All posts by AOGR

Dry Hole Fails To Cramp The Noble Style

Noble Energy, the American independent, went ahead to share out money, inspite of a very disappointing result of its first well in Cameroon, West Africa. The $35Million Trema 1 well, located in 594metres of water in the Tilapia licence offshore Cameroon was plugged and abandoned after coming up water wet at the objective levels. Noble Energy operates the licence with a 50% interest. The company’s board of directors declared an increase in its quarterly cash dividend to 25 cents per common share, up from 22 cents per common share last quarter.  The dividend was paid on November 19, 2012 to the shareholders of record on November 5, 2012. 

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Domestic Demand Pushes Egypt To Become Gas Importer

Egypt has a problem that’s rare among high volume African gas producers. It has created so much incentive for domestic gas use that, affected by its own success, it has headed on a slippery road to natural gas import.

In spite of holding close to 80Trillion cubic feet of gas reserves, the fourth largest store on the continent, Egypt, by most recent accounts, is so desperate for gas supplies that it already sees itself as a gas importer.

Just yesterday(November 22, 2012), Cairo based Citadel Capital, said it had signed an agreement with Qatari investors to import liquefied natural gas into North Africa’s largest economy.

The agreement is happening two weeks after the Egyptian government itself declared that it would allow liquefied natural gas imports after gas shortages contributed to countrywide power cuts.

On a government to government level, the Ministry of Petroleum and Natural Resources has concluded a deal with Algeria to import approximately 500 million cubic feet of gas daily from Algeria, starting in May 2013.

The details of these transactions are still quite sketchy. For one, the Citadel statement didn’t indicate any regasification plans.  And with regards to the import from Algeria, it wasn’t immediately clear whether this needed a pipeline construction or if there was already a transport route.

Egypt approached Algeria for import to meet its own export contractual agreements amidst a rise in domestic demand. Gas to Power, Industrial consumption, motor vehicles using gas as well as household usage were responsible for consumption of1.65 Trillion standard cubic feet of gas around the country in 2010/2011 year, according to EGAS, the state gas company. It is expected to rise. Currently, Egypt has three liquefied natural gas (LNG) plants and a pipeline to export gas. The LNG Plants include Segas LNG Train 1 in Damietta and Egypt LNG trains 1 and 2 in Idku. Their combined export capacity is close to 600Bcf a year. But in 2010, as domestic demand increased, LNG exports fell to about 354bcf, which was down by 30% from almost 500bcf in 2009.  The government has been using some of the gas destined for exportation to the local market to bridge the energy deficit, which resulted in rolling blackouts in second and third quarters of 2012.

Smit Lamnalco Builds New Vessels For Shell’s Gabon Operations

Anglo Dutch major Shell has renewed its marine support services contract with Smit Lamnalco in Gabon, in a deal that has triggered investment in three auxiliary vessel newbuildings.
The five year contract renewal extends an uninterrupted relationship between the marine support specialist and Shell Gabon dating back to the 1990s. It covers support for Shell Gabon’s tanker operations at the remote Gamba Terminal, south of Port Gentil.
“The trust Shell Gabon has in our services has sustained through the 2011 merger of Lamnalco and SMIT Terminals.” says Aart van der Wal, Managing Director Smit Lamnalco Africa.

Three newbuilds ordered
The renewal covers the deployment, crewing and management of four Smit Lamnalco support vessels, with three newbuilds ordered in mid-November to replace existing tonnage. The orders cover one ‘Shoalbuster’ and one Beach Landing Craft from Damen Shipyards, plus one Fast Offshore Crew Boat from UK-based yard and well-known supplier in West Africa Alnmaritec. An existing ‘Shoalrunner’ auxiliary vessel will remain in place.
“Our willingness to invest in new tonnage was clearly a factor in the renewal” says Mr Van der Wal.
“It is in line with our strategy to offer one of the youngest and most efficient marine and offshore support fleets in the industry.”
The Shoalbuster is a versatile, multi-purpose vessel for harbour, inland and coastal waters, characterised by high bollard pull and ample deck space. Meanwhile, the maneuverability of the 17m long, 25-knot plus, aluminium-hulled fast response vessel will be conferred by its double chine hull and Rolls-Royce Kamewa FF45 water jets.

Localisation programme
Smit Lamnalco has a locally-registered company in Gabon. The group pursues a localisation strategy in terms of employment, crewing and subcontracting. Nearly 75% of the Smit Lamnalco organisation in Gabon is staffed by Gabonese nationals.
Earlier this year, Smit Lamnalco signed a five year contract renewal with Total Gabon covering offshore oilfield support and tanker assistance at the onshore terminal of Cap Lopez, Port Gentil.

