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“There is Room to Build a Few More Nigerian Independents for the Remaining Divestments”

With divestment of chunkier sizes of assets in the last 30 months, International Oil Companies are selling off far more acreages to Nigerian independents than they did at the beginning of the current era of asset divestments in 2009. ExxonMobil sold its entire shallow water subsidiary to Seplat; ENI sold all of its onshore assets to Oando; Shell sold its 18 onshore and shallow water Oil Mining Leases to Renaissance (which includes ND Western, Waltersmith, First E&P, Aradel and Petrolin). The result is that most Nigerian companies with any significant cash to spare have committed some hefty sum of money to investing in growing their reserves. Austin Avuru’s boutique investment firm, A  A Holdings, has control of over 8% of Seplat Energy, but  he thinks that a vast opportunity awaits Platform Petroleum and Pillar Oil (where he has substantial shares) in the next round of divestments.

In the second part of our C-Suite interview in his office, Avuru fields our questions, more from the perspective of a beneficial owner of some of the top performing assets operated by Nigerian independents and a keen, competitive investor in the Nigerian upstream landscape. Excerpts transcribed by Akpelu Paul Kelechi…

Africa Oil+Gas Report: How prepared is AA Holdings to take advantage of the remaining divestments by European and American oil majors from Nigeria?

Austin Avuru: Our investment in the oil and gas sector, as I said, is that we are not trying to be an operator of an oil and gas asset; we are an investor. We and Platform Petroleum (operator of Egbaoma field, 3,000Barrels of Oil Per Day (BOPD) and 30Million standard cubic feet per day (MMscf/d)) and Pillar Oil (operator of Umuseti field, 4,500BOPD), have also created a vehicle of Pillar and Platform and A.A. Holdings that can have a small stake in it where the organizations Pillar and Platform and the shareholders of Pillar and Platform can put investment equity funds into that vehicle and chase opportunities. We are doing it with some marginal fields that we are trying to develop. We are planning a road show sometime in 2024 to get us ready with the requisite partnerships that may be required and the funding that may be required; which means the backing of banks that understand this thing. We are not just sitting and waiting so that if those opportunities come around, we won’t even know what to do. If those opportunities fall on the table tomorrow, we will be very active participants and by we, I mean using that vehicle supported by Pillar and Platform as an investment vehicle; A.A. Holdings will just be an investor into that vehicle. We believe that if the right opportunities are on the table, we can create another credible independent and that is really our target.

Umutu Gas Processing Plant-‘Platform can do bigger things’

You’ve always had a low opinion of downstream oil and gas as a site of investment. Has it changed now? Will it change with the Compressed Natural Gas (CNG) about to take off in full as investment opportunity?

It is not a low opinion but it just happens that we are in the upstream side of business and we can’t do everything. We have a non-upstream subsidiary of Platform Petroleum that we created deliberately as a hedge against the vagaries of the upstream. When prices are yo-yoing and you might have a situation where you don’t have enough money to pay dividends, we thought we should have a safe haven. The Platform Petroleum downstream subsidiary has a couple of petrol stations and it is expanding from there. It also does real estate and logistics; those are the three areas it is focusing on. We are hoping that we can grow it to a point where it can make some predictable revenue away from the upstream. I don’t have a low opinion of downstream petroleum; just that what we do as Platform Petroleum and as A.A Holdings is such that we define our boundaries so that we do not do just about everything.

AOGR: What about CNG, you know it is about to take off.

In Nigeria, it is those people that do not understand a subject that discuss it the most. People are shouting CNG. At Platform Petroleum’s facility gate in Umutu, we dispense three million standard cubic feet per day (3MMscf/d) of natural gas to Power Gas and I do not know who produces more CNG than them. They take 3MMScf/d and compress it to CNG and distribute that to all their customers. We are supporting that and we as Platform Petroleum are expanding and you would remember that we bought back our LPG business from those we sold it to and we now have PNG that is owned 75% by the Platform – Newcross JV and the other 25% is owned by other investors. We have taken it almost from the doldrums into a profit-making business now. We are expanding that business and in the next two years we are going to build our own CNG station because it is just a compression station that has all those tubes.  We are going to CNG and we have been supporting a CNG plant that is located just on our gates and so, when people say CNG ….

“We can Bump Up CNG Supply: We do 30MMScf/d of gas and we give 3MMScf/d to Power Gas and the remaining 27MMscf/d we put into the pipe but if there is a demand for all of the 30MMScf/d to be compressed, of course we will do it instead of putting it into the pipe so we are ready to expand as the demand expands”.

You know we do LPG and between LPG and excess propane, we do 50 tonnes a day without people knowing and that is part of our PNG and gas business. Our midstream business in terms of gas is strong. From LPG to CNG and lean gas we put into the pipe and supply 27MMscf/d into the OB3 pipeline every day and of course, our oil and condensate. Platform Petroleum has been successful in monetizing the resources they have but the only problem they have now is resource availability. If you give Platform Petroleum a block today, they know what to do with it end-to-end and not just with the oil. They know what to do with the oil, LPG, CNG, Lean gas.

Numbers ranging from 23MMscf/d to as high as 600MMscf/d have been cited as the likely volume of CNG that will be demanded when the market takes off. What is your opinion, as a geoscientist a Petroleum engineer and businessman?

