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Sudan, China, Discuss Refinery Expansion

Sudan’s oil minister Al-Zubair Ahmed Al-Hassan was in China for talks on Khartoum refinery expansion.

He discussed with Chinese officials an agreement to increase its production to 200,000 barrels per day instead of its current capacity of 100,000 bpd to meet the growing need of oil derivatives.

Sudan and the state firm China National Petroleum Corp (CNPC) signed on November 17, 2009, an agreement on the second phase of the expansion of the refinery.

China National Petroleum Corp. (CNPC), a leading energy investor in Sudan and parent of Asia’s top oil and gas firm PetroChina, owns 50 percent of the refinery, which it built and operates. The Sudan government holds the rest.

Surprise: Meziane Is Under Probe

Mohamed Meziane, CEO of Sonatrach, the Algerian state hydrocarbon company, is one of several company officials under judicial investigation. Chakib Khelil, the country’s flambouyant Energy and Mines Minister, told the press in mid January 2010 that Sonatrach Vice-President Abdelhafid Feghouli “has replaced him for the moment.”

It looks like “the moment” is going to stretch a bit. Mr Khelil says he does not know if the investigation into Meziane, and several other senior Sonatrach executives, could have an impact on the firm’s operations. “We should wait a year and then we shall see.”

Sonatrach is the world’s 12th largest petroleum company and the most profitable NOC on the continent. It is the national petroleum champion for Algeria, which supplies about 20% of Europe’s gas needs.

Meziane was appointed in September 2003 to head the firm, which employs 125,000 people. Sonatrach made a profit of $9.2 billion in 2008 for an annual turnover of $80.8 billion, according to its last financial report. The company accounts for 98 percent of the foreign exchange earnings of the North African country.

An examining magistrate ordered Meziane as well as another company vice president and five executives to appear before him concerning allegations of corruption in company tenders for consultancy and security contracts, the El Watan and El Khabar newspapers reported.

Two other Sonatrach vice presidents, the former president of a bank and his son, as well as two children of Meziane and a private businessman have already been detained as part of the probe, El Watan said.

Numerous foreign companies operate in Algeria in partnership with Sonatrach, including TOTAL and GDF (France), Repsol (Spain), Rosneft (Russia), ENI (Italy), BP (Britain), Statoil Hydro (Norway), Anadarko (US) and CNPC (China).

It is rare in Algeria, for officials of Meziane’s ranking to be under probe. The ruling political elite in Algeria is a tight knit group

EGYPT: Aminex In A Long Drawn Drill on South Malak – 1

South Malak-1 has proved to be a long, drawn out operation for operator Aminex. As of the time of going to press in early January 2010, the well was in the process of being hydraulically fractured. It’s a long story.

The exploration well, located in the West esh el Mellaha-2 concession in Egypt, reached a revised total depth(TD) of 11,200 feet (3,415 meters) as far back as 21st October 2009. High gas readings were recorded over 950 feet of hole and mud logs indicated oil shows in Eocene Dolomite and Cretaceous Matulla sands as well as in fractured basement rocks. Casing was set to approximately 170 feet above TD with a view to running an open hole test in the fractured basement rocks, but this was not successful, possibly because of cement contamination blocking the open fractures.

Subsequently, wireline logged oil- bearing intervals in the Eocene Dolomite and Matulla sands were perforated but the formations were found to be too tight to flow satisfactorily. Even the hydraulic fracturing is turning out to be a lengthy process and definitive results may still not be received for several weeks while fluids used in the frac are recovered. Aminex declared, almost in a tone of frustration: “The fracture treatment may or may not be successful in establishing commercial production but in a highly faulted formation the strong evidence of liquid hydrocarbons in close proximity is very encouraging”.

Partners are Aminex Petroleum Egypt Ltd. (80%) and Groundstar Resources Ltd. (20%). Aminex is a 12.5% shareholder in Aminex Petroleum Egypt Ltd. (operator) and is carried by other participants for 10% of exploration costs through to first commercial production. If sub-commercial rates of production are achieved, the carry will continue so long as the drilling programme continues.

Frank Timis On The Hunt For Liberian Treasure

Frank Timis hopes his London based firm, African Petroleum (not any relationship with the Nigerian company of the same name), will have the best portfolio in West Africa, “better than Tullow Oil, better than any of the giants,” within the next six months.

