All posts tagged feature


Court Restores Marginal Fields Revoked by Nigerian President

A Federal High Court in Abuja, Nigeria’s capital city, has set aside the purported reversal of the consent given by the Government for the farm-out agreement between Chevron and Transnational Energy Limited (TEL) on the Abigborodo and Hely Creeks marginal fields in the Oil Mining Lease (OML) 49.

Justice Taiwo Taiwo held that the defendants failed to supply counter evidence and arguments to disprove the plaintiffs’ claims. The judge noted: “One thing that is very clear and undeniably so, is that the averments of the plaintiffs, from the inception of the meetings and correspondences between the plaintiffs, Chevron Nig Ltd, the third defendant,  Department of Petroleum Resources, (DPR), Nigerian National Petroleum Corporation (NNPC) and National Petroleum Investment and Management Services (NAPIMS) on the farming out by Chevron Nigeria of the Hely Creek and Abigborodo marginal fields within OML 49 were not denied’.

The court, upheld the plaintiffs’ claims and granted all the reliefs sought, including an award of $20Million in damages against the defendants, who are all Federal Government’s agents. The suit was filed by Transnational Energy Limited (TEL) and Bresson A. S. Nigeria Limited. Defendants were Minister of Petroleum Resources, Minister of State, Petroleum Resources, DPR, NAPIMS, and the Attorney General of the Federation. Sijuade Kayode, lawyer to the plaintiffs, claimed that a farm-out agreement over the two marginal fields was concluded between TEL and the joint venture operators, Chevron Nigeria Limited in 2017 for amongst other purposes, to provide feedstock to a gas-to-power project developed by TEL and its partners, which started in 2012. The DPR, in a letter dated 20th February 2017, conveyed a letter of ministerial consent by the Minister of Petroleum Resources approving the farm-out and its terms, the lawyer stated. The DPR, in its said letter, equally directed TEL to pay a prescribed premium to Federal Government, after which the farm-out will become effective, a directive TEL complied with by paying the prescribed fee of $639,820.65, the plaintiffs added.

Rather than allow the plaintiffs enjoy the benefits of the agreement after the government acknowledged receiving TEL’s payment, the then Chief of Staff to President Muhammadu Buhari, the late Abba Kyari, wrote a memo, purporting to revoke the earlier ministerial consent, claiming to have acted on the instruction of the President. They added that the DPR, without any notice to the farmee (TEL) put the two fields in the 2020 marginal fields basket, even though the fields were not part of the original 57 fields approved for the bid round, a decision TEL and its sister company in the power business (Bresson A.S. Nigeria Limited) challenged by filing the suit.

The plaintiffs exhibited their audited accounts, business plan and financial model which showed that both plaintiffs had jointly expended $22,718,000.00 (twenty-two million, seven hundred and eighteen thousand United States dollars) on the development of the gas and power side of the project. They also exhibited their financial models in arguing that they have lost over $164Mllion due to the actions of the defendants, while Federal Government may have equally lost over $68Million in royalty and taxes not earned as a result of the actions of the defendants.

The plaintiffs asserted that their gas-to-power project elicited a massive international cooperation spanning over 15 countries and involving over 100 international experts. “As a matter of fact, the Hungarian Exim Bank went to parliament to amend its legislation in order to raise her scope of participation in the power side of the projects,” they said. Justice Taiwo, in the judgment delivered on October 18, 2020, a copy of which was made available on Friday, held that the defendants failed to supply counter evidence and arguments to disprove the plaintiffs’ claims.


Mozambique Issues New Regulations on Petroleum Infrastructure

With three Liquefied Natural Gas (LNG) plants underway and a number of local gas valourization facilities in view, Mozambique has reviewed its laws on Petroleum infrastructure.

Decree No. 84/2020, just approved by the government, is a clear and unambigouous statement that

petroleum infrastructure and petroleum operations can be set-up and executed, respectively, both on onshore and offshore.

