ophir enthusiastically declares in a release.
 
The contract structure allows flexibility for up to 1.1MMTPA of the Fortuna capacity to be marketed on an alternate basis. Consequently the agreement gives the Fortuna partners alongside the State of Equatorial Guinea, the potential to sell volumes to higher priced gas markets in Africa and beyond, whilst retaining a share in the profits of such onward marketing.
 
“With the identification of a preferred LNG Buyer now achieved, the last significant milestone prior to the FID of the Fortuna FLNG project is the completion of the project funding, with FID remaining on track for 2017”, Ophir says.
 
Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons for the Republic of Equatorial Guinea, commented: “The selection of Gunvor sets a landmark moment in the development of the Fortuna Project. The partnership with Gunvor also paves the way for the government’s objective to deliver important projects that monetize our gas, promotes local content and brings world-class petroleum technology to Equatorial Guinea.

The Fortuna Project will target becoming the first choice supplier of LNG for the LNG to Africa initiative , furthering Equatorial Guinea’s leadership position in Africa as an LNG exporter.”


Akufo-Addo Sacks The Last Man Standing

Theophilus Ahwireng, former geophysics manager at GNPC, was the first CEO of Ghana Petroleum Commission

The last political appointee in Ghana’s oil industry from the last dispensation has been fired.

Theo Ahwireng, appointed by former President John Mahama as the founding Chief Executive of the Ghana Petroleum Commission, the E&P regulatory agency, was removed early in the week of August 14, 2017, as President Akufo-Addo announced Egbert Faibilleas the successor.

Ahwireng went to the job four years ago as a veteran oil man. He had been manager geophysics at the Ghana National Petroleum Corporation and was credited as one of those in the GNPC who had proposed the drilling of the prospect that turned out to be Jubilee, Ghana’s first significant sized oil and gas field.

The location had been “on the drawing board”, long before Kosmos and its partners acquired the licence area and drilled the prospect in 2007.

Ahwireng established and fleshed out the local content philosophy in the hydrocarbon market, guided by the Petroleum (Local Content And Local Participation) Regulations, 2013. It was both his signature contribution to the fledgling industry and his major headache. Critics accuse him of using Local Content tools to feather the nest of cronies and disallowing competitive tenders.

But that was not the major reason why he was fired. President Akufo-Addo would not have an opposition party sympathiser at the head of such a crucial agency.

The man who takes over from Ahwireng has a lot to learn, even though some media platforms say he is incorruptible. Egbert Faibille, 47, is a keen supporter of President Akufo-Addo, and he has worked very briefly with the GNPC during which period he was seconded to the West African Gas Pipeline Project (WAGP) as the Ghana Country Communication Representative of the project.

He was on the job for less than a year and has not worked anywhere near the oil industry since. He is the publisher of the Ghanaian Observer Newspaper. He had previously worked for the Independent Newspaper.

After graduating from law school, he worked in the law firm of Yoni Kulendi, after which he moved on to establish his own law firm Faibille & Faibille.


The Oil Market Has Become Unruly-ENI

Italian major says the world’s top energy commodity is hostage of hedge funders
Claudio Descalzi, Chief Executive of ENI, Italy’s largest company, is not optimistic about the direction of the oil market, at least in the short term.

“The oil commodity has entered a difficult crisis. There is less confidence also among institutional investors, who normally have long positions and today they have become shorters”, Descalzi said in an interview published in ENI.com, the company website. “In this way space has been given to hedge funds and speculators. Probably they do not believe that OPEC is capable of taking radical initiatives. And today several sub-Saharan African countries are in serious difficulties”

ENI’s CEO told the interviewer, Roberto Bongiorni, that the geopolitical situation around the oil commodity “is explosive”. The situation, he said,“involves several OPEC countries, there is the shadow of U.S. shale gas which still today is facing over-production, and markets increasingly at the mercy of speculation are preventing low oil prices from emerging from a three-year crisis”.

The result, for one of Europe’s top oilmen, is dramatic.“ The moment is difficult, and speculation is strong. There are speculators that are making maybe billions of dollars. It is a market without rules, which is destroying the primary industry and in the energy sector it has burned 470,000 jobs in three years.

