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Nigeria: Rig Activity is Up by Six in Three Months

There were 32 rigs in various stages of operations on as many locations in Nigeria on January 15, 2020, the middle of the first month of the year.

They were either drilling, carrying out workovers, or completing, according to data compiled for Africa Oil+Gas Report by Ofserv, an oil service company focused on wells.

There were five other rigs that were inactive on the said date.

Two of these were in what is called the Pre-Drill phase; two were on standby while one was leaving location after several months of activity. This particular rig, in ‘move’ phase, is incidentally Ikenga 101, which had drilled Kolmani-1 for NNPC, the state hydrocarbon company, for nine months.

It wasn’t clear if it was moving to another location or was being retired.

Overall, rig activity in Nigeria had surged by over 25% from 26 rigs on as many locations, drilling, completing or carrying out workovers, in mid-October 2019.

Details are updated monthly and made available to paying subscribers of Africa Oil+Gas Report.

 


Chinese Firm Wins Kenya’s Prepaid Meter Supply

Shenzhen Star Instruments, the Chinese firm which won the tender to supply phase prepayment meters to Kenya Power, had pledged it would set up a manufacturing factory in late 2019.

The commissioning of the facility has not exactly happened, but it is not unlikely that the company had won on the strength of that pledge.

Kenya Power a listed company, has also called for bids for supply of nearly 200,000 post-paid meters, an indication that the company is keen on both post paid and prepaid schemes.

The single-phase prepaid meter supply contract awarded to Shenzhen is worth $7.4Million (or Sh746.2Million). The scheme is part of Kenya Power’s Last Mile Connectivity Project (LMCP), which links homes to the national grid under a subsidised programme. The LMCP was launched in 2015 to absorb more of the population in rural and peri-urban areas by providing subsidy for grid extension to enable customers get electricity supply at affordable cost.

Shenzhen Star had in 2017 bid for another tender worth Sh1.25 billion to design, supply and install an advanced metering system to Kenyan Power but lost to rival Chinese firm ZTE Corporation.

 


Prime Atlantic Has Vacancies for Engineers and Geoscientists

PAID POST/ADVERTORIAL

Prime Atlantic, a service provider in Nigeria’s E& P sector, has published a document offering jobs to experienced Electrical and Mechanical engineers, as well as skilled Geoscientists.

The company wants

  • Engineer: Electrical Lead III

Qualification: BSc, BTech or HND in Electrical Engineering

  • Geophysical Quality Control Representative

Qualification: BSc or MSc in Geophysical or Geotechnical Field

  • Engineer: Mechanical Lead III

Qualification: BSc, MSc in Mechanical Engineering

And

  • Geoscience Technical Quality Control

Qualification: BSc or MSc in Geophysical or Geotechnical field

The minimum experience is 10 years

The details of the offer are provided in this link.

Offer loses January 28, 2020.


Equatorial Guinea’s Hydrocarbons Minister Visits the Waltersmith Refinery

The 5,000BOPD Facility is on schedule for inauguration in May 2020

The leadership of Waltersmith Petroman carried out a site visit of the Watersmith Modular Refinery, under construction in southeastern Nigeria, with Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea as its guest.

Developed by Waltersmith Petroman Oil in partnership with the Nigerian Content Development and Monitoring Board, the modular refinery (5,000BOPD), embodies efforts of Africa’s oil producing countries, outside industrialized South Africa, Egypt and Algeria, to generate local value by refining their own crude at home.

As a rule, African hydrocarbon producers, with the exception of those three countries listed above, import most of their petroleum products. In 2018, Nigeria’s crude oil output was around 500,000Barrels of Oil Per Day (BOPD) higher than the output of the closest African rival, Angola, and yet 80% of the petroleum products consumed in the country were imported.

The Waltersmith refinery is on schedule for inauguration in May 2020, at a time when its phase 2 will take Final Investment Decision, to boost refining capacity from 5,000BOPD to 30,000BPD.

The refinery is also a path opener for many Nigerian operators of marginal fields, demonstrating how the exploitation of smaller assets such as Waltersmith’s Ibigwe field can generate value from upstream to downstream and help African nations meet their energy security agenda.

“I am truly impressed by the nature and advancement of this project,” declared Gabriel Mbaga Obiang Lima during his visit of the site. “I share our industry’s belief that it is high time for Africans to start refining and processing our own crude at home to maximize our energy security, create local jobs and add value to our economies. Creating the right public-private partnerships will be of great benefit to all of countries and business leaders. I salute Waltersmith Petroman for the work they do here.”

