All posts tagged feature


South Sudan Launches First Oil and Gas Bid Round

By Foluso Ogunsan, Upstream Correspondent

South Sudan has announced the launch of its first Oil Licensing Round, aiming “to welcome back experienced partners and operators following significant progress in returning to peace and stability”, the country’s Ministry of Petroleum says in a release.

With new data, analysis, and government mechanisms, the Ministry seeks to attract high-quality investors and partners.

“Potential investors are now able to request all relevant information from the Ministry of Petroleum until August 23rd 2021, by expressing their interest and providing contact details online at www.southsudanlicensinground.com”, the statement explains.

“Once the expression of interest process is concluded, the Ministry of Petroleum will host a virtual series of data presentations, followed by an international roadshow”.

There are thirteen open acreages, in the country, out of a total of 21, but this particular round is offering five (5) tracts, namely A2, A5, B1, B4 and D2, with areal sizes ranging between 4,000 and 25,000km2, and most comprising between 15,000 and 20,000 km2. This means there eight (8) “free” acreages, but the Ministry doesn’t say whether these could be negotiated for, even if they are not in the round.

“This bidding round is for a number of selected blocks, which will be facilitated and evaluated based on set criteria by the MoP”, the Ministry says.

South Sudan’s upstream hydrocarbon activity has been dominated by Asian companies, notably China National Petroleum Corporation and Petronas, respectively from China and Malaysia. They produced, in partnership with South Sudan’s government owned Nile Petroleum, about 139,000Barrels of Oil Per Day in 2019, according to the BP Review of Statistics, the industry bible for country-level oil and gas production figures. As these firms themselves are state hydrocarbon companies, South Sudan can certainly do with private and publicly listed companies from the West and the Middle East.

Below are further details from the South Sudan’s Ministry of Petroleum regarding the bid round:

Currently there are three consortiums operating producing blocks in South Sudan, with another four oil exploration companies having acquired production sharing contracts.

1. Producing Blocks:

• Block 3 and 7 – DAR Petroleum Operating Company: China National Petroleum Corporation, Petronas, Nile Petroleum Corporation (8% equity)

• Block 1, 2 & 4 – Greater Pioneer Operating Company: China National Petroleum Corporation, Petronas, Nile Petroleum Corporation (5% equity)

• Block 5A – Sudd Petroleum Operating Company: Petronas, Nile Petroleum Corporation (8% equity)

2. Awarded Exploration Blocks:

• Block B3 – Oranto Petroleum, Nile Petroleum Corporation (10% equity) 

• Block 5B – Ascom, Nile Petroleum Corporation (10% equity) 

• Block B2- Strategic Fuel Fund, Nile Petroleum Corporation (10% equity)

3. Free Blocks:

• Blocks: A1, A2, A3, A4, A5, A6

• Blocks: B1, B4• Blocks: C1, C2

• Blocks: D1, D2• Blocks: E1, E24. 

First Licensing Round:• Blocks A2, A5, B1, B4, D2

Potential investors are now able to request all relevant information from the Ministry of Petroleum until August 23rd 2021, by expressing their interest and providing contact details online at www.southsudanlicensinground.com

They can also contact directly:
For information about data access and purchase:
Pawel Ulatowski
Director, ZDS
southsudan@zebradata.com

For information about geoscience:
Dr. Omar B. Abu-elbashar
MD, Petro-Tec
petrotec@hotmail.com
petrotec@petrotec-int.com

“After years of instability and conflict, lasting peace is finally gaining a foothold in the country following the establishment of the Transitional Government of National Unity (TGNU) in February 2020, and the follow-up agreement over governance of the country’s states. South Sudan is now firmly back on a positive developmental path and is expected to continue as one of Africa’s fastest-growing countries in the foreseeable future”.


Of Beads and Trinkets

By Gerard Kreeft

The International Energy Agency (IEA) in its African Energy Outlook, 2019, paints a vivid picture of Africa’s situation.

The agency predicts that one-in-two people added to the global population between now and 2040 will be African.

Nearly half of Africa’s 600Million people did not have access to electricity in 2018, while around 80% of sub-Sahara African companies suffered frequent disruptions leading to economic losses.

 The Africa Scenario is a plea for full access to modern electricity by 2030, tripling the average number of people gaining access per year from around 20Million to over 60Million. Grid expansion and densification is the least cost option for nearly 45% of the currently deprived, mini-grids for 30%, and stand-alone systems for 25%.

LPG is used by more than half of those gaining access to clean cooking in urban areas in sub-Sahara Africa; in rural areas, home to the majority without access, improved cookstoves are by far the preferred solution.

