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Seplat/ExxonMobil Deal: Intra Government Public Spat Projects Poor Optics for Investment  

By the Editorial Board of Africa Oil+Gas Report

The public exhibition of disagreement between various agencies of the Nigerian government over the ExxonMobil/Seplat Energy share acquisition reinforces a troubling image for the country’s investment climate.

In the space of three hours, three press releases had gone out to the media, two of them declaring that ministerial consent had been granted and one clearly saying ‘no’ with some ambiguity.

In the afternoon of August 8, 2022, a press statement by the media aide to President Muhammadu Buhari declared that the president, as Minister of Petroleum Resources, had “consented to the acquisition of ExxonMobil shares in the United States of America by Seplat Energy Offshore Limited”.

That statement, coming from the office of the highest office in the land, seemed so sacrosanct that industry watchers were declaring victory for orderly exit of International Oil Companies from the Nigerian E& sector.

A ministerial consent for E&P asset sale, delivered in six months, would be one of the fastest in Nigeria’s recent history.

The content of the statement from the Presidency was the core material in the news stories by global news agencies Bloomberg and Reuters.

Seplat Energy’s external affairs directorate corroborated the Presidency statement, but in what must be seen as an important data point, the company’s statement declared it had received “a letter from the Honourable Minister of State for Petroleum Resources notifying Seplat Energy that His Excellency, President Muhammadu Buhari has graciously approved that Ministerial Consent be granted to Seplat Energy Offshore Limited’s cash acquisition of the entire share capital of Mobil Producing Nigeria Unlimited from its shareholders, Mobil Development Nigeria Inc and Mobil Exploration Nigeria Inc, being entities of Exxon Mobil Corporation registered in Delaware, USA (ExxonMobil).

So there. There had been a statement from the presidency and a letter from the Minister of State for Petroleum.

But just about the close of business, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) sent out a statement that at once contradicted those from the Presidency and the Minister of State but left open, doubts as to the conclusion of the transaction. “The Chief Executive of the NUPRC Engr. Gbenga Komolafe clarified that the Commission in line with the provisions of the Petroleum Industry Act 2021 is the sole regulator in dealing with such matters in the Nigerian upstream sector”, the Commission stated, adding, “the issue at stake is purely a regulatory matter and the Commission had earlier communicated the decline of Ministerial assent to ExxonMobil in this regard. As such the Commission further affirms that the status quo remains”.

Even as the Commission talked of commitment “to ensuring predictable and conducive regulatory environment at all times in the Nigerian upstream sector”, it is hard for anyone to read its statement, check with the others, and conclude that this is a “predictable regulatory environment”.




With Oza Back On Stream, Wade Cherwayko Returns to Nigerian Activity

The report of the revamped production on the Oza field, onshore eastern Nigeria, effectively announces the return of Wade Cherwaycko to the country’s oilfield activity.

Cherwayko is the spine behind Decklar Resources, the Toronto listed firm which has taken control of three marginal fields in Nigeria in the last three years.

The Oza field was the first asset the company moved on to, when in April 2019, it concluded an RFTSA with Millenium Oil &Gas, operator of Oza Field (one of the marginal fields awarded in 2004).

After re-entry into Oza-1 well, which had been produced sub optimally  by Millenium Oil& Gas  Decklar Resources announced resumption of production at Oza, at an averaged, stabilized production rate of 1,184 barrels of oil per day (BOPD) of 23 degree API sweet crude oil and flowing tubing head pressure of 400 psig with zero BS&W and an average gas oil ratio of 71 mcf/bbl. Production flows into storage tanks at the Oza Oil Field and then will be delivered by truck to the Umugini Pipeline Infrastructure Limited crude handling facilities.

The Asaramatoru field is the second field in Decklar’s basket. In July 2021, the Canadian minnow announced the completion of a Share Purchase Agreement to purchase all of the issued and outstanding ordinary shares of Purion Energy Limited, a Nigerian entity that had entered into a RFTSA with Prime Exploration and Production Limited, the Operator of the Asaramatoru Oil Field.

In June 2022, Decklar announced the purchase of all of the issued and outstanding ordinary shares of Westfield, a Nigerian entity that had entered into a Risk Finance and Technical Services Agreement (RFTSA) with Erebiina Energy Resources Limited to participate in the Emohua Field in Nigeria, located in Oil Mining Lease (OML) 22, onshore eastern Nigeria.

