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Our Latest Issue/The 16th Deepwater Africa Annual

Uganda’s Lake Albert basin wide development is the largest E&P project currently under construction in Africa. But onshore developments like this (it is expected to peak at 230,000Barrels of oil per day (BOPD)) are becoming outliers. The rule is that the large discoveries take place in deepwater.

After just one dry hole, the media have muted their once animated discussions about anticipated outcome of ReconAfrica’s exploration in the vast onshore Kavango basin in Namibia. And there was never major headline news tracking Invictus Energy’s wildcat drilling in landlocked Cahora Bass Basin in Zimbabwe.

On the contrary, discoveries in Namibian deep offshore and developments in South African deepwater, have remained on the front-page news.

And it seems to get better the more the water depth. TOTALEnergies is vigorously reconsidering a return to its 13Million Tonnes Per Day Liquefied Natural Gas project in Mozambique which, though located on land, is extracting and processing massive volumes of natural gas lying beneath 2,000 metres of water in the Indian Ocean.

Senegal should become an oil producer by the last quarter of 2023, when Woodside Energy and its partners complete the first phase of valourising the Sangmar field in water depths from 700 metres to 1,400metres.  The target is 100,000BOPD. Around the corner, straddling Mauritania and Senegal, the 2.5Million Metric Tonne Per Day Floating LNG project on the Grand Tortue Ahmeyim (GTA) field is located in 2,850metre water depth, representing Africa’s deepest offshore project to date.

This is the 16th edition of Africa Oil+Gas Report’s Deepwater Annual, in which we explore, as much as possible, the up-to-date market intelligence about the activities in the deep blue. Welcome to 2023.

Grab your copy here.

This journal is the primer of the hydrocarbon 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. Published by the Festac News Press Limited since November 2001, AOGR is a paid subscription based monthly, e-copy publication delivered around the world. Its website remains  and the contact email address is  . Contact telephone numbers in our West African regional headquarters in Lagos are +2348130733523, +2347062420127, +234803652979, +2348023902519.

– Editor

“There is a Matpatson Approach to Turnkey Drilling”

Matpatson Petroleum Services has been around the block longer than most of its peers, with drilling as its core operation. Founded in 2000, it has grown beyond the focus on well engineering to include procurement of drilling equipment, well workover services, downhole tool fishing, as well as training of drilling engineers and associated subsurface professionals. The buzz in the industry is now turnkey drilling but ‘there is turnkey drilling and there is turnkey drilling’, Matpatson argues.

In the ensuing piece, OLUBUKOLA OKULAJA and OLUMIDE ILESANMI, the company’s  Managing Director and General Manager Engineering & Projects respectively, conclude a two part conversation with Africa Oil+Gas Report’s Akpelu Paul Kelechi,  on the huge opportunity for the drilling service industry,  regardless of what happens to the industry as a whole… “Even if you don’t produce oil, you will produce gas and you can’t produce gas without drilling so drilling services will still have prominence…”


You founded the company in 2000. What has changed since then?

We were founded in 2000 and we had a vision which was achieved in two years. Then we crafted this current one which we know will drive us for as long as we operate.

You achieved that first vision in just two years of your operation?

It was to put together a team which will do drilling project management and we achieved that in just two years. It was easy to achieve because we had some professionally honed, drilling engineers who had retired from Shell and we put them together as drilling supervisors and that’s all. We have since then enlarged the scope of the vision by stating that we want to be distinguished as a profitable, progressive, cost effective one-stop-shop for well delivery process in Nigeria and the West Africa sub region. That is what has taken us a little bit out of Nigeria; we are doing something in Ghana but it is not large enough to be announced.

Who are you working for in Ghana?

We worked for Tullow but it was just supply of technology items. Then we have stepped out to Congo Brazzaville working for SNPC (the state hydrocarbon company) which also operates some acreages. We are going to be involved in some serious drilling operations for them now with about four rigs. They have come here (to Nigeria) to load some things from our warehouse and we are loading about seven containers of tubular goods for them.

How has Matpatson evolved in its close to a quarter of a century existence? What is the story?

After we set up the vision, we then wrote a mission which reads: “To develop a reservoir of indigenous well engineering competencies that are readily available to provide services to the oil and gas sector in Nigeria and the West African sub region and to also develop sufficient equipment supply chain capable of supporting five well projects at all times”. We then asked ourselves how are we going to achieve all these? It means we will have to have the engineers, the equipment and so on and so forth. We have operated with that and we have built ourselves like a triangle.

When we were setting up that vision, we were thinking about turnkey but it never did come immediately. The company’s first main contract came in 2005 from Niger Delta Petroleum Resources (NDPR), which was awarded to (the founder) Mr. Ilesanmi as a drilling consultancy. Then we stated expanding the base of the triangle to project management where we now have people and we started driving this. However, in-between, we found out 

Olubukola Okulaja, Managing Director.

that Nigerian (E&P) Independents didn’t actually know that you don’t start planning a well when the rig is around. Most of the time they want to drill there are no equipment available. This spurred us to include procurement of drilling equipment to what we serve. In 2016 -2017, we did what we can call a pseudo turnkey. We supplied some of the equipment, we did the well planning and we successfully drilled four wells at a stretch for Waltersmith and we increased their production from 3,000BOPD to about 9,000BOPD from those fields that were not so prolific. That was a good test of our development towards turnkey. In 2019, when they said they wanted to drill more wells, we said fine, we drilled most of your wells anyway.

The Five Fingers Matpatson runs five companies. We have the training, the procurement, logistics, project management and the fishing department. We have all kinds of fishing tools there. When we are stuck, we just mobilize our fishing tools to the rig. The thinking behind this is: if there is no drilling, there is workover. If there is no workover, there is fishing. Somebody must carry something and that is why we have the logistics.

Part of what you do now is running a training school. You said that earlier…

We have a training school where we train our engineers and measure their competence development processes. By the time they would have done the International Well Control Forum IWCF (a certification process for well engineers) and we have finished training them, we can then give them a pass mark. We take IWCF  levels 2-4 now adding level 5. However we run a wide range of courses as stated on our training website:

Drilling engineers take the IWCF certification very seriously.

In Matpatson, we train the engineers vigorously and they stay with us. Most of them stay with us. We have a warehouse; we have a workshop, all in the same building. When you train people and you say this is a Charismas Tree, he has seen it there. All you then have to tell him is that, though these Christmas Trees look alike, this here is Class B, Class D and Class E and tell him the differences.

If we pretend to be your students right now, what will you say are the difference between Class A, B, D, and E Christmas Trees?

Class A is a simple Christmas tree that you use for either water injection or production of some kind. A simple production without any kind of chemistry as such. Then Class B is for oil and also for gas that are not corrosive. No H2S (Hydrogen Sulphide), no CO2. (Carbon Dioxide). Class D has a certain percentage of CO2 it can accommodate; the point is that there is a threshold it can allow even if it doesn’t have H2S. Class E can accommodate a reasonable level of H2S and CO2. If you don’t select the right type of Christmas tree, then you will have corrosion and before you know it, you are having some leakages somewhere in the wellhead and that is the worst area you could have a problem because you have no control anymore. Just like in the casing too, we have K-55, N-80, L-80, P-110. They are all for different things; some are for tension; some are for chemistry.

