All posts tagged feature


Namibian Minister Delegitimises Kudu Field as A Discovery

By Akpelu Paul Kelechi

Tom Alweendo, the Namibian Minister of Mines and Energy, does not consider the Kudu gas field offshore the country as an asset.

When asked about his country’s contribution to conversations around global crude oil and gas demand and supply, he offered that “Namibia is a relatively new comer to this”. Then he said, surprisingly: “We don’t have a discovery, we have never had a discovery before and over the last couple of years, there have been some Majors doing prospecting in our sectors”.

The statement came in the course of a recent Webinar on Namibian Energy plans. The conversation was organized by African Energy Chamber.

The question that stood un-asked, after the minister claimed Namibia had never had a hydrocarbon discovery was: So, what should the Kudu Gas Field be called if it’s not called a discovery?

The Kudu field, discovered in 1974 by Chevron, is a deep-water field in 600 metres of water. The gas is stored in reservoirs at a depth of 4,400 metres (17,000 feet) and deeper, and they are interbedded with volcanic rock.

A huge challenge is that an estimated 1,3Trillion cubic feet of gas accumulation is not big enough for an LNG project, which is why the development concept has been around gas to power.  There’s considerable geologic risk around Kudu, but that’ not to say it’s not sitting there.

There has been a line of investors (including Shell, Tullow), going back the last 30 years who have taken a look at the Kudu field. Till date, the field is undeveloped. But its very presence suggests that Namibia is a hydrocarbon player. Mr Alweendo, instead, prefers to delegitimize the asset. He told the webinar: “I think the prospect of us becoming a player in the upstream is really growing by the day to the extent that now, we have a couple of the major oil companies doing exploration. Therefore, when that time comes when we actually do find something, hopefully we will not just continue to be a consumer but also a producer. But even as a consumer, as small as we are, of consumers have a role to play as well”.

This story was originally published in the June 2020 edition of the monthly, Africa Oil+Gas Report

 


ENI Will Fastrack First Gas from New Egyptian Discovery

Italian explorer ENI says it is working with partners, “on fast tracking production”, of its new gas discovery in Egypt, “through synergies with the area’s existing infrastructures”.

The company updated its earlier report of the find, in shallow water Nile Delta offshore Egypt.

Bashrush, as the prospect is called, delivered up to 32 MMscfd of gas.

“The test rate was limited by surface testing facilities. The well deliverability in production configuration is estimated at up to 100 MMscf of gas and 800 barrels of condensate per day”, ENI explains.

Located in the North El Hammad concession, the well encountered 102 meters net gas pay “in high quality sandstones of the Abu Madi formation”, the release says.

ENI, together with its partners bp and TOTAL and in coordination with Egyptian Natural Gas Holding Company, “will continue screening the development options of Bashrush”, with the aim of fast-tracking production through synergies with the area’s existing infrastructures.

ENIholds 37.5% interest and the role of Operator through IEOC, its affiliate, while bp holds the 37.5%, and TOTAL holds the 25% of the contractor share in the concession, which is in participation with the Egyptian Natural Gas Holding Company (EGAS).

 


SEPLAT: Avuru Leaves the Helm after 10 Years, Brown Takes Full Charge

Austin Avuru will be handing over the executive running of SEPLAT Petroleum Development Company Plc, to Roger Brown, on the last day of July 2020.

It is exactly the 10th year to the day the company, a dual listed (London and NSE) independent, received Ministerial consent for the purchase of Shell/TOTAL/ENI’s 45% stakes in Oil Mining Leases (OMLs) 4, 38, and 41, in northwestern Niger Delta basin. That day is widely considered, in company lore, as the foundational date.

Austin Avuru will run a Family Office from August 1, 2020

“In these 10 years, Avuru led the development of a strong organization, the deployment of agile systems, processes and stakeholder relationships that allowed the organization to grow rapidly from a gross production of 22,700Barrels of Oil Equivalent Per Day (BOEPD) as at December 2010 to peaks of 111,368BOEPD gross production as at December 2018 through major drilling campaigns and major new Oil and Gas plants development”, a release by the company says.

Brown has his work cut out. The company has the $700Million Asa North Ohaji South (ANOH) natural gas development project to deliver and the newly merged 30,000BOPD Eland Oil and Gas Plc to bring into strategic fit with SEPLAT. He is taking charge in an unprecedentedly challenging season for the fossil fuel industry.

