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M&P’s Tanzania Gas Production Far Less Than Optimum

By Sa’ad Bashir, in Dar es Salam

But the state hydrocarbon company is a ‘good customer

Maurel et Prom’s first quarter 2017 production from the Mnazi Bay Field averaged forty three million
standard cubic feet a day (43 MMscf/d).
This is just around half of the initial maximum volume the company and its partner agreed to supply the
Tanzanian gas network.

Pursuant to the Mnazi Bay Gas Sales Agreement, the Mnazi Bay Partners were contracted to supply to
the Pipeline Project up to a maximum 80MMscf/day of natural gas during the first eight months with the
option to increase over time to a maximum 130MMscf/day of natural gas for up to 17-year supply
period. The gas is sold and purchased at the inlet to a 16 inch pipeline connecting the Mnazi Bay gas
production facility to the state operated Madimba central processing facility.
Apparently the country’s natural gas demand has not surged as the government expected, at the time it
signed the contract in 2015.

Tanzania Petroleum Development Corporation ("TPDC"), who is the wholesale offtaker, commenced gas
delivery to a new industrial customer, Goodwill Tile Factory in first quarter 2017, demonstrating demand
growth from the industrial sector which is expected to increase throughout 2017 as Dangote Cement
begins using gas for power generation.

Wentworth, the junior partner in the Mnazi Bay project, says that the state hydrocarbon company has
so far been a good customer. So far in 2017, TPDC has settled in full the November 2016 and December
2016 invoices that were outstanding at the year end, and has also settled a 2015 invoice for line fill gas
volumes.

“As part of our Gas Sales Agreement with TPDC, payment guarantees are in place which can be utilized,
if determined necessary, should payments from TPDC be excessively delayed”.


GE’s Proud of Its African Leadership

General Electric (GE), the American industrial behemoth, is proud of its Africa born managers who run its operations on the continent.

Jeff Immelt, the group’s CEO and Chairman of the Board, paid these managers an extraordinary compliment in the company’s 2016 annual report.

“ I recently returned from a trip to Africa, a continent where GE has experienced explosive growth and is winning, even in a tough economy”, Immelt began in a paragraph in the report .
“I was reviewing a huge pipeline of power deals with Lazarus Angbazo, Elisee Sezan, and Leslie Nelson, members of our African leadership team”, he continued.

“ I could remember eating breakfast with them in Ghana almost 10 years ago. At that time, we couldn’t sell a gas cooker let alone a complex gas-to-power project”, Immelt recalled.

“But, I have watched these talented individuals mature into capable leaders for GE and their countries. They have grown while we have grown”, he concluded.


Malabu Block to Take FID In Spite of Court Proceedings

ENI and Shell are proceeding to Final Investment Decision on a field in the Oil Prospecting Lease (OPL) 245, despite a pending court case in which they are charged with corrupt practices on the same asset.

The two European majors are on course to taking FID on the Zabazaba field, the bigger of the twin Zabazaba-Etan fields, with the NNPC, an agency of the same Nigerian Government which is prosecuting a case against them, before the end of the second quarter 2017.

The invoice for the development of Zabazaba, located in 2,000metre water depth, the farthest offshore of any field development in Nigeria, is $13.5Billion. The project will drain 560Million barrels of oil over the course of 15 years.
As there is no indication that the government, through the Economic and Financial Crimes Commission (EFCC), has withdrawn from the case, it is curious that petroleum sector agencies of the Nigerian government are going ahead with the planned FID. OPL 245, also known as Malabu Oil Block, has thrown up international, high profiled legal interest, involving lawyers in three countries.
As recently as two months ago, Italian prosecutors asked for Claudio Descalzi, ENI’s global Chief Executive Officer, to stand trial over alleged corruption in the Malabu Oil Block case, according to the news agency Reuters quoting judicial sources in Italy. The prosecutors also asked for 10 other people, including Paolo Scaroni, the predecessor to Descalzi, to be sent for trial along with the ENI and Royal Dutch Shell companies. In the same month, theEFFCC, sought and obtained a court order for the asset to the Nigerian state.

