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Kenya To Produce 120,000BOPD at Peak, if $3.4Billion Oilfield Project Goes Ahead

By Toyin Akinosho

Partners in Kenya’s two proven onshore acreages have high graded the field development plan for the basin-wide, crude oil project.

Far from the earlier proposed “foundation stage development” involving a 60,000 to 80,000Barrels of Oil Per Day (BOPD) Central Processing Facility (CPF) and an export pipeline to Lamu, the three companies: Tullow Oil (operator), Africa Oil Corp, and TOTALEnergies, have now informed the Government that Blocks 10BB and 13T licenses can deliver production plateau of 120,000BOPD, with expected gross oil recovery of 585Million barrels of oil (MMBO) over the full life of the field.

This resource position, the partners say, “is supported by external international auditors Gaffney Cline Associates (GCA), who have issued a Competent Persons Report (CPR) and confirmed the life of field resource position of 585MMBO”. 

Charles Keter, Kenya’s Cabinet Secretary for Energy & Petroleum

The key changes to the development concept have been driven by: 

1. Incorporating the production data from the Early Oil Pilot Scheme (EOPS) where 450,000 bbls were produced from Amosing and Ngamia fields. These two fields account for over 50% of the resource distribution, leading to greater confidence in achieving the higher end of the resource distribution range.

2. Optimising the number of wells to be drilled with drilling initially at the crest of the fields to achieve First Oil. Changing the producer to injector ratio from 2:1 to 1:1 leading to improved pressure support and higher resources recovered from the reservoir. 

3. Adding the Ekales field into the first phase of production. Ekales is geographically straddled between the Twiga and Amosing fields and ongoing technical work has helped mature our understanding. 

As such, the first phase will now include the Ngamia, Ekales, Amosing, and Twiga (NEAT) fields and will target 390MMBO of the overall 585MMBO. 

4. Optimising the overall development cost with a facility design capacity of 130,000BOPD and an increase to the pipeline size from 18” to 20” to handle the increased flow rates. 

Total gross capital expenditure (capex), which covers both the upstream and the pipeline to First Oil, is expected to be c.$3.4Billion. 

The increase in capex from the previous design is due to a bigger facility processing capacity, additional wells to be drilled, and larger diameter crude oil export pipeline, which delivers a 30% increase in resources whilst lowering the unit cost to $22/bbl (previously c.$31/bbl). 

The revised concept also allows greater flexibility in adding additional fields into production without significant modifications to the project’s infrastructure.


Tullow Oil, Largest Operator in Ghana, Declares $93Million Profit After Tax

Tullow Oil, the London-listed independent that runs the largest oilfield operations in Ghana, has declared a profit after tax of $93Million for the First Half of 2021.

Most of the money was made from the proceeds of crude oil production from the West African country.

“The start of drilling in Ghana is one of the most tangible examples” of the significant achievements made during the period, the company explains.

Tullow’s gross (operated) production in Ghana averaged c.107,000Barrels of Oil Per Day (BOPD), with c.70,600BOPD(net: c.25,100BOPD) from the Jubilee field, “slightly ahead of expectations due to good facility uptime and well performance”. Gross production from the TEN fields averaged c.37,000BOPD(net: c.17,400BOPD).

Working interest production from Ghana averaged c 42,500BOEPD in 1H 2021, three times the WIP from Gabon (c.14,800BOEPD). Overall Group working interest production averaged 61,230 BOEPD, with Equatorial Guinea and Cote d’Ivoire contributing 2,100BOEPD and 1,800BOEPD respectively. 

Operating costs during the period averaged $12.9/bbl, “a year-on-year increase primarily due to lower production and increased costs related to extended COVID-19 operating procedures”.

Tullow reports underlying operating cash flow of $218Million and free cash flow of $86Million during the period and congratulates itself on reduced administrative expenses of $23Million in 1H 2021, “down c.50% year-on-year”. 

The company’s spent $101Million on capital investment and $37Million on decommissioning.

But its net debt at 30 June 2021 was around $2.3Billion, it says, with gearing of 2.6x net debt/EBITDAX; and “liquidity headroom and free cash of $0.7Billion. 

Tullow says it completed a comprehensive debt refinancing with $1.8Billion of five-year Senior Secured Notes issued and a new $500Million revolving credit facility.


Massive Production Drop in Nigeria’s Western Onshore

Crude Oil output crashed to significant lows in five acreages held by Nigerian independents in the western onshore Niger Delta, in August 2021, according to field data seen by Africa Oil+Gas Report.

