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Africa’s So Called Refining Boom Has Come Very Late/Our Latest Issue

The start-up of the Dangote Refinery in the east of Lagos in January 2024 and the likelihood of commissioning of Sonangol’s Cabinda refinery by July 2024 will not entirely make Africa self-sufficient in petroleum products supply. “The continent will remain a major importer of refined products in the foreseeable future due to the lack of new refining projects”, Anibor Kragha, Executive Secretary of the African Refiners and Distributors Association (ARDA), has said. “Because our demand in Africa is going to grow so much, we’re still going to have a shortfall,” he said.

From an intake of 350,000Barrels Per Day, Dangote was producing diesel, naphtha, jet fuel, and residual oil, as of February 5, 2024, while tests to determine if the supplies meet quality standards were in final stages. Angola’s Cabinda facility has a total capacity of 60,000BPSD, but only the first phase, at 30,000BPSD will come on stream in 2024. Apart from the Cabinda refinery, the Angolan government is also pursuing crude oil processing facility projects in Lobito in the coastal Benguela province and in Soyo, in Zaire province. For the Lobito refinery, the state hydrocarbon company Sonangol signed a memorandum of understanding, in October 2023, with China National Chemical Engineering (CNCEC), to construct a 200,000BPD plant. This project, then is still in the realm of paper work.

Geard Kreeft, the Dutch/Canadian economist who is a very significant member of the Africa Oil+Gas Report’s International Advisory Board, has put together an overview of the state of crude oi refining activity on the continent.   And there is more.

Read your copy here…

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions. Published by the Festac News Press Limited since 2001, AOGR is a paid subscription, monthly hard copy and e-copy publication delivered around the world. Its website remains www.africaoilgasreport.com, and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in the West African regional headquarters in Lagos are +2348124374087, +2348130733523, +2347062420127, +2348036525979, +2348023902519.

Editor

The Vol. 25, No. 2 (FEBRUARY 2024) edition of Africa Oil+Gas Report
is themed:

REFINING GAP ANNUAL 2024

Below is the link to your copy:

https://africaoilgasreport.com/wp-content/uploads/2024/02/AOGR-Volume-25-No2-FEBRUARY-2024.pdf
Some of the highlights:

 

 

COVER FEATURE

  • Africa’s Refining System: Half Full or Half Empty?
  • Nigeria’s Facilities Grab Export Market
  • New Timelines for NNPC Revamp
  • MAP of Africa’s Refining Capacity

IN THE NEWS

  • Absentee Landlords Threaten Uganda’s Oil Project
  • Angola in Crude Export Jump

WHO IS BUYING/SELLING?

  • M&P: The Contrast Between Gabon & Tanzania
  • Malabu On the Road to Settlement

C-SUITE SERIES/COVER INTERVIEW

  • Waltersmith: ‘The Industrial Park is Our Future’

SPREADSHEETS

  • Angolan Full Rig Activity Details, February, 2024
  • Nigerian Full Rig Activity Details, February, 2024
  • Nigerian Indigenous Producers: January 2024 Output

MAPS

  • Ghana E&P Map; Angolan Activity Map; Nigerian Independents; Marginal Fields Activity Map

Plus, the regular features; Nigerian Independents Output, Concession Status, Angolan Production by Companies, Petroleum Rights, etc.
Contacts: +2348028354297, +2348124374087, +2348038882629, +2348036525979

 

 

 

 


PetroSA Finally Gets a Substantive CEO

The South African government has finally appointed a substantive Chief Executive Officer for the state hydrocarbon company.

Xolile Sizani, a former CEO of the facilities management group Servest and the Medipos medical scheme, is the first CEO of PetroSA in at least seven years not appointed in acting capacity

He replaces Sesakho Magadla, who was only appointed around mid-February 2024 in acting capacity and who had succeeded former acting CEO Sandisiwe Ncemane.

Sizani, whose appointment was announced by the Cabinet on February 28, 2024, was a manager at Afrox and Sasol.

Sizani is taking hold of a cash strapped company who had been unable to refurbish its gas to liquid refinery, which has also run out of feedstock.

 


The Point of Success is Giving Back to Society-Austin Avuru

Three and half years after he retired as CEO of Seplat Energy, the London listed E&P firm he co-founded, AUSTIN AVURU runs A A Holdings, a boutique investment firm focused on upstream hydrocarbon portfolio as well as real estate and equity investing. Mr. Avuru is also keen on A A Foundation, a charitable outfit to which a share of A. A. Holdings’ revenues is allocated annually.

A A Foundation, in September 2023, hosted the ‘church blessing’ of the Arrupe Jesuit College, a secondary school it built in Avuru’s home town of Abbi in Delta State. The $7Milllon project had earlier been handed over to the Jesuits, a Catholic Congregation widely acclaimed for running top notch secondary schools. That ceremony came exactly six years after the Catholic Bishop of Warri had dedicated a $1.9Million, Sixty Bed Hospital, which Avuru had built in the same town, in 2016.

The hospital project in itself was a follow up to the construction of boreholes and water taps which Avuru delivered to the town in 2007.

“My emphasis basically is on education and healthcare and a strong dose of Catholic religion”, Avuru had told Africa Oil+Gas Report in 2020; “these are my foundation activities. If you bring them closer to your people, you have fair-minded people growing up properly educated with healthcare available to them. That’s about the best you can do”.

We met up with Mr. Avuru in his office at A A Holdings in Lagos.

Excerpts of the conversation by Akpelu Paul Kelechi:

At the Church blessing of the Arrupe Jesuit College, the Bishop said: “The Lord has provided all that human kind needs, but much of that provision is in the hands of some people and such people are supposed to deliver to the rest of society”. Do you see yourself as one of those vehicles?

That is truest statement that captures the essence of life that I’ve listened to in a long time. People see their personal wealth as reward for either super brilliance or hard work and so they beat their chest as having been so successful, more successful than everybody around them and that is the reason they are wealthy. There’s no person that believes in religion especially the Christian religion that will have that point of view. A typical Christian should believe that wealth is placed in your hands by God as belonging to him with you as a servant to distribute it. And I believe honestly that that is the truth.

One of the buildings in Arrupe Jesuit College

If you read that my biography, you can see so many instances where we have arrived at where we are not because we work harder than others; we did work hard and so forth but I also pointed out people, my own classmates, who have I believe were a step ahead of me that circumstance found them two-three Steps behind you in the fullness of time. It cannot be because you are more brilliant than them or anything like that. It is the same way that you and two other people will set out to do business and you all would be doing the right things but by some happenchance, you do better and you see so much wealth entrusted on you and you turn around and think you should go ahead and celebrate how much more successful you are than the others. Wealth and most of such endowments are God’s; they belong to God and when they are entrusted unto you, you should use them well.

I also think all of humanity believes this. Why do you think that the wealthy in the developed world spend as much as they do on philanthropy? Why do you think Bill Gates will be going around the whole world trying to solve the problems of the planet? He could sit down and just enjoy all his wealth. Warren Buffet will give out 80% of his wealth to somebody and say, go and distribute it. There is fun in living life and being successful in human endowments, it gives you satisfaction. But the moment you start thinking that that’s your personal belonging, you have missed the point and I think that’s what the Bishop was referring to.

You installed the bore holes and water taps in 2007. You set up Austin Avuru Foundation about 10 years later. Did you always envisage the foundation?

