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Dana Is Cautious About Akhenaton- 1 Results

Dana Petroleum has suspended Akhenaton-1, in the South October concession, offshore Gulf of Suez for potential re-entry at a later date. “The data is important for assessing further prospectivity in the South October concession”, according to a company release. Akhenaton-1 was drilled to a total depth of 4060metres below sea-level, penetrating both the primary and secondary targets. The top of the secondary Thebes target was encountered at 3567metres below sea-level and the primary Nubia target was encountered at 3988metres. A full suite of electrical wireline logs was acquired, including the use of a formation imaging tool. Although the Nubia was water bearing, oil was encountered in the shallower Thebes and Sudr formations with high oil saturations seen over an extensive vertical interval of 272metres. The Thebes and Sudr formations are low porosity fractured limestones and an imaging tool was therefore used to gather information on the extent of fracturing. A thorough interpretation of the acquired data will now be required before an assessment can be made of the commercial viability of this oil discovery. The 103 drilling rig has moved to the SouthEast July concession in the Gulf of Suez where Dana is drilling the South July-1 well.

CNODC Processes OPL 471 Data

CNODC Nigeria has initiated prequalification of contractors to process the 3D seismic data it acquired on the Nigerian Oil Prospecting Lease, OPL 471, in shallow offshore western Niger Delta. The China National Oil Development Corporation (CNODC), a subsidiary of the Chinese state behemoth CNPC, wants a full kirchoff post stack time migration (PSTM)processing for the 1,200sq km survey, which was acquired in 15-45metre water depth at bin size of 12.5 x 25 and a 60 fold coverage. The company says record length is nine seconds(in time depth). CNODC won OPL 471 in a bid round in 2006 and signed a Production Sharing Contract with the state hydrocarbon company NNPC in 2007. The seismic processing contract is to be awarded by first quarter 2009 and processing must be completed in a maximum of six months from receipt of input tapes

Sapetro Drills Seme SW

Nigerian independent South Atlantic Petroleum Ltd (Sapetro) may have commenced drilling the near-field exploration well Seme SW, around the Seme oil field, in Block 1. The Sèmè SW target had previously been identified but whether this becomes the company’s first operated well in Benin remains to be seen. It is understood the Noble Drilling’s jack up rig ‘Don Walker”, currently in Cameroon, has been contracted to do the job as the structure lies in around 30metres of water. Block 1, including Sèmè field, covers 551 sq km in the shallow waters of the Benin Embayment, at the maritime border with Nigeria.

It was awarded in December 2004 and is held 100% by Sapetro. In March 2007, Sapetro completed a 360 sq km 3D seismic survey over the Sèmè field and its environs. It is believed this data will form the basis for a redevelopment plan of the Sèmè field aimed at putting the field back into production. Sapetro has a share in the development of the Akpo deepwater field off Nigeria. Its chairman is General Theophilus Danjuma, formerly minister of defense under Olusegun Obasanjo.


By Toyin Akinosho

Nigerian deepwater oilfield activity is back in exploratory phase, in the main.

 With eight billion barrels of proven reserves, a daily output of 520,000barrels per day of crude oil and a long queue of oil field development projects waiting for approval, the Nigerian deepwater province is far from reaching the fullness of the potential that operators thought it had when the first set of 3D seismic data were acquired 1994.

Some companies hit the mother lode thick and fast (ExxonMobil and Shell are producing Erha and Bonga  respectively at around 180,000 BOPD respectively, down from an excess of 200,000 BOPD each and both are working on field extensions). Others (like Conoco Phillips, Statoil),quietly folded their arms when the expected elephants didn’t show up on their telescopes, and yet a company like Agip ignored the rules of deepwater field size versus threshold financial profitability and put the 100 million barrel Abo field, located in 500 metres of water, in production, ramping quickly up to 30,000BOPD. (The production had fallen to 19,000BOPD by early 2008 and was to have been boosted by two new wells drilled later in that year). Devon Energy walked out and Petrobras has gone very quiet. Other operators are caught in the less emotional corridor between the spectacular and the disappointing. Chevron brought Agbami on stream at 65,000BOPD in July 2008 and it has ramped up to 135,000BOPD by December 2008. It’s not just the slowest of the big three producing fields in deepwater Nigeria, the production is far below the expected 180,000BOPD anticipated in the first six months of production for the 800MMBO field, TOTAL’s Akpo is on course for first oil before the end of 2009 and the company’s Usan-Ukot and Egina fields are expected on stream between 2011 and 2012. The last really big deepwater fish on queue for first oil in Nigeria is Bonga SW/Aparo, expected on stream about 2013.