These acreages, operated as Joint Ventures with state oil firm NPDC, produce the bulk of the hydrocarbons in Nigeria’s western onshore as well as most of the natural gas for the country’s electricity supply.

NPDC/Neconde’s OML 42 output fell to 23,000 Barrels of Oil Per Day (BOPD), from 38,669BOPD averaged in July 2021.

NPDC/NDWestern JV grossed…Read more

 

 

 


Etame Co-Venturers Approve Replacement of FPSO Offshore Gabon

VAALCO Energy’s co-venturers on the Etame field offshore Gabon, have approved the agreements to replace the existing Floating Production, Storage and Offloading unit (FPSO) with a Floating Storage and Offloading unit (FSO).

The new deal, VAALCO says, will significantly reduce storage and offloading costs by almost 50%, increase effective capacity for storage by over 50%, and is expected to lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves from the field.

That transaction, christened ‘the Bareboat Contract and Operating Agreement with World Carrier Offshore Services Corp’, is now effective.

“We expect to have the FSO in place and operating in September 2022 prior to when our current FPSO contract expires”, says George Maxwell, VAALCO’s Chief Executive Officer. ”We will continue to maximize the value opportunities for our shareholders and look forward to beginning our next drilling campaign at Etame later this year.”

VAALCO, holds a 63.6% participating interest in the Etame Marin block, which to date has produced over 120Million barrels of crude oil and of which the Company is the operator.

 


NIGERIA: The Big Asset Sale Season

Nigeria is back in a big asset sale season.

This is like mid- 2013 all over again, a half-year after RoyalDutch Shell completed a significant asset sale and was about to conduct another. But this time, the scale is humongous, and the above headline is closer to the narrative than it was when we ran it in 2013.

Our latest edition, just released to our global pool of paying subscribers, covers the asset sale with full disclosure.

Shell is about to sell acreages. ExxonMobil is in the midst of selling and Chevron has almost concluded a sale.

But again, the really big disposer is RoyalDutch Shell.

When the European major concludes the imminent sale of its equity in 18 joint venture assets in Nigeria, it will be left with just one operated acreage and two non-operated assets, all of them in deepwater. Midstream, it will still hold the largest non-state share in the NLNG plant, but it will no longer be in direct control of the feedstock.  The company whose name was, for most of the last 65 years, synonymous with the phrase ‘Nigerian Oil industry’, will have retreated into the background.

In our last monthly edition, released in mid-July, 2021, we explored the likely beneficiaries of these sales. We have updated the analysis in this edition.  In that issue, we worried about the impairment to the state coffers and debated whether the overall divestment picture was a good or bad sign, on balance to the fiscus. In this edition, we ask, why is the state company deeply concerned about this sale?

Elsewhere in the magazine, our regulars are of course included: who is getting to first oil; who is drilling what and where? Where in Africa is gas being commercialized and how can our subscribers benefit from such opportunity? Where else is opening up and what are the new technologies?

The Africa Oil+Gas Report  is the primer of the hydrocarbon and the growing new energy industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions, for useful analyses of Africa’s oil and gas industry. Published by the Festac News Press Limited since November 2001, AOGR is a monthly, publication delivered to subscribers around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are +2348038882629, +2348036525979, +2347062420127, +2348023902519.

 

 


GNPC’s Not Part of Government of Ghana, State Oil Firm Tells Auditor General

By Toyin Akinosho

Ghana National Petroleum Corporation (GNPC) says that the country’s Auditor General was wrong to have accused it of breaching Public Procurement Law pertaining to Parliamentary approvals for international business transactions.

The corporation says that the cited law strictly relates to “Government” business and not generally to statutory corporations set up for commercial purposes.

“The Ghana National Petroleum Corporation Act (PNDCL 64) establishes GNPC as a distinct legal entity and, as such, it is not legally considered to be part of Government”, GNPC declares.

GNPC was responding to the call on government, by the Auditor-General’s office, to sanction the corporation for procuring the following five contracts, for a total sum of $34,165,235.15 and GBP464,963.13 (about $34.165Million and £465,000), without Parliamentary Approval.

The contracts, as well as the manner with which they were procured, are listed as follows:

1 Procurement of Teammate full version automated audit management system 28/08/2015 Wolters Kluwer Tax and Accounting Ltd $60,100.00. Single Source.

2 Procurement of Resolve Software 04/10/2016 Messrs. Petroleum Expert (UK) Limited £47,883.13 Single Source.

3 Procurement of Seismic Survey Design Software and related activities 23/06/2017 Messrs GX Technology, GMG Products Division $116,039.15. Single Source.