That clarity is not available in the extant law, the Regulations on Licensing of Petroleum Installations and Activities (Ministerial Order No. 272/2009), which it grandfathers, but does not revoke.

The new regulation clarifies the responsibility of the regulator Instituto Nacional de Petroleo (INP) and strengthens its powers of inspection and sanction over petroleum infrastructure and operations;

Decree No 84/2020 updates and expands the types of infrastructures used in petroleum operations and includes a schedule for fees to be paid for the issuance of each license, as well as the statement of the need of paying an annual fee by entities which operate petroleum infrastructures and carry out petroleum operations.

It also, and language is important, replaces the terms “installations and petroleum activities” with “infrastructures and petroleum operations”.

The new Regulation states the rules and procedures for the licensing of the construction, installation, modification, replacement, operation and demobilization of petroleum infrastructures, including the storage and transportation by road, sea, river or railway of petroleum products, as well as the relevant permits and authorizations.

The Decree applies to all petroleum infrastructures to be installed by petroleum concessionaires, operators, their contractors and subcontractors and other legal entities engaged in the carrying-out of petroleum operations within the territory of Mozambique.
The construction, installation, modification, operation, demobilization of any infrastructure used for the carrying-out of petroleum operations either offshore or onshore, as well as those related to development wells, drilling rigs, production, storage and transportation by vehicles, are now subject to mandatory licensing by the National Petroleum Institute (INP).The installation of petroleum infrastructures during the prospecting phase, installation and operation of petroleum infrastructures for a period below 180 days, replacement of parts or components of a petroleum infrastructure, as well as the transportation of petroleum by road, sea, river or railway, is now subject to INP’s authorization. Additionally, the installation of petroleum infrastructures during the prospecting phase and the installation and operation of petroleum infrastructures for a period below 180 days, is also subject to registration with the INP.
Thus, the new Regulation has expanded the authority of the INP in terms of licensing and authorization in the Oil and Gas sector.

 

 


DPR Waits on President Buhari’s Nod, to Announce Winners of Marginal Fields Bid Round

By Macson Obojemie, in Lagos

The Department of Petroleum Resources (DPR), Nigeria’s regulatory agency, is awaiting the approval of the Minister of Petroleum, to announce the results of the Marginal Fields bid round.

DPR concluded the analysis of the bids in the last two weeks and it has sent the results to the Minister of State for Petroleum, Timipre Sylva, who is to deliver it to President Muhammadu Buhari, the country’s defacto Minister of Petroleum.

The three and half month-long bid round exercise featured 52 fields and was concluded on September 15, 2020.

It was heavily subscribed; the largest number of bid applications in any hydrocarbon licencing sale in Africa in close to 10 years.

While the round started with over 500 applications, it closed with at least 100 applications making it all the way, each delivering at least $115,000 to the Nigerian treasury in the process.

And there will be more money heading to those coffers; when the results are announced, wining bidders have to pay signature bonus before the final awards. Analysts expect some highly contested fields, like Egbolom, to attract north of $5Million as signature bonus.

Nigerian marginal fields bid round is restricted only to locals.

Most applicants in this round, the second such formal round of its type in 17 years, were Nigerian independents who already produce crude oil and gas and are seeking to expand their portfolios. Others were Nigerian oil service contractors who now feel they should take positions in hydrocarbon acreages. Fuller story on the Bid Round is published in the monthly Africa Oil+Gas Report.


TOTAL in A Second Big Discovery in South Africa

With the second major discovery in less than two years, South Africa is shaping to become a major gas/condensate heartland for the French major TOTAL.

The company has announced that its drilling of the Luiperd prospect, which follows up the play opening 2019Brulpadda discovery, has yielded another “significant gas condensate discovery” on the Block 11B/12B in the Outeniqua Basin, 175 kilometers off the country’s southern coast.

The Luiperd well was drilled to a total depth of about 3,400 meters and encountered 73 meters of net gas condensate pay in well-developed good quality Lower Cretaceous reservoirs. Following a comprehensive coring and logging program the well will be tested to assess the dynamic reservoir characteristics and deliverability.

