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Nigeria Helps Chad With Fuel

NIGERIA HAS DONATED 40 TRUCKS OF petroleum products and $2 million to its northern neighbour, Chad, which is recovering from a rebel attack aimed at toppling the incumbent President Idris Deby.  Nigeria’s President Umaru Yar’Adua announced the donation in the capital city of Abuja in late February 2008, saying it was aimed at helping to restore normalcy to Chad.


It’s Competence, Not Skin Colour

By Fred Akanni, Editor-in-Chief

Baker Hughes’ First African born Country Director in Nigeria says he is proud to be a local..

IF IMAGERY WERE WHAT THE JOB WAS all about, Tayo Akinokun would determine that his stint in Algeria, North Africa was the best in his 18 year career with Baker Hughes, the ranking oil field service technology provider.

It was a decade ago now (1998) and Akinokun was a Senior field engineer who flew in “those tiny planes”, and was dropped on various airstrips close to well sites and was taxied straight to locations to lead field crews in deployment of the latest technology in Electric Wireline Logging services for the acquisition of various forms of petrophysical data.

The view from the sky was an endless stretch of desert sands, barbed wire fencing the wells, gendarmes guarding the fences and oil workers of various tones of skin colour. “Unlike in Norway (an earlier assignment) which was mostly Norwegians, the workers here were French, Arabs, Americans, Africans, you know, like colours of the rainbow”, he recalls.

But the images that come back to him, most vividly, were those of the rock formations. In Algeria, the essential rock sequences are carbonates. “I was acquiring an image log and it looked like a movie. The fractures in the formation leap at you”. In acquiring the acoustic log “you cold easily see the changes in the “acoustic travel time” very vividly”, this signifies essentially varying lithologies.

Akinokun joined Baker Hughes straight out of National Youth Service (a mandatory, one year post-graduation, quasi military service in Nigeria) in 1990. For a fresh bachelor’s degree holder in Electrical engineering, the opportunities, in his own words, were there to work in any service or E&P company”. He chose Baker Hughes because it was a place he thought he could make a difference. “The service companies are good building blocks. They roughen you up and build you for the future. Yours is just to perform”. Before long he was leading and supervising crews as a young wireline logging engineer.

Four years into his career he was transferred to Norway as a field engineer in the North Sea. Algeria, in North Africa, came after three years in Norway.

As this is the country that hosts the wealthiest state hydrocarbon company on the continent, this magazine is keen on what Akinokun has to say by way of experience in Algeria.

“There were lots of issues with security when I was there. But it’s like any other place-Nigeria, the United States-if you go to the wrong place you are dead meat.”

He went to Algeria because he “wanted to gather a lot of experience in a different environment”. He worked on various locations operated by various multinational operators and all operated out of Hassi Messoud.

Akinokun’s first management job came after the Algerian experience. He was appointed Operations Manager in Port Harcourt for one of Baker Hughes’ operating divisions, Baker Atlas in 1999 and then his career really took off.

“It was the first time I was managing as many as a hundred people”. He became a sales manager thereafter, a job which, in the upstream oil service company sector, is considered elitist, as it focuses on customers. The job description was Customer Service Manager, Baker Atlas, Port  Harcourt Nigeria. This was to prove a step to a bigger, more strategic sales & marketing job in Houston which, if you look closely at the CV, might have been the training ground for his current position.

In Houston, Akinokun worked as the Senior Technical adviser in the Baker Atlas Global Marketing Group. He was deeply involved in new tool development across the corporation, in the justification to build new technology services. “My job was to initially provide technical and financial justification to senior management for investment in specific new technology work and subsequently work with the scientists to intimate them with what the external customers wanted and interface with internal customers who engage with outside customers”. When a product reached the testing stage, Akinokun’s job was look for a candidate field, anywhere in the world, to test the product, receive the test data as collated from the field, engage the scientists again in refining the tool/product and then help in the deployment in the market. “I was traveling to every corner of the globe doing this job. It allowed me to know the corporation extensively”.  That job provided the greatest opportunity for exposure and global networking and was probably the leeway and to his present position.

He returned to Nigeria in 2004, as Business Development Manager for Baker Hughes in Port Harcourt. The following year he became the Deputy Country Director for Nigeria, a job which, with the benefit of insight, has proven to be just a stewardship for the current job.

