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Briefcase Companies, Procurement Scams, Partly to Blame for Decline in Nigerian Crude Output – NNPCL Boss

By Lukman Abolade, Senior Correspondent

Mele Kolo Kyari, Group Chief Executive Officer of the NNPC Limited, the Nigerian state hydrocarbon company, has fingered security issues, ‘briefcase companies’ and the fiscal environment, as parts of a cohort of challenges responsible for the declining investment in Nigeria’s oil and gas sector.

“As we all know, the security challenges are real, it is not just about theft, it is about the availability of the infrastructure to deliver the volume to the market. No one is going to put money into oil production when he knows that the production will not get to the market”, Kyari told a Stakeholders’ Engagement with the National Association of Petroleum Explorationists (NAPE).

Calling out ‘bad actors’ among the ranks of Nigerian indigenous operating companies, as well as the contracting segment of the industry’s upstream class, Kyari said: “the reality is that people create companies, in all segments, around friendships around relationships, not around value and the ultimate impact is that this country is seen not just as a bad investment location, but as a war zone. War means many things: war can be economic war, it is not just gun. So that’s why the issue of contracting both within our own company NNPC and within our partner companies is important to us. The good intention our country has of having local content development is essential, which is to produce locally, build capacity and return value to our country. This is beautiful, but it doesn’t mean that the meaning of this is to enrich a few people. I don’t think so. The combination of those compromises along the value chain resulted in sending most of the critical contractors out of our country today. And the reason is not competition”.

Arguing that contractual issues and “paper companies” were huge challenges wrestling down investors‘ confidence in the country, Kyari, a trained geoscientist who is a card carrying member and Fellow of NAPE, lamented to the group of petroleum explorationists  and C-suite level executives of  oil majors, that by creating shell contracting firms, several companies focus on making the money from procurement than from production, shooting up the cost of production.

But Mr Kyari c kept going back to highlight the security issues along the crude oil pipeline right of way in the Niger Delta.

“Within the last two years, we removed over 5,800 illegal connections from our immediate frontline, we took down over 6,800 illegal refineries. We simply cannot get people to put money into it until we solve that problem,” he said.

Kyari added that the discussions on energy transition, late passage of the Petroleum Industry Act (PIA), poor infrastructure “and the discovery of oil in many places” also contributed to the decline in oil and gas investments in the country.

“Our country struggled to change its fiscal terms since the year 2000 until 2021, when the PIA came into being, it was already 21 years late. New troubles that were created by the energy transition conversation, banks stopped lending to oil and gas and many more things. And secondly, oil started appearing in unexpected places. And everybody decided to throttle down investment in Nigerian oil and gas,” Kyari noted.

Highlighting the enduring demand for oil and gas in the energy mix, Kyari said projections have suggested a continued need for up to 100Million barrels of oil equivalent by 2050. Against this backdrop, he stressed Nigeria’s strategic position in Sub-Saharan Africa, where a substantial portion of global growth is forecasted to occur, with Nigeria poised to play a central role.

While speaking on NNPCL’s effort to increase production and attract investment in the sector, Kyari disclosed that three substantive gas projects are set to take off in 2024.

He stated that NNPC in collaboration with its JV and PSC partners plan to drill up to 26 gas exploration and appraisal wells, over 16 gas development wells and 21 oil exploratory wells as well as come up with a rig-sharing program to reduce the cost of drilling and enhance collaboration among companies.

“We are going to come up with a rig-share programme so that even the rig owners can have an assurance when they come to this country, they don’t have to go away. So that the cost of drilling itself will go down, there’s a visibility about when this will end, you have the assurance that the rig can stay with you for three to five years. We’re going to check this and this industry will align it so that we have a line of sight around our commitments. So that those drilling activities can actually take place at a cost and invest of course, that is possible,” he noted.

During his welcome address, the NAPE President, Abiodun Ogunjobi, said the Stakeholders engagement was to address pressing issues in the oil and gas industry that demand urgent intervention, most especially the declining investment in the sector.

“To restore us to the Two Million plus-barrel per day production will require a deliberate investment in the exploration and production activities. Despite our projections over the years of 40Billion barrel reserves and 600Trillion cubic feet (Tcf) of gas, we have consistently remained at the threshold of 37Billion barrels of oil and 209Tcf of gas”, Ogunjobi said.

The NAPE president added that to tackle these challenges, there must be strong and intentional collaboration between the NNPCL and E&P players.

He also said there is a need to leverage technology and foster a skilled workforce that is crucial for the industry to deliver these objectives.

