In the news - Africa’s premier report on the oil, gas and energy landscape. - Page 62

All articles in the In the news Section:

BG Says ‘No Drop Dead Date’ For Tanzanian LNG Sanction

By Toyin Akinosho

‘Asian LNG market grew last year despite the many challenges in the economy’

Any timing on LNG Development in Tanzania, as in other projects “has to be timed with how we see the market demand on one side and the cost of supply or cost of construction on the other side”, said BG’s Chief Operating Officer Sami Iskander.

→   Read the rest of this entry

Nigerian Navy Usurps Regulator’s Role On Eremor Field

The Nigerian Navy beat its chest on Television several weeks ago, announcing the arrest of employees and contractors working for Excel Exploration and Production, a local independent. “The company’s marginal field license has expired”, a naval officer beamed at the cameras, alleging that Excel E&P staffs were operating an illegal crude oil production field. He was standing at the company’s campsite on Eremor field in Oil Mining Lease (OML) 46 in the Niger Delta basin, site of the arrest.

The department of petroleum resources (DPR), the country’s hydrocarbon industry regulator, did not officially respond to enquiries from Africa Oil + Gas Report about the arrest, but impeccable sources at the Ministry of Petroleum said the agency was not apprised of the Navy’s action and did not grant the permission to make the November 26, 2014 arrest.

“The DPR will never or is unlikely to recklessly cause an abandonment of operations outside of the environmental requirements to properly plug in the wells “, said a petroleum lawyer in Lagos, choosing not to be named.“If the DPR had indeed served ‎Excel a notice of expiry (and a timeline to abandon the asset) it would be responsible of Excel to have adhered to same should negotiations to extend have failed.

“In any event”, she said “the powers of the Minister (and by delegation, the DPR) to shut down operations are clear under the laws, but a revocation of a licence is governed by the Petroleum Act and involves a 30 day notice within which the company is to make representations PRIOR to a final determination of the licence /lease. Any revocation outside of this will be unlawful and can be contested by an aggrieved person”.

She argued that “even if the above procedure were followed and a final determination made, and unless an expiry of the abandonment/plug in timeline given thereafter had lapsed, I am not ‎aware of any situation where  the Minister/DPR would or has utilised the Navy to eject persons out of an operational site”.

In the event, the DPR eventually wrote to the Nigerian Navy, weeks after the arrest, confirming that the award of the Eremor Marginal field to Excel E&P was “still subsisting”. The DPR’s letter explained that “the company had been carrying out extended crude oil production test on Eremor-1 well to determine ‘Technical Allowable Rate’ for the well”.  The DPR’s correspondence itself arrived only after the Navy’s Chief of Staff had intervened to call the patrol unit to release the detained men. The fact that the DPR, the primary regulatory agency for the Nigerian oil Industry had to write to the Navy explaining the legality of operations, indicate a misalignment of roles. In swooping on the field without authorization from the regulator, the Navy was usurping the role of the DPR.

Eremor is an undeveloped oil field in shallow waters near existing infrastructure and within 12 km of several Shell producing fields.  Excel was awarded the field during the Nigerian marginal field awards of 2003. It plans to evacuate the crude through 2km pipeline to Brass manifold in Peretorugbene, Bayelsa State in OML 46.

Jubilee Field Operating Cost Is Incredibly Low

The crown jewel of Tullow’s worldwide portfolio costs around $10 per barrel to operate.
Cash operating costs for Tullow Oil’s West Africa operations remain low, averaging around $13/bbl in 2014, according to the company’s latest statement. Operating costs for the Jubilee field, offshore Ghana, averaged around $10/bbl in 2014 “with potential to drive down costs further in the current market ahead of realising synergies relating to the combined Jubilee and TEN operations”. TEN refers to a cluster of fields the company is developing with the view to first oil in 2016.
West Africa remains the jewel in the crown for the company. In 2014, underlying production performance in the region was within guidance averaging 65,300 BOPD. “However, due to ongoing licence discussions in Gabon, which are yet to conclude, Tullow will report in 2014 a reduced working interest production of 63,400 BOPD”.

… Production to Build Towards 120,000BOPD by End of 2015

Tullow Oil says the Jubilee field exceeded its gross production target during 2014, averaging 102,000 BOPD “despite the restrictions caused by delays in the construction of the onshore gas processing plant by the Ghana National Gas Company”. The company expects average gross production to be at a similar level in 2015, with production building towards the FPSO capacity (which is 120,000BOPD) by the end of the year. “The gas plant is now complete and first commissioning gas was exported in November 2014 from the Jubilee field. As the gas management constraint is reduced due to increasing gas export, Tullow will be able to increase the oil production from Jubilee”. Elsewhere in Ghana, the important TEN development project is progressing very well and is now over 50% complete and remains within budget and on-track to deliver first oil in mid-2016.