The Middle is where the Problem Is

 In the battle to bring down well cost there are things that will not come down; the cost of materials is one, human elements are another. In every management, the top is not the problem neither is the bottom. The middle is where the problem is. The figures, the equations are worked out in the middle. If you are the MD of a company and you send out ten tenders, the people at the middle would have done the tenders and they give you the analysis, even if it doesn’t look too good to you, you will not start evaluating the tender

If you have a classroom to train your staff, you have the materials to drill the well and you have the engineers to drill the well, you are fully competent to do the turnkey contract and that is where we are. We have progressively developed ourselves. Our approach to turnkey is new: a drilling model reengineered for greater efficiency and increased economic value to the operator, the Matpatson approach. People might consider that to be expensive but if you lose 2 days, you would have actually lost all the money you would have used to pay the Subject Matter Experts because they come in at the planning phase and they come in when their part of the operation is going on. The open hole wireline expert comes here at the planning phase. He is able to say: if you have this angle already and this dog leg severity, there is no way you can run this log on wireline. Then he jumps on his computer and does the simulation and proves to everybody that you can’t run it on wireline. So straight away from day one, you are planning to log on drill pipe. You have taken care of that risk straight away. The cementing expert comes in and says, if you need this height of cementing behind your casing, you are going to break down the shoe.

When you say you are ‘logging on drill pipe’ does it mean you are ‘logging while drilling’?

No, we call it Tough Logging Condition, TLC. You know, if you are drilling an exploration well, some people might want to take a risk of putting neutron tool in the hole. If you are stuck with it, you are in big trouble. You can drill with your gamma ray resistivity and then come back and log your neutron density on wireline if the hole is good; otherwise, just put the TLC straight away and by that, you can be sure of going in and coming out. These are the things. We had no issues at all with any of these operations and everything went smoothly on the Ebendo wells (which the company drilled for Energia Petroleum). We had a few tool failures particularly on the wireline but the rig had no Non-Productive Time at all; it worked fine. Did we have any major problems? Yes; somewhere we had differential staking when we were coming out of hole. I think the driller was actually messing around and it was static at a point. The over balance was actually higher across the formation and we got stuck. That was majorly all we had.

You said: “the driller was..” But in a turnkey project, that driller was Matpatson?

Yes it was us actually because we brought the rig. It was a Chinese rig that we used and they did well other than that incident.

You are not going to use that rig again?

You can throw the oil away into the gutter but we will produce gas. Our worry about the industry is that competencies are going down.

Oh we would. The driller made a mistake and that point. The truth is that, if somebody makes a mistake, you don’t sack him immediately. Let’s take an example of a career drilling engineer with Shell, just an archetype.  When he was six months old on the rig, still a trainee, he was on a job and he lost this finger. He went to his manager even though he was still a trainee and said he wanted to change to petroleum engineering (meaning reservoir engineering) department or production technology, but the manager said “no”. he said “you will stay in this department or you will leave the company” and the trainee asked why? The manager responded: “because this has happened to you, you will never allow it to happen to anybody” Our archetype drilling engineer experienced series of that situation that resulted in the loss of his finger during the course of his career but he always remembered that this was why he lost his finger. So, if somebody makes a mistake, you don’t sack them immediately because someone else will come and still make the same mistake. Back to the driller on Ebendo. He was warned and he had a warning letter and he apologized. Yes it cost us some money because we lost some drill pipes and drill collars along the way.

So far, how many students have gone through your drilling classroom?

Oh a lot; we actually do some training for Shell

Do you want to put a number to it?

Sometimes, they come in like 15 or 16 at a time particularly for the drilling courses. The highest number you are allowed to carry at a time is 12. We have well intervention courses and then we have some drilling companies that bring their staff for rig training at different levels. The rough neck, the driller, the tool pusher and the drilling manager. Right now we are actually training some engineers for Nigerian Content Development Monitoring Board NCDMB.

Do they work for NCDMB?

We don’t think so; they just took some people and gave them to us to train and if we like them, we can take them. We have identified two of them that we will take through our own critical training programme. So that is it about training.

Do you have a live rig or a simulator?

We have a simulator particularly for the certification. We just actually finished installing the Shell DS-500 simulator last November. It is as big as the rig floor and we are going to Angola to install one in March 2023.

For what company?

We are going to install that on behalf of the manufacturer actually because we are now partners with them. The Drilling Systems in London and we are also partners with Aberdeen Drilling School.

There is a growing number of drilling companies who now do turnkey projects. What is Matpatson’s opinion about the state of turnkey drilling in Nigeria today. Would you say it has really taken off?

Do you see a general uptick in the drilling industry now relative to, say, Ten years ago-before the massive price crash and then pandemic? What do you see as the prospect to the drilling industry?

We are talking about green energy and the rest but in this country, even if you don’t produce oil, you will produce gas and you can’t produce gas without drilling so drilling will have to continue. You can throw the oil away into the gutter but we will produce gas. Our worry about the industry is that competencies are going down. That’s a huge worry and you can see it; Last year, one Nigerian owned firm had two blowouts. That’s the cost you pay for declining competencies. Another cost is downtime. The fact that you have finally finished the well doesn’t mean that you have done well. If you plan a well for 50 days and you are drilling it for 150 days, the cost is proportionate to the number of days in a way and some constants. This is the way we see the industry going. In those good old days, when we generally had the good people, you take the drilling report, there is only one line – drill from 5,000 to 6,000 feet. Then the mud SG (Specific Gravity) and viscosity, finish. There was no geological report, nothing. Although there were companies like Geo-services and Baroid was doing some mud logging and so on and so forth.  But today, there are more information in this report. It’s almost per hour, per hour.

So that means that people should be able to take better decisions

Exactly, but it is not so. Three decades ago, in one Shell operated well in Belema (an oilfield in the eastern onshore Niger Delta basin); they were already setting the nine-inch casing when the (drilling) programme was signed. They were drilling the well with the draft programme and it was so fast. But today, the wells are complicated and there are no cheap wells anymore, that’s for sure. The depths are getting deeper and the formations are getting more aggressive. Again, the morale of people is dampened by security issues and so on. So where is the oil industry going? We will remain with it no doubt about that but then, if you take how the IOCs train their drilling engineers, we do not think there is any Nigerian indigenous independent that will train its staff that way. The industry keeps ending up with less and less skilled people. Some of them will actually grow but it won’t be like the kind of people that we had before that had real hands-on experience. The IOCs encouraged people to go for trainings. It was like going to earn more when you had a course in San Ramon, Holland, Milan; of course you would go back there to do some exams and if you failed, you were in trouble.

It is not there anymore and as you can see; the Nigerian independents are taking all the people from the IOCs and when the old ones are no more there because they are finally retired, what do you then do with the younger ones that are not properly trained? You end up with competencies that are already depleting.

Do you think there is an obsession among operators to bring down the cost of drilling projects? You did say that wells are becoming expensive.

