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With $64Million To Spare, AOC Aims for More of Namibia’s Pie

By Toyin Akinosho

Africa Oil Corp. has offered to acquire from minority shareholders in Impact Oil and Gas Limited up to 8.0% of the issued shares in Impact.

This is expected to lead to AOC holding 39.1% of Impact, as the former currently holds a 31.1% shareholding in the latter.

The move, announced March 18, 2024, is the kind of transaction that any small producing independent, with some decent cash flow, should pay some attention to.

The significance of the proposed buy is derived from Impact’s 19.5% stake in Blocks 2912 and 2913B, the two Namibian offshore leases where the French major TOTAL has discovered the giant Venus field and adjoining accumulations.

With 39.1% holding in Impact, AOC will have around 7.8% of these two acreages.

But we are getting ahead of ourselves.

TOTAL is in the process of concluding a farmin into Impact ‘s stakes in these acreages, a transaction which, when concluded, will leave Impact with 9.5% of these two blocks. The farmin is awaiting the consent of Namibian authorities.

Should that be consummated, and should AOC conclude the 8% acquisition, AOC will have around 3.9% of Blocks 2912 and 2913B.

TOTAL’s Venus accumulation (two billion barrels of oil equivalent recoverable reserves) has moved up the scale of the most likely-to-be -developed of all the several discoveries made in Southern Africa in the last four years.

AOC says that the Offer it is making is at a price of $ 0.728 per Impact share, for a consideration of up to approximately $64Million, which implies a valuation of USD 805 million for 100% of the issued share capital of Impact.

“The share purchase is conditional upon completion of the farm down transaction for Impact’s Namibia assets announced on January 10, 2024. The Offer is made to select minority shareholders and is open for acceptance until April 5, 2024. Africa Oil is under no obligation to purchase any specific number of shares in Impact”.

Roger Tucker, AOC Chief Executive Officer, commented: ” At no upfront cost, we retain exposure to the Venus development, and to the significant follow-on upside potential on Blocks 2912/2913B. Venus is expected to add significant reserves and production to Africa Oil’s portfolio from the late 2020s through the 2030s”.

 

 


South Africa Passes a Historic Electricity Regulation Amendment Act

South Africa’s National Assembly has passed the Electricity Regulation Amendment Bill into an Act of parliament.

The legislation is considered by many experts as the most significant reform of the country’s electricity supply industry since 1923 when Escom was established.

“It will have profound impacts for the sustainability of the power system”, says Anton Eberhard, a Professor Emeritus and Senior Scholar at UCT where he leads the advisory board at the Power Futures Lab at the Gordon School of Business.

“Eskom’s conflict of interest as a generator, off-taker of private power, and monopoly owner and operator of the national grid, will be removed by unbundling the transmission system, guaranteeing fair and transparent access for competing power generators”, Eberhard says.

The unbundled transmission company will have four distinct functions – transmission ownership and operation, system operation (balancing of supply and demand), market operation (trading) and a central purchasing agency that will house legacy and vesting contracts.

Some of those who follow the trend of Africa’s electricity supply industry (ESI) will wonder why there should be any applause for the surrender of public sector monopoly to private competition. Afterall, 19 years after Nigeria passed its electricity reform law and 11 years after a massive sale of generating and distribution companies to the private sector, the country’s ESI hasn’t fared better. Neither generation nor distribution has improved and transmission consistently fails.

Yet, over 3,000 kilometres northwards, Algeria and Egypt, whose ESIs are still firmly state controlled, deliver better access to electricity to their citizens. Algeria has 100% universal access. Egypt has over 98%.

Mr. Eberhard, a fierce promoter of free market for electricity in SA, remarks that the Electricity Regulation Amendment Act is coming to fruition, “26 years after the Energy Policy White Paper recommended breaking up Eskom’s monopoly and five years after President Cyril Ramaphosa’s Eskom Sustainability Task Team recommended the unbundling of Transmission”.

The unbundled company initially will be a subsidiary company of Eskom Holdings, known as the National Transmission Company of South Africa.

Within five years this will be converted into a completely separate state-owned company, the Transmission System Operator SOC Ltd.

 

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Okunbor Warned of the Fall in February, Forecasting Nigeria’s Output Plunge

By Macson Obojemuinmoin

‘January 2024 Recorded 1.7Bscf/d, Our Highest Contribution to NLNG in Three Years’…

Osagie Okunbor, Chair of Shell Companies in Nigeria (SciN), warned of the likely crash in Nigeria’s crude oil output in February 2024, two weeks before the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed, on its website, the 104,000Barrels Per Day (BOPD) decline from January’s figures.

Okunbor praised the NUPRC and the state hydrocarbon company “for the vigilance which led to achieving an uptick in recent months, especially in the first month of the year”, but warned that the recovery was fragile and things were unravelling in February.

“January was good”, Okunbor told delegates at the Nigerian International Energy Summit (NIES) on February 29, 2024. “In that month, we supplied the highest quantity of gas to NLNG: 1.7Billion standard cubic feet per day (Bscf/d), compared with our contractual 1.8Bscf/d. That is the highest we have achieved in any month in the last three years”.