“For efficient gas production and utilisation, we will need to upgrade all our existing and add more infrastructure to our gas development system. The time to increase your oil and gas production is now and it requires an intentional workforce such that we can use the resources that we have and navigate our way through the transition phase to the new mega-change dynamics,” Ogunjobi noted.

Kyari was asked, in a post-address question-and-answer session, about the status of the NNPCL’s frontier basin drilling as well as update on the Ajaokuta-Kaduna-Kano (AKK) gas pipeline in the north of the country. A summary of his response:

“The Chad Basin, you know that we’ve been around there for over 40 years. Currently, we are drilling a well. I think it’s too early to speak about it due to some NDA issues. I don’t know if I can speak about it. But where we are today is better than what we ever did in 40 years. Now that is sufficient information. So, there is oil in the cretaceous, of course, you know, there are regulatory issues around making declarations but I can tell you with all confidence that there is sufficient oil even in the Chad basin,” he said.

On the AKK pipeline, Kyari said that over 75% has been completed and is expected to become functional by the end of 2024 or first quarter of 2025.

“I can also tell you today, we have almost done over 75% on the AKK line and our target is to complete it by the end of this year. At least introduce hydrocarbon into it, we may not complete some of the associated facility that we don’t need today,” he said.

Consortium Announces Plan to Build 10,000MW Wind Powered Plant in Egypt

The Egyptian government has approved a proposal by a consortium to develop 10,000 MW wind farm on 3,025 km2 of land in the western Suhag governorate.

Infinity Power, a joint venture between Egypt’s Infinity and Masdar (Abu Dhabi Future Energy Company) is in league with Hassan Allam Utilities, another Egyptian player, for the project.

With the vast parcel of land granted by the Egyptian government further studies can begin, including resource measurement campaigns (wind), geotechnical and topographical studies, as well as environmental studies, all “aimed at ensuring minimal impact on the environment”, according to a statement by Infinity Power.

This mega project could cost as much as $10Billion and should be capable of injecting 47,790 GWh of clean electricity per year into the Egyptian grid, while avoiding emissions of 23.8 Milliontonnes of carbon dioxide (CO2) equivalent over the same period.

Infinity expects “the 10 GW wind farm to save the country around $5Billion in natural gas costs per year”.

Egypt plans to achieve a 42% share of renewable energies in its electricity mix by 2030, up from 7% in 2023. As part of its strategy, the Egyptian government has also granted land to independent power producers (IPPs) Scatec and Engie for the deployment of 8,000 MW of onshore wind turbines.

Viridien is the New Name for CGG, Western Europe’s Top Geophysical Company


Shareholders of CGG have renamed the company at the Annual General Meeting on May 15, 2024.

The AGM approved the resolution to change the company’s corporate name from CGG to Viridien.

: “Our new name, Viridien, connects our company’s history to our future, confidently positioning us for accelerated growth as an Advanced Technology, Digital and Earth Data Company,”declares Sophie Zurquiyah, CEO of the company formerly known as CGG.

To further support its growth strategy, the company will launch the new Viridien brand on 10th June at the upcoming EAGE Annual Conference in Oslo, further strengthening its focus across a portfolio of solutions including the Core businesses of Geoscience, Earth Data and Sensing & Monitoring, as well as new offerings in both the Low Carbon markets of Minerals & Mining and CCS, and markets beyond energy in High-Performance Computing (HPC) and Infrastructure Monitoring.

Scatec and Engie Secure Land for 8,000W of Renewable Energy Facility in Egypt

Scatec, the Norwegian renewable energy player; Engie, its French counterpart and Orascom Construction, the Egyptian firm,  have secured land from the Egyptian government for the deployment of 8,000MW of wind power for two different projects.

One of them, a 5,000MW project, is to be developed by Scatec. The other, a 3,000MW facility, is a planned joint development by a consortium that includes Engie, Orascom and  Eurus Energy, a Japanese concern.

The two projects are proposed to be sited in the western governorate of Sohag.

Mohamed El-Khayat, Chairman of Egypt’s New and Renewable Energy Authority (NREA) signed the land permits, at a signing ceremony which took place recently in the presence of Mohamed Shaker, Egypt’s Minister of Electricity and Renewable Energy, and Hilde Klemetsdal, Norway’s Ambassador to Egypt.

These two projects represent an investment of $9Billion, according to NREA.

The first memorandums of understanding for the two developments were signed at COP27, hosted by Egypt in 2022. The power is proposed to be injected into the Egyptian Electricity Transmission Company (EETC) grid.