Gas is driven by the demand and not by the production so today, the CNG market remains light to medium industry. So instead of using gasoline the government wants to encourage CNG. The midstream business is profitable because we give them gas at $2.30 and they put it in those bottles and go and sell to their customers at $7. The difference is in the logistics because they have to pass through all the bad roads; there is no federal road that you can drive 30kilometres on good road so you can imagine having all those tubes of CNG on those trucks and taking them from Umutu to Agbara; that takes a toll. So you think it is a wide difference of $4 but 80% of that goes into logistics before you talk about their margins. Now, how fast will that grow into cars? It seems that everybody believes gasoline is too expensive so they want to go to CNG. It is not going to be like that because it is also a dollar based resource. I just told you that it is sold at $7 per thousand and by the time you start filling your car with CNG at that price, I haven’t really run the numbers but I don’t know if it is necessarily cheaper than petrol if it is made available prudently. I don’t know if it is cheaper but the fact that people are shouting that petrol is expensive so they should move to CNG so that they won’t pay as much, that is not the issue. People in other environs are going to CNG because it is cleaner and not because it is cheaper. I think light to medium industries will still require CNG just like the domestics and other areas in cooking will still require LPG. We, using the Platform Petroleum vehicle are ready to play in that market; we are already leading in that market not on a small scale. We are ready to expand as the demand expands. We are ready to expand to meet the demand and I mean, we do 30MMScf/d of gas and we give 3MMScf/d to Power Gas and the remaining 27MMscf/d we put into the pipe but if there is a demand for all of the 30MMScf/d to be compressed, of course we will do it instead of putting it into the pipe so we are ready to expand as the demand expands.

AAHoldings put $3Million in Decklar Resources, a Canadian company controlled by Wade Cherwaycko, who also founded Mart Resources. That money is probably wiped out. Mr Cherwayko  was until two months ago, trucking crude to modular refineries as he couldn’t still inject into Trans Niger Pipeline (TNP) because it kept being ruptured by vandals. Trucking crude is subpar, Are you going to exit that investment?

We can’t even exit now even if we wanted to. We entered almost at the bottom and that is why we are ok. I mean, we entered at about 30 cents per share and that went up to about $1.50 before it crashed back to the bottom not because they didn’t know what they were doing but because they completed all their production programme but could not evacuate it because the TNP was down. Nobody went into developing those fields so that they will be trucking 500 barrels of oil per day and that is why it is not moving the needle. But I think that now that evacuation problems are solved one way or the other, they will pick up again. We are trying to support them in one of the marginal fields they have an interest in, to see how they can put that into production. Right now in our balance sheet, that is a loss making investment but we think it can pick up later and if it doesn’t, so be it, but we are not thinking of exiting that investment but rather, we are thinking of what we can do to support them to pick up again.

What is the timeframe that you are looking at?

If the TNP is working today and they can put their 2,000 barrels a day into the TNP, it makes almost all the difference for them. Then in the Oza field, they can drill another well and make it 6,000 barrels and it makes all the difference.

Five new marginal field companies have moved rigs to locations in the last five months. All of these companies are rank outsiders. None of the two new marginal field investments in which your vehicle: AA Holdings/Pillar Oil/Platform Petroleum is involved have got up to speed in field development. Are you regretting this investment?

Pillar did not get a new marginal field so they are not developing any new marginal field. In fact, they were doing something bigger but they weren’t as successful. They actually took a whole block as technical partners and that’s the NigDel acreage.

Platform was involved in three marginal fields but they didn’t win any so they had to go to the black market and in this three marginal fields, I can tell you that they are dredging which means location preparation. All of them are not easy marginal fields; they are all in the swamp. One of them is in the shallow water, at the mouth of the Benin River in the Benin Estuary. So, the Benin Estuary, Kuri field and the Helly Creek field are the new fields Platform is currently working on. Platform is the operator on behalf of the partners in each of those three and they are working on them actively.

They were expected to be spudding between December 2023 and Q1 2024 and Kuri was the first one that they were meant to spud. Then they would drill one well and re-enter one in Helly Creek. In Benin Estuary, they will first re-enter the existing one before they drill another one so I can tell you that work is on going. We have never competed with other companies but we compete with our own work programme. We are following our work programme diligently and by God’s grace we are going to bring them into production. There is Emuoha (a  marginal field in eastern Niger Delta) that we are discussing with Deckler on how we can support them to work that field and that is a much easier one because it is onshore. Once we put all the partnership issues in place, that’s easy to drill a well and re-enter a well. If you had an onshore field, you would know what it means to deal with the swamps and then you dredge; you first need to get a rig and then deal with all these community issues. The rig that we are going to use in Helly Creek is coming from the United States  and that is one of the things that I have been saying about local content. It is much easier to beat our chest about local content but in the execution, our execution capacity right now has fallen to the lowest level. If the activity level in this industry has to pick up to that point where you can close that gap in production level, you won’t even find the rig even if all the money is on the table; that is where we are right now in terms of execution capacity.

Depthwize was the most reliable swamp rig vendor and they only had two swamp rigs and now, one has flipped over. If you are looking for a swamp rig you can’t really find it and if you are looking for a land rig, you still can’t really find it and that is why you see that the Indians brought all their swamp rigs from their country to work for them. Execution capacity is very low right now in the industry. But we are not lagging behind in execution of the marginal fields and in our own case, we didn’t win any of them. You first have to go through one and a half year of farming into somebody else’s marginal field and sort out all those other issues before you start raising the money to do the job. If we are about one year behind those ones, you can understand. We went to the black market to get those fields.

What is Platform Petroleum’s percentage equity in Kuri, Helly Creek and Benin Estuary fields?

In the Benin Estuary, we actually farmed into another party’s 40% stake and by the time you look at our economic interest there, it is probably about 20%. Our equity interest in Helly Creek is about 40% but because we are carrying everybody else, our economic interest will be about 80% until payout. Our equity interest in Kuri is 50% and economic interest would be about 80% until payout. So that’s the way it is with all of them.

If Chappal wins the bd for TOTAL’s 10% in SPDC Joint Venture, A.A. Holdings will not be in the game. What are you going to do?

My honest answer to that is that I do not know. There are issues about our participation in an equity interest in Chappal and in the fullness of time, those issues will have to be resolved one way or another. In the fullness of time the issues of our participation and equity interest in Chappal will be resolved one way or the other.

Are you more comfortable to play as Platform/Pillar?