 At no time did I really sit down to plan about it because I am not a politician that would sit down and plan on how to give out so that people will vote for him in the next election, no. I’ve always wished right from my childhood that I had enough to give out, always. I’ve always known that it gave me more inner satisfaction than anything else. In a way, I think I must have taken after my mom. I couldn’t believe that even in her state where she’s a weak 90-year-old, we were talking and my sisters were discussing about the school opening, and all she could ask was: how many of so and so persons’ children were they able to give employment in that place? She’s thinking of how people will benefit from the presence of the school and that’s the first thing that crosses her mind.

It’s the same thing throughout my tenure in and both Platform and Seplat; anytime I go home, once she says I should sit down, I know she’s going to discuss employment for people. So and so person, haven’t you been able to give him a job? Why have you not done this? Why have you not done that? She’s over 90 years of  age and she does it even up to now!

So it does give me real inner peace and satisfaction when I give out especially when you see that glint in the eyes of the receiver that they appreciate what you give them, that it really made a different to the person.

Can you outline the four key focus areas of AA Foundation’s philanthropy?

It is education, healthcare, sanitation and empowerment or poverty elevation. All four are woven together. I believe that if you offer a child proper education, especially a child is endowed to receive education; you have created the future for that child. You now need the child to thrive by providing the fairly decent environment. Just think about drinking clean water. You see, you may not appreciate it because you didn’t grow up in a village like I did. The difference between drinking pond water, brown water from the pond or from a well and drinking clean water might mean the difference between dying at 20 from typhoid in the village and leaving up to 80 years.

When we speak about sanitation, the difference between going to the back of the house to stool and throw it across and flies gather around it and so on, might mean the difference between dying of dysentery a week later and simply being a healthy child that grows into adulthood because there’s clean drinking water. It doesn’t take too much to make that difference so when you talk about sanitation, that’s really what we are referring to.

I knew I couldn’t give water to the entire village with those boreholes we drilled. However, for the villager who goes to farm in the morning, when he returns in evening and he is sure there’s a place he can go and fetch a bucket of clean water to drink, he can use all his muddy water to do all other things but the water he and his family members are going to drink, he knows he can go across and fetch it and that’s what I did with those boreholes. With sanitation, that child that you’re giving education will also be given a chance to live.

Healthcare and sanitation are tied together while education is to provide the future. And of course poverty alleviation is simply this, somebody has an idea that can be transformed into proper value creation and you can support them to achieve that, it doesn’t take too much. We have supported some kind of farming in the village level and some cottage industries. We are not making noise about it. In education, we have paid the school fees of people doing their Master’s degree in Harvard and so on. Again, like everything that we try to do, we’ll try to be very definitive but we also try to create the boundaries so that we don’t do just about everything; which is why we’ve systematically said, those are the four areas and we have concentrated on those four areas hoping that all of them taken together, will simply help to take poverty away from people who can ordinarily live a good life if you give them a chance.

You could have tackled Orogun Grammar School, your Alma mater and Abbi Grammar School, the community college, for refurbishment, but you chose a new build project. Why?

We are already tackling both schools and I will tell you two stories. You know, when you are living in the rural areas, you will almost not forgive these people who run the affairs of our society as governors and president because they are actually wicked.

Abbi Grammar School started when we were kids in 1972, when I was 14 and I was already in Orogun Grammar School, in class 2. They gathered us to go and clear the forest that was going to be Abbi Grammar School, so I’ve known it from the day when we cleared that forest until its glorious days when it produced people in Divisions One and Two. But then, it deteriorated to a point where trees were growing through the roof.  The school enrolment dropped to 82 in the entire school and they were no longer a centre for writing School Certificate examination. That’s how poor it became with government running it. At Platform Petroleum, we had a budget for community development; what we then did was to say, okay, to help these people where I come from, we took 10% of our community development budget to Abbi. Fortunately, the area where Platform Petroleum is operating is contiguous to Abbi. So, if we budgeted ₦50Million, we would take ₦5Million and go to Abbi and that’s how we picked the classroom blocks one at a time. It was direct labour with just ₦4 – 5Million. We turned it around one by one over time; we changed the roof, changed the tiles of the floors and took it one at a time. By the time we did three blocks of six classrooms each, did the principal’s quarters, put a borehole and water supply in there, and in those four years that we did that, between 2008 – 2012, the enrolment went back to almost 400. We breathed life into the school otherwise the school was dead. It was only after that that the government came in and did all those TET Fund things. We revived the then dead Abbi school thanks to part of Platform Petroleum’s community development effort.

For Orogun Grammar School, it is the Old Students that have been on the vanguard to reviving that school. I personally renovated one classroom block and I have made pledges that I have redeemed to Orogun Grammar School Old Students and that is an on-going thing. We didn’t build a school because we’re not doing the others; no. We’re doing all that we can do and of course, you know that in my honour, Platform Petroleum built an entire geology department at the University of Nigeria, Nsukka UNN, where I graduated.

I could have built a secondary school or a university in my name and pump in a lot of money into it but that is not what I am looking for. We chose a secondary school because that’s the foundation really; primarily and secondary school.  I was looking for a secondary school that will be run to world class standard in perpetuity. We went out deliberately to seek approval of the Jesuits; if you look at their schools, the Loyola Jesuits Collage in Abuja and the one they have in Port Harcourt and look at their numbers, you know that you don’t have to tell them what to do. You don’t have to worry about it because it’s not your school, it’s theirs. It’s not a question of saying oh, when Austin Avuru dies, the vision is dead, no. I thought that it would be the right thing to do, build it for them and allow them run it and maintain their standard.

Then you are sure that in addition to those schools around, whether it’s Orogun or Abbi Grammar School that we are renovating, you have a top-notch school that sets the standard for them to look up to for both students and stuff. This is the best thing to do in that environment to raise the standard of education. You know, when you go to Uromi, because Lumen Christi has been in Uromi, it changed narrative about that whole area. Lumen Christi is for boys and Presentation is for girls in Benin. The standard of education in the whole of Edo State changed because of those two schools run by the Catholics.  When you set such standards it helps to elevate the others who aspire.

How much will you have spent by the time you exit funding the school in September 2025?

Our original budget was to spend a million dollars a year for 5 years but once we started, we knew that wouldn’t do. In fact, 2023 was our highest spend year because once we set a date for the school to take off, there is a minimum that must be in place because the school couldn’t take off without you fencing it for instance; you were putting buildings in place but you have not fenced the place. Imagine fencing 18 hectares of land. There must be water also and there must be electricity. By water, what I mean is not just the water but the entire reticulation around the entire place so that any other building can just hook up to the main supply and the same thing is applicable to electricity as well. With all of those things added we found out we had spent three times what was our annual budget in the fiscal year of September 2022 to September 2023.

All the things we had committed to putting there and now, we believe that we will be spending about Seven (7) Million US Dollars over those five years but it could be slightly more. We deliberately put our budget in dollars so that we are not battling with exchange rate-based inflation. Buildings that could have cost us ₦200,000,000 are now costing us ₦400,000,000 to build but in dollar terms, they are about the same price so it is safer for us to just budget in dollars. In 2020 when we started, we could have told you that our plan was to spend ₦3Billion but in today’s reality, we would be spending ₦6Billion but in dollar terms, there is not much of a difference. The figure is somewhere around $7Million over the next five years.

The medical centre was built at the cost of around $2Million without the cover of AA Foundation. How do you ingratiate such earlier project, those done pre-AAF into the overall AAF operation?

