All posts tagged DPR


Africa’s Electricity Unlikely to Go Green This Decade

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New research from the University of Oxford predicts that total electricity generation across the African continent will double by 2030, with fossil fuels continuing to dominate the energy mix – posing potential risk to global climate change commitments.

The study, published by Nature Energy, uses a state-of-the art machine-learning technique to analyse the pipeline of more than 2,500 currently-planned power plants and their chances of being successfully commissioned. It shows the share of non-hydro renewables in African electricity generation is likely to remain below 10% in 2030, although this varies by region.

“Africa’s electricity demand is set to increase significantly as the continent strives to industrialise and improve the wellbeing of its people, which offers an opportunity to power this economic development through renewables” says Galina Alova, study lead author and researcher at the Oxford Smith School of Enterprise and the Environment

“There is a prominent narrative in the energy planning community that the continent will be able to take advantage of its vast renewable energy resources and rapidly decreasing clean technology prices to leapfrog to renewables by 2030 – but our analysis shows that overall, it is not currently positioned to do so.”

The study predicts that in 2030, fossil fuels will account for two-thirds of all generated electricity across Africa. While an additional 18% of generation is set to come from hydro-energy projects. These have their own challenges, such as being vulnerable to an increasing number of droughts caused by climate change.

The research also highlights regional differences in the pace of the transition to renewables, with southern Africa leading the way. South Africa alone is forecast to add almost 40% of Africa’s total predicted new solar capacity by 2030.

“Namibia is committed to generate 70% of its electricity needs from renewable sources, including all the major alternative sources such as hydropower, wind and solar generation, by 2030, as specified in the National Energy Policy and in Intended Nationally Determined Contributions under Paris Climate Change Accord,’ says Calle Schlettwein, Namibia Minister of Water (former Minister of Finance and Minister of Industrialisation). “We welcome this study and believe that it will support the refinement of strategies for increasing generation capacity from renewable sources in Africa and facilitate both successful and more effective public and private sector investments in the renewable energy sector.”

“The more data-driven and advanced analytics-based research is available for understanding the risks associated with power generation projects, the better”, Mr. Schlettwein argues. “Some of the risks that could be useful to explore in the future are the uncertainties in hydrological conditions and wind regimes linked to climate change, and economic downturns such as that caused by the COVID-19 pandemic.”

The study suggests that a decisive move towards renewable energy in Africa would require a significant shock to the current system. This includes large-scale cancellation of fossil fuel plants currently being planned. The study also identifies ways in which planned renewable energy projects can be designed to improve their success chances – for example, smaller size, fitting ownership structure, and availability of development finance.

“The development community and African decision makers need to act quickly if the continent wants to avoid being locked into a carbon-intense energy future’ says Philipp Trotter, study author and researcher at the Smith School. ‘Immediate re-directions of development finance from fossil fuels to renewables are an important lever to increase experience with solar and wind energy projects across the continent in the short term, creating critical learning curve effects.”

 

 

 


Three Tiers of Winners Emerge in Nigeria’s Marginal Field Bid Round

By Macson Obojemiemoin, in Port Harcourt

Three tiers of winners are likely to emerge in the result of Nigeria’s marginal field bid round, according to indications at the Ministry of Petroleum Resources, in Abuja, the country’s capital.

The first tier refers to a list of two companies awarded the same field. The second tier is a list of three companies awarded the same field and the third tier refers to a list of companies numbering as many as 10, awarded the same field.

Not a single company is awarded a field, all by itself, Africa Oil+Gas Report checks indicate.

161 companies, in total, are on the three tiers.

Out of the 57 fields offered in the bid round, four fields are left unawarded, Africa Oil+Gas Report has learned, but we couldn’t confirm if those four fields include Abigborodo and Hely Creek, which were on offer at the time of bidding, but have since been ordered by a Federal High Court to be removed.

The matching of several companies to a field would suggest that payment of signature bonus, which is a determining factor in winning a field, will be shared.

A company might find itself the sole holder of a marginal field license in the event that the other company/ies matched to the field is/are unable to come up with its/their share of the signature bonus.

The three and half month-long bid round exercise was concluded on September 15, 2020 and the bid analysis, by the Department of Petroleum Resources (DPR), was concluded a month after and sent to President Muhammadu Buhari for approval.

But the process of approval of the award list has gone on for over two months, “because several of the companies who bid, paid all the fees and made it through all the milestones, had put so much pressure to be accommodated”, impeccable sources tell Africa Oil+Gas Report. “In the event, government was trying to please everybody and that is why you end up with 161 winners”.

When contacted, the DPR did not officially comment about these details. The agency did not also say when the result will be announced. Instead, its Head of Public Affairs, Paul Osu, simply said: “Successful candidates will be notified when the process is concluded”,

As have become evidently clear in the last 12 months, Ministry sources tell Africa Oil+Gas Report, the authorities will be very strict with signature bonus payment, as they have been with royalty, lease rentals, and other tariffs recently. “Once you cannot pay your share of the signature bonus within a time limit, you are out”,

 

 


Court Restores Marginal Fields Revoked by Nigerian President

A Federal High Court in Abuja, Nigeria’s capital city, has set aside the purported reversal of the consent given by the Government for the farm-out agreement between Chevron and Transnational Energy Limited (TEL) on the Abigborodo and Hely Creeks marginal fields in the Oil Mining Lease (OML) 49.

