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Drilling Starts: Zimbabwe Too Wants to Be an Oil Producer

By Macson Obojemuinmoin

Drilling has started at the first of two potentially play opening exploration wells in Zimbabwe.

Australia based Invictus Energy has spud Mukuyu-1(formerly Muzarabani-1), claiming to target 20Trillion cubic feet + 845Million barrels of conventional gas condensate, which translates to about 4.3Billion barrels of oil equivalent on a gross mean unrisked basis. This makes Mukuyu, in the words of Invictus Energy, “one of the largest oil and gas exploration prospects to be drilled globally in 2022”.

The company says that Baobab-1, the proposed second of the two well campaign, will test “recently identified Basin Margin play”.

The prospects are located in the Cabora Bassa basin onshore Zimbabwe.

The Mukuyu-1 well is designed to target several stacked Triassic and younger sandstones within a 200km2 four-way dip closure on the basement high trend.

Exalo Rig 202 will drill Mukuyu-1 to total depth of 3,500metres

The well will be drilled to a projected depth of 3,500 metres. Drilling and evaluation of the well is prognosed to take approximately 50 to 60 days to complete.

Baobab-1 will take approximately 30 to 40 days to complete. It will target stacked Cretaceous and younger sandstones, within four-way and three-way dip closures, against the southern basin bounding rift fault.

Invitcus says that “Baobab displays similar structural characteristics to the play opening Ngamia discovery in Kenya’s Lokichar Basin, which resulted in subsequent discoveries in the “String of Pearls” along the basin margin”.


Conoil to Drill New Exploration Plays in OML 103

The Nigerian independent, Conoil Producing. has moved a rig to Oil Mining Lease (OML) 103 in a swampy terrain in North Western Niger Delta, to drill an exploration well and, if successful, appraise it immediately with another well.

The Imperial rig, operated by Depthwize, is on location and about to spud.

The tentative name of the wildcat is AX#4.  The full name will come after the spud. AX#4 and its appraisal prospect are located in an untested fault block in the pan handle shaped, southern part of OML 103, directly north of NPDC/Elcrest operated OML 40.

The wells are to be drilled to as deep as 11,000feet Measured Depth subsea.

There are plans for a possible two more wells, if the campaign is successful.

AX#4 will be the second exploration well to be drilled in the Niger Delta shelf in the space of six months.  The NPDC/Elcrest Joint Venture recently finalized the Sibiri exploration well in OML 40, with initial results indicating 353 feet gross hydrocarbon pay in eight oil-bearing reservoirs, 229 feet being net pay.

Sibiri-1 is, however, located far from the AX#4 probe.

 


‘Strong Governance, Collaboration Has Kept OPTS Relevant after 60 Years ‘

Founded sixty years ago, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce& Industry, has become a foremost advocacy group in Nigeria, helping to shape policies that enhance growth in the country’s upstream value chain while protecting the interests of member companies. Rick Kennedy, Managing Director Chevron Nigeria and incumbent Chairman of OPTS, shares with select journalists including Africa Oil + Gas Report, factors that have kept the organisation going strong as it marks its 60th anniversary.

Sixty is such a milestone, tell us a little bit about the journey so far.

The OPTS really Is a trade group and the intent is to improve the health of the offshore and onshore oil and gas industry in Nigeria by allowing the operators to come together in a forum where we can address common issues.

Obviously, we have to respect laws on competition but, there are a number of common issues that we deal with, so we work collectively and I think the organization has been very successful in moving various things forward on behalf of industry and in partnership with the Nigerian government for the benefit of the country, as well as the oil and gas industry.

This is done through advocacy, providing input on the development of regulations. I think the other big success over that 60 years is not only contributing to enabling the success of the oil and gas industry but also being able as an industry to give back to the country in terms of direct and indirect jobs, revenue to the country and social investments by member companies. For example, we have provided funding for universities, scholarships, and other social investment activities tied to economic empowerment, health, as well as education.

At a high level, OPTS supported the government in moving forward with the oil industry bill and we are now focused on supporting the implementation of the petroleum industry act.

So what have been some of your biggest challenges thus far?

Probably the biggest issue of the day is oil theft, insecurity, and the impact on the industry’s ability to produce safely and reliably. We’ve had infrastructure that has either been damaged or forced to be shut in. And we’re all aware of the impact on production revenue to the government.