But the updates on field development activities in the media last week didn’t reference the court challenges. Simbi Wabote, the Executive Secretary of the National Content Development Monitoring Board NCDMB (an agency that ensures that in-country capacity is taken care of in any oil and gas project) , reportedly affirmed his board’s readiness to expedite national content approval for the Zabazaba field development, which has moved from technical bid tenders to commercial tenders. NNPC officials too are raring to go.

Whereas Wilson Uwajuoren, EFCC’s spokesperson declined to respond to our query about what EFCC thinks of the progress of the project, legal opinion is divided on the progress of the project. “If they go ahead it would mean that the government is even more dysfunctional than we thought”, says one highly ranked private petroleum lawyer who has served in the upper reaches of government.


BP Pumps Up Egypt’s Gas Volume

By Mohammed Jetutu, in Cairo
 
With the new discovery in the North Damietta Block in Egypt’s East Nile Delta, announced March 27, 2017, BP has provided more reason for Egypt to pull out of the club of gas importers.

Since 2015, the country has been importing LNG to meet the shortfall in domestic production.

Africa’s largest domestic gas market consumes 2Tcf of gas a year, or 5.5Bcf every day, most of it going to fuel 70% of its 30,000MW electricity production capacity.
In the last three years, however, a string of discoveries, aided by the leap in domestic gas price to as high as $5.9 per thousand cubic feet (Mscf), has been made by international oil companies in the country.

BP’s Qattameya Shallow-1 discovery, arrives right in the middle of two of the company’s most ambitious gas monetization developments. The Atoll Phase One project, in the same North Damietta Block as the Qattameya Shallow-1 discovery, is an early production scheme that will bring up to 300 million cubic feet a day (MMscf/d) gross of gas to the Egyptian domestic gas market starting in the first half of 2018.The Western Nile Delta project will develop five trillion cubic feet (5Tcf) of gas resources. Peak production is expected to be 1.74Bcf/d, by 2020. BP is also currently appraising the Salamat discovery, in the North Damietta concession.

Qattameya Shallow-1 was drilled to a total depth of 1,961 metres in water depth of approximately 108 metres using the El Qaher II jack-up rig. The wireline logs, pressure data and fluid samples confirmed the presence of 37 metres of net gas pay in high quality Pliocene sandstones. Options to tie the discovery back to nearby infrastructure are being studied.

Qattameya Shallow-1 well is located 60 kilometres north of Damietta city, 30 kilometres south west of Salamat and only 35 kilometres to the west of Ha’py offshore facilities. BP has 100% equity in the discovery.
 


JDR To Set Up Umbilicals Maintenance Base in Nigeria

Unlike Angola, country still does not manufacture umbilicals

JDR, supplier of subsea cables and umbilicals, has announced a partnership agreement with Proserv Instrumentation Nigeria Ltd.
Under the strategic alliance, JDR will establish a service and maintenance base in Proserv’s operations facility in Port Harcourt, Nigeria. Together, the two European companies will offer combined subsea solutions and local content support to the West African market. JDR’s offering will include maintenance and offshore installation services, product termination and testing and technical training.

“This alliance will enable JDR to increase local content support for projects in Nigeria and the wider region”, says Carl Pilmer, sales director for oil and gas at JDR. We’re proud to work alongside Proserv to better service our clients with integrated solutions and develop the local skills needed to execute projects. Almost every project in the deepwater basins off West Africa includes a JDR-supplied umbilical and this partnership marks the next step in our strategic plan to offer our customers high quality, reliable products and services on a global scale.”

Olu Phillips is Proserv’s country manager based in Lagos, while Tai Fadipe-Davids is JDR’s business development manager, appointed in 2016 to JDR’s strategic sales and marketing activities in the region.JDR has supplied intervention, workover control systems (IWOCS) to major developments including Egina, Kaombo and Moho Nord in Nigeria, Angola and Congo respectively. It also delivered a hybrid steel umbilical to the ABO 12 field offshore Nigeria, and has since invested in a technical test and repair container for umbilical and reeler management, but there is no in country manufacturing of umbilicals in Nigeria, unlike Angola .


