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With A Huge Gap to Potential, “NDEP is Industry’s Best Kept Secret”, CEO Says

The Niger Delta Exploration and Production Plc, Nigeria’s longest running marginal oilfield producer, has a larger upside in its portfolio than most of its peers, its Chief Executive Officer has argued.

Gbite Falade, who has run the company for close to a year, says that “the gap to potential in terms of ullage and the improvement that you can institute immediately in terms of agreements that are in play and the new ones that you can bring on stream”, gives him a sense of the “awesome potential prospect” of this organization.

The way Falade sees it, something is always lurking around as an opportunity for increased value creation in the NDEP business profile.

At the start of 2021, the Ogbele marginal field, the company’s main upstream asset, was producing 9,000Barrels of Oil Per Day (BOPD). Today, it is doing 12,000BOPD, “not because we have drilled an additional well but as an outcome of production optimization and well intervention in a “’rig less’ way”.  Again the company’s natural gas production, which was around 40Million standard cubic feet of gas a day (MMscf/d) in January 2021, is now delivering 53MMscf/d, “and we are on a journey to double that by next year”, the CEO explains. “The lead time for gas development is such that you cannot wait until the problems are fully solved before you make the investment otherwise you would be left stranded”.

And despite the fact that Ogbele has been just a marginal field for all its 16 years as a producer of oil and gas, “the envelope of what we have today, can sustain that 12,000BOPD both on the infrastructure level and in the sub-surface”, Falade says.

Falade took over the reins of NDEP in February 2021 from Layiwola Fatona, an industry icon who led the company for 25 years, from negotiation of the acquisition of two marginal fields: Ogbele and Omerelu from Chevron, through first oil from Ogbele in 2005 to inauguration of a gas processing plant and modular refinery (2011) and establishment of NDWestern, a special purpose vehicle for acquiring Shell’s divested assets, in which NDEP holds a 42% interest (2011).

In 2020, the Africa Oil+Gas Report named NDEP Number 1 among the Nigerian Independent producers of oil and gas in its fourth edition of The Talented Tenth, a deeply researched industry ranking of the top 10 progressive, indigenous Nigerian E&P Independents. It was the first time in the four years of the ranking that any company would upstage Seplat Energy as Number 1. And the more intriguing story is that NDEP was not even a manager of an oil mining lease.

The interview with Falade, at his relatively small, modestly furnished office in Victoria Island, an upmarket business suburb located close to the South Atlantic Ocean in Lagos, is the first of a series of C-Suite conversations by the Africa Oil+Gas Report with industry leaders in 2022.

“We are going through some sub-surface data review and the preliminary opinion that we have on the table shows us prospects that are descent and significant and material enough not only to sustain the 12,000BOPD threshold that we are on right now but to take us higher by a factor of at least 50%. And this is one of the most interesting things about the asset that we are operating and indeed, not just that asset but the general story of the Niger-Delta basin”, he explains.

“At the time we took over the asset, the initial view was that there was about 5Miilion barrel of oil in place but at some point, it was upgraded to 10 Million barrels in place. In 15 years of production, we have successfully extracted 20 Million barrels and we are still producing at the level that we are right now. So, the continuous examination and re-interpretation of the data that we have today shows us that there is still a whole lot possible.

“With proven technology in place for proven extraction and with proven technology in place for discovery, what we are finding out is that most of the reservoirs that we have in Nigeria contain a whole lot more than we have given them credit for”.

NDEP is a diversified hydrocarbon producer with upstream crude output, midstream (gas processing) and downstream (refining, product sales). Everywhere across the chain, things are on a ramp up.

We have pre-invested and taken an investment decision to expand the 100MMsfc/d gas processing capacity by an additional 300MMscf/d to 400MMscf/d. We have taken custody of the plant members to carry that out and at the rate at which we are going, we foresee that in the next one or two years, we would have installed and commissioned that additional 300MMscf/d. What is driving that decision is more around the feedstock supply guarantee than the market offtake because there is more than enough latent demand in the market both in terms of export and domestic to consume the additional capacity that we are looking for”.