What these deals mean is that Decklar Resources Inc is targeting a list of Nigerian independents struggling with financing and technical capability to continue developing their assets.

The striking thing is that the holders of Emohua field were only granted the licence to the field in late June 2022, as the field is one of those in the just concluded 2020 Marginal field bid round.

What these deals mean is that Decklar Resources Inc is targeting a list of Nigerian independents struggling with financing and technical capability to continue developing their assets.

This role is reminiscent of what Mart Resources, an earlier vehicle that Mr. Cherwayko championed, played in the Nigerian oil industry in the 2000s.

Indeed, Wade Cherwayko first showed up in Nigeria in the early 1990s, with his Toronto-listed minnow, Abacan Resources, with which he farmed into two Nigerian offshore licences. The company eventually went belly-up. He reappeared in 2003 during the first marginal fields bid round and farmed in and funded four marginal fields, the star one of which was the Umusadege Field, won by Midwestern Oil and Gas Limited. He and his Mart Resources brought the field to a peak production of 27,000Barrels of Oil Per Day. He eventually collapsed Mart into MidWestern and, together with other investors, they founded Eroton, which won the bid (jointly with Sahara Energy) to acquire Oil Mining Lease (OML) 18 from the Shell partnership in 2015. With that deal, Cherwayko moved far away from the nuts and bolts of things. He returned to the  Marginal Fields terrain in 2019 with another Toronto-listed minnow, Decklar Resources. The success of Decklar in Oza’s revamp is a statement. Cherwayko is signaling: watch this space

This article was adapted from a piece published two months ago in the May 2022 edition of the Africa Oil+Gas Report.

Bid Round: Mozambique Drops AITEO From Contention

12 of the 13 companies which participated in Mozambique’s Sixth Licencing Round, launched in November 2021, were prequalified.

The only one who didn’t make it was the Nigerian owned AITEO Eastern Exploration and Production Company Limited, who was dropped for not meeting the pre-qualification requirements.

Sasol of South Africa, the only other Africa headquartered company in the bid round-apart from AITEO-made it to the next round.

The results will be announced before the end of January 2023.

The National Petroleum Institute (INP), Mozambique’s regulatory agency, says six of the pre-qualified companies are operators and the rest non-operators.

The operators include: China National Offshore Oil Corporation (CNOOC) Hong Kong Holding Limited, ENI Mozambico SPA, ExxonMobil Mozambique (Offshore) Limited, Petro-China International, Iraq FZE and TOTALEnergies Ep New Venture. Non-operating companies include RN Angoche PTE, Joint Stock Company Novatek, Qatar Petroleum Mozambique Limited, Sasol Africa (PTY) Limited, ONGC Videsh Limited and Discover Exploration Limited.



ENI Claims Azule Energy is Angola’s Largest Hydrocarbon Producer

Italian explorer ENI has announced the completion of the incorporated joint venture of bp and ENI.assets and operations in Angola.

Azule Energy, as it is called “is now Angola’s largest independent equity producer of oil and gas, holding 2Billion barrels equivalent of net resources and growing to about 250,000 barrels equivalent a day (boe/d) of equity oil and gas production over the next 5 years”.

The new company holds stakes in 16 licences (of which six are exploration blocks) and a participation in Angola LNG JV. Azule Energy will also take over ENI’s share in Solenova, a solar company jointly held with Sonangol, and the collaboration in the Luanda Refinery.

Azule Energy boasts a strong pipeline of new projects that are scheduled to come on stream over the next few years, growing organically from exploration discoveries. These include the Agogo Full Field and PAJ oil projects in Blocks 15/06 and 31 respectively, and the New Gas Consortium (NGC), the first non-associated gas project in the country, which will support the energy needs of Angola’s growing economy and strengthen its role as a global LNG exporter. The JV also holds significant exploration acreage in excess of 30,000 sqkm in Angola’s most prolific basins, allowing it to leverage proximity with existing infrastructures.

Azule Energy’s leadership team draws on experience and expertise from both parent companies. The leadership team will report to a six-person board comprising three bp and three Eni representatives, reflecting the ownership share of the company. All bp Angola and ENI Angola staff have joined Azule Energy.