Brown is a 1992 graduate of the University of Dundee who started out as Financial Advisor at PwC, and grew into reckoning in investment circles in the 12 years he spent at Standard Bank. He joined SEPLAT in 2013 as Chief Financial Officer (CFO), has been on the board of directors for seven of the company’s 10 years.

Prior to joining SEPLAT, Brown was an advisor to the Company since 2010 while he was the Managing Director and head of EMEA Oil and Gas at Standard Bank Group. “During his time at the bank, he was instrumental in providing advice and deploying capital across the African continent in the Oil & Gas, Power & Infrastructure and the renewable energy sectors”, the company had said, while announcing Brown as MD designate in November 2019.

Brown brings to the CEO role, a deep knowledge of the Company in his 6 years as the CFO and a member of the Board. He has strong financial, commercial and M&A experience as well as proven people skills which will be an asset as the Company embarks on the next phase of its growth plan.

Avuru will remain on the bard of the company as a non-executive director. He will also be running a family office, AA Holdings. And he certainly will be very busy in the African investing landscape.


US EXIM Bank Provides the Largest Financing for Moza LNG, with $4.7Billion

United States’ Export Import (EXIM) bank says it has initiated “the process of providing $4.7Billion in financing a major integrated liquefied natural gas (LNG) project in Mozambique”.

The money is the largest committed by any lender to the 13 Million Tonnes Per Annum project, led by French major TOTAL.

The Mozambique LNG project will cost $20Billion to develop, but TOTAL is borrowing $14.9Billion from 28 financiers.

EXIM bank is one of eight Export Credit Agencies financing the project, the priciest hydrocarbon development on the continent. Other ECAs, aprt from US EXIM Bank, are: Japan Bank for International Corporation (JBIC), Nippon Export and Investment Insurance (NEXI), UK Export Finance (UKEF), Servizi Assicurativi del Commercio Estero of Italy (SACE), Export Credit Insurance Corporation of South Africa (ECIC), Atradius Dutch State Business (Atradius), Export-Import Bank of Thailand (EXIM Thailand)”,

There are also 19 commercial banks involved, of which Standard Bank of South Africa, is leading with $485Million loan. The Africa Development Bank, which is neither an ECA nor a commercial bank, is putting $4000Million in financing.

US EXIM bank’s involvement is primarily to support American contractors involved in the project. It says its funding “will support an estimated 16,700 American jobs over the five-year construction period”. Those jobs are at 68 suppliers located in eight states — Florida, Georgia, Louisiana, New York, Oklahoma, Pennsylvania, Tennessee, and Texas — and the District of Columbia. Follow-on sales are expected to support thousands of additional jobs across the United States.

“As the Mozambique LNG project marks further milestones, we want to underscore EXIM’s continuing commitment to this project,” said EXIM President and Chairman Kimberly A. Reed. “This project continues to serve as a great example of how a revitalized EXIM can help ‘Made in the USA’ products and services compete in a fierce global marketplace and counter competition from countries like China and Russia. It also reinforces EXIM’s strong support for President Trump’s Prosper Africa initiative to unlock opportunities for U.S. businesses in Africa. This authorization will stand as a reminder to companies across the board in all industries: EXIM is open, and we want to work with you to help fill financing gaps in the market to support our great American workers and exporters.”

A US EXIM Bank press release says that the transaction supports the Trump Administration’s Prosper Africa Initiative, “a whole-of-government economic effort to substantially increase two-way trade and investment between the United States and Africa.”

Launched in December 2018, Prosper Africa brings together the resources of more than 15 U.S. government agencies, including EXIM, to connect U.S. and African businesses with new buyers, suppliers, and investment opportunities.

 


Malabu: ENI’s Descalzi Has Won the Politics, but Can He Escape Judicial Conviction?

By Toyin Akinosho

ENI is wrestling with the request by the Italian Public Prosecutor for conviction of the Company, its former and current CEOs and the managers involved in the Malabu case.

The company says the pursuit of convictions “are completely groundless”.

Mr. Descalzi has held the reins of the Italian E&P major for six years. His appointment, last May, for a third term of another three years by the President of Italy, is clear indication that he has won the politics of the most important challenge to his reputation.

