All posts tagged feature


62nd Anniversary/ Decade of Gas: What Took So Long?

Nigeria has come a long way trying to monetise its vast gas reserves, which have quintupled from 38Trillion cubic feet in 1980 to 200Trillion cubic feet by 2021.

In the last 20 years the country’s policy makers have announced headline grabbing “plans” around gas utilization.

After the stalled Gas Master Plan (2008), the frustrated Gas Revolution (2012) and several other proposals, the continent’s largest warehouse of natural gas has declared The Decade of Gas (2021 to 2030).

In the 18 months since the declaration of the “decade”, however, there has been no published, detailed plan of action/activity indicating what boxes the government is ticking and how enterprises are to key into the vision to make Nigeria an attractive gas-based industrial economy, giving primary attention to meeting local gas demand requirements, and developing a significant presence in international markets.

There are promising signals in the new legislation, the Petroleum Industry Act (PIA). We summarize some of them here, but we argue that legislation is one thing and its different from a Plan which helps to hand hold investors and enable projects.

The PIA creates a Midstream & Downstream Gas Infrastructure Fund to enable government make equity investments in infrastructure to increase domestic consumption of natural gas and encourage private investment , reduce/ eliminate gas flare; the new law also updates the previous Domestic Supply Obligations to ensure the gas gets from producers to point of use. The PIA adopts the framework of the pre-existing network code to enhance domestic gas distribution and establishes a fiscal framework for gas hitherto unsettled.

But there are a lot of areas still hanging and it takes an actionable plan to deliver on the intents of the legislation.

It is the failure of excitement to take plans to delivery stages that is responsible for the lack lustre performance of the Nigerian gas market, compared with Algeria and Egypt, its peers.

And yet Nigeria has been constructing gas utilisation infrastructure for over 35 years.

The One -Billion cubic feet a day (1Bscf/d) – Escravos–Lagos Pipeline System ELPS, commissioned in 1989, was primarily intended to …

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GNPC Holds on to $100Million Oil Proceeds Meant for the Ghanaian Treasury

Ghana National Petroleum Corporation (GNPC) is holding, in its account, about $100Million that should otherwise have been paid to the country’s Petroleum Holding Fund.

The money is part of the proceeds of crude oil export in the first half of 2022.

Following the acquisition of 7%, interest in the Jubilee and TEN Oilfields by GNPC in 2021 (later ceded to its subsidiary, Jubilee Oil Holding Limited – JOHL), reports the Ghanaian Public Interest Accountability Committee (PIAC), “JOHL made its first lifting (944,164bbls) on the Jubilee Field in the First Half 2022, amounting to $100,748,907.95. This amount was not paid into the Petroleum Holding Fund (PHF)”.

The PIAC, in its just released 1H 2022 report, recommends that “the proceeds of liftings by JOHL should be paid into the Petroleum Holding Fund (PHF), as the Committee is convinced that the proceedsform part of Ghana’s petroleum revenues”.

The PIAC also notes that “Capital Gains Tax was not assessed and collected by the Ghana Revenue Authority in the sale of the 7% interest by Anadarko in the Jubilee and TEN Fields in 2021”, and when the committee requested for explanation, “the Ghana Revenue Authority referred the Committee to the Ministry of Finance indicating that the Ministry was exclusively in charge of the transaction. The Ministry of Finance in turn referred the Committee to the Ghana Revenue Authority for answers”.

The lack of assessment of Capital Gains Tax of upstream asset sale by revenue authorities in the land was “contrary to Section 6(e) of the Petroleum Revenue Management Act, 2011 (Act 815)”, PIAC maintained.

The 186-page report observes an overall tardiness in petroleum revenue collection in 1H 2022. “Surface Rentals outstanding continue to increase”, it points out. “As at the end of H1 2022, the balance outstanding was $2,774,702.29 constituting an increase of 7.58% percent on the surface rentals of $2,579,170.21 at the end of 2021.

“The Ghana Petroleum Funds received an amount of $390,029,916.55 for the H1 2022, which is 91.43% percent higher than the budgeted allocation of $203.75Mllion for the GPFs for the full year in compliance with Section 4(a)(iii) of the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893).

“The retention of the current cap of $100Million on the GSF for the year 2022 is not in accordance with the formula stipulated in the Petroleum Revenue Management Regulations, 2019 (L.I. 2381). A proper application of the formula would have returned a figure of $460,633,074.02.

The PIAC is an independent statutory body mandated to promote transparency and accountability in the management of petroleum revenues in Ghana.