Platform has always been there before we moved to Seplat. The only difference is that we moved to Seplat and had a 24% stake in Seplat just the same way as Aradel has 42% stake in ND-Western. The difference is that we took it to the market and it became public and then we were diluted as we went to the market and so on. That’s our story with Seplat and that is done and gone and that is why we look at Seplat as something that we have accomplished. We don’t chew our nails over Seplat and we don’t beat our chest over Seplat because we have finished it. When I moved in to try and do Chappal, people accused me of competing with Seplat but I say Seplat is just like any other operator. It just happens that we were involved in its formation and we could compete with any other operator to create another independent and I didn’t see anything that was wrong with it, provided I made the necessary disclosure which was what I did. Now, since I have retired from Seplat, it is time to ask what’s next for Platform? Is it just going to remain a marginal field producer? We think that, for the amount of work that they have done and the amount of diligence that they have shown, I think it is time to then package them and move to the next level of being a proper independent if they can. In the process, we as A.A. Holdings and Platform, invested in Pillar. So Platform has 20% of Pillar and A. A. Holdings has 20% of Pillar and in trying to move Platform to the next level, it only makes sense that there is a drag along with Pillar because Pillar is like an associate company. And Pillar is also doing its own things and doing them quite efficiently. If we combine those operating capabilities and experiences and find the funding to put them, and there are assets available, we think there is room in the combination of those two companies to grow them into a proper independent. While all of that is going on and as I said, in the fullness of time, our involvement in Chappal will be resolved one way or the other.

We don’t have too much time and I am not like Lai (Dr. Layiwola Fatona, founding CEO of Aradel) who is still as active, in his mid 70s, as he was when he was in his 40s; I believe that by 70 we will start slowing down and so, if we need to build, we need to build it in the next five years. There is room to build a few more independents. Today, if there is an asset on the table and you are building, the real issue is where are the buyers? If Seplat concludes its transaction today, they are not likely to jump in to bid for any assets tomorrow. If ND-Western concludes their own, they are not likely to jump in on any assets tomorrow. If Chappal, the upcoming one concludes one or two of the one that they are doing, it will also be difficult for them to jump in on any new asset.

That’s true, if they conclude TOTAL …

in the TOTAL deal, it came down to Platform and Chappal. In the Shell deal it came to NDWestern and Heirs Holdings and the ND Western led consortium won. Those are not the most competitive bids; if you don’t have five or six strong companies competing to win, something is wrong. As you are eliminating the successful ones, the field is getting narrower and narrower in terms of those that who have the capacity to actually come after the assets.

“We are planning a road show sometime in 2024 to ensure readiness with the requisite partnerships that may be required and the funding that may be required; which means the backing of banks that understand this thing”.

Dangote has always featured in Divestments but he never quite gets anything

Dangote is busy. Let me tell you: for someone who couldn’t even find time to pay attention to his own corporate headquarters: the building on Kingsway Road ( in Ikoyi, Lagos, Nigeria), you should know that he is busy. He has to get that refinery working.

As for Heirs Holdings, founded by Tony Elumelu, I think they have the appetite but the company was slowed down because of the evacuation problem; they borrowed money to get that asset and took production to a fairly good level that it should be coasting but they could not evacuate. They were held back for about six to seven months but I think they are back now.

This article has been published in the October 2023 edition of the monthly Africa Oil+ Gas Report. It is being published here for public service purposes.

 


NCDMB poised to have new Financial, Prosecutorial Powers, Keep 20% of Content Fund for Administrative Costs, under Proposed Amendment Bill

By Lukman Abolade, Senior Correspondent

The Nigerian Content Development and Monitoring Board (NCDMB) will have the power to enter into financial partnerships with public and private institutions, among other new regulatory functions, if the law setting up the institution is amended in the current form being presented at the National Assembly.

The bill before the House of Representatives, the lower chamber in Nigeria’s bicameral legislature, will repeal the Nigerian Oil and Gas Industry Content Development Act, 2010, and enact a ‘Nigerian Oil and Gas Industry Content Development Act’, “that will among other things cure defects observed in the existing Act”,  in its place.

Central to the proposed amendment is the enhancement of the authority and capacities of the Nigerian Content Development and Monitoring Board (NCDMB).

The bill gives approval to the Board to participate in equity investments and allocate twenty percent of the money received in the Nigerian Content Development Fund to be used to defray administrative expenses. “This is also an innovative provision as there is no such provision in the existing NOGICD Act. and others”, according to a statement signed by Director/Committee Clerk of the House Committee on Nigerian Content Development and Monitoring Board of Nigeria’s National Assembly.

The bill also seeks to provide statutory approval for existing funds managed by the NCDMB, including the Nigerian Content Intervention Fund (NCI), NCDMB Research and Development Fund, Working Capital and Capacity Building Fund, Women in Oil and Gas Fund Bank, and NOGAPS Manufacturing Fund that the Board presently established and had been operating on.

In a bid to streamline and monitor project approval processes, the bill prescribes strict timelines for the NCDMB to approve or disapprove projects and programmes for industry operators and contractors. This measure aims to introduce a limitation on contract cycles and unnecessary delays to improve efficiency and give statutory backing to the agreement reached among the Board, Nigerian National Petroleum Corporation Limited (NNPCL) and International Oil Companies (IOCs) on limitation of contract cycle in the Nigerian Oil and Gas Industry.

In terms of enforcement, the proposed legislation grants the NCDMB prosecutorial powers to address criminal offenses outlined in the bill.

Moreover, it empowers the Board to impose administrative sanctions for non-criminal violations, providing a comprehensive mechanism for regulatory oversight. The Bill further provides for active encouragement of backward and forward linkages in the oil and gas Industry.

On February 9, 2024, the House of Representatives passed the bill for the second reading and has since referred it to the Committee on Nigerian Content Development and Monitoring Board for further review.

The Committee expects industry stakeholders to submit, by March 18, 2024, a Memorandum which should be fifteen (15) hard copies and a soft copy to: The Clerk, House Committee on Nigerian Content Development and Monitoring, Room 413, 4th  Floor, White House, House of Representatives, National Assembly Complex, Three Arms Zone,

Abuja. A date for the Public Hearing shall is expected to be communicated in due course

 


My Oil Well Is in Your Premises

BLAST FROM THE PAST/FROM OUR ARCHIVES

By Toyin Akinosho

The just concluded court battle between Cross River and Akwa Ibom States rewrites the Eritrean war of independence in small letters.