Of the company’s 11,000 barrels per day refining capacity, 6,000 barrels is commissioned; and the company has the license to operate 6,000 barrels, which comprises two trains. The first train is for the 1,000 barrels and the second train is for the first 5,000 barrels. The first train produces only AGO, the second train produces five different products mainly AGO, DPK, Naphtha, MDO and HFO.

“The third train has not been commissioned officially though operational. There are certain conditions to be satisfied before the regulator (the Nigerian Midstream and Downstream Regulatory Authority NMDRA), would then certify it. But we are very convinced that in the next three months, we would satisfy those conditions that will formally and officially certify that we have an 11,000 barrels per day refining capacity. In addition to that, we also have some bolt on component parts of the refinery including a PMS unit that is also at the final stages of installation and would soon be commissioned. The naphtha that is coming out from Trains 2 and 3 right now would then be the feedstock for the production of LPG and PMS which are two vital refined products that we need as a country”.

Even with this scaling up everywhere, Falade, a one-time Senior Business Economist at Shell and a former Managing Director of Oilserv, (arguably Nigeria’s largest hydrocarbon project management service provider), is of the view that NDEP is punching below its weight.

“When you look at the fact that this company is not a listed company yet, this company is traded on the NASD and when you look at what it would mean for the fortune of both the company and its shareholders, first, for the company, its ability to raise capital for the endless opportunities that we see, it helps you to appreciate the gap-to-potential that is on the table. How this remains the best kept secret in the industry.

The aspiration of the shareholders that the board has mandated is to take this company to the stock exchange at some point to be determined. By the time we are ready, we will unfold it for the general public to be aware of but that is the ultimate aspiration and we see that as a necessary point to fully unleash this company to the next level of its pursuit. We have largely operated as a well-run company in terms of financial discipline and we have largely grown this company through internally generated funds. So, the extent to which we have scaled is driven a whole lot more by the leverage that our balance sheet carries and also by the cash that we generate in the business. But when you look at the opportunities available to us as a company, when you look at our pedigree, our track record, our reputation and at the universe of opportunities begging to be exploited, the scale of capital that you would need to execute those requires that you have a platform that would give you access if you are to pursue them. The issue of being listed is not an option, it is something that we will do but we are going to do it in the most responsible way. We are going to make sure that we remain financially stable, we remain solid and prudent and value is not destroyed in the process.

This is the first in a three-part series of published interviews with Mr. Falade.

 


Chevron’s Agbami Experiences a Headlong Plunge in Output

Chevron operated deepwater Agbami field offshore Nigeria is in a headlong crash in output.

The field produced 122,000Barrels per day of condensate in 2021, a 15% drop from the 143,307BPD averaged in 2020, according to state sanctioned official figures.

It led the seven Nigerian deepwater producing fields in a collective 50,000BPD decline year on year as indicated in this chart.

 


GCC Wins the Camp Management Job for Africa’s Largest Onshore Oilfield Project

GCC Services has been picked by McDermott to provide camp services for the Tilenga Project Upstream Facilities in the Lake Albert Basin of Uganda.

The work, “to take place over six years, begins in February 2022 and is to include camp management, catering and camp support services for an international and local workforce that is expected to peak at 3,500 workers”, GCC explains in a statement.

The Tilenga project, under the overall operation of TOTALEnergies , is the centerpiece of oil projects projected to bring investments of over $10 billion to Uganda and Tanzania. It will eventually have the capacity to process 190,000 to 700,000 barrels of oil a day.

Rashad Sinokrot, CEO GCC Services, says the company is planning “significant local engagement” that will include training and upskilling of the local workforce, as well as support and development of local vendors and suppliers, including farmers in the region.

“We understand the importance of this project to Ugandans and their future. We’ve been operating in Uganda since 2010, so we have a strong reputation there and an understanding of the market,” said. “Our local presence, international footprint and record of performance on critical energy projects were defining elements of our winning proposal.”

During construction, the Tilenga project and related EACOP pipeline build are expected to generate 58,000 direct and indirect jobs, 2.1Million hours of training to build local skills, and $1.7Billion worth of work for local companies, TOTALEnergies says.