We are very pleased with this second discovery and its very encouraging results, which prove the world-class nature of this offshore gas play,” said Arnaud Breuillac, President Exploration & Production at TOTAL. ‘’With this discovery and the successful seismic acquisitions, Total and its partners have acquired important data on the Paddavissie fairway, which will help to progress development studies and engage with South African authorities regarding the possible conditions of the gas commercialization.”

The Block 11B/12B covers an area of 19,000 square kilometres, with water depths ranging from 200 to 1,800 metres. It is operated by TOTALwith a 45% working interest, alongside Qatar Petroleum (25%), CNR international (20%) and Main Street, a South African consortium (10%).

 


Two Percent Is Too High for Operators to Pay Now, NCDMB Pleads

The Nigerian Content Development and Monitoring Board (NCDMB) and key organisations in the country’s oil and gas industry – the Petroleum Technology Association of Nigeria (PETAN), Petroleum Contractors Trade Section (PCTS), Oil Producers Trade Section (OPTS) and the Nigeria LNG Ltd have advised against increasing the percentage of the Nigerian Content Development Fund (NCDF) from the current 1% to 2% as proposed in the amendment of the Nigerian Oil and Gas Industry Content Development (NOGIDC) Act.

The NCDF is deducted from the value of contracts awarded in the oil and gas industry and was pegged at 1%  by the NOGICD Act of 2010.

The organisations canvassed this position in separate presentations they made last Monday in Abuja at the two-day public hearing organised by the Joint Senate Committee and House of Representatives Committee on Nigerian Content Development and Monitoring.

The NCDMB argued that the 1% NCDF deduction should be maintained, “given the pressure that the global oil and gas companies are facing with cost escalations and price reductions in the industry. With prudent management of the NCDF and the full cooperation of the operating companies, we believe Local Content shall continue to operate efficiently and grow.”

The public hearing is focused on three proposed legislations, namely the Bill for an Act to amend Nigerian Oil and Gas Industry Content Development Act, Cap 2, 2010 and other maters connected thereto and  the Bill for an Act to enact Nigerian Local Content Act for the development, regulation and enforcement of Nigerian Content in all sectors of the Nigerian economy except Oil and Gas Industry Sector and for related matters. The third legislation seeks to repeal the NOGICD Act and enact Nigerian Local Content Development and Enforcement Commission Act and establish the Nigerian Local Content Development and Enforcement Commission.

The NCDMB also responded to the proposed new provision to earmark 0.5%  of gross revenue of oil and gas companies for research and development, saying that the Board welcomes it on the condition that the money would be for the operator’s own utilization. The Board also supported the proposal by the amendment to add Naira to the Benchmark Currency for Local Contracts “This means a paradigm shift from the dollar-denominated provision to a bi-currency model,” the Executive Secretary explained.

 

 


Kaduna Electric Disco (KAEDCO) is Granted a 2MW Renewable Energy Sub-Franchise

Konexa, a renewable energy developer with funding from Climate Fund Managers (CFM), has partnered with Kaduna Electric Distribution Company (KAEDCO), to co-develop a private renewable energy generation and distribution sub-franchise project in the Kaduna state, Nigeria.

The project will consist of the development and construction of a 2.5MW solar PV plant with the potential to include a storage component:

  • Construction of eight solar mini-grids and associated distribution works;
  • Roll out of solar home systems, deployment of smart metering infrastructure;
  • an integrated cutting edge information and operations technology platform, grid network upgrades, as well as securing energy supply from nearby existing renewable generation assets.

The project, requiring an investment of approximately $50Million, will enable Konexa to serve the entire range of customers in its sub-franchise area – from large commercial and industrial customers that currently cannot rely on KAEDCO due to supply reliability and quality issues, to small rural customers that are not viable to be reached by the grid.