Millions of people are affected. Africa is exploding: the lack of diversification of the economies and the absence of wealth distribution is contributing to poverty and to migration flows”.


Sonangol Inaugurates A Gas Fired Plant In Soyo

Angola’s state hydrocarbon company Sonangol has commissioned a gas fired thermal plant in Soyo, located in the province of Zaire, at the mouth of the Congo river.
The city is host to the Angola LNG Plant.

The Soyo Combined Cycle Thermal Power Plant is operated by Luxerviza, a Sonangol subsidiary that manages natural gas plants.

The Soyo plant is producing 22 megawatts of energy for the time being, with two turbines in operation, utilising natural gas from mainly the Angola LNG plant.

As more turbines are added in subsequent phases, the plant is expected to be integrated into the National Energy Network (RNE) to supply power to Luanda, the country’s capital city and commercial hub, as well as other regions of the country.


West Africa Lags Behind In Response to the Oil Price Downturn

By Henrik Poulsen and Bimbola Kolawole, Rystad Energy

The fall in crude oil price has foisted a significant challenge on the E&P industry.

Things have eased since January 2016, but crude oil price has stabilized at a much lower level than expected. In order to survive and deliver healthy economic results, companies have initiated a string of methods to improving operations. The hydrocarbon industry is about to develop a new standard on how we collectively look upon cost levels, development concepts and efficiency.

By comparing operating cost levels, investments and robustness of future production to low prices in four different regions, we at Rystad have discerned a pattern of how the industry is evolving globally. We have scrutinized how operating costs per barrel and investments (Capex) have changed since the oil price crash in four regions, including West Africa, South East Asia, South America and Western Europe. We have also looked at the impact on how the latter changes have influenced the breakeven price distribution of the production. In other words, how robust future production will effect low oil prices. A region is a coarse geographical entity and may not reflect differences at a country level. However, a region comprises so many projects and fields that the statistics becomes significant and reliable.

Has the industry been able to improve their efficiency – Operating expenses per barrel (Opex/Bbl)
Opex/Bbl is a measurement on how cost efficient the actual oil production is. Until 2014, such expenses were by far the highest in Western Europe (among the four regions compared). The price downturn has made operators in Western Europe work more efficiently, and the cost level has lowered by more than 30% to come down to the same level as in the three other regions in this review. In the same period, South America lowered their Opex/Bbl by about 20%, while West Africa and South East Asia have only been able to lower their Opex/Bbl by 10% each. South East Asia has a declining production, which explains much of the low reduction, while West Africa is falling behind in terms of reducing their operating costs.
Investments (Capex)

The oil price crash has of course had a great impact on the investment level. Previous projects with a robust economy at US$100/Bbl are not sustainable at US$50/Bbl. Many projects have been deferred, re-designed or simply abandoned, which has caused a dramatic drop in investment levels since 2014. Regions that have been able to re-design their projects have seen a lower drop in investment levels. Among the peers, the drop have been most dramatic in West Africa and South East Asia, with an almost 60% decline in investments from 2014 to 2017. The drop in Western Europe and South America has respectively been 45 and 30%. South America stands out as positive in this respect due to the development of its many great discoveries done some years before the oil price crash. Future production will be harmed most where projects have been deferred or abandoned, while re-design will have less impact on future production, apart from the fact that redesign also cause a delay, but only by some few years.
Future robustness to low oil prices

There is no doubt that how the E&P industry is handling the current uncertain market conditions will greatly impact future performance. Decisions and achievements completed in recent years will influence how the different regions will be able to attract and develop the industry into the future. As we have seen, has the efficiency in operations and investment levels developed significantly different from region to region? The issues discussed can also help us to understand how robust the future production in the different regions will be if low oil prices remain for a longer period. Rystad Energy believes the prices to be positioned upwards of US$60/Bbl when we reach the 2020’s. However, oil prices have never been precisely predictable. Therefore we have looked at how much of a portion of future production (in 2020 and in 2025) will need a breakeven price higher than US$60/Bbl.