4 Procurement of a contractor to acquire and process 2D Seismic Data over the Voltarian Basin for GNPC 15/04/2015 Messrs. BGP-Bay Geophysical Limited $33,989,096.00. Restrictive Tendering.

5 Development of Brand Architecture for GNPC and Explorco 27/11/2015 Future Brand £417,080.00. Single Source.

“This practice has the tendency of not allowing the intentions of the promulgators of the law (1992 Constitution) inure to the benefit of the State”, the Auditor-General had admonished. “It also denies the Lawmakers the opportunity to make inputs towards such transactions.

“The absence of above could plunge GNPC into paying for higher contract sums and possible judgment debts. Report of the Auditor-General on the Public Accounts of Ghana – Public Boards, Corporations and Other Statutory Institutions for the year ended 31 December 2020 142”, the Auditor-General observed. “We recommended that Management of GNPC should be sanctioned in accordance with Section 92 of the Public Procurement Act 2003, (Act 663) as amended for breaching the Public Procurement Law”.

The Auditor-General’s Office however noted that GNPC Management explained that “the products involved in the transactions in question were all proprietary products that needed to be procured from the Original Equipment Manufacturer (OEM)”.  

The GNPC Management also stated, according to the Auditor-General, that it sought and obtained the approval of the Public Procurement Authority (PPA) for those transactions and that the items involved were captured in the approved annual budget of the corporation which was approved by Parliament, as well as its approved procurement plans for the respective periods”. But the Auditor-General’s report insisted that the “ said budgets were not made available for our review, more so, from our audit point of view, Parliamentary approval of the Corporation’s budget does not imply approval for international business contracts since the budget does not indicate the procurement method to use neither does it indicate the vendors to deal with”.

It, therefore “reiterated its audit recommendation”, that GNPC be sanctioned.


NNPC Says it Made a Profit, a First, in 44 Years

Nigeria National Petroleum Corporation has declared a net profit for the year 2020.

The state hydrocarbon firm announced, through the President of the country, a Profit after Tax of Two Hundred and Eighty-Seven Billion Naira (₦287 Billion) in the Year 2020, sequel to the completion of the statutory Annual Audit exercise for the Year 2020.

“The NNPC losses were reduced from ₦803 Billion in the year 2018 to ₦1.7 Billion in the year 2019 and the eventual declaration of Net Profit in the Year 2020 for the first time in its 44-year history”, a statement by Femi Adesina, Special Adviser (Media and Publicity), to President Muhammadu Buhari, said.

“This development is consistent with this administration’s commitment to ensuring prudent management of resources and maximization of value for the Nigerian people from their natural resources.

NNPC published an audited annual report for the first time in 2019; it was the 2018 annual report. It published the 2019 annual report in August 2020, exactly a year ago.

The media has been so excited by the fact that NNPC now publishes audited annual reports that the default response is to praise the NNPC management for the achievement of publishing an audited annual report. The content of the reports, with the exception of the worn-out conversations around the corporation’s malfunctioning crude oil refineries, is hardly debated.

President Buhari’s own statement on the report toes the line: “I congratulate the Board, Management, and Staff of the Corporation and look forward to greater value creation for the Nigerian people.”


Nigeria’s President Signs the Petroleum Industry Bill Into Law

President Muhammadu Buhari has signed the Petroleum Industry Bill 2021 into law.

“Working from home in five days quarantine as required by the Presidential Steering Committee on COVID-19 after returning from London on Friday August 13, the President assented to the Bill Monday August 16, 2021, in his determination to fulfill his constitutional duty”, according to a press statement issued by the Nigerian state house and signed by Femi Adesina, special adviser to the President (Media and Publicity).

“The ceremonial part of the new legislation will be done on Wednesday”, August 18, 2021, “after the days of mandatory isolation would have been fulfilled”, the statement adds.

“The Petroleum Industry Act provides legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters.

“The Senate had passed the Bill on July 15, 2021, while the House of Representatives did same on July 16, thus ending a long wait since early 2000s, and notching another high for the Buhari administration”.

 


ENI Starts Production of Angola’s Cuica Field, Four Months After Discovery

Italian explorer ENI has reported starting production of the Cuica Field, in Block 15/06 of the Angolan deep offshore.

The company’s release does not provide the output figure, but it explains that the field is being produced via the Armada Olombendo Floating Production Storage and Offloading (FPSO) vessel.