Sergio Mattarella’s government is either convinced  that Desclazi is untainted by the Malabu case, involving alleged corrupt dealing with Nigerian officials in the course of the purchase of the Oil Prospecting Licence (OPL)245, or it would rather have a seasoned technocrat at the helm of its largest energy company to steer the country into the green economy, however smeared that technocrat is.

So, the political arm of the Italian government has signaled that it is comfortable with the 65-year-old, hard-working graduate of Physics from the University of Milan, but the country’s Judiciary has indicated, consistently, that it is not sure he is clean.

The fact that the state prosecutor is still pursuing “a conviction of the current CEO” says a lot about how it is convinced of wrongdoing.

ENI has insisted on its innocence, both in court and in public. “During its indictment, in the absence of any evidence or tangible reference to the contents of the trial investigation, the Public Prosecutor has told a story based on suggestions and deductions as already developed during the investigation. This narrative ignores both the witnesses and the files presented within the two years long and more than 40 hearings proceeding, that have decisively denied the prosecutorial hypothesis”.

Descalzi, who has been ENI’s CEO since May 2014, is on course of being the longest serving CEO of ENI in 30 years, if this case does not stop him.

He joined the company in 1981 as a young reservoir engineer. His career took off in 1994, when he was appointed Managing Director of the company’s subsidiary in Congo. Four years later he was Vice President & Managing Director of NAOC, a subsidiary of ENI in Nigeria. From 2000 to 2001 he held the position of Executive Vice President for Africa, Middle East and China. From 2002 to 2005 he was Executive Vice President for Italy, Africa, Middle East, covering also the role of member of the board of several Eni subsidiaries in the area. In 2005, he was appointed Deputy Chief Operating Officer of the Exploration & Production Division in Eni. From 2006 to 2014 he was President of Assomineraria and from 2008 to 2014 he was Chief Operating Officer in the Exploration & Production Division of ENI. From 2010 to 2014 he held the position of Chairman of ENI UK.

ENI’s press release earlier today, July 22, 2020 repeats the claim it has always made: “ENI and Shell paid a reasonable price for the license directly to the Nigerian Government, as contractually agreed and through transparent and linear means. Furthermore, Eni neither knew nor should have been aware of the possible destination of the money subsequently paid by the Nigerian government to Malabu. Moreover, the payment was made after an inquiry carried on by the UK’s Serious Organised Crime Agency (SOCA).

“So there can therefore be no bribes from ENI in Nigeria, no existence of an ENI scandal. ENI recalls the decision of the Department of Justice and the US SEC, which decided to close its own investigations without taking any action against the company.

“The multiple internal investigations entrusted to international third parties by the company’s supervisory bodies have long since highlighted the absence of unlawful conduct. ENI trusts that the truth can finally be re-established following the defensive arguments that will be presented at the end of September, pending the Milan Court’s forthcoming verdict”.

 

 


Digital Transformation in Oil & Gas—How to Choose the Right Partners?

PAID POST

Low oil prices, combined with the COVID-19 pandemic, are putting pressure on oil and gas companies to reduce operational costs through efficiency and optimization. There is only a limited number of ways to achieve this — by downsizing, reducing production, or implementing digital transformation. While a quick fix, downsizing and production reduction are not sustainable solutions. As such, more and more oil and gas companies are looking at the strategic advantages of digital transformation, driven by cloud computing, Internet of Things (IoT), big data, and Artificial Intelligence (AI).

Digitization: A Must for the Oil and Gas Industry

According to Accenture Technology Vision 2019, of the 168 oil and gas executives surveyed, 85% from upstream and 90% from downstream companies said that they were currently implementing one or more of the following technologies: Distributed Ledger Technology, AI, Extended Reality, and Quantum Computing (DARQ).

In recent years, most large oil and gas companies have increased investment in digital transformation. Internationally, large multinationals have launched their own digital and intelligent oilfield construction plans, such as the Digital Oilfield by ExxonMobil, Integrated Development by ConocoPhillips, Smart-Field by Royal Dutch Shell, I-Field by Chevron, and E-Field by BP.