The JV incorporation takes place after the pending conditions were met, among them having secured a third-party financing of $2.5Billion in the form of Pre-Export Financing, and after receiving regulatory approvals.

After announcing the intent to form the joint venture in May 2021, bp and ENI worked closely with the Angolan government, and Azule Energy’s formation was subject to all customary governmental and other approvals.



Panoro Finally Exits Nigeria

Three years after it first announced a deal to sell all its Nigerian assets, Panoro ASA has finally got it done. The Nowegian minnow has completed the sale of its fully owned subsidiaries Pan-Petroleum Services Holdings BV and Pan-Petroleum Nigeria Holding BV to PetroNor E&P ASA for an upfront consideration of $10Million plus a contingent consideration of up to $16.67Million based on future gas production volumes.

The Divested Subsidiaries hold 100% of the shares in Pan-Petroleum Aje Limited (“Pan Aje”), which participates in the exploration for and production of hydrocarbons in Nigeria and holds a 6.502% participating interest, with a 16.255% cost bearing interest, representing an economic interest of 12.1913% in Offshore Mining Lease no. 113 (OML 113). Following completion of the Transaction Panoro has no operational presence remaining in Nigeria.

“The upfront consideration of $10Million is expected to the paid within fifteen business days via the allotment and issue of 96,577,537 new PetroNor shares”, the company explains in a release. “The volume of PetroNor shares issued to Panoro has been determined with reference to the contractually determined 30-day volume weighted average price (VWAP) of PetroNor’s shares which are listed on the Oslo Børs with the Ticker “PNOR””.

Once the Consideration Shares are issued and received, Panoro will implement steps to distribute these new PetroNor shares to Panoro shareholders as a dividend in specie. Panoro will communicate separately in due course the timetable for this process and key dates.

Following receipt of the Consideration Shares, Panoro will temporarily hold a 6.78% shareholding with voting rights in PetroNor, until such Consideration Shares are distributed in specie to Panoro shareholders.


PetroNor Expects to Complete Aje Field Purchase in Two Weeks

The transaction has gone far beyond merely buying out Panoro’s interest

Norwegian minnow PetroNor E&P ASA has announced the seventh extension of the long stop date on its Aje field transaction.

This time the extension is shorter than a month: from 30 June 2022 to 15 July 2022. The company expects the Nigerian authorities to have sanctioned its purchase of interests in the Oil Mining Lease (OML) 113, which hosts the Aje gas and condensate accumulation in shallow water, off western Nigeria.

“Most CP’s (conditions precedent) have been satisfied or waived and the companies are initiating the final steps towards completion”, PetroNor says in a release. PetroNor expects conclusion of the outstanding matters and the subsequent closing with Panoro to commence within 14 days

The initial transaction announcement had  simply noted, in late 2019, it was PetroNor’s acquisition of Panoro Energy’s 6.5% interest in the asset, but  PetroNor had sought to have more stake in the overall asset and accompanying development project.

After several announcements of “extension of long stop dates”, PetroNor provided, in a May 2022 statement, a far deeper insight into the deal (which explains why the approval from the authorities had appeared to drag). The company said: “as an interim step towards completion of the transaction, PetroNor and the OML 113 Operator, Yinka Folawiyo Petroleum (YFP) have executed amendments to agreements for the formation of the jointly owned Aje Production, originally signed on 5 December 2019.

“The amendments provide for YFP’s contribution to Aje Production being limited to the shareholding in the YFP DW company. As a consequence, PetroNor’s ownership will be increased to 52% and Aje Production will hold a 15.5% participating interest and an economic interest in the order of 38.755 % in OML 113 during the majority of the project period. YFP has undertaken to align its voting rights with Aje Production’s objectives in the development of the Aje field”.



37 Entities Get Licences to Start Operating Marginal Fields in Nigeria

Nigeria has awarded Petroleum Prospecting Licences (PPLs) for 37 undeveloped discoveries (aka marginal fields) in the country’s prolific Niger Delta Basin.

At a glittering ceremony witnessed by over 300 guests in Abuja, the country’s political capital, 37 of the 57 oil and gas fields offered in a bid round launched two years ago were issued with the PPLs, having satisfied all conditions for award.

As of the date of the ceremony on June 28, 2022, 41 fields had been fully paid for, but four of those fields are having one challenge or the other in terms of partner relationships for the fields’ development.

