All posts tagged feature


BP’s Rocky Road to Becoming an Energy Company

By Gerard Kreeft

 

 

 

 

 

 

 

 

BP’s 2020  Energy Outlook is timely both for its insightful energy scenarios and as a tool for scrutinizing the company’s journey towards a greener future.

It outlines three energy scenarios in which all record a  decreased use of fossil fuels:

  • Business as Usual(BAU) records a decrease of fossil fuels (as a share of primary energy) to 80%, based on 2020 statistics; both renewables and electrification play a modest role.
  • Rapid records a decrease of fossil fuels (as a share of primary energy) to 40% and renewables rise to 40% as share of primary energy. Electricity consumption also rises above 40%.
  • Net Zero has a decrease of fossil fuels(as a share of primary energy) to 25% and renewables rise to 60% and electricity rises above 50%.

In terms of CO2 reduction the Net Zero scenario is the obvious safe choice(see below) if “Well Below 20C is to be reached by 2050.

In all three energy scenarios natural gas is a constant bridging fuel. Even under the Net Zero Scenario  the growth of natural gas to

the period  2050 remains constant.

A key point of BP’s data analysis is that non-fossil and natural gas are the winners in India and other Asian countries, while use of coal and crude oil decreases(see above).

In all three scenarios the cost of wind and solar continues to decrease substantially: using 2018 as a baseline the cost of wind energy is down some 25% and solar 50%.

Between 2030-2040 wind and solar capacity under the Net Zero Scenario apex at some 1000GW.

Average annual investments in wind and solar(based on 2018 figures) vary between $300Billion (BAU) to more than $1.1Trillion(Net Zero).

The Greening of BP

In the following 5 year period BP paints a glowing portrait of how it will reach the promised green land,for its shareholders:

  • An underlying EBIDA(Earnings before interest, depreciation and amortization) of between  5% – 6% per year through to 2025 with returns in the range of 12% – 14% in 2025 – up from around 9% today.
  • After allowing for the impact of divestments, and reflecting the expected share buyback commitment, EBIDA per share is expected to grow by 7%- 9% per year through to 2025.
  • From  2025 onwards when its low carbon projects start to kick in expect growth of between 12%- 14% to be maintained.

According to BP, its $25Billion divestment will provide the basis for up-scaling its low-carbon business. A pipeline of 25  oil and gas projects, and and additional 18 projects  in the pipeline are also key factors.

Yet key questions remain.

This year BP already wrote off $16.8Billion and in the 2nd Quarter halved its dividend. The Corona-19 crisis and the energy stalemate are  key factors for these impairments.

What if the crisis endures an additional year? Can BP’s ‘Wall of Cash’ withstand that?

An additional write-off in 2021 and a further continued reduction of the golden dividend is not unthinkable.

Then there is the paradigm of an oil company becoming an energy company. The oil company strategy: high risk = high returns is being replaced by high risk= low/no returns.

Energy companies by contrast– Vattenfall, RWE, Engie, Orsted– all are low risk:  low or no dividends for 2019. Yet their stock prices are steady and positive. Their green strategy has been delivered, in place  and accepted by the investor community.

It should not be surprising that the investor community is wondering how a transformed BP can become an energy company promising to deliver results that other energy companies can only dream about: an    EBIDA per share of between 7%- 9% per year through to 2025 and from  2025 onwards when  low carbon projects start to kick in growth of between 12%- 14%.

Then there is  the slight inconvenience of TOTAL’s  announcement: taking on board the IEA’s (International Energy Agency)  Sustainable Development Scenario(SDS) for medium/long term.  Meaning “well below 20C.” This requires a further explanation.

In July of this year TOTAL announced that it was declaring two of its oil sands projects(Canada) stranded assets even though they were classified as ‘proven reserves’.

TOTAL has in essence taken on a new classification system for struggling oil companies seeking a green future. In short, casting aside the The Society of Petroleum Engineers’(SPE) classification system which for decades has given legitimacy  for petroleum reserves.

BP has announced it wants to reduce its oil production by 2030 by 40%.  Which BP  assets will become stranded  assets?

What will happen to BP’s 20% share in Russia’s Rosneft which comprises three oil and gas joint ventures? Maintaining a presence in Russia could be very strategic, given the country’s oil and gas assets and the fact that a green strategy is still waiting to be discovered.

What about BP’s assets in Africa where the company has a considerable footprint. Some examples:

In Algeria BP has helped to deliver two major gas developments at Salah Gas and In Amenas, both of which are joint ventures with Sonatrach and Equinor.