I think probably the other challenge that we have more recently given the state of the economy and the reduced revenue coming in due to oil theft, is the ability of the NNPC to pay their share of Joint Venture operating expenses in a timely manner.

And so the outstanding cash calls are building up and lack of reinvestment just further hurts the ability of the industry to deliver…

But there were efforts made by the NNPC to address these arrears, what happened?

There was a significant effort to address the historical arrears. We were able to form a great partnership between industry and the government to come up with an innovative approach to address it. That has been largely successful and I think in a few cases those historical arrears have been fully paid off.

Unfortunately, more recently, with maybe the challenges of the economic environment and then the increasing oil theft,  outstanding cash calls have became an area of concern in the latter part of 2021 and through 2022.

Investments into the Nigerian oil sector have been few and far between and many projects are yet to come on stream. As an advocacy group, what measures do you recommend to attract investments into Nigeria?

That’s a good question. Obviously, there’s probably a long list of things but in general, developing and maintaining investor confidence is key. Are we competitive, relative to other opportunities, globally?

If the government can perhaps address and mitigate factors such as the impact of inflation, unemployment, and ease of doing business. Issues around security, for example, increase in the cost of our operation. Cost competitiveness is really critical, and that’s something that we’re  doing a lot of work on.

The Nigerian upstream cost optimization program is an area where the industry is partnering with the government to try to lower the contracting cycle times and drive down costs.

We are working closely with the regulators to try to help the development of regulations that are effective and streamlined hopefully, to minimize some of the administrative burdens that may be placed on the industry which again, leads to cost.

Historically, there’s been a lot of levies and fees and various taxes applied to the industry and we are seeing that continue even in the current legislative activity. There is a discussion on even more taxes to be placed on the industry to help fund various programmes and departments across the country.

So really, this whole area around cost competitiveness and driving down costs is a critical element.

On the plus side, the passage of the petroleum industry Act has brought some clarity to the industry and a certain level of certainty around the fiscal framework. So that’s a real positive in gaining investor confidence.

 What would you say are some of the successes recorded by the OPTS in the past 60 years?

Well, I’m going to point to the passage of the PIB and that’s not all OPTS but I know OPTS was involved. This success goes back to the willingness of President Buhari and the Minister of State for Petroleum Resources and NNPC GMD to collaborate with the industry and this gave us an opportunity to make an input.

The government ended up crafting a very good bill that ultimately got passed and OPTS and the member companies spent a lot of time supporting that effort, providing input and ideas. So that to me is a very recent example of success.

In addition, we’ve had numerous scholarships given to different students in different communities. We’ve built numerous hospitals, in different communities within the nation and around the Niger Delta. During the COVID pandemic, the OPTS put forward about $30 million to support government efforts. We did a lot of vaccination and built health care facilities in the six geopolitical zones of the country.

So for 60 years, you’ve managed to stay relevant as an advocacy group, what is the secret?

I think there’s probably an element around governance. We all have a common purpose and we do have positive intentions for the country, its citizens, and the government. We have very positive working relationships with all stakeholders. The folks that first came together to form OPTS, I think, laid down a good set of governance. It’s very inclusive. It’s very collaborative. We follow all the  relevant anti-trust and competition laws in how we conduct our activities.

It is several factors and right now we have 29 members, including five IOCs, plus some other larger exploration and production companies and many of our indigenous companies. So we work hard to really bring in all the perspectives and collaborate very closely across the member companies.

There is a mindset of true partnership and collaboration, not only within the member companies but with all stakeholders in the country.

 

 


Sanmi Famuyide is the New CEO of Decklar Resources

Decklar Resources, the Canadian minnow which controls three Nigerian marginal oil fields, has appointed the Nigerian banker, Oluwasanmi “Sanmi” Famuyide, as its Chief Executive Officer (CEO).

The appointment is subject to the Toronto Venture Exchange (TSX-V), which is Canada’s version of the Nasdaq Small Cap Index of over-the-counter markets.

Famuyide has worked as Managing Director of Decklar Petroleum (Nigeria) Limited since its founding four years ago, where he led the asset acquisition transactions resulting in the Company’s current portfolio of three risk service assets (for Oza field, Assaramatoru Field and Emohua Field) in Nigeria. Declar Resources Inc., the international company, acquired Nigerian-based Decklar Petroleum Limited between late 2020 and early 2021.