Although the African economy will grow four-fold by 2040, energy efficiency can limit primary energy to just 50%. Current electricity demand in Africa is 700 terawatt-hours(TWh) with over North Africa and South Africa accounting for over 70% of the total. In the African Scenario, growth could reach 2300TWh, with much of the additional demand coming from middle and higher income households.

Solar is only 5 GW, less than 1% of global installed capacity. In African Scenario solar overtakes hydropower and natural gas to become the largest electrical source in Africa in terms of installed capacity.

Tripling of the electricity demand requires building a more reliable power system and a greater focus on transmission and distribution to reduce power outages. Significant scale-up of investment in grids and generation is required given that Africa has 17% of the world’s population and just 4% of the global power supply.

Natural gas meets half of North Africa’s fuel requirements, but in sub-Sahara Africa only 5%. Gas will rise to 24% by 2040, mainly to power industry.

 Green help from the oil majors?

Will the IOCs produce green energy in Africa? According to Toyin Akinosho, Publisher, African Oil and Gas Report, African oil and gas revenues are financing the energy transition in the rest of the world:  ” the oil majors are funding clean energy from the balance sheet of dirty oil.”

Take TOTALEnergies.

The company is stimulating new renewable energy on a global basis while dispatching oil and gas projects in Africa. The French major’s lead in taking on board renewables as part of its reserve count, would be expected to set a precedent for other renewable projects in Africa, thus helping the continent move forward with the Energy Transition. Unfortunately, this has not proven to be the case.

Around 30% of TOTALEnergies production is in Africa but less than 0.5% of its new energy investment will directly benefit the continent. Yet according to Akinosho, TOTALEnergies is the best African renewable energy investor out of the six majors which include:

ENIlaunched with fanfare the installation of a 14KW solar system in a medical facility in Angola. In Egypt where ENI is a major player the company has not featured in the country’s relatively aggressive renewable energy plan.

BPwhich has pumped over a billion barrels of oil in Angola in the last 20 years has excluded Africa from all of its renewable energy plans.

Equinor-which pumps 120,000 barrels of oil equivalent per day in Angola also has no plans for renewables.

Chevron’s focus is not so much about investing in stand alone renewable projects but increasing renewable power in support of its business to lower its carbon intensity.

Shell-will likely take out $7.5Billion out of Nigeria between 2021-2025. Shell has funded some offgrid projects through solar developers in Nigeria, which basically represents Shell’s footprint in Africa.

If Big Oil is indeed shifting African oil money outside the continent to finance the energy transition elsewhere, what steps should be taken to ensure that Africa’s oil money is indeed used for Africa’s energy transition?

This is perhaps highly relevant at a time when national oil companies have to fill the vacuum being vacated by the international oil companies. Think of the upcoming merger between the Angolan activities of both BP and Eni, possibly to be followed by other African activities.

Jason Bordoff, Columbia Centre on Global Energy Policy, recently indicated that any shift away from the major oil producers could in the short term ..  “benefit the world’s leading petrostates, that would increase the share of global supply controlled by OPEC+ and increase the cartel’s control of world oil markets.”

According to Bordoff private equity companies are turning their attention to assets being aborted by the oil majors. Private equity now accounts for 10% of all North Sea production, up from virtually zero in 2014. Bordoff concludes that Chinese banks have also shown an ability to fill these investment slots.  Could Sub-Sahara Africa become part of this scenario?

New independent start-ups could become part of the equation.  Look at Nigeria: today 25 private companies produce nearly 400,000bopd.  If green incentives become part of the mix, growth is assured.

Africa’s power sector: The new energy players?

A final part of the equation could well be Africa’s national power and transmission companies, normally seen as a distinct and separate category and not associated with the oil and gas industry. Their story has in many cases not been properly told. Yet in a period of great transition, we can anticipate movement from the power sector.

Will the international power companies – Enel, Engie and EDP, who have broad international project experience across Africa-provide their African national power colleagues a helping hand?

 Enel

Antonio Cammisecra, CEO of Enel Green Power symbolizes Enel in Africa. “We’re Africa’s top privately-owned renewable energy operator. This is something we can definitely feel proud about but still, it’s a drop in the bucket if we consider the sheer size of Africa’s untapped potential and the huge amount of energy it needs.”

The company claims to be Africa’s largest independent renewable energy player in terms of MW installed. According to Enel’s 2019-2021 strategic plan the Enel Group is investing around €700 million in the continent, building 900 MW of wind and solar capacity.

In South Africa the company has 1.2 GW generating capacity scattered over 13 projects across the country.

In Ethiopia a 120 MW solar power plant has been installed in Metehara, Oromia Region.  All net electricity generated by the plant is delivered to the power grid. This project contributes to the achievement of Ethiopia’s electricity master plan for solar installation target of 300 MW by 2020.