SEPLAT Enters 2015 Running Low

SEPLAT Petroleum’s gross crude oil output hit a skid a day before the end of 2014, plunging to 36,064 Barrels of Oil per Day (BOPD) on December 31, from 73,745BOPD just a day earlier. By January 6, 2015, Nigeria’s largest indigenous oil company was producing a mere 204BOPD.

Vandals had hacked into the Trans Forcado Pipeline (TFP) as they had done time and again. The Oben, Amukpe and  Sapele stations (in OMLs 38 and 41)  were shut down on December 30, 2014, “due to reported leak on the Kantu/Ofugbene/Yeye axis of the 28 inch TFP, ”  according to technical reports.

Production was also down to 1,200BOPD  and zero respectively at the NPDC  operated  OMLs 26 and 42 as of January 6, 2015. The leak that led to these reductions happened at the Chanomi axis of the same Trans Forcados Pipeline. It is instructive that First Hydrocarbon Nigeria, a subsidiary of Afren Plc, holds 45% equity in OML 26. So much trouble in a long dry season.

SEPLAT had prepared for this kind of eventuality.  The company completed a new alternative export route, “which mitigates sole reliance on exports via the Trans Forcados System”, in the second quarter of 2014.  That alternative is a 10 kilometer pipeline that transports the crude to NNPC operated Warri refinery. “Deliveries to the Warri refinery increased in the third quarter of 2014 – gross deliveries in the first nine months stand at 288,661 bbls”, SEPLAT claimed in a statement last October.

Africa Lines Up Three Floating LNG Projects

By Sully Manope

Cameroon is the latest African country to signal a planned LNG project. It adds to three such planned projects in Nigeria, two planned LNG projects in Equatorial Guinea, two in Mozambique and one in Tanzania, none of which is sanctioned. Of the two planned LNG projects in Equatorial Guinea, one is a Floating LNG. In Mozambique, the same pattern holds true.

With a string of LNG projects coming on stream in Australia and piped gas agreements signed between Russia and China, analysts have warned of threats of oversupply dimming the chances of profitability.

But the Cameroonian Floating LNG project, announced on Christmas Day 2014 as a three way  Heads of Agreement (the HOA) between Golar LNG Ltd (Golar) Societe Nationale de Hydrocarbures (SNH) and Perenco Cameroon, is small, nimble, and designed to get to market quicker than 2018, the earliest at which any of the other listed  projects is likely to come online.

“The HOA is premised on the allocation of 500 billion cubic feet (Bcf) of natural gas reserves from offshore Kribi fields, which will be exported to global markets via the GoFLNG facility Golar Hill, now under construction at the Keppel Shipyard in Singapore”, a statement by Golar LNG states.

Nimble as its project is, Golar still needs to watch out for the Ophir led FLNG initiative off Equatorial Guinea. “Our project is well placed to take advantage of ongoing LNG market tightness prior to planned East African and North American volumes coming on-stream”, Ophir said in a recent statement. Ophir did state its Final Investment Decision would be taken in 2016 and first gas will come on line in 2019. Its statement was several months before the Golar announcement.

 “Golar will provide the liquefaction facilities and services under a tolling agreement to SNH and Perenco as owners of the upstream joint venture who also intend to produce liquefied petroleum gas’ for the local market in association with the Project. It is anticipated that the allocated reserves will be produced at the rate of some 1.2 million tons of LNG (liquefied natural gas) per annum over an approximate eight year period”. This sounds so simple, and far removed from the mega projects proposed in Mozambique and Nigeria.

“It is expected that during the first half of 2015 definitive commercial agreements will be executed and necessary licenses and approvals secured for the production, liquefaction, and export of the reserves, and that production will commence in the first half of 2017. The Project will be the first floating LNG export project in Africa and will see Cameroon joining the small number of LNG exporting nations”.

Golar claims to be one of the world’s largest independent owners and operators of LNG carriers with over 40 years of industry experience. The company boasts that its “innovation delivered the world’s first Floating Storage and Regasification Units (FSRU) based on the conversion of existing LNG carriers”.

ENI to Take FID on Etan /Zabazaba in 2015

Italian major ENI is proposing to take a Final Investment Decision on the Etan and Zabazaba fields in 2015 and hope to bring the project online by 2018. The company is developing the two deep water fields off Nigeria, as a joint development. Front end activities are ongoing, ENI disclosed at a recent conference. Etan was discovered in February 2005 and Zabazaba was encountered in August 2006, both by Shell.