BP currently produces, with its partners, close to 60% of Egypt’s gas production through the joint ventures the Pharaonic Petroleum Company (PhPC) and Petrobel (IEOC JV) in the East Nile Delta as well as through BP’s operated West Nile Delta fields.

In Angola BP is the operator of blocks 18 and 31 and have non-operated interest in blocks 15, 17, 20 as well as the Angola LNG plant in Soyo.

In Mauritania and Senegal,  BP and its partners are developing  the  Greater Tortue Ahmeyim  gas field with a 30-year production potential.  The field has an estimated 15Trillion cubic feet of gas and is forecast to be a significant source of domestic energy and revenue.

Many of these projects are natural gas related and could provide the bridging fuel needed for the energy transition.

The Green Competition

BP also announced that it will be spending $5Billion per year to green itself and by 2030 will have 50GW of net regenerating capacity.  To date the company has a planned pipeline of 20GW of green generating capacity.

How does this compare to its green competition:

  • Iberdrola: in the period 2018-2022 will be spending €34Billion on renewable energy and has a pending target of 45GW of installed wind capacity and a pipeline of an additional 10GW.
  • Engie: in 2020 will spend €7.4Billion on investments across a broad swath of sectors including solar, wind (on and offshore), hydro plants, biogas and developing gas and power lines , and will have 33GW of global renewable installed capacity by 2021.
  • Vattenfall: In the Nordic countries Vattenfall has low emissions with practically 100% of the electricity produced based on renewable hydro-power and low-emitting nuclear energy.
  • RWE: by 2022 RWE will have 28.7 GW of installed wind and solar capacity.
  • Orsted:has an installed capacity of 10GW and a build-out plan to increase capacity to 15GW.
  • Enel(Italy): strategic plan outlines total investments of €28.7Billion, of which 50% will be geared for deployment of 14 GW new renewable capacity.

Recently BP and Equinor announced that BP would become a 50% partner, of the non-operated assets Empire Wind(Offshore New York State) and Beacon Wind (Offshore Massachusetts).

Possibly more joint-actions can be anticipated. Why? Economies of scaling up quickly in a growing offshore wind market. Moreover, the majors have always shared costs to reduce risks in developing oil and gas assets, a tradition sure to be followed in the offshore wind sector.

Perhaps also anticipate that both BP and Equinor spin off their wind assets as a separate company.

BP’s Net Zero Scenario of reducing fossil fuels to 20% of today’s share of primary energy by 2050 is an indication how quickly this energy transition can occur. The urgency of the task ahead is virtually a guarantee that this BP scenario will happen sooner rather than later. Do not be surprised that 2030 could become the new date to become 20C neutral.

 

Gerard Kreeft, BA (Calvin University) and MA (Carleton University, Ottawa, Ontario, Canada), Energy Transition Adviser, was founder and owner of EnergyWise. He has managed and implemented energy conferences, seminars and master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. He writes on a regular basis for Africa Oil+Gas Report.

 

 

 

 

 

 

 

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‘African Governments Will Be in “Listening Mode” Now More than Ever’-Monsieur Afrique

The current shock in the hydrocarbon industry “is so profound and so deep”, in the view of Tim O’Hanlon, Tullow Oil’s former Vice President for Africa, that “companies will find Governments across Africa in “listening mode” now than before”.

That comment references the perception, by International Oil Companies, that African Governments, as a rule, are never in a hurry to follow the pointers to fiscal terms dictated by the market.

African Governments, O’ Hanlon says “have sometimes been more than a bit “late-to-the-party” when it comes to adjusting the work programme or fiscal arrangements, necessary when the oil price dies and capital dries up”.

O’Hanlon should know, or should he not?.

For most of the last twenty years he was the face of Tullow Oil in Africa. Known to governments and stakeholders around the continent as ‘Monsieur Afrique’, he negotiated the entries for the company, represented the partner countries’ feelings in Tullow’s executive management meetings and promoted the Tullow brand at the C-Suite level type conferences.

In those years, the company earned the sobriquet: ‘Africa’s Leading Independent’. Now as it leaves Uganda, winds down in Kenya and sees its Ghanaian production declining, Tullow Oil calls itself ‘An independent oil and gas company focused on Africa and South America’.

‘Monsieur Afrique’, retired last April after 34 years with the company, and four months after Tullow’s historic headlong stock price crash.

“To have African governments listen, he says is “all it will take to re-ignite the flame and get the ball rolling whereby exploration permits are extended, stay alive and stay in the right hands (like Tullow’s) until the inevitable turn-around comes”.

O’Hanlon: Oil explorers always seem to end up looking either like visionaries or idiots – rarely in between

The inevitable turnaround?