The gas volume that Okunbor declared, referred to the 53% contribution of the Shell-TOTAL-Agip-NNPC Joint Venture. Two other JVs: Agip-Oando-NPDC and TOTAL-NNPC, contribute 45.9% of the 3.3Bscf/d for the NLNG’s six trains. Aradel Holdings contributes 1.1%.

“Again, I thank the NUPRC and the NNPC, but we should not rest. Things have started to unravel. In February, we woke up to learn of seven vandalized points on the Soku line”, Okunbor warned.

NUPRC, the official archivist of the country’s hydrocarbon output volumes, posted on its widely consulted website, that the February 2024 crude output averaged 1.322Million BOPD, a 7% decline from January’s 1.427MMBOPD.

The Soku field, whose natural gas output contributes significantly to the NLNG, is located south west of Port Harcourt and the crude oil pipeline from the field to the Bonny Terminal (Soku line), passes through Orubiri and Alakiri fields.

 

 


TOTAL Takes More Stake in South Africa as It Sweeps for Region wide, “Greater Venus” Development

By Toyin Akinosho

French major TOTALEnergies has grabbed more stake in the South African part of the prolific Orange Basin, in a quest for accelerated appraisal to unlock a commercial project at the field perimeter of the Venus discovery offshore Namibia and encompassing South Africa.

The European giant signed, together with its partner QatarEnergy, an agreement to acquire participating interests in Block 3B/4B, offshore South Africa, from Africa Oil Corp., Azinam (a wholly owned subsidiary of Eco Atlantic Oil and Gas) and Ricocure.

The transaction is coming less than three months after the company took more share in the Namibian part of the same basin.

Just like its last grab in Namibia TOTAL is taking these South African interests along with its partner, Qatar Energy.

The deal had been widely anticipated for some time by analysts. Africa Oil Corp., Eco Atlantic and Ricocure belong to a class of companies who, as a rule, acquire assets and work towards wooing well-heeled companies like TOTAL, to purchase, large, operating stakes in those properties. In effect, these companies treat hydrocarbon assets, in frontier basins, as items of real estate.

Following completion of the transaction, TOTALEnergies will hold a 33% participating interest in Block 3B/4B and assume operatorship, while QatarEnergy will hold a 24% interest.

The remaining interests will be held by existing license holders, Africa Oil (17%), Ricocure (19.75%) and Azinam (6.25%). The transaction is subject to final approvals from relevant authorities.

In Namibia in November 2023, TOTALEnergies s signed an agreement to acquire an additional 10.5% participating interest in block 2913B and an additional 9.39% participating interest in block 2912, from Impact Oil and Gas.

THE INSPIRATION FOR TOTAL’S CONTINUOUS GRAB of assets in both countries, is the Venus discovery and its adjoining prospective enclave.

The 2Billion Barrel (recoverable oil equivalent reserves) Venus accumulation, stored in 3,000metres below the seabed in the South Atlantic Ocean, has inspired, for TOTAL, a regionwide exploration and appraisal strategy in Southern Africa.

TOTAL said  at the Africa Energy Week in November 2023 that it would acquire new seismic data and drill several appraisal wells as well as exploratory upsides.
“Venus has opened a new chapter in TOTALEnergies exploration, with very significant running room over our vast exploration acreage in the area”, said Clement Fleury, lead author of a geoscience paper focusing on the follow up of the play opening discovery.
The company also said it would be launching a regional exploration drilling programme “in the coming years in both Namibia and South Africa”.
Mr. Fleury’s paper added that TOTAL  was working on “intensive exploration and appraisal efforts on blocks 2912 and 2913b in Namibia and taking advantage of its leading acreage position in South Africa”, to sweep the region for leads, prospects and developments.

Located within the prolific Orange basin, 200 km off the western coast of South Africa, Block 3B/4B covers an area of 17,581 km2. Block 3B/4B is adjacent to the DWOB license operated by TotalEnergies (50%) alongside QatarEnergy (30%) and Sezigyn (20%).

“Following the Venus success in Namibia, TotalEnergies is continuing to progress its Exploration effort in the Orange Basin, by entering this promising exploration license in South Africa”, said Kevin McLachlan, Senior Vice-President Exploration of TOTALEnergies.

 


Nigeria’s President Issues Policy Directives on Non-Associated Gas Investment, Contracting Cycle Timeline, Local Content and New Deepwater Developments

The office of Nigeria’s president, Bola Ahmed Tinubu, says the President has initiated the amendment of primary legislation to introduce fiscal incentives for oil and gas projects, reduce contracting costs and timelines, and promote cost efficiency in local content requirements.

This action, “follows the extensive engagements as well as analyses, and benchmarking with other jurisdictions” , the statement explains.

In issuing these directives, Mr. Tinubu is responding to industry concerns around a range of investment hinderances, inducing low development of non-associated gas reservoirs and dwindling execution capacity of projects, the latter being a result of the unintended consequences of aggressive implementation of the local content policy, which has pushed away the major international service providers with deep research and development capabilities.