He has raised up to at least $200million to list the company, the vehicle with which he hopes to exploit resources in deepwater Liberia and Sierra Leone.

African Petroleum owns the rights to two deepwater blocks in the two countries. The founder expects the company to acquire several other big blocks soon. And whereas the company has yet to drill a well, the Romanian born millionaire is confident of imminent fortune. “If even two of our seven or eight blocks work, we will be a $20 billion company overnight,” he told the Times of London.

There’s some data available to give people like Timis enough courage to take money from others and invest it in acreages in deepwater Liberia and Sierra Leone. In the first deepwater test in the Sierra Leone-Liberian Basin, American independent Anadarko encountered more than 45 net feet of hydrocarbon pay in September 2009. The Venus

B-1 well was drilled to a total depth of approximately 18,500 feet in about 5,900 feet of water i in block SL 6107 offshore Sierra Leone. Anardako said the Venus prospect is one of its “more than 30 identified prospects and leads on its West Africa acreage position, which includes interests in almost 8 million acres across 10 blocks offshore Sierra Leone, Liberia, Cote d’Ivoire and Ghana”. The company said that with Jubilee on the east (Ghana) and Venus on the west (Sierra Leone), with Liberia in between, it has “ established bookends spanning approximately 1,100 kilometers (700 miles) across two of the most exciting and highly prospective basins in the world”.

That’s the kind of claim that could draw investors to African Petroleum. But there are problems.

The former head of Regal Petroleum, which was handed the largest ever fine by the Alternative Investment Market in London, is having an issue with the management of the London Stock Exchange, which has halted the flotation of the company, because of concerns about Timis’ controversial past.

Officials at the stock exchange told Timis’s advisers in December 2009 that the float could not go ahead if he had a position on the board. Their decision was based on his role at Regal Petroleum, an oil firm whose share price collapsed in 2005 after it emerged that its giant oilfields were unviable. Timis was chief executive at the time.

Investors lost millions of dollars after investing in Regal. The company produced a series of misleading announcements between January and April 2004 relating to a failed Greek oil well that led to a fine of $l million on November 17, 2009.

The new company, Africa Petroleum, will include assets off the Liberian coast that have been the target of a reverse takeover by Indonesia-focused Sound Oil, which had its shares suspended in October.

Mirabaud Securities was advising on the AIM listing, which should have taken place before Christmas 2009. But the London Stock Exchange wants Mr. Timis’ name out of the company’s board before it can allow the floatation.  If London doesn’t  want him, he told the Times of London, he will go elsewhere, perhaps to Toronto or Hong Kong.  “London’s not the only exchange,” he said, before adding with a laugh.  “I may buy one in Africa,” the newspaper reported.

Ghana Turns The Commercial Corner

Toyin Akinosho reports.

… But geology can still obstruct the roller coaster,

Ghana is going from discovery to first oil in a giant deepwater oilfield, in less time than did Nigeria and Angola. If everything goes according to the press statements of the investing partners in the 800 million barrel Jubilee field project, the field would be delivering oil in just about three years from discovery. Jubilee was discovered in June 2007; the partners Tullow, Anadarko and Kosmos insist that the field is coming on stream sometime in the second half of 2010.

Angola’s Girassol and Nigeria’s Bonga, with roughly the same status and significance as Ghana’s Jubilee, made it to first oil in more than five years after they were each discovered. Apart from these two, there’s no other country on the Gulf Of Guinea that has deepwater fields of comparable size with Jubilee, a helpful explanation for why majors like ExxonMobil, ENI, and BP as well as CNOOC have shown keen interest in Ghana.

Ghana has had a good year in terms of overall oilfield activity relating to both the drill bit and the commercial playground; almost as soon as Tullow Oil announced the discovery of the Twenoboa field, proving that the deepwater oil tank extends beyond Jubilee, news filtered in about ExxonMobil ‘s interest in acquiring Kosmos Energy’s stake in Jubilee for $4billion. The reputation of the putative buyer and the amount of money on the table heightened the perception of profitability of the overall Ghanaian portfolio.

