All posts tagged feature

Solarise Africa Receives ~$40Million for Kenyan Expansion

Section: ENERGY TRANSITION · January 3, 2023 · No comments |

The European Union’s ElectriFI Electrification Financing Initiative (EDFI) has joined a league of funders injecting new money into Solarise Africa.

In addition to $33.4Million from the Energy Inclusion Facility (EIF), Oikocredit and the AfricaGoGreen Fund (AGGF), ElectriFI will fund Solarise Africa with $3Million , to expand its operations in Kenya.

The European Union (EU)-funded Electrification Finance Initiative (EDFI), is managed by EDFI Management Company, whereas the Sandton, South Africa-based Solarise Africa builds solar photovoltaic power plants that are then leased to commercial and industrial (C&I) customers.

“As an existing shareholder holding shares in Series A and B, EDFI ElectriFI is proud to strengthen its partnership with Solarise Africa and support the service platform to grow its portfolio of assets in Kenya. We expect this investment to bridge the funding gap until the company closes its next round,” says Geraldine Crosset, Senior Investment Officer of ElectriFI at EDFI MC. Solarise Africa was advised in this transaction by Viruni Capital Partners, a financial services provider based in Dubai, United Arab Emirates.

EDFI ElectriFI is providing this financing under its country window for Kenya. “The ElectriFI country window for Kenya is developed in partnership with EU delegations and host governments. In particular, it contributes to Kenya’s national electrification strategy as part of a Team Europe approach,” says EDFI ElectriFI.

Solarise Africa, founded by South African and Swiss entrepreneurs, is active in Kenya, Uganda Rwanda and South Africa.

The New Energy Players: Their Progress and Beyond for 2023!

Section: ENERGY TRANSITION · January 3, 2023 · No comments |

By Gerard Kreeft

1989 was when I first set foot in Newfoundland (Canada).

I was a Member of a Netherlands Trade Mission focused on oil and gas developments. We were warmly welcomed.

Newfoundland’s fishermen had in large quantities become unemployed. A boycott had been placed on cod fishing, the mainstay of many of the Islanders. Would a Trade Mission featuring oil and gas provide them with the pot of gold they were so desperately in need of?

No, the story does not have a happy ending. Their talents were not usable in the oil and gas renaissance which would follow.

Fast forward to 2023 and now it’s the former talents of the oil and gas world—geologists, geoscientists and drillers– who are to become redundant, much like Newfoundland’s fishermen. Instead, algorithms, digitalization and electrification of energy systems have become the new symbols of the energy transition in 2023.

Below a story of the various players who are playing component parts in the ongoing energy transition. A transition being driven by earlier CO₂ deadlines, which for a majority of new energy companies, have given them a commercial edge. The swiftly changing landscape provides these new energy companies with technical specialization, virtually a guarantee that their market share and value will only increase. In some cases, creating near monopoly situations.

A key question remains: have they forgotten their green heritage? Have they forgotten that an important part of the green heritage is to help those in need? Not out of pity but a humane act of kindness. Forget not that Sub-Sahara Africa will one day will become a dominant green market. Can Sub-Sahara Africa with its 568Million people who have no access to electricity and 900Million, who have no access to clean cooking fuels and technologies be ignored (The Energy Progress Report 2022)? Finally, forget not that one day you may require the humanity of Sub-Sahara Africa.

The Trend Setters

ENEL

Enel’s Strategic Plan 2023-2025 is designed to make the company leaner and meaner: Shedding $21Billion in assets to reduce debt, a sharpened focus on six key countries, electrification and digitalization of its customer base, achieving CO₂neutrality by 2040 instead of 2050 and increasing profitability.

Enel’s core operations have been reduced to six key countries: Italy, Spain, the United States, Brazil, Chile and Columbia. The key will be to add some 21GW (gigawatts) of installed capacity so that by 2025 the company will have an installed generating capacity of some 75GW, to create a digital platform on which value does not reside in owning resources but rather in managing data-driven ecosystems. A key goal is to achieve 75% of electricity from renewables and 80% digitalization of its customers on the grid by 2025.

Note: 1GW can generate electricity for 750,000 households.

Enel’s strategy is simple: “The term platform often refers to a business model typical of digital companies which, very efficiently, manage to connect assets and services that they do not own.” This, in effect, borrows a chapter from Uber, which does not own taxis or Booking, which does not own hotels. A digital platform on which value does not reside in owning resources but rather in managing data-driven ecosystems.

To spur its growth outside its six-core-country strategy Enel has developed a Stewardship Model. Enel, together with partners will invest $15Billion in infrastructural investments in countries where the company has a potential interest.

In Africa Enel (Enel Green Power) has teamed up with the Qatar Investment Authority (QIA), an investment fund to invest on a 50/50 basis in all of the new ventures and opportunities in renewables in Sub-Saharan Africa. Already QIA has taken over half of Enel’s stake of 800MW of existing projects in South Africa and Zambia.

ENGIE

Engie is pledged to reduce to CO₂ neutrality by 2045. The company has indicated it will reduce its focus to 30 countries instead of 70. Four new core divisions have been implemented:

Renewable energy

Energy solutions

Networks

Thermal production and energy supply.

45% of investments is focused on renewables. Between 2023-2025, an additional capacity of 4GW per year will be added; 6GW per year from 2026 onward, resulting in almost 80GW by 2030.