Scatec is a leader o Egypt’s renewable energy programme. It  operates 380 MW of installed solar capacity in the country.

The Engie-Orascom Construction-Eurus Energy consortium already operates a 262 MW wind farm in the Gulf of Suez. In the same region, the three partners are currently building a 500 MW wind farm.

Egypt’s national objective is to produce 42% of electricity from renewable energies by 2030, enabling the country to reduce its dependence on natural gas, the price of which has fluctuated greatly on the international market in recent years, first during the post-Covid-19 recovery, and then after the start of the war in Ukraine.




Morocco Launches Pre-Qual Bid Process for 400MW Wind Power Projects

Moroccan Agency for Sustainable Energy (MASEN), has launched the pre-qualification process for the selection of a private company to support the implementation of a two-part, 400 MW Nassim Nord wind power programme.

The proposal involves the construction of two wind farms.

Developers interested in building the two wind farms have until June 24, 2024 to apply.

Named Nassim Dar Chaoui, the larger wind farm (planned to be a 250MW capacity) will be located between the provinces of Tangier and Tetouan, in the north of the country. The second is a 150MW project, which will extend the existing Nassim Koudia Al Baida wind farm, already injecting 100 MW of clean electricity into Morocco’s national grid.

The company selected at the end of the tender process will be responsible for the development, financing, construction and operation of the two wind farms. “By structuring it as a project financing scheme, this new programme will encourage greater involvement of the private sector in the deployment of renewable energies, with the participation of Moroccan and international commercial banks in its financing”, says MASEN.

Norwegian Operator Claims “Substantial Oil Discovery” In Gabon, Extending the Hibiscus Field Further North

By Macson Obojemuinmoin

Oslo listed BW Energy has announced “a substantial oil discovery with good reservoir quality” in the DHIBM-7P pilot well drilled to appraise the northern flank of the Hibiscus field, in the Dussafu licence, offshore Gabon.

BW did not provide figures for the find, but it declares its “plans to complete the well as a production well later in 2024”.

It says that its preliminary evaluation indicates a notable increase in both the volume of oil in place and gross recoverable reserves.

“As final data becomes available, technical personnel will be engaged in updating the analysis for publication of the uplift at a future date”.

The DHIBM-7P pilot was drilled from the MaBoMo production platform to a total depth of 3,941 metres. The target area is located approximately 1.5 kilometres north-northwest of the MaBoMo and was drilled by the Borr Norve jack-up rig. Evaluation of logging data, sample examination and formation pressure measurements confirm approximately 24 metres of pay in an overall hydrocarbon column of 37 metres. Notably, the hydrocarbon column extends across the boundary between the Gamba and the underlying Dentale formation. This is the first example of a common Gamba-Dentale hydrocarbon accumulation in Hibiscus Field.

“This is yet another confirmation of the significant potential of the Dussafu licence, which BW Energy is rapidly unlocking through low-cost and low-risk development activity,” said Carl K. Arnet, CEO of BW Energy.

The next operation will be to place a production well (DHBSM-2H) in the northern flank of the Hibiscus South field that was recently successfully appraised.


European Bank Approves Membership of Kenya and Nigeria

By Nibal Zgheib

The shareholders of the European Bank for Reconstruction and Development (EBRD) have approved applications by Kenya and Nigeria to become members of the multilateral financial institution.

The authorities of Kenya and Nigeria applied for EBRD membership in March and April 2024, respectively. Approval from the Bank’s Board of Governors is the first stage of the membership procedure; the two countries will need to meet some final pre-membership requirements before the process is concluded.

The move follows the Governors’ approval – at the EBRD’s 2023 Annual Meeting in Samarkand – of amendments to the Bank’s statutes to enable the limited and incremental expansion of its operations to sub-Saharan Africa and Iraq.

The applications of Kenya and Nigeria also included requests to become recipients of EBRD financial and advisory services, which the Bank will address once the statutory amendments are in force.

EBRD President Odile Renaud-Basso said: “We are very happy about this important milestone in the process for Kenya and Nigeria to become new EBRD members. With this approval the six sub-Saharan African countries have joined the Bank, a step that reflects our Governors’ historic decision, last year, on the future expansion of the Bank’s operations there. Together with other international partners, our goal will be to help unleash the potential of the countries’ private sectors, create jobs and support sustainable development.”

The successful applications from Kenya and Nigeria follow those from Benin and Côte d’Ivoire (approved in October 2023) and Ghana and Senegal (approved in February 2024). Benin finalised all membership requirements in April 2024, becoming the first sub-Saharan African country to join the Bank and its 75th shareholder.