In Morocco, Enel Green Power has led a consortium to complete the construction of the Midelt wind power plant, with a capacity of 210 MW. Morocco’s Integrated Wind Power Project will have a total capacity of 850 MW.

Morocco already produces some 3GW of renewable power and aims to increase its renewable production capacity to 52% by 2030. In 2008 the country imported almost 98% of its fuel, oil and gas, and therefore choose renewables to become more energy independent.

In Zambia Enel developed, built, owns and operates the 34 MW Ngonye solar PV facility, located in southern Zambia. Power will be sold to the country’s state-owned utility ZESCO through a 25-year power purchase agreement.

 Engie

Gillian-Alexandre Huart, CEO of ENGIE Energy Access, is Engie’s man in Africa. The company’s Access to Energy business on the continent, is tasked with providing millions of households and businesses across the continent with clean and affordable energy.

Engie’s Energy Access is now one of the leading off-grid, Pay-As-You-Go (PAYGo) solar and mini-grid solutions providers in Africa, serving over one million customers and impacting more than five million lives in nine countries – Uganda, Zambia, Kenya, Tanzania, Rwanda, Nigeria, Benin, Côte d’Ivoire, and Mozambique.

Engie Africa counts nearly 4,000 employees, and has 3.15 GW of power generation capacity. The group has more than 50 years of experience on the African continent and has the unique ability to implement integrated solutions all along the energy value chain, from centralized electricity production to off-grid solutions (Solar Home Systems, mini-grids) and energy services.

 EDF (Électricité de France)

EDF partners with innovative start-ups to provide energy and services to a rural clientele in South Africa, Côte d’Ivoire, Ghana, Senegal, Kenya and Togo.

Such services enable more than 1Million people to light and power their low-consumption household appliances or also to be equipped by solar powered water pumps, thereby significantly improving their crop yields.

The company plans an extensive expansion of its solar and wind activities throughout Africa in the coming years.

 Some final considerations

Recently IRENA (International Renewable Energy Agency) and AfDB (African Development Bank) have jointly announced support of low carbon projects to enhance the energy transition. IRENA in its Global Renewable Outlook states the sub-Sahara Africa could generate as much as 67% of its power from indigenous and clean renewable sources by 2030. In the energy transition this would increase welfare and stimulate the creation of up to 2Million green jobs by 2050.

Certainly public-private partnerships should be part of this mix. Governments to ensure a broad basis of support and energy companies who have the know-how and project management skills. A key bonus for oil/energy companies is knowing that renewables can be added to their reserve count.

Developing Africa’s Green Deal should be the key theme for a new partnership among oil and gas companies, national oil and gas companies and electrical and transmission companies. Such collaboration should work closely with The Clean Energy Corridor which aims to support integration of cost-effective renewable power options to national systems, promote its cross-border trade and support creation of regional markets for renewable energy.

The Clean Energy Corridor initiative has two African components: (1.) African Clean Energy Corridor (ACEC) for the member countries of Eastern and Southern African power pools.  (2.) West African Clean Energy Corridor (WACEC) within the Economic Community of West African States.

Gerard Kreeft, MA (Carleton University, Ottawa, Ontario, Canada) Energy Transition Advisor, has more than 30 years’ experience in the energy sector. He was the founder of EnergyWise.  He has managed and implemented oil and gas conferences in Alaska, Angola, Brazil, Canada, Kazakhstan, Libya and Russia. He is a Canadian/Dutch citizen. He writes on a regular basis for Africa Oil +Gas Report


Nigeria Oil & Gas Conference Returns for 20th Year

PARTNER CONTENT

The Nigeria Oil and Gas Conference & Exhibition (NOG 2021) provides a platform for the international energy industry to meet with Nigerian oil and gas decision makers to hear policy announcements, explore partnership opportunities and discuss the strategies that will drive the nation towards energy sufficiency.

Serving the Nigerian oil and gas industry for 20 years, NOG 2021 will focus on the strategies that will be employed by the Nigerian government and private sector leaders to navigate the emerging business environment – helping to set the nation’s energy agenda for the next 12 months and beyond.

The strategic conference event is attended by both local and international stakeholders in the oil and gas sector. Speakers at this year’s event include; The Minister of State for Petroleum Resources, Federal Republic of Nigeria, H.E. Dr Timipre Sylva, Mele Kolo Kyari, Group Managing Director, NNPC, Engr Simbi Wabote, Executive Secretary, Nigerian Content Development & Monitoring Board and over 80 CEOs/Directors of leading International and Indigenous Oil and Gas companies with attendance from more than 25 countries.