But once the Deepwater Tano and Cape Three Points blocks have been taken, what other acreages can be prospective enough to interest the majors?

The discoveries of the last two years, principally Odum and Tweneboa, have basically confirmed the prolificity of these two acreages. Odum and Tweneboa are located outside the Jubilee channel, but they both reside on the megastructure.

Hess Corporation’s dry hole, Ankobra 1, drilled in 2008, is located in adjacent Deepwater Tano/Cape Three Points license, but is off the Jubilee megastructure. Is it possible that prospectivity decreases southwards, away from Jubilee and its satellites?

Are we replaying, in Ghana, the experiences of Equatorial Guinea Mauritania and Egypt where, every other operator/partner outside the flagship field has had much less luck than those operating the signature field?

Some background: As soon as Triton announced the discovery of Le Ceiba, in Eq Guinea’s deepwater Rio Muni Basin, everybody rushed in. But while Triton (and latterly Hess) kept deepening their understanding of La Ceiba and increasing their take points, every other company on leases adjacent to La Ceiba was reporting either sub-commercial finds or outright dry holes. In Mauritania, there was a host of smaller oil and gas discoveries, after Woodside’s Chiguetti find, but the commerciality was low and even Chinguetti’s own production headed south rather quickly.

In Egypt’s deepwater, no company has been able to encounter anything close to the size of the hydrocarbon accumulation in the West Deep Delta Marine Concession, the country’s signature deepwater asset, which provides all the gas for one of Egypt’s two LNG projects. Shell has struggled in the past five years to put an LNG project on the drawing board on the basis of accumulations in its North East Mediterranean Deepwater NEMED) Block, which is adjacent WDDM. So far, the Anglo Dutch major hasn’t come up with the reserves figure that can justify such a project.

So, is this the way the marginal (smaller) provinces of deepwater Africa, outside Nigeria and Angola, work?

Does this mean that Vanco/Lukoil, who hold the Cape Three Points Deep and ENI, which is operator of Cape Three Points South are far more likely to encounter dusters, or sub-commercial hydrocarbon pools?

The experience with Equatorial Guinea, Mauritania and Egypt says “Yes”. But we are the first to admit that this analysis is not being made with any hard technical data. We are not privy to anything more than well location and results and sheer common sense.

If there would be any other field of Jubilee size, outside the Jubilee megastructure, in Ghanaian deep waters near the size of Jubilee it would have to happen in another basin.

To explain this, let’s take another look at Equatorial Guinea.

While every company-major and independent- crowded around the vicinity of Le Ceiba in deepwater Rio Muni Basin, Noble Energy ventured northwards, to take a look at the largely unexplored deepwater Douala Basin. The company probed Miocene targets in Douala, contrary to Cretaceous age reservoirs that others were pursuing in Rio Muni. In three years of work, (2005 to 2007), Noble had encountered commercial sized hydrocarbon pools in Belinda, Benita, Yolanda and Diega prospects in blocks O and I. As of the time of our going to press, the field development plan for Benita (renamed Aseng) had been approved. The field is expected to produce some 50,000Barrels of oil per day at peak, a few months after it comes on stream in 2012. Noble will develop the other fields after Aseng by tieing them to the main facilities in Benita.

In the past two years, Afren has been the only company that has drilled a well outside of the Tano Basin in Ghana. Its Cuda 1, located in Keta Block on the Accra  Keta basin, which is farther east, towards the Ghanaian border with the Republic of Togo, was not completed. It may be stretching things a little to say that Afren will encounter a commercial sized pool in Accra-Keta basin for the simple reason that it is a long way away from the frenetic activity in the Tano Basin. From the point of view of its location, the Accra Keta is too close to the lack luster Togo Basin and the once productive, barren looking Benin Basin, to suggest that it might be prospective.

But then the Tano Basin itself was a grave yard of hopes just 10 years ago, until Kosmos, Anadarko and Tullow started re-interpreting the data differently from earlier explorers. Kosmos itself described the Tano Basin as a bad address only four years ago.