Each of the 57 fields on offer was provisionally awarded to more than one company and each group of  “potential awardees” were meant to set up a Special Purpose Vehicle (SPV), some incorporated joint venture (IJV) that will then operate the fields.

The Nigerian Upstream Petroleum Regulatory Commission NUPRC, which is superintending the award exercise, has said that those who had not paid signature bonus as of February 2022 were deemed to have been disqualified.

As 41 fields have been duly paid for, there are 16 fields that are still open, in varying degrees, for awards.

Timipre Sylva, Nigeria’s Minister of State for Petroleum, gushed with pride as he spoke at the ceremony. “The implementation of the Petroleum Industry Act (PIA 2021) is in top gear”, he declared, referening the new petroleum regulation that governs the industry. “Consequently, the new awardees should note that their assets will be fully governed by the provisions of the PIA 2021”.

Mr. Sylva told the awardees to “ensure that good oilfield practice is employed, environmental considerations and community stakeholders’ management are not neglected”, as they develop their assets. “It is my strong belief that the awardees would take advantage of the current attractive oil prices to bring these fields into full production within a short period to increase production, grow reserves and reduce cost of production.



Tanzania to Ease Fiscal Conditions, Then Launch a Bid Round

Tanzania is looking to amend its nine-year-old Model Production Sharing Agreements (MPSAs) for its upstream hydrocarbon assets and then launch an acreage licencing sale.

The country’s Petroleum Upstream Regulatory Authority (PURA) is conducting reviews of the hydrocarbon code as well as the salability of the MPSAs, after which it hopes to launch a bid round of 23 acreages in the onshore and offshore terrains in the second quarter of 2023.

Tanzania introduced MPSA in 1989, as its own way of clarifying the terms and conditions it offers for investors interested in hydrocarbon acreages and how the government/ investor revenue share is caliberated in Production Sharing Agreements (PSAs). The 1989 MPSA was amended in 1995 and the 1995 MPSA was amended for 2004 and then 2008 and then 2013.

The 2013 MPSA has lasted the longest.

Tanzania holds close to 60Trillion cubic feet (Tcf) of gas, most of it in deepwater Rovuma Basin, located in the far reaches of the Indian Ocean. It has a modest gas-based industry which feeds off its 8Tcf of gas onshore and shallow water.

About 50Tcf or 83% of the gas reserves are a result of the discoveries in deepwater Rovuma basin between 2011 and 2014. Tanzania has launched two bid rounds since the MPSAs were promulgated in 2013 which have not attracted investor interest

The ongoing review of the MPSAs will update the fiscal regime in accordance with the global trends in trade, fuel prices over the past decade and estimates for the next decade, the institutional changes in Tanzania and current legal system, including the Petroleum Act of 2015, which is said to be unfavourable to investors.

The amendments will also address cost recovery; dispute resolution; local content; responsibility between the two parties in the contract and the exploration period.


Nigerian Marginal Fields Awardees to Receive Licenses June 28, 2022

By Joe-Jamola Mthembu, in Abuja

Nigeria will wrap up its most contentious hydrocarbon lease sale on June 28, 2022, when the regulator expects to issue Petroleum Prospecting Licences (PPL) to Special Purpose Vehicles (SPVs) formed by the winners of the marginal field bid round.

“We are focused on delivering the end result- issuance of PPL to awardees of the marginal fields before June ending”, says Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission.  “It is going to be an impressive ceremony where awardees, National Assembly representatives, Officials from Oil Producing States, Delegates from Host Communities, Executives of the Nigerian Extractive Industry Transparency Initiative (NEITI), Representatives of the Oil Producers Trade Groups: OPTS and IPPG, aside members of the press will be present”, he explains. “Yes, we’ve progressed very fast and in deliberate manner as promised the nation”.

The NUPRC has hosted a joint review of the model license and model contract with the respective SPVs for alignment and concurrence and is currently incorporating the feedback into the model license and model contract to finalize the documents. Collation of the deed documents and preparation of the deed package are expected to have been finalized by 23rd and 24th June, 2022, thus enabling the contract signing and PPL issuing ceremony to happen on 28th June, 2022.