At dmg events we are working closely with all stakeholders and local partners to ensure a safe and secure in-person event in July 2021, and we are looking forward to reconvening the 20th Nigeria Oil and Gas Conference & Exhibition.

Click here to find out how you can get involved in the 2021 in-person Conference & Exhibition.

 


Ruth Nankabirwa is Uganda’s New Petroleum Minister, Will Oversee FID for Lake Albert

By Akpelu Paul Kelechi

President Yoweri Museveni of Uganda has appointed Ruth Nankabirwa Ssentamu, former Chief Whip in the government, as the new Minister for Energy and Mineral Development, a powerful position which includes oversight of power supply and exploration and production of petroleum resources.

With a new cabinet in place after a bitterly fought election, the Ugandan government can proceed to consider the one major item on the table: the Final Investment Decision for the Lake Albert development project, the Ugandan basin wide crude oil development, which has been on course for 15 years.

Nankabirwa, 55, is a career politician who has been in government since 1998. She replaces Irene Muloni, the Ugandan engineer who had headed the Energy and Mineral Development Ministry for 10 years since 2011, and saw much of the challenging twists and turns of the Lake Albert development, all through to April 2021, when the partners TOTALEnergies, CNOOC, and the Tanzanian and Ugandan governments, concluded the final agreements required to launch this major project.

The discovery of oil, via the drilling of Mputa 1 onshore Uganda, was made in 2006, a year before the well that led to Ghana’s first oil in 2010 was drilled. But the tyranny of geology (landlocked, waxy crude, over a thousand kilometres from the coast), and one of the industry’s most arduous regulatory processes (the Ugandan bureaucracy), stalled the development.

Uganda’s new energy minister served as Chief Government Whip, a Cabinet-level position in the country’s executive apparatus from March 2015 to May 2021, when the cabinet was dissolved. Before then, she was State Minister for Fisheries from May 2011 to March 2015 and was State Minister for Microfinance from February 2009 to May 2011.

A graduate of Fine Art (Bachelor’s degree) and Conflict Studies (Master’s), from Makerere University, Nankabirwa started her political work in 1994, when she served as a delegate to the Constituent Assembly.

In 1996, Ruth Nankabirwa was elected to serve as the member of parliament for Woman Delegate for Kiboga District. From 1998 through 2001, she served as Minister of State for the Lowero Triangle in the Office of the Prime Minister. Between 2001 and 2009, she served as State Minister for Defence. The Energy Minister’s j position, then, is her first as a senior Minister.


PRESS RELEASE/Lekan Akinyanmi Leads a “Mass Resignation” of Directors from Lekoil Cayman

PARTNER CONTENT
Lekoil Nigeria, in which Lekoil Cayman, a Cayman Islands-registered AIM-listed holding company holds a 40% equity holding, announces that a number of its directors and senior executives have resigned with immediate effect from the Board of Lekoil Cayman.

Aisha Muhammed-Oyebode, Chair of Lekoil Nigeria, has resigned as a non-executive Director of Lekoil Cayman. Lekan Akinyanmi, CEO of Lekoil Nigeria, has resigned as an executive Director of Lekoil Cayman. Gloria Iroegbunam, Company Secretary of Lekoil Nigeria, has resigned as Company Secretary of Lekoil Cayman. All three will remain in their current positions at Lekoil Nigeria.

The resignations have been prompted by the recent behaviour and actions of the of the Board of Lekoil Cayman. In particular, Mr. Akinyanmi vigorously disputes his unilateral termination as CEO of Lekoil Cayman and all of the statements made by Lekoil Cayman in connection with his employment contract and the loan agreement between him and Lekoil Cayman.

Mrs Muhammed-Oyebode commented: “The Board and management of Lekoil Nigeria remains committed to its vision of developing the company’s assets and we wish to assure our numerous stakeholders, especially our shareholders, partners and colleagues, that the strategic national assets under our purview will be protected by all legitimate means available to us.  This in turn will ensure the restoration of value for all shareholders, both in Lekoil Nigeria and Lekoil Cayman.

“The Board of Directors of Lekoil Cayman continue to show a blatant disregard for the Shareholder Agreement, a legally binding agreement which governs the relationship between Lekoil Cayman and Lekoil Nigeria and which was implemented at the time of Lekoil Cayman’s listing to meet the requirements in Nigerian law in respect of control of indigenous strategic assets.

“The continuous breaches of due process and corporate governance by the Board of Lekoil Cayman has left us with no option but to resign collectively from the Board of Lekoil Cayman.  Meanwhile, Lekoil Nigeria has separately written to Lekoil Limited’s advisers and to the AIM authorities requesting them to investigate the behaviour of the current Board of Lekoil Limited.”