With mixed results all over, oilfield activity in this segment of the Niger Delta basin has come full circle and back to where it all started; the exploratory phase. The mood is: “let’s go and check out what else is there”.

Newcomers and grizzly old hands are completing new seismic acquisition and drilling both rank wildcats and first appraisals, largely in areas that have proven to be prospective.

BG, the British gas company, commenced its drilling programme in the Oil Prospecting Lease OPL 286-DO, which was carved out from what used to be Chevron operated OPL 218. The company plans two wells on this lease before moving to OPL 284, which, DPR officials think “is far more prospective”. Its Ogide 1, located in the general, high pressured Boi -1 area(See story on page 13), is being drilled with the semi submersible rig Sedco 702.

After a sustained period of production and development work, Agip is drilling an appraisal well outside the Abo field licence area. The semi submersible rig MG Hulme Jr has reached a depth of 4,000metres subsea in Oberan 2, the first appraisal of the 2003 discovery in what was then OPL 211(now Oil Mining Lease OML 134). The logging programme is fairly comprehensive, including coring and-if there is oil as expected- testing the well. Agip is hoping that the well confirms or even increases, the 200MMBBO it hopes the Oberan structure holds. Swiss operator Addax, who has largely operated on the shelf, commenced its first major activity in deepwater in December 2008 and is currently completing a 1,000sq km of 3D survey in the Oil Prospecting Lease (OPL 291), lying between 500 and 2,500metres of water. The block was carved out of Chevron’s OML-127 (after production permit was granted) where the giant Agbami is seated. The acquisition will cover the northern part of the block extending into north OML- 127. If this G&G exercise in this block comes out successful, then Agbami might have a good tie-back customer in


Petrobras is on queue to acquire 3D seismic with the PGS vessel that is doing the acquisition for Addax.

America’s largest major in Nigeria does not have exploratory wells on the drilling queue in 2009. ExxonMobil will acquire fourth dimensional 4D seismic data on the Erha field, but it doesn’t plan any drilling, exploratory or development, on any of its operated deepwater acreages in 2009.

Chevron may drill one well in OPL 247, now that it has evaluated the carpet 3D it acquired on the lease The company plans exploration drilling elsewhere in its operated deepwater acreages, but no candidate has been firmed up due to rig scheduling and ranking issues.

There are, for example, three candidates, “but the reserves figures are not giving the operator any comfort”, according to a source at the state owned NNPC, which is the concessionaire for all operated leases in deepwater Nigeria. Chevron is still drilling in Agbami for development and production purposes. Shell and TOTAL, on the other hand, have better defined, active drilling schedule, outside of ongoing development activity. Shell plans to drill four exploratory and appraisal wells, apart from the development work on extending Bonga production farther north. The company completed a 4D seismic acquisition on the Bonga structure in early 2008, but the 2009 exploration and appraisal campaign excludes the general Bonga area. Discussions are ongoing to resolve the dispute around OPL 245, where Shell discovered Etan and Zabazaba, its most recent finds and its not clear if any of the four wells is planned for this lease but some of the appraisal work will certainly be in OML 135, where Shell has the undeveloped  discoveries Ngolo, Bolia and the Nnwa-Doro gas field.

TOTAL plans to drill a well in the Continental Oil and Gas held OPL 257, which adjoins SAPETRO’s OML 130. TOTAL is the technical operator of both OPL 257 and OML 130 and -if it works-the proposed well in OPL 257 is meant to be part of the overall development of the Egina field, which is expected to come on stream in 2012.