Hydrogen production in 2030 will be 4GW, 700 km of dedicated hydrogen networks will be in place, and more than 100 fueling stations for hydrogen mobility will be rolled out.

Engie has strong ambitions in Africa comprising 3,000MW of electricity generation facilities, both in operation and in construction, located in Egypt, Morocco, Senegal and South Africa; service activities in Algeria, Burkina Faso, Côte d’Ivoire, Ghana, Mali, Morocco, Mozambique, Niger, Senegal, South Africa, and Tunisia; decentralized power generation, mini-grids development and Solar-Home-Systems (SHS) in 9 countries serving over more than 4Million people.

IBERDROLA

Iberdrola’s 2023-2025 Strategic Plan indicates that the company will invest $50Billion and achieve net zero for Scope 1, 2 and 3 before 2040.

By 2030 the company will have installed capacity of 100GW, valued at $70Billion.

Key markets include France, Germany, United Kingdom, Spain, USA, Brazil and Australia.

Offshore wind projects, totaling $18Billion in France, Germany, UK and the USA, are the key investments of the company.

Net profitability by 2025 will increase to more than $5Billion, up from $4Billion in 2022.

Electrification of all sectors is high on the company agenda.

The company under its Electricity for All Programme has carried out projects in Benin, Ethiopia, Kenya, Rwanda, Tanzania and Uganda.

ØRSTED

Ørsted, the Danish wind energy pioneer, continues to set new records. Its share price in December 2022 was $93; five years earlier in 10 June 2016 it was $37.

By 2030 the company’s goal is to have an installed capacity of 50GW. Ørsted is also involved with the building of two energy islands– Bornholm and North Sea– which will deliver 10GW of power.

The company’s return on investment is predicted to be 12% EBITA (earnings before interest, taxes and amortisation) for the period up to 2027.

The company has projects in Taiwan, Japan, South Korea, throughout Europe (Belgium, Germany, Denmark, France, Netherlands, Poland, and UK) and the USA.

The Equalizers

ACWA

ACWA is Saudi is a developer, investor, and operator of power generation and desalinated water plants. The company has 66 assets, spread over 12 countries, valued at $68Billion and has 44.6GW generating power. Some examples:

In Morocco ACWA has developed three solar parks totalling 500MW for the Moroccan Agency for Solar Energy (MASEN).

In the Republic of Uzbekistan, it is developing the 1.5 GW Kungrad wind farm in the republic of Karakalpakstan. The wind farm will comprise three 500MW wind power projects.

ACWA is in agreement with nine renowned Chinese entities for financing, investment and construction of ACWA Power’s global clean and renewable energy projects in Saudi Arabia and Belt and Road Initiative countries.

There is also an agreement with The Sovereign Fund of Egypt (TSFE) to explore a joint investment in the 1.1 GW Wind Energy project, located in the Gulf of Suez in Egypt.

The company has an extensive memorandum of understanding (MoU) exploring a partnership for the development of green hydrogen and its derivatives in the Republic of South Africa.

It also inked agreements with both the National Water Company of Senegal (SONES) and the National Electricity Company of Senegal (SENELEC) for the development of a 300,000 m3/d seawater reverse osmosis plant (SWRO) in Grande Côte; and working closely with SENELEC to develop a Combined Cycle Gas-Turbine (CCGT) plant in Cap des Biches with an initial design capacity of 160 MW.

Lekela

Lekela’s current portfolio includes more than 1GW of power involving projects in Egypt, Ghana, and South Africa.

The company’s focus is utility-scale projects which supply much-needed clean energy to communities across Africa. The focus is on taking projects from mid-or late-stage development into long-term operation.

Scatec

Scatec is a Norwegian, renewable power producer, developing, building, owning and operating solar, wind and hydro power plants and storage solutions. Scatec has more than 4.6GW in operation and under construction on four continents. The company is targeting 15GW capacity by the end of 2025. In Africa the company has projects in, Burundi, Cameroon, DRC, Egypt, Gabon, Guinea. Malawi, Madagascar, and Rwanda.

Key Takeaways

Enel, Iberdrola, and Ørsted have focused their strategy to the markets of North America, South America and Asia where growth is expected to flourish.
The Energy Transition is gathering speed: Witness the bringing forward the dates of CO₂ neutrality to 2040 instead of 2050 that both Enel and Iberdrola are proposing.
The increased specialization and experience that Enel/ Iberdrola/Engie have achieved is a steep barrier for new entrants. Think of the oil majors who for the most part have only symbolic experience in renewable energy. The one exception is Equinor which will have more than 50% of its capital budget allocated to renewables by 2030.
That the primary focus of Enel, Iberdrola and Ørsted is not on Sub-Saharan Africa should come as no surprise. This has simply not been a key portion of their market. Can this continue? Is it not time that these companies put together a Marshal Plan for Sub-Sahara Africa? True Enel through its Stewardship Model and Engie with its African footprint have seized business opportunities but much more is needed. Sub-Sahara Africa can very quickly become a primary renewable marketplace!
Sub-Sahara Africa is receiving a sharp focus from both the development banks and such companies as ACWA, Lekela and Scatec.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise. He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. Kreeft has Dutch and Canadian citizenship and resides in the Netherlands. He writes on a regular basis for Africa Oil + Gas Report, and is a guest contributor to IEEFA(Institute for Energy Economics and Financial Analysis). His book ‘The 10 Commandments of the Energy Transition ‘is on sale at https://books.friesenpress.com/store/title/119734000211674846/Gerard-Kreeft-The-10-Commandments-of-the-Energy-Transition

Mozambique to Legalize Village Militias to Fight Terrorists in Gas Rich Province

Section: Gas Monetization · December 29, 2022 · No comments |

The Mozambican parliament has passed the first reading of a government bill that will legalise the “local forces”, which are village militias in the northern province of Cabo Delgado, set up to fight against Islamist terrorists.