 


Tim Woodall Walks Out on FAR

FAR has announced Timothy Woodall’s resignation from its Board, one day to his proposed re-election as a director.

The exit, announced by the company June 21, 2021, was “effective immediately”. 

Mr. Woodall has been a Director since August 2017 and an Executive Director since September 2019.

He was FAR’s commercial director, overseeing the company’s upstream asset sales and purchases and overall deal making. 

Prior to taking executive role at FAR, Woodall, an Australian national, was managing director of Miro Advisors for six years, chief executive of oil and gas technical consulting firm RISC and chief financial officer of New Orleans based intermediate E&P company, Energy Partners.

His resume says he has worked as an executive director in the energy division at UBS’ London offices and spent three years in the Credit Suisse oil and gas team in New York. He was also head of corporate development at Woodside Energy, Australia’s largest E&P firm.

FAR said of Woodall’s decision to quit: “As a result of Mr.Woodall’s resignation, the resolution to re-elect Mr. Woodall as a director (Resolution 2) to be voted on by shareholders at the Company’s Annual General Meeting has been withdrawn. The Annual General Meeting will be held tomorrow, 22 June 2021. FAR advised on 7 May 2021 and in the Notice of Meeting dated 21 May 2021 that Mr. Woodall’s executive role would cease on 2 July 2021”.


Construction Starts on Mozambique’s Cuamba Solar-Battery Project

United Kingdom-based Globeleq has commenced construction on the 19MWp/15MWac Cuamba Solar PV plant with 2MW/7MWh battery storage in the Tetereane district of Cuamba, Niassa province, Mozambique.

Source Capital, the private equity firm is involved in the $32Million project. So is the Electricidade de Moçambique (EdM). The project is aimed at bolstering the country’s northern grid, including upgrading the existing Cuamba substation.

Cuamba will be the first independent power producer in Mozambique to use energy storage. 

Power will be sold through a 25-year power purchase agreement signed with EdM in September 2020. 

The project is being strongly backed by the Private Infrastructure Development Group (PIDG)’s Emerging Africa Infrastructure Fund, which is looking to provide $19Million debt and the project will also receive a $7Million viability gap funding grant from PIDG and a $1Million grant from CDC Plus to reduce the tariff and finance the storage system.

Spain’s TSK is the engineering, procurement and construction contractor. Globeleq will oversee construction and operations of the plant.


Jubilee, TEN Deliver 120MMscf/d of Gas to Ghana’s Atuabo Plant

By John Ankromah, in Tema

Tullow Oil has announced that its oilfield production performance in Ghana “continues to be supported by reliable gas offtake from the Government of Ghana”.

That offtake, from Jubilee field and the TEN cluster of fields, “is regularly averaging between 110 – 130MMscf/d”, the company says in its latest operational statement.

This is a far more upbeat news about gas production than Tullow has had in the last two years.

It suggests that the Ghanaian economy is absorbing an increasing volume of natural gas.  In late 2019, Tullow had lamented that “Gas export from both fields has been limited in 2019 due to low demand from the Ghana National Petroleum Company (GNPC)”, which is the offtaker.

“Discussions on increasing gas offtake are ongoing with GNPC with an increase anticipated towards end of 2019. Sustaining increased levels of gas offtake will reduce the amount of gas being reinjected into the fields, improving oil production over time”, the operator explained.

The gas that Tullow supplies to the Ghanaian government is delivered unprocessed from the two FPSOs (Kwame Krumah for Jubilee and John Atta Mills for TEN) through 12-inchpipelines to the Ghana National Gas Corporation (GNGC) controlled Atuabo plant, which has a processing capacity of 150MMscf/d. Processed gas is evacuated from Atuabo plant through a 20-inch 111km pipeline to (primarily) Volta River Authority’s Thermal Power Stations.


Nigeria’s Producers Are Generally Non-Compliant with Oil Spill Regulations, Data Shows

By Bunmi Christiana Aduloju

NAREP Fellow

Since oil was first discovered in Oloibiri, in Nigeria’s Bayelsa State in 1956, communities hosting the hydrocarbon reservoirs in the Niger Delta have had to put up with devastating oil spills. Biodiversity has suffered from harm done to it by the continual flowing oil in the region.  

An integral part of oil spill clean-up and remediation is oil stoppage. This practice aims to close off oil spills as early as possible. The faster the response to oil spills, the likelier the cushioning of its effects and so ideally, the journey to oil spill clean-up should begin in twenty-four (24) hours. 