Production with breakeven prices higher than US$60/Bbl might be at risk, if the world remains as oversupplied as it is today. Among the four regions, West Africa has the second highest portion of vulnerable production if prices remain lower than US$60/Bbl. Only South East Asia has a higher portion of production at risk. 13% of West Africa’s predicted production in 2020 is at risk, while this increases to 27% in 2025. This shows the importance of constant work on cost reductions and efficiency gains in order to remain competitive and economically sound. However, we still forecast a small increase in oil (Crude & Condensate) production from West Africa from 2020 to 2025, while South East Asia is expected to continue its decline.

Summary
As shown, the West African E&P industry has room for improvement on how they run their daily operations. What has been achieved in other parts of the world should be possible, to a certain degree, for West Africa to copy. Efficiency gains will often require a collaborative and open environment between the E&P and OFS industry together with the authorities. We assume there is room for improvement for at least another 10% on the operating costs in West Africa.

Low oil prices have made the industry even more cautious to invest in high politically at-risk and unstable countries and there is no doubt that some regions are hurt more than others by this fact. It is important to understand that doing investments, which will pay off the next two or three decades, requires a stable and predictable investment climate.

In a high-risk environment with low oil prices, we would expect that West Africa is one of the regions in the world that would be harmed most – close to 60% drop in investments the last 3 years. This is partly due increasing maturity, deeper water, more complex reservoirs, but also difficult political conditions in some countries. We would encourage the industry, together with the authorities, to uncover simpler development concepts instead of deferring or abandoning projects to make future production more robust to accommodate lower prices. We see room for improvements on the latter.
Lower operating costs per barrel and increased focus on improved and more efficient development concepts may arrest our prognosis, that West Africa may face a doubling of their production at risk with oil prices lower than 60 USD/bbl.

Whatever the future oil price will be is it evident that both Governments and the industry would profit by working smarter and more cost efficient in a joint collaborative environment.

About Rystad Energy
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.

Rystad Energy’s headquarters are located in Oslo, Norway. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro), as well as Singapore and Dubai.

Author: Henrik Poulsen
Henrik holds an MSc. in Petroleum Geology from the Norwegian University of Science and Technology and is currently Senior Vice President – Government Relations at Rystad Energy. He has more than 25 years of experience in the E&P and oilfield service industry and has worked as a consultant for 15 years in the E&P industry, assessing geological and economic uncertainties. Since 2005, Henrik has held several senior management positions at different companies such as Roxar (Emerson), Schlumberger and Rystad Energy.

Author: Bimbola Kolawole
Bim (Bimbola) is Business Development Manager –Africa at Rystad Energy. She is also responsible for account management, training and support for clients in the Region. Her area of expertise includes business strategy, general management, business development, training and support as well as project coordination. Previously, Bim worked at IHS Energy where she was responsible for managing selected clients across the Oil & Gas space value chain in the EMEA region. She holds a BSc. in Economics from Ilorin University, MSc. in Energy Finance from Dundee University and an MBA from Leicester University.


‘I Will Improve the Approval Turnaround at the Regulatory Agency’-Maseli

Pat Maseli, head of the Upstream Monitoring and Regulation at the Department of Petroleum Resources, Nigeria’s hydrocarbon regulatory agency, says she intends to drive improvement in approval turnaround time in her department.

Maseli took up the job six months ago; a deputy director’s role and one with significant responsibilities.

The DPR processes applications for various Licences, Permits and Approvals across the entire Oil and Gas value chain in Africa’s largest hydrocarbon producing country. The permits and approvals range from Oil Exploration Licence (OEL) to Lubricant Retailers Licence. Mrs. Maseli’s department is the most influential of the six departments in that its activity delivers acreage renewals, approves field development plans and grants permits to seismic, drilling and well intervention, among other upstream activities. It serves as the gatekeeper to the all-important “Ministerial consent”, without which a farm in by any investor into an awarded acreage cannot be concluded.

“All Companies requesting approvals would have to apply early enough and ensure all the required are provided in line with provisions of the Petroleum Act and applicable regulations rather than stampeding the Department with ‘urgent’ requests every now and then”, she said in a high profile interview, published in NAPE News, an organ of the Nigerian Association of Petroleum Explorationists.

“As a proactive regulator”, Maseli explains, “the DPR is expanding its capacity both human and technological to supervise the Industry more effectively. In evaluating applications and granting licences, permits and approvals, they should utilise appropriate tools to validate and review submissions from companies”.