PetroData Pushes Cloud Data Storage

By Akpelu Paul Kelechi, in Lagos

From inception, PetroData Management Services has catered primarily to the data management needs of the oil majors operating in Nigeria. “It took several years for PetroData to persuade these to start trusting their data to our storage site at Ikeja, (in the north of Lagos, the country’s financial hub)”, Taukeme Koroye, member of PetroData’s board told a group of industry experts at the recent ISMS ISO 27001:2013 award ceremony presented to the company. “But it happened after several years of work and exposing our environment to them. “We are trusted by 95% of the oil and gas industry in Nigeria on data management”, he claimed.

Data management is moving away from physical storage environments to shared service platforms that are beyond our physical reach. “We have been investing in e-business for the past 4 years to basically provide data management services to clients that don’t have to have it physically hosted in the environment either because the CAPEX justification will be difficult for them or because on a Stand Alone basis, their requirement will not warrant that level of investment”. Rather than companies buying individual IT capabilities such as infrastructure, platform, software, support and so on that will drive up cost, they could buy these capabilities from one source and enjoy availability, reliability, high value addition at a reduced cost on a shared platform.

“We want to encourage our clients, financial institutions, SMEs, government agencies amongst others to start moving over to this platform that we have so that rather than CAPEX, they start working on OPEX, rather than individual capabilities that will be built into these areas, they buy capabilities from one source and enjoy it” Koroye urges.

Depending on where you go from that migration path, from infrastructure as a service through platform to software, there will be different degree of the CAPEX-OPEX mix. The end point is when you are at software as a service that you can be said to be entirely on OPEX. Effective cost reduction during IT migration largely depends on your appetite for either one big move or stage by stage move. Overall, 70% of IT executives believe that moving to cloud technologies certainly delivers efficiency over their managing themselves individually because this certainly delivers cost efficiency. Empirical evidence shows that operating cost in relation to resilience requirement will be a loss of 15%.

“PetroData has been operating to world-class standards in data management since 1995 and the award of the ISMS ISO 27001:2013 certification really confirms what we have been doing as a business proposition through all these years. If you went into a shared service platform that has a scale and capacity that you need rather than stand alone, your benefits will accrue at cost per unit of whatever your measure is. This will be lower investment cost, more efficiency, easily operative and you will get into it without the necessity of initial investment cost. We also have the best partnerships in all of the offices that are built, whether at application level or at infrastructure level; we have always partnered with best in class providers so that in line with world class standards, we are delivering value to clients consistently”, Koroye emphasized.

Only about five companies in Nigeria has attained the award of the Information Security Management System (27001:2013) certification by the International Standards Organization and PetroData is one of them.

“I’d like to say that this is an amazing achievement and there are not many organizations out there who can achieve this kind of certification”, Director for International Trade at the office of the British High Commissioner to Nigeria, said as he presented the certificate to Wole Shebioba, Managing Director of PetroData Management Services. “It’s a prestigious award and what it means is that it put you guys at the top; which mean you are one of the best companies out there”.
Babajide Soyode, chairman of PetroData added: “PetroData is now in the league of such entities as the World Bank, IMF, CBN who have achieved this prestigious award’.


ENI Wins More Assets In The Tano Basin

Africa’s leading hydrocarbon producer has snagged more assets in a prolific part of the continent’s deepwater.
Italian explorer ENI has been awarded 90% interest in two new exploration blocks, in the Ivorien part of the Tano basin, which has proven commercial in nearby Ghana.

With this March 2017 acquisition of Cote d’Ivoire’s CI-101 and CI-205, covering an area of approximately 2,850km², ENI is following up on its acquisition, in 2016, of the Cape Three Point Block 4, in the same Tano Basin, in neighbouring Ghana.
ENI’s interest in Cote d’Ivoire’s segment of the Tano basin suggests that the company is evaluating the entire Basin, which straddles the two countries.

Ghana and Cote D’Ivoire have dragged themselves to court over oil production in this basin, with Cote d’Ivoire arguing that it is entitled to some of the oil being produced in Ghana’s TEN cluster of fields (operated by Tullow).

Whereas ENI’s Cape Three Point Block 4 is an exploratory tract, the company is developing another block in Ghana. The Sankofa-Gye-Nyamme project in the Offshore Cape Three Points (OCTP) is expected to come on stream by the third quarter of 2017, delivering, at peak, 45,000BOPD of oil and 180MMscf/d of gas.