The project’s promoters are taking advantage of the Nigerian government’s eligible customer regulation, ratified in 2017, which states that customers with energy demand of more than 2MWh/h per month can directly buy power from a grid connected Genco at a mutually agreed price.

The promoters say that this is an opportunity to contribute towards Nigeria’s grid stability, accelerate the country’s sector reforms and demonstrate the private sub-franchise model.

Donors to the project include donors include Shell and Rockefeller Foundation, the UK’s Foreign, Commonwealth and Development Office and Power Africa and the CFM.

The Nigerian energy sector is notable for its significant energy deficit which has hindered economic growth for many years. Lack of access to grid power has resulted in around 55% of the population resorting to self-generation and has created a $15Billion off-grid market that is primarily fossil-fuel based, Konexa says in a statement.

 

 


Dana Gas Sells Part of Its Egyptian Asset for $236Million

Sharjah based Dana Gas has formally announced the sale of its 100% working interests in the El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases in Egypt.

Dana Gas will retain its interests in its onshore and offshore exploration concessions, respectively El Matariya (Block 3) and North El Arish (Block 6), and will actively pursue maximizing the value of these assets.

The property on sale produced 30,950 barrels of oil equivalent per day, and contributed $38Million to the Company’s EBITDA in the first half of 2020, the company says. Transfer of ownership, responsibilities and staff to the buyer of the assets will take place upon execution and formal approval of the deeds of assignment for the various concessions.

The beneficiary of the sale is IPR Wastani Petroleum Ltd, a member of the IPR Energy Group to whom Dana Gas is selling for a consideration of up to $236Million. The two parties have entered into a binding agreement with including contingent payments. Under the terms of the sale, the consideration comprises (i) a base cash consideration of $153Million, including the net working capital associated with the assets and before any closing adjustments, and (ii) contingent payments of up to $83Million subject to average Brent prices and production performance between 2020-2023 as well as the realization of potential third party business opportunities. Upon closing, the base consideration will be adjusted by the collections received and payments made by the Company during the intervening period between the effective date, and the closing date.

The transaction, which is subject to a number of conditions precedent and to the Egyptian Ministry of Petroleum and Mineral Resources’ approval, is currently expected to complete early 2021. The proceeds will be used to reduce debt and for general corporate purposes. Consistent with this reported actions this year by most international oil and gas companies, the COVID-19 pandemic and associated negative economic effects, Dana Gas will take an impairment in Q3 2020 which will be disclosed to the market following review by the external auditors as part of the Q3 financial results.

 


OPEC Quota Crimps Indie’s Output in Gabon

Paris based minnow, Maurel et Prom (M&P) reports its working interest oil production (80%) in Gabon’s onshore Ezanga permit dropping by a whopping 14% in the first nine months of the year, compared with the same period in 2019.

The volume was 17,500BOPD (gross production: 21,875 bopd) for the first nine months of 2020.

“This was due to production cuts, initially voluntary, then mandatory as a result of OPEC quotas”, the company explains in its most recent update.

“In order to take advantage of the period of low crude prices, M&P had temporarily suspended production from certain wells to improve reservoir conditions for the future starting from May 2020.

“This effort has subsequently continued under the quotas established by OPEC, of which Gabon is a member. Production at the Ezanga field is therefore currently limited to 19,000BOPD (or 15,200BOPD for M&P working interest).


BRADE: We Place a Premium on our Values

PARTNER CONTENT

The legacy transformation of BRADEAFRICA from a consulting company to a group of companies with interests in Nigeria, Ghana and Uganda is largely due to the premium the company places on its values and human capital. “Our organizational values describes our core principles.” For any institution such as the family unit to be enduring, core values such as integrity, reliability, respect, safety and creativity, must be closely knit. “This is the philosophy behind the recent overhaul of our logo, as this points towards our growth and our strategic improvement plans to maximize shareholder values,” Horace Enemugwem, Business Development Manager for BRADE says in a recent interview with the Africa Oil+Gas Report.