 


NECONDE Finalises Finance and Technical Service Agreement with NPDC on OML 42

The Nigerian independent NECONDE has finalized an agreement with the state-owned Nigeria Petroleum Development Company NPDC in which a Special Purpose Vehicle will fund as well as carry out technical services on the Oil Mining Lease (OML) 42.

The FTSA will see an SPV named Amaranta…

Read more…


Ghana Looks for Contractors to Build, Co-Own a 300MMscf/d Gas Processing Plant

Ghana Gas Company has completed a Front-End Engineering and Design for a 300Million standard cubic feet of gas per day (300MMscf/d) Gas Processing Plant, which will be developed in phases, the first phase being 150MMscf/d (Phase II-A) and the second Phase II-B. The entire 300MMscf/d constitutes the second plant (second train in industry terminology) to the existing 150MMscf/d Atuabo plant and will be located just north of the first train.

The state gas company is in discussion with some companies, but wants to expand the dialogue to more local and international enterprises with expertise in the field to build the facility and co-own it and co-run it on equity participation basis with Ghana Gas (BCCT basis).  It will cost up to $400Million to install. Gas will come from Tullow Oil operated Jubilee field and TEN cluster of fields, as is the case with the first train. This planned expansion assumes that Tullow has enough gas reserves to underpin the project.

Ghana Gas is hoping that interested parties can show up early enough to sign the necessary documents and get the facility up and running by 2024.

 


OPEC Picks Al Ghais to Replace Barkindo, as OPEC+ Decides: More Oil or Less?

The oil exporters cartel OPEC has appointed a new secretary-general.

Kuwait’s Haitham Al Ghais, will replace Nigeria’s Mohammed Sanusi Barkindo, who leaves at the end of July 2021.

Barkindo, the Nigerian energy bureaucrat has led the cartel through some of the most momentous 52 months in the cartel’s 61 year history, and his second, three-year term ends this year. Barkindo took charge as Secretary General in August 2016, implementing “the freeze” that enabled the uplift from the extremely low oil prices in 2016 to ‘balancing the market’ by 2017 to engaging with the Pandemic from first quarter 2020.

Meanwhile OPEC+, the expanded group of countries that includes OPEC members and 13 other countries, meets Tuesday, January 4, 2022 to decide, whether to go ahead with plans to add another 400,000 barrels per day to the market from February 2022. The group had agreed, just before the Yuletide, to continue ramping up oil production despite concerns that omicron could scupper demand. Pundits see it sticking to its planned monthly production increases at this week’s meeting.

OPEC is made up of 15 member countries i namely Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, IR Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.To make OPEC+, 13 other countries are part of the agreement to decide whether or not to increase or increase crude oil production. They include: Russia, Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, South Sudan, Brazil and Bolivia.…


Africa Wants to Finance African Oil & Gas Projects

Africa’s Oil and Gas Ministers are mulling the idea that a greater percentage of financing of oil and gas projects  on the continent should be financed by Africa based financiers.

At the 41st ministerial session of the African Petroleum Producers’ Organization (APPO) , the ministers identified the imminent challenges that the oil and gas industry will face in Africa as international financiers withdraw funding for the industry, and oil and gas research institutions in the developed countries that have always led the technological development are closing their petroleum faculties.

“The Council resolved to look within the continent at both public and private sources to raise the necessary capital to continue to finance the oil and gas industry”, according to a statement on the resolutions released by the APPO secretariat. “They agreed that Africa needs to” re-strategize as the game is fast changing.

“Furthermore, the Council called on the technologically advanced and financially capable countries to lend their support to African countries as they grapple with the challenges of Energy Transition”.

 


LOCAL CONTENT, GLOBAL INSIGHT, 2021

The latest monthly edition of the Africa Oil+ Gas Report has been released.