ENI will operate the two newly awarded blocks in Cote d’Ivoire, with remaining 10% stake owned by Petroci, the state-hydrocarbon company.


Manish Takes Over From Phillip Ihenacho

Seven Energy Finance Limited has announced the appointment of Manish Maheshwari as its Chief Executive Officer.
Until recently the Chief Executive Officer of Essar Exploration & Production, Maheshwari succeeds Phillip Ihenacho, who had elected to step down from a full time executive role with the Company.

Maheshwari has over 25 years’ experience in the oil and gas sector. Before his movement to Essar in November 2014, he was Managing Director of Hindustan Oil Exploration Company Limited, a subsidiary of the Italian giant, ENI SPA.
The Essar job entailed responsibility for 15 blocks and fields in various stages of exploration and production in India, Indonesia, Madagascar, Nigeria and Vietnam. The total reserves and resources across these assets were estimated, by the company, to be 2,034MMBOE in March 2015.

“Manish has been instrumental in turning around and delivering multi-fold growth from onshore and offshore assets in a safe, timely and cost effective manner in his previous assignments”, Seven Energy notes in a statement. “Manish has been involved in negotiating Production Sharing Contracts with Governments, Joint Operating Agreements with National & International Oil Companies, Crude Oil Sales Agreements, Gas Sales Agreements with aggregators and end users, as well as successfully completing several farm-in and farm-out arrangements.

Manish brings rich experience overlapping technical, commercial and financial domains in emerging economies. Manish has a Bachelor (Hons.) in Engineering and a Masters in Business Administration from Strathclyde University and has been a member of several professional bodies including the Society of Petroleum Engineers (SPE) and Association of International Petroleum Negotiators (AIPN).

Seven Energy is a leading player in the domestic Nigerian gas market, supplying gas to the power generation and manufacturing industries, principally through its own integrated processing and pipeline infrastructure, and the backing of strategic long-term investors. The Group’s midstream gas infrastructure assets, focused in the south east Niger Delta, include the 200 MMscf/d Uquo gas processing facility and a gas pipeline network of 260 km with distribution capacity of 600 MMscf/d. Its upstream assets include licence interests in the Uquo Field and the Stubb Creek Field (south east Niger Delta), an indirect interest in OMLs 4, 38 & 41 through a Strategic Alliance Agreement with Nigerian Petroleum Development Company (north west Niger Delta) and a licence interest in OPLs 905, 907 and 917 (Anambra Basin). The Group has its main offices located in Lagos and London.


Algeria Reduces Fiscal Deficit Despite Lower Oil Price

By Mohammed Jetutu, in Cairo

Overall economic activity was resilient, but IMF advises reduction in ‘costly’ energy subsidies

The International Monetary Fund (IMF) has praised Algerian authorities for achieveing a notable reduction in the fiscal deficit in 2016, despite the challenges of lower oil prices.

Algeria is the third largest crude oil producer in Africa and the continent’s largest gas exporter. But its economic indices are better than Nigeria’s and Angola’s, the two top oil producers.

In a March 21 2017 report, the IMF noted that Algerian authorities were seeking to reshape the country’s growth model, but the country “continues to face important challenges posed by lower oil prices” the World Bank institution noted.. While efforts to adjust to the oil price shock are underway, “fiscal . consolidation will need to be sustained as oil prices are expected to remain low”. 

The report is the product of an IMF staff team visitation led by Jean-François Dauphin.

Discussions focused on the appropriate mix of policies to adjust to lower oil prices. “Overall economic activity was resilient, but growth in the nonhydrocarbon sector slowed under the effects of spending cuts and is estimated at 3.4% in 2016,” Mr. Dauphin explained in the statement.

Inflation increased from 4.8% in 2015 to 6.4% in 2016 and stood at 8.1% year-on-year in January 2017. Unemployment increased to 10.5% in September 2016 and remains particularly high among the youth (26.7 percent) and women (20.1 percent). Despite some fiscal consolidation in 2016, the fiscal and current account deficits remained large, and public debt increased. International reserves, while still ample, fell by $30Billion to $113Billion (excluding SDRs).