Mr. O’Hanlon is unapologetically clear sighted about the continued relevance of fossil fuels.

In a rare, extended conversation, his first interview with any publication since his exit, he fielded questions ranging from the future of oil, the alleged retreat of Independent companies from Africa, to the ‘hysteria’ about climate change.

Excerpts from the interview, published a month ago, in the August 2020 issue of Africa Oil+Gas Report.

Having spent several decades, right in the jungles of the oil patch, negotiating deals and seeing them implemented, as actual crude flow to export, how does it feel to sit back and watch things from a distance?

For the moment, I am relaxed to sit back and watch from a distance……….but my feet are still a bit itchy to be honest!  While poor Tullow is not what it once was, our legacy is secured. Through the efforts of the brilliant technical people we always surrounded ourselves with and the cool leadership at the top, Tullow added many tens of billions of dollars to the economies of some lucky African nations. It’s uplifting to think that ordinary people just doing their day-jobs like that have had such a positive impact on a Continent with wall-to-wall problems to solve. This achievement can never be undone.

Does any of the things happening now: lockdowns everywhere, crude oil prices going negative at some point, Massive write downs by oil majors, does any of them feel surreal?

Surreal is a bit strong. We chose to work in this oil-patch which is, after all, a boom/bust game. Oil explorers always seem to end up looking either like visionaries or idiots – rarely in between. Extreme outcomes are the norm. What we do for a living is so different from all the mainstream careers out there, that after 35 years of it – all spent in Africa – little ends up being truly surreal. Surprises, shocks, failure and setbacks are what to expect and so it becomes only a question of degree…

How do you see the future of Tullow in Africa? Is there life after death?

They say “debt is death” but that is just a corny cliché. At the right level, debt is an indispensable financial tool which is perfectly suited to our E&P business. Unfortunately, some recent mis-steps by Tullow management put our debt level in the spotlight – unnecessarily centre-stage in our story – whereas our banks had been actually quite relaxed about matters. Optics and story-telling matter in the fickle marketplace and this contributed to a spiral in equity value which of course did indeed highlight the then relatively high debt level. Discretionary spending like exploration is always the first to go in tough times and yet that’s what attracted so many fans (both shareholders and African Governments) to Tullow down the years. If the new leadership is wise, it will re-establish a credible African growth narrative for Tullow – however modest for now – in order to attract again the savvy shareholders as well as the key African stake-holders before the fabulous, hard-won, Tullow brand withers further………….

With the prevailing conditions likely to linger a while longer, is there any likelihood that those many acreages in Cote D’Ivoire and other frontier acreages in Africa are likely to be worked on by the company at all?

I am on the outside now and can only speculate. While African Governments have sometimes been more than a bit “late-to-the-party” when it comes to adjusting the work programme or fiscal arrangements, necessary when the oil price dies and capital dries up, Ivory Coast has proven to be very responsive and pragmatic with us in the recent past. The current industry shock is so profound and so deep that I predict companies will find Governments across Africa in “listening mode” now than before. That’s all it will take to re-ignite the flame and get the ball rolling whereby exploration permits are extended, stay alive and stay in the right hands (like Tullow’s) until the inevitable turn-around comes.

For the past three years, the International Independent, whose exploration exploits since the late 90s led to massive discoveries of gas in Mozambique and Senegal, and oil in Mauritania, Ghana and Senegal, has been on the retreat. Anadarko is gone. Noble Energy is about to be wrapped in Chevron’s voluminous folds, Tullow has left Uganda. Do you still see a role for International Independents finding new hydrocarbons and developing them?

No doubt about it. As long as oil and gas dominate the energy mix and Africa’s energy needs accelerate like no other Continent’s, investment in exploration will have a role, albeit modest for the moment. With no criticism of the MAJORS intended, the industry niche of frontier exploration has not, with a few exceptions, been theirs in Africa for the last few decades. The risk profile of true wildcatting across Africa – often onshore – doesn’t particularly suit them whereas the independents’ shareholders are prepared to face high risk in return for access to possible bonanza outcomes. A new crop of independents will emerge to fill these needs when the time is right. They may even start with developing already discovered resources which abound in Africa, moving out into exploration again as the oxygen returns into the room.

Is this ongoing retreat only a blip?

In my opinion, it’s a wee bit more than a blip – maybe more like an abrupt and violent speed-bump! But the fundamentals are still there for the E&P business to thrive again. Africa needs development and nations develop faster with cheap energy. Resources abound on the Mother Continent and the technology and skills are there to exploit them safely and profitably. Each side – Govts and oil explorers – needs the other and this “need” is the eternal driver of good business.