 


Petrofac Wins $300Million Contract for Gas Processing Facility in Algeria

Petrofac, leading a consortium with Genie Civil et Batiment (GCB), has signed an engineering, procurement and construction contract with (Algerian state hydrocarbon company) Sonatrach for the Tinrhert EPC2 Development Project. The contract, signed at an official ceremony in Algiers, is valued at approximately $300Million, with Petrofac’s share around US$200 million.

Located in Alrar, around 1,500 kilometres southeast of Algiers, the project will provide a new Central Processing Facility (CPF) with inlet separation and decarbonisation units. The scope of work also includes tie ins to the existing Alrar Separation and Boosting Facilities, along with commissioning, start-up and performance testing. When completed, the development will boost natural gas production and remove CO2 from the field’s gas reserves, within specifications for the global market, enabling further economic growth in Algeria.

A Memorandum of Understanding (MOU) between Petrofac and Sonatrach’s Algerian Petroleum Institute (IAP) was also signed at the ceremony. The collaboration is designed to build local capability in support of Algeria’s nationalisation objectives.

The IAP was created in 1965, with the objective of providing qualified personnel for the development of Algeria’s energy industry. The Petrofac/IAP partnership will modernise training schools, construct new facilities, and provide training and competence management solutions for local engineers. In addition, Operations and Maintenance training programmes will be implemented for both local and regional markets. The MOU also encompasses the development and roll out of e-learning resources.


Growth Surge in Nigeria’s Decentralized Renewable Energy Sector

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Research shows Nigeria has the fastest sector job growth; jobs expected to exceed 76,000 in 2023, up from 32,000 in 2019, overtaking the oil and gas sector.

Power for All, the global campaign to end energy poverty, in collaboration with Clean Technology Hub Nigeria, today launched the Powering Jobs Census 2022: The Energy Access Workforce Nigeria report. The study shows Nigeria has built a strong market position in decentralized renewable energy (DRE) and is poised to reap the benefits as it addresses energy poverty and rural unemployment.

The DRE sector in Nigeria has been growing rapidly and delivering clean and affordable energy, particularly to remote rural communities and is now also a major source of good and stable jobs, nearly matching those in the county’s oil and gas sector, the report makes clear.

The DRE sector, which includes pico-solar appliances, solar home systems (SHS), and commercial and industrial (C&I) standalone systems, currently employs 50,000 people compared with 65,000 in Nigeria’s oil and gas sector. The demand for DRE products in the country is expected to create more than 76,000 new jobs by 2023. This is over twice the number of DRE jobs created in 2019 as reported in the Powering Jobs Census 2019: The Energy Access Workforce report.

The sector is further expected to grow following the recently launched Nigeria Energy Transition Plan which outlines the country’s ambitions and plans to achieve net-zero emissions by 2060, while also ending energy poverty.

“The report demonstrates the health and viability of the DRE sector to help not only accelerate the country’s energy access agenda  but also to help alleviate unemployment, especially in rural areas,” says Suranjana Ghosh, Power for All’s Director for Campaigns and Partnership.

The report—made possible through the generous support of The Rockefeller Foundation, Good Energies Foundation, and the European Programme GET.invest—is based on a survey of more than 350 companies across five countries: Ethiopia, India, Kenya, Nigeria, and Uganda. It provides a comprehensive picture of employment in the DRE sector, including recruitment, the skill levels of the DRE workforce, availability of and investment in training, compensation levels, women’s participation, and workforce retention.

Of the countries analyzed Nigeria enjoyed the fastest post-pandemic recovery and growth in DRE jobs. The country lost almost 2,000 DRE jobs in 2020 from short-term pandemic impacts. However, the sector bounced back strongly in 2021, registering approximately 50,000 jobs, nearly twice the number of jobs observed in 2020. The demand for Solar Home Systems products, which was already on a fast upward trajectory before the pandemic, was key to the rapid recovery and growth.

The report indicates the sector is maturing with  the percentage of formal and skilled workers comprising over half of the DRE workforce in the country, at more than 56 percent. Mature DRE markets tend to have a relatively high share of skilled laborers as the technologies become advanced and demand for advanced technical positions, such as installation technicians and maintenance professionals.

However, the renewable energy sector in Nigeria, similar to the other study countries, is still failing to adequately integrate women into the workforce, and this was only exacerbated by the pandemic. The share of women working in the DRE sector in Nigeria was 37 percent behind Kenya’s 41 percent which was also the highest. Notably, in the countries studied, female participation was higher in DRE than in the traditional energy sector at only 22 percent, and in the broader renewable energy sector at 32 percent. This shows the role that DRE can play in bringing more women into more meaningful workforce positions.