Chinese Give Up Ugandan Prospect After Dry Hole

The Kanywataba prospect area in Exploration Area 3A (Southern Lake Albert), has reverted to the Government of Uganda, following the expiry of the six months Exploration licence which was issued Tullow Oil in February 2012. The licence, which was issued in recognition of the time lost during the tax dispute over the sale of Heritage’s interests in Uganda to Tullow, was to enable the drilling of an exploration well on the Kanywataba Prospect.

Following the farm-down by Tullow Oil to the French major TOTAL and China’s state owned giant CNOOC in February 2012, CNOOC was appointed operator of the area and subsequently drilled the Kanywataba-1 well in May 2012 to a total depth of 2105metres.

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Atlantic Energy To Grab A Stake In Shoreline Energy Resources

Atlantic Energy is in the process of raising a billion dollar ($1Billion) loan from Nigerian banks, in large part to fund its planned acquisition of a significant percentage of Shoreline Power’s equity in Shoreline Energy Resources.

Shoreline Energy Resources is the special purpose vehicle(SPV) with which Shoreline Power, a Nigerian energy and infrastructure company, and Heritage Oil Plc, the London listed independent, are about to acquire the 45% equity held by Shell, ENI and TOTAL in the Oil Mining Lease (OML) 30, onshore Niger Delta. NPDC, the operating arm of the state hydrocarbon company NNPC, will operate the acreage with 55%.

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Lekoil Is The Preferred Bidder For ConocoPhilips’ Nigerian Assets..


Lekan Akinyanmi, CEO, Lekoil

“We have a preferred bidder”, Conoco Phillips wrote in a message to Oando, Seplat and Transcorp/MidWestern on the night of Wednesday, October 31, 2012. But the company didn’t name the winner to the three losers, leaving all of them guessing. Lekoil, the least known of the four last runners, won the bid hands down with its $2.5Billion offer.  There are feelers that one of its several institutional backers is willing to put down a hefty share of the sum, even as the negotiation process is being finalised. But we had goofed. We announced, in last week’s edition of this newsletter, that Oando, with $1.3Billion bid, was leading the race. We were wrong but the fact is that our assumptions mirrored those of some of the most impeccable sources in the industry. “You know, we easily forget about Lekoil”, noted one respected industry watcher.

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Egyptian Crisis Turns Dana Gas Into A Debt Defaulter

Dana Gas has fingered the Egyptian revolution for its cash flow issues, lamenting that the government’s inability to pay for gas purchases has cast the company in an image of a chronic debtor. The UAE based company attributes its recent default, on a $1Billion Islamic Shari’a-compliant Sukuk bond, to “ receivables” from the government, becoming “much more complicated as well as much more severe”.

The bond’s maturity date came and passed on 31 October 2012. $920 million was due after Dana Gas repurchased $80 million of the bond issue in 2008. The company also failed to pay $18.75 million of accrued profit from the Sukuk-holders ownership stake due on 30 October 2012.

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Shell Transforms To A Gas Producing Company

Shell’s equity gas production all over the world will surpass its net oil output by the end of 2012. It is official. “Globally, Shell is focusing more on gas”, says Ubaka Emelumadu, Vice President Gas, Sub-Saharan Africa Shell Upstream International.
Shell is increasing its gas output in places as far flung from one another as Qatar, The Netherlands, Australia, Russia and Nigeria.

Shell Transforms To A Gas Producing Company

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Conoil Targets 20,000 Feet With Discovery Well

Photos courtesy of MegaDrill and IDSConoil’s Ango-1, the new field wildcat being drilled by the new build swamp barge Majestic, is expected to drill to 19800 feet(or 6035metres). Our report, last week, mistakenly reported that the proposed TD was 18000(5486metres). A depth of 19,800ft Measured Depth (with TVD around 17990feet, or 5852metres) is clearly more than a thousand feet deeper than the deepest onshore well in the Niger Delta: Agip’s Tuomo-2.
We reported last week that the well, located 30km North east of Otuo South field, in Conoil operated Oil Mining Lease(OML) 59, in southwestern Niger Delta basin encountered over 150 feet of suspected hydrocarbon column at around 16000ft(4876metres) TVD, which itself is very deep by Niger Delta standards. If this turns out to be a producing reservoir, it will be one of the two deepest pay zones in onshore Niger Delta. The original hole has been sidetracked, but the objectives remain. Conoil expects to hit another payzone at about 18,000feet TVD.

Dana: Gas Discovery To Market In One Week

Dana Gas PJSC will tie its West Sama -1 gas discovery to a processing plant within a week, the company said in a press release. Dana Gas produces approximately 230MMscf/d plus 7500 barrels per day of natural gas liquids.  All dry gas is sold into the domestic market in Egypt.

The Sharjah, UAE based company announced the discovery at West Sama-1 in Egypt’s West El Qantara Concession, in the Nile Delta, on October 22, 2012.  Dana Gas operates the acreage 100%.

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