Now he runs all of the Nigerian operations which consist of approximately 400 staff, taking over from Phil Vogel, who was the Country Director until December 2007.

In a sense, Akinokun’s rise to Baker Hughes’ top job in Nigeria feels like a breeze and it’s clearly atypical, in the international segment of the oil service sector in Nigeria, let alone in the major E&P companies, where technical people throw big parties if they make it to field superintendent at 50 and go for huge thanksgiving services, if they become General Manager of any unit at all, at age 55. “I have never been stagnated”, he notes. “Every two years, something happens”.

He quickly chips in that he’s not telling what will happen in 2010. “I have an assignment to further develop, stabilize and reposition the organization for bigger successes in the Federal Republic of Nigeria. Does that include, we ask him, getting an African, or a Nigerian for that matter, ready to succeed him? “It could well be a Nigerian as we have several bright Nigerian rising stars working for us both in Nigeria and around the world, but as an International multinational Company with several nationalities it doesn’t have to be a Nigerian”, he says. “The way we operate; the Country Director’s role is about the skill set, competencies and experience just like a Nigerian with the right skill set could lead the business in any of our locations and countries around the world”

If I can get here, anyone else can and it is not a matter of skin colour. Baker Hughes employs more than 34,000 people around the globe.

The Baker Hughes workforce in Nigeria is 90% Nigerian and 10% Expatriate. “Several Nigerians are also making a great career as key players in our international locations around the world”, he contends. “Training and development is a culture well entrenched in our organization which has contributed greatly to our success story. All our young engineers right from the first day at work are scheduled to attend training programmes in our educational training centres spread across the United States, the United Kingdom and the Middle East where they have the opportunity to compete and learn along with other international employees from several countries. A process which continues all through our career”.

Akinokun explains that the company has operated in Nigeria for 40 years and has been in the forefront of the development of the skill set and critical mass required for the development of our industry through the recruitment and training of young Nigerian graduate engineers who have eventually blossomed over the years to be key players at various levels of leadership across the industry.  “Such has been the case with my career and development over the last 18 years”.

 


Birthday Bash At The 19th World Petroleum Congress

THE WORLD’S, PETROLEUM Congress, coming up in late June 2008 in Spain, marks the 75th Anniversary of the World Petroleum Council. Thomas Dewhurst urged his fellow members of the Institution of Petroleum Technologists to create a world-wide forum of thought between oil men of various nations. This resulted in the call for the first World Petroleum Congress held in July 1933 in London. Their first and foremost purpose was to discuss the scientific issues of the petroleum industry, in particular the challenges of production, of refining, and especially of consumption of oil as questions affecting the well-being of not one but of all nations.

From June 29 to July 3 2008, about 75 years to the day, over 4,000 participants from more than 40 countries will be in Spain for the 19th edition of the Congress. The event, as in the last 18, is expected to provide an excellent overview of a cross section of the key issues in the petroleum sector, both in the areas of expertise of the industry and its demographics. From its early audience of learned academics and experts with decades of industry experience a younger group of delegates has evolved with many leaders of the future from around the world now participating in the Congress. In honour of Thomas Dewhurst, the World Petroleum Council recognizes one of the outstanding individuals of the industry with the Dewhurst Award. Ali AlNaimi, Saudi Arabia’s Minister of Petroleum and Mineral Resources, has been selected to receive this Award in WPC’s anniversary year and will deliver the Dewhurst Lecture at the 19th WPC. The Spanish Committee is hosting a special event in Madrid to celebrate the 75th anniversary which will take place on Saturday the 28th of June, in Retiro Park. Other National Committees from around the world will join them to commemorate the previous 75 years and 18 Congresses.