Excerpts:

AOGR: Three years ago or thereabouts BRADE was at the verge of breaking into the Ghanaian industry. It eventually did after overcoming various government-imposed challenges such as the delay in getting the Petroleum Commission Permit. It then organized a synergized training secession between its Nigerian and Ghanaian staff to boost business development. Today, the reality of COVID-19 is with us. How would you say those training have impacted the BRADE business during this period?

BRADE: The 2016/2017 local and foreign trainings for BRADE staff in Ghana and Nigeria was very impactful. We achieved several benefits from the trainings, including enhancement of our capacity to deliver quality services, improvement of our work-culture and development of teamwork & leadership skills among our staff. Now, we do not just do things right, we get it right the first time and every time. We have followed up those trainings with even more in Europe and North America. And the later have facilitated business opportunities and strategic alliances with key OEM’s in Europe and the Americas.

The leadership skills acquired from the trainings aided our business focus and resilience through the pandemic. We are hopeful that other values gathered from the trainings will be utilized as upstream activities pick up in 2021. In this regard, we executed some Engineering projects in 2018 and 2019 for international clients

AOGR: Is Uganda still a big deal for you? How so?

BRADE: Yes, Uganda is still a big deal for us. Uganda is a developing market, with several opportunities and a huge growth potential. We are aware of the major developmental projects coming up in the Oil & Gas industry in Uganda and BRADE is well positioned to participate locally, with a team of experienced professionals and our investments in technology and knowledge transfer. We recently participated in two major tender opportunities for the development of Tilenga Upstream Project for Total E&P. We have received some interests to partner with globally renowned OEMs to deliver projects for Lake Albert development. Hopefully things will move quicker now with a clear plan to take FID after the tax issues between Uganda and the IOCs were resolved.

AOGR: Let‘s talk about why BRADE rebrands. What is the philosophy behind the overhaul of your logo and name? I mean, I knew you first as BRADE Consulting, then BRADE West Africa and now BRADE Africa. Should we expect any more changes in your identity or is this the real deal?

BRADE: The philosophy behind the overhaul of our logo points towards our growth, the premium we place on our values (integrity, reliability, respect, safety and creativity, all qualities that are synonymous with an enduring institution: the family unit) and our strategic improvement plans to maximize shareholder values. Our new visual language is bolder, more colorful, modern, clearer and simpler.

We commenced operation, from inception as a company (BRADE Consulting Limited) and grew into a group of companies (e.g BRADE West Africa Ghana), with interests in the Ghanaian Market and then BRADE Oil & Gas Uganda, to service the nascent industry in Uganda and Eastern Africa. BRADE has grown into an emerging African conglomerate based in Nigeria, Ghana and Uganda with business interests and operations across Africa. The Group’s activities span petroleum and energy services, manufacturing, consulting services and chemical solutions. Our new brand identity marks the start of a new era for BRADE Group, and it will not be changed soon.

AOGR: The BRADE Legacy is something I find very interesting. Could it be part of the reason you added the red tinge to your new logo?

BRADE: Yes. The red tinge was added to our new logo, as a visual depiction of the premium we place on our values as mentioned earlier. This ties into the BRADE Legacy. Our new logo is modern, clearer, and simpler. In the new logo, a new red tone has now been added to the letter “A” in the brand name.

AOGR: Why should anyone care about BRADE Africa aside from the legacy you are trying to build?

BRADE: Asides the legacy, BRADE is proudly African with 100% globally experienced indigenous workforce. At BRADE, we do not just do things right, we get it right the first time and every time. That is something people should care about.

AOGR: I know BRADE prides itself with having hands-on technical and management staff that are industry certified. When it comes to well engineering, what are your main strengths?

BRADE: Our main strengths in Well Engineering lies in our highly trained and experienced well-engineering team, ability to deliver well-engineering projects to budget and  schedule, good relationship with our clients and our excellent work ethics. We deploy our best personnel and technology on every project to provide innovative solutions to technical challenges and improve the performance and economics of our Client’s assets of operators. We design cost-effective wells that deliver value to shareholders.