Terrorist attacks in Cabo Delgado began in October 2017, and have been characterized by great brutality, including beheadings, mutilations and rapes. As from 2019, rather than rely exclusively on units of the defense and security forces, some villages began to set up their own self-defence units, initially drawn largely from veterans of Mozambique’s war for independence from Portuguese colonial rule.

The government bill makes it clear that the “local forces” are not independent, but fall under the control of the regular armed forces (FADM), which will provide them with logistical support. Introducing the bill, Defence Minister Cristovao Chume said the military chain of command covers the local forces, which are a temporary expedient arising from the crisis of jihadist terrorism.

Local forces began as an offshoot of the veterans of the independence war, the Defence Minister says in a statement. Today, they include many young people determined to defend their villages, and even some demobilized soldiers who had once been members of the main opposition party Renamo.

Both Renamo and the Mozambique Democratic Movement (MDM), the second opposition party, denounced the bill, claiming that it legitimizes a “parallel” paramilitary force, serving the ruling Frelimo Party.

Renamo deputies repeatedly declared that the bill “legitimizes naparamas”. In fact, the bill does not mention the naparamas, which are an independent peasant militia, quite separate from the local forces.

The naparamas first appeared in the late 1980s, fighting alongside the Mozambican army against Renamo, and, for a few years, enjoying considerable successes in Nampula and Zambezia provinces. They reappeared a few months ago to fight against the jihadists in Cabo Delgado. It is not at all clear that the naparamas would disband, even if the government told them to.

Renamo and the MDM argue that the local forces are “unconstitutional”, because the Mozambican constitution states that defence matters are exclusively the domain of the armed forces and the police.

But the government’s bill deals with this problem by bringing the local forces explicitly under the control of the FADM. Indeed, if the bill is not passed, the situation of the local forces would clearly become unconstitutional.

Neither Renamo nor the MDM suggested disbanding the local forces. Instead, they argued that they could be replaced by reservists, or by recalling demobilized soldiers into the FADM.

In the vote, the 161 members of the ruling Frelimo Party present supported the bill, while all 56 Renamo and MDM deputies in the room voted against.

The bill now enters a committee stage, where amendments can be proposed, but it is unlikely to undergo any significant change. The second and final plenary reading of the bill will occur on Friday or Monday

Century Begins Upgrade of FPSO For Dangote’s Kaelekule Field

Section: In the news · December 29, 2022 · 2 comments |

By Prospect Mojido, in Lagos

“The real work is to repair relations between NNPC, WAEP AND First E&P”

Century Energy Group has moved the Front Puffin FPSO (Floating, Production Storage and Offloading) vessel from the Aje condensate and gas field offshore Nigeria, to the SHI–MCI FZE quayside in the Port of Lagos, for upgrade.

It is the third project to be carried out in the SHI–MCI FZE yard, widely known to as Samsung -Ladol yard, since the fabrication and integration of the Egina FPSO, which sailed away to the deep offshore field in August 2018.

The de-bottlenecking upgrade is meant to get the Front Puffin ready for its next assignment on the Kaelekule oil field in in Oil Mining Lease (OML 72), held by the NNPC/West Africa E&P (WAEP) Joint Venture.

This event “draws closer the date for first oil on the field and may possibly make everyone involved more committed to early monetization of this resource”, multiple sources tell Africa Oil+Gas Report.

Owned and managed by the Century Group, the Front Puffin, has produced from the Aje field since May 2016. It is a single-sided FPSO with a hydrocarbon production facility designed to receive well fluids, separate and stabilize produced crude, store and stabilize crude in the FPSO’s cargo tanks, treat and discharge the produced water and compress the produced gas for gas lift with the balance of the gas being flared.

The upgrade is focused on changing the current submerged turret production (STP) and mooring configuration to a spread-moored design and inclusion of riser porch so as to accommodate the shallow water and draft requirement of the FPSO.

The location of the de-bottlenecking project in Nigeria provides a significant discount. It reduces the cost that would have been incurred if the job was to be performed in Singapore or Korea. Industry data evaluated by Africa Oil+Gas Report indicate a steep reduction in overall cost of the upgrade from over $250Million to less than $100Million.

Although Samsung sources say that the upgrade would be completed by late February 2023, at which time the vessel would be ready to receive hydrocarbon fluids, there is no certainty that all the upstream partners are in agreement over the proceedings of the work programme, let alone the date of first oil.

Which is odd, as Nigeria has struggled with declining crude oil revenues in the last one year as it battles a huge shortfall in its OPEC production quota. The country is in urgent need of topping up its crude oil output now.