It will be interesting to see what Vanco, Hess and ENI come up with, as they drill in the vicinity of Ghana’s main hydrocarbon prizes

Apache’s Production Surges in Egypt

In 2008, Apache Egypt accounted for 21 percent of the company’s global production revenue. We completed 215 of 238 wells drilled during the year and achieved record daily production in the first quarter of 2009 of over 161,000 barrels of oil per day (bopd) of gross oil and condensate and daily gross gas production of nearly 685 million cubic feet per day.

Gabon Is Desperate To Join The Fray

 By Fred Akanni, in Libreville

Gabon has been out in the cold since I lit onset of the contemporary phase of deepwater exploration in the Gulf Of Guinea This is what the deepwater bid round, scheduled to kick off in May 2010, is about to change.. Gabonese authorities believe that the country’s deepwater acquatory has never been properly explored.

The country was producing it around 350,000Barrels of Oil Per Day (BOPD), about the highest in its production history, in the mid I 990s, when countries like Nigeria nod Angola started witnessing a series of spectacular discoveries in water depths outboard of 750 metres. As Gabon shares the prolific Congo basin with Angola, and was the third largest oil producer in sub-Saharan Africa, it was expected to be part of the game. But the wildcats that were later drilled in deepwater Gabon in the first few years of the 21st century failed in a big way.

  • In 2001, a consortium led by TOTAL drilled Judy 1, Genny 1 and Renee 1 to 4806metres, 4793metres and 4047metres respectively, all very deep wells, in the Astrid Marin acreage. They were all located in excess of 2000metre Water Depth. They were all disappointingly dry holes.
  • Inshore, in the Anton Marin acreage, Jeane-1 was drilled to 2882mTD in water depth of I ,500m. It was also a dry hole.

As these wells were all located in the lower Congo Basin, where operators in Angola had been having a field day harvesting giant oil fields, it was beginning to look like Gabon might not be part of the West African deepwater party.

But Agip wasn’t so sure. The Italian major picked up a lease northwards in deep offshore Ogooue Delta, part of the Gsbon Coastal Basin. This was even a riskier spot; unlike the broad, gentle slope from shallow water to deepwater in the Lower Congo basin, the descent to deep offshore is rather abrupt. In 2002, Agip came up dry at a TD of 2,882m in Powe Marin 1, drilled in 1,000m Water Depth on the Awoure lease.

In 2005 Amerada Hess, running on adrenalin from its successful foray in deepwater Equatorial Guinea, drilled two equally disappointing wells in deep offshore Ogooue Delta.

So what happened?

There have been explanations for the poor results in the Gabonese deepwater segment of the Oogue and the Lower Congo Basins.

• The Ogooue Delta is not formed by the kind of large sized rivers like the Congo River which birthed the Congo Basin, or the Niger and Benue rivers which created the Niger Delta.

• The part of the lower Congo Basin that is in deepwater Gabon contains the obligatory hydrocarbon source, but it is buried too deep and the apparent lack of structuration disallows the source to adequately charge the reservoirs. Seismic data doesn’t suggest the presence of large scale canyons that could help deliver products of turbiditic flows into the deeper waters. There have been questions about of whether the direction of flow of the Benguela currents, which impact sediment movement on the Nigerian coast for example, could have anything to do with the possible lack of commercial hydrocarbon reservoirs in deepwater Gabon. The jury is still out on that.

Gabonese authorities, aided by IHS energy, a firm of industry scouts, say that there is enough information in hand for the bid round to aid operating companies in determining the best locations for sizeable reserves of oil. A survey by CGG Veritas, launched in March 2009, includes more than 9600km of 2D seismic in Gabon’s southern and northern offshore zones, as well as a proposed 4,500 sqkm of 3D and 2D data in the southern zone.

Gabon desperately needs to shore up production, which has declined from 365,000BOPD in 1995, to 234,000BOPD in 2008.

South Africans May Produce Oil In Venezuela by 2012

PetroSA, the South African state hydrocarbon company, expects first oil from its joint venture mature oil fields projects with Venezuela’s PDVSA within 24 months of concluding a technical study.

PetroSA ‘s CEO Sipho Mkhize says the company was investing $10million to have the study finished within six months, and “we could be producing from that field within 18-24 months after the completion of the technical study,” Mkhize told journalists.

In September 2008, PetroSA signed an agreement for participation in exploration and production activities in the Orinoco Oil Belt, in Venezuela, where the company would conduct a study to quantify and certify reserves in the Boyaca 4 Block.