The Nigerian government has also been engaged in drawn out discussions on new investments in the deepwater terrain, as the authorities have sought to increase the government’s revenue, while the oil majors have pushed back, insisting on extensive revision of fiscal terms and, in cases, return to some aspects of the 1991 sweetheart deal, as the basis for their return to sweat the deepwater asset in the country.

The details of these Policy Directives, the implementation of which the Special Adviser to the President on Energy has been directed to continue coordinating, “will be gazetted and communicated by the Federal Ministry of Information and National Orientation”.

The directives are in the following areas:

(1) ⁠Introduction of fiscal incentives for non-associated gas, midstream and deepwater developments.

(2) ⁠Streamlining of contracting process to compress the contracting cycle to six months.

(3) ⁠The application of the local content requirements without hindering investments or the cost competitiveness.

“These incentives were developed in collaboration with the Federal Ministry of Justice, Federal Ministry of Finance, Federal Ministry of Petroleum, Federal Ministry of Budget and Economic Planning, Federal Inland Revenue Service, the Nigerian National Petroleum Company Limited, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Commission, and the Nigerian Content Development and Monitoring Board”, the President’s statement added.

“The Special Adviser to the President on Energy has been directed to continue coordinating the aforementioned stakeholders to ensure the implementation of these directives within a stipulated timeframe”.

This is a developing story with fuller details here.


ENI Makes Another “Significant“  Discovery in Côte d’Ivoire

By Adeniyi Adeoloye

Italian major ENI has made yet another discovery offshore Côte d’Ivoire. This is coming after its Baleine find in 2021 which commenced production in August 2023.

The discovery, christened Calao, was penetrated by the Murene 1X well.

“Light oil, gas and condensates were encountered at different intervals in Cenomanian age reservoirs with permeability value of good to excellent”, ENI says in a release, adding that “drilling operations took place approximately 45 kilometres off the coast in block CI-205, reaching a depth of 5,000 metres in water depths of around 2,200 metres”.

The find is estimated to hold between 1 and 1.5Billion barrels of oil equivalent. If the Infrastructure led strategy of the company is still in play, this new discovered hydrocarbon pool can hit the market within a few years, the Italian explorer explains.

With Calao, ENI has made discoveries in the two blocks it acquired in Cote d’Ivoire in 2017.

Baleine was discovered in Block CI- 101.

The two deep offshore blocks, denominated CI-101 (Baleine) and CI-205 (Calao), are in the eastern part of the prolific Tano basin. Collectively, they, and cover a total area of about 2,850 square kilometers. Block CI-101 is at water depths of between 200 and 2,500 metres  and located 50kilometres  south of the capital Abidjan, while block CI-205 is at water depths of between 2,000 and 2,700 metres, and located 80 kilometres south-west from the city.

ENI has maintained a presence in Côte d’Ivoire since 2015 holding equity in various blocks including block CI-205, CI-101, CI-501, CI-801, and CI-802, all in partnership with the National Oil Company, Petroci Holding.

 

 

 

 

 

 


“There is Room to Build a Few More Nigerian Independents for the Remaining Divestments”

With divestment of chunkier sizes of assets in the last 30 months, International Oil Companies are selling off far more acreages to Nigerian independents than they did at the beginning of the current era of asset divestments in 2009. ExxonMobil sold its entire shallow water subsidiary to Seplat; ENI sold all of its onshore assets to Oando; Shell sold its 18 onshore and shallow water Oil Mining Leases to Renaissance (which includes ND Western, Waltersmith, First E&P, Aradel and Petrolin). The result is that most Nigerian companies with any significant cash to spare have committed some hefty sum of money to investing in growing their reserves. Austin Avuru’s boutique investment firm, A  A Holdings, has control of over 8% of Seplat Energy, but  he thinks that a vast opportunity awaits Platform Petroleum and Pillar Oil (where he has substantial shares) in the next round of divestments.

In the second part of our C-Suite interview in his office, Avuru fields our questions, more from the perspective of a beneficial owner of some of the top performing assets operated by Nigerian independents and a keen, competitive investor in the Nigerian upstream landscape. Excerpts transcribed by Akpelu Paul Kelechi…

Africa Oil+Gas Report: How prepared is AA Holdings to take advantage of the remaining divestments by European and American oil majors from Nigeria?

Austin Avuru: Our investment in the oil and gas sector, as I said, is that we are not trying to be an operator of an oil and gas asset; we are an investor. We and Platform Petroleum (operator of Egbaoma field, 3,000Barrels of Oil Per Day (BOPD) and 30Million standard cubic feet per day (MMscf/d)) and Pillar Oil (operator of Umuseti field, 4,500BOPD), have also created a vehicle of Pillar and Platform and A.A. Holdings that can have a small stake in it where the organizations Pillar and Platform and the shareholders of Pillar and Platform can put investment equity funds into that vehicle and chase opportunities. We are doing it with some marginal fields that we are trying to develop. We are planning a road show sometime in 2024 to get us ready with the requisite partnerships that may be required and the funding that may be required; which means the backing of banks that understand this thing. We are not just sitting and waiting so that if those opportunities come around, we won’t even know what to do. If those opportunities fall on the table tomorrow, we will be very active participants and by we, I mean using that vehicle supported by Pillar and Platform as an investment vehicle; A.A. Holdings will just be an investor into that vehicle. We believe that if the right opportunities are on the table, we can create another credible independent and that is really our target.