With Famuyide’s elevation, Duncan Blount, an American national, “has stepped down as CEO of Decklar effective immediately and will continue to serve on Decklar’s board of directors as a non-executive director”, the company explains.  Mr. Blount’s LinkedIn page indicates that he has been, since August 2022, the CEO of Chilean Cobalt Corp. (C3), a privately-held critical materials exploration and development company focused on developing the La Cobaltera project located in Chile’s historic San Juan cobalt district

“Mr. Famuyide has over 20 years of experience structuring and executing on oil, gas and infrastructure transactions across Africa”, the company says in a statement. He “has performed the role of asset manager and has been directly involved in and responsible for key stakeholder engagements. His previous roles include Head of Business Development at Lekoil Limited, Head of Investment Banking Coverage at FBN Capital and Head of Oil & Gas – Marginal Fields and Independents at Guaranty Trust Bank”.

Decklar’s new CEO has an MSc in Applied Environmental Economics from the Imperial College London, and a BSc in Chemical Engineering from the University of Lagos.

 


Chinese Pick Up Drilling Where Shell Made a Discovery in Deepwater Gabon

China National Offshore Operating Company CNOOC will spud the first of a two well campaign in two blocks divested by Shell in deepwater Gabon.

The campaign is for one well each to be drilled in first quarter 2023 in blocks BC-9 and BCD-10. The latter was where Shell encountered 200 metres of net gas pay while drilling the Leopard-1 wildcat in 2014. Shell was excited by the result at the time and there were speculations (that Shell did not refute), of potential resource of 10Trillion cubic feet of gas in the Leopard structure, which is located below a salt (carbonate) formation.

Shell has since divested from Gabon entirely, with CNOOC Ltd, its partner in the 2014 discovery, taking over 100% and operatorship of both assets in an acquisition finalized in 2019.

For the campaign, CNOOChas inked a contract with rig operator Stena Drilling, for mobile offshore drilling unit (MODU) Stena Icemax. The two (2) well programme has an estimated total campaign duration of 90 days.

The dynamically-positioned dual mast Stena IceMax is a harsh-environment ice-class drillship with managed pressure drilling capabilities.

The drilling programme is crucial to the Gabonese authorities, who have struggled, in vain for the last 30 years, to place Gabon on the deepwater production map of the world. It is the only African oil producing country, lying on the edge of the south Atlantic, without crude oil or gas output from thedeepwater terrain.

 

 

 

 


Can Wael Sewan Transform Shell into an Energy Company?

 

By Gerard Kreeft

Can we anticipate a radical new course for Shell when Wael Sewan, Shell’s newly announced CEO, takes over the helm in 2023? Sewan is young and ambitious and by all accounts robust and ready to take on this important challenge. Yet there are certain simple truths that transcend the man and his office. The most obvious that Shell is not an energy company but an oil and gas company.

Oil company vs Energy Company

Shell and the other oil majors must face a significant paradigm shift: an oil and gas company becoming an energy company. Their previous strategy of high risk = high returns is being replaced by high risk = low/no returns. The real litmus test is the contrast between the performance of the share price of the oil majors and the Dow Jones Industrial Index: between January 2018 and June 2022 the Dow rose 23%(25,295 to 31,097) while the oil majors, with the exception of Equinor and Chevron, have under-performed dramatically. Shell, for example, in the five-year period January 5 2018–July 1 2022 has decreased 25% (from $69 in 2018 to $52 in June 2022). Will Sewan’s leadership change this?

 Table 1: Stock market prices of  majors 2018-2022(NYSE)

Year Repsol       BP       Shell Eni Total

Energies

Chevron ExxonMobil Equinor
2018 $18 $43 $69 $35 $58 $128 $87 $23
2022 $13 $29 $53 $28 $49 $157 $88 $34

Note: Values based on January 5 2018 and June 30 2022

During this 5-year period the share price of the oil majors is as follows:

  • BP is down 32%
  • Repsol is down 28%
  • Shell is down 25%
  • Eni is down 20%
  • [1]TOTALEnergies is down 16 %
  • ExxonMobil remained flat
  • Chevron’s stock up 23%, and
  • Equinor up 48%.