“Efforts to adjust to the oil price shock are underway. The authorities achieved a notable reduction in the fiscal deficit in 2016 and have adopted an ambitious fiscal consolidation plan for 2017-19. They made progress improving the business environment and are working on a long-term strategy to reshape the country’s growth model to foster greater private sector activity and economic diversification. The central bank is adapting its monetary policy instruments to a tighter liquidity environment. This growing reform momentum is welcome.

“A key challenge at this juncture is choosing a policy mix that will help the economy adjust to the oil price shock in a way that is sustainable and the least costly in terms of growth and employment.

“Fiscal consolidation will need to be sustained as oil prices are expected to remain low and hydrocarbon reserves are exhaustible. At this stage, the consolidation should rely primarily on broadening the tax base, including through better tax enforcement and the rationalization of tax exemptions; containing current spending; gradually replacing costly energy subsidies, which mostly benefit the well-off, by direct support to the population most in need; and improving the efficiency of capital spending and reducing its cost. Investment in health, education, and well-targeted social safety nets should be preserved. These efforts should be supported by further strengthening the budget framework and closely monitoring growing fiscal risks.

“Too abrupt a fiscal deficit reduction, however, should be avoided to reduce the risk of a sharp slowdown in growth. In the mission’s view, given the relatively low level of public debt, Algeria could afford a somewhat more gradual fiscal consolidation than entailed in the current medium-term budget framework if it were to consider a broader range of financing options, including external borrowing and the sale of state assets.

“The mission strongly supports the authorities’ objective to decrease the economy’s dependence on hydrocarbons and unleash the potential of the private sector. This is not only needed to adjust to lower oil prices but also to ensure a sustainable source of job creation even beyond the horizon for proven oil and gas reserves. Achieving this goal will require wide-ranging structural reforms. Measures are needed to improve the business environment and access to finance, strengthen governance and transparency, make the labor market more effective, ensure that skills produced by the education system and sought by students match the needs of employers, foster greater female participation in the labor market, and further open the economy to foreign investment. The overall strategy should be designed and sequenced so that reforms reinforce each other and the burden of economic adjustment is shared equitably. Action should be timely as structural reforms take time to bear fruit.

“Exchange rate, monetary, and financial policies should support the adjustment. Further efforts to bring the dinar in line with fundamentals, combined with steps toward the elimination of the parallel foreign exchange market, would support fiscal and external adjustment. The Bank of Algeria is appropriately introducing open market operations, which should become its main monetary policy tool. The Bank of Algeria will need to stand ready to tighten monetary policy in light of growing inflationary pressures. Based on preliminary data, the banking sector as a whole remains adequately capitalized and profitable, but the oil price shock has increased liquidity, interest rate, and credit risks. It is therefore important to accelerate the transition to a risk-based supervisory framework, enhance the role of macro-prudential policy, strengthen the governance of public banks, and develop a crisis resolution framework”, the statement concluded.
 


NPDC Annexes OML 13

The Nigerian government awards a block outside the process of a bid round..

The Nigerian Petroleum Development Company (NPDC) has been awarded the Oil Mining Lease (OML) 13, in the south east onshore Niger Delta.

The 1,923 sq km block used to be operated by Shell, but was revoked along with a number of other blocks in 2005. Shell went to court, but ultimately gave up the asset.

It is not clear why such a petroleum producing property was awarded outside of the process of a bid round. OML 13 hosts the Utapate South and Ibibio fields, as well as a string of producing marginal fields including the Frontier oil operated Uquo, a gas accumulation and the 2,000BOPD Qua Iboe, operated by Network E&P.

NPDC is the operating subsidiary of the state hydrocarbon company NNPC and as an operating company, it is subject to the same laws of the country as any operating company.

Although the extant petroleum laws of the country allow the Minister of Petroleum to award Oil Blocks on discretionary grounds, the current bills at the Senate and the House of Representatives are in favour of competitive bid rounds as the way to grant assets to E&P companies.

“I can’t exactly comment on your query”, said Ndu Ughamadu, NNPC’s spokesperson, when asked about the award. “As you know, matters such as this are currently being discussed at the hearings of the National Assembly in Abuja and the DPR (industry regulator) is involved”.

What makes the award to NPDC more intriguing is the fact that the government has signaled intention to declare a transparent lease sale sometime in 2017, so why the hurry?

© 2017 Festac News Press Ltd..

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