In Nigeria, under the law, oil spills must be stopped by thefacility operators within 24 hours of being notified of the oil spill, whether the spill was caused by the company’s activities or third-party action. In other words, it is the duty of facility operators to ensure that oil flow is closed off as soon as it is detected. 

NEGLIGENCE 

However, there are shortfalls in the discontinuation of oil spills at the appropriate time by oil companies, according to data obtained from the National Oil Spill Detection and Response Agency (NOSDRA), the Federal Government oil spill monitoring agency in Nigeria.

An Africa Oil+Gas Report analysis of data obtained from NOSDRA, indicate that a total of 494 oil spill incidents occurred from January 2020 till May 2021.

A further analysis of the time between oil spill incidence and the oil spill stop showed that in 2020 alone, there were about 373 incidents of oil spill.

At the time of filing this report, from January 2020 till May 2021, oil companies failed to stop oil spill within 24 hours of the incident in 110 cases and in 133 cases, oil companies stopped oil spill within 24 hours. In 251 cases, due to missing data in NOSDRA’s dataset, it was not specified when the oil spill was closed off. 

Within this timeframe, a total of 26178.34 barrels of oil was spilled by 26 oil companies.

The Shell Petroleum Development Company (SPDC) was the highest offender within this period. In 80 cases, it failed to stop oil spill within 24 hours and in 82 cases it stopped oil spill in 24 hours. Also, SPDC tops the list with the longest response time to oil spill during this period. It stopped an oil spill after 185 days in an incident that occurred due to sabotage at the 28” Bomu-Bonny Trunckline at Alaskiri, Rivers State on the 28th of January, 2020. The oil spill was stopped on the 31st of July, 2020. The impact of the spill was labelled, “Non-leaking and no impact on the environment.”

However, criss-crossing NOSDRA’s data with SPDC’s oil spill report showed that the company did not report this incident in its January 2020 report

In another occurrence, on the 23rd of March 2021, which is the second slowest response to oil spill stoppage in the analysed period of January 2020 to May 2021, Shell Petroleum Development Company (SPDC) responded to an oil spill in 20days. The oil spill was caused by corrosion and it affected 3” Imo River Well63T at the Owaza community, Etche Local Government, Rivers State. The impact was labelled, “Dripped of crude oil within right of way.” It was stopped on the 12th of April, 2020. However, in SPDC’s March 2021 oil spill report, this incident was recorded to have occurred on the 24th of March, 2021. Additional information by SPDC on the oil spill event attributed the delay to “security concerns.”

The third slowest response to oil spill stop, brought off by Nigerian Agip Oil Company (NAOC), was 16 days, according to NOSDRA. The incident was caused by sabotage at the 16” Tuomo Ogbainbiri Delivery Gas Line at Ayamasa, at EkeremorLocal Government, Bayelsa and the impact was labelled, “Gaseous Emission (Condensate).”

The oil companies who complied fully with the oil spill stoppage timeline of 24 hours from January 2020 till May 2021 are KAMLIK Nigeria Limited, Pipelines and Products Marketing Company (PPMC), PPMC (NPSC) and TOTALUpstream Nigeria (TUPNI), according to NOSDRA’s data. 

The companies with missing data during this period are Mobil Producing Nigeria Limited (MPN), National Petroleum Development Company (NPDC), Heritage Energy Operational Service Limited, Enageed Resources Limited, Platform Petroleum Limited, Infravision Ltd Company, Esso Exploration and Production and Production Nigeria Limited, First Hydrocarbon Nigeria, ND Western, Midwestern Oil & Gas Corporation, Neconde and Pan Ocean Oil Corporation Nigeria Limited (POOCN). 

CLEANING-UP OIL

Out of the 494 incidents of oil spill recorded from January 2020 till May 2021 by NOSDRA, oil spill clean-up data was recorded scantily for only 40 incidents. First Hydrocarbon Nigeria started cleaning an oil spill after 13 months and 10 days, accounting for the longest response time in the 40 incidents recorded. The incident, caused by sabotage, happened at Isoko-North, Delta State at the NPDC OGINI – Eriemu 10” Delivery Line at Eniagbedhi Owhe on the 23rd of February, 2021. It started cleaning the oil spill on the 10th of March, 2021 and ended the clean-up process on the 22nd of April, 2021. 

The fastest clean up response was carried out by NAOC from January 2020 till May 2021. On three occasions, on the 9th of January, 2020, 11th of January, 2020 and the 30th of January, 2020 at the Ebocha 9l Flowline at Mgbede, Rivers State and the 10” Clough Creek/Tebidaba Pipeline at Gbaraun, Bayelsa State, oil spill clean-up was achieved in 24 hours.