Yes and we have added a few more things to it since then but between 2002 and 2020, I was either in Platform or Seplat as Owner-Manager. This means that I have shareholding; that also means I earn revenue beyond my salary. As an individual, those revenues were coming into my coffers up to the point where I retired in 2020; up until that time, those revenues were coming in as Austin Avuru’s revenues and I would use part of it to do those things you are talking about. As part of my restructuring as I was getting ready to retire, I then setup A.A. Holdings and everything that I own as an individual: my shareholding in Platform, my shareholding in Seplat and now in Pillar and a few other things were aggregated into a trust fund called A.A. Holdings. So I no longer own those things and A.A. Holdings pays me a salary now. Because everything now goes into A.A. Holdings, everything had to be done properly. If I had written a will, the beneficiaries of A.A. Holdings would have been the beneficiaries of the will.

A.A. Foundations is also a beneficiary of A.A. Holdings so it is not just my wife and children and A.A. Foundation owns 15% of A.A. Holdings. The way we run it is that, 15% of our annual budget at A.A. Holdings goes to A.A. Foundations to do its job and that is why we do not look for external funding. We use the little we have to fund whatever project we choose to fund and that is the structure.

What we have done is to move from individual earnings into earnings that are aggregated into a trust and I am managing the trust on behalf of those that will succeed me.

16 years ago, you drilled four wells in Abbi. Has that number increased?

No, it is still those same four wells. We make sure that they remain functional by having somebody with a small motorcycle and a generator who goes around every morning and evening and pumps the water so that every time someone from the village goes there to fetch water, it works.

Do you have plans to increase the wells?

No because in-between, there has been all those World Bank projects and the like that other people have done but after one or two years, they won’t work again. If you drill a borehole, somebody must be responsible for it to work every day. So we don’t need more drinking water boreholes because the way we located the wells is such that they are located at the four corners of the town so that average villager won’t have to go too far to get water. That was intentional.

Let’s go back to what the Bishop said again. Do you have a template for what the wealthiest Nigerians should do to help their country and the role they should play vis a viz what Government’s roles should be?

The average wealthy person knows that the excitement is in working very hard to create wealth and make money but after you have created the wealth, you just find out: so what? I believe that every wealthy person should first go through the excitement of creating value and creating wealth but after that is done; he should ask himself what he wants to do with it. If wealth is not created for the public good, then it is not wealth. Whether it is philanthropy or creating jobs and redistributing wealth to people through job creation, wealth has to be distributed because wealth belongs to God and it was handed to you for proper distribution.

Can philanthropy take care of all of Nigerian society’s needs?

No. Philanthropy is only in response to what we have talked about several times that the wealth belongs to God and that you are only playing your little role in redistributing it because it was placed in your hands. It doesn’t take away the role of societal governance; there has always been governance since the medieval times which means that there is a structure that aggregates well from all those they are taking through taxes that can be used to generate what amounts to the general public good. You cannot take that away and that is governance.

For individuals who also see wealth entrusted to them should not lock it up somewhere; they have to also redistribute it and to redistribute it means doing something for the public good.

The $7Million you talked about is coming from the investment of A.A Holdings. How much is the investment boutique A.A Holdings making to be able to fund a project for $7Million?

A.A. Holdings tries to spend between 12 and 15% of its annual budget on philanthropy through A.A. Foundation and that is the way it is structured. Those sums of money are not arbitrary and in a year like this where we have over spent, we are going to have to make it up. There is proper planning, budgeting and execution both in A.A Holdings and its affiliates.

Duomo Lulu Briggs, chairman of Platform Petroleum, pledged the sum of 250Million Naira to the AA Foundation. That’s $280,000. Is that going to be added to the money set aside for Arrupe or you’d look for another project for it?

They have already paid and that is the best thing that has happened to us at A.A Foundation in recent times because as I explained to you, we have really over spent and we are  under financial pressure to get that facility ready for use. So essentially, what we were supposed to finish in September 2024 was what we were forced to finish in September 2023 because there are a certain minimum requirements that must be met before they can start. When Duomo pledged on behalf of Platform where he is the chairman the sum of N250Million, it was a life line. They acted swiftly and four days after his announcement, they had paid. As I speak to you, ₦150Million of that N250Million has already been disbursed to various vendors and contractors whose payments were due.

Where is AA Foundation going after 2025? Will you  be called upon to keep helping with the school infrastructure after some time? Will you keep refurbishing the Magistrate building and the Police station in Abbi? Will you keep changing the cars for the Officiating Minister of the Catholic Church in the community? Or will you be doing other things?

The good thing about the Jesuit College is that, when we exit in 2025, they will not even call on us to do anything for them again; Jesuit colleges run on their own and that’s partly why their school fees is a bit higher than moderate. They are self-funding non-profit so they provide top quality education from the resources available to them from school fees. We will not go back and be subsidizing them, no. That is not how they are structured and that is why we went to them.

For the magistrate court buildings and vehicles, those are the examples of the failure of government. The police station in my village, I had to be the one to go and refurbish it, I have to provide them with a vehicle. For the magistrate court, with an actual magistrate there so it wasn’t as if the court wasn’t there, I had to be the one to spend money to make it look decent for the magistrate to dispense justice. If you go there before we renovated the place, it was a rat hole. Those are the failures of government. We shouldn’t be doing those things; we should be doing things to compliment what they are doing, not taking over the role of government. I didn’t mention that we also put Two kIlometres of drainage along that same road and it cost us money to do that which we shouldn’t be the ones doing. But you sit there and the government is doing absolutely nothing.

As we go along, our educational spending will be shifting from infrastructure to the softer things. For instance, we have paid ₦32Million school fees for eleven kids and we have paid ₦11.5Million as our share of the cost of running that school. Half of the cost of running the primary school comes to us and this is just JSS1 and Primary 1. So when the school is in full session in six years’ time, we probably won’t have eleven children on scholarship. Assuming we have 30 children on scholarship by that time, that easily comes to almost a hundred million naira and the same thing is applicable to the primary school. So you are going to be seeing a shift in spending from just infrastructure to maintaining the scholarship obligation that we have. Because we have a finite budget and because we know what our current liabilities are, it is the remainder that we can then put in other projects going forward. We are driven by how much we have each year and it is finite and almost predictable. It is a business that we do and we know how much revenue that we get. If we are dedicating a certain amount on projects the next year and if we are saying 10-15% of that goes to the foundation, it means that when we are planning the work programme for next year, we know what is going to the foundation because we know what our current commitments are and therefore, we know what new projects we can take on. It is therefore up to us to pick what projects we can fund within those key four elements that we have discussed. It is not just limited to Abbi.

So apart from Abbi, which other community are you looking at?

We can be anywhere. There are projects that have been delivered on our behalf. I mean, we went to Nsukka to build a Geology Department and in the Faculty of Sciences, it is the best facility that they have till date. It was built and fully equipped so we can be anywhere. When we know that there is a dire requirement and we know the impact of what we do would be far reaching in those four areas, you can find us there because we are not really restricted by geography.

Female Ward of Abbi Hospital

You paid 2.9Million per student and you do talk about mommy saying you have not done anything about so and so person’s job search, are those monies paid with these kinds of things in mind?

Now that we are getting better organized and putting everything under the foundation. Those days, my secretary had a list of all the people that we would send their school fees and there were different people in different schools. People come to me and say my name is so and so and I finished from so and so school and you paid my school fees. I don’t know them.