-Adapted from a press release by African Energy Chamber, which is backed by the Equatorial Guinea Government.


Angola Awards Three of the Blocks Offered in 2019 Bid Round

Angola’s National Agency of Petroleum, Gas and Biofuels (ANPG), has announced the winners of three concession awards from its 2019 bid round for hydrocarbon blocks in the Namibe and Benguela Basins.

The awards were announced, the agency said, “under the terms of Decree No. 86/18, of 02 April, and in compliance with the predefined Bidding Schedule 2019”.

The three blocks awarded are 27, 28, and 29, and all three are located offshore in the deepwater Namibe Basin.

The International Competitive Bid Round for oil gas licenses, announced last year, is a scheduled offering for onshore and offshore, in the period 2019-2025.

The blocks awarded, which are all considered frontier, currently have no hydrocarbon production. A total of 10 frontier blocks were made available for concession in the 2019 round, which initiated with round presentations in Fall 2019. Other blocks offered during the 2019 licensing round included 11, 12, 13, 41, 42 and 43 in the Namibe Basin, and block 10 in the Benguela Basin.

The state hydrocarbon firm Sonangol, received a working interest of varying percentages in all three blocks, and is joined by others as operators or shareholders, including ENI, TOTAL, Equinor and BP as follows:

* In the act of negotiations, the National Concessionaire and the awarded companies must find means that lead to the identification of interested companies for the conclusion of the constitution of the Contractor Groups.

The date and place of the start of the negotiation process for each block will be announced shortly.-These footer statements are direct quotes from the website of  the National Agency of Petroleum, Gas and Biofuels (ANPG).

 


Lighting up Africa

By Gerard Kreeft

Royal Dutch Shell’s Sky Energy Scenario, first published in 2018, still provides energy companies a solid roadmap to develop their own Post—Parisenergy plans. A key observation in the document is that “New energy sources grow up to fifty-fold, with primary energy from renewables eclipsing fossil fuels in the 2050s”.

An important message for Africa here is simply that the continent has a window of 30 years to decide how its fossil fuels can help usher in renewables.

It’s crucial not to hastily abandon your fossil fuel resources in favour of renewables,be that wind or solar. Instead strategic fossil fuel scenarios should be developed to provide an energy roadmap. In Africa the need to speed up oil and gas exploration and production has never been greater. The oil and gas assets are the currency to finance renewable energy. Can Africa’s oil and gas assets be harvested for lighting up Africa, before they are declared ‘stranded assets’?

Defining the Need

A key message from Akinwumi A. Adesina, President of the African Development Bank, is that a New Deal on Energy for Africa must have the goal “to light up and power Africa by 2025”. Certainly this must be a key goal for the oil and gas industry.

Power conditions are to say the least terrible. Power consumption per capita is the lowest of all continents: 181 kilowatts per annum, 6500 kilowatts in Europe and 13000kilowatts in the USA.

Energy sector bottlenecks and power shortages cost Africa between 2%-4% GDP per annum. Companies in Tanzania and Ghana lose 15% of sales value as a result of power outages. It is estimated that two thirds of a million people, mostly women and children, die annually due to indoor air pollution associated with the use of fuel wood for cooking. Children under-perform at school for lack of electricity since over 900 of Africa’s primary schools have no electricity.

The goals of 2025 are increasing:

On-grid generation to add 160GW of new capacity;

On grid transmission and grid connections by 160% in order to create 130 million new connections;

Off-grid generation to add 75Million connections, an increase 29 times more than what Africa generates today;

Access to clean cooking energy for 130Mllion households.

In Search of an Energy Champion

Is it not time to enlist an energy champion to help leapfrog exploration and development hurdles? To ensure that oil and gas projects are implemented, on time and under budget. To ensure that these energy assets can be used in developing Africa’s economic needs. Without reservation TOTAL would be my nomination to fulfill such a role. A company well positioned in the Upstream, Mid-stream and Downstream sectors across a broad swath of the African Continent.Having a well-defined strategy, transparency and an ability to operate, in what may appear to outsiders as a difficult marketplace. And, finally a unique ability to deliver projects at neck-breaking speed in which technical zeal is always present!

To address climate change the company is expanding its natural gas output. i.e. LNG production; expanding in the non-regulated low carbon electricity market; and striving for carbon neutrality through carbon sinks(wetlands and forests and Carbon Capture Storage).

TOTAL has also acquired two companies- Saft, an industry leader in advanced battery technology and Eren, which promotes and invests in technological innovations in the water, basic materials and energy sectors.

