All posts tagged gas


Egypt Faces Headwinds to Mass Autogas Conversion

By Mohammed Jetutu, in Cairo

Egypt is facing considerable obstacle to its plan to convert close to Two Million Vehicles into dual fired engines that could be fueled by both gasoline and natural gas in the next three years.

Japanese auto companies Nissan, and Toyota, two key early supporters of the plan, are no longer as enthusiastic as they once were.

Nissan has withdrawn. Toyota is playing hardball, asking for more incentives.

The two companies were to convert thousands of minibuses to run on dual fired engines.

Toyota had been far more supportive of the project, which targets 1.8 Million vehicles. Toyota had tentatively agreed it would manufacture 240,000 minibuses running on dual fired engines.

Toyota is now requesting for customs and VAT exemptions from the authorities and the negotiations are dragging out.

Apart from Toyota and Nissan, there are two local distributors of minibuses; Al Amal and Modern Motors. They are still fully engaged with the project.

Ultimately, President Abdel Fatah el-Sisi has said, Vehice licencing will be conditional on cars being equipped with natural gas engines.

Through the initiative, owners of vehicles over 20 years old will receive low interest loans through MSME Development Agency to purchase new dual-fueled vehicle. Owners of newer vehicles can access zero interest finance to outfit them with new engines

In the meantime, Egypt’s Mass Transit Authority (MTA) says it would work with the Military Production Ministry to convert 300 buses to run on natural gas as a first phase, The MTA plans to convert the engines on its entire 3,500-bus fleet within two years.

The national conversion project follows up on a 2009 scheme that sought to replace 70,000 old taxicabs with zero- interest loan new vehicles fitted with dual fuel engines

Although the programme fits into the standard Egyptian government’s effort to utilize natural gas in the country, officials say that this scheme is targeted at ameliorating the cost of living. Whereas a litre of 80-octane gasoline, (the cheapest) fetches $0.39, the same volume of natural gas can be purchased for $0.21, at any of Egypt’s filling stations.

 


Sonatrach’s 50% Budget Slash, Cuts Out Sixty Planned Wells in Algeria

Algerian state hydrocarbon company Sonatrach is spending half of its originally planned budget for 2020.

Africa’s largest NOC was ordered to reduce its budget for 2020 from $14 Billion to $7 Billion(or from €12.4Billion to €6.2Billion).

The group, which contributes nearly 60% of the state budget and more than 95% of the country’s foreign exchange earnings, has significantly reduced its drilling and field optimization activities and suspended plans for newfield developments, no matter how close to existing facility. Africa Oil+Gas Report sources say that over 60 planned new wells will be affected.

There were 50 active rigs in Algeria in 2018, but they dropped to 42 in 2019. They would have dropped to 32, with COVID-19 challenges, but now they are likely to slip to 29, Africa Oil+Gas Report research suggests.

Hydrocarbon revenues into Algeria crashed by nearly 30% in the first quarter 2020, compared to last year.

Unlike most other hydrocarbon-led economies in Africa (Nigeria Angola, Libya, etc), most of the work programme in Algeria is performed by Sonatrach, as a result of historic production agreements that always insisted that Sonatrach operate the acreages.

So, unlike its peer countries, the state cannot spread the burden of financing oil and gas field operations in this time of pandemic, in a way that international companies have a good share of the risk.

Algeria, last year approved laws to encourage increased equity stakes and participation in acreages and projects by E&P companies, but the lingering antigovernment protests have discouraged implementation.

This article was originally published in the June 2020 edition of the Africa Oil+Gas Report


Angolan Output Will Slip Much Further, Before It Recovers

By Toyin Akinosho, Publisher

Rumours of Angolan petroleum prospects having turned the corner are extremely exaggerated.

Declining production in Africa’s second largest crude oil producing country is too set on course that output will fall deeper than it is now before it reverses.

Angola’s hydrocarbon regulatory agency ANPG forecasts that the country’s crude oil output in blocks currently under production will contract continuously in the next decade, and drop below 1 Million barrels per day (BOPD) in four to five years.