The Field Development Plan calls for conversion of a Very Large Crude Carrier (VLCC) to a Floating Production Storage and Offloading (FPSO). The two fields are in water depths of between 1,500 and 2,000metres. The cost of development is around $9 Billion, according to sources at the Department of Petroleum Resources, the Nigerian regulatory agency. Recoverable reserves for the two fields combined are in the region of 500Million barrels. ENI recently finalized Etan 3, an appraisal well that extended the pool to the south west and released the rig, Sedco Express.

OPL 245 has been the subject of intense rancour in the media in the last three years. Opposition to the sale of 40% equity on the lease, by Malabu Oil and Gas, a company owned by former Nigerian Petroleum Minister, Dan Etete, for a consideration of over $1billion to Shell and ENI(parent of Agip), had been set on moral, ethical grounds. ENI is engaging the Nigerian government on converting the Oil Prospecting Lease to a Mining lease. Wood McKenzie thinks that a 2018/2019 commissioning date for the fields is ambitious.

Seplat Hires Celine Loader, Moves On Afren at last

Days after Seplat Petroleum appointed Celine Loader as General Manager of Corporate Strategy & Business Improvement, the company made a take-over move on Afren, its closest rival in terms of asset development in Nigeria. Loader reports to company’s board.

The London listed Afren itself confirmed in a stock market statement that it had received the “highly preliminary” approach regarding the possible combination of Seplat and Afren. The statement came with the customary warnings that “there can be no certainty that an offer will be made”.

Seplat, a homegrown Nigerian company also listed on the London Stock Exchange, had been widely expected to move on Afren for several months now; ever since Afren’s share price went on a headlong crash as a result of allegations of corrupt practices by its former Chief Executive, market analysts had started seeing the company as a lame duck for take over and generally felt that Seplat should do the taking. Afren’s share price has tumbled by as much as 80% since the scandal broke in July.

Seplat, however, was not particularly keen, since it had other ideas about growing its portfolio, primarily acquisition of assets from which oil majors are divesting. Now as those planned acquisitions are not gaining much traction, one option is to take over Afren.  News of Seplat’s move boosted Afren’s share price by as much as 20%.

Loader was a Group Director, Marketing and Corporate Relations at the United Bank for Africa (UBA), after which she was appointed Chief Marketing Officer of First Bank of Nigeria, the country’s top lender. Until the Seplat appointment, which happened last week, she was Senior Adviser at the Nigerian Central Bank.

It’s not clear if Loader’s appointment and Seplat’s decision to take over Afren are related. Loader, a media savvy communications specialist whose career kicked off as business analyst for Microsoft UK, is better known as a diva with strong marketing skills but not as an expert on upstream new business opportunity or E&P market intelligence. But the coincidence is striking.

It’s also not clear why, Seplat would consider a communications strategist at General Manager level, when it already has a structured corporate affairs department. Seplat officials were not available for comments, although, one impeccable source dismissed our misgivings about the hiring as coming across as creating a top heavy management personnel. “The Seplat board can always hire experts to advise it”, the source said.

SAPETRO Owns 13% of Afren

Nigerian independent, on the advice of PWC, is on an aggressive acquisition drive

South Atlantic Petroleum Company (SAPETRO) had, as at December 1st acquired about 13% of the shares of Afren. SAPETRO snapped up the shares as the price plummeted from 140 British pence in July 2014, but the Nigerian independent also lost money. SAPETRO bought the shares when the price was 100 pence. However, as of December 10, it was 38 pence. Now, the take-over move by Seplat Petroleum has buoyed the Afren share price again, jerking it up to 50 pence.

SAPETRO is on an acquisition mode. The company wants to grow its assets beyond its equity holding in the deepwater Oil Mining Lease (OML) 130. SAPETRO is redeveloping the Seme field offshore Benin Republic. It has a vast exploration tract in the Mozambique Channel, on which it has completed a 10,000 square kilometres of three dimensional (3D) seismic acquisition.

It also has acreage holding in Central Africa Republic. While the  Seme is a marginal field, the Mozambique Channel and the CAR assets are rank exploratory tracts. SAPETRO has engaged the services of PricewaterhouseCoopers (PWC) to shop for assets and advise on value adding business strategy. The Afren investment is one of the several results of that engagement. Afren has been in deep trouble since the revelation in July by the company that illegal payments were made to some of its top staff. Five of the staff have since been fired and others involved sanctioned.

Uganda Evaluates Five Field Development Plans

Uganda is evaluating five applications for field development plans for five fields and clusters of fields in Uganda’s Albertine basin.

The country issued its first production licence, in September 2013 to CNOOC Uganda Ltd, who is developing the Kingfisher field in the southernmost part of the current, proven oil part of the basin.

→   Read the rest of this entry

© 2021 Festac News Press Ltd..