Again, let’s go back to some archetypal operations in an IOC three decades ago. There was a workshop and a team was put together on well cost reduction. The team was to compare the company’s cost per barrel with a competitor’s cost per barrel. This archetypal IOC’s cost per barrel was double that of its closest competitor at that time. One key reason for additional cost, the team found, was community issues. The competitor’s was an offshore operation and there were no community issues. But there were other things, and this is where we are going: how that sort of lesson helped the Matpatson’s design of its work. It helped Matpatson -when it was formed-to set itself apart. WhenMatpatson started consulting for Niger Delta Petroleum Resources, it came up with the idea of drilling four wells in one cellar. That reduces your line take and it reduces your rig move time. The pipeline is also part of your well cost and you have to acquire right of way for the four wells because they are scattered here and there. Finally, what cost does the real operation itself add? In the battle to bring down well cost there are things that will not come down; the cost of materials is one, human elements are another. In every management, the top is not the problem neither is the bottom. The middle is where the problem is. The figures, the equations are worked out in the middle. If you are the MD of a company and you send out ten tenders, the people at the middle would have done the tenders and they give you the analysis, even if it doesn’t look too good to you, you will not start evaluating the tender. You might be wondering why certain things are not there but you won’t push it.  We don’t want to say it absolutely but that is the case.

Again, technically, what we did with these Energia wells was that we actually got somebody to do some geo-mechanical study for us. We gathered some data like pore pressure regime from the wells that they had drilled and so, we already knew the mud that we would need and so on. We didn’t have to struggle with top holes and so on. This is what we are saying, we have all these people here and what you will lose will be more than if you had them. That is why we call it the Matpatson approach to turnkey drilling in addition to the fact that we have all the equipment.

You said because of material cost and human issues the average cost of $25Million per well will never go to like say $10Million?

Well it might if the oil price goes to like $8 per barrel, the whole price will crash. But if it remains the same, I think a 12-13,000 feet well, dual completion, will still be about $20-25Million depending on what you put in it for completion.

Does Matpatson have any plan to own a rig?

No and this is the question that everybody is asking. First, there’s the risk of not having a job and operations go down. What do you then do with the rig? The rig is more like your car, if you park it and you don’t drive it, but you cover it up and you think it is still new, you are just wasting your time. It is getting older faster. To properly stack a rig will probably cost you nothing less than $2Milion. Cold stacking means that everything is shut down. You can imagine what happens to the bearings. You have to change all the oil in the engine to cold stacking oil and all your bearing will have special grease. Your drill pipe pin and box will have a totally different dove.

When you now need that rig to work, you then find out that the legs might not be able to work. You will then have to start looking for injecting pumps and all sorts of things to get it running again. Finally, the draw works are not working, the NCI Unit is not working and so on. You might need to spend like $5Million before you get it to work. If you don’t have that kind of money, what do you do? Then it becomes a junk. Since you can always find a rig to rent for your operations, just go and rent a rig. Today, the Chinese are taking over everywhere because you can’t beat them. True or false I don’t know but people say their government give them money and say they should just go away because they are too many and they do not have to pay back. So how do you beat those people? I look at what ACME energy did and I know how much it cost. We built that rig and I actually went to America to select it. That is still the strongest land rig in Nigeria today and we can vouch for that. But now, it is stacked after the Waltersmith turnkey operations that they did.

Now that Matpatson has multiple arms: drilling, training, even logistics; which of them would you say is the highest revenue earner for you?

It is actually the procurement company, in the last two years.

Which one brings up the rear in earnings, then, the training school?

Matpatson runs five companies. We have the training, the procurement, logistics, project management and the fishing department. We have all kinds of fishing tools there. When we are stuck, we just mobilize our fishing tools to the rig. The thinking behind this is: if there is no drilling, there is workover. If there is no workover, there is fishing. Somebody must carry something and that is why we have the logistics. Finally, when there are no serious operations that is when people come for training. It is well covered and when you go to our warehouse, you will see the way it is lined up.

Is it the training school that is dealing with the Angolan operations?


And is this for Azule Energy?

They haven’t told us who the company is yet. We just know that we have a contract with them.

So now that the Petroleum Industry Act (PIA) has been made law, how would you evaluate the upstream industry year-on-year?

We don’t know because we tried to get one of the marginal fields and we were bounced.

You tried as Matpatson?

Yes with a joint venture. We were bounced.

Did the authorities give you a reason why they bounced you from the bid round?

Would you ever know? With all the stupid things that happened then, we weren’t even interested at some point anymore because even the DPR director was asking for all kinds of stupid things and those things don’t go well with us.

Congratulations on delivering two wells back-to-back on Ebendo field. There was so much excitement…

We drilled one exploration and one appraisal/development well back-to-back; all on turnkey, for Energia Petroleum in Oil Mining Lease (OML 56).

The idea for contracting well drilling on a turnkey basis is not totally new in the industry, but if you remember, the operator provided everything apart from the actual making of the hole. However, we have gone beyond that, we drill the well and we provide everything. We also provide other services like open-hole logging, for which we make arrangement with other contractors. Basically, the client gives us the coordinates, we design the well and they agree with the design, we also write the programme and they agree with the programme and then we go to execute.

You are their drilling department in a sense.

Nigerian (E&P) Independents didn’t actually know that you don’t start planning a well when the rig is around. Most of the time they want to drill there are no equipment available. This spurred us to include procurement of drilling equipment to what we serve.

Yes and they only have somebody that oversees what we are doing to ensure that it is in line with what we have agreed on. The job opportunity came when we say an Energia tender for a rig in 2022 and we approached them and said why don’t you just give us this job to do and we’d provide all the services. We did all the negotiations and they asked if we had everything and we said yes, they could come visit our warehouse here in Lagos. If they wanted to see some of the completion accessories, then they could come to our warehouse in Port 

Harcourt. Although we did two wells in this project, we have the capacity to do five wells back-to-back.  if we get a contract today, we don’t need to order anything. We have tubing, we have casing accessories, we have well heads and we have completion accessories all in our warehouse in Port Harcourt. We also have a pipe yard here in Lagos because at a point, it was actually easy to move stuff from here to the Warri zone rather than go from Port Harcourt because of the bad road. We still have pipes for about four wells here and five in Port Harcourt, tubing and casing…

You carried out e-logging on the wells too…and did the completion job?

Yes, we bring in top service companies, supervised by ranking Subject Matter Experts, for the e-logging and we pay them for the service. We actually have a contract with them for such services. But we complete the wells …

It is full oil field service that you do then.

Totally correct. Everything is on you; the risk is on you and the benefit is on you as the turnkey contractor. So that is like transferring the entire risk to you and you accept that. If you do your job very well and you have competent people, you are probably not taking too much risk and that is the difference between us and others.


Activists Lose the Battle to Halt Uganda’s Oilfield Development

By Foluso Ogunsan, in Lagos

“This decision does not rule in favor of TOTAL either, as the Court did not rule on the core issue, which is whether or not the company has fulfilled its duty of care”.

The Paris Civil Court has dismissed the case by a concert of environmentalist groups, seeking to halt cluster development of several oil fields in Uganda and truncate the proposed installation of a long-heated pipeline from Uganda to the Tanzanian coast

“The court issued a summary judgment (1) following a legal action brought by Friends of the Earth France, Survie and four Ugandan civil society organizations (AFIEGO, CRED, NAPE/Friends of the Earth Uganda and NAVODA) against French oil giant TOTALEnergies, regarding its oil mega-projects (Tilenga and EACOP) in Uganda and Tanzania”, a group known as disclosed in a statement.