It’s true that Angola’s rig activity has inched up in the last month and that industry reforms by President João Manuel Gonçalves Lourenço (in power since September 25, 2017), has bolstered investor interest. It’s also true that Angola has not experienced cancellations of any large-scale projects due to COVID-19 and that production shortfall since May has largely been the result of OPEC+ agreed cuts. Angola’s key challenge, however, is that reservoir depletion will take its course.

ANPG’s latest published updated oil production forecast for the coming years assumes only the exploration of the existing blocks until maturity, underlining the need for the country to increase production through exploration of new blocks, so as to avoid a crash in revenue.

Energy analysts, including the Economist Intelligence Unit (EIU), see production increasing in four years’ time, after the current reforms in the country have led to new investment.

Until then, however, result of natural field output decline will outpace new take points from infill drilling.

The ANPG´s forecast points to production of 1.28Million barrels per day (MMBOPD)  in 2020, a figure that is 0.092MMBOPD below the average in 2019.

Oil production should decrease in the coming years, plunging bellow 1MMBOPD between 2024-2025.

 

 


PIB: “I’ve Finished My Work”, Sylva Says, “Delivery Now Up to The National Assembly”

By Bunmi Aduloju

Timipre Sylva, Nigeria’s Minister of State for Petroleum Resources, says that the timeline for the delivery of the Petroleum Industry Bill (PIB) is out his control.

“Timeline is always a difficult question because this is something that has to do with the National Assembly”, Sylva told Osten Olorunsola, who engaged him at a discourse organized by the Nigerian Association of Petroleum Explorationists (NAPE).

The PIB is an omnibus reform legislation, which, “combines 16 different Nigerian petroleum laws in a single transparent and coherent document ….” according to the Nigerian Ministry of Petroleum.

The first version of the PIB was presented to the National Assembly, the country’s bicameral house of legislature, in 2007. It didn’t make it to law. It has returned, fruitlessly, to two National Assemblies after that.

Olorunsola, who started out as a Petroleum Geoscientist, has been director and chief executive of the Department of Petroleum Resources, the country’s regulatory agency, and was a former Vice President, Shell Gas and Power, Africa.

Sylva explained to him: “For us (in the executive arm of Nigeria’s Federal Government), I would tell you very confidently that we have finished our job. The drafting process is concluded. We have discussed with some relevant industry operators as well. At this point what is happening is that the Ministry of Justice was looking at the draft again to ensure that it is not in conflict with the existing laws in the country. And even that process has now been concluded. So, we have requested the National Assembly to see if they can re-convene during their recess to accept the PIB. And then after that, frankly, I cannot say how long it is going to stay with the National Assembly. I am sure you understand that. But, my understanding from all the consultations we have had with them is that they are going to look at it expeditiously. I do not think that it is going to stay for more than (I am just trying to be excessive in my estimation) six months in the National Assembly”.

The discourse with Mr. Sylva, was the third in the series of engagements that NAPE, the largest body of upstream petroleum technical professionals in Africa, has been having with the policy and regulatory heads of the Nigerian Petroleum industry. The series has included Sarki Auwalu, Director/Chief Executive of the DPR and Mele Kolo Kyari, the Group Managing Director of NNPC, the state hydrocarbon company.

 

 


S/Sudan Wants JV Partnership with Well Logging, G&G Service Providers

Nile Petroleum Corporation (Nilepet) has entered a number of Joint Ventures with oil service providers in engineering, ICT, drilling, and. road construction

But there is a big opportunity gap in Geology and Geophysics expertise. “We have a number of JVs but we don’t have a JV which is specialized in well logging, mud logging and wireline logging and all that”, declared James Yugusuk, one of the company’s Director Generals. “We also have some potential in waste management and treatment, Yugusuk explained, at a Global E&P conference.

“There are business opportunities in the downstream business and we are constructing four refineries and we have one which is already in progress. All the others we are still looking for investors. We have four refineries in our master plan and we need investors who can join us in doing that.