What is your take on the imminent end of the fossil fuel era -especially in the context of the timeline that is now so readily bandied around?

”Bandied around” is a perfect phrase for what’s going on here. Nobody ever seems to police these wild claims and you get a hearing these days once you have a wifi connection. But words matter and the IOC’s speak in a much more measured tone. Nothing will happen overnight and indeed the energy transition is quietly underway. And so it should be. Fossil fuels are already being replaced in the mix by cleaner energy sources but (pre-Covid) the total energy demand was increasing worldwide. So, common sense and sound economics will prevail because, as ever, the private sector will have to do all the heavy-lifting here. The transition will happen faster in some regions than others but oil and particularly gas will have a major albeit  decreasing role to play for decades to come.

You keep saying Africa needs development and nations develop faster with cheap energy. That’s quite contrary to the growing narrative that solar PV prices keep going down and power generated from them is ultimately cheaper?

Solar power technology  improves daily and seems to have a huge role to play in Africa’s future energy needs. However, the connected electric grid leaves a lot to be desired in Africa and so, a bit like the connected landline phone system of old, sunny Africa could maybe skip a technology chapter here with solar power being generated much closer to where it is consumed. That would indeed be great. But again, it will be in the context of an overall energy mix. Oil products are relatively safe, flexible, cheap, widely-distributed and dense bundles of energy. Transport is the principal user of fossil fuels worldwide and Africa is on-the-move!  Just like high-Capex / low-Opex hydro-power, large-scale solar can produce impressive generating costs on a given day and that will be a very welcome addition to the minestrone of Africa’s future energy needs.

What, in your view, is the future of the oilfield service companies…Halliburton/Schlumberger/Baker Hughes? What, in your view, is the short- and long-term future of the drilling companies?

Like the IOCs, the service companies including drillers are having a grim time at the moment. But the industry is uniquely experienced in dealing with appalling risks every day which Main St. businesses can’t even comprehend. How can you set out to drill a well which will cost you M$50+ and which has an 85% chance of failing? While that risk is the IOC’s risk, we pay the service companies bills and therefore their salaries. So it is also their risk really in a way. But the service companies are habitual innovators, forever adjusting to the twists and turns and challenges of the business. This will stand to them and they will be fine. There will be mergers, they may have to learn new skills but change and challenges have been their constant companions in our crazy industry and thus ensured their survival to date…

Which of the majors will be left standing?

If Africa………….it will be TOTAL.

Can we anticipate a revival of the industry any time soon?

Yes….but one man’s soon is another man’s eternity. This COVID-19 issue needs urgent solving and then there needs to be less hysterical shouting and more listening / thoughtful discussion around the climate change debate. The huge technical, creative and financial firepower of the oil industry can then be harnessed to make a sensible and properly-paced transition towards a cleaner future energy mix. This should be done without forfeiting the right of the developing world to catch-up with our living standards here in the West which benefited from cheap energy.

Will there be a merger of activities with renewables or are these two separate worlds?

There is space and need for both entities in the energy mix for the foreseeable future. That said, the MAJORs – who have a vulnerable presence at street level and MUST therefore think big picture – will be more able and more likely to try to cover both sectors and hedge their bets through acquisition of renewable energy targets. But under the entire energy supply umbrella, there will always be a need for niche players with their expertise – be they frontier oil and gas explorers or renewable energy technology innovators. You need these pioneers and risk-takers in ours and every other industry as well as the heavy-lifters to see the job through. It’s not an either/or.

There is not a lot in the media about how you showed up. How did it all start? An engineering education in the UK? Then what? 

Do you remember the cartoon guy, Mister Magoo? Well I’m his Irish cousin and I’ve been safely walking under ladders all my life! I scraped through Engineering in UCD, Ireland’s best Engineering school, then worked with Schlumberger for a few years, then scraped through Imperial College London, the UK’s best Engineering school, then bumped into dodgy-Accountant (his words) Aidan Heavy in Dublin on the very week his start-up Tullow Oil signed an onshore exploration permit just outside Dakar, Senegal. It was like the blind hiring the blind although to be honest, Aidan is a superb entrepreneur. Ignorance of the scale of our undertakings was our best friend for the first 15 years but the work ethic was amazing. Surrounded by hungry, talented people – back then, mostly fellow Irish – survival was the objective and it remains the miracle of Tullow to this day. Success inevitably follows in our game if you can just remain focussed and simply stay in the game! Our turn eventually came and we surfed those waves, one after another – SNS gas fields, Energy Africa acquisition, huge oil discoveries in Uganda, then Ghana and finally Kenya. Aidan’s laser focus on Africa was our big differentiator. I have been blessed to be at the heart of this story from my twenties to my sixties and for much of that time I was Tullow’s Monsieur Afrique. What a ride………

And now?