The licence award ceremony will cap a two-year, drawn-out process, fraught with significant challenges and ringing allegations of ‘bribe-for-field’ involving state officials. It was, until now, the least transparent hydrocarbon property sale in the country’s history. The bids were launched on June 1, 2020 by the (now defunct) Department of Petroleum Resources (DPR), with the bidding expected to close in September 2020, after which, six- months -at the most- the winners should have been announced, who, after payment of signature bonus, would have had their contracts finalised.

NUPRC meets the press: Part of the obstacles that the new regulator faced, it says, was that it had to conclude stakeholder consultations on draft regulations of the PIA, from which it would generate Model Licences and Leases, that would facilitate issuance of the licences to the Awardees who formed SPVs as required in the 2020 bid round guidelines.

There was not to be any licence awards. The provisions to grant licences to bid winners came with the passage of the Petroleum Industry Act (PIA), which itself came into being in August 2021, fourteen months after the launch of the bid round.

The NUPRC, which succeeds the DPR, came into being in September 2021.

Awardees have, however been clamouring for the license as far back as November 2021, as there can be no clear sight to development finance and field visit without a licence.

Marginal field rounds differ from other acreage lease sales because the fields are undeveloped discoveries located in acreages operated by some companies. To start work on a marginal field, an awardee has to engage with the party that operates the acreage from which the marginal field is carved out and ringfenced. Full due diligence can only be carried out with access to full field data, which cannot be accessed without a licence.

Even so, part of the obstacles that the NUPRC faced was that it had to conclude stakeholder consultations on draft regulations of the PIA, from which it would generate Model Licences and Leases, that would facilitate issuance of the licences to the Awardees who formed SPVs as required in the 2020 bid round guidelines.

At the most recent meeting with the winners, the NUPRC noted that it expected there is now a contract in place between the S.P.V member companies. The agency also noted that:

  • Non performing S.P.V member shares can be reassigned, due to lack of performance, cash call e.t.c. S.P.V member contracts should also include such clauses.
  • PPL is for three (3) years with an optional extension by the commission based on work done or on-going.
  • Performance Security (Amount and process) is still been reviewed, though it will be a one-off for the 3 year PPL term, covering the work program to first oil. Yearly work program will not require performance security only presentations to the commission.
  • Exploration rights belong to the commission, they would guide the work done and activities process, this is to endeavor that work is continually on-going on the asset.



Angola’s Bid Strategy: Deliver 50 Blocks to E&P Companies in Five Years

By Toyin Akinosho, Publisher

Angola is banking on aggressive acreage lease sale to revamp its dwindling oil and gas production.

“The permanent supply of oil blocks is one of the actions that the Angolan Executive and the ANPG are counting on to stabilize the levels of oil production in the country”, according to the country’s National Agency for Oil, Gas and Biofuels (ANPG).

Angola’s production has been on a decline since it reached the magical Two Million Barrels of Oil Per Day (2MMBOPD) in 2008.

In March 2022, it produced 1.133MMBOPD and exported 1.094MMBOPD, according to ANPG figures published in the April 2022 edition of the Africa Oil+Gas Report.

Angola’s reserves have also trended south: dropping from 9.1Billion barrels at the end of 2010 to 7.8Billion barrels at the end of 2019, data published by BP Review of Statitics, the industry’s bible of reserves and output, indicate. In the same period, Algeria’s Nigeria’s and Libyan reserves have either grown or been flat, the same data affirm.

APPO Conference in Luanda

“We have the mandate to work towards the replacement of reserves with a view to mitigating the sharp decline in production”, declares Paulino Jerónimo, the ANPG’s Chief Executive Officer. “Thanks to the work that we have been carrying out within the scope of the 2021 – 2025 Bidding Strategy”, Jerónimo told the delegates at the just concluded 8th African Oil Congress and Exhibition held in Luanda, organised by the Organization of African Petroleum Producing Countries (APPO). “In this period, we estimate to deliver 50 concessions, and on the day I speak to you, 25 are awarded”, he underlined.

The ANPG Chief also reiterated the planned programme for a permanent offer of acreages to interested parties, in an open transparent fashion, outside the formal process of bid round. “After approval of the permanent offer regime, the ANPG is strengthened in terms of instruments to increase and boost oil concessions, through direct negotiation with national and international operators that are interested in working with us. This is a really important step so that we do not have prolonged stops in the granting of concessions and that exploration can be carried out so that production can then take place”.

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