By contrast, new energy companies—ENGIE, Enel, Iberdrola, Ørsted, RWE, and Vattenfall—all are low risk, and their dividends are competitive with the oil majors. Iberdrola had a 5% dividend in 2021, Enel provided a dividend yield of 6.6% in 2020, and ENGIE dividend yield 6.23% in 2021. Their stock prices are steady and positive. Their green strategy has been delivered in place and accepted by the investor community.

For new energy companies there is only good news: With the exception of Enel, the Italian power company has seen its share price remain flat and most of the major power companies have seen their share price increase, some very substantially. Engie, the large French energy giant, has seen its share price increase by 17%. Iberdrola, the Spanish power company, has had an increase of 30%. The two big winners are RWE, the German utility giant, which has seen a stock price increase of 111% and Ørsted, the Danish power company, which has seen its stock soar by 132%.

 Table 2: Stock market prices of new energy companies 2018-2022

Year Enel Engie Iberdrola Ørsted RWE  
2018 $5 $17 $7 $47 $18
2022 $5 $20 $10 $109 $38

Note: Values based on January 5 2018 and June 30 2022

 Shell’s Present Situation

Annual capital expenditures in the near term, according to Shell, could be in the range of $21-23Billion. The company has stated that its renewables and energy solutions will be $2-3Billion compared to previous targets of $1-2Billion. This pales in comparison to the $3Billion earmarked for marketing, $4Billion in integrated gas—its LNG arm, $4-5Billion in chemicals and products as well as $8Billion in upstream investments consisting of upstream exploration and production.

While its competitors—BP and TOTALEnergies—are busy buying and creating gigawatts of new energy, Shell maintains that it wants to focus on the value it generates for shareholders across the entire value chain. While the company is eager to proclaim value generation, there is little indication to shareholders what this means. For the period 2025-2030, Shell lumps together the capital budgets devoted to three categories:

Growth which entails renewables and marketing, will receive 30% of Shell’s capital budget;

 Transition which entails Integrated gas (read LNG) and chemical & products will receive 30-35% of Shell’s capital outlay; and

Upstream will get 30-35%.

Predicted IRRs (Internal Rates of Return) per category, vary between 10-25%.

Will this strategy placate shareholder unrest?

Shell has a target to become a net-zero-emissions energy business by 2050. The company plans to transform its refinery footprint to five core energy and chemical parks, reducing the production of traditional fuels by 55% by 2030.

Does Shell’s goal for its energy and chemical parks fit within the verdict brought down by the Dutch courts that ordered Shell to cut its CO2 emissions by 45% by 2030 compared to 2019 levels? Is Shell still in charge of its energy transition scenarios or is it desperately playing catch-up to ensure that its influence and strategy has an impact on the swiftly changing energy landscape?

In Shell’s latest energy scenario update, four conclusions are stated:

  • Energy needs will grow.
  • Energy systems will be transformed; speed is the issue.
  • Transformation will have costs and benefits.
  • Action accelerators are necessary to meet climate aspirations.

In its Sky 1.5 Scenario, Shell anticipates a rapid and deep electrification of the global economy, with growth dominated by renewable resources. Global demand for coal and oil will peak in the 2020s and natural gas in the 2030s. In the sectors that are more difficult to electrify, liquid and gaseous fuels will be progressively decarbonized through biofuels and hydrogen.

Shell’s energy prognosis is certainly in line with other sources who are sounding the alarm about global warming and the need for rapid decarbonization. But how will this affect Shell? Is the company nimble and dextrous enough to ensure it will be a force for good in the next phase of the energy transition? The signs are not encouraging.

In 2020 the IEEFA (Institute for Energy Economics and Financial Analysis) evaluated Shell’s green progress. According to Clark Butler, the author of the report, Shell must shift at least $10Billion per annum or 50% of its total capital expenditures from oil and gas and invest it in renewable energy if they are to reduce their carbon intensity in line with their stated goals.

Shell’s Lazarus Moment

Was Shell’s second quarter results of 2022 a Lazarus moment?  The company announced adjusted earnings of $11.5Billion in the second quarter of 2022 and adjusted EBITDA (earnings before deduction of Interest, Tax and Amortisation) of $23.1Billion. Also included was a post-tax net impairment of $4.3Billion. Translated meaning that $4.3Billion previously identified as stranded assets is now seen as an energy asset that can be developed profitably.