The same month I retired from Tullow (April 2020) was the month Europe and Africa went into COVID-19 lockdown and the worldwide E&P sector hit the rocks. Mr Magoo again just walked under that ladder! But I am flattered to report that my phone has rung a few times with requests for advice from people with African E&P projects needing to navigate through the maze. But the maze is new every time and the same routes that Tullow took aren’t available. But that’s ok. There are other routes and there are similarities that I am recognising in their stories! I can probably help much more than I even realise but time will tell. A new start-up to go back and “discover” all that oil we left behind, well that’s possible too maybe some day. 

 

 

 

 


The New Map: Energy, Climate and the Clash of Nations

The COVID-19 pandemic has brought new disruption to a world already struggling over how to satisfy its energy needs, address climate change and cope with new power relationships in a complex new era of “Energy Transition,” according to a new book, The New Map: Energy, Climate and the Clash of Nations, by IHS Markit Vice Chairman Daniel Yergin.

“As a result of the pandemic, an uncharted chasm has suddenly appeared on the map, which the world is now beginning to work its way around,” Yergin writes.

In The New MapYergin, author of The Quest and The Prize (for which he received the Pulitzer Prize) looks at an energy world already being reshaped by myriad forces—from the remarkable change in the energy position of the United States in the middle of a contentious presidential election, to geopolitical tension with China and Russia, to the reappearance of the electric car, the growing global role of renewables and the “post-Paris” era of energy transition.

“This is no simple map to follow, for it is dynamic, constantly changing,” Yergin says, as major countries chart intersecting and sometimes conflicting geopolitical paths in a new era of “great power competition.”

This already-disrupted world is now being further disrupted by the coronavirus and its dire impacts on people’s daily lives and the habits that underpin the global energy system. “The office of the future” for many will end up “at home”, he writes, which will mean less commuting, and thus reducing gasoline demand. But that will be offset by more people driving their own cars to avoid mingling with others on public transportation, as indicated by the upsurge in the sale of used cars indicates. And “electrons will replace molecules” as business travelers make more of their trips digitally, rather than in airplanes.

COVID-19 has also opened a wholly new era for world oil—what Yergin calls the era of the “Big Three”—the United States, Saudi Arabia and Russia.

When COVID-19 triggered the shutdown of entire economies, what Yergin describes as the “economic dark age,” it caused an unprecedented collapse in oil demand and (briefly) the unthinkable—oil priced at less than zero. That is when the United States, now the world’s largest oil producer, took the extraordinary step of brokering an agreement between Saudi Arabia and Russia to rebalance the market.

The pandemic also raises the big question: will the pubic health related upheaval speed or hinder the much-debated “Energy Transition” from fossil fuels to renewables? Yergin recommends a degree of caution against expectations for a rapid transformation.

“The notion of a fast track to a wholesale energy transition runs up against major obstacles: the sheer scale of the energy system, the need for reliability, the demand for mineral resources for renewables, and the disruptions that would result from speed,” Yergin writes. “On top of all of that is the high cost of a fast transition and the question of who pays for it—especially given the staggering amounts of debt that governments took on in 2020 to fight the economic consequences of the coronavirus.”

“Energy transition certainly means something very different to a developing country such as India, where hundreds of millions of impoverished people do not have access to commercial energy, than to Germany or the Netherlands,” he adds.

Yergin also observes how the global health crisis has underscored the role of plastics, made from oil and natural gas—whether for food and sanitary purposes, its multiple applications in hospital operating rooms, the indispensable N-95 mask or the-now-ubiquitous plastic shields that protect shopkeepers and essential workers.

The New Map is also a story of the clashing paths of global powers:

  • New Cold Wars

Energy looms large in the new cold wars that are developing between the United States on one hand, and Russia and China on the other.

Russia’s path on The New Map is a mix of energy flows, geopolitical competition, contention over the unsettled borders left in the wake of the Soviet Union’s collapse—and “Vladimir Putin’s drive to restore Russia as a Great Power.” This includes Russia’s “pivot to the east,” geared mainly towards one country, China and its energy needs for what will become the world’s largest economy.

The New Map looks at how swiftly (and potentially perilously) the relationship between China and the United States is changing from “engagement” to “strategic rivalry” at a time when “China is expanding its reach in all dimensions”, most visibly via the trillion dollar-plus Belt and Road Initiative.