She just takes the name and puts on the list and then send the money but now, we are organizing it in a more structured way. But yes, paying the school fees of those who need it is part of what we do and in the specific case of the school, we went out of our way, my elder sister and Jonnie who runs the foundation, went out of their way and gathered about 60 children, some of the most brilliant ones that they could find in the primary schools and organized six weeks of extra mural studies to prepare them for the entrance exam into the school. The reason they did that was that soon, the school will be starting and it would be somehow if they didn’t have a single pupil from the community. They had to work extra hard with past question papers and so on and fortunately, eleven of them were admitted. After the admission however, we found out the next problem. The parents of those children were preparing to sell their farmlands in order to pay for the school fees. We had to gather all of them together and say, please don’t worry, since we put you into this, we are going to take care of this responsibility. Which is how, we initiated a scholarship scheme in a manner of speaking that says: any kid that is admitted into that school, because you can only be admitted on merit, whose parent lives in Abbi, we will take care of that child’s school fees because the assumption is that for any parent who live in Abbi, paying that school fees is a huge burden and we do not want to deny a brilliant child who is able to get admission on merit the opportunity to excellent quality education.

 


Tony Attah is Back: He takes the Leadership of Renaissance

Tony Attah has returned.

The former Managing Director of the Nigeria Liquefied Natural Gas (NLNG) Ltd has taken the helm of Renaissance Africa Energy Company, the consortium of five companies which has just acquired Shell Petroleum Development Company (SPDC) of Nigeria.

Attah is the new Chief Executive and managing Director of the newly formed, incorporated consortium company, which expects to manage what used to be Shell’s 30% stake in the SPDC-JV comprising 18 Oil Mining Leases (OMLs) 20, 21, 22, 23, 25, 27, 28, 31, 32, 33, 35 36, 43, 45 and 46, all onshore, and OMLs 74, 77& 79, in shallow water, in the Niger Delta basin.

Attah retired from Shell only two years ago, precisely January 2022, after a career spanning over 30 years. He left the UK major five months after he stepped down from the NLNG Ltd at the end of August 2021, after having delivered on the most crucial item on his to -do -list; leading the company to a Final Investment Decision (FID) on Train 7, the seventh LNG Train in Bonny Island.

Attah has an impressive Cee Vee, and comes to the new job highly recommended. A mechanical engineer by training, he was previously Managing Director of Shell Nigeria Exploration Producing Company (SNEPCo), the Shell subsidiary which manages the upstream deepwater business. On his watch, the SNEPCo operated Bonga field, which is also Nigeria’s flagship deepwater hydrocarbon accumulation, was delivering over 150,000Barrels of Oil Per Day.

At the time he led NLNG Ltd to an FID on the incremental 8Million Metric Tonne Per Annum in 2019, he was the only CEO from an International Oil Company (IOC) background, working in Nigeria, who had delivered a project of that magnitude in the country in the five years before then. And going on five years after that decision, no project of that magnitude has seen an FID in Nigeria. Tony Attah took the reins of NLNG Ltd, nine years after the last Liquefaction Plant (Train 6) came on stream. Before him, two Chef Executives had worked to get Train 7 project off the ground, with some traction, but not visible success.

Attah’s experience in gas monetization will come in handy in the new job. The bulk of the feedstock for the NLNG (in which Shell holds a 25.6% stake) had always been sourced from the SPDC assets that Shell has just divested. The largest among them include Gbaran Ubie, Soku, Bonny (onshore), and EA (shallow water). These fields will now be operated by Renaissance.

Then again despite the sale of over 60% of its natural gas reserves in the country to Renaissance Africa Energy, Shell is still keen on playing the domestic gas market through Shell Nigeria Gas, its downstream gas distribution subsidiary while also focusing on clean energy via Day Star its recently acquired subsidiary which plays in the solar energy landscape.

 

 

 


If Ojukwu Could Lay Claim, Why Should I, on Whose Land the Oil Was, Not Let the World Know?

BOOK EXCERPT/BLAST FROM THE PAST

By Ken Saro Wiwa

I had begun to speak to friends and to stir up resistance wherever I could.

I cannot say that I was particularly successful, for people were generally frightened. A few who saw the truth stood their grounds. Many, even the educated, did not understand, so entirely misled by propaganda were they. Others who understood chose to play safe, accepting whoever held sway over them.

I am speaking here largely of the Rivers people among whom I operated and whose welfare was uppermost in my mind at the time. As for the Ogoni, they had been intimidated in political times. Now, with guns behind their backs, could they be expected to resist? They could not. They did not. What I saw, I characterize as slavery. A convoy of ill-clad soldiers would arrive in any Ogoni town and everyone would flee, leaving the town and its wealth to the plundering thieves in tattered uniform. I was not prepared to accept this. It also seemed silly to be sitting idle at home, grumbling or bemoaning our fate instead of actively assisting to crush the rebellion. Since it was becoming virtually impossible to oppose biafra from within, the only answer lay in fighting her from outside. Besides, I reasoned, if Ojukwu. having no oil in his home, could lay claim to the same, why should I on whose land the oil was situated not let the world know that the oil was Ogoni oil? I began to cast about for ways of leaving biafra. It was early in September of 1967.

At the time, I owned a minibus – I had invested in passenger transport in 1966 – and the idea came to me to drive it across the Niger at Onitsha into the Mid-West. Of course, this was not a workable proposition. The Mid-West was a battle ground in the proper sense of the word and would not serve as an escape route. Whal to do?

I had to leave for Lagos by all means. I considered the Cameroun border Here, again, the Federal troops appeared to have sealed off the mute through Ikom. I could perhaps go through Calabar? Maybe. But how would I go from Cameroun to Lagos? I had to give up the idea. The only way out was to go through Bonny or through Brass.

Excerpted from On a Darkling Plain; An Account of the Nigerian Civil War, by Ken Saro Wiwa, published by Saros International Publishers, 1989. The book was one of the 20 books of the festival, discussed at the 25th Lagos Book and Art Festival in November 2023 with the theme: The Reset: History and The Darkling Plain.

 


Will the Current Drilling in Tobias Oil Field Bring New Life to Angola’s Onshore Kwanza Basin?

By Tako Koning, Calgary, Canada

Oil industry analysts and observers, both Angola-based and overseas, are closely watching a well testing programme underway in the Tobias oil field, located in the onshore Kwanza Basin, approximately 90 kilometres south of Angola’s capital city of Luanda.

This oil field has been inactive since it was abandoned in 1998 during Angola’s long civil war.

However, Sonangol – Angola’s state oil company and London-based Corcel Plc are attempting to bring life back into Tobias.

In the past half year they have drilled two wells, Tobias-13 and Tobias-14 in the Tobias field and have embarked on testing both wells.  Should they be successful, this could lead to a sharply rejuvenated interest in other opportunities within the basin.

History of Exploration and Production in the Onshore Kwanza Basin

The onshore Kwanza Basin was the first basin in Angola to have undergone oil exploration and development.  The first-ever well to be drilled for oil was in 1915 in the valley of the Dande River about 40 kilometres northeast of Luanda.  Oil exploration occurred sporadically for the next four decades with no commercial success.  The Belgium-based oil company Petrofina was the most active of the oil companies in the basin.  Petrofina drilled Angola’s first commercial oil discovery at Benfica, near Luanda in 1955.  Oil production commenced in the same year and eventually 80Million barrels of oil were produced from the onshore Kwanza Basin. The oil was delivered through a small diameter pipeline to the Petrofina refinery in Luanda.  The company achieved maximum production in 1988 when it delivered 18,000Barrels of Oil Per Day (BOPD).  About half of this oil was from eight fields which produced from the Lower Cretaceous-age Binga Formation limestones and the other half was from Miocene-age sandstones in the Quenguela North field.