The prestigious Dutch Financieele Dagblad(Financial Times) correctly asked whether Shell’s increased asset value is now positioning the company to do a  takeover of a major renewable energy company? Or will it continue to plough more of its investments in fossil fuels? Shell’s last major investment  was the takeover of British Gas in 2015  for $70Billion. With $100 per barrel of oil predicted for the short-to-medium term there is sufficient motivation to continue down the current hydrocarbon path and pay scant attention to even think about a dominant renewable energy future.

Yet Shell’s post-tax net impairment strategy has a precedent. In the summer of 2020, French oil and gas giant TOTALEnergies announced a $7Billion impairment charge for two Canadian oil sands projects. This might have seemed like an innocuous move, merely an acknowledgement that the projects hadn’t worked out as planned. However, it opened a Pandora’s box that would change the way the industry thinks about its core business model—and point the way toward a new path to financial success in the energy sector. While it wrote off some weak assets, it also did something else: TOTALEnergies began to sketch a blueprint for how to transition an oil company into an energy company.

The heart of the oil and gas industry is knowing how it measures its value: learning to understand the petroleum classification system, which provides the heartbeat of the industry. In the trade this is called the RRR (reserve replacement ratio), the annual amount of oil and gas reserves that a company must replace on an annual basis to maintain its portfolio.

The Paris Agreement of December 2015 was a sharp warning to the oil and gas industry that it was no longer business as usual.

But it was during the summer of 2020 that the seeds that eventually transformed the oil and gas industry, as we know it, were planted. Patrick Pouyanné, TOTALEnergies’ chairman and CEO, now says that by 2030 the company “will grow by one third, roughly from 3 million BOE/D (Barrels of Oil Equivalent per Day) to 4 million BOE/D, half from LNG, half from electricity, mainly from renewables.”(TOTALEnergies Strategies and Outlook Presentation, 9/30/2020, TOTALEnergies.com/media/news).

This was the first time that any major energy company had translated its renewable energy portfolio into barrels of oil equivalent. So, at the same time that the company had slashed proven oil and gas from its books, it also added renewable power as a new form of reserves.

Each of the oil and gas majors spilled red ink in 2020, and most took significant write-downs, but TOTALEnergies’ oil sands impairments were different. The company wrote off reserves, or oil and gas that the company had previously deemed all but certain to be produced. Proven reserves long stood as the holy of holies for the oil industry’s finances—the key indicator of whether a company was prepared for the future. For decades, investors equated proven reserves with wealth and a harbinger of long-term profits.

Because reserves were so important, the reserve replacement ratio (RRR), the share of a company’s production that it replaced each year with new reserves, became a bellwether for oil company performance. The RRR metric was adopted by both the Society of Petroleum Engineers and the US Securities and Exchange Commission. An annual RRR of 100% became the norm.

Now Shell has concluded that because of high energy prices,  its post-tax net impairment strategy—a role reversable—the company can reclaim a portion of its stranded assets. Will other companies follow? Will these claims lead to more investments in the oil and gas sector, or in renewable fuels?

 The Emissions Issue

Scope 3 Emissions

Under pressure from its shareholders and public opinion, Shell may be forced to move its zero emissions deadline forward to 2030 instead of 2050. At the AGM(Annual General Meeting)  in May 2022, shareholder climate resolutions did not carry the day but still is a major issue which the company cannot ignore.

Greenhouse gas emissions are categorised into three groups or ‘Scopes’ by the most widely-used international accounting tool, the Greenhouse Gas (GHG) Protocol. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company.

Scope 3 includes all other indirect emissions that occur in a company’s value chain. Scope 3 emissions, most of the oil majors claim, are difficult if not impossible to control. Shell has on this basis argued that it can only react to client reactions and not predict or anticipate their reactions. This is why the court decision of May 2021 in the Netherlands ordering Shell to cut its CO2 emissions by 45% by 2030 compared to 2019 levels was a rude awakening to Shell management. Suddenly Scope 3 emissions have been declared a societal duty.