What’s clear in the overall Niger Delta deepwater 2009 drilling activity, no company is venturing into the outer toe thrust belt. The great story of Nigerian deepwater, in the last five years, is the spate of disappointing wells that were drilled by Agip (Dou 1 and Emein 1, OPL 244), Chevron (Iroko 1, OPL 250), Phillips (Onigun 1, OPL 318), Petrobras (Erimi 1, OPL 324) and Ocean Energy 9Pina 1 and Tari 1, OPL 256). What’s happening may be a lot of exploratory work, but it’s taking place in areas already deemed safe bets.

Bio Therm Elects Former Eskom CEO As Chairman

Allen Morgan has been appointed as chairperson of South Africa’s renewable and clean energy generation project developer Bio Therm Energy.

Morgan served as CEO of Eskom, the country’s power utility, from 1994 until 2000 and is currently a non executive director of the power utility and JSE.listed Kumba Iron Ore. He will continue to serve on the Eskom board. Bio Therm recently announced a $228Million equity commitment by Denham Capital. Bio-Therm was founded in 2003 and has a significant project pipeline in the energy recovery, clean and renewable energy field in South Africa.

“Allen is highly respected for his contributions to both Eskom and the electricity sector in South Africa. We are fortunate to have someone of his stature joining our team at this critical juncture in the global and domestic economy,” said Bio Therm Energy founder and CEO Charles Liebenberg.

“It’s going to be exciting to be part of a young and growing company at this stage of its development,” stated Morgan.

Bio Therm Energy makes use of carbon finance as created by Article 12 of the Kyoto Protocol (the Clean Development Mechanism) to finance projects.

The company is based in Johannesburg, South Africa, and develops, owns and operates turnkey energy waste to energy, renewable energy and energy efficiency projects in the sub-utility range of 5 MW to 100 MW.

BP Orders FPSO from Jurong

Jurong Shipyard has secured an approximately $132.75 million contract to convert the Very Large Crude Carrier (VLCC) tanker, the IVIV “PSVM” (ex Bourgogne), to a Floating Production Storage and Offloading (FPSO) vessel for MODEC.

This conversion contract involves the installation of an external turret mooring system and process facilities, which include gas turbine generators, oil separation, gas injection/gas lift and water injection system. Planned delivery to MODEC is 1Q 2011.

The FPSO is designed to operate for 20 years without dry-docking, and it will have a production capacity of 150,000 barrels of oil per day and a storage capacity of 1,600,000 barrels of oil.

The FPSO will be delivered to BP for deployment in the Plutao, Saturno, Venus and Marte (“PSVM”) Fields in Block 31 offshore Angola, located in water depths of between 1,500 and 2,500m.

This conversion contract is not expected to have any material impact on the net tangible assets and earnings per share of Sembcorp Marine for the year ending December 31, 2008.

Zambia Zooms In On $2.2bn Hydropower Plant

Zambia has authorised private developers to start feasibility studies and construction of hydroelectric power stations totaling $2.2billion to overcome a crippling power deficit.

Power rationing by the state run utility Zesco Ltd., has forced copper mines, the country’s major sources of revenue, to scale down output.

Zambia would require a separate $1.1billion to raise power supply in rural areas to 51% from the current 3% by 2030. This translates into an annual expenditure of $50million between 2008 and 2030.

Zambia is developing a plan to streamline its generation and transmission of power, currently the sole responsibility of state power utility Zesco Ltd.

Yar’Adura’s Team Of Rivals

By Toyin Akinosho

Rilwanu Lukman, Nigeria’s newest minister for petroleum, is the public face of the group, within the government of President Umaru Yar’Adua, that re-instated the Power Holding Company of Nigeria, as the country’s monopoly power generation and distribution entity.

Rilwan Lanre Babalola, the newly appointed minister for power, was the Team Leader for Power Sector Reform at the Bureau for Public Enterprises (BPE), driving the privatization of the entire utility, during the last government headed by Olusegun Obasanjo.

The two personalities have diametrically opposite perspectives on improvement of the power sector in Nigeria. So, what are they doing together in the same cabinet?

Was the idea to bring Babalola in to join Lukman, in what used to be Ministry of Energy, to create a team of rivals? If so, to what end?

Lukman’s idea of the continuation of power sector reform is to have the PHCN run as government funded entity until 2011.