For the first time TOTALs Chairman and CEO’s compensation package has quantitative criteria linked to trends in greenhouse gas emissions at operated oil  and gas facilities.

According to the company’s Rupture Energy Scenario renewables will capture 90% of the power growth between 2018-2030.

An African Pioneer Illustrated

TOTAL’s track record in fossil fuels exploration and production in Africa is awesome: The company’s field development projects in several fields in Angola’s flagship deepwater Block 17 have produced almost 3 Billion barrels of oil produced since the taps opened with Girassol in 2001. Currently producing around 440,000 barrels of oil equivalent per day, the potential of this very prolific block is still high, with more than 1 Billion barrels yet to be produced.

In 2019, operator TOTAL and its partners Equinor, ExxonMobil and BP signed an agreement with national oil, gas and biofuels agency ANPG and state-owned Sonangol of Angola, to extend their consortium’s production licenses in Block 17 to 2045.

In South Africa, TOTAL made a discovery with the Brulpadda Deepwater Prospect, a world-class find in which 57 meters of net gas condensate was found. TOTAL and its partners plan to acquire 3D seismic this year, followed by up to four exploration wells on this license. The Block 11B/12B covers an area of 19,000 square kilometers, with water depths ranging from 200 to 1,800 meters.

TOTAL acquired Anadarko’s 25% in and operatorship of Mozambique LNG project in 2019, and is currently leading other partners in the construction of a two-trains liquefaction plant with a capacity of 12.9Million tonnes per year (Mt/y). The reservoirs in deep-water Area 1 contain more than 60 Tcf of gas resources, of which 18 Tcf will be developed with the first two trains. The Final Investment Decision (FID) on Mozambique LNG was announced on June 18, 2019, and the project is expected to come into production by 2024.

Electrifying Africa

TOTAL’s challenge is to ensure it can harness it’s project management skills to ensure that Africa can be lit up.The company currently delivers 3GW of renewable energy through its affiliate Eren but it has a goal of delivering 25GW on renewable energy.The French super major develops projects in countries where renewable energy provides an economically viable response to growing power demand.

Eren in 2018 installed the world’s largest hybrid solar/thermal with a capacity of 15MW for the IAMGOLD Mine in Burkino Faso. The company also provided two photo voltaic power plants(PV) with a capacity of 126MW for the Benban Complex, Aswan Province, Egypt. Eren delivered  a 10MW facility for the Soroti Power Plant in 2016;Uganda’s first-grid connected solar plant generating clean energy for 40 000 households.

A likely partner with TOTAL could also be IRENA ‘s(International Renewable Energy Agency) Clean Energy Corrid or which aims to support the integration of cost-effective renewable power options to national systems, promote its cross-border trade and to support the creation of regional markets for renewable energy. The Clean Energy Corridor initiatives has two African regions:

The African Clean Energy Corridor (ACEC) for the member countries of the Eastern and Southern African power pools;

West African Clean Energy Corridor (WACEC) within the Economic Community of West African States.

So, why not begin a serious public-partnership involving TOTAL and the Oil and Gas Industry and  the African Development Bank together with IRENA so that Africa can be lit up by 2025?

Why not go for 100GW of electrical energy?. Translated to the oil and gas sector: 565800 barrels of oil equivalent. A language TOTAL understands, representing approximately 20% of their current oil production. Adding 20% production goes a long way in supporting your RRR (Reserve Replacement Ratio).

A final message to the African Development Bank. Ensure that your oil and gas partners understand that their energy contribution can be translated to oil of barrel equivalent. Presently the illusion continues to be fostered that renewable energy can be added to the reserve count of an oil company. The SEC, the USA watchdog of Wall street makes it abundantly clear that only fossil fuels are legitimate reserves. Africa can provide a great service to the oil and gas industry by helping them become energy companies.

Gerard Kreeft holds a BA (Calvin University) and  MA (Carleton University, Ottawa, Ontario, Canada). An Energy Transition Adviser, he was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. He writes on a regular basis for Africa Oil + Gas Report.


Angola May Break A Four-Year Recession Jinx in 2020-IMF

Africa’s second largest oil producer may be out of recession in 2020, the IMF hopes.

If it doesn’t, then Angola would be marking the fifth year of contraction of its mono-product economy.

The IMF reported a 1.1% drop in the country’s GDP in 2019, due to a further decrease in the oil economy (-5.0%), not compensated by the largely stagnant non-oil economy (+0.6%), but the Fund is expecting a 1.2% growth of the economy in 2020, supported by a 1.3% increase in oil GDP and a 1.1% growth in non-oil GDP.