Re-inventing Shell

How will Shell’s rebranding affect the company’s three major divisions—upstream, integrated gas, and downstream? Could Shell’s post-tax net impairment strategy be a smaller part of a major Shell renovation?  Not in the first place any takeover of any renewables company but a serious reallocation of its resources—both financial and technical. A Good Bank vs Bad Bank Scenario: Spinning off its huge Upstream Division to possibly merge with other upstream divisions;  thus, freeing up funding needed to transform its Integrated Gas and Downstream and Renewables Divisions for the energy transition.

Shell indicated that it will reduce its upstream division to nine core hubs—Permian, the Gulf of Mexico, United Kingdom, Kazakhstan, Nigeria, Oman, Malaysia, Brunei and Brazil– and it will do no frontier exploration after 2025. If the rush to the global exploration exit continues to pick up speed, Shell may well have to reconsider its upstream strategy, perhaps going so far as to spin off the upstream division as a separate entity or do a joint venture with other partners.

Shell’s integrated gas division, translated Shell’s LNG division which is the largest of the oil majors,  could prove to be its star asset. For example, Wood Mackenzie’s AET-2 Scenario (Accelerated Energy Transition Scenario) predicts that in the following decades, market power will shift from OPEC to the giant gas producers, such as the USA, Russia, and Qatar.

According to AET-2, the “Era of carbon-neutral gas is born. AET-2 would require $300Billion to support Liquified Natural Gas growth globally and $700Billion to support dry gas development in North America.”  Given that Shell is the global leader of LNG (liquid natural gas)this is certainly a sweet sound for Shell’s LNG business.

Downstream could also prove to be a key energy transition asset. Shell’s REFHYNE Project, the Rhineland Refinery in Germany, could well become the precedent that the company needs to ensure it becomes the leading supplier of green hydrogen, where hydrogen production is powered by renewable energy for industrial and transport customers. Could the REFHYNE Project be duplicated many times over to ensure that green technology becomes a key ingredient in the energy transition?

Shell must make some key strategic choices. The time for small incremental steps to meet the goals of the energy transition is over. Currently renewables and energy solutions account for only $2-$3Billion or approximately 10% of the company’s total expenditures. Will Shell use its post-tax net impairment of $4.3Billion as a first step to drastically expanding its renewable energy division or will it be utilized to explore for more oil and gas?

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Gerard has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report, and contributes to IEEFA(Institute for Energy Economics and Financial Analysis). His book The 10 commandments of the Energy Transition is now on sale at  Bookstore

Note: This article is an updated and modified version to reflect Shell’s change at the top.

 

 


Kreeft’s “Ten Commandments” Call for Out of the Box Thinking on Energy Transition

By Ken Seymour

Where does one begin to achieve global net zero by 2050 through energy transition?

A proposition of biblical proportions involving not the twelve tribes of Israel but the one hundred and eighty-four nation states of our planet.

Gerard Kreeft suggests that you start with “The Ten Commandments of Energy Transition.”

He takes us through his proposed commandments and applies them to a series of essays based upon his values and areas of expertise.

There is repetition and at times his eloquent literary prose collapses into bullet point lists that would be more at home in a presentation. However, he raises issues that must be addressed in the board rooms and cabinet offices of the world.

His values are clearly hard working, frugal Christian fairness and his areas of expertise are those of the oil and gas business in Canada, Europe and Africa.

He analyzes and challenges the major oil companies, who fail to see that their one-hundred-year-old value proposition no longer works. He also questions the fairness of big oil in their attitudes to Africa and the future of Calgary. He opens the Pandora’s box of energy transition.

Gerard is clearly an out of the box thinker and his book is a thought-provoking collection of observations worthy of study to all of those facing the challenge of net zero through energy transition by 2050. Gerard suggests that without radical change that hope no longer remains in the box.

Ken Seymour, of England registered Seymour Oilfield Solutions www.seymouroilfieldsolutions.com, is an experienced engineer with a proven track record in the oil & energy industry. Skilled in Negotiation, Operations Management, and Well Engineering (Drilling). Strong engineering professional with a MBA focused on Information Technology from University of Aberdeen and a PhD in Rock Mechanics from the University of Leeds.


With Lekela in the Bag, Infinity Transits  to the Summit of Africa’s Renewable Sector

With the signing of an agreement to acquire 100% of Lekela Power, the Egyptian power developer Infinity Group and Africa Finance Corporation (AFC) have moved to the very peak of the continent’s renewable power market.