Cross River was praying Nigeria’s highest court to confer on it the status of a littoral state. It wanted to be defined-even if not by geography-as a state bounded by the Atlantic Ocean to the south. The verbal court arguments, in a democratic jurisdiction, echoed the claims of angry roar of Ethiopian fighter jets pounding Eritrean territory for thirty years: “the coastline is ours!”

The Ethiopians lost the red sea in spite of their mighty army. The Cross Riverians lost the Atlantic in spite of their sparkling brand name.

For, like it or not, Cross River is a bigger brand than Akwa Ibom.

Cross River State used to encompass what are now both Cross River and Akwa Ibom states.

Calabar, the state capital, is a niche town which, as far back as the 16th Century, has been a recognized international sea port, shipping out goods such as palm oil. Today it hosts one of the largest street carnivals on the continent. On the contrary, Uyo, the  capital of oil rich Akwa Ibom State, stubbornly remains a small, sleepy town, while Calabar is its more boisterous neighbour across the river.

The trickster god of Geology probably helped in deceiving Cross River into believing it was entitled to some chunk of the proceeds that its neighbour was getting. The sediments that created the reservoirs in which the oil pools of Akwa Ibom State are trapped were deposited by the Cross River, for which the resource-poor state is named. The Cross River system is responsible for perhaps the most prolific segment of the Niger Delta basin; four companies, namely ExxonMobil, TOTAL, NPDC and Addax, produce over 1Million barrels of Oil per day in the south east offshore corner of the Niger Delta which is, really, roughly one tenth of the basin. That same south east corner, we must acknowledge, is where the main oil production in Equatorial Guinea and Cameroon comes from. The same petroleum system spawned what has so far been discovered in the Joint Development Zone (JDZ)between Nigeria and Sao Tome et Principe(STP).

But Geology is not a respecter of political boundaries. That is why countries which share boundaries with hydrocarbon rich countries are, quite often, resource poor themselves and they are always complaining they have been cheated.

Somali and Kenya never had a public spat over boundaries until recently, when Kenya became a magnet for exploration companies and encountered its first commercial pool of oil. Now the two sides are bickering.

The Somali government, ordinarily concerned with keeping terrorists at bay in its war weary cities, now has a new cause to fight. It accuses Kenya of awarding offshore oil and gas blocks illegally to TOTAL and ENI, French and Italian oil majors respectively, claiming that the blocks lie in Somali waters. Just a few days before the Supreme Court in Nigeria ruled that Cross River was not a littoral state, Somali deputy energy minister Abdullahi Dool claimed that L21, 22, 23, and 24, the four deepwater blocks awarded to TOTAL and Eni, were invalid and that his country would take the matter to the United Nations.

Kenya has so far rejected the Somali claims to the area. Although the two countries signed a memorandum of understanding in 2009, which stated that the border should run east along the line of latitude, Somalia rejected the agreement. The contention between Kenya and Somalia is about acreages in the Lamu Basin, right in the Indian Ocean, the vast seaway which bounds the African continent in the east. In these same waters, International Oil Companies have, within two years discovered-by their own submission-over 100Trillion Cubic feet of gas, more than half of Nigeria’s gas reserves, off Mozambique and Tanzania.

And, this is the point about “the trickster god of geology” again: the discoveries in Tanzania have been a fraction of the finds in Mozambique, even though the assets in question lie in the same Ruvuma Basin and the acreages are quite close to one another.

Tanzania has vowed to get as lucky as Mozambique and is planning a bid round to award acreages which has “similar geologic features to the richly endowed tracts of Mozambique”.

Democratic Republic of Congo is battling two oil rich neighbours to the east and west. Some of the most prospective, but undrilled structures in the DRC lie along the same trend in the Albertine basin as the reservoirs where Tullow Oil has reported estimates of a billion barrels of oil in several fields in Uganda. Congolese and Ugandan troops have clashed several times in this area. In Uganda’s Hoima district, Heritage, the London listed operator, constructed a school in memory of Carl Nedft, the British geologist who was slain in a pre-dawn raid on workers by Congolese troops in August 2007.

To the west, DRC has long accused Angola of “stealing” oil from offshore wells near its coast–thought to be a reference to operations in the Cabinda enclave, which is surrounded by DRCongo and Congo Brazaville. “In early 2010, Angola’s National Assembly agreed to open talks with the DRCongo on the extension of its border out to 350 nautical miles, rather than 200 miles, as a prelude to an application to the UN for recognition of that boundary. Relations between the countries deteriorated sharply in 2011 after a series of disputes” says the World Markets Research report. A report in a July 2012 edition of Journal De Angola notes that the Angolan Cabinet in Luanda “analysed a number of treaties between Angola and Congo on joint exploration of oil in the Lianzi development area concerning the share of revenues, customs and migratory matters”. It may be a way of saying that the issues were finally getting to resolution.

The clash between Sudan and South Sudan has shown that the more battle hardened the neighbours are, however, the more difficult it is to reach a solution around boundaries. In January 2012, Salva Kiir, the president of South Sudan, took the decision to shut down oil producing facilities and thus cut off revenue to both Sudan and his own government. It’s an unusual course of action for an African head of state. When South Sudan became independent of Sudan in July 2011, it inherited over 90% of the crude oil reserves and production which were, until 2005, entirely under the control of Khartoum. Even though most of the fields are located in South Sudan, the processing, storage and evacuation facilities are sited in Sudan and  revenues from these resources had been shared equally in the seven years since the signing of the Comprehensive Peace Agreement that granted autonomy to the South. Now that South Sudan “owned” most of the oil, the major revenue accruable to Sudan was transport tariff charges. Sudan was demanding tariff as high as $35 per barrel, which South Sudan was unprepared to pay. Sudan was also making claim to some boundary areas that the South insists were part of its territory. In April 2012, Kirr sent forces to one such border town named Panthou(by the Dinkas of South Sudan) and Heglig(by Arab Sudanese).