“After more than three years and a lengthy procedural battle, the interim relief judges dismissed the case on controversial procedural grounds. The plaintiffs strongly deplore this decision and are consulting with affected communities to determine the appropriate next steps”, bitterly exclaimed.

The statement says that “the verdict was long awaited by civil society, as it was the very first case based on the French law on the duty of vigilance of transnational corporations”.

It contended, however that “the judges did not rule on the core elements of the case, namely TOTAL’s serious failures to meet its duty of vigilance obligations to identify and properly prevent the risks of human rights violations and environmental damage associated with its Tilenga and EACOP projects in Uganda and Tanzania.

“The Paris Court – ruling in summary proceedings – considered that the CSOs’ legal action could not be admitted because their current claims were “substantially different from the claims” made in the initial formal notice sent to the defendant.

“The CSOs contest the assertion that they have substantially modified their claims, stating that they have only clarified their requests and arguments while providing more than 200 documents. The CSOs explain that the amount of evidence provided is proportionate to the issues at stake and necessary to update their complaint due to the prolonged procedural battle initiated by Total in 2019.

“Given the social and environmental urgency in Uganda and Tanzania, the six CSOs had chosen to bring the case before the interim relief judge (“juge des référés”) in 2019 in the hopes of obtaining a swift decision.

“However, a lengthy procedural battle ensued, ultimately leading to the involvement of the French Supreme Court (i.e., France’s highest court for civil matters).

“The judgment also states that the CSOs’ claims exceed the interim relief judge’s competence and should be “be examined in depth” by a civil judge following a regular procedure on the merits.

“However, this decision does not rule in favor of TOTAL either, as the Court did not rule on the core issue, which is whether or not the company has fulfilled its duty of care”.



A Fading Colonial Power…A Desperate Last Grasp at Cheap Oil

By Paul Kenyon

DATELINE EDJELEH, ALGERIA, DECEMBER 1955-The history books will always record Oloibiri as the winner of Africa’s oil race, but a quiet discovery of huge commercial value had in fact been made six months earlier. The reason it is rarely mentioned, however, is because it happened in the middle of an African war zone.

The scorched village of Edjeleh lay on a plain of grit and gravel where sandstorms sometimes a mile high blew in from the Sahara, smothering the sun for days on end. Although the village was close to some promising Libyan concessions, the oil companies were never much interested in Edjeleh itself. A twitch of the cartographer’s pen had left it on the other side of the border, not in Western-friendly Libya but in Algeria.

The country was a French possession, but rebellion had exploded in 1954, and had become a fierce war of independence characterized by massacres and torture on both sides. The main reason Paris doggedly clung on while the death toll soared was the possibility of discovering gas and oil. Algeria was the French empire’s best hope. As fighting raged in the more populous regions on the coast, a French oil consortium was able, in 1955, to move unhindered into the sparsely populated southern desert. Protected by an armed unit, the exploration team managed to wheel drilling equipment to the edges of Edjeleh, almost in sight of the Libyan concessions on the other side of the border. Canvas tents were erected, and a 100-foot rig winched into place. It looked like a tower made from Meccano, but its drill penetrated hundreds of metres through solid rock. After several weeks, it broke through an ancient seal, sending a column of hot oil shooting into the sky. The French had, technically, won the race. But how could they make it pay? There was no chance of building a pipeline while the war was going on. Neither were they prepared to give it up to the Algerians.

France quickly realized that all it really required of Algeria was the empty southern desert quarter. The populated coastal region was worth nothing, though it contained a million pieds-noirs, non- Muslim settlers of European origin. Paris came up with idea of dividing the country, splitting it between a self-governing north and a French-governed south. There was no point in trying to disguise their motives. The French began to turn on the charm. If only the Algerians would trust them, they would extract the oil and share it fairly with the impoverished desert tribes. The Algerians chose not to. It seemed to them like this was a fading colonial power – France had already lost its Indo-Chinese colonies after a disastrous war – making a desperate last grasp at cheap oil. The war dragged on for eight years, putting Edjeleh out of play.

But what about the corresponding piece of land over the border? It was possible they could drill into the same geological structure from the Libyan side.

Oil companies stampeded to pay court to King Idris. They purchased forty-five concessions in just two months, and a spree of urgent drilling began. The borderlands around Edjeleh yielded nothing of value, and the whole circus departed as quickly as it had arrived. The next destination was Libya’s Sirte Basin, where Esso, the most prolific of drillers, was about to become involved in one of the oil industry’s luckiest-ever steals, a discovery that would make Libya the hottest property in Africa.

There was a vacant strip of land in the scorched moonscape of the Sirte Basin. It lay between two concessions, and remained unclaimed because it seemed to have no potential. On one side was Esso, on the other, Mobil. The Libyans were unhappy about dead acreage in (the middle of their quilt-work of expensive desert. They offered it to Mobil, but Mobil said no. Esso was minded to do the same, but the Libyans badgered the company until it agreed to take the concession. Esso called in its seismic team to carry out a quick survey of the neglected plot.

When the first data began arriving at their tented base in the desert, They thought it must be a mistake. The figures seemed to indicate that, right beneath their feet, was an oilfield of spectacular proportions.  They quietly rolled in the rig and began drilling. It was the spring of 1959. A mile beneath the Libyan desert, Esso hit the jackpot.

It was a staggering find. There were 2Billion barrels of oil down there, with several interconnecting reservoirs that promised more. It became known as the Zelten Field and heralded an unseemly Libyan oil rush.

Excerpted from Dictatorland: The Men Who Stole Africa, first published in the UK in 2018 by Head of Zeus Ltd.



BP Hands Over “Statistical Review”, the Bible of the Fossil Fuels Industry, to EI

The Energy Institute (EI) is about to become the new custodian of the Statistical Review of World Energy, the longstanding, free-to-access data source of the global energy industry.

But bp, the British Oil Major, will remain key contributor, including participation in new advisory board

EI is the chartered professional membership body for people who work in energy.

KPMG and Kearney will become EI’s Partners for the Statistical Review.

Published for more than seventy years by bp, the annual publication is the most comprehensive, objective and timely collection and analysis of global energy production, consumption and emission data. It is completely free for users to access.

It has been published by bp since 1952 and widely known as bp Statistical Review of World Energy

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Azule Energy Awards Subsea Contract for Angola’s Expanded “Agogo” Oilfield Project

Azule Energy, the incorporated joint venture combining bp and ENI’s Angolan assets, has awarded a large subsea contract for the Agogo oilfield, in the country’s deepwater.

The contract is for an extension of an ongoing greenfield project in Block 15/06, which began with 20,000Barrels of Oil Per Day in 2020, produced as a tie into an existing FPSO on the block.

The second phase of the Agogo project, to monetise crude oil accumulation stored in reservoirs in 1,700 metres of water, calls for an FPSO on its own, which will deliver up to 120,000Barrels of Oil Per Day. First oil is expected in 2026.

The scope of work for the subsea contract, awarded to Baker Hughes, includes 23 standard subsea trees, 11 Aptara manifolds, SemStar5 fiber optic controls and the related system scope of supply, the oil service giant says in a statement

Baker Hughes will also provide services and aftermarket support for the Agogo integrated west hub subsea production system.