Chinese enterprises have also been actively implementing new digital strategies in the industry. China National Petroleum Corporation (CNPC) has built an exploration and production cloud platform, as well as over 50 digital management systems, including exploration and development, refinery and chemical engineering, and service support, among others. Sinopec has set up three digital platforms for operation management, production operation, as well as information infrastructure and O&M. In addition, it has built several technology-driven solutions, such as ProMACE, smart factory, Chememall, and Epec. At the same time, China National Offshore Oil Corporation (CNOOC) is developing on-going plans for intelligent oilfields. It has successfully built unmanned platforms, and has piloted multiple projects on intelligent exploration, oil production, asset management, and drilling and completion.

Oil and gas companies are rapidly investing in digital and intelligent projects to improve exploration and development efficiency and reduce production costs. Ultimately, the industry looks to seize the opportunities that digital transformation has to offer.

A Difficult Road to Digital Transformation

Each upstream enterprise progresses at a different pace during digital transformation. Various companies in the oil and gas industry have achieved different levels of development in data monitoring and collection, device networking, data analysis, and predictive maintenance; the industry overall has had some success in these domains. However, the further the industry transforms digitally, the more challenges it faces.

Zhang Tiegang, former Deputy Chief Engineer of Daqing Oilfield Exploration and Development Research Institute, introduced the three key pain points in the digital transformation of the oil and gas industry at the Huawei Oil and Gas Virtual Summit 2020 held on July 15.

  1. Massive Data Growth

Compared with other industries, oil and gas manages an even larger amount of data. For example, the amount of seismic data is increasing at an unprecedented speed. As oil and gas exploration becomes more difficult, the process requires more precise seismic wave exploration techniques. Broadband, wide-azimuth, and high-density (BWH) seismic data collection is particularly important, amounting to nearly 1 TB/km2. The exploration area is constantly expanding and the originally collected high-resolution seismic data in just a single work area may amount to over 17 TB. In addition, the continuous increase in historical data records further speeds up data growth.

  1. Increased Computation Workload and Complexity

The ever-increasing data volume leads to a sharp increase in the computation workload. For example, the computation workload of pre-stack reverse time migration (RTM) and storage volume are 10 and 50 times higher than before, respectively. To ensure comprehensive and accurate understanding of oilfield production dynamics, the computation requirements of large-scale reservoir numerical simulation also increase significantly. Therefore, oilfield companies have increasingly high requirements on data processing technologies. More and more complex algorithms — such as anisotropic pre-stack depth imaging, RTM, and full waveform inversion (FWI) — also pose higher requirements on computational capabilities.

  1. Weak Information Infrastructure

Equipment rooms, computing, storage, and IT O&M constitute the information infrastructure system of oil and gas enterprises. Most companies used to build their own, resulting in many equipment rooms with high energy consumption and low security. At the same time, low server configuration and utilization are no longer able to meet the requirements of massive data processing. In addition, the existing shared storage devices come from different providers and feature low capacity, unable to store massive data. Moreover, O&M departments face increasing pressure to hire highly skilled personnel to ensure the O&M of independent and scattered IT with a poor intelligence level.

Partnership Can Help Oil & Gas Streamline Digital Transformation Who Will the Partners Be?

The digital transformation of oil and gas enterprises is a huge systematic undertaking. Therefore, technical support from IT companies is indispensable.

Partnership Between Oil and Gas Enterprises and IT Companies (Some Cases)

Every large oil company has chosen to form partnerships for digital transformation. In this case, IT companies provide oil and gas enterprises with comprehensive digital solutions by using advanced technologies such as AI, big data, and cloud computing.

Take the partnership between Huawei and Daqing Oilfield Company as an example. Cloudification is key for digital transformation. However, data, computing, and facilities present serious challenges. To address these, Daqing Oilfield Company cooperated with Huawei to build a cloud data center, achieving an elastic supply of IT resources. The computing power of the data center now reaches 1,000 trillion FLOPS — a 300% increase in efficiency. Thanks to the elastic supply of computing and storage resources, the acquisition period has been reduced from three days to three hours. At the same time, servers with super computing power and the cloud-based deployment environment optimize data processing by 3 to 10 times. To achieve this, production data is transmitted to the cloud center through the high-speed dedicated network for processing. The calculation results are automatically sent back to the data center for archiving and management, ensuring the security of the core oilfield data.