Umutu Gas Processing Plant-‘Platform can do bigger things’

You’ve always had a low opinion of downstream oil and gas as a site of investment. Has it changed now? Will it change with the Compressed Natural Gas (CNG) about to take off in full as investment opportunity?

It is not a low opinion but it just happens that we are in the upstream side of business and we can’t do everything. We have a non-upstream subsidiary of Platform Petroleum that we created deliberately as a hedge against the vagaries of the upstream. When prices are yo-yoing and you might have a situation where you don’t have enough money to pay dividends, we thought we should have a safe haven. The Platform Petroleum downstream subsidiary has a couple of petrol stations and it is expanding from there. It also does real estate and logistics; those are the three areas it is focusing on. We are hoping that we can grow it to a point where it can make some predictable revenue away from the upstream. I don’t have a low opinion of downstream petroleum; just that what we do as Platform Petroleum and as A.A Holdings is such that we define our boundaries so that we do not do just about everything.

AOGR: What about CNG, you know it is about to take off.

In Nigeria, it is those people that do not understand a subject that discuss it the most. People are shouting CNG. At Platform Petroleum’s facility gate in Umutu, we dispense three million standard cubic feet per day (3MMscf/d) of natural gas to Power Gas and I do not know who produces more CNG than them. They take 3MMScf/d and compress it to CNG and distribute that to all their customers. We are supporting that and we as Platform Petroleum are expanding and you would remember that we bought back our LPG business from those we sold it to and we now have PNG that is owned 75% by the Platform – Newcross JV and the other 25% is owned by other investors. We have taken it almost from the doldrums into a profit-making business now. We are expanding that business and in the next two years we are going to build our own CNG station because it is just a compression station that has all those tubes.  We are going to CNG and we have been supporting a CNG plant that is located just on our gates and so, when people say CNG ….

“We can Bump Up CNG Supply: We do 30MMScf/d of gas and we give 3MMScf/d to Power Gas and the remaining 27MMscf/d we put into the pipe but if there is a demand for all of the 30MMScf/d to be compressed, of course we will do it instead of putting it into the pipe so we are ready to expand as the demand expands”.

You know we do LPG and between LPG and excess propane, we do 50 tonnes a day without people knowing and that is part of our PNG and gas business. Our midstream business in terms of gas is strong. From LPG to CNG and lean gas we put into the pipe and supply 27MMscf/d into the OB3 pipeline every day and of course, our oil and condensate. Platform Petroleum has been successful in monetizing the resources they have but the only problem they have now is resource availability. If you give Platform Petroleum a block today, they know what to do with it end-to-end and not just with the oil. They know what to do with the oil, LPG, CNG, Lean gas.

Numbers ranging from 23MMscf/d to as high as 600MMscf/d have been cited as the likely volume of CNG that will be demanded when the market takes off. What is your opinion, as a geoscientist a Petroleum engineer and businessman?

Gas is driven by the demand and not by the production so today, the CNG market remains light to medium industry. So instead of using gasoline the government wants to encourage CNG. The midstream business is profitable because we give them gas at $2.30 and they put it in those bottles and go and sell to their customers at $7. The difference is in the logistics because they have to pass through all the bad roads; there is no federal road that you can drive 30kilometres on good road so you can imagine having all those tubes of CNG on those trucks and taking them from Umutu to Agbara; that takes a toll. So you think it is a wide difference of $4 but 80% of that goes into logistics before you talk about their margins. Now, how fast will that grow into cars? It seems that everybody believes gasoline is too expensive so they want to go to CNG. It is not going to be like that because it is also a dollar based resource. I just told you that it is sold at $7 per thousand and by the time you start filling your car with CNG at that price, I haven’t really run the numbers but I don’t know if it is necessarily cheaper than petrol if it is made available prudently. I don’t know if it is cheaper but the fact that people are shouting that petrol is expensive so they should move to CNG so that they won’t pay as much, that is not the issue. People in other environs are going to CNG because it is cleaner and not because it is cheaper. I think light to medium industries will still require CNG just like the domestics and other areas in cooking will still require LPG. We, using the Platform Petroleum vehicle are ready to play in that market; we are already leading in that market not on a small scale. We are ready to expand as the demand expands. We are ready to expand to meet the demand and I mean, we do 30MMScf/d of gas and we give 3MMScf/d to Power Gas and the remaining 27MMscf/d we put into the pipe but if there is a demand for all of the 30MMScf/d to be compressed, of course we will do it instead of putting it into the pipe so we are ready to expand as the demand expands.

AAHoldings put $3Million in Decklar Resources, a Canadian company controlled by Wade Cherwaycko, who also founded Mart Resources. That money is probably wiped out. Mr Cherwayko  was until two months ago, trucking crude to modular refineries as he couldn’t still inject into Trans Niger Pipeline (TNP) because it kept being ruptured by vandals. Trucking crude is subpar, Are you going to exit that investment?