“The Department, as the technical arm of the Ministry of Petroleum Resources, does a lot of work at the back end and its staff are, most often than not, stretched to the limit”, Maseli avers. “The DPR provides technical inputs into development of policies carry out bid-round activities, mediate to resolve conflicts between companies”.

It is why she is keen on training and retraining: “My focus is to expose staff to state-of-the-art tools, like those used by the Industry and enhance their capacity to a level superior to their industry counterparts.
“For me, every Geologist, Geophysicist or Engineer should be able to utilise modern tools for evaluation, interpretation and processing of sub-surface data”.

Maseli, who entered the hydrocarbon industry as a Youth Corper (the mandatory one year post graduation service) in NNPC 35 years ago, is the first woman to get to that position. She admits to the journal that she has broken the ceiling into multiple shards of glass at the agency, but argues that women “have only scratched the surface”, in reaching upper management in the Nigerian oil industry.

“There are more glass ceilings to be broken. I want to see more women in key positions in the oil industry. We are yet to have a female GGM in NAPIMS, (the investment arm of the NNPC, the state hydrocarbon company), a female Director of DPR and a female Group Managing Director in NNPC. These three strategic positions have been occupied by men since inception of the oil industry. Until this is achieved, there are more glass ceilings to be broken, and I would like to use this medium to appeal to Government to consider the female folks with wealth of experience and right competencies to be appointed to those positions. Government should ‘search and shall find’ worthy women to be appointed to key positions in the sector”.


Mwangi Takes Hold of Kenya’s NOCK

MaryJane Mwangi, former General Manager in charge of Downstream at the Kenyan state hydrocarbon company, has been confirmed as the firm’s CEO, a position she has held in acting capacity for 18 months.

Ms. Mwangi, who is contracted by the board of directors of the National Oil Company of Kenya to serve a renewable three year term as the boss, has been in the company for nine years, starting as Head of Sales and Marketing in 2008. She also has worked for downstream units of Chevron, ENI and Shell-BP in a career spanning 18 years.

She succeeds Sumayya Hassan-Athmani who proceeded on terminal leave ahead of her contract expiry in March 2017, after a troubled tenure that began in September 2010.

But the seeds for the same challenge that faced Ms. Hassan-Athmani have been sown for Mwangi.

Whereas Hassan-Athmani was accused of, among other things, granting exclusive rights to acquire data over any offshore acreage exclusive permits to Western Geophysical, a subsidiary of the oil service behemoth Schlumberger, Ms. Mwangi faces the certain prospect of being accused of nepotism, should Tullow Oil, the top upstream oil company player in Kenya, be seen to be favoured on any issue.

She is married to Martin Mobogo, Tullow Oil’s Country Manager in Kenya.


Chinese Firm to Build A Massive Hydro Power Plant in Angola

Angola expects to boost its electricity supply capacity by 2,172MW in six years’ time, after China’s Gezhouba Group completes the Caculo Cabaça hydroelectric complex on the Cuanza River.

Ren Jianguo, deputy director of the Gezhouba Group, contracted by the Angolan government to execute the $4.5Billion project in the Cuanza Norte province, says that the facility is the biggest hydroelectric complex under construction by a Chinese firm in Africa. Plans call for it to be completed in 2023. Caculo Cabaça’s output capacity will be 102Megawatts higher than the Laúca Dam which officially opened in the Malanje province, also on the same Cuanza River, on Friday, August 4, 2017, the same day that President José Eduardo dos Santos laid the foundation stone for the Caculo Cabaça complex.

The current project has an execution deadline of 80 months. It will involve the contracting of more than 10,000 workers during the peak of construction. The Gezhouba Group Co. Ltd will also be in charge of maintaining the complex during a four-year period and training a group of technical personnel who will subsequently be responsible for operating the dam and the electric power production equipment.

The Laúca hydroelectric complex, under construction by the Brazilian firm Odebrecht group, is being launched in phases. What was inaugurated last Friday, August 4, was the first of a set of six turbines, able to produce 334Megawatts. The complex is 156 metres high and 1200 metres long, encompassing an area of 24,000 hectares, including the reservoir. It counts a main power station with six generator groups each able to produce 334Megawatts and a 65Megawatt ecological plant. The project cost around $4.3Billion.

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