Cote D’Ivoire had been producing more oil than Ghana had ever hoped to produce since the early 90s. But the discovery of the600Million barrel Jubilee field off Ghana in 2007, has sparked renewed exploration interest in the so-called “transform margin” of the Gulf Of Guinea, where offshore Ghana and Cote d’Ivoire are located. In 2011, the Ivorian authorities–at the time still under the helm of former president Laurent Gbagbo–published a map with a new border, taking in several Ghanaian oil blocks. The situation caused a stir in Ghana, as the proposed border came dangerously close to the Jubilee oilfield and recent oil and gas discoveries such as Tullow’s Tweneboa and Enyenra complex. However, the governments have enjoyed cordial relations for a long time and are keen to solve the matter peacefully.

The one African leader who has dealt upfront with the issue of hydrocarbon prone maritime boundaries has been Olusegun Obasanjo, former president of Nigeria. He “settled” disputes, which had long lingered before his tenure, with Equatorial Guinea, Sao Tome et Principe and Cameroon. And his solutions were such that Nigeria, playing the big brother, gave out more territory to these less endowed neighbours. In coming to a resolution with Equatorial Guinea, Nigeria surrendered a chunk of the Zafiro field, which currently produces 140,000Barrels of Oil Per Day.  And it was in the process of giving up the Bakassi Peninsula that Cross River lost “its coastline”. But in going to court to get an alternative to its probable loss of oil revenue accruing from Bakassi, Cross River could have asked itself: how much oil, really is in that peninsula? The answer, really, is, not much, if any. Cameroon itself, in total, is producing just 60,000BOPD. And if indeed, there was some commercial pool of hydrocarbon in Bakassi, it would most likely have made Cross River the least endowed of the fringe Niger Delta states, like Edo, Ondo Imo and Abia.

This piece was originally published in the March 2012 edition Africa Oil+Gas Report. No, it has not been updated

 

 


Africa’s So Called Refining Boom Has Come Very Late/Our Latest Issue

The start-up of the Dangote Refinery in the east of Lagos in January 2024 and the likelihood of commissioning of Sonangol’s Cabinda refinery by July 2024 will not entirely make Africa self-sufficient in petroleum products supply. “The continent will remain a major importer of refined products in the foreseeable future due to the lack of new refining projects”, Anibor Kragha, Executive Secretary of the African Refiners and Distributors Association (ARDA), has said. “Because our demand in Africa is going to grow so much, we’re still going to have a shortfall,” he said.

From an intake of 350,000Barrels Per Day, Dangote was producing diesel, naphtha, jet fuel, and residual oil, as of February 5, 2024, while tests to determine if the supplies meet quality standards were in final stages. Angola’s Cabinda facility has a total capacity of 60,000BPSD, but only the first phase, at 30,000BPSD will come on stream in 2024. Apart from the Cabinda refinery, the Angolan government is also pursuing crude oil processing facility projects in Lobito in the coastal Benguela province and in Soyo, in Zaire province. For the Lobito refinery, the state hydrocarbon company Sonangol signed a memorandum of understanding, in October 2023, with China National Chemical Engineering (CNCEC), to construct a 200,000BPD plant. This project, then is still in the realm of paper work.

Geard Kreeft, the Dutch/Canadian economist who is a very significant member of the Africa Oil+Gas Report’s International Advisory Board, has put together an overview of the state of crude oi refining activity on the continent.   And there is more.

Read your copy here…

The Africa Oil+Gas Report 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 2001, AOGR is a paid subscription, monthly hard copy and e-copy publication delivered around the world. Its website remains www.africaoilgasreport.com, and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in the West African regional headquarters in Lagos are +2348124374087, +2348130733523, +2347062420127, +2348036525979, +2348023902519.

Editor

The Vol. 25, No. 2 (FEBRUARY 2024) edition of Africa Oil+Gas Report
is themed:

REFINING GAP ANNUAL 2024

Below is the link to your copy:

https://africaoilgasreport.com/wp-content/uploads/2024/02/AOGR-Volume-25-No2-FEBRUARY-2024.pdf
Some of the highlights:

 

 

COVER FEATURE

  • Africa’s Refining System: Half Full or Half Empty?
  • Nigeria’s Facilities Grab Export Market
  • New Timelines for NNPC Revamp
  • MAP of Africa’s Refining Capacity

IN THE NEWS

  • Absentee Landlords Threaten Uganda’s Oil Project
  • Angola in Crude Export Jump

WHO IS BUYING/SELLING?

  • M&P: The Contrast Between Gabon & Tanzania
  • Malabu On the Road to Settlement

C-SUITE SERIES/COVER INTERVIEW

  • Waltersmith: ‘The Industrial Park is Our Future’

SPREADSHEETS

  • Angolan Full Rig Activity Details, February, 2024
  • Nigerian Full Rig Activity Details, February, 2024
  • Nigerian Indigenous Producers: January 2024 Output

MAPS

  • Ghana E&P Map; Angolan Activity Map; Nigerian Independents; Marginal Fields Activity Map

Plus, the regular features; Nigerian Independents Output, Concession Status, Angolan Production by Companies, Petroleum Rights, etc.
Contacts: +2348028354297, +2348124374087, +2348038882629, +2348036525979

 

 

 

 


Paulino Jerónimo Gets a Second Term as Head of Angola’s Petroleum Regulator

Angolan President João Lourenço, declared the term of office of the Board of Directors of the National Oil, Gas and Biofuels Agency (ANPG) to be over.

The Presidential Decree signed on February 19, 2024 affected Paulino Fernando de Carvalho Jerónimo, president of the Board of Directors; César Paxi Pedro, administrator;  Nataxa Alexandre Tavares Ferreira Monteiro Massano, administrator; Gerson Henda Baptista Afonso dos Santos, administrator.

In the same Decree, President Lourenço appointed:  Paulino Fernando de Carvalho Jerónimo, president of the Board of Directors; Artur Manuel Custódio, administrator; Ana Rosa da Costa Nhanga Miala, administrator; Nicola Isabel dos Santos Lemos de Mvuayi, administrator and  Alcides Fernandes Mendes de Andrade, administrator.