It is also asserting control for almost all of the South China Sea, through which $3.5Trillion of world trade flows and nearly half of all the global oil tanker shipments travels. The most critical oceanic route in the world has become the “sharpest point of strategic confrontation with the United States.”

  • Rivalry in the Middle East and “Peak Demand?”

The Middle East, still the source for a third of the world’s oil and gas, continues to be shaped by rivalry, most notably between Saudi Arabia and Iran, and by jihadism. But it is also being reshaped by concerns over “peak demand”—how long consumption of oil will continue to grow and when it will begin to decline. This has fueled a new urgency for exporters to diversify and modernize their economies—an urgency heightened by the collapse of demand in the wake of COVID-19.

  • “Auto-Tech” and the “Mobility Revolution”

Concerns of “peak demand” have been driven in no small part by the emergence of the electric car, ride-hailing and ride-sharing services, and automated vehicles. This “New Triad” is challenging oil’s century-long dominance of the transportation market and creating a new contest for what could be a new trillion-dollar industry—what is dubbed “Auto-Tech.” But here too, the coronavirus may have “disrupted the disruption”—as consumers turn more to personal vehicles rather than shared ones.

  • A Mixed Energy System of Rivalry and Competition

Yergin says that the next few decades will likely see the world’s energy supplies coming from a mixed system of rivalry and competition among energy choices—one where oil retains a preeminent position as a global commodity. He also emphasizes that technological innovation will be the critical factor for the future of energy.

“How fast the mix changes will be determined not only by politics and policies, but by technology and innovation,” Yergin writes. “That means the ability to move from idea and invention to technologies and innovation and finally into the marketplace. This is not something that necessarily happens fast.”

 

 


ENI’s New Gas Find Boosts GIP in Egypt’s Nooros to 4Tcf

The Nidoco-NW-1 exploratory well has encountered 100 metres Net Gas Sand in ENI operated Abu Madi West Development Lease in Egypt.

The discovery has extended, further north, the gas potential of the Greater Nooros area.

“The preliminary evaluation of the well results, considering the extension of the reservoir towards north and the dynamic behaviour of the field, together with the recent discoveries performed in the area, indicates that the Great Nooros Area gas in place can be estimated in excess of 4 Tcf”, ENI says in a release.

Nidoco NW-1 is located in 16 metres of water depth, 5 km from the coast and 4 km north from the Nooros field, discovered in July 2015.

50 metres of the 100 metre gas footage is located within the Pliocene sands of the Kafr-El-Sheik formations with the remaining 50 metres within the Messinian age sandstone of the Abu Madi formations, “both levels with good petrophysical properties”, the Italian major explains. “In the Abu Madi formations a new level, which was not yet encountered in the Nooros field, has been crossed proving the high potential of the Great Nooros Area and the further extension of the gas potential to the North of the field.

ENI, together with its partner bp, in coordination with the Egyptian Petroleum Sector, will begin screening the development options of this new discovery benefitting of the synergies with the area’s existing infrastructures.

ENI, through its subsidiary IEOC, holds a 75% stake in the license of Abu Madi West Development Lease, while bp holds the remaining 25% stake. The operator is Petrobel, an equal joint venture between IEOC and the state company Egyptian General Petroleum Corporation (EGPC).

 

 


German Solar Firm Sells its Stakes in Egypt’s 1,650MW Benban Park

ib vogt GmbH has announced the sale of its shareholding in the 64.1 MWp “Infinity 50” photovoltaic project in Benban, Egypt to Masdar, Abu Dhabi’s renewable energy company.

ib vogt and Masdar have additionally signed agreements of intent concerning the purchase of ib vogt’s shareholdings in three more solar parks also located in the Benban solar complex which have a combined volume of 166.50 MWp.

The Infinity 50 solar plant, inaugurated in early 2018, was the first large-scale PV power plant built in Egypt and the first to mark what would later become the Benban Solar Development Complex, one of the largest utility-scale grid-connected solar power complexes in the world. The complex comprises 41 solar plants,  developed on plots ranging from 0.3km² to 1.0km² in size, constructed by different consortia, totaling 1,650MWp in capacity.  It represents a landmark in the development of renewable energy infrastructure, both in Africa and in the Middle East North Africa (MENA) region.
The project was jointly developed, built and has been operated by ib vogt together with its partner Infinity Energy S.A.E. One of only two projects that qualified for Egypt’s very demanding, highly competitive Feed in Tariff (FiT) Round 1 programme, it is contributing to Egypt’s renewable energy targets under a 25-year Power Purchase Agreement.