“We also have strategic storage terminals but currently we have historic facilities but they are not strategic. They are small so we are looking for strategic ones that would be like 15-20Million litres. Again, we are looking at entering business in the aviation sector and we have about four international airports in South Sudan and we want opportunities in Jet A1 fuel provision for depots and all that.

“The last opportunity that we have is in the technical consultancy and we are looking at E&P Consultancy and like I mentioned earlier, we have three operating companies which are currently producing oil and we have a lot of opportunities in E&P Consultancy, G&G studies, field development studies and a number of them”.


36 Gaps to Plug for Optimal Petroleum Reform in Nigeria-NNRC

There are thirty-six principles to improve, in four departments, for Nigeria’s ongoing petroleum legislation reform to optimally benefit the country, in the opinion of a broad swathe of stakeholders.

These departments are Administration, Fiscal Framework, Host Community (or Local Impacts) and Governance of the Nigerian Oil and Gas Industry.

The principles to improve administration of the industry include: reduced bureaucracy; Elimination of barriers to entry, Efficiency in acreage management; Simplicity and predictability in administration, Reduced cost of doing business, Open access to assets. Transparent licensing process, strict adherence to regulation of competition and anti-trust practices. enhancement of value addition and creation and utility and scrupulous use of the beneficial ownership register.

In terms of the fiscal framework, the stakeholders’ suggestions, under the aegis of the Nigeria Natural Resource Charter (NRC), argue for certainty with respect to the fiscal framework; flexible and responsive fiscal structure; capacity enhancement for administration institutions; streamlining of  fiscal laws for ease of representation; enhancement of ease of doing business;  sunset provisions for incentive programmes; sustainable fiscal competitiveness; transparency of fiscal terms; simplification of  tax administration and establishment of savings mechanism for economic stabilization and future generations.

While the NNRC is an advocacy body “for the effective use of Nigeria’s natural resources for public good”, as it says in its website, its periodic benchmarking report  is a product of research, opinions, analyses and studies of the petroleum sector by a host of civil society groups, academics and academic institutions and petroleum industry resource persons.

Most of the 36 “principles to improve”, to achieve an optimal Petroleum Industry Bill for Nigeria, are published in its 2019 Benchmarking Exercise Report (www.nigerianrc.org/2019-benchmarking-exercise-report), an effort which provides a broad analysis of petroleum sector gaps in Nigeria).

The two other departments of concern to the NNRC are the management of local impacts, otherwise known as host community reforms, and improvement of overall governance in the petroleum sector.

The key issues the NNRC wants addressed about local impacts include: clarity in definition of the intended beneficiaries;  inclusiveness of all interest groups; direct economic benefits and disbursement to Host Communities  to restore sense of ownership; meaningful community participation in project identification and development; transparent and accountable management of resources; adoption of  effective dispute resolution;  adherence to compensation mechanisms or penalties for pollution and decommissioning of abandoned assets and corporate social responsibility.

The overarching governance gaps that need improvement in the sector, in NNRC’s opinion, are: separation of roles of the various actors in the petroleum industry; disclosure to achieve transparency; commercially defined priorities for NOC; consequences/Penalties imposed to encourage legal compliance; merit-based appointments; workable funding mechanism for NOC; reduction of political interference in appointments and strong regulator to ensure sector effectiveness.

The full details of the 36 Gaps and how to plug them are in this link.

 

 

 

 

 


NNPC Invites Tender for the Sale and purchase of Nigerian Crude Oil Grades

Nigeria’s state hydrocarbon company NNPC, is inviting “interested and credible companies” to participate in tender for sale and purchase of Nigerian crude oil grades.

Credible companies are those who are either

A bona fide end user who owns a refinery and/or retail outlet. Possession of refinery that can process Nigerian crude oil grades.

Government to Government arrangement (Bilateral relationships) with high energy consuming countries

An International established and globally recognized large volume Crude Oil trader

An Indigenous Nigerian company engaged in Nigerian Oil and Gas downstream business activities.

The duration of the Term Contract shall be for period of One year (12 calendar months).