In addition, Huawei has developed multiple technical service capabilities for oilfield digitization by using technologies such as AI, big data, and 5G. By deploying HUAWEI CLOUD, SONATRACH (Algeria) has successfully transitioned to cloud-based IT by deploying a company-wide ERP system. With AI, big data, and industrial IoT technologies, Huawei has built a fault prediction model for predictive maintenance of pumping units. Huawei has also built the largest industrial 5G oilfield lab in Europe’s biggest oil refinery, as well as implemented future-oriented services such as inspection robots, wireless sensors, “connected” employees, and predictive maintenance. Recently, Shengli Oilfield and Huawei recently signed a strategic cooperation agreement to build a cloud platform and 5G-based intelligent oilfields.

Efficiency and cost are the competitiveness indicators of the oil and gas industry. As a leading global ICT solutions provider, Huawei is continuously working with oil and gas partners to reduce costs, increase efficiency, and achieve digital transformation.

  1. Improved efficiency

In line with the strategy of increasing reserves and production, how to maximize value from historical exploration and development data has become a new requirement of CNPC. Together with partners, Huawei planned and built a computing AI platform for CNPC, to implement AI training and big data analytics. The customer has now applied AI in multiple ways, such as artificial lift fault diagnosis and seismic first arrival wave identification. The value of underused historical exploration and production data has been fully explored.

  1. Reduced cost

Huawei built a local, dedicated cloud for Daqing Oilfield, to provide oil and gas exploration computing. This in turn helped Daqing to optimize its costs and shift high-performance exploration and development computing services from CAPEX to OPEX. By reusing ten PB of historical exploration data, the cloud helped improve computing power by 833 percent, and increase the annually processed area from 400 square kilometers to 2000 square kilometers.

Strong partnerships are essential in the oil and gas industry, regardless of the digital transformation strategies a company may adopt. Alone, digital transformation is difficult, due to its complex technical requirements. The key for success is to build strong and strategic partnerships with industry leaders, ensuring a clear scope of cooperation. In this period of digital transformation, it is critical for oil and gas enterprises to choose their partners wisely — it will define the industry trends, but more importantly, it will determine who will become the new industry leaders.


Nigerian Bid Round: DPR Says ‘Hold on, We’d Communicate Soon’

Nigeria’s Department of Petroleum Resources (DPR) says it will communicate the next steps of the ongoing bid round of marginal fields soon.

Several of the 500+ companies who have been notified of their prequalification had fruitlessly attempted to access the portal, on Monday and Tuesday, to pay for the next step of the round.

But officials at the regulatory agency told Africa Oil+Gas Report, they were still dealing with matters arising over the pre-qualification process and that access to the portal was closed for now.

The portal itself, on the DPR website, says: “Next step of the bid round to be communicated, soon”.

For the purpose of further payments, the notice on the portal adds: GIFMIS Code for Application Fee: 1000289370 and GIFMIS Code for Bid Processing Fee: 1000289383.

The matters arising that the officials spoke about has to do with the fact that there were companies who could make the qualification, but who are owing government a tax, tariff, fee or the other. A company may have fulfilled all obligations to government, but a director on its board may be a director in another company that is delinquent in paying statutory fees. Prequalificiation of such a company is on hold until the director clears himself.

Companies so affected have to comply by close of business on Friday, July 24, 2020.

In effect, the Nigerian government has taken advantage of the bid round to reclaim some of the debts owed to it.

As an update to our last report, there are no clear schedules for the remaining steps of the bid round, now.  The best thing to do is keep visiting the website of the DPR, https://www.dpr.gov.ng/


Chevron Announces Agreement to Acquire Noble Energy

Chevron Corporation announced today that it has entered into a definitive agreement with Noble Energy, Inc. to acquire all of the outstanding shares of Noble Energy in an all-stock transaction valued at $5Billion, or $10.38 per share.

Based on Chevron’s closing price on July 17, 2020 and under the terms of the agreement, Noble Energy shareholders will receive 0.1191 shares of Chevron for each Noble Energy share. The total enterprise value, including debt, of the transaction is $13Billion. The acquisition of Noble Energy provides Chevron with low-cost, proved reserves and attractive undeveloped resources that will enhance an already advantaged upstream portfolio.