HHI To Build Usan FPSO

HYUNDAI  HEAVY INDUSTRIES (HHI) has received a Letter of Award (LOA) from Elf Petroleum Nigeria, Ltd. (EPNL), a Nigerian subsidiary of French oil company TOTAL S.A., to build a super-large Floating, Production, Storage, and Offloading unit (FPSO). The FPSO contract is worth $1.6 billion. The facility will measure 32Dm in length, 61m in width, 32m in depth, and weigh 114,000 tons. It will be able to produce 160,000 barrels of oil and five (5) million cubic meters of natural gas per day. and will be able to store two (2) million barrels of oil. The FPSO will be completed by the end of 2011. It will be located in the Usan field, which is in water 750 meters deep, 100 km southeast of Bonny Island in Nigeria. HHI will carry out all phases of the project on a turnkey basis, from the engineering, procurement, and construction, to the test runs. HHI has successfully completed at least one super-large FPSO every year since 1997, including the Kizomba A and B FPSOs for ExxonMobil, the Plutonio FPSO for BP, and the Akpo FPSO for TOTAL. The Korean builder has received five consecutive orders from TOTAL since 2005, when it won the first Akpo FPSO order. HHI’s Offshore & Engineering Division is now in negotiations for further projects in West Africa and the North Sea.


Expro Wins $60MM contracts in Western, Southern Africa

EXPRO, THE OIL SERVICE FIRM, HAS won contracts valued at over $60 million in the last six months in West and South African regions. The contracts cover a range of offshore deepwater projects and services and would be delivered on phases over the next three years. The work involved include provision of offshore deepwater technology for Chevron, Agip, Shell in Nigeria as well as increased scope of work from BP deepwater in Angola, as well as for TOTALl and Noble Energy in Cameroon. Another set of contracts were secured in North Africa, including BP and BG in Algeria and Libya together with multiple well- testing contracts in Egypt.


Oando Shells Out $0.625 Billion On A Huge Bet

After  a bid in which two of China’s largest oil firms participated and failed, a small, ambitious Nigerian independent won Shell Nigeria’s 49.8%stake in two deepwater leases.

For the Anglo Dutch oil major, who had been forced by militants to shut in close to 500,000barrels of oil (gross production) every day for much of the last two years, it was money sorely needed.

What was not immediately clear was whether the minnow who paid the cheque was getting a good deal for the investment. PetroChina aborted its bid for the two acreages: Oil Mining Leases (OMLs) 125 and 134, a few months after offshore specialist CNOOC withdrew its bid for the blocks. Both companies were told that their offers, at around $300 million to $400 million, were too low. Then Oando, a Nigerian energy company, stepped up to the plate, offering $625Million. There was jubilation on national television as the company, a ranking member of the Nigerian Stock Exchange, announced its winning. With a net ownership of 9,000 barrels of oil per day (BOPD) of Agip operated Abo field in OML 125, it is clear that this acquisition marks a significant entry into the Upstream sector for Oando, which has succeeded in venturing into almost everything except crude oil production, in the last five years. Oando has run a petroleum marketing enterprise, acquired rigs, distributed natural gas, won a non producing prospecting lease, holds a partnership in an undeveloped discovery and gotten a foothold in oilfield services, but all of these pale into insignificance, in the minds of its management, if the company doesn’t have a drop of oil to its name. The question is: Is a 9,000BOPD from a declining oil field and a mining lease with no established oil production enough value for $625 million? Part of the answer came by way of Anne Pickard, Shell’s Executive Vice-President, Africa, commenting on the divestment on the week of the sale “We have a maturing asset, which is operated by Eni (Agip), which is offshore. When things get mature, we tend to sell them.” But the answer only breeds more questions. Such as: Is Oando shelling out money far in excess of half a billion dollars to buy an asset that Shell considers maturing? Does the word “maturing” merely refer to the Abo field, or does it also refer to the so called upside potentials in OML 125 and the undeveloped prospects in OML 134? The answer lies in looking at the portfolio. The leases OML 125 and 134 were carved out from OPLs 316 and 211, which Agip won in the 1993 bid round. The company established production in 2003, a clear seven years after discovering Abo (1996) in OPL 316 and converted the producing half of the lease into OML 125.  Abo production peaked at 30,000BOPD and started falling, reaching 19,000 BOPD last year.  Initial drilling in OPL 211 (Udoro, Engule) were unsuccessfiul. In 2003 however, Agip drilled a well in a prospect located in the south east of the lease. Uberan- 1 encountered commercial footage of oil. In anticipation of development of this field, Agip sought permission to convert half of the oil prospecting lease (OPL) 211 into a mining lease OML and got the name OML 134. Geoscientists in Shell and Agip are both excited about the potentials of Uberan, which they consider the real juice in the two blocks. Even though the discovery well was not tested, company sources say the field could be at least 200MMBO. An $80million appraisal well, to be drilled (tested, cored, etc) later in 2008, will confirm the field potentials.