The Kaelekule oil field redevelopment project has dragged, although the scope has increased from “early, marginal output “, of about 2-3,000Barrels of Oil Per Day, to a sizeable 15,000BOPD

The initial plan was to commence some production from the OML 72 by 2019, four years after WAEP, a subsidiary of the Dangote Industries Conglomerate, purchased 45% of the shallow water OMLs 71 and 72 from Shell, TOTAL and ENI for $300Million. WAEP has had, as a technical partner, First E&P, a Nigerian independent oil producer. Kalaekule field, the only field in the two acreages with a history of production, had been scheduled for a revamp; the field had produced crude oil between 1985 and 2002, peaking in 1999 at 22,000BOPD, but much of the facility has rotted.

In 2019 WAEP carried out safe access works, as well as repairs, on the field’s two wellhead platforms, KCPP-A & KCPP-B platforms. The company also did some work on some of the wells on both platforms, including well testing work on the platform B wells. Asset Integrity work, which will end in certification when all complete, is ongoing.

But much of the delay has been due to pushbacks from the National Petroleum Investment Management Services (NAPIMS), the arm of the state hydrocarbon company NNPC Ltd which oversees NNPC Joint Venture activity. NNPC, through NAPIMS, holds 55% of the asset, and thus contributes that proportion to the wok programme.

NAPIMS eventually agreed to honour work done and the costs incurred in the field optimization work of 2017-2019, but NAPIMS did not honour the 2021 work and has provided no budget for the 2022 work.

“What is important is to repair relations between the partners”, one insider tells Africa Oi+Gas Report.

When the upgrade is completed, “the FPSO will receive co- mingled well fluids from KCPP-A platform through 10″ HP flowline, to enable topside production facility to be isolated from flowline/Production Platform”, says Mochamad Yudistira Nugraha, SHI–MCI FZE yard’s Senior Manager Business Development, .

Egypt Will Offer 12 Blocks for Gas Exploration

Section: Farm in, Farm Out · December 24, 2022 · No comments |

Egyptian Natural Gas Holding Company (EGAS), is expected to launch Energy companies can bid for 12 new oil and gas exploration blocks latest by the first week of January 2023.

The bid offering will close by the end of second quarter 2023.

It will cover concessions in the Western Desert and the Mediterranean, where a host of gas fields have been discovered by BP, ENI and latterly Chevron, in the last seven years.

Egypt is a perennial launcher of bid rounds.

The country’s last tender, concluded barely six months ago, witnessed seven international energy companies win eight of the 24 oil and gas exploration blocks that were up for sale. in the tender, and. BP, ENI, Apex International, Energean Egypt, United Energy, Ukraine’s INA Naftaplin, and Chile’s Enap Sipetrol all received blocks in the tender.

Evaluating Palmeron’s blues in the OML 130 drilling campaign tender

Section: Paid Post · December 23, 2022 · 2 comments |

By Oluwaseun Adeoti

PAID POST/ADVERTORIAL

The Nigeria’s oil and gas industry is witnessing some kind of disquiet stemming from procurement process in the award of contract for the provision of drillship for TOTAL E&P OML 130 Drilling Campaign TENDER NO DW00001997. Mr Christopher Palmer, the Chief Executive Officer of Palmeron Nigeria, petitioned the Group Chief Executive Officer of the NNPC Limited, Mr Mele Kyari, alleging some irregularities and abuse of process in the tender.

He also accused NAPIMS, under the management of Mr Bala Wunti, of forcing TOTALEnergies to cancel the bid he ‘won’ in order to award the contract to the Tirex consortium through an illegal process. Then, following the award of the contract to a consortium of Derotech /Geoplex/ PIDWAL/NOBLE, which Tirex Petroleum and Energy is not even a part of, Mr Palmer is said to have started accusing the new consortium of underhand dealings.

A closer look at the petition shows that this issue pretty much looks like a business relationship that went sour. It emanated from TOTALEnergies’ Call for tender (CFT) and the participation of some bidders including Palmeron Nigeria. According to the petitioner, the tender process was cancelled midway in a bid to deny Palmeron Nigeria the contract of the award, which Mr. Palmer assumed his company won. Even without reading from either NAPIMS or TOTALEnergies, one could conveniently evaluate his claims using his own petition.

Mr Palmer alleged that TOTALEnergies and NAPIMS in August 2022 were considering awarding the contract to another consortium at a daily rate of $430,000 as compared to its lower rate of $322,500. It beats every imagination to suggest that business concerns will choose a more expensive option over a cheaper one unless it has to do with an issue of quality.

It could be that TOTALEnergies dropped Palmeron from further participating in the bid when it found out that he does not have a rig, a basic requirement for participation in the bid process. Is it not paradoxical that Mr Palmer who claims to have won the bid before ‘independence’ has been galivanting all over the place looking for where to get a rig. He was so desperate that, as late as October 2021, he was begging Prince Rotimi Ibidapo, the Chief Executive Officer of Derotech Offshore, to offer his rig to him for the project. He even promised to make his company the rig manager and a pay of $8,000 per day.

Anybody with a good knowledge of the workings in the oil and gas industry knows that bids attract all sorts of companies – those with experience and those without; the capable and the incapable; contenders and pretenders etc. The bid process is put in place to sift the grains from the chaff and, until the process is concluded with the award of a contract, the callers of the tender reserve the right to disqualify any responder to the bid. The lack of basic knowledge of this fact, made obvious by Palmeron’s assumption that it had won the bid, even when the process was on-going, shows its seeming ignorance of how the industry operates.