Due to escalation of Angola’s civil war and the danger of attacks by the rebel faction UNITA, Petrofina stopped producing oil in 1998 and terminated all its field developments in the basin. Consequently, ten small oil fields remained unproduced or under-produced and eventually the fields fell into a state of disrepair.  In the past half decade, a few bid rounds have taken place where several blocks were available for acquisition.  Sonangol and some small Angolan oil companies and junior international oil companies are interested in rehabilitating the old oil fields using modern oil field technology. The Angolan companies have included Somoil, Simples Oil, Tusker Energy and Mineral One.  Edmonton, Canada-based MTI Energy has also obtained operatorship and non-operatorship in a number of blocks in the onshore Kwanza and onshore Lower Congo Basins.

Re-development of the Tobias Oil Field

In the past year, a high-profile event has been the drilling of two wells in the Tobias oil field in 2023 by Sonangol and Corcel Plc. This has resulted in a much-heightened interest by oil companies in the onshore Kwanza Basin.

The Tobias field is situated onshore in the southern area of the Kwanza Basin. The field consists of 12 historic vertical wells drilled in the 1960s and 1970s by Petrofina.   The discovery well, Tobias-2 was drilled in 1961 and discovered oil in the limestones of the Binga Formation.  Tobias is structurally a deformed anticline approximately eight (8) kilometres long and 1 kilometre wide. The Binga in Tobias is a low porosity limestone with an average of 2.0% porosity but locally the matrix porosity can be in the order of 14%, according to legacy 1983 and 1991 publications by Schlumberger.  Production is possible mainly because of the intense faulting and fracturing resulting from the folding of this structure.  The Tuenza evaporites serve as the caprock.

Structural cross-section across the Tobias oil field, onshore Kwanza Basin. From: Schlumberger, 1991 (Well Evaluation Conference, Luanda).

Oil in the Tobias field has a density of 31 degrees API.  The top of the reservoir is at a depth of 520metres (1,710 feet).  The initial oil column was 350 metres (1,150 feet) and the bottom hole pressure was 53kg/cm2. Due to the intense natural fractures in the Binga, the initial oil production was high at 12,000BOPD by solution gas drive (Schlumberger, 1983).  However, production dropped rapidly, and water injection was necessary to maintain production.  Prior to Tobias being abandoned by Petrofina, the field produced a total of 29Million barrels of oil.

Corcel Plc has a 20% working interest (18% net) in Block KON-11 which is operated by Sonangol. Corcel is an Angolan – Brazilian oil and gas company focused on onshore upstream development as well as mining and mineral resources development.  Corcel also has a 22.5% working interest in Kwanza Basin Block KON-12 and 31.5% in KON-16.

Corcel is an AIM-listed company.  The Alternative Investment Market (AIM) is the London Stock Exchange’s (LSE’s) international market for small and medium size growth companies.

Corcel announced that Tobias-13, which was spud in September 2023 was drilled at a downdip location from historic production and reached its target depth of 959metres. Corcel’s press release mentioned that the full Binga reservoir section of about 120metres was encountered in the well as prognosed and intersected 80metres of Binga reservoir with several potentially productive zones in multiple intervals.  Corcel stated that the results of Tobias-13 implies significant hydrocarbon potential remaining.

Tobias-14 was drilled directly after Tobias-13 to its target depth of 781metres.  In a December 28, 2023 press release, Corcel said that Tobias-14 was located at the top of the Tobias anticlinal structure and is an offset to Tobias-4, the largest historic producer in the field, which produced 12,580BOPD at its peak, albeit penetrating only the first eight (8) metres of the reservoir. Tobias-14 penetrated a full Binga reservoir section of about 80 metres with identical zones encountered as in Tobias-13 and had oil shows throughout.  Tobias-14 drilling encountered highly fractured oolitic limestones in the reservoir with good primary porosity values in the range of 4 – 14%. Corcel believes that the porosity is enhanced by the extensive, naturally fractured carbonate system.  Initial pressure readings support Corcel’s predrill thesis that the reservoir has returned to its original pressure values through active recharge of the system.  Tobias-14 found no presence of water despite Tobias-4 watering out at the end of its production life. Corcel believes that this indicates the field has been fully re-equilibrated.

Tobias-14 and Tobias-13 Well Testing Programme

In a February 12, 2024 press release, Corcel announced that testing of Tobias-14 has formally begun. Delays in the start of the testing have been encountered over recent weeks primarily due to longer than expected timelines for deliveries of required testing equipment, combined with severe inclement weather at the well location, which included heavy rains and regional flooding.

Once completed, the Operator, Sonangol will then move the test equipment to the Tobias-13 well pad, which is already being prepared for testing, and will conduct flow testing on the Tobias-13 well.  Testing of both wells will determine formation pressures and ultimately the flow rates. Sonangol and Corcel believe the results will allow them to restart production via an early production system (EPS).

Various companies and oil industry analysts are closely watching the oil industry media for announcements on the Tobias wells testing programme.  If favorable results are achieved, then this would send out the message that there is positive life left in the other old oil fields in the Kwanza Basin.  This could start a stampede of companies exploring for oil in similar fields or focus on greenfield exploration.

It is evident that the investment community has high hopes for positive news from Tobias.  One year ago, Corcel’s share price was 0.25 British pence per share.  Their share price quadrupled to the current price of 1.0 pence.

 

Tako Koning is Holland-born and Canada-raised.  He has a B.Sc. in Geology from the University of Alberta and a B.A. in Economics from the University of Calgary.  He lives in his home city of Calgary, Canada.   During his long career in the Canadian oil industry, he also lived and worked in Indonesia from 1980 – 1986, Nigeria from 1992 – 1995, and Angola from 1995 – 2015. He was employed primarily by Texaco and also by Tullow Oil (Angola Block 1/06) and Gaffney, Cline & Associates. He has driven through most of the onshore Kwanza Basin and had the opportunity to study the basin’s outcrop geology as well as visit some of the abandoned oil fields including the Tobias, Galinda and Quenguela North.  He is pleased to share his knowledge in this article.  For the past 23 years, he has been a member of the International Advisory Board of Africa Oil + Gas Report (AOGR) since it was founded in 2001 in Lagos, Nigeria by Toyin Akinosho.


Paulino Jerónimo Gets a Second Term as Head of Angola’s Petroleum Regulator

Angolan President João Lourenço, declared the term of office of the Board of Directors of the National Oil, Gas and Biofuels Agency (ANPG) to be over.

The Presidential Decree signed on February 19, 2024 affected Paulino Fernando de Carvalho Jerónimo, president of the Board of Directors; César Paxi Pedro, administrator;  Nataxa Alexandre Tavares Ferreira Monteiro Massano, administrator; Gerson Henda Baptista Afonso dos Santos, administrator.

In the same Decree, President Lourenço appointed:  Paulino Fernando de Carvalho Jerónimo, president of the Board of Directors; Artur Manuel Custódio, administrator; Ana Rosa da Costa Nhanga Miala, administrator; Nicola Isabel dos Santos Lemos de Mvuayi, administrator and  Alcides Fernandes Mendes de Andrade, administrator.