We can’t even exit now even if we wanted to. We entered almost at the bottom and that is why we are ok. I mean, we entered at about 30 cents per share and that went up to about $1.50 before it crashed back to the bottom not because they didn’t know what they were doing but because they completed all their production programme but could not evacuate it because the TNP was down. Nobody went into developing those fields so that they will be trucking 500 barrels of oil per day and that is why it is not moving the needle. But I think that now that evacuation problems are solved one way or the other, they will pick up again. We are trying to support them in one of the marginal fields they have an interest in, to see how they can put that into production. Right now in our balance sheet, that is a loss making investment but we think it can pick up later and if it doesn’t, so be it, but we are not thinking of exiting that investment but rather, we are thinking of what we can do to support them to pick up again.

What is the timeframe that you are looking at?

If the TNP is working today and they can put their 2,000 barrels a day into the TNP, it makes almost all the difference for them. Then in the Oza field, they can drill another well and make it 6,000 barrels and it makes all the difference.

Five new marginal field companies have moved rigs to locations in the last five months. All of these companies are rank outsiders. None of the two new marginal field investments in which your vehicle: AA Holdings/Pillar Oil/Platform Petroleum is involved have got up to speed in field development. Are you regretting this investment?

Pillar did not get a new marginal field so they are not developing any new marginal field. In fact, they were doing something bigger but they weren’t as successful. They actually took a whole block as technical partners and that’s the NigDel acreage.

Platform was involved in three marginal fields but they didn’t win any so they had to go to the black market and in this three marginal fields, I can tell you that they are dredging which means location preparation. All of them are not easy marginal fields; they are all in the swamp. One of them is in the shallow water, at the mouth of the Benin River in the Benin Estuary. So, the Benin Estuary, Kuri field and the Helly Creek field are the new fields Platform is currently working on. Platform is the operator on behalf of the partners in each of those three and they are working on them actively.

They were expected to be spudding between December 2023 and Q1 2024 and Kuri was the first one that they were meant to spud. Then they would drill one well and re-enter one in Helly Creek. In Benin Estuary, they will first re-enter the existing one before they drill another one so I can tell you that work is on going. We have never competed with other companies but we compete with our own work programme. We are following our work programme diligently and by God’s grace we are going to bring them into production. There is Emuoha (a  marginal field in eastern Niger Delta) that we are discussing with Deckler on how we can support them to work that field and that is a much easier one because it is onshore. Once we put all the partnership issues in place, that’s easy to drill a well and re-enter a well. If you had an onshore field, you would know what it means to deal with the swamps and then you dredge; you first need to get a rig and then deal with all these community issues. The rig that we are going to use in Helly Creek is coming from the United States  and that is one of the things that I have been saying about local content. It is much easier to beat our chest about local content but in the execution, our execution capacity right now has fallen to the lowest level. If the activity level in this industry has to pick up to that point where you can close that gap in production level, you won’t even find the rig even if all the money is on the table; that is where we are right now in terms of execution capacity.

Depthwize was the most reliable swamp rig vendor and they only had two swamp rigs and now, one has flipped over. If you are looking for a swamp rig you can’t really find it and if you are looking for a land rig, you still can’t really find it and that is why you see that the Indians brought all their swamp rigs from their country to work for them. Execution capacity is very low right now in the industry. But we are not lagging behind in execution of the marginal fields and in our own case, we didn’t win any of them. You first have to go through one and a half year of farming into somebody else’s marginal field and sort out all those other issues before you start raising the money to do the job. If we are about one year behind those ones, you can understand. We went to the black market to get those fields.

What is Platform Petroleum’s percentage equity in Kuri, Helly Creek and Benin Estuary fields?

In the Benin Estuary, we actually farmed into another party’s 40% stake and by the time you look at our economic interest there, it is probably about 20%. Our equity interest in Helly Creek is about 40% but because we are carrying everybody else, our economic interest will be about 80% until payout. Our equity interest in Kuri is 50% and economic interest would be about 80% until payout. So that’s the way it is with all of them.

If Chappal wins the bd for TOTAL’s 10% in SPDC Joint Venture, A.A. Holdings will not be in the game. What are you going to do?

My honest answer to that is that I do not know. There are issues about our participation in an equity interest in Chappal and in the fullness of time, those issues will have to be resolved one way or another. In the fullness of time the issues of our participation and equity interest in Chappal will be resolved one way or the other.

Are you more comfortable to play as Platform/Pillar?