A significant portion of the equipment will be manufactured, assembled and tested in Angola, leveraging Baker Hughes’ local facilities and workforce.

“Our local manufacturing capabilities, deepwater development equipment and innovative subsea control system technology enable us to provide exceptional support to Azule Energy in their efforts to increase oil production in Angola,” said Maria Claudia Borras, executive vice president of Oilfield Services and Equipment at Baker Hughes.”

Industrial Park Will Provide Gas & Power: A Solar Manufacturing Plant Is in the Pipeline

CHIKEZIE NWOSU will retire as Managing Director/Chief Executive Officer, Waltersmith Petroman in the next three months. Which makes this second part of  Africa Oil+Gas Report’s  interview with him a valedictory feature. He talks about the company’s upstream business; its asset in Equatorial Guinea, as well as host community, human capacity development and “the future” issues, including the planned investment in renewables.

Waltersmith is an influential player in the African Exploration & Production sector. EXCERPTS by Akpelu Paul Kelechi….

Waltersmith dropped its acquisition in Uganda and later took up assets in Equatorial Guinea. What’s the update on the award?

In 2019 we bid with many other international companies for the EG-Ronda 2019. We put in the most competitive bid for Block EG 23, which is an offshore block roughly about 70 metres of water depth and with significant oil and gas reserves. There are discoveries there, they just have never been developed to be put in production, but they’ve been tested so these are not exploration type blocks. We negotiated a production sharing contract (PSC) with the Government, and we have signed off on our own-in February 2020- and they told us it was going to go through their legal process. Unfortunately, both COVID and some internal processes within Equatorial Guinea meant that they have not yet signed. Now at the launching of the NNPC Limited, the (then) Minister for Mines and Hydrocarbons honorable Gabriel Obiang Lima was there and we again reminded him of the fact that we were still anxiously waiting. And they actually sent us a letter indicating that we are still on track and that once they go to the processes, they would sign the PSC and return it to us. We intend to set up an office, which would be our first International office, in Equatorial Guinea.

So, you see, these things take time. We earlier talked about negotiation with the Nigerian government for  Assa and OML 20 taking about four and a half years. Now we are talking about Equatorial Guinea having taken three years or there about, and we’re still there.

Did you participate in this just completed 2020 marginal field bid round?

Yes we did.

Did you get any field?

No we didn’t.

You want to tell us your story behind it?

There is no story behind it. We put in what we think was one of the best technical bids as we usually do and we couldn’t have won block EG 23 in Equatorial Guinea against other international companies if we didn’t know what we’re doing, yeah? We put in the best Technical and Commercial bid that we thought there was and we’re not going to pay anybody any ridiculous signature bonuses because for us, the value from royalties and taxes to the Nigerian government for early development, if you don’t hamper people’s development through paying huge signature bonuses, is much more than any upfront signature bonus. I can almost tell you that in a field where you have about let’s say 20Million barrels of Reserves, even if you do a conservative $50 per barrel, if you do your calculations well, that’s a significant revenue. And then from there, you pay a significant amount up front of the revenue if you manage to sell it for royalty. Then you take away your costs; we are a very cost-efficient company and then you pay taxes which are significant as well. Those monies cumulated together are much more than any signature bonus. But if you hamper those assets with a huge signature bonus, then those companies will pay a signature bonus but will be unable to develop the field very quickly. Which means that the federal government will lose early revenue from the field. The logical thing to do is bring down the signature bonuses and go to people who are technically and commercially proficient and have the funding to quickly develop and deliver these Fields. That’s what we thought we were. That’s what they thought we weren’t.

Waltersmith now has three arms, your upstream arm, midstream arm and your downstream arm. Is there any point where all these arms coalesce in your host Community relationships?  Or are they separate?

We have to deal with the different companies at arm’s length because they have different boards. But all the energy components report in to me and we keep our transactions at arm’s length. The refinery pays the commercial rate for the oil coming from the upstream part of the business. The gas-to-power pays for gas at the commercial rate and then delivers the power at a commercial rate to the refinery and flow station at this moment and we will continue to do that. How do we deal with the communities?

Whatever China has as a competitive advantage, Nigeria can provide it as well. We started working with some parties to see whether we can start solar PV manufacturing in the industrial park

At the moment, we have Global Memorandum of Understanding (GMoUs) tailored towards Waltersmith as a group not as individual companies. When we invested in the refinery, we adjusted the value of our GMoU along the principles we agreed with communities that for any new projects of XX size, we’re going to increase the GMoU funding by a certain amount of money and that’s what we keep doing. With the refinery we increased it, with the gas business that will also happen. In terms of what we do in the communities and what we’re also trying to change. Human Capital Development HCD is one of the most critical ones for me because it’s not about just building hospitals or building schools because everybody does that. The quality has to be right and then putting utilities in place, like water, electricity is still a challenge and we’re trying to address it together with the other companies in the same operational area and providing good roads. We want to provide good paying jobs and so we started a technical skills acquisition programme. Now using our HCD part of our project, we identified 200 graduates from the community who had graduated but were not industry ready. We have to prepare them for the industry. From the first batch, there were 50 applicants but only 47 attended. And out of that 47 we have hired 12 formally as staff of Waltersmith into our operations, both the refinery and the flow station and three more are there on a contract basis. So, 15 altogether. We expect that as our project grows, for example our trailer park, we want to hire a few more people from that programme into the trailer park and we also have certified them in such a way that other companies there can also look to hiring them for some of their operations. We’re trying to encourage all our other counterpart companies there to look at these communities and hire from them because the disadvantage these communities have is the fact that, if you open up the competition for those kind of positions to everybody in the country or even in the state, the communities will probably lose out. Okay, so we have a different programme that is for all Nigerians and that is our Graduate Intensive Programme and then we have a specific programme for the communities which is our technical skills, acquisition programme.

It is not about these artisanal skills, like welding and all those things. It’s about operations, maintenance and those kind of skill sets that we are hiring graduates into our operations for. And that to a large extent has brought a lot of better relationship between ourselves and the youth in the community.  And as we expand into Assa field, we will continue with the same thing. We’re going to run the programme in 2023 as well with another batch of about 50.

And we’re going to deploy some of these people who we are training but who we cannot hire directly, into being the supervisors of the project we deliver. Because sometimes we are delivering projects in the communities and the supervision is poor, but if they have their own graduates who have come through our training programme and understand projects, civil engineering work projects and things like that, they can supervise Market store buildings, Hospital buildings and the like and hopefully going forward, as we build more hospitals and schools, we can then start training teachers, and medical personnel who would man some of these facilities as well. So human capital development is an integral part and a critical part of our delivering projects to the community.

Now things are going to change a little bit with the host community regulations. And Waltersmith is one of the first to try and get its entire documents ready and submitted to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for that purpose. We’ve already started identifying some of the people that will from the Committees from the community itself so that will transit from the GMoUs into this, host Community bill.

In terms of spend, are you necessarily spending more or less? You know, you can have this very robust programme but in terms of spend, it can be much lower than what the Host Community Fund in the Petroleum Industry Act mandates you to spend.

I think you said you know me by reputation.

Oh, yes I do.

