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VOG Adds Bomono to the Douala Gas Network

Victoria Oil & Gas (VOG) Plc is on course of extending its gas network in Cameroon to include gas to be produced from the Bomono production sharing contract (Bomono PSC).

The company signed a farm-in agreement with Bowleven plc, operator of the Bomono PSC, which allows that gas produced from the Bomono PSC will be fed into the customer distribution network owned and operated by Gaz du Cameroun S.A. (“GDC”), a wholly owned subsidiary of VOG.

In the event, VOG will have 80% working interest in Bomono PSC.
VOG currently runs a 7Million standard cubic feet of gas per day (7MMscf/d) network which feeds power plants and industries in the city of Douala, the commercial hub of Cameroon.

“First gas supply to the GDC network is anticipated to start following granting of a Provisional Exploitation Authorisation (“PEA”) and other approvals”, Bowleven notes in a statement. “This Agreement, which has been negotiated by the parties over several months, aligns Bowleven’s intention of realising near term value from Bomono through commercial production of its Bomono gas deposit with VOG’s business of commercialising local onshore gas deposits using its established gas infrastructure and customer network”, the company explains, adding: “The transaction provides the ability to minimise the timescale to first production and optimises the proven advantages of Bowleven’s upstream expertise and VOG’s established gas supply business that feeds a diverse range of industries and the local power grid.

The initial plan is that gas currently suspended at Moambe be brought onstream and that further drilling be considered to supply the growing domestic market in and around the Douala area.

Farm Out Highlights
On completion, EurOil Limited (“EurOil”), a Bowleven subsidiary, will have a 20% working interest in the Bomono PSC and GDC Bomono S.A. (“GDC Bomono”), a wholly owned VOG subsidiary, will have an 80% working interest.
Bowleven will remain as operator of the project.

Gas from Bomono PSC will be sold to GDC less a tolling fee. The gas price paid will be a weighted average received by GDC for its total domestic sales less a tolling fee for use of the pipeline network.

The pipeline connection from the Bomono PSC to the main network will be managed and funded by GDC. GDC Bomono will complete the civil engineering works necessary for the gas processing plant installation at the Bomono site. The estimated capital cost for these works is US$6 million.

Bowleven has agreed to pay GDC Bomono 50% of any deficit, limited to a maximum payment of US$2 million, if the first 3 years of net income received by GDC Bomono is less than the development expenditure incurred.

EurOil will receive a 3.5% royalty from GDC Bomono’s production share of hydrocarbons, with an aggregate cap limiting the total royalty payments to US$20 million.

Bowleven will, on completion, also receive £100,000 worth of new ordinary shares in VOG based on the volume weighted average share price 10 days preceding the date of the Agreement, being 69.23 pence per share. It is the intention of Bowleven to retain these shares initially, but keep that decision under regular review as there are no restrictions on their disposal.
Asset Details:

The farm-out transaction relates to the Bomono PSC, onshore Cameroon. EurOil is operator of the Bomono PSC.

Bowleven completed extended well flow tests on the Moambe well that exceeded 7mmscf/d. The Moambe and Zingana exploration wells drilled at Bomono were then suspended as future producers.

As previously announced by Bowleven, the detailed prospect inventory prepared indicates there is 146bcf and 263bcf of mean un-risked GIIP in the Tertiary and deeper Cretaceous reservoir intervals respectively.

Additional Transaction Details:
The economic effective date of the transaction is 1 January 2017.
The above interests are expressed prior to the exercise of any back-in rights by the Cameroon State. Under the terms of the Bomono PSC, the Cameroon State has the right to take a 10% participating interest in development activity undertaken under an exploitation authorisation.

Completion is subject to, amongst other things:
The grant of a PEA over the Bomono PSC. The PEA application was submitted by Bowleven to the Cameroon authorities as requested following Ministerial approval for the award of a two-year extension to the Bomono PSC (to 12 December 2018);
The approval by the Cameroon Government of the assignment of the equity interest from EurOil to GDC Bomono; and
Should these conditions precedent not be satisfied by 30 June 2017, both Bowleven and VOG have the right to terminate the Agreement.

In the event that any of the resolutions requisitioned by Crown Ocean Capital P1 Limited at the forthcoming Bowleven General Meeting on 14 March 2017 are passed, VOG has the right to terminate the Agreement.


Three New Plants Add 270MMscf/d Capacity to Nigeria’s Domgas Market

By Toyin Akinosho, in Abuja

The Utorogu NAG 2 Plant, a 150MMscf/d capacity gas plant to process Non Associated Gas on the Utorogu field in Oil Mining Lease (OML) 34, has been commissioned.

The Oredo-Obale gas pipeline has been completed, so the 80MMscf/d Oredo gas plant can now supply gas. Also on stream is a 40MMscf/d capacity gas processing plant on the Odidi field in OML 42, the first of two phases, according to David Ige, who was Executive Director in charge of Gas and Power at the NNPC until May 2015.

The combined 270MMscf/d capacity was unlocked between December 2016 and February 2017. Nigeria can certainly do with this volume in its domestic gas market, especially for power, where gas supply has been severely constrained.

But Layiwola Fatona, Chief Executive Officer of the NDWestern Limited, a Nigerian upstream independent which holds 45% equity in the Utorogu NAG 2 plant, says that questions about gas plant commissioning are not the right ones to ask at this time.

“So what? Are you paying for the gas taken and not paid for?” he asks a reporter with Africa Oil+Gas Report. “What is the big deal about commissioning NAG2. Or NAG 3, when no one will pay for the gas being taken?”
Gas producers in Nigeria have, of recent, complained about lack of payment for gas supply to power plants mostly owned by the government.

Dr. Fatona queries: “Are we running a Father Christmas enterprise?”


SDX Moves to Drill SD 1X

London headquartered SDX is mobilising the Sino-Tharwa 6 drilling rig to the location of South Disouq (SD)1X, its first well in the South Disouq licence onshore.  

The Company anticipates drilling to commence at the SD-1X location by March 20, 2017.
SDX is 55% operator of the South Disouq licence, an exploration asset located onshore central Nile Delta. IPR Group of companies holds the remaining 45%.

The South Disouq concession spreads over 1,275 sq km and is estimated to contain 1.3 TCF of resource potential (P10). The concession is located within the prolific Abu Madi – Baltim trend which to date consists of 10 discoveries containing 6.3 TCF of gas and 100 MMBO of liquids.

The company also has a working interest in two producing properties (50% North West Gemsa & 50% Meseda) located onshore in Egypt’s Eastern Desert, adjacent to the Gulf of Suez.


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

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