The government’s figures are more optimistic, claiming a likely 1.8% increase in GDP, due to an anticipated 1.5% growth in the oil economy.

Despite efforts to diversify the economy, GDP, exports and government income mostly rely on crude oil.

For 2020, the government forecasts oil production to rise to 1.44Million barrels per day (MMBOPD) from 1.39MMBOPD in 2019, which is contrary to projections based on the natural rate of decline in mature projects.

The Angolan budget bases its calculations on an average of $55 per barrel of oil, in line with the long-term anchor price forecasted for Brent although price for most of the last quarter of 2019 and first half of January 2020, have hovered close to $70. This means that a budget surplus of 1.2% of GDP can kick in during 2020.

 


Oil Refinery is Back on the Agenda in Equatorial Guinea

Equatorial Guinea’s Ministry of Mines and Hydrocarbon reported signing an MoU on the EG Refinery, which will have a capacity of 20,000 to 30,000BOPD“and will see the country become a refiner and producer of petroleum products”.

The agreement took place in the context of the Atlantic Council’s Global Energy Forum in Abu Dhabi in early January 2020.

The Minister, Gabriel Mbaga Obiang Lima, held several bilateral meetings and discussions with heads of national oil companies, including PetroVietnam, ministerial counterparts of the Ministry of Energy of the UAE H.E. Suhail Al Mazrouei and the Ministry of Petroleum, Energy and Mines of Mauritania, and private stakeholders.

The report didn’t say which of these the Equatorial Guinea delegation signed the MoU for a refinery with.

The idea of a refinery was a No-No for the West African oil producer as recently as 2015, when the country’s oil and gas leaders talked up an Oil Terminal project on Bioko Island. “The terminal will eliminate the need for a local refinery”, Mercedes Eworo Milam, then Director General of Hydrocarbons at the Ministry of Mines, Industry &Energy, told The Oil &Gas Year (TOG). “The problem with a refinery is that it has high operating and maintenance costs and a risk of excess production”. She said that “in -country processing of local crude may also fail to provide sufficient qualities and quantities needed to fulfil the domestic demand for each of the various petroleum products, meaning that imports might still be necessary”.


Africa Oil Finalises Acquisition in Agbami, Egina

Canadian explorer, Africa Oil Corp., has announced the closing of the acquisition of a 50% ownership interest in Petrobras Oil and Gas B.V. (POGBV).

BTG Pactual E&P B.V. will continue to own the remaining 50% of POGBV. The total cash payment by AOI to close the Acquisition, including the Nigerian Government’s consent fee, amounts to $519.5Million. This includes a deferred payment of $24.8Million which is due by end of June 2020.

The primary assets of POGBV are an indirect 8% interest in Oil Mining Lease (OML) 127 and an indirect 16% interest in OML 130. OML 127 is operated by affiliates of Chevron Corporation (Chevron) and contains the producing Agbami Field. OML 130 is operated by affiliates of TOTAL S.A. (TOTAL) and contains the producing Akpo and Egina Fields.

Aggregate gross field production from these assets averaged approximately 442,000 barrels of oil per day (BOPD)1 for the period January 1st to December 29th, 2019. Average daily entitlement production2 net to AOI’s 50% shareholding in POGBV for the same period, was approximately 33,630BOPD. This compares to a January 2019 average net entitlement production of 22,460BOPD, with growth over the course of 2019 being mostly due to the production ramp-up on the Egina field, which came onstream in late December 2018.

Africa Oil CEO Keith Hill commented, “We are very pleased to have acquired an interest in these established, low unit cost, producing assets with additional appraisal and development upside, that are operated by some of the best companies in the industry. With the addition of production and cash flow, Africa Oil is transforming into a significant, Africa-focused independent E&P company. Combining these assets with our Kenya development project and exploration portfolio, we believe that Africa Oil has tremendous growth potential in a range of oil price scenarios”.