Justice Taiwo Taiwo held that the defendants failed to supply counter evidence and arguments to disprove the plaintiffs’ claims. The judge noted: “One thing that is very clear and undeniably so, is that the averments of the plaintiffs, from the inception of the meetings and correspondences between the plaintiffs, Chevron Nig Ltd, the third defendant,  Department of Petroleum Resources, (DPR), Nigerian National Petroleum Corporation (NNPC) and National Petroleum Investment and Management Services (NAPIMS) on the farming out by Chevron Nigeria of the Hely Creek and Abigborodo marginal fields within OML 49 were not denied’.

The court, upheld the plaintiffs’ claims and granted all the reliefs sought, including an award of $20Million in damages against the defendants, who are all Federal Government’s agents. The suit was filed by Transnational Energy Limited (TEL) and Bresson A. S. Nigeria Limited. Defendants were Minister of Petroleum Resources, Minister of State, Petroleum Resources, DPR, NAPIMS, and the Attorney General of the Federation. Sijuade Kayode, lawyer to the plaintiffs, claimed that a farm-out agreement over the two marginal fields was concluded between TEL and the joint venture operators, Chevron Nigeria Limited in 2017 for amongst other purposes, to provide feedstock to a gas-to-power project developed by TEL and its partners, which started in 2012. The DPR, in a letter dated 20th February 2017, conveyed a letter of ministerial consent by the Minister of Petroleum Resources approving the farm-out and its terms, the lawyer stated. The DPR, in its said letter, equally directed TEL to pay a prescribed premium to Federal Government, after which the farm-out will become effective, a directive TEL complied with by paying the prescribed fee of $639,820.65, the plaintiffs added.

Rather than allow the plaintiffs enjoy the benefits of the agreement after the government acknowledged receiving TEL’s payment, the then Chief of Staff to President Muhammadu Buhari, the late Abba Kyari, wrote a memo, purporting to revoke the earlier ministerial consent, claiming to have acted on the instruction of the President. They added that the DPR, without any notice to the farmee (TEL) put the two fields in the 2020 marginal fields basket, even though the fields were not part of the original 57 fields approved for the bid round, a decision TEL and its sister company in the power business (Bresson A.S. Nigeria Limited) challenged by filing the suit.

The plaintiffs exhibited their audited accounts, business plan and financial model which showed that both plaintiffs had jointly expended $22,718,000.00 (twenty-two million, seven hundred and eighteen thousand United States dollars) on the development of the gas and power side of the project. They also exhibited their financial models in arguing that they have lost over $164Mllion due to the actions of the defendants, while Federal Government may have equally lost over $68Million in royalty and taxes not earned as a result of the actions of the defendants.

The plaintiffs asserted that their gas-to-power project elicited a massive international cooperation spanning over 15 countries and involving over 100 international experts. “As a matter of fact, the Hungarian Exim Bank went to parliament to amend its legislation in order to raise her scope of participation in the power side of the projects,” they said. Justice Taiwo, in the judgment delivered on October 18, 2020, a copy of which was made available on Friday, held that the defendants failed to supply counter evidence and arguments to disprove the plaintiffs’ claims.


DPR Waits on President Buhari’s Nod, to Announce Winners of Marginal Fields Bid Round

By Macson Obojemie, in Lagos

The Department of Petroleum Resources (DPR), Nigeria’s regulatory agency, is awaiting the approval of the Minister of Petroleum, to announce the results of the Marginal Fields bid round.

DPR concluded the analysis of the bids in the last two weeks and it has sent the results to the Minister of State for Petroleum, Timipre Sylva, who is to deliver it to President Muhammadu Buhari, the country’s defacto Minister of Petroleum.

The three and half month-long bid round exercise featured 52 fields and was concluded on September 15, 2020.

It was heavily subscribed; the largest number of bid applications in any hydrocarbon licencing sale in Africa in close to 10 years.

While the round started with over 500 applications, it closed with at least 100 applications making it all the way, each delivering at least $115,000 to the Nigerian treasury in the process.

And there will be more money heading to those coffers; when the results are announced, wining bidders have to pay signature bonus before the final awards. Analysts expect some highly contested fields, like Egbolom, to attract north of $5Million as signature bonus.

Nigerian marginal fields bid round is restricted only to locals.

Most applicants in this round, the second such formal round of its type in 17 years, were Nigerian independents who already produce crude oil and gas and are seeking to expand their portfolios. Others were Nigerian oil service contractors who now feel they should take positions in hydrocarbon acreages. Fuller story on the Bid Round is published in the monthly Africa Oil+Gas Report.

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