ANPG was set up on February 6, 2019, as National Concessionaire, separate from Sonangol, the state hydrocarbon firm, which had, in the four decades prior, played both commercial and regulatory roles in the country’s hydrocarbon industry.

On its fifth anniversary, ANPG touted its credentials as having boosted investment in the oil sector in Angola considerably between 2022 and 2023. “ANPG data points to growth of 96%”, the regulator claimed, arguing that it also “actively contributed to mitigating the decline in oil production in the country and to the relaunch of new production”.

ANPG claimed that its efforts bolstered Local Content as it implemented policies and actions aimed at developing human capital and social responsibility. The regulator boasted that it pushed  bidding for new concessions and encouraged investment in exploration activity through the 2020-2025 exploration strategy. It also, by its own telling, led “development of joint efforts to decarbonize oil operations and boost renewable energy with a focus on biofuels;; creating conditions for maintaining investors who were already present in Angola and for the entry of new ones; establishing closer relationships with all partners, particularly investors”.


The Downstream Gas Market Has a Large Headroom to Grow in Nigeria

In the third and final part of a C-Suite interview series, AOGR’s Akpelu Paul Kelechi, searches for insights to Aradel Holdings’ Natural Gas Development Plans in Nigeria.

Excerpts from the answers by GBITE FALADE, the company’s CEO…

In a recent report, Aradel Holdings quoted the realised price for gas at $2.1 per thousand cubic feet (Mscf). For a company that supplies the Nigeria Liquefied Natural Gas (NLNG) system, that’s pretty low. That’s even lower than the $2.18 that domestic gas suppliers are complaining that government is limiting them to supply to electricity producers. Is that how low the NLNG pays?

The price that we get from our gas supply to NLNG is lower than $2.10 per thousand cubic feet. We have two customers and what we have published there (in the half year report) is the blended price of the two markets. The domestic off-taker is actually paying more than what the NLNG does but I think it’s important to go back in history. This is a pricing that has been enshrined in a long-time off-take agreement that lasted ten years. At the time when the contract was put in place, that price was the best you could get. The only option was the domestic market at that time was basically selling at N10 per thousand standard cubic feet. The pricing framework of gas is now more cost reflective. We are going through a round of negotiation to renegotiate that contract and we are very clear our minds that we would not renegotiate on those similar terms.

The NLNG model was structured such that gas was meant to be fed into the plant from the owner companies, from their upstream businesses. What those parent companies did was to take an integrated view.  So, it was okay for them to take a haircut on the feedstock sales price of the gas to NLNG knowing full well that the super normal margins they have in NLNG would make them more money on an integrated basis. For a third party like ourselves who do not have equity in NLNG, it’s a very punitive price. Now, [there has been] a whole lot of maturation in the gas business, that we now have options and we are digging in our heels to insist that we need to sell at a price that reflects what the domestic market currently offers.

“We’ve done feasibility studies for three major gas-based industries; ammonia-urea, ethylene and methanol. We are about on boarding a business opportunity manager whose full-time job is to drive this activity, such that as we bring more gas to the surface, we are sequestering a portion of it and creating”

Now that you have talked about a maturating market, what does the Nigerian government’s CNG policy mean for producers like you? Are people talking to you about gas supply? Government is keen on pursuing this as the alternative to gasoline and diesel and it looks like it might energise the domestic gas market.

One of our off-takers who has been off-taking gas from us for more than three years now is a CNG manufacturer. They source the gas from us, compress it and reticulate it using specialised CNG trucks.

It’s important to first understand the construct of the CNG business. It is meant to be a displacement fuel. CNG and LPG offer a commercial advantage where they are cheaper in terms of calorific content basis benchmarked against their next alternative. So, the whole idea around gas is that gas should be a displacement fuel. If your primary fuel today is LPFO, HFO or AGO for whatever application, gas is always in a position to displace them from an economic point of view.

There are a couple of CNG plants in the Southwest. Even at the current price today which is north of $8, in fact, it is more of about $10 per thousand standard cubic feet; it still offers a significant discount advantage relative to whether you’re talking about LPFO or you are talking about HFO and all of that.  Even within the southwest area, it offers as much as a 40% discount in terms of price advantage. By the time you transpose that into PMS, it even becomes a whole lot more. So, for producers like ourselves, we are more than happy to continue to support that space.

It is a space that is infrastructure enabled so there needs to be not just investment in the mother station that compresses the gas, you also need investment in the specialised trucks, you need investment at the last mile where you have a PR (Pressure Reduction) and monitoring station that steps down the pressure and allows it to go into the applicative usage. The more of those that we have, we could then create a network that makes it a whole lot easier. Initially, the off-take is more around people who are using it to displace AGO, HFO, HPFO and LPFO for power generation. So, people are using it to generate power of up to about 1MW capacity and that finds ready application in that area.

But that’s a one-to-one delivery. To use gas a displacement for PMS, it means you need to have a network of different CNG stations where if somebody fills up his car with CNG at point A, he doesn’t need to come back to point A to refill because there are intermediate spots among the line. As government continues promoting CNG, we expect to see entrepreneurs latching on to the momentum of government campaign and investing in dispensing stations. It may first of all start as a cluster maybe within the southwest and then extended to maybe the middle belt. Transporters can then be comfortable that as they drive through the length of breath of the line, there is a dispensing station that is not too far away where they can refuel and continue their journey. 

With as little as 5MMScf/d, you [can do] decent CNG investment that forms the basis of your mother station and then from there, you go to feed the daughter stations and the refuelling sites.

You’re suggesting that there is a whole lot of infrastructure investment that needs to happen. The way the filing stations are on the road as one travels from Afikpo to Bede in Nigeria’s middle belt, that’s not going to happen in three years for CNG right?

It can happen and it just takes a different business mindset to make it happen. An approach that segments the off-take for the purpose of transportation is required. They need to first of all target the fleet vehicles. And there are popular fleet vehicles and I will like to use for example, those from Port Harcourt to Lagos. Assume you do have supply capacities for CNG in the south-south and because you have the presence of the ELPS line from Warri all the way coming to Lagos; it then becomes possible to find intermitting points where you can T-off and set up a mother station such that when you look at the endurance, if somebody takes his truck today and fills it up, I don’t know the numbers but I strongly believe that a full tank for those trucks can take them some hundreds of kilometres in terms of drive time. So, coming from Port Harcourt and going to Lagos, you probably don’t need more than one or two intermediate points to refill your tank.

So, you can start by building the case around fleet vehicles such as the trucks, the luxurious buses, and as that becomes deepened, it becomes easier for even light vehicles to ride on the back of those structures. Before, you know what’s happening, somebody could say, okay, since there is a dispensing station at the Shagamu- Ore-Benin Road, why can’t I extend this CNG service into city-centre? So, it’s that sort of reticulation that allows people build around existing hubs and radially expanding out that could help the adoption and I think that in two-three years, this can be done.

”We’ve gotten to a peak of about 61Million standard cubic feet of gas per day in the recent past and we strongly believe that with some intervention work that we’re starting shortly, we should be able to restore our gas production potential to about 70Million standard cubic feet of gas per day

There was supposed to be some Final Investment Decision (FID) taken on a new, large, gas project. Now that you are talking of maturation of gas in the market, what is the agenda for gas commercialisation in Aradel in the next ten years?