The two describe the deal as Africa’s largest renewables acquisition.

That statement is not unfounded. Dow Jones has indicated that Lekela was valued at $1.5Billion.

The transaction was between the two owners of Lekela Actis, with 60% stake in Lekela Mainstream Renewable Power, with 40% of the company on the one hand and Infinity and AFC on the other.

The transaction hands to Infinity and AFC a 2,800MW portfolio of wind projects across the continent.

Does that make Infinity the largest renewables company in Africa?

Infinity and AFC say so, but Africa Oil+Gas Report’s annual listing of Africa’s largest renewable energy developers states that Scatec, with a portfolio of over 3,500MW solar and wind projects, is the largest renewable energy enterprise focused on the continent.

“Lekela is Africa’s largest independent power producer (IPP) and has >1 GW of installed capacity at projects located in Egypt, South Africa and Senegal. It has another 1.8 GW of projects in the pipeline that are expected to close “in the near future,” Infinity and AFC said. The company brought online its 250-MW wind farm in West Bakr in November 2022.

The acquisition is expected to close in the 4th Quarter 2022 subject to regulatory approvals and customary closing conditions.

Infinity and AFC plan to more than double the capacity of the company’s operating assets between 2022 and 2026.

Infinity is keen on integrating Lekela into the company. “We will assess with Lekela’s management how we structure this new integrated company to achieve our aggressive plans for future growth,” Infinity said.

Actis spoke with quite a number of willing buyers before settling to sell to Infinity and AFC. Bidders included Old Mutual, Masdar (of the UAE), CNIC (a Chinese state fund) as well as (South African owned Mainstream Renewable.

Actis is looking to sell its South African business BTE Renewables for around $1Billion and has hired Citigroup as advisors, according to Bloomberg.

 


Shell’s Latest Well on the Bonga Field is a Dud

Bonga -70, the latest well finalised in the ongoing multi-well drilling campaign on the Bonga field by UK major Shell, is a disappointing dry hole.

The probe was an exploration effort, drilled to test a turbidite lobe in the Bonga Main.

The Bonga field has various satellites, including Bonga North, Bonga North West and Bonga South West. The Bonga Main is, as the name implies, the main field. (The Bonga North West, Bonga North and Bonga South West are developed/to be developed, separately).

The Bonga structure has been one of the most durable of the eight deepwater fields that have come on stream in Nigeria since 2003. The field has delivered over 900Million barrels of oil from first production in 2005 to the end of 2021. In that time, the initial field development had been expanded with further drilling of wells in Bonga Main Phases 2 and 3 and through a subsea tie-back that unlocked the Bonga North West in August 2014. The final investment decision has not been taken for Bonga South West.

Bonga field, currently the third highest producing deepwater field in Nigeria is….

Read more

 

 


No Guarantees Over Libya’s Return to Daily Output of > 1Million Barrels

There is no assurance that Libya could sustain its return to producing crude oil in excess of 1Million Barrels of Oil Per Day.

Since mid-July 2022, when Khalifa Haftar, strongman of the East of the country, got his wish to replace Mustafa Sanalla with Farhat Bengdara as head of the National Oil Corporation, he has ended the three-month blockade and allowed production to resume at close to optimum.

Mr. Haftar seems to be capable of closing and opening Libya’s crude oil taps at his whim.

He had simply, in April 2022, repeated the 2020 shut-in which crimped more than 1Million Barrels per Day of output.

What this simply means is that Libya will get optimum output only if General Khalifa Haftar wants it.

Between April 2022 and the end of July 2022, Haftar, and his eastern allies, instigated the shutdown of several key oil facilities under the guise of local ‘protests, effectively seeing  550,000BOPD of output shut in.

Mr. Haftar’s blockade caused the closure of

  • The Repsol-led 300,000BOPD El Sharara Field
  • Eastern ports of Zueitina and Marsa El Brega exporting 180,000 BOPD
  • The 70,000BOPD El Feel field operated by ENI

Now production is back and Mr. Bengdara, the new head of the state hydrocarbon company, has visited Rome to see ENI ‘s CEO Claudio Descalzi to assure him of safe investment. But an oil industry that depends on the might of a militia is not sustainable.

© 2021 Festac News Press Ltd..