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Eland Not Ready For Ubima Development

Nigerian authorities are lenient about the entire marginal field exercise

AIM Listed Eland Oil and Gas is not ready for development work on Ubima field, located onshore eastern Nigeria.
The company farmed into the asset as a 40% technical and financing partner to All Grace Energy Ltd., holder of the field, as far back as 2014.

It was two years after All Grace Energy was awarded the field by the Nigerian authorities, on a discretionary basis, outside of the process of a bid round.

The Ubima field is covered with three dimensional (3D) seismic data. Shell, the former operator, had drilled four wells on the structure. It would seem that its development would be easy.

But Eland had struggled as a going concern for the past five years. Even in the year it purchased equity in Ubima, it recorded a loss of over $10Million.

Today, Eland is back in the black, but it is not in a hurry to take Ubima to first oil. The company says the scheduling for evaluation and production of Ubima 1 is planned for 2018, with full field development being scheduled for 2019. The exact details of the development will be subject to the results obtained from the Ubima-1 re-entry.

“Work is currently on-going with pipeline surveys to both evacuation opportunities to the south through the Bonny Oil Terminal and to the north east through Brass River Oil Terminal”, Eland says in its full year 2017 report. “We expect to finalise these studies prior to completing the Ubima-1 re-entry”.

Eland cannot commit adequate time and resources to Ubima just yet because (1) it is busy with an aggressive development drilling campaign on OML 40 and (2), there are still cash flow issues, even with the seeming success of OML 40 (where it now produces in excess of 20,000BOPD from as low as 3,000BOPD three years ago).

In April 2018, Eland is continuing with drilling of with Opuama-9 and 10. “Further drilling activity on OML 40 is being considered for the Gbetiokun field development with the re-entry and completion of Gbetiokun-1 and the drilling of Gbetiokun-3 also potentially within 2018, subject to the various regulatory approvals being in place”.

Eland is also planning an exploration well on the Amobe prospect, to potentially be drilled in late 2018 or 2019, in the same acreage. “This large, robust, structure is similar to Opuama in structural style, shows structural closure over a vertical interval of 5,000 feet, and is located less than seven kilometres from the Opuama Flow Station. Best estimate prospective resources are assessed by NSAI at 78 MMstb, with very high upside potential”.

There is really no space for Ubima development here.

Nigeria Approves 14 of Shell’s 17 Renewal Applications

By Sully Manope, in Abuja

Nigeria’s Ministry of Petroleum has approved the recommendation by the Department of Petroleum Resources (DPR), to revoke three Oil Mining Leases (OMLs) operated by Shell Petroleum Development Company, a local arm of Shell, the Anglo Dutch major.

The 17 acreages that Shell submitted for renewal purposes were: OMLs 11, 17, 20, 21, 22, 23, 25, 27, 28 31, 32, 33, 35, 36, 43, 45 and 46. The properties were due to expire in 2019.

The acreages revoked include OMLs 31, 33 and 36.

Licences for 13 of the remaining 14 leases were renewed but the DPR proposed that OML 11 be split into three because it is too large (2,800sq km). Those renewed have a new lease of life for another 20 years.

Shell will have a new OML 11, which is one of the three tracts carved out from the old OML 11, but it can apply for only one of the remaining two, according to ranking sources at the Ministry of Petroleum Resources in Abuja.

In other words, the DPR expects Shell to re-apply for the “new” acreages carved out of OML 11, either in sum or in parts, but ministry sources say that the company is unlikely to be re-awarded all the three. Shell had not re-applied as of April 17, 2018.

The old OML 11 was actually under a Shell divestment programme when the AngloDutch giant applied for its renewal; Shell is talking with Transcorp, a Nigerian company which is scouting for $1Billion to pay for 45% of OMLs 11 &17. It is not clear how that transaction will work under the government’s “split it to three acreages” instruction.

Other interests, including a company named Robo Michael, claiming to be championing a community cause, have laid claim to those parts of the old OML 11 which lie in Ogoniland, a piece of territory where Shell had been refused access by the communities for upwards of 23 years. Bodo, Bodo West and Yorla fields, all in Ogoniland, are in the south of the old OML 11. It’s not clear where they would be, when the government concludes the split.