That is a sharp reversal of the policy that Babalola and others championed through the BPE, a framework which provided the grounding for the country’s power sector reform act that was signed into law in March 2005. That act supercedes any law on electricity generation, transmission and distribution in the country.

Babalola cut the image of the spokesperson for privatization of the power sector between 2002 and 2005, during which the power reform bill crawled its way through the bureaucracies of the state house and the national assembly. His statements vilified the running of the PHCN and he was quoted as saying that tariffs could not have been higher than the loss Nigerians suffered from the inefficiency of the PHCN, which he said was understaffed in the technical and marketing departments and over staffed in administration. At a public forum in 2004, Babalola disclosed that he had been asked, in private, even by people in the legislature, why he was so passionate about selling off


As of May 2007, the BPE had put up for sale three of the seven electricity generation companies (power stations) and all the 11 distribution companies carved out of the PHCN. As the Obasanjo government wound up, private investors had submitted a total of 102 expressions of interest (EOI) for the three generating companies on offer and 302 EOIS for the distribution companies.

Yar’adua’s arrival at the state house put all that effort on the back burner.

Lukman’s committee declared that much of the implementation of the reform programme, midwifed by the BPE under Obasanjo, was hasty and that the targets set out in the programme were not met. It noted the pending issues of staff pension, the failure to define the workings of the Rural Electrification Fund and the establishment of the Consumer Protection Fund, among other regulatory shortcomings. To Mr Lukman, it didn’t matter that these issues he listed did not grapple with the argument that the nature of graft, in Nigeria, guaranteed that a government owned power utility could not work. South Africa and Egypt, the biggest economies on the continent, are powered by utilities that are owned by government. But these countries are not Nigeria, simple.

A small digression here. The national consensus in Nigeria, as of May 29, 1999, when civil rule was ushered in after 15 years of military dispensation, was that the electricity utility and the telecommunications monopoly should be disposed off. Nigerian intellectual, commercial and political elite couldn’t guarantee that, like France’s EdF, or South Africa’s Eskom, electricity could be sustainably supplied by a state run entity in Nigeria. The rot in government parastatals, especially those of the commercial variety, was and is still so deep that even officials do not trust their own instincts.

Yet in July 2008, Lukman’s committee called for a halt to the sale of PHCN. Against the run of play, and a subsisting law which provides guidance for the end of the monopoly, the committee decreed “a strengthening of the utility through the establishment of a coordinating body at its headquarters to provide leadership.” That leadership mandate was to run for three years. That was how PHCN returned to run things.

The question, then, is, if PHCN would not be privatised until 2011, the terminal date of the Yar’adua administration, why hire a minister who is ideologically opposed to a PHCN monopoly?

Some have called on Babalola to return the country swiftly to the Obasanjo era reform agenda and finalise the process. They ask him to quickly complete the National Integrated Power Projects, involving the construction of 11 generating stations and an overhaul of old radial transmission and distribution system, with state money and then hand over their operations to those private companies who win in a competitive, transparent sale process. That way, they say, government would not have to spend any single cent more to provide electricity, going forward.

But what’s crucial here is what the president wants.

Is he prepared to allow the forty something year old Babalola push his own initiatives, or is he just having him in the cabinet, to suggest that there are young people in his court, while he implements the initiatives of the elderly Lukman?

With Babalola and Lukman in the same cabinet, are we going to have a bruising fight between those who want the status quo of Africa’s largest country lavishing money on a chronically ill power utility and those who want a choice to a more competitive environment, with a strong regulatory oversight that ensures equitable prices and businesses that don’t take advantage?

President Yar’adua has shown so far to be on the side of those who prefer government ownership of energy companies, no matter how inefficient. In September 2008, Mr. Yaradua’s spokesmen publicly disowned, in a very gruff manner, an announcement by the BPE to privatise the Petroleum Products Marketing Company. The government statement essentially reversed proposals that the BPE, itself an arm of the Nigerian presidency, had put forward after deliberations with members of Mr Yaradua’s cabinet. In the move against the PPMC sale, there were echoes of Mr Yar’adua’s first symbolic act in office; the re-nationalisation of two refineries (with total capacity in excess of 300,000BOPD)from a private enterprise that bought them, returning cheques with value in excess of half a billion dollars. Mr Yar’adua had stated then, that the state hydrocarbon company NNPC had only 12 months to restore the refineries to health.  As of the time of writing this, 19 months after, the refineries are still short of that target.