Then you know that my business ethics are right at the top. So let me explain coming from Shell. Sometimes at Shell, 2% of the CAPEX, before the Nigerian Content started, 2% of the CAPEX of projects was supposed to be allocated to community projects. Any capital project that I was involved in, 2% was spent. Or more. Because sometimes the communities’ needs did not amount to the value of the 2%, I have to go and make the case that our rules internally are 2% and so let us go and ask them for more projects. The same thing here; I have had conversations internally where it has been pointed out to me that you can go and negotiate something lower to be spent. I don’t even know how that is done and I tell them, please do not do that. It’s not while I’m here. While I’m here, for our capital projects, we submit them to (National Content Development Monitoring Board(NCDMB), they calculate what the 3% is and that is what we use for human capital development. So it can be that or more not less.


Oh later on it will become NUPRC. But at this point, for our human capital development, I don’t know how it’s going to transit under the PIA, the human capital development is 3% of the CAPEX of the projects; it is different from the Host Community Fund. The Host Community Fund is under the PIA at this time and it is 3% of your operating expenditure of the previous year.

You did say you trained 50 people?

Chike Nwosu: We brought in 50 but 47 showed up for the training.

AOGR: Was it last year?

Chike Nwosu: It was last year, yes.

AOGR: Okay, you did mention 200.

Chike Nwosu: We identified 200 and we are going through the entire 200. This is the first batch and we are doing it phase by phase. Because if you train 200 people, then you have to bring in a significant portion of that 200 and we have to tie it in with the progress of our projects. So the next batch will be targeted at the refinery expansion. Yeah, and the next batch will be targeted at the condensate expansion while the next batch will be targeted at the industrial park.

Because we also want to provide for the people that will come into the industrial park, the technical, operational, whatever competency, even supports competencies, administrative competence, that are required for them to run their factory, will be from the people in the community first.

Let’s examine this large elephant in the room. Waltersmith has not exported a drop of crude, out of the country since March 2022. The Trans Niger Pipeline, its evacuation route, a has been down for that long. There are people who believe that much of the stolen crude is actually being exported.

I believe that absolutely.

You don’t think that those artisanal refineries-there’s quite a large number of them-are largely responsible…

I’m looking at the logic going backwards because I’ve run a refinery. If for a 5,000 barrels per day refinery, 130,000 litre truck is less than 200 barrels, about 188 barrels. And it you take the dead stock away you would have let’s say 180 barrels. A 45,000 litre truck is less than 280 barrels so you can imagine that for a 5,000 barrel refinery, I need about 30 trucks. Now the crude that is supposedly stolen for illegal refining on the TNP is in excess of 150,000 barrels by the time crude oil theft got to 90%. That is 30 times the number of trucks that I need which is about 750 trucks. I don’t think you could have 750 trucks a day plying that axis without anybody seeing them. It is near impossible to imagine that scale of trucking and logistics happening and that was why I said illegal refineries do not go beyond 40-50,000 barrels per day. The rest of it is a major cartel; I borrow the words of one of my colleagues, I think it is the MD of ExxonMobil, who said that it is an international criminal cartel that are hugely moving away our crude in big tanks not the artisanal or what they call illegal refineries.

The question then is, is it that, once you have a significant volume of theft, you just basically stop producing, so that when the entire production in the country turns out to be just 1.2 million, it is not so much that 1.3Million has been stolen? Or that companies just scale back because you know, so much is being stolen?

There’s been a massive reduction from highs of over$ 20Billion investment per annum to as low as $6 Billion investment in the oil and gas industry. That has the most significant impact on our overall production

Let me tell you about to perspectives about OPEC’s quota and how low it has come. I think Austin Avuru and Osten Olorunshola have shown some work that has been done to indicate that even without crude thefts, because of the lack of investment, you know, these assets will decline. And the decline on the average is 10 to 15% per annum. And the only way you can actually increase production is through new investments, new developments, new production optimization, enhanced oil recovery and things like that. Now Austin, the two Austins, have shown that over the period of the last seven to ten years, I think more likely seven years, there’s been a massive reduction from highs of over 20Billion dollars investment per annum to as low as six Billion dollars investment in the oil and gas industry. That has the most significant impact on our overall production and you know, our OPEC production. So let nobody go away with the thought that it is because of crude thefts that we have gone from two point something Million barrels to 1.2Million. No; investments have not been there to sustain that level of production and to grow it because decline will happen. What you can do is go to 2Million barrels seven years ago and do a decline at 10 to 15 percent and you’ll see the impact of that. Okay? And they even showed the direct correlation between the trending down of Investments and the trending down of production.

Now, however, it doesn’t mean that crude theft is not a problem. It is a significant problem on the onshore assets and he talked about the figures and these are NUPRC’s/DPR figures.

The Waltermith Industrial Park will provide energy products to companies around Ibigwe. That’s the plan. These products are essentially gas and power. Before I ask you where you see Waltersmith in the next five years, there was a point you mentioned at the Nigerian International Energy Summit (NIES) about solar assembly. That was a data point that just leapt at me. I mean, solar, what’s that all about?

There’s something else in our blueprint beyond solar. I’ve got an intern here working on Blue Hydrogen. We recognize that there’s going to be a transition and that the transition will happen through gas as the transition fuel. Our gas business will start dominating the Upstream and we’re looking at the portfolio where that happens and Equatorial Guinea EG 23 is an example of where there’s a lot more in terms of gas reserves in BOE terms and then there’s oil. OML 20 has a lot of gas reserves as well and so we’ve continued to look at those assets. OML 21 as well, where you have the ANOH gas plant. If we start getting gas from there, the total quantum of energy that we are using for consumption will go more towards gas. However, we have to look at the fact that even gas has significant greenhouse gas emissions. We have to start replacing some of the gas to power and fossil fuels to power through refinery into more renewable sources.

That is why we started studying solar energy and these solar panels and we discovered that most of the manufacturing of photovoltaic cells, solar PV cells, were done in China. And we believe that whatever China has as a competitive advantage in Nigeria can provide it as well. We started working with some parties in the United States to see whether we can start solar PV manufacturing in the industrial park.

So part of the industrial park will have solar PV manufacturing so that slowly we can transit our gas business into a balance of gas and solar. Now we’ve also started doing some study communities solar assessments, so the power we want to deliver to the community could be a mix of solar and gas. But we’ve done the enumeration for solar first of all and we’ll take a look later on to see what it possibly means for gas.

But even in our facilities, with street light and things like that, we’ve started going away from using diesel power generators to using solar panels for electrification. So if you go to a facility, all the street lights are solar. So we’re testing this concepts as we move along because we know the transition will happen soon.


You Report Oil Spillage on Nigerian TV, You Go to Jail

By Vincent Maduka

Within three months of my director-generalship, I had come face-to-face with an arm of the Federal Military Government, the state security apparatus, in an experience which, as turned out, I was totally incompetent to manage.

I had received a radio-telephone message from the General Manager of NTV, Port Harcourt, that a news crew from that station had been arrested by security forces and detained at the Alagbon Close- a place reputed for its legends of uncompromising officers and dungeon cells. I had spent my entire childhood and adolescent life in Lagos; nevertheless, I required considerable help to find the infamous Alagbon Close in Ikoyi.