On the legal aspects, everyone who is conversant with the operations of the oil and gas industry knows that there are clauses in every CFT document that speak to the relationship between the CFT caller and the tenderer. This, Mr Palmer even acknowledged when he noted in his petition, that Article 5.2 of the instruction to TENDERER clearly states that no claim for compensation of any kind in respect of the preparation of the tender or any other cost shall be due to TENDERER in the event that COMPANY decides not to or is unable to proceed with the award of the CONTRACT.

Such clauses are put in the guidelines for participation to take care of such unforeseen circumstances that may arise in the course of the bid process and the belated decision of Palmeron Nigeria to disagree with that particular clause puts him and his company at risk of being regarded as bad losers.

There is no gainsaying that these IOCs even look beyond the horizon of the Nigerian legal system to also include the international anti-corruption laws when it comes to corporate governance issues. Moreover, the role of NAPIMS, headed by Mr Wunti – a highly respected regulator in the industry – in such instances, further questions the propriety of Mr Palmer’s tantrums.

Today, Mr Palmer, the only saint in Sodom and Gomorrah, has been blackmailing, and issuing threats to, the winners of the bid to do his bidding. Since the week of December 12, 2022, one of his phony groups, Citizen Group Nigeria, has been sending emails to one James Sanislow of the Noble Group, a member of the winning consortium, threatening him to quit the contract with TOTALEnergies or risk their attack. In their latest email, sent on 20 December, 2022, the phony group tried to apply pressure on Noble as they threatened, “this email and other emails to you will form part of our evidence that we informed you of your company’s illegality in Nigeria if you fail to take appropriate steps.” In an earlier email, the group even bragged of making money from DOJ for their nefarious acts. He has also been recruiting faceless groups and a discredited media organization in his inglorious fight.

Lastly Palmeron seems to be playing the victim card by alleging that it is being bullied as an indigenous company by an IOC and NAPIMS. Yes, same NAPIMS that is promoting the interests of indigenous oil and gas servicing companies, just to curry undue sympathy to itself. In its bid to achieve that, he started bullying other indigenous players, starting with Tirex Petroleum and Energy and moving on to the Derotech /Geoplex/ PIDWAL/NOBLE consortium when he realized that the contract has been awarded to the latter. One even wonders why Palmer is only fighting NAPIMS, a JV Operator, and not the Nigerian Content Development Monitoring Board (NCDMB), without which Noble rig would not have been contracted.

The irony in the whole issue, which goes a long way to point to his character, is that this same Derotech that Mr Palmer has started accusing of underhand deal is the same company he was begging to partner with him in the contract bid but was turned down. One even wonders what sort of a businessman could be behaving the way he does – indiscriminately burning all the bridges he would need in the future.

Mr Palmer’s unfortunate expedition is trying to tarnish the image of responsible institutions in the country – NAPIMS and its Group General Manager, Mr Bala Wunti; TOTALEnergies, Tirex PE, Durotech Offshore, Noble Corporation and a host of other industry operators. He has even gone ahead to try and tarnish the image of the whole country by alleging that the Presidency is corrupt and powerless in dealing with corrupt practices.

This piece is entirely the opinion of the writer.

ENI Tops Up Congo’s FLNG Capacity By 300%

Section: Gas Monetization · December 23, 2022 · 1 comment |

By Sully Manope, in Brazzaville

Project will deliver ~440MMscf/d by 2025

Italian producer ENI has launched a second Floating Liquefied Natural Gas (FLNG) project to increase the production of and export from the Republic of Congo.

The company announced it had signed a contract with Wison Heavy Industry for the construction and installation of an FLNG unit with a capacity of 2.4Million Metric tons per annum (2.4MTPA). The FLNG will be deployed offshore the Republic of Congo, widely known as Congo Brazzaville.

This facility will be the second FLNG to be deployed in the country, the first one being Tango FLNG (0.6 MTPA capacity), with LNG production expected to begin in 2023. With the second FLNG, overall LNG production capacity on the Marine XII field will reach 3Million tons/year (3MTPA), which is ~160 Billion standard cubic feet/year or 440MMscf/d in 2025.

The 380 metre long and 60 metre wide vessel will be anchored at a water-depth of around 40 metres and will be able to store over 180,000 cubic meters of LNG and 45,000 cubic meters of LPGs. Preliminary activities have already started, with long lead items ordered and steel cut of cryogenic tanks occurred on December 20th.

“Both initiatives are part of Marine XII gas valorisation plan, in line with ENI’s strategy to leverage gas equity”, the company says in a statement.

Somoil Grabs Even More

Section: Farm in, Farm Out · December 22, 2022 · No comments |

Angola’s largest homegrown E&P firm, Somoil, has agreed to increase its equity position in one acreage, even as it waits for government approval to acquire stakes in three others.

Somoil will purchase the 2.5% interest belonging to Indonesian state hydrocarbon company PTTEP in TOTALEnergies operated Block 17/06 project offshore Angola. Completion of the sale is expected by mid-2023, subject to the conditions prescribed in the sale and purchase agreement (SPA).