ANPG was set up on February 6, 2019, as National Concessionaire, separate from Sonangol, the state hydrocarbon firm, which had, in the four decades prior, played both commercial and regulatory roles in the country’s hydrocarbon industry.

On its fifth anniversary, ANPG touted its credentials as having boosted investment in the oil sector in Angola considerably between 2022 and 2023. “ANPG data points to growth of 96%”, the regulator claimed, arguing that it also “actively contributed to mitigating the decline in oil production in the country and to the relaunch of new production”.

ANPG claimed that its efforts bolstered Local Content as it implemented policies and actions aimed at developing human capital and social responsibility. The regulator boasted that it pushed  bidding for new concessions and encouraged investment in exploration activity through the 2020-2025 exploration strategy. It also, by its own telling, led “development of joint efforts to decarbonize oil operations and boost renewable energy with a focus on biofuels;; creating conditions for maintaining investors who were already present in Angola and for the entry of new ones; establishing closer relationships with all partners, particularly investors”.


”This is The Year We Take  Exception…We do the Listing”…

In the second of a three-part series, GBITE FALADE, Chief Executive Officer of Aradel Holdings, the Nigerian integrated  energy provider, fields a wide range of questions, including, very specifically, the company’s view of listing on a stock exchange, a taboo subject for most Nigerian independents.

Excerots of the conversation, by Akpelu Paul Kelechi

Aradel has had several Annual General Meetings before this year’s…The reports always came. But now, you regularly publish half a year’s report. And you have comprehensive summaries out in the open before the AGM. For investors who are keen and who like to do some analysis and some market intelligence, that’s okay, but Nigerian companies, especially E&P types don’t do that, as a rule….

We don’t want to wait until we become listed before we start disclosure and reporting, which are a fundamental obligation.  We desire to become a company that operates to global standards, not just at the operational level but corporately as well. We actually think that our adherence to such stringent practices only sells the case for us when we become listed.  And it gives the investing public an opportunity to have a clear perspective as to where we are and how we are threading along in our journey.

Aradel has led the Africa Oil+Gas Report’s Talented Tenth Ranking for two consecutive years. Your company is profitable, pays dividends regularly but has promised itself over the last 12 years that it will be listed on the stock exchange. What is holding you back?

Aradel will be listed in 2024. We are already on that journey to becoming a listed company. We already have a programme that we are working with and even the event of our rebranding is part of that effort.  The issue of standardising on the reporting and the disclosures is also part of that effort. So, we are on the home stretch towards becoming a listed company.

Where will Aradel be listed?

We will be listed first on the Nigerian Stock Exchange with the possibility of a second listing subsequently. For now, our efforts are on being listed on the Nigerian Stock Exchange.

Unveiling a new name and logo signals a new beginning for the company with you at the helm. What keeps you up at night when you think of the past 31 years of the company especially how it relates to your responsibilities to steer it into the future?

The company has very faithful shareholders. There are a lot of shareholders that have been shareholders from the very first day that this company started. They are well informed industry people and they’ve remained faithful. They’ve not divested. Now, though practically every one of them in that category are no longer young I think what will be worth their while, for those who are still alive, is to let them see the fulfilment of their dreams. That keeps me awake at night.

Beyond the operational growth, it is about how we unlock values. How do we create the right price determination for shareholders, such that from the dividend that they get as a result of the operational performance and from share price appreciation and capital gain they can truly be happy? That keeps me awake at night.

Our industry is going through some reconfiguration, new players are coming in, old players are enduring. The boldness and the scale of the future that you dream about and how you pursue it will create a clear distinction about your position in the market. So, how “does one sustain the Legacy of leadership in this industry?” How do you play in such a way that in decades to come, you still continue to be a force to be reckoned with in the Industry?

It is not just in terms of scale but also in terms of what else are you pioneering, because pioneering is in the DNA of our company. How are you expanding the frontier of your accomplishments? How are you redefining how this business should work? How are you working to make sure you remain the best performing energy investment? How are you making sure that on multiple indices, you continue to remain right there at the top? It’s not how far we have come over the last 31 years but what we are reinventing to make sure that we continue to stay ahead of the pack. That is what keeps me awake at night.

In the last two years that we have engaged in conversations with you on the promise of Aradel, you have been a little shy of talking about what used to be the company’s pan African ambitions: Its venture in South Sudan; its aspirations in Mozambique.

In the two years leading to 2023, our industry in Nigeria had been comatose and the first instinct is survival. I came in at a time when crude theft was at a record high, when your barrels were not making it to terminals and at that point in time, survival was the natural extent and it became very difficult to then be going conquering across the continent where your house is burning. So, the last two years have been devoted more to arresting the situation and creating some sort of buffer for ourselves within the mad chaos that was going on in our industry and that’s what we have really focused on.  But we have been very active in South Sudan, nonetheless. Our aspiration in going to South Sudan was to replicate our success in Nigeria which is the success in the upstream and we went into a joint venture partnership with NilePet, which is their state-owned national company and our subsidiary is called NileDelta. Our number one aspiration is first and foremost to achieve commercialisation of the significant volume of gas that is being flared.

The second one is also to enter into upstream asset ownership and get some volume. But South Sudan has also had its own fair share of challenges that has then meant that, there is a lot of bureaucracy and things don’t get executed in time at the same pace we have in Nigeria. So, it takes an awful lot of time to sell a case and get the necessary approvals. So, while we are working activity within the structure of the NileDelta JV to achieve these two aspirations, which are still not yet achieved, we have seen progress. What we’ve done is to continue to offer ourselves as the go-to person for oilfield services. Today we are active players in the Electrical Submersible Pumps (ESPs) and the Progressing Cavity Pumps (PCPs), which we offer to help lift the heavy crude that they have and that has been the basis of existence in South Sudan as we speak today, so we’ve got a NIleDelta today that employees over 50 people and as much as 99% of them are South Sudanese that we’ve trained.

We provide PCPs and ESPs to many upstream operators and help them with their with the recovery from their wells, from the heavy oil that they produce whilst working carefully a tripod agenda of gas commercialisation, upstream asset ownership and a potential modular refinery.