Shukri Is Back On Seat

Shukri Ghanem, the chairman of Libya’s state hydrocarbon company NOC, whose “resignation” was widely reported in the business press, is back on the job, in the public eye and fully in charge. The NOC website gleefully reports his leading a Libyan delegation to the Council of Ministers of the Organization of Arab Petroleum Exporting Countries (OAPEC) in Cairo, Egypt.

Dr Ghanem met with Ms Sandra McCardell, the Canadian Ambassador to Libya in late December 2009, before he led another delegation of Libyan officials to represent the country at the ministerial meeting of the Organization of Petroleum Exporting Countries (OPEC) held at the Angolan capital Luanda on December 22, 2009.

The website reports that the meeting with the Canadian diplomat explored the possibility of Libyan participation at the International Petroleum Exhibition to be held in the province of Alberta, Canada in June 2010. “The activity of Canadian companies operating in Libya and the desire of other Canadian companies to engage in exploration and production projects with the National Oil Corporation” was also discussed.

Ghanem was accompanied to the OPEC meeting by Ahmed Mohamed Al Ghaber, Libyan Governor at the cartel, Omar Mohammed Ghazal, the Libyan National Representative at the Economic Committee Ahmed Eljaroushi the former Libyan Representative at the Economic Committee Musbah, Ali Matouk General Manager of Administration and Services , and Mohammed Mahmoud Bin kura Coordinator of (OPEC) Office.

Those who accompanied the NOC Chairman to the OAPEC meeting in Cairo included Ali El Sogher Mohammed Saleh, General Manager of NOC, Mohamed Kamel Alzendah Libyan representative of the Executive Office of the Organization, Omran Abukrah General Manager of Arab Company for drilling, Ibrahim Abudreadah General Manager, Human Resources Development and Mr. Jamal Talha.

Italians Face Opposition In Ugandan Adventure

By Toyin Akinosho, in Lagos

Italian major, ENI, has encountered its first major opposition in its current acquisition binge across the African continent.

The Sale and Purchase Agreement (SPA) it signed with Heritage Oil, for a share in two of Uganda’s most prospective acreages now mean nothing, as Tullow Oil has exercised a right to buy Heritage’s entire stakes in Blocks 1 and 3A, which contain at least half of the 700Million barrels of oil already proved up in Uganda.

Tullow issued a press release saying it had served notice on Heritage on January 17, 2010, potentially wrecking ENI’s plan to build a new presence in Uganda.

The Ugandan bid was the third of ENI’s petroleum rights agreements across Africa in four months. In August 2009, it signed a strategic partnership with Congo’s Ministry of Petroleum “with the aim to develop the host country’s oil reserves”, according to ENI’s spokesmen. In September, 2009, ENI acquired operatorship of the offshore exploration permits Cape Three Point and Cape Three Point South (Eni 47.2%), off the Ghanaian coast. In December 2009, ENI announced it had signed the Sale and Purchase Agreement for the assignment of Heritage’s 50% interest and operatorship in Blocks 1 and 3A in Uganda, for a total amount of $1.35 billion, following the agreement reached last November by the two companies. About the time of the SPA agreement for Ugandan resources, ENI commenced production in Oyo field in deepwater Nigeria. This was the outcome of an agreement, signed in 2007, with the Nigerian Independent Allied Energy, for joint pursuit of opportunities.

In effect, in four months, ENI had concluded three petroleum rights deals and one field production, in four African countries.

With this bullish run on the continent, it can be assumed that ENI will go ahead to deal with Tullow Oil, to achieve the purpose which its SPA with Heritage was meant to. Only this time, it would be competing bend on with other investors, who have, like itself, been visiting Tullow’s data room. If the speculations were true that Tullow favours dealing with TOTAL or ExxonMobil, then the Italian major faces a real challenge. The treasures in Uganda may well be worth a bruising battle: “Over the last six years, Tullow and Heritage have invested over US$700 million in the Lake Albert Rift basin in drilling 27 wells to prove up over 700 million barrels of oil and identify over 1.5 billion barrels of potential yet to be explored”, Tullow said in its pre-emption statement.

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