Since its inception in 1991, the Bank has invested over €195Billion in 7,021 projects and supported policy reforms to develop the private sector in more than 30 economies. Its investments span natural resources, financial institutions, agribusiness, manufacturing and services, as well as infrastructure projects, such as power and renewable energy, and the upgrade of municipal services.

Nigeria’s Central Bank Tightens Grip on Petroleum Export Inspection and Revenues

By Masha Otula, in Abuja

The Central Bank of Nigeria (CBN) has appointed new petroleum export pre-shipment inspection agents. CBN also listed new exemption categories under the restrictions on foreign exchange revenues of petroleum exports that it introduced in February.

CBN distributed 31 oil and gas export terminals to nine inspection agents with each Nigerian company assigned three to five terminals. The Bonny, Forcados and Qua Iboe terminals were assigned to Neroli Technologies while Brass, Escravos and the Abigail-Joseph floating production, storage and offloading (FPSO) vessel were assigned to Offshore Bulk Inspection.

But CBN did not assign the Nembe crude stream or the Galilean 7 FSO from which it is produced to an inspection agent in its latest circular. Production of the Nembe crude stream started last year. Its output averaged 24,000Barrels of Oil Per Day (BOPD) from 25 May 2023 to 31 March and 32,000BOPD in April 2024, according to upstream regulator NUPRC.

“A market participant said Nigeria needs to reduce the “gangs of competing regulators” operating at its petroleum export terminals and unify multiple certifications of petroleum export quantity and quality if it expects to provide genuine ease of doing business.

The Aje, Abo, Okono and Ugo-Ocha streams were assigned to Candid Oil Services even though Aje last produced oil in November 2021, according to NUPRC. And Okono is not producing as we speak. Norwegian independent Petronor said in November 2023 that a 25,000 Barrels of Oil Equivalent Per Day (BOEPD) redevelopment target had been set for Aje as a gas producer. Partners in the asset would soon complete the re-processing of seismic data in preparation for drilling four or five gas wells, constructing a 30 kilometre gas pipeline and getting an FPSO with gas processing capacity, Petronor said. But the company did not provide a restart date. CBN also assigned LNG and NGLs exports from terminals in Escravos and Bonny to Dakee Engineering and Construction.

But CBN is yet to name inspection agents for oil products exports. The 650,000Barrels Per Stream Day (BPSD) Dangote refinery, which started to export naphtha in March 2024, said on May 8, 2024, that it expects to start gasoline (petrol) production in June. An industry source said Dangote has now received approval to start its residual fluid catalytic cracker. The refinery previously said it expected to export 8Million litres/day of petrol when it ramps up production to full capacity.

CBN may also later name inspection agents for the jetties of the NNPC-operated 210,000BPSD Port Harcourt and 125,000BPSD Warri refineries, which are both under different rehabilitation contracts. An industry source said while work is ongoing at both refineries much remains to be done and it would not be surprising if neither Port Harcourt nor Warri restart production this year. But NNPC maintains the two refineries will restart in 2024. Previous restart deadlines have been missed. The Warri refinery was shut in 2019 and Port Harcourt in 2020 but industry sources said that naphtha and fuel oil from the 5,000BPSD Waltersmith and 11,000 BPSD Aradel modular refineries are currently exported from the jetties of the Warri and Port Harcourt refineries, respectively.

Export pre-shipment inspection agents “ascertain the quality, quantity and price competitiveness” of exports, acting as agents of the CBN as it monitors “the repatriation of all export proceeds”. A market participant said that the inspection agents always had a low profile but CBN’s latest announcement may signal their increasing prominence as the central bank continues aggressive foreign exchange reserves management in response to a weak and volatile naira and high inflation.

A separate market participant said Nigeria needs to reduce the “gangs of competing regulators” operating at its petroleum export terminals and unify multiple certifications of petroleum export quantity and quality if it expects to provide genuine ease of doing business. CBN also announced two monitoring and evaluation agents, Arlington Securitas Nigeria and DV Howells Nigeria, to supervise the work of the nine inspection agents.

But an energy lawyer said CBN is only discharging its statutory responsibilities and that the Pre-shipment Inspection of Exports Act, which empowers the central banker, dates back to 1966 and was modified by the military government in 1996 before being compiled as one of the Laws of the Federation of Nigeria (LFN) in 2004.

The paper trail generated in compliance with that law was evidence and the basis of Chevron’s defence in a suit filed by the federal government alleging that a Chevron subsidiary did not declare a cargo of oil that was exported to the US. Therefore the provisions of the law and its enforcement by CBN actually protects oil companies, the lawyer said.