Somoil currently has at least 10% stake in each of six blocks, including 2/05, 3/05, 3/05A, 4/05, 14, FS/FST, all of them producing assets. Block 17/06, which is the seventh is under development.

Somoil’s net daily output in these properties collectively ranges from 10,000BOPD to 15,000BOPD, an outlying performance among Angolan indigenous players.

Somoil is currently, in partnership with Sirius Petroleum, in the process of acquiring, from state owned Sonangol, participating interests of 8.28% and 10% respectively in Blocks 18 and 31 (producing blocks) and a 25% participating interest in the exploration Block 27, for a total consideration of $335.5Million.

If that deal, which is far gone, is consummated by mid 2023 as anticipated, Somoil will have a position in 10 acreages in Angola, eight of which are producers.

Neither Somoil, nor PTTEP has disclosed the sum for which Somoil will purchase PTTEP’s 2.5% participating interest in Block 17/06. What’s clear is that the Block is host to the Begonia oilfield, currently under-development by French supermajor TOTALEnergies, who is the operator. Located in water depths of up to 750 metres, Begonia will be exploited as a subsea tie-back to TOTALlEnergies’ Pazflor floating production, storage and offloading vessel on adjacent Block 17. The Begonia project, which is expected to cost $850Million, will deliver about 30,000 barrels per day of crude.

NUPRC Calls for Inputs for the Next Phase of Regulations Development

Section: In the news · December 21, 2022 · No comments |

PARTNER CONTENT

The Nigerian Upstream Petroleum Regulatory Commission(NUPRC) has given notice of stakeholder consultation regarding the third phase of regulations development in line with section 216 of the Petroleum Industry Act (PIA) 2021.

The commission invites inputs from Lessees, Licensees, Permit holders, Host Communities, and other stakeholders of the Nigerian Upstream Petroleum sector, between now and January 9, 2023.

1. The matters to which this stakeholder’s inputs and consultations relate are as follows:

i. Upstream Petroleum Measurement Regulations

ii. Advance Cargo Declaration Regulations

iii. Significant Discovery Regulations

iv. Gas Flare Penalty (Amendment) Regulations

v. Domestic Crude Oil Supply Obligation Regulations

vi. Nigerian Upstream Measurement Regulations

2. Stakeholders are kindly enjoined to follow the link below to download and

review the proposed regulations; https://www.n u p r c.gov. ng/regulation- development-pio-2021/.

3. Accordingly, submissions of inputs to the regulations are hereby requested as part of the process of stakeholder consultation prior to finalization of the regulations, to give meaning to the intent of the PIA 2021

4. All submissions must be made using the format accessible through this link https://WWW.nuprc.gov.nq/wpcontent /uploads/2022/NUPRC–Requlation-Comments-Sheet- xlsl.

They must be received at the email address below NO LATER THAN 21 DAYS FROM DECEMBER 19 2022, which means January 9, 2023 (as his publication was put on NUPRC website on December 19 2022).

5. Kindly forward your submissions to the Head Compliance and Enforcement Unit of NUPRC, Kingston Ezeugo Chikwendu on regcon@nuprc.gov.ng, GSM 08077724442 for further necessary action.

Signed:

Engr. Gbenga Komolafe FNSE Commission Chief Executive

Will 2023 see a Revival of the Deepwater Market?

Section: In the news · December 19, 2022 · No comments |

By Gerard Kreeft

Is the deepwater market on the cusp of a revival in 2023? Preliminary signs are promising. Yet to participate in this marketplace requires very deep pockets and stamina. While the drilling fraternity has undertaken the necessary rationalization—witness Saipem selling its land rigs to KCADeutag and the merger of Noble Drilling and Maersk Drilling—the oil majors have indicated that it will be business as usual. How will the deepwater marketplace develop in an ongoing turbulent energy future? Is there room at the poker table for the deepwater players who are being constantly overshadowed by energy scenarios which are predicting the early death of the oil and gas industry and hence the deepwater sub-market? Have deepwater exploration and development been given a premature death sentence?

Two opposing scenarios are currently in play: the re-emergence of the offshore marketplace, in particular the deepwater plays; and the International Energy Agency (IEA) ’s recent prediction that in the period 2022-2027 there will be a sharp growth by 2,400 gigawatts (GW) in installations of renewable power. That renewables are becoming a bedrock of the energy transition is not in doubt. Less sure is whether the deepwater players will have a continuing staying power. How will the oil majors divide their capital budgets between oil and gas projects and renewables? Below an overview of what to anticipate in 2023.

The Current Market Situation

A telling sign for 2023 are the recent robust contracts signed by Transocean and the drillship purchased by Saipem. Tranocean’s Deepwater Corcovado drillship was awarded a four-year contract having an estimated worth of $583Million; the company’s Deepwater Orion drillship signed a three-year contract worth an estimated $456Million.

Saipem, in turn, has announced that it has purchased the Santorini, an ultra-deepwater drillship, from South Korea’s Samsung Heavy Industries to strengthen its offshore drilling fleet amid the growing demand in the market. Saipem disclosed that its purchase option of $230Million will be financed entirely from available cash.

Can the deepwater drillers expect better times in 2023? The terrain, according to WoodMackenzie, is the fastest growing upstream oil and gas venue: production is expected to hit 10.4Million Barrels of oil equivalent per day (BOEPD) in 2022 and will reach 17MillionBOEPD by the end of the decade.