OPEC Shoots For $75 Oil

OPEC oil ministers are hoping to push prices back towards the $75 level by removing a record two-million barrels per day from oil markets.

As the ministers convened in Oran, Algeria, in mid December 2008, oil was trading just above $44 a barrel.

The 12 members of the Organization of the Petroleum Exporting Countries were aiming to build a floor under prices that have dropped more than $100 from a July 2008 peak above $147 a barrel.

Saudi Arabia, the world’s biggest oil exporter, admitted, readily: “The cut may lead to higher prices or may not.”

The expected cut, the third in 2008, would bring a total reduction in OPEC supply to four-million barrels of oil per day (4MMBOPD), nearly a five percent cut in world oil supplies.

OPEC’s wish to encourage other producers to cut back was countered by Russia whose Deputy Prime Minister Igor Sechin said in a speech to OPEC that Moscow did not plan to join in coordinated output cuts and did not want to join the group.

“You must understand the purpose of the $75 price is for a much more noble cause,” the Saudi Oil Minister said. “You need every producer to produce and marginal producers cannot produce at $40 a barrel.”

“Therefore we believe that $75 is probably more conducive to marginal producers to continue so we don’t have a shortage in the market and we avoid the future skyrocketing of prices.”

The influential Saudi Oil Minister clearly outlined the kingdom’s route to lower production.

The country was pumping 8.2MM BOPD in mid-December 2008 against 9.7MMBOPD in August, 2008, four months earlier.

“The difference is 1.5MMBOPD,  that is what we’ve done,” Naimi said.

Saudi Arabia’s implied output target is about 8.477MMBOPD under existing OPEC curbs.

To have a lasting price impact, any OPEC deal must to be strictly observed.

According to independent observers cited in OPEC’s monthly report, the group’s compliance in November to existing cuts was only just over 50%.

Analysts said deeper cuts would further test discipline in the group. That restraint would be needed to slim down growing world oil stocks.

A slump in consumption has lifted oil inventories in OECD industrialised nations to the equivalent of nearly 57 days of forward demand, a measure OPEC closely monitors. The industry norm for this time of year is about 52 days.

Mozambique Gets Funding For Power Project

The World Bank has released $88Million to fund the construction of transmission lines to carry power from Mozambique’s Cahora Bassa Hydroelectric (HCB) dam to Malawi.

The power transmission line, to be erected as part of a Southern Africa Development Community (SADC) energy co-operation agreement, will have an average capacity rating of 300 megawatts (MW). The project is expected to get underway in 2009, following a public tender for the venture.

$43 million of the World Bank funding is to be used for projects in Mozambique and the remaining $45 million in Malawi. Mozambique will enlarge the Matambo substation (in Tete province) and build transmission lines to the Malawian frontier, from where Malawi’s utility will construct a line to the Phombeya region, site of a planned new substation being built as part of the same project.

The new infrastructure is expected to boost Mozambique’s position as one of the primary electricity exporters in the region at a time when the energy crisis demands increased cross-border cooperation to respond to potential negative impacts on development projects. Mozambique is aggressively investing in its power infrastructure to solve the regional power crunch, which had caused many mega-projects to grind to a halt.

The government has approved the construction of an $800 million power station in the northern province of Tete starting from 2009, to boost regional power supplies. Building another power station would increase Mozambique’s capacity to export electricity to other southern African countries, which have been affected by a power crisis.

HCB has exhausted the maximum capacity of 2,075 MW of power it could produce from its generators on the southern bank of the Cahora Bassa river.

HCB, which suffered decades of neglect and lack of investment, now provides 60% of its power to South Africa’s state utility Eskom and 35 percent to the Zimbabwe Electricity Supply Authority (ZESA).

Mozambique consumes the rest of the power.  Only 15 percent of the country’s 20 million people have access to electricity.

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