“CBN did not assign the Nembe crude stream or the Galilean 7 FSO from which it is produced to an inspection agent in its latest circular. Production of the Nembe crude stream started in 2023. Its output averaged 24,000BOPD from 25 May 2023 to 31 March 2024 and 32,000BOPD in April 2024, according to upstream regulator NUPRC.”

CBN has also now said the restriction it introduced in February for 50% of oil export revenues to be maintained as domestic bank balances for 90 days by foreign upstream companies, permits withdrawals within the 90-day period for the payment of local corporate taxes, petroleum taxes and royalties, cash calls and contractor invoices, operating loan payments or hard currency sales in the official domestic market.

Chariot Confirms Moroccan Probe is a Duster

UK junior Chariot Limited has reported that a wildcat probe it drilled onshore Morocco has turned out to be a dud.

The RZK-1 well on the Gaufrette prospect, is the first of a two well drilling campaign, in the Loukos Onshore licence in Africa’s north westernmost country.

“Following comprehensive evaluation of the well data, including wireline logs, cuttings and gas data, preliminary interpretation confirms thick intervals of good quality reservoir exceeding pre-drill expectations”, Chariot explains in a statement, “with multiple gas shows of various intensity, however these reservoirs are largely interpreted to be water-bearing and therefore are sub-economic.”

Chariot, which describes itself as “Africa focused transitional energy group with three business streams, Transitional Gas, Transitional Power and Green Hydrogen”, says that the “RZK-1 well was safely and efficiently drilled, on time and on budget, to a final measured depth of 961metres through the Gaufrette Main target which was found on prognosis”.

The company, operates the Loukos Onshore licence with 75% interest, State hydrocarbon firm, ONHYM, holds the remaining 25%.

Further post-drill analysis will be conducted, alongside interpretation of the newly reprocessed  three dimensional (3D )seismic data, to understand the results of the well and implications for future exploration in the Gaufrette area, including potential deeper objectives.

“The well will now be plugged and abandoned and the rig will then move to the second location of the campaign to drill the OBA-1 well at the Dartois prospect in the coming days, which is targeting a different independent prospect. An update will follow confirming commencement of these operations”, Chariot adds.



Nigeria’s 2024 Bid Round Continues Roadshow:  NUPRC Releases Time Table, to Wrap Up in December

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC )’s International Road Show  moved to Miami, in the state of Florida, in the United States on May 14 2024, a week after the agency launched the US leg of the licencing round at the Offshore Technology Conference in Huston.

NUPRC is offering 12 blocks in its second licencing round in 15 months. The commission says that  in addition to these blocks, the seven deep offshore blocks from the 2022/2023 mini-bid round exercise shall also be concluded, bringing a total of 19 oil blocks offered to investors in 2024.

The 2022/2023 ultradeep water mini bid round, which was launched with fanfare in January 2023, was to conclude in July 2023 but was held up by lack of response from the new executive administration which came into power in May 2023.

“The Roadshow  is needed to showcase and provide insight into new investment opportunities in Oil and Gas Exploration in Nigeria”, the regulator remarks in its promotional material, adding that the core objectives were to: “release the requirements for qualification;  present avenues for new business and partnership opportunities; provide exclusive information, data, teasers of oil licenses in proposed 2024 bid rounds; highlight the hydrocarbon potential of the blocks and existing data packages; establish legal, fiscal and contractual framework and commercial terms and ease matchmaking between country representatives and NUPRC”.

The regulatory agency has released a Time Table for the bid round, which notes that registration/submission of Pre-Qualification documents is currently ongoing and will end on June 26, 2024.

2022-2023 Ultradeepwater Offerings are included

A Pre-Bid Conference is scheduled for May 25, 2024 and Evaluation of submissions/publication of prequalified applicants are scheduled to run from Jun 28 to July 2, 2024.

NUPRC will invite selected companies to participate in the licencing round on July 4, a process that is scheduled to end on July 8. The commission will then open up its portals for data access/ data purchase/evaluation/bid preparation and submission. That process will last for more than three months from July 8 to October 15, 2024.

Nigeria holds 36.966 Billion Barrels of Oil, which ranks her 2nd in Africa, 8th in OPEC and 11th in the world, the NUPRC promotional material explains. “Nigeria is also richly endowed with 208.83 Trillion cubit feet (Tcf) of Natural Gas reserves with upside potential estimated at 600 Tcf”.

Find below, the full schedule of events in the bid round calendar:

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