But a renewal of OML 11 licence, either in wholesale or in pieces, improves the investment climate around the asset.

Transcorp has struggled, without success, to raise money to purchase the 45% because of the nearness of the licence expiry date.

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.

Nigerian Bid Round May Not Happen Until After 2019 Elections

By Fred Akanni, Editor in Chief

President Muhammadu Buhari is not predisposed to assenting to a bid round, for now, sources at the Nigerian Ministry of Petroleum have suggested.

He hasn’t said a word about the several lease sale proposals on his table.

]Nigeria’s last bid round was in 2007, which means that the Presidencies of Umar Yar’adua, and Goodluck Jonathan did not conduct any lease sale, but the Goodluck Jonathan administration executed a number of discretionary marginal bid round awards, especially two (Ubima and Otakikpo) fields in the country’s east.

To its credit, the Buhari administration hasn’t agreed to a single discretionary award.

Between 40 and 50 marginal fields-undeveloped discoveries which have lain fallow in acreages operated by Shell, TOTAL ExxonMobil, Chevron and ENI for over 13 years- are expected to be up for grabs. Aspects of the proposed regulations of the bid round indicate that interested investors will be required to pay $50,000 each for a Report which include “details of their shareholding structure, names of their directors, track record in the oil and gas sector, audited financial statements, partnership and/or collaboration with indigenous firms, and financial resources to bid and pay for the oil acreages”. After the report is approved, bidders will also pay $15,000 each as data mining fees to enable them gain access to the relevant data on the acreages that will be placed on offer”.

Mr. Muhammadu Buhari, elected on an anti-corruption platform in 2015, reportedly sees issues such as hydrocarbon lease sale, electricity tariff increase, deregulation of petroleum product prices and willing buyer-willing seller natural gas prices, as avenues where the elite take advantage of the poor, who he sees himself as representing. Some of the country’s most vocal economic analysts have described the president’s stance as inflexible. Indeed, most of the areas where the President has disallowed free market laws of economics have been in the crucial energy sector.

GE Linked Company Leads SPV Winners For Uganda’s Refinery

Nuovo Pignone International SRL, a General Electric Company located in Italy and the EPC Contractor SAIPEM SPA, also Italian, are the most recognisable of all the partners in the Special Purpose Vehicle who won the bid to build, operate and partly own the much anticipated 60,000BOPD refinery in Uganda.. 

The Albertine Graben Refinery Consortium (AGRC), as it is known, includes YAATRA Africa (Mauritius) and Lionworks Group Limited (Mauritius) as well as the Uganda National Oil Company (UNOC), which is a limited liability petroleum company owned by the government.

The SPV will now build the oil refinery in Hoima District after the signing of the Project Framework Agreement between the government and the AGRC.

The composition of the nationalities in the consortium was not lost on Yoweri Museveni, the Ugandan President who, like his peers, have recently been keen on doing business with China. He said the composition of the AGRC showed that Western companies were also waking up to realize Africa’s potential. He challenged Western companies to take interest in “helping” Africa explore its resources potential, saying the continent presented immense business opportunities. “Africa and the West share a lot of history together and there is a need for them to use these past linkages to further economic business,” said the President.

The signing of the PFA means pre-Final Investment Decision (FID) activities like Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimation (PCE), Environmental and Social Impact Assessments (ESIA) can commence.
Under this agreement, AGRC will be responsible for funding the pre-FID activities listed above and will also proceed to construct and operate the refinery. The consortium has also been tasked to ensure Ugandans get jobs and skills out of the project.

The refinery, which will be developed as a commercial undertaking with focus on the regional market, will supply products like kerosene, petrol, diesel, heavy fuel oils, among others.

The entire project will be implemented by a Special Purpose Company, the Refinery Company, that will be incorporated by the private investors and the Uganda Refinery Holding Company, which is a subsidiary of the Uganda National Oil Company.
AGRC commenced negotiations in 2017, in 2017 following the fall out of Russia’s RT Global Resources, with the Government of Uganda, after talks collapsed with the ministry, around RT’s request to scale down the size of the refinery while SK Engineering the alternate bidder showed disinterest with the project thereafter.