Nor is Abo field a low vaklue asset. Agip plans to increase production here to 25,000BOPD by drilling and hooking up two wells later in 2008. These wells are targeting deeper reservoirs. There are some other prospects around Abo, which are quite small, but can be hooked up relatively cheaply. One of these prospects will be probed by a well later this year. While the divestment of Shell interests in OMLs 125 and 134 is clearly for reasons of cash flow, Oando’s enthusiastic buying may be justified in the near term. But the real challenge is not in the finances. It is how Oando utilizes this entry to build capacity. Oando already has a corps of technically honed petroleum engineers and earth scientists, who develop its burgeoning oil services business, manage its upstream joint ventures and help to evaluate assets. But with the cash it is able to play with it can afford to build a sizeable pool of technical professionals, paid competitive wages, who take on projects from geologic leads through prospects to drilling and production. Nigerian companies don’t get the opportunity to be equal partners with experienced majors in acreages. When they hold the assets, they rarely have the cash and more often, a technical operator is also the financier. Oando is an equal partner with Agip. It must get everything it can from this partnership.


White Nile Wins Ethiopian Lease

WHITE NILE LTD HAS SIGNED A Production Sharing Agreement (PSA) with the government of Ethiopia for a 29,000 sq km block in the Southern Rift Basin in southwestern Ethiopia. Under the terms of the PSA, the UK operator has received sole rights for the exploration, development and production of petroleum in the contract area in return for satisfying various development commitments. The PSA follows a two year Joint Study Agreement (JSA) with the Ethiopian government’s Petroleum Operations Department of the Ministry of Mines over the prospective East African rift system in the southwest region of the country. Geophysical and geological work, primarily in the Omo River area to the north of Lake Turkana, has confirmed the presence of deep potential hydrocarbon-bearing sedimentary basins within the JSA area. The prognosis by White Nile and its advisors is that the contract area is sited at an intersection between a southeast extension of the petroliferous Cretaceous and early Tertiary basins of southern Sudan, in particular the Muglad rift system and the younger East African rift system, which is proving petroliferous in Uganda as underlined by Tullow Oil Plc’s recent progress.

Under the PSA, the Government of Ethiopia has granted the sole right to White Nile to explore, develop and produce petroleum in the contract area, There is an initial exploration period of four years from the date of execution, and a development period and production period of 25 years from the date of adoption of the development plan. During the initial exploration period, White Nile is required to make a minimum expenditure of $6 million for seismic operations and a minimum expenditure of $8 million for drilling operations. White Nile plans to begin seismic operations in Q4 2008, prior to which it will conduct extensive geological field work and preparation for the geophysical programme.

“Following the highly successful JSA with the Petroleum Operations Department of the Ministry of Mines, I am very excited that this PSA has been signed to develop the Southern Rift Basin area,” White Nile Chairman Phil Edmonds said. “We have been encouraged by early work, especially with the identification of deep basins, potentially containing sedimentary sections similar to that of the petroliferous Muglad and Melut Basins of southern Sudan and also those in Uganda.

“The agreement in Ethiopia is part of White Nile’s strategy of building a regional oil company, which I believe we have the ability to achieve. The geology seems to connect Uganda, Ethiopia and southern Sudan so our land positions are in ideal locations to take advantage of this situation.”


Vegas Tries Out In Western Desert

VEGAS OIL & GAS SA WAS ON COURSE to suspending the new field wildcat Al Magd 1 (Hh 31-2) as a discovery as of March 15, 2008. The well is located in the Alam El Shawish West block (Block I). The Total Depth as of mid March was 3,200metres, but the prognosed Total Depth PTD was 3,487metres. Vegas officials say that the main objective of the well were the Abu Roash “C”, “E” and “G” units and the Bahariya Formation. The rig is L/R “Nafla-2.