Despite the growth in the number of jobs,  DRE companies surveyed as part of this study have indicated that they struggle to fill critical roles due to a lack of qualified applicants. This shortage of skilled workers is expected to get worse as the sector grows and the world transitions away from fossil fuels.

“This report is coming at a very auspicious time because with the very recent release of Nigeria’s Energy Transition Plan, the report provides a great opportunity for decisions makers in government as well as industry actors to apply a job and economic growth lens in implementing the plan. This #PoweringJobs report makes this easier because it provides the data, and the numbers for what is possible when decentralized renewables is a core part of the transition,” notes Ifeoma Malo, CEO of Clean Technology Hub.

The report calls for immediate action to help address this growing skills gap. Collaboration of various stakeholders—education institutions, technical and vocational education and training (TVET), government and DRE companies—is required to support reskilling and upskilling the DRE workforce. A successful focused approach will support the growth and scaling of the sector to realize its potential to deliver modern energy (SDG 7), as well as good work and decent jobs (SDG 8) in the country.

 


Saipem Wins €1Billion Contracts for Cote D’Ivoire’s Field Development

The ENI Cote d’Ivoire-Petroci consortium, a partnership of Italian explorer ENI and Cote d’Ivoire’s state owned Petroci, has awarded the major contracts for the development of Cote D’Ivoire ‘s large deepwater oil development to Italian contractor Saipem.

There are two new contracts and they are “worth approximately 1Billion euro overall”, Saipem says in a statement released September 27, 2022.

The contracts are for the Baleine Phase 1 Project, for the development of the relative oil and gas field offshore Ivory Coast located at a 1,200m water depth. “The Baleine Prospect represents the largest commercial discovery in the country in the last 20 years”, Saipem explains. The field was discovered in 2021 and it holds over 1Billion barrels of oil in recoverable reserves, ENI itself has disclosed.

The first contract entails Engineering, Procurement, Construction and Installation (EPCI) activities of Subsea Umbilicals, Risers and Flowlines (SURF) and of an onshore gas pipeline for the connection to the distribution grid. The offshore laying of flexible lines, risers and umbilicals will be executed by Saipem’s flagship vessel FDS2 and the development of the project will be on a fast-track basis. The start of operations is planned for the fourth quarter of 2022.

The second contract – also expected to be a fast-track – encompasses Engineering, Procurement, Construction and Commissioning activities regarding the refurbishment of the Firenze FPSO vessel, plus 10 years of Operations and Maintenance services of the vessel.

The award of significant contracts in a new area with great potential such as Cote d’Ivoire represents an important recognition of Saipem’s role as a contractor of excellence for the execution of complex projects requiring the integration of drilling, engineering and construction skills – both onshore and offshore – on a fast-track basis. These contracts also consolidate Saipem’s strategic positioning in West Africa.

 

 

 


Drilling Starts: Zimbabwe Too Wants to Be an Oil Producer

By Macson Obojemuinmoin

Drilling has started at the first of two potentially play opening exploration wells in Zimbabwe.

Australia based Invictus Energy has spud Mukuyu-1(formerly Muzarabani-1), claiming to target 20Trillion cubic feet + 845Million barrels of conventional gas condensate, which translates to about 4.3Billion barrels of oil equivalent on a gross mean unrisked basis. This makes Mukuyu, in the words of Invictus Energy, “one of the largest oil and gas exploration prospects to be drilled globally in 2022”.

The company says that Baobab-1, the proposed second of the two well campaign, will test “recently identified Basin Margin play”.

The prospects are located in the Cabora Bassa basin onshore Zimbabwe.

The Mukuyu-1 well is designed to target several stacked Triassic and younger sandstones within a 200km2 four-way dip closure on the basement high trend.

Exalo Rig 202 will drill Mukuyu-1 to total depth of 3,500metres

The well will be drilled to a projected depth of 3,500 metres. Drilling and evaluation of the well is prognosed to take approximately 50 to 60 days to complete.

Baobab-1 will take approximately 30 to 40 days to complete. It will target stacked Cretaceous and younger sandstones, within four-way and three-way dip closures, against the southern basin bounding rift fault.

Invitcus says that “Baobab displays similar structural characteristics to the play opening Ngamia discovery in Kenya’s Lokichar Basin, which resulted in subsequent discoveries in the “String of Pearls” along the basin margin”.


Conoil to Drill New Exploration Plays in OML 103

The Nigerian independent, Conoil Producing. has moved a rig to Oil Mining Lease (OML) 103 in a swampy terrain in North Western Niger Delta, to drill an exploration well and, if successful, appraise it immediately with another well.

The Imperial rig, operated by Depthwize, is on location and about to spud.