The prospective bidder(s) must:

  1. Indicate on your application the specific category being applied for
  2. Note that a prospective bidder can only apply under one category.

Fuller details are in the link


Kenyan Oilfield Development Rolls to the Back Burner

There is no hurry to get Kenyan oilfield development to financial close, let alone construction stage, even by mid-2021
And this is despite the fact that Tullow Oil, TOTAL and Africa Oil Corp. have lifted the Force Majeure that were declared on May 15, 2020 on the project’s workstreams.
Although the emphasis in the media has been on the partners’ “dialogue with the Government of Kenya to determine the best way forward for this strategic project”, which is really about fiscal framework, the reality on ground is that there is very little enthusiasm on the part of the Joint Venture to move forward on a project that will cost more than $3Billion to first oil, including a heated 1,000+km pipeline from the oilfields in the north of the country to the coast and which is unlikely to deliver more than 80,000Barrels of Oil Per Day at peak.
TOTAL and Africa Oil Corp, the two other partners in the Lokichar basin development in which Tullow Oil is operator, have not always been as aggressive on the oilfield activities as the Irish independent.
TOTAL is farming down its 25% interest in the development, and does not want to be an operator. Tullow is reducing its stakes and is hoping for an exit. Africa Oil Corp. doesn’t have the technical capability that these two companies have, to take a field into production. The Canadian minnow has largely been a real estate broker in Kenya.
The speed with which Kenyan development will happen post COVID-19 depends on which company/companies purchase/s TOTAL/Tullow equity/ies. Final Investment Decision is unlikely to happen before 2023.

 


Danite Limited: Making E&P Field Development Affordable

PARTNER CONTENT

As multinational oil and gas companies (the IOCs) divest their interests in mostly onshore ventures in the Gulf of Guinea, new local E&P companies emerge, taking advantage of the divested interests. In many cases these new local ventures underestimate the challenge of maintaining production at inherited levels, and of developing and pursuing growth plans. Danite Limited recognises these challenges and seeks to support these private firms in a cost-effective way. We see the key challenges as follows:

Executive Steering:

Entrepreneurs that are new to the E&P sector often struggle with the time frame for making returns on their investment. An investor in the downstream oil and gas sector is basically a trader. The most critical success factors in that sector are: (a) A safe and efficient supply and distribution system that keeps costs really low (in view of the razor-thin profit margins), and (b) Attractive retail outlets which consumers would want to patronise. If the investor gets these things right in the downstream, he should be fine.

However, the upstream is a totally different ball game. The most critical success factors are (a) Technology, and (b) Safety and Environment. Drilling a couple of dry wells can sink the business. A few years ago, one multinational company drilled two dry wells offshore Nigeria at a total cost of almost US$200m and that was the end of its venture in the country. On safety and the environment, we have read of some of the world’s worst disasters in the Gulf of Mexico and how respected multinational companies have paid very dearly in both human lives, money and reputation.

Danite Limited seeks to support new investors into the industry by helping them understand the investment journey so they can manage their expectations, and by giving them sound steers as they embark on their first field developments. Sometimes, if they so request, we can provide a project manager who would work with the client’s resources to deliver successful projects.

Resourcing:

There is the immediate challenge of technical resourcing due to the dearth of capable technical manpower in the country. The newcomers typically seek to attract experienced technical resources from the IOCs. They soon find out that these technical experts sometimes with decades of experience would not easily leave their current employers with all the stability associated with IOCs, to join newcomers where a lot more is required of them, and with all the uncertainty of what lies ahead. Despite this challenge, with enough carrots, the newcomers do manage to attract some experienced technical resources. Often, these are resources that are close to normal retirement from the multinationals and so have little to lose by retiring early. But the future of the business cannot hinge on senior retired professionals – the newcomers need to invest in some inexperienced resources – typically graduates of technical disciplines – who can be developed very rapidly to be productive. Danite Limited offers to help develop such rookies through training programmes offered by industry veterans. Within a few weeks of employment, young graduates would be able to deliver real useable work that add value.