SHELL AND ENI

In 2018, Amnesty International, an international human rights organisation, published a report that accused Shell and Nigerian Agip Oil Company (NAOC), subsidiaries of Shell Petroleum Development Company (SPDC) and ENI respectively, of being negligent with oil spill clean-up. Long delays in conducting the Joint Investigative Visit (JIV) to ascertain the extent of damage of the oil spill to the environment, slow response to shutting off the flow of oil, and contradicting evidence pointing to their activities instead of recorded oil spill caused by “third party interference”, are some of the issues raised by the international NGO. 

The 2011 United Nations Environment Programme (UNEP) report on Ogoniland reiterated that, “Any delay in cleaning up an oil spill will lead to oil being washed away by rainwater, traversing communities and farmland and almost always ending up in the creeks.” 

As with Ogoniland, in Nigeria, communities are at the receiving end of oil spills. Even when Shell Petroleum Development Company, in keeping with the polluter-pays principle, accepted liability for the clean-up of Ogoniland 11 years after the oil spill, the UNEP study revealed that cleaning up Ogoniland could take about 30 years. 

OIL SPILL COMPENSATION

According to NOSDRA, sabotage and theft is the highest cause of oil spill in oil producing states. 

Consequently, if an oil spill is not caused by the company’s activities, compensation would not be paid to the affected communities. Stakeholders Democracy Network (SDN), a watchdog organisation, in one of its publications titled, International Compensation Systems for Oil Spills in Relation to Reform in Nigeriastated that the compensation structure for oil spill in Nigeria doesn’t measure up to international standards, as they come with “highly variable rates of compensation and high legal costs.”

Also, it stated that because oil spills instigated by third parties are not compensated in Nigeria, “many communities are blighted by the illegal actions of the few.”

This story was produced under the NAREP Media Oil and Gas 2021 Fellowship of the Premium Times Centre for Investigative Journalism. Aduloju is a reporter with Africa Oil+Gas Report.


How OPEC+ Cuts Have Sliced Deep into Nigerian Crude Output

By Bunmi Christiana Aduloju

NAPREP Fellow

The COVID-19 pandemic roiled global markets for most of 2020, and kept down demand for crude oil in the earlier part of the year, nudging the price per barrel of the commodity to as low as $-37.63 on April 20th, 2020, (West Texas Intermediate, an international oil benchmark), for the first time in history.  

OPEC+ AGREEMENT 

As the demand collapse held up, the Organisation of Petroleum Exporting Countries (OPEC) and its allies, OPEC+, an intergovernmental cartel, reached an agreement on the 9th of April, 2020, to reduce their crude oil production output in order to rebalance the international oil market. This was the beginning of a journey to periodic cuts of crude oil by member states of OPEC and its allies. 

On the 12th of April, 2020, they finalised the agreement and decided to reduce oil output to 9.7Million barrels per day(9.7MMBOPD) from May 1, 2020 to June 30, 2020. From July 1, 2020 to December 31, 2020, 7.7MMBOPD and a 5.8MMBOPD cut in output from January 1, 2021 to April 30, 2022. The reference point for the calculation of the cut down was the oil production for October 2018.

OPEC is on familiar grounds whenever it takes a decision to modify crude oil production output. According to a Reuters report, the cartel has changed production output 34 times – often exempting some of its member countries from these cuts – from 1998 to 2018. 

But this particular cut which started in May 2020 was referred to as the “single largest output cut in history.” With this cut, the oil production in OPEC member countries sank to the lowest in almost 20 years, in the first month of the curtailment. 

Prior to this agreement, there had been a price war between Russia and Saudi Arabia which instigated a major oil price crashing the global market. Nigeria, Africa’s giant, being a member country of OPEC, joined in the production cuts.

OPEC+ CUTS AND NIGERIA

In fulfilment of the OPEC+ decision, Nigeria agreed to cut its production to 1.412MMBOPD for May to June 2020, 1.495MMBOPD for July to December 2020 and 1.579MMBOPD for January 2021 to April 2022, based on the reference production of October 2018 of 1.829MMBOPD. These production cuts exclude condensate production which is exempt from OPEC’s output cuts.

These periodical cuts have proven to be an effective mechanism for cushioning the oil glut that pervaded the international oil market in the early months of 2020.

Oil prices skyrocketed with the OPEC cuts. Brent crude oil futures, an international oil benchmark, jumped from as low as $26 on April 20th, 2020 to as high as $71.49 on June 7, 2021 and WTI price, from as low as $-37.63 on the 20th of April, 2020 to as high as $69.23 on June 7, 2021. 

Oil prices may have increased with the OPEC+ cuts, which is an advantage for oil revenue generation in terms of FX, but “the rising oil prices could also be a curse for Nigeria as it has to pay more because of an operating cost of about $40,” notes Bamidele Samuel, a senior research analyst with one of the big four accounting firms in Lagos.