The tentative name of the wildcat is AX#4.  The full name will come after the spud. AX#4 and its appraisal prospect are located in an untested fault block in the pan handle shaped, southern part of OML 103, directly north of NPDC/Elcrest operated OML 40.

The wells are to be drilled to as deep as 11,000feet Measured Depth subsea.

There are plans for a possible two more wells, if the campaign is successful.

AX#4 will be the second exploration well to be drilled in the Niger Delta shelf in the space of six months.  The NPDC/Elcrest Joint Venture recently finalized the Sibiri exploration well in OML 40, with initial results indicating 353 feet gross hydrocarbon pay in eight oil-bearing reservoirs, 229 feet being net pay.

Sibiri-1 is, however, located far from the AX#4 probe.

 


‘Strong Governance, Collaboration Has Kept OPTS Relevant after 60 Years ‘

Founded sixty years ago, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce& Industry, has become a foremost advocacy group in Nigeria, helping to shape policies that enhance growth in the country’s upstream value chain while protecting the interests of member companies. Rick Kennedy, Managing Director Chevron Nigeria and incumbent Chairman of OPTS, shares with select journalists including Africa Oil + Gas Report, factors that have kept the organisation going strong as it marks its 60th anniversary.

Sixty is such a milestone, tell us a little bit about the journey so far.

The OPTS really Is a trade group and the intent is to improve the health of the offshore and onshore oil and gas industry in Nigeria by allowing the operators to come together in a forum where we can address common issues.

Obviously, we have to respect laws on competition but, there are a number of common issues that we deal with, so we work collectively and I think the organization has been very successful in moving various things forward on behalf of industry and in partnership with the Nigerian government for the benefit of the country, as well as the oil and gas industry.

This is done through advocacy, providing input on the development of regulations. I think the other big success over that 60 years is not only contributing to enabling the success of the oil and gas industry but also being able as an industry to give back to the country in terms of direct and indirect jobs, revenue to the country and social investments by member companies. For example, we have provided funding for universities, scholarships, and other social investment activities tied to economic empowerment, health, as well as education.

At a high level, OPTS supported the government in moving forward with the oil industry bill and we are now focused on supporting the implementation of the petroleum industry act.

So what have been some of your biggest challenges thus far?

Probably the biggest issue of the day is oil theft, insecurity, and the impact on the industry’s ability to produce safely and reliably. We’ve had infrastructure that has either been damaged or forced to be shut in. And we’re all aware of the impact on production revenue to the government.

I think probably the other challenge that we have more recently given the state of the economy and the reduced revenue coming in due to oil theft, is the ability of the NNPC to pay their share of Joint Venture operating expenses in a timely manner.

And so the outstanding cash calls are building up and lack of reinvestment just further hurts the ability of the industry to deliver…

But there were efforts made by the NNPC to address these arrears, what happened?

There was a significant effort to address the historical arrears. We were able to form a great partnership between industry and the government to come up with an innovative approach to address it. That has been largely successful and I think in a few cases those historical arrears have been fully paid off.

Unfortunately, more recently, with maybe the challenges of the economic environment and then the increasing oil theft,  outstanding cash calls have became an area of concern in the latter part of 2021 and through 2022.

Investments into the Nigerian oil sector have been few and far between and many projects are yet to come on stream. As an advocacy group, what measures do you recommend to attract investments into Nigeria?

That’s a good question. Obviously, there’s probably a long list of things but in general, developing and maintaining investor confidence is key. Are we competitive, relative to other opportunities, globally?

If the government can perhaps address and mitigate factors such as the impact of inflation, unemployment, and ease of doing business. Issues around security, for example, increase in the cost of our operation. Cost competitiveness is really critical, and that’s something that we’re  doing a lot of work on.

The Nigerian upstream cost optimization program is an area where the industry is partnering with the government to try to lower the contracting cycle times and drive down costs.

We are working closely with the regulators to try to help the development of regulations that are effective and streamlined hopefully, to minimize some of the administrative burdens that may be placed on the industry which again, leads to cost.

Historically, there’s been a lot of levies and fees and various taxes applied to the industry and we are seeing that continue even in the current legislative activity. There is a discussion on even more taxes to be placed on the industry to help fund various programmes and departments across the country.

So really, this whole area around cost competitiveness and driving down costs is a critical element.

On the plus side, the passage of the petroleum industry Act has brought some clarity to the industry and a certain level of certainty around the fiscal framework. So that’s a real positive in gaining investor confidence.

 What would you say are some of the successes recorded by the OPTS in the past 60 years?