The American major says that Noble Energy brings low-capital, cash generating offshore assets in Israel, strengthening Chevron’s position in the Eastern Mediterranean. Noble Energy also enhances Chevron’s leading U.S. unconventional position with de-risked acreage in the DJ Basin and 92,000 largely contiguous and adjacent acres in the Permian Basin.

“Our strong balance sheet and financial discipline gives us the flexibility to be a buyer of quality assets during these challenging times,” said Chevron Chairman and CEO Michael Wirth. “This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources. Noble Energy’s multi-asset, high-quality portfolio will enhance geographic diversity, increase capital flexibility, and improve our ability to generate strong cash flow. These assets play to Chevron’s operational strengths, and the transaction underscores our commitment to capital discipline. We look forward to welcoming the Noble Energy team and shareholders to bring together the best of our organizations.”

Transaction Benefits, according to Chevron include:

  • Low Cost Acquisition of Proved Reserves and Attractive Undeveloped Resource: Based on Noble Energy’s proved reserves at year-end 2019, this will add approximately 18 percent to Chevron’s year-end 2019 proved oil and gas reserves at an average acquisition cost of less than $5/boe, and almost 7Billion barrels of risked.
  • Proved reserves to be acquired for under $5 per oil equivalent barrel
  • Delivers $300 million in anticipated annual pre-tax synergies
  • Accretive to ROCE, free cash flow and earnings.

“ This combination is expected to unlock value for shareholders, generating anticipated annual run-rate cost synergies of approximately $300 million before tax, and it is expected to be accretive to free cash flow, earnings, and book returns one year after close,” Wirth concluded.

“The combination with Chevron is a compelling opportunity to join an admired global, diversified energy leader with a top-tier balance sheet and strong shareholder returns,” said David Stover, Noble Energy’s Chairman and CEO. “Over the last few years, we have made significant progress executing our strategic objectives, including driving capital efficiency gains onshore, advancing our offshore conventional gas developments and significantly reducing our cost structure. As we looked to build on this positive momentum, the Noble Energy Board of Directors and management team conducted a thorough process and concluded that this transaction is the best way to maximize value for all Noble Energy shareholders. The release says that

Noble Energy’s assets will enhance Chevron’s portfolio in:

  •  U.S. onshore
  • DJ Basin – New unconventional position with competitive returns that can be further developed leveraging Chevron’s proven factory-model approach.
  • Permian Basin – Complementary acreage that enhances Chevron’s strong position in the Delaware Basin.
  •  Other – An integrated midstream business and an established position in the Eagle Ford.
  • International o Israel – Large-scale, producing Eastern Mediterranean position that diversifies Chevron’s portfolio and is expected to generate strong returns and cash flow with low capital requirements.
  • West Africa – Strong position in Equatorial Guinea with further growth opportunities.

Chevron anticipates the transaction to be accretive to ROCE, free cash flow and earnings per share one year after closing, at $40 Brent.

The acquisition consideration is structured with 100 percent stock utilizing Chevron’s attractive equity currency while maintaining a strong balance sheet. In aggregate, upon closing of the transaction, Chevron will issue approximately 58Million shares of stock. Total enterprise value of $13Billion includes net debt and book value of non-controlling interest.


Harouge Oil Operations Tenders for Materials for Well Tie in Project

Harougue Oil Operations, a joint operating company on behalf of National Oil Operation, Libya and Suncor Oil (North Africa) GmbH invites tenders for the supply of material for tie-in of production wells.

The project s to be executed on Amal field,

  • The material request to be utilized for tie-in of Three new oil production wells at Amal field. All materials to be supplied to the specifications addressed in the material’s requisition.

Announces an invitation to participate in tender No (03/2020) for Companies which have the required Legal and valid License documents.

SCOPE OF SUPPLY:

 


Tender for Replacement of Gas Compressors Package for Libya’s Sarir Refinery

The Arabian Gulf oil Company (AGOCO) of Libya has called for tenders for replacement of the reciprocating type hydrogen recycle compressors in the 30,000Barrel per day Sarir Refinery, located in the Sirte Basin.

The compressors currently in place are two old electronic driven reciprocating type

The project is TURNKEY IMPLEMENTATION and incudes design, supply, installation, start-up and commissioning of the gas compressors.

The contractor shall replace them as a full package with electric motors, drums, instrumentation and connect it to the existing system.

For details, click here.

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