We’re not in Mozambique today but we were in Mozambique before. Our board decided for us to scale back from pursuing and progressing the Mozambique opportunity based on some regional factors that we thought was not playing to our strength, but we have since then been actively looking at some other jurisdictions on the African continent. 

In that sense, you are a service provider in some cases?

Yes, we are.

Let’s go back to upstream. You did intimate the public of your plan to acquire an upstream asset but during the unveiling, you kept mute about that asset. Is it time to talk about it?

No, it’s not yet time for the purpose of confidentiality and respect for our counter parties.

So, it hasn’t been signed yet?

I can assure you that in no long a time from now, an announcement will be made and we think it’s only fair that it is made in consultation with the seller.

We’ll be able to speak to the asset itself. We think it’s a very fitting asset that strategically fits into what we currently have and it gives us options to develop that asset along with others that we have in well synergised arrangements that give us a chance to make an economic success out of the development and give us the base for enough scale to justify certain facility investments that make it worth the while. We always want to make sure that we are matching the scale of our surface facilities investment to the reserve potentials we have in order to ensure that it is economically viable.

What kind of volume are you looking at in terms of output?

It’s difficult to put it number to it primarily because there are unexplored prospects within that field. Until we carry out the exploration and appraisal before we are in a better position to say what it is; but we see the opportunity for both oil and gas development. So, it will serve to deepen gas production that is available in the economics both for domestic and otherwise. It will also help in bringing additional barrels of crude and condensates.


Africa Energy Bank to Decide Headquarters in March 2024, Launch Before June

By Lukman Abolade, Senior Correspondent

The highly anticipated multi-billion-dollar Africa Energy Bank, spearheaded by the African Petroleum Producers’ Organization (APPO) with support from the African Export-Import Bank (Afreximbank), is slated to be operational before June 2024, with the announcement of its host country headquarters expected in March of the same year.

Omar Ibrahim, the Secretary-General of APPO disclosed this during the just concluded Sub Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) held in Lagos, Nigeria.

“I want to inform this meeting that at the last ministerial, conference of the APPO Ministerial Council approval was given to us by Afreximbank.  To ensure that by the end of March, we take a decision on which country is going to host the headquarters of the Africa Energy Bank. We have also been given a mandate to ensure that the Africa Energy Bank becomes operational before the end of the first half of this year,” Ibrahim announced.

The establishment of the Africa Energy Bank is expected to mark a pivotal moment in Africa’s energy landscape. The bank aims to address the growing financing challenges capable of imperilling the development of the continent’s vast energy resources in the context of the energy transition.

As the developed world amplifies its calls for phasing out fossil fuels to combat climate change, Africa confronts the persistent challenge of energy poverty. With more than 600Million people lacking access to electricity and 900Million lacking clean cooking solutions, urgent action is needed to address this crisis Africa’s energy technocrats and experts say.

In response, stakeholders are advocating for the swift expansion of Africa’s oil and gas sector, acknowledging the potential of these resources to alleviate energy poverty. However, despite the pressing need and opportunities presented, global investors are displaying hesitancy towards investing in hydrocarbons. This reluctance leaves the continent without the critical investment required to unlock the full potential of its natural resources.

Acknowledging the progress made by certain countries like Nigeria and Algeria in advancing their energy sectors, Ibrahim emphasized the need for Pan-African cooperation. He underscored that no single country can tackle the challenges alone, advocating for a unified approach towards infrastructure development and knowledge sharing.

“We do not believe that Nigeria or Kenya or Mozambique or any of these individual countries S has what it takes to be able to say that it has mastered the technology of the oil and gas industry. I must admit that some countries have gone very far. Nigeria is one.  Algeria is another.  But, this notwithstanding, Nigeria cannot do it alone. And that is why we are coming together as a continent to establish or develop these various institutions so that it may be established in Nigeria, Algeria or Angola,” he noted.

Central to the discussion was the development of pipeline systems such as the Central Africa Pipeline System (CAPS), which aims to connect 11 African countries, facilitating the transportation of oil and gas across the continent. Ibrahim emphasized the importance of regional connectivity, highlighting the economic opportunities it presents for all African nations.

“We commend Nigeria for its leadership with the Trans Sahara Gas Pipeline, the West African Gas Pipeline.  We are focusing today on developing the Central Africa Pipeline System, CAPS.  It’s going to bring the 11 African countries together to be led by pipelines for oil, for gas, Don’t say that, we are in West Africa.  It is going to benefit you.  Because once that network has been done, you are in a position to take the West Africa gas pipeline or, um, Trans Saharan gas pipeline.  Take from there to Chad, which is in Central Africa. And if you don’t get a market in Europe or Asia, you have a market in Central Africa,” he argued.

Ibrahim addressed the misconception surrounding energy access, insisting that it plays a crucial role in driving economic productivity. He stressed the need to empower African communities with access to energy, not only for lighting but also for enhancing their economic activities. The vision of APPO, as outlined by Ibrahim, is to transform Africa’s energy landscape, ultimately leading to sustainable economic growth and development.

 

 


TOTAL Tops Up Nigerian Output with A Trickle of Condensate in Akpo West Field

By Toyin Akinosho                             

French oil supermajor TOTALEnergies has announced the commencement of production from the Akpo West Field.

By mid-2024, the company said, “Akpo West will add 14,000 barrels of condensate production per day”.

That volume is about 1% of the country’s crude oil and condensate output.

A big announcement about the commissioning of a such a low production is a sobering commentary on the struggle to bring out any reasonable amount of crude oil volume in Nigeria.

TOTAL added, for effect, that the field will follow up with 141Million standard cubic feet per day (141MMscf/d) of gas by 2028, that is, four years away.

Akpo West is tied back to the existing Akpo Floating Production Storage and Offloading (FPSO) facility, which started-up in 2009.

TOTAL said in the announcement that it produced 124,000 barrels of oil equivalent per day in 2023.