Platform has always been there before we moved to Seplat. The only difference is that we moved to Seplat and had a 24% stake in Seplat just the same way as Aradel has 42% stake in ND-Western. The difference is that we took it to the market and it became public and then we were diluted as we went to the market and so on. That’s our story with Seplat and that is done and gone and that is why we look at Seplat as something that we have accomplished. We don’t chew our nails over Seplat and we don’t beat our chest over Seplat because we have finished it. When I moved in to try and do Chappal, people accused me of competing with Seplat but I say Seplat is just like any other operator. It just happens that we were involved in its formation and we could compete with any other operator to create another independent and I didn’t see anything that was wrong with it, provided I made the necessary disclosure which was what I did. Now, since I have retired from Seplat, it is time to ask what’s next for Platform? Is it just going to remain a marginal field producer? We think that, for the amount of work that they have done and the amount of diligence that they have shown, I think it is time to then package them and move to the next level of being a proper independent if they can. In the process, we as A.A. Holdings and Platform, invested in Pillar. So Platform has 20% of Pillar and A. A. Holdings has 20% of Pillar and in trying to move Platform to the next level, it only makes sense that there is a drag along with Pillar because Pillar is like an associate company. And Pillar is also doing its own things and doing them quite efficiently. If we combine those operating capabilities and experiences and find the funding to put them, and there are assets available, we think there is room in the combination of those two companies to grow them into a proper independent. While all of that is going on and as I said, in the fullness of time, our involvement in Chappal will be resolved one way or the other.

We don’t have too much time and I am not like Lai (Dr. Layiwola Fatona, founding CEO of Aradel) who is still as active, in his mid 70s, as he was when he was in his 40s; I believe that by 70 we will start slowing down and so, if we need to build, we need to build it in the next five years. There is room to build a few more independents. Today, if there is an asset on the table and you are building, the real issue is where are the buyers? If Seplat concludes its transaction today, they are not likely to jump in to bid for any assets tomorrow. If ND-Western concludes their own, they are not likely to jump in on any assets tomorrow. If Chappal, the upcoming one concludes one or two of the one that they are doing, it will also be difficult for them to jump in on any new asset.

That’s true, if they conclude TOTAL …

in the TOTAL deal, it came down to Platform and Chappal. In the Shell deal it came to NDWestern and Heirs Holdings and the ND Western led consortium won. Those are not the most competitive bids; if you don’t have five or six strong companies competing to win, something is wrong. As you are eliminating the successful ones, the field is getting narrower and narrower in terms of those that who have the capacity to actually come after the assets.

“We are planning a road show sometime in 2024 to ensure readiness with the requisite partnerships that may be required and the funding that may be required; which means the backing of banks that understand this thing”.

Dangote has always featured in Divestments but he never quite gets anything

Dangote is busy. Let me tell you: for someone who couldn’t even find time to pay attention to his own corporate headquarters: the building on Kingsway Road ( in Ikoyi, Lagos, Nigeria), you should know that he is busy. He has to get that refinery working.

As for Heirs Holdings, founded by Tony Elumelu, I think they have the appetite but the company was slowed down because of the evacuation problem; they borrowed money to get that asset and took production to a fairly good level that it should be coasting but they could not evacuate. They were held back for about six to seven months but I think they are back now.

This article has been published in the October 2023 edition of the monthly Africa Oil+ Gas Report. It is being published here for public service purposes.

 


 SunTrust Atlantic Energies Limited (formerly SunTrust Oil)

PARTNER CONTENT

SunTrust Atlantic Energies Limited (“SunTrust”) is a wholly indigenous exploration and production (E&P) company currently operating in Nigeria. SunTrust has actively participated in the Nigerian Upstream industry since 2003 with equity interests in OMLs 56 and 23 (now PPL 202).

The Nigerian Government awarded SunTrust a 30% interest in the Umusadege field located in OML 56 (onshore Delta State) in February 2003, during the first marginal field license bid round. SunTrust and its joint venture partner, Midwestern Oil and Gas, have successfully operated the Umusadege field since 2008, producing over 54.1 million barrels of oil to date via 20 production strings from 17 wells with a current average daily production of 10,000bopd.

The crude oil from the Umusadege field is strategically exported via two terminals: the Shell-operated Forcados terminal (through the Umugini Pipeline) and the NAOC-operated Brass terminal. The Umugini Pipeline, commissioned in 2014, is a 51.4km x 12” pipeline with an evacuation capacity of 100,000bopd and is co-owned by SunTrust.

In 2022, following SunTrust’s participation in the 2020 Marginal Field Bid Round, SunTrust was awarded a 35.82% participating interest in the Egbolom field (formerly OML 23) in PPL 202. Based on its appreciable accredited reserves base, the Egbolom field is set to become a significant contributor to Nigeria’s indigenous production target with an estimated Ultimate Recoverable (2P) Reserves of 85 million barrels and STOIIP (2P) of 220 million barrels. Full field development activities have commenced in earnest with re-entry operations of the Egbolom-2 well ongoing. Crude oil production from the Egbolom field is expected by March 2024.


The Lobito Corridor: A Highway to Heaven or  Hewers of Wood and Drawers of Water?

By Gerard Kreeft

Is the Lobito Corridor, which traverses 1,300 kilometres east through Angola from the Atlantic Ocean coast to theborder with the Democratic Republic of Congo (DRC) and within easy reach of the Zambian border becoming a neo-colonial route for the transport of critical raw materials (CRMs) for China, Europe and the USA?

Will the countries who are investing in this corridor behave differently than, for example, the oil and gas industry who have left behind a checkered track record?

A case of beads and trinkets?

If the past is any indication of what to anticipate, Africa be forewarned!