“Brazil remains the leading deepwater producer, it accounts for around 30% of current global capacity and will continue to grow. Guyana, the most significant new entrant, will be producing 1MillionBOEPD within the next five years. In total 14 other countries will contribute to the deepwater supply mix in the coming years.”

Indexed oil & gas production growth by resource theme, 2022-2030

Source: ‘Global deepwater production to increase 60%’, WoodMackenzie, November24, 2022

According to WoodMackenzie the sector remains under the control of a small number of key players: “Petrobras and the seven majors dominate deepwater production, operating 22 of the top 25 deepwater assets. Petrobras’ deepwater portfolio is around twice as big as its nearest peer, Shell, which stands out among the majors for leading production and cash flow. ExxonMobil and TOTALEnergies show the highest rates of growth this decade.”

According to a recent Valaris investor presentation 2023 and beyond will provide the drillers market conditions not seen for many years:

At present the deepwater drillship fleet has been rationalized to 158 units from a peak of 281 in late 2014; the jackup supply has declined to 493 units from a high of 542 in 2015. Yet one-third of the jackups are more than 30 years old and have a limited use for the future.

Majority of the deepwater rigs are very modern, only 16% of current supply is older than 20 years;

Because of improved market conditions, rationalization of the offshore fleet utilization for both drillships and jackups is above 90%.

Average dayrates for drillships signed in the third quarter of 2022 have more than doubled to $402,000 from $193,000 in the fourth quarter 2020. Average dayrates for jackups signed in the third quarter of 2022 is $97,000 compared to $71,000 in the fourth quarter of 2020.

The Oil Majors

A key component of BP’s strategy is building an investment structure, which requires only a few skilled accountants. The company has either sacked employees or will be delegating BP’s headcount to its joint ventures. The goal is to become lean and mean, reducing costs and, hopefully, increasing margins. In short becoming an investment vehicle.

A key strategy is to decrease its oil production by 40% by 2030. In Angola BP has merged its upstream activities with ENI to form Azule Energy, which could become a model for other African countries.

To date the company has initiated a series of joint ventures to speed up its transition.

BP and Ørsted have partnered to develop zero-carbon ‘green hydrogen’ at BP’s Lingen Refinery in north-‎west Germany, BP’s first full-scale project in a sector that is expected to grow rapidly. The 50 MW electrolyser project is expected to produce 1 ton of ‎hydrogen per hour – almost 9,000 tonnes a year – starting in 2024. The project could be expanded to up to 500 MW at a later stage to replace all of Lingen’s fossil fuel-based hydrogen.
BP and Equinor revealed that BP will become a 50% partner of the non-operated assets Empire Wind (offshore New York State) and Beacon Wind (offshore Massachusetts). BP and Equinor will jointly develop four assets in two existing offshore wind leases located offshore of New York and Massachusetts that together have the potential to generate power for more than 2Million homes.
BP joined Statkraft and Aker Offshore Wind in a consortium bidding to develop offshore wind energy in Norway. The partnership—in which BP, Statkraft, and Aker Offshore Wind will each hold a 33.3% share—will pursue a bid to develop offshore wind power in the Sørlige Nordsjø II (SN2) licence area.

Chevron

Two-thirds of Chevron’s production in 2025 will come from just two projects: Tengiz in Kazakhstan and the Permian Basin in the United States will each yield 1MillionBOEPD.

In 2021, Chevron established a New Energies division devoted to lower-carbon technologies, pledging to spend $10Billion through 2028—about $2Billion per year, or 12.5-14% of Chevron’s projected capital.

The company has indicated that over the next 3 years it will spend some $10.5-$12.5Billion yearly in the USA, mostly in the Permian Basin and Gulf of Mexico. This means that at least 75% of Chevron’s total capital budget over that period is pledged for the U.S. market.

Outside the USA, Chevron will spend $3.5Billion, or 70% of its international budget, to develop its Tengiz asset in Kazakhstan, with the remaining $1.5Billion spent elsewhere. This is not promising for Africa, where Chevron has major operations stretched across the continent, including major projects in Nigeria, Angola, Equatorial Guinea, and Egypt that have received limited funding in order to bankroll Tengiz.

Eni

ENI states that 90% of exploration capex is spent on near fields and proven basins. Some $11Billion in the last 10 years has been spent on its dual exploration model—near fields and proven basins. The company states that it only requires three years—from first discovery of oil to market—twice as fast as the industry average. The company produces 1.7MMBOEPD, has a balance sheet which has an economic leverage of 20%, and has, according to its website, an Internal Rate of Return(IRR) of 34%, the highest of all its peers for the period 2012-2021. Also, its RRR(Reserve Replacement Ratio) of 110% for the period 2012-2021 is the highest compared to its industry peers.

A key ENI strategy is developing a series of joint-ventures to ensure that ENI can achieve maximum leverage for its current oil and gas assets and at the same pursuing new strategies as part of its energy transition plan. A key example is Azule Energy, Angola, a 50-50 joint venture between ENI and BP formed in 2022 to include both companies’ upstream assets, LNG and solar business. Azule Energy is now Angola’s largest independent equity producer of oil and gas, holding 2Billion barrels equivalent of net resources and growing to about 250,000BOEPD of equity oil and gas production over the next 5 years. It holds stakes in 16 licences (of which 6 are exploration blocks) and a participation in Angola LNG JV. The company also participates in the New Gas Consortium (NGC), the first non-associated gas project in the country.