First oil came on July 30, 2021, “just over four months from discovery”, the company says.

The Cuica field was discovered by the exploration well Cuica 1 in March 2021. It is located in a water depth of 500 metres, approximately three kilometres from the Olombendo FPSO. The early production of the development, that will increase and sustain the Olombendo FPSO production plateau, includes an oil producer well and a water injection well, tied back subsea to the existing Cabaça North subsea production system, thus exploiting the full potential of available infrastructures in the area.

The Armada Olombendo FPSO has a production capacity of 100,000 barrels of oil per day and is designed to operate during her production life with zero discharge. Besides Cuica, whose production rate is in line with expectations, the Olombendo is now receiving and treating the production of Cabaça, CabaçaSouth East, and UM8 fields for a total of 12 wells and 5 manifolds at a water depth ranging from 400 to 500 metres. The Olombendo FPSO will also receive production from the Cabaça North field in 4Q 2021.

Block 15/06 is operated by ENI Angola with a 36.84% share. Sonangol Pesquisa e Produção (36.84%) and SSI Fifteen Limited (26.32%) compose the rest of the Joint Venture. Further to block 15/06, ENI is operator of exploration blocks Cabinda North, Cabinda Centro, 1/14 and 28, as well as of the New Gas Consortium (NGC). In addition, ENI has stakes in the non-operated blocks 0 (Cabinda), 3/05, 3/05A, 14, 14 K/A-IMI, 15, and in Angola LNG. 


Mozambique Claims Major Victory Over Insurgents Stalling Gas Project

By Toyin Akinosho

…But Mocímboa da Praia has changed hands more than once…

Mozambican authorities are claiming to have “conquered” a key stronghold of Al Shabab, the Islamic insurgent group whose activities have forced a hold up of Africa’s largest single gas project.

The Portuguese news agency, LUSA, citing several Mozambican official sources but not naming any, reports that a joint operation by Mozambican and Rwandan forces resulted in the occupation of the main positions of armed groups around the town of Mocímboa da Praia, the insurgents’ “headquarters”, located in the province of Cabo Delgado, in the north of the country.

“The joint force occupied the positions of the insurgents in Awasse and Diaca, in Mocímboa da Praia, having seized various war material from the rebels and killed several members of the armed groups”, LUSA reports, citing “sources, linked to the Ministry of Defence of Mozambique”.

LUSA reports that “after the joint force operations, Bernardino Rafael, General Commander of the Police of the Republic of Mozambique, visited the locality of Awasse, where he assured that the intention is to remain in the occupied points”.

Islamic insurgents have killed hundreds of people and turned thousands to refugees in  towns and villages located in the Cabo Delgado province and close to the Afungi Peninsula, where the TOTALEnergies operated 13 Million Metric Tonnes Per Annum Liquefied Natural Gas project is sited.

In late March 2021, the insurgents made their most sweeping attack on the neighbouring  Palma town, just when TOTALEnergies’ workers returned to site in Afungi to continue construction.

“They want to intimidate us”, President Filipe Nyusi, Moazmbique’s head of state and government said a in a speech two weeks after the incident, declaring war. “Following the attack on the town of Palma, the situation in Cabo Delgado has received a lot of national and international attention. All of this attention is legitimate,” the President said. “This town and the adjacent Afungi peninsula are close to the natural gas deposits. It is in this region where the foundations for the exploitation of this resource so important to our economy are being laid”.

General Rafael told the media:“The tendency is to improve even more in those points where the Defence and Security Forces, together with the Rwandan forces, are conquering”. He said that “the terrorists vandalised several infrastructure Bernardino Rafael told the media, with an emphasis on the electricity grid”.

The coastal town of Mocímboa da Praia, located 70 kilometres south of the gas project site, had been invaded and occupied for a day by insurgents on March 23 2020, and was the theatre of clashes between Mozambican troops and the Jihadists several times over and over up until December 2020, when the insurgents firmly held it, only to be repulsed again by government forces.

But the offensive from the state is different this time, aided, as it is, by the battle hardened, thousand strong Rwandan soldiers and police officers, fighting since the beginning of July 2021. The East African warriors, who are fighting under the auspices of a bilateral agreement between the Maputo and the Kigali, are expected to be soon joined by troops  from the Southern African Development Community (SADC), consisting of contingents from South Africa, Namibia, Botswana, Angola and Malawi, under a mandate from a “joint force on alert” approved on June 23, at an extraordinary summit of the organization in Maputo.

 

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