Some of the highlights:

COVER FEATURE

  • Angola Lists ‘Locals Only’ Services
  • A Target $2.5Billion Spend in Mozambique
  • Ghana: Get a Local Partner
  • Nigeria: The 10 Year Plan

KICKSTARTER

  • Shell Divestment: The Final Five

 FARM IN FARM OUT

  • MAP of Marginal Bid Round Winners

The link to the edition is here

https://africaoilgasreport.com/wp-content/uploads/2021/12/AOGR-VOLUME-22-NO-9-2021-global-Local-contents.pdf

Other stories in the copy include:

BRIEFINGS

  • Afreximbank: The Lender Chews It All
  • ENI, TOTAL, Will Be the Last Majors

FULL DISCLOSURE

  • PIA: The Promise Vs. The Delivery

 IN THE NEWS

  • Bullish on Libya

SPREADSHEETS

  • Angolan Operators’ Production
  • Nigerian Indigenous Producers: October 2021 Output
  • Angolan Rig Activity November 2021
  • Nigerian Rig Activity, November, 2021

MAPS

  • Equatorial Guinea E& P Map, Ghana E&P Map; Mozambique’s Activity Map; Angolan Activity Map; Nigerian Independents; Marginal Fields Activity Map

Plus, the regular features; Nigerian Independents Output, Concession Status, Angolan Production by Companies, Petroleum Rights, etc.
Contacts: +2348028354297, +2348124374087, +2348038882629, +2348036525979

 


ENI Commits to Invest $1Billion in Egypt’s Gulf of Suez and Nile Delta

The Italian player ENI has signed an agreement with the Egyptian General Petroleum Corporation (EGPC), committing to spending a minimum $1Billion on exploration and extraction in the Gulf of Suez and Nile Delta regions, the country’s Oil Ministry says in a statement, which does not specify a timeframe.

Tareq Al-Mulla, Egypt’s Minister of Oil and Mineral Wealth, and Alisandro Politi, ENI’s Executive President of Natural Resources Activities signed the agreement “of commitment to search for oil and development and exploitation in the Gulf of Suez and the Nile Delta between the Oil Corporation and Eni Italian Company and issued under law No. 185 for 2021”, the statement says.

ENI is also committed to spend at least $20Million extra dollars to Drill four (4) wells, “and the agreement comes within the new curriculum of the Ministry of Oil and Mineral Wealth to increase production rates and countering the natural shortage of energy by using the latest technologies in some areas are currently producing”, the statement, translated from Arabic says.

Egypt and ENI have lined up a number of joint initiatives on carbon capture, utilization and storage (CCUS), to be announced during the upcoming COP27 global climate summit in Sharm El Sheikh next year. Carbon capture is expected to be a big theme at COP27, with Oil Minister Tarek El Molla stressing its importance to the oil and gas industry and to combating climate change

 

 

 


Baker Hughes Executes Services Agreement on OML 65 Development

Sirius Petroleum reports that it has now executed a legally binding Master Services Agreement with Baker Hughes relating to the development of the Oil Mining Lease (OML) 65 in Nigeria’s Niger Delta. “This follows the Memorandum of Understanding (MOU) signed with Baker Hughes Company Limited earlier this year”, the London headquartered company says.

The MSA formalizes the terms of the appointment of Baker Hughes as the approved services provider to Phase 1 of the approved work programme (AWP) of the OML 65 Licence, a large onshore block in the western Niger Delta, Nigeria. Baker Hughes will provide a range of drilling and related Integrated Well Services under a mutually agreed pricing structure to deliver the initial nine well programme to Sirius and the joint venture COPDC Petroleum Development Company Limited (COPDC) in which Sirius is a 30% shareholder.

Phase 1 of the AWP will focus initially on the redevelopment of the Abura field, involving the drilling and completion of up to nine development wells, intended to produce the remaining 2P reserves of 16.2 MMbbl, as certified by Gaffney Cline and Associates (“GCA”) in a CPR dated June 2021.

The execution of the MSA with Baker Hughes constitutes the fulfilment of a key condition precedent to the drawing of the first tranche of funds under Sirius’ senior secured prepayment facility as the first stage of the OML 65 development programme, announced earlier this year.

“This marks a significant milestone for Sirius and its operational partners, and we look forward to working with the team on this innovative project.” said Toks Azeez, Sales & Commercial Executive for Subsaharan Africa at Baker Hughes. “Our leading Integrated Well Services solutions leverage new digitalization capabilities and will help deliver cost effective and efficient operations for the development of this important onshore opportunity.”

 

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