AOGR: What helped you manage the effects of COVID-19 and how do you intend to reinvent yourself post COVID-19?

BRADE: Our diversity. Although most of our contracted opportunities were suspended, our diversity and business interests helped us sustain cashflow and kept us busy in other service offerings. We have learnt a lot from the pandemic – and presently, we have equipped our offices with upgraded IT infrastructure to support “Work From Home.”

AOGR: What projects are you currently working on in Nigeria, Ghana, and Uganda if any?

BRADE: We have two ongoing contracts with SEPLAT Petroleum Development Company in Nigeria. We are also in the beginning stages of 2 additional field development projects in Nigeria.

Several other contracted projects have been suspended due to COVID-19 pandemic and the decline of upstream activities due to the low price of crude. Hence, we are not part of any project in Ghana at this time. Uganda should come into play in terms of projects, once we succeed in the current “Tendering” stage.

AOGR: What future plans do you have in the pipeline for expansion beyond your current operating locations in Africa?

BRADE: Our current operating locations are strategic, for easy deployment of our services and products across the sub-Saharan region in Africa. Our current operating locations also serve as launching terminals for deployment of resources and solutions for projects in nearby countries. Our plan is to consolidate and grow our operations across our existing locations, in preparation for resumption of upstream Oil & Gas activities in 2021 and beyond.

The Nigerian Oil & Gas industry promises a flurry of activities in the short term, say 6 months to 18 months. We are prepared for that. Realise that the Nigerian Oil & Gas space is quite large, when compared to any of the markets we currently play today.

AOGR: Finally, the call right now seems to be for renewables! In fact, some governments of the world have been taking proactive steps to move away from fossil fuels, the natural resource that Africa depends on heavily for its sustenance. Do you see this impacting the BRADE bottom-line in the next 10 years for instance?

BRADE: Truly, the world is shifting towards a more diversified energy mix to achieve net-zero emissions and a lot of support is being given to renewables at the moment. The argument out there is that what we need is a supplementary source of energy and not a total elimination of pre-existing source which is fossil fuel. Efforts are being made to make fossil fuel cleaner and environmentally friendly hence it will remain dominant for the next 30-plus years to provide the supply needed by the global demand.

Having said the above, we have our thinking caps on. Our Consulting arm is actively working on this. Let’s just say it is still early to let the cat out of the bag on our plans.


New Oil Route Planned to Bypass the Suez Canal

Israel’s state-owned Europe Asia Pipeline Company (EAPC) has inked an agreement with UAE-based Med-Red Land Bridge to move crude oil from the Arabian Gulf to Europe through a land route

Currently crude oil shipments to Europe from the Gulf States go through the Suez Canal, which is supervised by Egypt.

The binding Memorandum of Understanding (MoU) by the two parties, calls for using the existing Eilat-Ashkelon pipeline, owned by EAPC, to connect the Red Sea to the Mediterranean.

EAPC says it could increase the quantity of shipped oil by “tens of millions of tons per year,” according to newswires.

Oil could start flowing through this route at the start of 2021.

EAPC and Med-Red — a consortium of Emirati and Israeli companies say that the “land bridge” to ship oil between countries in the region will save time and fuel compared with the Suez Canal.

Israeli economic magazine, Globes said: “There will be options to bring the oil by tanker to Eilat port or to build a pipeline from the UAE across Saudi Arabia to Israel”, adding that Med-Red is already in “advanced negotiations with major players in the West and in the East for long-term service agreements,” according to EAPC’s statement.

The UAE and Israel began normalizing relations only two months ago, in a truce brokered by the US’ Trump administration.

The proposed alternative route to the Suez Canal will certainly shave significant revenue from the waterway’s pocket.

Nearly 66% of oil sent from the GCC to western countries is shipped through the Suez Canal or the Sumed pipeline linking Alexandria to the Red Sea.

 

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