Equinor

Equinor’s has two pillars: natural gas and its growing offshore wind portfolio. Does the company have the financial depth and ability to achieve maximum leverage for both pillars?

Equinor’s offshore wind portfolio is pledged to grow to 12–16 GW of installed capacity by 2030. Renewables will receive more than 50% of capital investments by 2030.

Equinor has chosen a series of joint ventures to develop its offshore wind portfolio. The first, Dogger Bank, heralded to become the world’s largest offshore wind farm, is being developed together with SSE Renewables based in the UK. Located in the North Sea, the project will produce some 3.6 GW of energy, enough to power 6Million households. More recently, Eni has purchased a 20% stake in the Dogger Bank A & B Project.

The second is Equinor’s Empire Wind and Beacon Wind assets off the USA’s east coast. In September 2020 it was announced that BP was buying a 50% non-operating share, a basis for furthering a strategic relationship. The two projects will generate 4.4 GW of energy.

By 2030 the company will be spending more than one-half of its capital spending on low carbon energy to become a leader in offshore wind technology.

ExxonMobil

For 2023 the company has stated that its capital investments will range between $23Billion-$25Billion. Over a six year period ExxonMobil will invest some $2.5Billion per year in low carbon solutions: CCS (Carbon Capture and Storage) hydrogen initiatives and biofuels. The company will invest 70% of its capital budget in the Permian Basin (USA), Guyana, Brazil and LNG projects. By 2027 production is anticipated to be 4.2MillionBOEPD.

Shell

Annual capital expenditures in the near term, according to Shell, could be in the range of $21-23Billion. The company has stated that its renewables and energy solutions will be $2-3Billion compared to previous targets of $1-2Billion. This pales in comparison to the $3Billion earmarked for marketing, $4Billion in integrated gas, $4-5Billion in chemicals and products as well as $8Billion in upstream investments. For the period 2025-2030, Shell lumps together the capital budgets devoted to three categories:

Growth which entails renewables and marketing will receive 30% of Shell’s capital budget;

Transition which entails Integrated gas and chemical & products will receive 30-35% of Shell’s capital outlay; and

Upstream will get 30-35%.

Predicted Internal Rates of Return per category vary between 10-25%.

TOTALEnergies

TOTALEnergie’s capital expenditures for the period 2022-2025 is anticipated to be between $13Billion-$16Billion per year: 50% ($6.5Billion-$8Billion) on hydrocarbons and only 25% ($3.25Billion-$4Billion) on renewables.

Much of TOTALEnergies’ hydrocarbon budget will be devoted to Africa in which low-cost, high-value projects are the goal. Squeezing more value out of various African assets to ensure a prolonged life cycle.

A prime example is TOTALEnergies’ Mozambique LNG project, which is expected to cost $20Billion and produce up to 43Million tons per annum.

In Angola the company produces more than 200,000 boepd(barrels of oil equivalent per day) from its Block 17 and Block 32, and non-operated assets including AngolaLNG.

In Namibia TOTALEnergies has made a significant discovery of light oil with associated gas on the Venus prospect, located in block 2913B in the Orange Basin, offshore southern Namibia.

In South Africa the company is focused on its two South African assets: Brulpadda(drilled to a final depth of more than 3,600 meters) and Luiperd, the second discovery in the Paddavissie Fairway in the southwest of the block.

Key Takeaways

Deepwater production is expected to hit 10.4MillionBOEPD in 2022 and will reach 17Million BOEPD by the end of the decade.

Wood Mackenzie’s AET-2(Accelerated Energy Transition) scenario states that oil and gas demand in 2050 will be 70% lower than today. From 2023 onward oil demand drops with year-on-year fall of around 2Million barrels per day (bpd). Total oil demand by 2050 is down to 35MillionBPD. What affect will such long-term reductions have on future deepwater investments and strategies? Will the deepwater plays continue to be a strategic part of the energy world?
Further long-term investments and rationalization will have to be done if the deepwater sector is to be a strategic energy player. Already the deepwater drillers—Saipem and Nobel Drilling+Maersk Drilling– have rationalized their deepwater fleets. Of the oil majors only BP and Eni have joined forces in Angola to form the JV Azule Energy. Will others follow?
Closer examination of the oil major plans reveals that in 2023 it will be business as usual. Continued higher oil prices have postponed any thought of possible future mergers and rationalization among the oil majors. Be that at a project or at a corporate level.
Finally, the IEA’s recent report which states that “renewables are set to account for over 90% of global electricity expansion over the next five years, overtaking coal to become the largest source of global electricity by early 2025,” should be a sharp warning to all energy players.
In conclusion ‘Fasten Your Seat Belts’, we are headed for turbulent weather.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise. He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. Kreeft has Dutch and Canadian citizenship and resides in the Netherlands. He writes on a regular basis for Africa Oil + Gas Report, and guest contributor to IEEFA(Institute for Energy Economics and Financial Analysis). His book ‘The 10 Commandments of the Energy Transition ‘is on sale at https://books.friesenpress.com