Present Situation

The race is on to ensure that CRMS can be mined, transported and be used in

the products of the EV (electric vehicle) battery value chain. Certainly, the transportation of CRMs—namely the Lobito Corridor—has proven to be the missing link.

Angola Participation

THE Angolan government signed a 30-year concession with a consortium including Trafigura, Mota-Engil Engineering and Construction Africa, and Vecturis, Belgium, to operate rail services and offer logistical support for the Lobito corridor, which runs from Luau on the eastern border with Democratic Republic of Congo to Lobito Port on the Atlantic Coast.

The consortium will be responsible for the operation, management and maintenance for the transport of goods, minerals, liquids and gases. The consortium has agreed to invest “significant capital in improving the capacity and safety of the corridor” as well as invest in rolling stock for operation.

The group confirmed that it will spend $100Million in the initial concession premium, $170Million for infrastructure, and $170Million for rolling stock. The concessionaire will pay $319.4 million to the Angolan state in the first 10 years of the contract, $787 million in the second 10 years, and $919 million in the final 10 years.

African Development Bank and Donor Countries

The African Development Bank, together with the United States government, the European Commission, the Africa Finance Corporation (AFC), and the host governments of Zambia, Angola and the Democratic Republic of the Congo (DRC). signed a Memorandum of Understanding (MoU), to mobilize resources for the Lobito Corridor and the Zambia-Lobito rail line.

The works entail the construction of approximately 550 kilometres of rail line in Zambia from the Jimbe border to Chingola in the Zambian copper belt and the 260 kilometres of main feeder roads within the corridor.

The hope is that the programme will expand an economic corridor connecting the host countries to global markets to enhance regional trade and growth, and to advance the shared vision of connected, open-access rail from the Atlantic Ocean to the Indian Ocean. The Bank plans to contribute approximately $500Million to the project through a blend of sovereign and non-sovereign instruments, including concessional allocations.

Expectations are high. Amos J. Hochstein, Deputy Assistant to President Joe Biden for Energy and Investment stated:

“Demonstrating the Partnership for Global Infrastructure and Investment in action and leveraging both Western and African capital, this strategic transport infrastructure unlocks regional trade and enables additional investments in digital connectivity, agriculture value chains, green energy supply chains and rural health centre electrification, among other transformative economic imperatives”.

The Chinese Connection

According to E. D. Wala Chabala, an Independent Economic Policy and Strategy Consultant and MBA Lecturer, there are several challenges to developing the Lobito Corridor:

“…not only are the Chinese ubiquitously present on the African continent, but China is already far ahead in building supply chains for cobalt, lithium, and several other essential metals and minerals. …It is also not insignificant that China signed MoUs with most African countries a decade ago. The fruit of some of these are infrastructure developments that have already been rolled out on the continent through the Belt and Road Initiative (BRI).”

Hardships to Overcome

Chabala notes that ” EV battery value chain is not only complex, with almost 300 players already involved and regionalization being a big factor, but that the EU and the US are not currently leaders in EV technology. It is reported that almost 90% of cell component manufacturing, the most significant step in the battery value chain – 30% of players in the six-stage value chain are concentrated here – is undertaken in Asia.”

He adds that “ two major European car manufacturers have recently been reported to have acquired stakes in Chinese EV manufacturers to gain access to their EV technology”. Plus, “the largest Chinese EV manufacturer, BYD, has surpassed Tesla in terms of EV production as per the Q4 2023 figures. Both TESLA and BYD are also major players in EV battery technology.”

Local Content

The DRC produces 51% of the world’s cobalt, and no longer wants to have the sole role of only being a raw material supplier. Instead, it wants to build its own battery supply chain in the country; also, a battery factory is being considered.

The first step, however, is the construction of a pilot plant for the production of cobalt precursors for cathode production. Also, a complete battery cell factory is being considered.

A Bloomberg NEF study investigated the feasibility of establishing special economic zones for manufacturing battery precursors in the DRC and Zambia: costing $2.7Billion. Such a facility in the DRC would be three times cheaper than it would cost to building a similar plant in the USA because of cost competitiveness and proximity to raw materials.

EU + DRC strategic partnership

Recently the EU and the DRC signed a strategic  partnership. Both parties express commitment to sustainable development, local value addition and respecting each other’s rights in extending raw materials and net-zero technologies value chains within their countries.

The partnership covers non-energy and non-agriculture raw materials along the entire value chain, with a primary focus on strategic and critical raw materials. Five areas of collaboration are identified:

  1. Integration, where feasible, of (critical) raw materials and renewable hydrogen value chains, including networking, new business models and promotion and facilitation of trade and investment linkages.
  2. Mobilization of funding for the development of infrastructure required for project development.
  3. Co-operation to leverage environmental, social, and governance (ESG) criteria and align with international standards, including through increased due diligence and traceability.
  4. Co-operation on research and innovation along the raw materials value chain.
  5. Capacity building to enforce laws and regulations and increase training and skills.

On the same day, the European Union announced a similar MoU with Zambia and a separate MoU with the Angola, DRC, the United States, Zambia, the African Development Bank, and the Africa Finance Corporation to support development of the Lobito Corridor, which would connect the mining regions in Southern DRC and Northern Zambia to ports in Angola to facilitate export of raw materials.