Well, I’m going to point to the passage of the PIB and that’s not all OPTS but I know OPTS was involved. This success goes back to the willingness of President Buhari and the Minister of State for Petroleum Resources and NNPC GMD to collaborate with the industry and this gave us an opportunity to make an input.

The government ended up crafting a very good bill that ultimately got passed and OPTS and the member companies spent a lot of time supporting that effort, providing input and ideas. So that to me is a very recent example of success.

In addition, we’ve had numerous scholarships given to different students in different communities. We’ve built numerous hospitals, in different communities within the nation and around the Niger Delta. During the COVID pandemic, the OPTS put forward about $30 million to support government efforts. We did a lot of vaccination and built health care facilities in the six geopolitical zones of the country.

So for 60 years, you’ve managed to stay relevant as an advocacy group, what is the secret?

I think there’s probably an element around governance. We all have a common purpose and we do have positive intentions for the country, its citizens, and the government. We have very positive working relationships with all stakeholders. The folks that first came together to form OPTS, I think, laid down a good set of governance. It’s very inclusive. It’s very collaborative. We follow all the  relevant anti-trust and competition laws in how we conduct our activities.

It is several factors and right now we have 29 members, including five IOCs, plus some other larger exploration and production companies and many of our indigenous companies. So we work hard to really bring in all the perspectives and collaborate very closely across the member companies.

There is a mindset of true partnership and collaboration, not only within the member companies but with all stakeholders in the country.

 

 


Sanmi Famuyide is the New CEO of Decklar Resources

Decklar Resources, the Canadian minnow which controls three Nigerian marginal oil fields, has appointed the Nigerian banker, Oluwasanmi “Sanmi” Famuyide, as its Chief Executive Officer (CEO).

The appointment is subject to the Toronto Venture Exchange (TSX-V), which is Canada’s version of the Nasdaq Small Cap Index of over-the-counter markets.

Famuyide has worked as Managing Director of Decklar Petroleum (Nigeria) Limited since its founding four years ago, where he led the asset acquisition transactions resulting in the Company’s current portfolio of three risk service assets (for Oza field, Assaramatoru Field and Emohua Field) in Nigeria. Declar Resources Inc., the international company, acquired Nigerian-based Decklar Petroleum Limited between late 2020 and early 2021.

With Famuyide’s elevation, Duncan Blount, an American national, “has stepped down as CEO of Decklar effective immediately and will continue to serve on Decklar’s board of directors as a non-executive director”, the company explains.  Mr. Blount’s LinkedIn page indicates that he has been, since August 2022, the CEO of Chilean Cobalt Corp. (C3), a privately-held critical materials exploration and development company focused on developing the La Cobaltera project located in Chile’s historic San Juan cobalt district

“Mr. Famuyide has over 20 years of experience structuring and executing on oil, gas and infrastructure transactions across Africa”, the company says in a statement. He “has performed the role of asset manager and has been directly involved in and responsible for key stakeholder engagements. His previous roles include Head of Business Development at Lekoil Limited, Head of Investment Banking Coverage at FBN Capital and Head of Oil & Gas – Marginal Fields and Independents at Guaranty Trust Bank”.

Decklar’s new CEO has an MSc in Applied Environmental Economics from the Imperial College London, and a BSc in Chemical Engineering from the University of Lagos.

 


Chinese Pick Up Drilling Where Shell Made a Discovery in Deepwater Gabon

China National Offshore Operating Company CNOOC will spud the first of a two well campaign in two blocks divested by Shell in deepwater Gabon.

The campaign is for one well each to be drilled in first quarter 2023 in blocks BC-9 and BCD-10. The latter was where Shell encountered 200 metres of net gas pay while drilling the Leopard-1 wildcat in 2014. Shell was excited by the result at the time and there were speculations (that Shell did not refute), of potential resource of 10Trillion cubic feet of gas in the Leopard structure, which is located below a salt (carbonate) formation.

Shell has since divested from Gabon entirely, with CNOOC Ltd, its partner in the 2014 discovery, taking over 100% and operatorship of both assets in an acquisition finalized in 2019.

For the campaign, CNOOChas inked a contract with rig operator Stena Drilling, for mobile offshore drilling unit (MODU) Stena Icemax. The two (2) well programme has an estimated total campaign duration of 90 days.

The dynamically-positioned dual mast Stena IceMax is a harsh-environment ice-class drillship with managed pressure drilling capabilities.

The drilling programme is crucial to the Gabonese authorities, who have struggled, in vain for the last 30 years, to place Gabon on the deepwater production map of the world. It is the only African oil producing country, lying on the edge of the south Atlantic, without crude oil or gas output from thedeepwater terrain.

 

 

 

 

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