Tullow Gives Up A Bird in the Hand

The Irish Operator Sells Off A Producing Asset In Congo In Favour Of Development of Spectacular Discoveries In Ghana and Uganda

WHEN TULLOW OIL ANNOUNCED it was selling off its interest in a 46,500BOPD field(2007 average) onshore Congo, some analysts wondered whether that wasn’t a lot to give up for a mid sized independent, especially in an era of high oil prices. The ostensible reason for selling was to raise cash to spend on the promising discoveries in deepwater Ghana and onshore Uganda.

Is that not losing a bird in the hand for two in the bush?

Afterall, deepwater development, at 1,200 metre water depth anywhere, is quite expensive and the Ugandan discoveries, which are over 1,200 km from the nearest seaport, don’t look, on paper at least, like an immediate cash cow.

The questions stopped when it was realized that the Irish operator was getting $435 million from the Korea National Oil Company for giving up about 5,000BOPD of the Mauriel et Prom operated M’boundi field. This is 11% stake. Tullow outrightly sold its subsidiary company – Tullow Congo Limited- to the Koreans. Mboundi is undergoing an injection of 1 0,000Barrels Of Water Per Day (BWPD) which will increase to 40,000BWPD by the end of 2008. Is this the evidence that the reservoirs are difficult to manage? “M’Boundi is now entering a new phase in its development at a time when Tullow is also looking to reallocate capital resources to projects where it has more material participation and influence”, Tullow said in a release.

Tullow’s cash flow comes mainly from Gabon, Equatorial Guinea and Cote Dlvoire, where assets are delivering over 35,000BOPD on a net basis. Tullow is going to be leveraging on the cash generated from fields in these countries as well as money from the Mboundi disposal to advance its appraisal and development programmes in Ghana and Uganda and to continue business development elsewhere.

For some reason, Tullow has been looking to get out of Congo. Two years ago, there was a buzz all over that the Irish owned operator would sell its 4%interests in the Moho-Bilondo, N’Kossa and N’ Soko exploitation permits offshore Congo to TOTAL for $72MM.

Tullow has also divested its 15% in Block 24, located in an unremarkable site off Angola. The acreage is in Benguela sub basin, where oil majors have endured a spate of dry holes. Tullow, however is keen on its 50% participation in Block 1/06, containing three undeveloped oil fields located in the prolific Lower Congo Basin. Tullow is equally bullish on Cote Dlvoire, where it has interest in the 27,000BOPD East and West Espoir fields with 3,000BOEPD of associated gas. Upgrading the processing facilities will increase the liquid handling capacity from 50,000 to 70,000 BFPD by early 2010. This upgrade could also facilitate a further infill drilling programme on East Espoir and the earlier tie-back of potential satellite fields. This is another reason to raise cash.

There are challenges here and there, of course.  Tullow is having a hard time convincing the Namibian authorities to move forward on the 1 .3tcfKudu gas project. The latest report is that Namcor, the state power utility, has dropped down Kudu Gas-to-Power project on the list of its priority power projects, describing it as marginal and a non- commercially viable standalone project, “as it is characterized by a high US dollar-denominated gas price, meaning that the foreign exchange and hedging cost will translate into high electricity tariffs.”

Tullow and its partners have commenced field development studies to ensure earliest first production of the deepwater Jubilee field(formerly known as Mahogany and Hyedua) off Ghana. Two rigs have been contracted to drill up to seven exploration and appraisal wells. In Uganda the Ngassa well was progressing as of the time of writing this report and the Butiaba multi-well programme was scheduled to commence in March on the Taitai prospect.

Tullow has been bullish on Uganda, but the uncertainties of the region cannot be dismissed out of hand. Operators here could easily find themselves in the crossfire between troops loyal to President Yoweri Museveni of Uganda and those who back Joseph Kabila of the Democratic Republic of Congo. The low intensity war in the Great lakes region can blow up in anyone’s face.


Total Confirms Mostarda Discovery

ANGOLA

FRENCH MAJOR TOTAL HAS SUCCESSFULLY appraised its 2005 discovery Mostarda-1. The appraisal well Mostarda 2G1, was suspended at a Total Depth of 5,150metres subsea, but TOTAL did not provide details of the hydrocarbon find. Mostarda 1 was drilled in the Ultra deepwater Block 32 in late 2005 and flowed 5,347 BOPD of 30 degree API oil.

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