Future Chinese and US Challenges

To date, 52 African governments signed Memorandums of Understanding (MoU) with China regarding the BRI and the initiative has translated into billions of dollars invested in the construction of critical infrastructure for railways, roads and ports. Chinese FDI in Africa remains much higher than Western nations.

In recent years the competitive edge has shrunk. An economic slowdown post-pandemic and weakening lending capabilities have caused BRI-related investment to fall from a peak at $125Billion in 2015 to $70Billion in 2022.

Due to increasing concerns about the risk of debt distress in various African nations and internal economic challenges in Beijing, the Chinese government has decided to halt funding for energy projects in Africa. This has led to a significant decline in lending to the continent, bringing it to below $1Billion, the lowest in approximately two decades.

The USA’s late involvement is the Lobito Corridor is an attempt to foster economic development, create job opportunities, and build lasting partnerships that can serve both African nations and US interests. Probably too little too late.

Yet the Chinese presence continues to be omnipresent and dominant throughout the continent.

Some Final Remarks

It is claimed that the Lobito Corridor Transit Transport Facilitation Agency Agreement (LCTTFA) – signed by the governments of Angola, the DRC, and Zambia – will accelerate domestic and cross-border trade along the Corridor and foster the participation of small and medium enterprises (SMEs) in value chains. While the intention is clear, specific goals and strategies for industrial development are not.

Have the governments of Angola, the DRC and Zambia initiated studies and strategies to ensure economic harmony and plans for growth? On a country and regional basis?

The irony is that western countries are enjoying the benefits of their EVs, priding themselves on their progress in furthering the energy transition. Based on what? Battery technology—cobalt produced mostly in the DRC and sent onward ore for processing abroad.

To date few signs of added value.  While plans exist to design and set up battery value chains within the region there are few visible signs that indicate any urgency in this direction.

EV technology as is presently implemented has little to do with a serious contribution towards the energy transition. While EV technology is fast becoming commonplace, the value chain for production of CRMs has exposed some gaping holes—namely that Africa is again slated to become a Hewer of Wood and a Drawer of Water.

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/store/title/119734000211674846/Gerard-Kreeft-The-10-Commandments-of-the-Energy-Transition

 

 

 


NCDMB poised to have new Financial, Prosecutorial Powers, Keep 20% of Content Fund for Administrative Costs, under Proposed Amendment Bill

By Lukman Abolade, Senior Correspondent

The Nigerian Content Development and Monitoring Board (NCDMB) will have the power to enter into financial partnerships with public and private institutions, among other new regulatory functions, if the law setting up the institution is amended in the current form being presented at the National Assembly.

The bill before the House of Representatives, the lower chamber in Nigeria’s bicameral legislature, will repeal the Nigerian Oil and Gas Industry Content Development Act, 2010, and enact a ‘Nigerian Oil and Gas Industry Content Development Act’, “that will among other things cure defects observed in the existing Act”,  in its place.

Central to the proposed amendment is the enhancement of the authority and capacities of the Nigerian Content Development and Monitoring Board (NCDMB).

The bill gives approval to the Board to participate in equity investments and allocate twenty percent of the money received in the Nigerian Content Development Fund to be used to defray administrative expenses. “This is also an innovative provision as there is no such provision in the existing NOGICD Act. and others”, according to a statement signed by Director/Committee Clerk of the House Committee on Nigerian Content Development and Monitoring Board of Nigeria’s National Assembly.

The bill also seeks to provide statutory approval for existing funds managed by the NCDMB, including the Nigerian Content Intervention Fund (NCI), NCDMB Research and Development Fund, Working Capital and Capacity Building Fund, Women in Oil and Gas Fund Bank, and NOGAPS Manufacturing Fund that the Board presently established and had been operating on.

In a bid to streamline and monitor project approval processes, the bill prescribes strict timelines for the NCDMB to approve or disapprove projects and programmes for industry operators and contractors. This measure aims to introduce a limitation on contract cycles and unnecessary delays to improve efficiency and give statutory backing to the agreement reached among the Board, Nigerian National Petroleum Corporation Limited (NNPCL) and International Oil Companies (IOCs) on limitation of contract cycle in the Nigerian Oil and Gas Industry.

In terms of enforcement, the proposed legislation grants the NCDMB prosecutorial powers to address criminal offenses outlined in the bill.

Moreover, it empowers the Board to impose administrative sanctions for non-criminal violations, providing a comprehensive mechanism for regulatory oversight. The Bill further provides for active encouragement of backward and forward linkages in the oil and gas Industry.

On February 9, 2024, the House of Representatives passed the bill for the second reading and has since referred it to the Committee on Nigerian Content Development and Monitoring Board for further review.

The Committee expects industry stakeholders to submit, by March 18, 2024, a Memorandum which should be fifteen (15) hard copies and a soft copy to: The Clerk, House Committee on Nigerian Content Development and Monitoring, Room 413, 4th  Floor, White House, House of Representatives, National Assembly Complex, Three Arms Zone,

Abuja. A date for the Public Hearing shall is expected to be communicated in due course

 

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