The reality is that, out of the 124,000BOEPD claimed for the field by the European giant, around 70,000BPD is liquid (condensate). The remaining 54,000BOEPD is gas, which translates to 324Million standard cubic feet of gas a day, which is supplied to the Nigeria Liquefied Natural Gas (NLNG) plant in Bonny, in the eastern Niger Delta basin.

TOTAL, in the short announcement, also noted that Akpo West field is on the Petroleum Mining Licence (PML) 2 license in Nigeria. It is the first time a field is announced by a major company in the context of the new nomenclature of mining licences in the country. Previously, Akpo field, like Egina, was in Oil Mining Lease (OML) 130.

The company adds that “Akpo West development leverages the existing Akpo facilities to keep costs low and minimize greenhouse gas emissions. The project’s carbon intensity is expected to be below 5 kg CO2e/boe and will contribute to reduce the average carbon intensity of TOTALEnergies’ portfolio”.

TOTALEnergies is the operator of PML2 with a 24% interest, in partnership with CNOOC (45%), Sapetro (15%), Prime 130 (16%) and the Nigerian National Petroleum Company Ltd as the concessionaire of the PSC.

 


The Politics of African Oil Conferences

By Toyin Akinosho

In 1994, South Africa’s first year of fully democratic elections, the Africa Oil Week (AOW) began in Cape Town, the country’s widely acclaimed ‘mother city’.

Christened ‘Africa Upstream’, at the time, the Conference was inaugurated in Camps Bay, “a beautiful locale over the towering Cape peaks, facing the ever cold Atlantic”, reports Duncan Clarke, the AOW’s founder, in his memoir Three Decades in the Long Grass: The story of Global Pacific & Partners. “No facility existed and we used a huge marquee to accommodate the 300 delegates”, the Zimbabwe born Clarke notes in the book.  Clarke enlisted Alec Erwin, “an old friend and minister in Mandela’s cabinet, who had gone to school in Umtali (Mutare), in [then] Rhodesia to give the opening address”.

The second edition of the conference was held in Johannesburg, “unwisely persuaded that this, the heart of sub-Saharan Africa’s economy, would prove a more fertile ground. It didn’t, and the location of the conference in Midrand was a near disaster of logistics and on-site management. Never again, we vowed, so we moved back to the Cape to find the IMAX BMW Centre as our next venue-and for the next 17 years to follow-initially taking a smaller room than the main theatre for the conference meeting”.

…………………………………………………………………………………………………..

By 2013, the conference had been renamed Africa Oil Week (AOW).

…………………………………………………………………………………………………..

I’d pause here to scan across the continent to focus on the emergence of NJ Ayuk, a gutsy, charismatic, Cameroonian born, US trained lawyer.

I met NJ Ayuk in 2015, in the company of Thabo Kgogo, then CEO of the JSE listed, South African independent SacOil, at the Cubana bar and restaurant, an upmarket lounge in Cape Town, which was a sundowner favourite hangout of the AOW crowd. At the time, I had watched Ayuk from a distance with a large dose of respect mixed with curiosity and a lot of questions. His Centurion Law firm seemed so unutterably successful for a company headquartered in Equatorial Guinea. It wasn’t lost on me that, even while located in such a back water part of the continent, it was loudly touting Pan African credentials.

How did the Africa Energy Week, created by  Ayuk’s Energy Capital & Power and African Energy Chamber, manage to wrestle down the wrestle down the “gigantic” AOW, which no longer has Duncan Clarke at the helm, but being managed by the Hyve  Group?

The full article is in the October/November 2023 edition of the Africa Oil+Gas Report

 

 


Who Will TGS Acquire Next?

After a string of acquisitions of smaller rivals over the last four years, TGS finally moved on one of the big ones: PGS

As the company’s chewing of PGS graduates into a swallow, the question comes up: who is TGS’ next acquisition target?

CGG?

The TGS-PGS tie up is a massive challenge to CGG’s dominance in both digital library and the fleet (of acquisition vessels). This ongoing merger hands to TGS a larger data library than CGS’ but relatively equal match in terms of fleet of vessels.

“The transaction helps mitigate supply chain risks and will add further to economies of scale and efficiency, enhancing the value offered to clients”, TGS explains, adding: “preliminary estimate of more than $50Million annually in cost synergies”, TGS has said in a statement. “In Multi-Client, the combined company will offer customers a global seismic library with data from all active basins in both the western and eastern hemispheres. In data acquisition, the combined company will be a substantial player globally with a strong operational track record. For streamer acquisition, it will hold an operational fleet of seven three dimensional (3D) data acquisition vessels, and for Ocean Bottom Node (OBN) acquisition, the combined company will benefit from around 30,000 mid and deepwater nodes. Within imaging, the combined company will offer a strong service to in-house and external customers integrating on-premises and cloud based high-performing computing services. In addition, the combined company sees significant growth opportunities in new energy with complementary technology offerings for Carbon Capture and Storage (CCS) and offshore wind”.

TGS has not always been gung-ho about vessel ownership, even though its specialty was in Multi-Client data acquisition, which involve days of vessel usage.

When TGS acquired Spectrum Geophysical in 2019, the word in the industry was that the Multiclient data acquisition specialist was only out to grow its data library. TGS, it was said, wasn’t in the business of owning its own vessels.

The same sentiments prevailed when the company moved on to grab ION Geophysical. It so happened that the purchase of ION’s bankrupt business included substantially all of ION’s global offshore multi-client data library, data processing and imaging capabilities, intellectual property, and Gemini Extended Frequency Source technology and equipment”, TGS said in a statement. ION’s data library consists of over 637,000 kilometres of 2D and over 317,000 square kilometres of 3D multi-client seismic data in major offshore petroleum provinces globally, generating revenues in excess of $86Million in 2021. TGS’ takeover of ION was concluded as part of the latter’s bankruptcy process in the United States Bankruptcy Court for the Southern District of Texas. At the time, Kristian Johansen, CEO at TGS, said the company was “excited about taking over another quality data library, particularly in the South Atlantic”.

TGS then moved on to grab Fairfield Nodal company, which was one of the world’s leading specialists in acquisition of 3D time Lapse seismic data.

Now it is PGS’ turn.

Who is the next target?

 

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