“As the first major utility-scale solar plant in the country, this was a complex undertaking, a group effort from the very beginning and would not have been possible without the absolutely fantastic collaboration of countless parties including our financing partners, suppliers, advisors, governmental and local authorities and the local communities…a very challenging project which has been very well executed and very successful for all the stakeholders”, says Anton Milner, Managing Director of ib vogt GmbH.

“This strategic investment for Masdar marks our first collaboration with Infinity Energy under the platform our two companies announced at Abu Dhabi Sustainability Week earlier this year – Infinity Power – to pursue renewable energy opportunities in Egypt and elsewhere in Africa. We see numerous opportunities for our partnership in this region and continue to work closely with Infinity Energy on the future success of Infinity Power,” said Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar. “We also thank ib vogt for its professionalism and support on this strategic transaction for our company in Egypt and look forward to engage on other major opportunities with the company.”


Africa E&P Virtual Summit: Africa’s Online Oil, Gas & Energy Event

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Africa E&P Virtual Summit delivers…
• 7 Governments and 50 Speakers Now Confirmed
• Liberia Harper Basin License Round Update
• Face-to-Face Networking within Africa’s oil and gas community
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• Africa Oil and Gas License Round Promotions
• Access to Virtual Exhibition
• Interactions with Clients
• Access to Private Meeting Rooms
• Round Table Discussions

See the full agenda and book tickets >> https://www.frontierenergy.network/africa-ep-virtual-summit-2020-overview
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No Palliative for the Nigerian Oil Industry, Sylva Says, “But the Coming PIB Will Help..”

By Bunmi Aduloju

The Nigerian government is not in the best place to support the country’s oil industry, notably the upstream sector, with any form of palliatives, to cushion the effect of the pandemic.

“As a government we are not also in the best frame and shape at this point”, Timipre Sylva, the country’s Minister of State for Petroleum, has said. “Our earnings are heading south as a result of COVID-19”, Sylva said at a discourse with the Nigerian Association of Petroleum Explorationists (NAPE). “So, we are not in the best position right now to support in more positive terms”, he explained.

Nigerian upstream operators, especially the homegrown independents who produce over 25% of the country’s entire output, have lamented that they were continuing to face royalty and other taxes, a crippling debt overhang and a disproportionate burden of the cost of insecurity in the Niger Delta, despite dwindling revenues.

Sylva said that “the easier way to support is to make sure that the fiscal terms, the framework around your operational environment is actually eased off so that, at least, you can operate better. And unfortunately, these are not things that we can do for most of the time”.

“But, I think”, he explained, “the most important support for the industry I believe, will come from the Petroleum Industry Bill (PIB, the reform legislation currently on its way to parliament), “because the PIB is taking everything holistically into consideration to ensure that at least, operators will have the best terms available”.

In a short speech prefacing the dialogue, Sylva had revealed that royalties for onshore and shallow water assets (in which most Nigerian independents participate) would be reduced “in the new law”. He had also noted that the law would “establish a gas base price that is higher than current levels for producers and this base price will increase over time. This price level should be sufficiently attractive to increase gas production significantly since this gas price will be comparable with gas prices in other emerging economies with considerable gas production”.

Sylva offered that the PIB would be very competitive. “We are looking at the global environment. It is a very competitive environment now in the oil and gas sector. I will want to ensure that Nigeria continues to be one of the destinations of choice and that is why we ensure that the PIB is least as easy on the industry as much as possible.

 


Petroci in League with Sahara for a $43Million LPG Project

Sahara Energy Logistics Holding Limited (A Sahara Group company) and  Société Nationale d’Opérations Pétrolières de la Cote d’Ivoire (The National Oil Company of Cote d’ivoire, Petroci Holding), have entered into a Joint Venture Agreement (JVA) to facilitate the construction of a 12,000 Metric Tonnes Liquefied Petroleum Gas (LPG) storage facility to guarantee LPG supply security in the nation.

The cost of the project is estimated at $43Million and will be executed in two phases, with commissioning scheduled for November 2021 and October 2022 respectively.

Incorporated as SAPET Energy S.A., the joint venture company will handle the construction, operation, and maintenance of the ultra-modern LPG storage terminal. “Upon completion, the facility will become the largest of its kind is Sub-Saharan Africa”, Sahara’s spokesman, Bethel Obioma, claims in a release, “and more importantly, support the government’s efforts to meet Cote d’Ivoire’s growing LPG demand”.

The challenge with Obioma’s claim is that there are facilities with similar size in Nigeria currently and a raft of construction of larger sized LPG terminals in the country, is on course for commencement before the end of 2021.