Compliance or Non-compliance 

Nigeria started on a discordant note, in the first month of the curtailment, by complying only partially with its agreed portion of the cut. The country overproduced crude oil in May 2020, with about 1.61MMBOPD, accounting for about 52% compliance. 

However, Nigeria promised to make up for the non-compliance by the end of June 2020 or no later than mid-July 2020. 

As OPEC+ alliance extended the 9.7Million barrels oil production cut – which was supposed to end in June 2020 – into July 2020 to further rebalance the oil market, again, Nigeria overproduced oil at 1. 49MMBOPD, against its promised 1.41MMBOPD production for July, according to OPEC monthly oil market report.

In the following months until the end of the year, OPEC recorded that Nigeria was mostly compliant with its designated quota of crude oil production.

The country recorded the lowest production output for 2020 at 1.42MMBOPD in December, which was the lowest production level since August 2016, according to OPEC’s report. This was largely due to disruption in production at ten terminals including Yoho, Agbami, Pennington, Qua Iboe and Erha terminals.

OIL PRODUCTION IN NIGERIA 

On one hand, Nigeria promised to make up for the OPEC cuts loopholes with condensates, which is not part of the OPEC+ curtailment. Timipre Sylva Minister of State, Petroleum, reiterated that through the respective periods of the OPEC+ cuts, Nigeria would add “condensate production of between 360-460 KBOPD.” 

In November 2020, Nigeria urged OPEC to reconsider the oil production cuts designated to Nigeria due to the confusion over the categorisation of Agbami field as condensate or as crude oil. 

However, OPEC declined Nigeria’s request with a comment that the production cuts was in the best interest of the international oil market.

With these cuts and other production challenges, Nigeria’s overall oil and condensate production slumped drastically in 2020 to around 1.66MMBOPD in 2020 from 2.04MMBOPD in 2019, according to an S&P Platts analysis, a UK-based market intelligence firm. This was its lowest annual output figure since 2016 when militancy in the Niger Delta pushed output to as low as 1.60MMBOPD.

According to data obtained from the NNPC Annual Statistics Bulletin, total crude oil and condensate production for the year 2019 was 735,244,080 barrels of oil and the daily average production was 2.01MMBOPD. In 2020, however, Nigeria produced 643,938,257 barrels of oil and condensate, the lowest ever produced since 1990, when the production figure was 630,245,500 barrels of oil and condensates. 

In January 2020, Nigeria produced 64,260,394 barrels of oil and condensate, representing an average daily production of 2.07Million barrels, the highest in the year and in December 2020, it produced 44,018,411 barrels of crude oil and condensate, with an average daily production of 1.42Million barrels, accounting for the lowest. 

Mr. Bamidele Samuel regards the operating cost to the upstream sector – which is around $40 – as a major shortfall for oil exploration and production in Nigeria. 

2021 PRODUCTION CUTS

In December 2020, the OPEC+ alliance agreed to increase production by 500,000BOPD, from January 2021. This brought the total production cut for OPEC+ in January to 7.2MMBOPD. This production cut decreased gradually to 7.13MMBOPD in February and 7.05MMBOPD in March 2021 through April 2021. Saudi Arabia, OPEC kingpin, stepped in with a voluntary cut of 1MMBOPD from February 2021 till April 2021.

On April 1, 2020, OPEC+ alliance decided to ease cuts to 5.8mb/d spanning from May 2021 till July 2021.

Some analysts believe that the OPEC+ cuts would continue to go down the slope until April 2022 as the world recovers from coronavirus and the oil glut that accompanied it. 

According to OPEC monthly crude oil production data obtained from its secondary sources, in 2021, Nigeria’s crude oil production figures stood at 1.34MMBOPD in January, 1.49MMBOPD in February, 1.48MMBOPD in March 2021 and 1.56MMBOPD in April 2021. 

“The fact that Nigeria cannot do as much as an average capacity of 1.9MMBOPD is a challenge, especially with oil prices trading above $70 per barrels,” Bamidele Samuel argues.

“If we are producing more, that is more revenue for the government to stimulate the economy on the part of recovery,” he added. 

Russia and Saudi Arabia keep disagreeing on the change in production output. While Russia has been pushing for increase in OPEC+ production output, Saudi Arabia has been more conservative, contending that another wave of coronavirus in India and other parts of Asia, is capable of assaulting demand for crude oil.

This story was produced under the NAREP Media Oil and Gas 2021 Fellowship of the Premium Times Centre for Investigative Journalism.

© 2021 Festac News Press Ltd..