I was a senior official of the Federal Republic of Nigeria, after all, on an official business, and I should have no problem getting the crew back to Port Harcourt, and in no time.

I explained to the security officers at the front desk (“counter”) that I was Director-General (and they did not appear to be impressed), and what my mission was. After they interrogated me for some time, they produced Mr. Ida Wilcox from somewhere. He was looking very miserable, stripped to only his underpants, and I could not but express shock at the sight.

As Wilcox explained to me there, the NTA Port Harcourt news crew had filmed and broadcasted, in the news, a story of an oil spillage that occurred in the creeks somewhere in Rivers State.

The security personnel considered the news story to have State implications, so, they came to the station in Port Harcourt and arrested the reporter and the cameraman who did the filming. When they asked the cameraman who his boss was, and he pointed out Wilcox, Wilcox was also arrested. Now, Wilcox was not a news personnel, not a journalist, but all cameramen and camera operations were assioned by him as Head of Programmes (but not News). I remonstrated with the security operatives; first, for stripping the gentleman as if he was some dangerous criminal, then secondly, as I pointed out, his was a clear case of mistaken identity.

He had little or nothing to do with the story, beyond handing out the cameras and the camera operators to the reporter.

I had noticed some anger, arrogance, and indignation in the officers, all along, but after I protested what I considered unnecessarv humiliation of a senior professional at NTA, the officers warned that they would detain me and strip me too, of my clothes in the same way for daring to interfere in their work. They ordered that I leave immediately. Then a senior officer appeared and I was rather pleased over his propitious entry, as I hoped to make more sense with him. But he only surprised me further with his fiercer threats. So, I left Alagbon Close and made for the Office of the Secretary to the Federal Military Government, SFMG.

Mallam Liman Ciroma was a very decent, soft-spoken, seasoned bureaucrat, but I did not receive an automatic sympathy there, either.

Rather, he admonished me to keep well out of the way from security matters and operatives, as the people there treated no one with respect, as I had iust found out. I was to report such cases to his office in future and never attempt to deal with these people by myself. Oil spillage had international dimensions and NTA was to take great care in reporting it (if, at all, we must). Oil spillage only brought Nigeria a bad name and so on, and so on! Well, it certainly brought NTA and NIV Port Harcourt bad luck this time. He asked me to leave the matter with him and, indeed, Wilcox and his team were released that dav. I do not recall if we ever reported another case of oil spillage during my tenure: I had asked that I be informed before any such broadcasts were made in the future.

Excerpted from REEL LIFE: My Years Managing Public Service Television, by Vincent Maduka, First Director-General, Nigerian Television Authority NTA (1977-1983, 1984-1986). Published in 2022 by SSQ Publishing.

“The Onshore Terminal We’re Building is Like, Another Bonny”-GEIL

By Foluso Ogunsan

Green Energy International (GEIL) moved on to site for the construction of an onshore terminal and export infrastructure, the first by any indigenous E& P company in Nigeria.

The facility will have the capacity to hold 750,000 Barrels of Oil at any time. This is expandable to 3Million barrels of crude.

It is the second phase of oil field development, a project that the company embarked on a few weeks after completing the first phase.

The first phase ended with the completion and hook up of two new wells the company drilled on the Otakikpo field, which has raised production capacity from 5,000Barrels of Oil Per Day (5,000BOPD) to over 12,000BOPD.

“The team has worked extremely hard this year to complete the terminal project design in-house and negotiate more favorable terms with service providers to reduce the overall cost of the project considerably”, says Professor Anthony Adegbulugbe, GEIL’s Chief Executive Officer.

“The development of the onshore terminal and export infrastructure is in line with our corporate strategy of developing and installing an efficient evacuation/export system at Otakikpo, thus reducing overall OPEX dollar per barrel ($/bbl). We also plan to make the Otakikpo field a crude processing and export hub by providing access to fit-for-purpose evacuation and export infrastructure for the several stranded fields in the Eastern Niger Delta area. There are over 20 stranded fields in close proximity to the terminal that will benefit from it.”

Kayode Adegbulugbe, GEIL’s Chief Operating Officer, weighs in: “What we are building (with CAKASA as our contractor) here is a new Bonny Terminal”, adding, “It’s not just for us, it is for the energy security of the country …it took nine months for the design. And our staff worked with CAKASA to make sure that the cost is the cheapest in the world.

Mr. Adegbulugbe references (Shell Plc’s) Bonny Terminal in his speech to give a sense of the scope of the budding GEIL terminal. The Bonny Terminal is the biggest in Africa with a capacity to process and export 1.25Million Barrels of Oil Per Day. It is situated on Bonny Island, 48 kilometres southeast of Port Harcourt, a port town on the edge of the Atlantic in eastern Nigeria.

“In the terminal we have accommodation, administrative area for 120 personnel, office for 120 personnel, and it is expandable. We’re building 23kilometres of pipeline into the ocean, because at the depth, we’ll be at about 25kilometres , that’s the depth at which the export tankers can berth and load. The COO explains that ‘the Green Energy 2026 Story’ as he calls it, “may not have been possible without the impeccable efforts of yet another Nigerian organisation, Fidelity Bank, which structured a loan of $250Million for two phases of our project in record time of less than eight months. This is a most unprecedented feat”.


Son of Rainmaker: An Open Letter to Wael Sawan, Shell CEO

By Gerard Kreeft

 Prelude: A (possible) scenario of succession at the Shell top

 In the summer of 2021, the Shell Board decided that the then CEO Ben van Beurden had to go. The Shell share was on a downward spiral and the transition message proved stale. What to do? The Board decided that Wael Sawan, then Head of Upstream, would become the Prince in Waiting. In Oct 2021, he was appointed Head of Integrated Gas, replacing Maarten Wetselaar who, at the time, was Head of Integrated Gas and seen as the logical heir apparent of Ben van Beurden. Wetselaar resigned and Sawan became Head of Integrated Gas and then CEO.

Dear Mr. Sawan:

I would like to extend my congratulations on your appointment as Shell’s new CEO. As a fellow Canadian its always good to see a fellow countryman endowed with such a prestigious position. Yet with such a position comes much responsibility, in particular shaping the vision for Shell for much of this century; preparing Shell for a brave new energy world. There are some tough choices to make. At best, radical re-alignments and at worst, simply dissolving the company and giving shareholders an alternative  option on how to invest their savings.

Shell’s Current Dilemma

Shell has just announced its highest results of the last 115 years: $40Billion in annual adjusted profit for 2022. Yet investor interest has been muted at best. Shell’s share price has only shown a downward spiral of 17% in the 2018-2022 period. The Dow Jones Industrial Index in the same period: January 2018-December 2022, rose 31%: increasing from 25,295 to 33,147.


Table 1: Stock market prices of majors 2018-2022(NYSE)


Year Repsol       BP       Shell ENI TOTAL


Chevron ExxonMobil Equinor
2018 $17 $43 $69 $35 $58 $128 $87 $23
2022 $16 $35 $57 $29 $62 $179 $110 $36

Note: Values based on January 2018 and December 2022


Results for all of the majors was as follows:

Repsol down 5%

BP down 19%

Shell down 17%

Eni down 17%

TOTALEnergies up 7%

Chevron up 39%

ExxonMobil up 26%

Equinor up 57%.