Our future development plan is actually more denominated in gas than in oil. Our five-year programme would see more than double the growth rate in gas than what we have in oil. Our future plans and programmes are actually rooted more in gas exploration and gas development. But it’s not as if we are holding back our oil development; we are very focused on chasing the oil barrels because there’s a market for it today and we know that the time frame that you have for oil development is shorter than the one you have for gas because of the transition narratives. But even without holding back the development of oil, we have sufficient established gas reserves that allow us to be able to even grow our gas production at more than doubled the rate at which we are able to grow our oil. So, gas exploration and gas development are a big play for us going to the future.

We’ve gotten to a peak of about 61Million standard cubic feet of gas per day in the recent past and we strongly believe that with some intervention work that we’re starting shortly, we should be able to restore our gas production potential to about 70Million standard cubic feet of gas per day and that’s more than double what we had in third quarter 2022. But consistent with our thoughts, philosophy around oil and how we create value in the oil, we create value through exports and through refining for domestic. We’re taking a similar view for our gas. We’re going to bifurcate it along the lines of playing gas sales but we are also forward integrating in the value chain to applicative usages of gas. By the end of this year, we should be taking the final investment decision on which of the gas-based industry would we be creating as a further extension in our value chain. We do have the endorsement of our board to travel in this direction.

We’ve done feasibility studies for three major gas-based industries; ammonia-urea, ethylene and methanol. We are about on boarding a business opportunity manager whose full-time job is to drive this activity, such that as we bring more gas to the surface, we are sequestering a portion of it and creating value in some base industry whose final products them becomes the subject of either a domestic or a regional reticulation.

So, you’re going to see a wider extension of our integration beyond the three lines that we have today. Today we have the upstream, the gas plants in the midstream for gas commercialisation and the refinery. We will have an investment that is downstream of that gas plant that takes some of the product from the gas plant and create value. For us, that is the best way to domicile value and benefit for the local economy and in terms of what the product is, each of the three products that I have spoken about, we are undeserved; whether it is in our domestic economy or in the region economy. That is the direction we’re going.

Again, this is part of the reason why we will become listed and listing is going to ultimately [open up] significant capital to be able to play across all these Investments. So, gas remains a very key component part of our value proposition going into the future.

What is Aradel’s overall vision for the next five years?

Our vision is to continue to remain relevant when it comes to the key and strategic industry players. Today, we see an evolution in our industry, an evolution where, increasingly, the contribution of the IOCs, especially in the onshore, shallow waters and swamp is declining significantly. We’re seeing different players trying to come into that space and we think that process will become full blown within the next five years.

So, what you should expect of Aradel is that we will be one of the big players that will fully step in to ensure that the country doesn’t get short-changed because the IOCs have exited. We have in our own little way shaped how things have evolved in this industry. We pioneered marginal field operations, we pioneered host community trust fund and we pioneered modular refinery.

We intend not to vacate these spaces in the next five years. End of last 2022 we became the first company in our sector to go to the bond market and raise capital. When we did that, we were oversubscribed at excellent pricing terms, 99% of that subscription came from pension funds. That’s a huge vote of confidence, [for] pension funds which are the biggest holders of funds to start looking in our direction. We did that without being a listed company. We won’t be the first to become listed, Seplat is. But we would deepen that leadership when we get listed. You are going to see a significant scaling up of our reserves holdings, in our production and all of that.

Where we are headed to is when you look at our return in terms of value per barrel of our reserve per spend, you will struggle to find a company that is doing better than what we are doing.

One aspect that I’ve not spoken about because we’ve kept it under the radar is that we’ve already started a journey to renewables.  I am not allowed to say more about that at this pint.

You talked about the IOCs leaving and you own 42% of ND Western. Aradel has also, on its  own, apart from ND Western, taken a stake in Renaissance, which just acquired Shell Petroleum Development Company (SPDC). Will Aradel on its own singularly go for acquisition of Oil Mining Licences ( OMLs) or PMLs or would it continue to do so as a partner of ND Western?

All options are on the table. We also have demonstrated our capacity to work in partnership with others and that’s evident in ND-Western where with three other partners and allies, we invested and acquired divested interest and we have run that for north of 10 years. We’ve done that without an issue, which is very rare in our industry. Within the context of that framework we are committed to exploring more of such opportunities together. Within our structure as Aradel, we also do have some opportunities that we are pursuing but which are just premature for me to talk about now but which will end up in play. Our strength has always come from directly operating things.

”With as little as 5MMScf/d, you [can do] decent CNG investment that forms the basis of your mother station and then from there, you go to feed the daughter stations and the refuelling sites.

Our industry is evolving and we believe that as long as we continue doing what we’re doing now, it’s only a matter of time before we get to the next operated venture. Whether that is a full-blown mining lease or a PML.

 

 


”This is The Year We Take  Exception…We do the Listing”…

In the second of a three-part series, GBITE FALADE, Chief Executive Officer of Aradel Holdings, the Nigerian integrated  energy provider, fields a wide range of questions, including, very specifically, the company’s view of listing on a stock exchange, a taboo subject for most Nigerian independents.

Excerots of the conversation, by Akpelu Paul Kelechi

Aradel has had several Annual General Meetings before this year’s…The reports always came. But now, you regularly publish half a year’s report. And you have comprehensive summaries out in the open before the AGM. For investors who are keen and who like to do some analysis and some market intelligence, that’s okay, but Nigerian companies, especially E&P types don’t do that, as a rule….

We don’t want to wait until we become listed before we start disclosure and reporting, which are a fundamental obligation.  We desire to become a company that operates to global standards, not just at the operational level but corporately as well. We actually think that our adherence to such stringent practices only sells the case for us when we become listed.  And it gives the investing public an opportunity to have a clear perspective as to where we are and how we are threading along in our journey.

Aradel has led the Africa Oil+Gas Report’s Talented Tenth Ranking for two consecutive years. Your company is profitable, pays dividends regularly but has promised itself over the last 12 years that it will be listed on the stock exchange. What is holding you back?

Aradel will be listed in 2024. We are already on that journey to becoming a listed company. We already have a programme that we are working with and even the event of our rebranding is part of that effort.  The issue of standardising on the reporting and the disclosures is also part of that effort. So, we are on the home stretch towards becoming a listed company.

Where will Aradel be listed?

We will be listed first on the Nigerian Stock Exchange with the possibility of a second listing subsequently. For now, our efforts are on being listed on the Nigerian Stock Exchange.

Unveiling a new name and logo signals a new beginning for the company with you at the helm. What keeps you up at night when you think of the past 31 years of the company especially how it relates to your responsibilities to steer it into the future?

The company has very faithful shareholders. There are a lot of shareholders that have been shareholders from the very first day that this company started. They are well informed industry people and they’ve remained faithful. They’ve not divested. Now, though practically every one of them in that category are no longer young I think what will be worth their while, for those who are still alive, is to let them see the fulfilment of their dreams. That keeps me awake at night.

Beyond the operational growth, it is about how we unlock values. How do we create the right price determination for shareholders, such that from the dividend that they get as a result of the operational performance and from share price appreciation and capital gain they can truly be happy? That keeps me awake at night.

Our industry is going through some reconfiguration, new players are coming in, old players are enduring. The boldness and the scale of the future that you dream about and how you pursue it will create a clear distinction about your position in the market. So, how “does one sustain the Legacy of leadership in this industry?” How do you play in such a way that in decades to come, you still continue to be a force to be reckoned with in the Industry?