Key highlights 3, 4, 5:

  • A transformational transaction as Africa Oil becomes a full-cycle E&P company with material reserves and production, strong operating netbacks, and free cash flow generation that is supported by an active oil price hedging program at the POGBV level;
  • Year-end 2018 net entitlement proved reserves (“1P”) of 62.7 million barrels of oil equivalent (“MMBOE”) and proved plus probable reserves (“2P”) of 94.7 MMBOE, net to AOI’s 50% shareholding in POGBV, with more than 90% comprised of light and medium oil;
  • Based on the year-end 2018 entitlement reserves and LR’s 2019 production estimates, pro-forma (as of December 31st, 2019) entitlement 1P reserves of 49.2 MMBOE (95% liquids) and 2P reserves of 80.6 MMBOE (93% liquids) net to AOI’s 50% interest in POGBV;
  • These reserves are for the three producing fields only and don’t account for undeveloped discoveries in the licenses;
  • 2019 average operating cost estimate6of $7.0 /BOE;
  • 2019 average operating netback estimate7of $50.1 /BOE;
  • Total cash payment of $519.5Million is funded from cash on hand and a loan for $250Million (“Loan”) provided by Banco BTG Pactual S.A.;
  • A deferred payment of $123Million, subject to update, may be due to the seller depending on the date and ultimate OML 127 tract participation in the Agbami field5; and
  • POGBV has an existing reserve-based lending facility, with a syndicate of international banks with a drawn amount of $1.825Billion.

Asset Highlights

The three fields in these two licenses are all giant deep-water fields, located over 100 km offshore Nigeria, and are some of the largest and highest quality in Africa. All three fields have high quality reservoirs and produce light, sweet crude oil.

Two of these fields, Agbami and Akpo, have been on production since 2009. The TOTAL-operated Egina FPSO, started production in December 2018 and ramped up to plateau production of approximately 200,000 barrels of oil per day during the first half of 2019.

In addition to the current producing reservoirs there are additional growth opportunities in undeveloped horizons within existing fields; adjacent undeveloped discoveries; and identified exploration targets within the licenses that are under consideration for development and exploration drilling. One advanced opportunity is the Preowei oil discovery, which is being considered as a satellite tie-back to the Egina FPSO. In the first half of 2019 the Field Development Plan for the Preowei field within OML 130 was approved by the Government of Nigeria. Preowei is not currently included in the Company’s reserves estimates.

 


South Sudan Invites Tenders for Environmental Audit of Oilfields

The Government of the Republic of South Sudan has announced a tender for a comprehensive environmental audit of all the country’s producing oilfields.

The Petroleum Act of 2012, enacted a year after independence, governs the oil sector in South Sudan. The Act is designed to better manage the environmental impact of the sector after years of neglect prior to independence, and the resulting pollution.

Civil war also prevented the proper management of the environment, based on environmentally, socially and economically sustainable principles.

South Sudan is now faced with the challenge of balancing developmental needs with the spirit of environmental protection enshrined in the Petroleum Act. The sector has in the past caused a loss of grazing land, deforestation, soil and water contamination, and health issues in and around oil-producing areas.

President Salva Kiir, writing in the South Sudan First State of Environment and Outlook Report in 2018, explained the country’s desire to become the bread basket and economic powerhouse of East Central Africa.

“The lack of environmental standards and guidelines to safeguard the exploration and exploitation in the extractive industry has led to pollution in the oilfields and in the surrounding areas. This trend needs to be checked through the formulation of environmental policies, standards and guidelines, and enforcement of these instruments.”

Ahead of any new exploration and drilling, the government has committed to conducting an environmental audit. Minister of Petroleum, Hon. Awow Daniel Chuang, explains that understanding the pollution damage will allow the country to put systems in place to prevent further damage as the country looks to ramp up production.

At a media briefing late in August 2019 in Juba, President Salva Kiir warned that his government would be taking a stronger stance against pollution in oil-producing areas. And while the government is eager to welcome new exploration and production, companies would be held to a high standard. The era of “bad business” was coming to an end.

He warned, “I will not tolerate irresponsible activities in the oil sector.”

An international independent organization will now be appointed to conduct the audit, mandated to suggest best practices for new exploration as well as ways to repair the historical damage in South Sudan.

Tender pre-qualification documents for conducting a Full Environmental Audit will be available during office hours at the Ministry of Petroleum’s headquarters in Juba, and from its website http://bit.ly/2NauFKA. The documentation will be available between 13 and 20 January 2020.

Completed documentation needs to be submitted by 16h00, 20 January 2020 to:

1. Electronic Submissions:
wanyak@mopam.goss.org
audit@mopam.goss.org

2. Hardcopy Submissions to be delivered in a sealed envelope addressed to:
Environmental Audit Tender Committee Secretary
Ministry of Petroleum HQ
Ministries Road, Juba
Republic of South Sudan
PO Box 376

Distributed by APO Group on behalf of South Sudan Ministry of Petroleum.

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SOURCE
South Sudan Ministry of Petroleum

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