Affordable Software Tools:

There are well-known big names in the industry when it comes to software tools. For example, when you talk of process simulation, Aspen’s HYSIS is the industry standard. For pipeline studies, you speak of PipeSim – a Schlumberger product. These products have deservedly made their name from the patronage of the industry heavyweight operators. This has fuelled astronomical prices of these products, often beyond affordability of a new entrant into the business. However, from a technical standpoint, these software tools are based on well-known engineering principles, formulae and correlations, and their functionality can be replicated by much more affordable alternatives. This is the concept Danite Limited promotes – Provide useable tools without the mega-prices of the big names. For example, Danite’s RaffloLive (https://rafflolive.com) is a perfect solution for carrying out flow assurance studies of pipelines such as are encountered in the oil and gas fields. RaffloLive is the online version of what used to be a PC-based software called Rafflo, developed in the eighties by the current CEO of Danite Limited. After rigorous testing and validation, Rafflo was adopted by one of the leading IOCs in Nigeria as the official tool for pipeline flow assurance studies. That IOC used Rafflo for 13 years until the company received a directive from its headquarters to only use global industry software. Retaining the core Rafflo engine, Danite has re-created it into RaffloLive – a full on-line application that only requires a web browser to run. It does not require anything to be installed on the user’s device as everything is online. Even an Android tab or an iPad can be used to simulate huge pipeline networks with RaffloLive. It is offered by subscription only. However, participants at our training course on Pipeline Planning and Design automatically receive a 30-day license that enables them carry out hands-on exercises.

Field Development Planning:

The seeds of failure of many failed E&P projects are sown at the development planning stage. At this stage, you need your most experienced professionals who, working as an integrated team of surface and subsurface professionals, with other supporting disciplines like Safety, Environment and Corporate Social Responsibility (CSR), would develop optimal concepts. Danite Limited offers this service.

The CEO:

Dr Raphael Sunday Awoseyin founded Danite Limited. He has four decades experience in the upstream and downstream sectors of the petroleum industry, covering project management, facilities engineering, maintenance and management of oil and gas production facilities, processing and distribution, process re-engineering and business process integration. He has led formulation of standards, business processes and procedures for upstart E&P companies and championed skills and career development planning for thousands of operations 

personnel. He led implementation of SAP (ERP system) for the largest Shell E&P company in the world.

He holds a First-Class BSc (Hons) degree in Mechanical Engineering from University of Greenwich, London and a PhD, also in Mechanical Engineering, specialising in Pipeline Hydraulics. He is a graduate of IMD (Lausanne) Program for Executive Development and of Wharton (University of Pennsylvania) Executive Development Program. He is a Master of Business Process Re-engineering.


Africa Oil Makes $137.5Million in Seven Months, on Asset It Purchased for $519Million

Africa Oil Corp. concluded its acquisition – worth $519.5Million – for a 50% ownership interest in Petrobras Oil and Gas BV (POGBV) in January 2020.

Today, seven and half months later, it reports it has received  total dividends amount of $137.5Million since the closing of the Prime acquisition on 14 January 2020.

POGBV’s primary assets are an indirect 8% interest in oil mining lease (OML) 127, operated by Chevron, containing the Agbami Field, and 16% interest in OML 130, operated by TOTAL and contains the Akpo and Egina Fields, offshore Nigeria.

The Toronto listed minnow says it has received four dividends from Prime Oil and Gas B.V. (Prime) since the January 2020 purchase. Prime is a company that holds interests in deepwater Nigeria production and development assets.

On August 31, Africa Oil Corp. reported that Prime has distributed the fourth dividend, “a  $50Million dividend with a net payment to Africa Oil of $25Million related to its 50% interest”.

The Company has applied  $17.7Million of this dividend to pay down the BTG term loan, reducing the outstanding balance to  $176.9Million.

Africa Oil Corp. is a Canadian oil and gas company with producing and development assets in deepwater Nigeria; development assets in Kenya; and an exploration/appraisal portfolio in Africa and Guyana. The Company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm under the symbol “AOI”.

 

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