However, Ibrahima Diaby, Director General, Petroci, said of the SAPET project: “this joint venture project is the first of its kind in Cote d’Ivoire and will serve as a model for other projects in the energy sector. It is a historic event that will pave the way for a robust and seamless storage, distribution, and supply of LPG. This translates to more clean energy, growth, and productivity in Cote d’Ivoire. We are delighted and look forward to more collaboration with Sahara Energy.”

“We are excited about the project and the huge opportunity it will confer on Cote d’ Ivoire as the leading LPG hub in the sub-region”, commented Olayemi Odutola, Country Manager, Sahara Energy.

 


Agreement Signed: Construction of East Africa Crude Oil Pipeline to Start in 2021

The Uganda government and TOTAL E&P, the French oil supermajor, have moved rapidly towards common ground on the country’s oilfield project, with both inking an agreement that paves the way for a final investment decision (FID) on the 230,000Barrels of Oil Per Day (BOPD) development.

Yoweri Museveni, President of Uganda and Patrick Pouyanné, chairman and CEO of TOTAL, signed the Host Government Agreement (HGA) for the East Africa Crude Oil Pipeline (EACOP) project. The meeting was held at the Ugandan State House, in Entebbe last Friday, September 11, 2020.

The two parties agreed on the participation of the Uganda National Oil Company (UNOC) in the EACOP as well as on governance issues around the benefits, to Host Governments from the export pipeline in Uganda. The project is expected to cost the consortium $3.5Billion, with construction expected to start early next year, a government statement declared.

The Host Government Agreement aims to ensure that both countries (Uganda and Tanzania) fully benefit from the project in the course of transportation of the crude to the international market. The Host Government Agreement will govern the construction and operation of the crude oil pipeline from Hoima, the Ugandan oil rich district, to Tanja, the Tanzanian port town from which the crude will be exported.

“We now look forward to concluding a similar agreement with the Government of Tanzania and to completing the tendering process for all major engineering, procurement and construction contracts,” said Pierre Jessua, managing director of TOTAL E&P Uganda.

Jessua said the conditions are set for the ramp-up of project activities and in particular, the land acquisition activities in Uganda.

TOTAL E&P Uganda is leading the development activities towards production in the Tilenga project area – Exploration Area1 (EA-1) and Exploration Area2 North(EA-2N) within the Albertine Region.

 

 


Renergen’s Gas Well Fails at a Prime Position

A gas well being drilled by South African independent, Renergen, has collapsed at the very position the company considers most efficient and cost effective.

The well had been on a horizontal course, but Renergen had moved the trajectory on inclined drilling through the sandstone sequence to intersect the underlying faults in the underlying volcanic rock.

But the base assembly was lost before breaking through the base of the Karoo sedimentary rock and the company decided it best to abandon the well. Renergen has thus, again, revised the drilling programme and has also secured a directional drilling rig.

The dual listed Renergen (JSE, ASX) is the only active South African independent in exploration and production of hydrocarbon. Its Virginia Gas Project covers 187,000 hectares of gas fields across Welkom, Virginia and Theunissen, in the country’s Free State.

The asset holds both natural gas and helium. Renergen currently sells compressed natural gas (CNG) from the hub, but following a plant expansion planned for completion in 2021, Renergen will instead produce liquified natural gas (LNG).

Earlier in the course of the drilling, the company reported “strong gas flows with high (up to 12%) helium”, and announced that technical issues had necessitated significant changes from the original horizontal well design. It also said that the sections penetrated by several side-tracks had provided valuable encouraging data for future development drilling. The company noted, then, that the key learnings from the drilling were as follows:

  • The gas is migrating up through two major fault structures, named 2089 and 2057, which have a combined known strike length of approximately 31 kilometres
  • The gas emanating from the faults contains helium of up to 12%, and not the anticipated lower concentration (~3%). It was previously postulated that high helium (11%) in an earlier well at this site was a result of helium dissociation in the overlying sandstone reservoir
  • The sandstone is stratified with siltstone, and some coal, such that the zones of high porosity and permeability cannot be accessed efficiently with horizontal drilling.

It was the inclined trajectory chosen after these “key learnings” that has now been compromised by the failure of the rig.

“It is unfortunate that the drilling rod broke”, commented Renergen ‘s CEO Stefano Morani, “but unfortunately accidents happen beyond anyone’s control. The silver lining is that it resulted in us gaining access to a fit-for-purpose directional drilling rig, which means we will be able to drill with far greater confidence and speed.”

“Where we were drilling one before, now we have multiple targets being drilled concurrently, and in some highly prospective areas where indications of gas are strong, and no exploration drilling has been undertaken to date,” he explained.

 

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