It is not just in terms of scale but also in terms of what else are you pioneering, because pioneering is in the DNA of our company. How are you expanding the frontier of your accomplishments? How are you redefining how this business should work? How are you working to make sure you remain the best performing energy investment? How are you making sure that on multiple indices, you continue to remain right there at the top? It’s not how far we have come over the last 31 years but what we are reinventing to make sure that we continue to stay ahead of the pack. That is what keeps me awake at night.

In the last two years that we have engaged in conversations with you on the promise of Aradel, you have been a little shy of talking about what used to be the company’s pan African ambitions: Its venture in South Sudan; its aspirations in Mozambique.

In the two years leading to 2023, our industry in Nigeria had been comatose and the first instinct is survival. I came in at a time when crude theft was at a record high, when your barrels were not making it to terminals and at that point in time, survival was the natural extent and it became very difficult to then be going conquering across the continent where your house is burning. So, the last two years have been devoted more to arresting the situation and creating some sort of buffer for ourselves within the mad chaos that was going on in our industry and that’s what we have really focused on.  But we have been very active in South Sudan, nonetheless. Our aspiration in going to South Sudan was to replicate our success in Nigeria which is the success in the upstream and we went into a joint venture partnership with NilePet, which is their state-owned national company and our subsidiary is called NileDelta. Our number one aspiration is first and foremost to achieve commercialisation of the significant volume of gas that is being flared.

The second one is also to enter into upstream asset ownership and get some volume. But South Sudan has also had its own fair share of challenges that has then meant that, there is a lot of bureaucracy and things don’t get executed in time at the same pace we have in Nigeria. So, it takes an awful lot of time to sell a case and get the necessary approvals. So, while we are working activity within the structure of the NileDelta JV to achieve these two aspirations, which are still not yet achieved, we have seen progress. What we’ve done is to continue to offer ourselves as the go-to person for oilfield services. Today we are active players in the Electrical Submersible Pumps (ESPs) and the Progressing Cavity Pumps (PCPs), which we offer to help lift the heavy crude that they have and that has been the basis of existence in South Sudan as we speak today, so we’ve got a NIleDelta today that employees over 50 people and as much as 99% of them are South Sudanese that we’ve trained.

We provide PCPs and ESPs to many upstream operators and help them with their with the recovery from their wells, from the heavy oil that they produce whilst working carefully a tripod agenda of gas commercialisation, upstream asset ownership and a potential modular refinery.

We’re not in Mozambique today but we were in Mozambique before. Our board decided for us to scale back from pursuing and progressing the Mozambique opportunity based on some regional factors that we thought was not playing to our strength, but we have since then been actively looking at some other jurisdictions on the African continent. 

In that sense, you are a service provider in some cases?

Yes, we are.

Let’s go back to upstream. You did intimate the public of your plan to acquire an upstream asset but during the unveiling, you kept mute about that asset. Is it time to talk about it?

No, it’s not yet time for the purpose of confidentiality and respect for our counter parties.

So, it hasn’t been signed yet?

I can assure you that in no long a time from now, an announcement will be made and we think it’s only fair that it is made in consultation with the seller.

We’ll be able to speak to the asset itself. We think it’s a very fitting asset that strategically fits into what we currently have and it gives us options to develop that asset along with others that we have in well synergised arrangements that give us a chance to make an economic success out of the development and give us the base for enough scale to justify certain facility investments that make it worth the while. We always want to make sure that we are matching the scale of our surface facilities investment to the reserve potentials we have in order to ensure that it is economically viable.

What kind of volume are you looking at in terms of output?

It’s difficult to put it number to it primarily because there are unexplored prospects within that field. Until we carry out the exploration and appraisal before we are in a better position to say what it is; but we see the opportunity for both oil and gas development. So, it will serve to deepen gas production that is available in the economics both for domestic and otherwise. It will also help in bringing additional barrels of crude and condensates.


Africa Energy Bank to Decide Headquarters in March 2024, Launch Before June

By Lukman Abolade, Senior Correspondent

The highly anticipated multi-billion-dollar Africa Energy Bank, spearheaded by the African Petroleum Producers’ Organization (APPO) with support from the African Export-Import Bank (Afreximbank), is slated to be operational before June 2024, with the announcement of its host country headquarters expected in March of the same year.

Omar Ibrahim, the Secretary-General of APPO disclosed this during the just concluded Sub Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) held in Lagos, Nigeria.

“I want to inform this meeting that at the last ministerial, conference of the APPO Ministerial Council approval was given to us by Afreximbank.  To ensure that by the end of March, we take a decision on which country is going to host the headquarters of the Africa Energy Bank. We have also been given a mandate to ensure that the Africa Energy Bank becomes operational before the end of the first half of this year,” Ibrahim announced.

The establishment of the Africa Energy Bank is expected to mark a pivotal moment in Africa’s energy landscape. The bank aims to address the growing financing challenges capable of imperilling the development of the continent’s vast energy resources in the context of the energy transition.

As the developed world amplifies its calls for phasing out fossil fuels to combat climate change, Africa confronts the persistent challenge of energy poverty. With more than 600Million people lacking access to electricity and 900Million lacking clean cooking solutions, urgent action is needed to address this crisis Africa’s energy technocrats and experts say.

In response, stakeholders are advocating for the swift expansion of Africa’s oil and gas sector, acknowledging the potential of these resources to alleviate energy poverty. However, despite the pressing need and opportunities presented, global investors are displaying hesitancy towards investing in hydrocarbons. This reluctance leaves the continent without the critical investment required to unlock the full potential of its natural resources.

Acknowledging the progress made by certain countries like Nigeria and Algeria in advancing their energy sectors, Ibrahim emphasized the need for Pan-African cooperation. He underscored that no single country can tackle the challenges alone, advocating for a unified approach towards infrastructure development and knowledge sharing.

“We do not believe that Nigeria or Kenya or Mozambique or any of these individual countries S has what it takes to be able to say that it has mastered the technology of the oil and gas industry. I must admit that some countries have gone very far. Nigeria is one.  Algeria is another.  But, this notwithstanding, Nigeria cannot do it alone. And that is why we are coming together as a continent to establish or develop these various institutions so that it may be established in Nigeria, Algeria or Angola,” he noted.

Central to the discussion was the development of pipeline systems such as the Central Africa Pipeline System (CAPS), which aims to connect 11 African countries, facilitating the transportation of oil and gas across the continent. Ibrahim emphasized the importance of regional connectivity, highlighting the economic opportunities it presents for all African nations.

“We commend Nigeria for its leadership with the Trans Sahara Gas Pipeline, the West African Gas Pipeline.  We are focusing today on developing the Central Africa Pipeline System, CAPS.  It’s going to bring the 11 African countries together to be led by pipelines for oil, for gas, Don’t say that, we are in West Africa.  It is going to benefit you.  Because once that network has been done, you are in a position to take the West Africa gas pipeline or, um, Trans Saharan gas pipeline.  Take from there to Chad, which is in Central Africa. And if you don’t get a market in Europe or Asia, you have a market in Central Africa,” he argued.

Ibrahim addressed the misconception surrounding energy access, insisting that it plays a crucial role in driving economic productivity. He stressed the need to empower African communities with access to energy, not only for lighting but also for enhancing their economic activities. The vision of APPO, as outlined by Ibrahim, is to transform Africa’s energy landscape, ultimately leading to sustainable economic growth and development.

 

 

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