 Also, Shell’s dividend yield is uninspiring: 3.47% as of February 2023. This is much in line with Chevron’s dividend yield of 3.56%, BP’s 3.89% and ExxonMobil’s dividend yield of 3.25%. Yet their dividend yields pale compared to the Green Energy Alliance:

Iberdrola  4.19%

Enel  7.46%

Engie  6.49%

Equinor  8.56%

Ørsted only has a dividend yield of 2.3% but its share price in December 2022 was $93; five years earlier in 10 June 2016 it was $37.


Finally, there is the matter of Shell’s Powering Progress, a three-step plan designed to transform and fully prepare the company for the energy transition:

  1. “Growth pillar includes our service stations, fuels for business customers, power, hydrogen, biofuels, charging for electric vehicles, nature-based solutions, and carbon capture and storage. It focuses on working with our customers to accelerate the transition to net-zero emissions.”
  2. “Transition pillar comprises our Integrated Gas, and our Chemicals and Products businesses, and produces sustainable cash flow.”
  3. “Upstream pillar delivers the cash and returns needed to fund our shareholder distributions and the transformation of our company, by providing vital supplies of oil and natural gas.”

Of particular importance is the third pillar which in Shell’s vision will provide the cash flow to fund its transition and growth. Is this really so? The Shell share price and dividend yield demonstrate that there is little trust in this vision. Leaning and depending on its upstream portfolio to lead the company to a bright new green future is perhaps central to Shell’s dilemma. The share price and dividend yield simply demonstrate that upstream oil and gas is viewed as a sunset industry, perhaps a distant memory of the integrated oil companies of 50 years ago. This pillar is not one to build a green future on.

Shell’s vision is also a testimony demonstrating how little the Green Alliance—Enel, Engie, Iberdrola, and Ørsted–is understood and viewed. What has set these companies apart is that they have created a huge competitive advantage which will be hard to challenge for newcomers. They have moved well beyond simply dabbling in green energy. These companies have become specialists and now moving on to the next level: creating a digital platform on which value does not reside in owning resources but rather in managing data-driven ecosystems. The Green Alliance has essentially borrowed a chapter from Uber, which does not own taxis, or, which does not own hotels. They create a digital platform on which value does not reside in owning resources but rather in managing data-driven ecosystems.  Some members of the Green Alliance have established new goals, such as CO2 neutrality by 2040 instead of 2050 to which Shell is pledged.

 Enel: committed to achieving CO2 neutrality by 2040 instead of 2050, achieving 75% of electricity from renewables and 80% digitalization of its customers on the grid by 2025. and having an installed generating capacity of 75GW by 2050.

Engie: pledged to reduce to CO2 neutrality by 2045, 45% of investments is focused on renewables and by 2030 will have 80GW of installed generating capacity.

Iberdrola: in the period 2023-2025 the company will invest $50 billion and achieve net zero for Scope 1, 2 and 3 before 2040. By 2030 the company will have installed capacity of 100GW, valued at $70 billion.

Note: Essentially, scopes 1 and 2 are those emissions that are owned or controlled by a company, whereas scope 3 emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it.

 Ørsted: the Danish wind energy pioneer, continues to set new records. Ørsted share price in December 2022 was $93; five years earlier in 10 June 2016 it was $37. By 2030 the company’s goal is to have an installed capacity of 50GW. Ørsted is also involved with the building of two energy islands– Bornholm and North Sea– which will deliver 10GW of power.

How will shareholders react to these companies in 2023? To date there is good news and bad news for green energy companies.

Table 2: Stock market prices of new energy companies 2018-2022

Year Enel Engie Iberdrola Ørsted
2018 $5 $16 $7 $49
2022 $5 $14 $12 $93

 Enel, the Italian power company has seen its share price remain flat. Engie, the large French energy giant has seen its share price decrease by 12.5%. Iberdrola, the Spanish power company has had an increase of 71% and Ørsted, the Danish power company, has seen its stock soar by 90%.

Annual capital expenditures in the near term, according to Shell, could be in the range of $23-$27Billion. The breakdown of Shell’s capex is not given but all indications are that as in the past the lion’s share will go to its upstream and integrated gas and chemicals. Renewables share is unknown.

 Re-inventing Shell

Shell is rebranding itself:

Integrated Gas+ upstream becomes Integrated Gas and Upstream Directorate;

Downstream + Renewables and Energy Solutions becomes Downstream & Renewables Directorate.

Shell indicated that it will reduce its upstream division to nine core hubs—Permian, the Gulf of Mexico, United Kingdom, Kazakhstan, Nigeria, Oman, Malaysia, Brunei and Brazil– and it will do no frontier exploration after 2025. If the rush to the global exploration exit continues to pick up speed, Shell may well have to reconsider its(new)upstream strategy, perhaps going so far as to spin off the upstream division as a separate entity or do a joint venture with other partners.

Shell’s integrated gas division could prove to be its star asset. For example, Wood Mackenzie’s AET-2 Scenario (Accelerated Energy Transition Scenario) predicts that in the following decades, market power will shift from OPEC to the giant gas producers, such as the USA, Russia, and Qatar.

According to AET-2, the “Era of carbon-neutral gas is born. AET-2 would require $300Billion to support Liquified Natural Gas growth globally and $700 billion to support dry gas development in North America.”  Given that Shell is the global leader of LNG (liquid natural gas) this is certainly a sweet sound for Shell’s LNG business.

Downstream could also prove to be a key energy transition asset. Shell’s REFHYNE Project, the Rhineland Refinery in Germany, could well become the precedent that the company needs to ensure it becomes the leading supplier of green hydrogen, where hydrogen production is powered by renewable energy for industrial and transport customers. Could the REFHYNE Project be duplicated many times over to ensure that green technology becomes a key ingredient in the energy transition?

Pay attention to Shell’s Pernis refinery in the Netherlands. One of the largest in Europe, Pernis refinery has a 400,000 b/d capacity and a complexity enabling the processing of many different crude types. The site is already deeply integrated with chemicals production and is being transformed into an integrated energy and chemicals park that will deliver low-carbon products.

A key remaining issue is how Shell can reallocate its resources—both financial and technical—and maintain an image of being in control of its energy transition scenarios. Upstream with its huge exploration and development costs is perhaps Shell’s largest impediment to becoming a greener company. Do not be surprised to see Shell’s upstream division find a new home, thus freeing up funding needed for Shell’s energy transition. Shell’s Management must very quickly devise a road map demonstrating how by 2030  integrated gas and downstream and renewables divisions will receive the lion’s share of Shell’s capex.

TOTALEnergies has recently announced that by 2050 the company will be on track to have 50 per cent of its energy mix in renewables + 25% in “new molecules” (green fuels). By 2030, Equinor is pledged to having more than 50% of its capex dedicated to renewables. Will Shell follow?

A final comment: Shell’s inability to convince shareholders of its added value is not so much a climate issue. It is rather the inability of the board to proclaim a clear message—be that wanting to be an oil company or an energy company.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report and is a guest contributor to IEEFA(Institute for Energy Economics and Financial Analysis) based in Cleveland, Ohio, USA. His book ‘The 10 Commandments of the Energy Transition ‘is on sale at




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