Why SEPLAT Wants In On Addax Sale

By Sully Manope

Seplat Petroleum is interested in acquiring Addax Petroleum’s Oil Mining Lease (OML) 124, onshore Eastern Nigeria and it is willing to move, once there is certainty that Sinopec, the parent company, is divesting the company’s assets in Nigeria and Gabon, as variously reported.

Seplat has been proactive enough to call BNP Paribas, the bank that reportedly had the mandate to dispose of the assets, to find out if it could indeed proceed to purchase.

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NDPR Moves Rig To Ogbele, With Omerelu in Sight

Nigerian independent Niger Delta Petroleum Resources (NDPR), commenced a 3 well campaign on the Ogbele field in mid-March 2018.

It is the company’s fourth Drilling Campaign on Ogbele and “it will be a field life changing exercise”, gushes Layi Fatona, the company’s outgoing Managing Director.

NDPR plans to move the rig to drill one well in another small field: Omerelu, after the Ogbele campaign.

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Angola Rig Activity Drops Again

There are five rigs active on the same number of locations in Angola as of March 28, 2018, which means a drop of one rig compared with the situation on February 28, 2018.

Seadrill’s West Polaris, which was drilling for ExxonMobil on Block 15, has left the country.
ExxonMobil is still an active driller though, so is TOTAL.

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BP’s Gas Success in Egypt Makes Oil Look Uncool.

By Toyin Akinosho

Britain’s top hydrocarbon company is aiming to dump its oilfields in Egypt, as its recent string of successes in natural gas, aided by the country’s competitive local prices, makes oil properties relatively uncool.

Competitors have been invited to scrutinise BP’s data, a prelude to purchasing the major’s stake in Gulf of Suez Oil Company (GUPCO), the company’s 50+ year old joint venture with the Egyptian General Petroleum Corporation (EGPC).

Egypt is paying at least $5 for every thousand cubic feet –in new projects-to E&P companies who pump gas into its national grid, the largest domestic gas market in Africa.

While payments had been a struggle in the past, the government has recently been in haste to clear the backlog.

BP has found itself right in the centre of Egypt’s gas boom, even though its oil output is 15% of the country’s total production.

BP holds 10% of ENI operated Shorouk concession offshore Egypt, which includes the giant Zohr gas field. The company itself operates the Atoll field, of which it announced the start of gas production from the project’s Phase One last February. Both Zohr (which came on line December 2017) and Atoll collectively produce 700MMscf/d.

BP’s Net production in Nile Delta increases sixfold from 50,000BOEPD in 2016 to over 300,000BOEPD in 2020; 90% of that is natural gas.

ENI’s Egypt Joint Venture Announces Half A Billion Barrel Crude Oil Milestone

Italian giant ENI has reported that cumulative oil production of AGIBA, the operating joint venture company between its subsidiary IEOC Production BV and Egyptian General Petroleum Corporation (EGPC), reached 500Million barrels in mid March 2018.

AGIBA has been active since 1981 with operations mainly focused in Egypt’s Western Desert Area.

With recent development of a number of new discoveries such as Rosa North, Emry Deep and Melehia West Deep within existing conventional asset, AGIBA, leveraging on its operated infrastructures “has been able to produce and valorize oil resources amounting to around 110 MMbbls in the last five years, thus reaching the target of 500 MMbbls as oil cumulative production”, the company says in a release on its website.

“This achievement confirms the success of ENI’s strategy to focus on exploration activities which offer high value and quick development within a mature environment by optimising traditional drilling/infilling campaign and the synergies with existing upstream infrastructure and national hydrocarbons export network”, ENI explains.

The Italian payer, on a n aggressive campaign across Africa, says it plans new exploration investments in Egypt in the next four years “to valorize the deep oil potential and the gas resources of the Melehia Concession”.

ENI has equity production of more than 250.000 barrels of oil equivalent per day in North Africa’s largest economy.

© 2018 Festac News Press Ltd..