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Savannah May Get A Trickle of Crude Oil to Zinder Refinery In Niger Republic

Savannah Petroleum intends to commence installation of an Early Production System by the end of financial year (FY) 2021, market conditions and financing permitting, and intends to deliver its initial production of 1,500Barrels Per Day from the R3 East development, to the Zinder refinery in Niger Republic.

“Subsurface work has been progressing well following the completion of our Pre-Stack Depth Migration (PSDM) processing of the R3 East seismic in 2019”, Savannah explains in a release. Savannah has now completed the seismic interpretation of the R3 East area. The PSDM dataset shows an overall improvement in the interpretation of faults and horizons, supported by attributes analysis which has also improved our structural, stratigraphic and sedimentological interpretations. Based on the newly interpreted PSDM, 3D geocellular models have been built for the Amdigh and Eridal discoveries. The resulting oil in place volumes are in line with previously reported estimated figures from the Niger CPR dated April 2020.

Significant further potential on the Savannah PSC areas remains, with 146 further potential exploration targets having been identified for future drilling consideration as Savannah looks to follow up on its highly successful R3 East drilling campaign in 2018, which saw five exploration discoveries from five exploration wells. The R3 East portfolio is currently being re-evaluated based on the newly interpreted PSDM seismic dataset with a focus on the deeper Cretaceous plays.

 


TOTAL Averages 377,000Barrels A Day in Angola’s Block 17

By Toyin Akinosho

French major TOTAL produced 377,673.9Barrels of Oil Per Day (BOPD) on average (operated, gross) in Block 17 in November 2020.

The French major was also active with the drill bit in the country, utilizing Maersk Drilling’s Maersk Voyager, on Block 17.

Chevron’s operated shallow water Block O produced 195,453BOPD.

BP’s operated deepwater Block 32 averaged 188,617BOPD in the month whereas ExxonMobil ‘s Block 15 averaged 129,763BOPD, according to figures from Angola’s Ministry of Finance.

The British player was the most active with the drillbit, utilizing Enso’s DS12 on Block 18 and Transocean’s Skyros on Block 32, reports.

Angola’s oil production in November 2020 was 36,559,945 barrels and corresponds to an average of 1,218,665Barrels of Oil Per Day (BOPD), reports the Angolan Oil, Gas and Biofuels Energy Agency (ANPG), the country’s hydrocarbon regulator.


Savannah Inks Revised Gas Sales Agreement with Lafarge

New deal comes with a price of $7.5 per thousand cubic feet of gas

Savannah’s Accugas subsidiary has entered into a revised Gas Sales Agreement GSA with Lafarge Africa for the supply of gas to its Mfamosing cement plant in Cross River State, Nigeria.

The company says the new deal “establishes a more sustainable long-term contractual position for the benefit of both parties”.

The revised GSA sees the contract term with Lafarge extended for a further five years to January 2037, giving a remaining contract life of 17 years.  The new agreement also allows for an increase in the gas sales price from 2027, with additional US-Consumer Price Index indexation from 1 January 2029.

The revised GSA has a reduction in the daily contracted quantity (DCQ) of gas from 38.7 MMscf/d to 24.2 MMscf/d. This reduction in the DCQ will allow Accugas to release approximately 12 MMscf/d of currently reserved gas processing capacity at its Central Processing Facility (CPF), enabling Accugas to enter into additional long-term GSAs for these volumes, which will increase the business’ future revenues and cashflow potential.

To compensate Accugas for this reduction in DCQ, the revised GSA includes an advance payment of $20Million and a prepayment structure over the period to 2027, which effectively results in a gas price of $7.50/Mscf on take-or-pay volumes during this period.  “This revised structure also allows Lafarge to utilise its accumulated make-up gas balance of approximately $58Million, whilst we have preserved the capacity to supply higher volumes when these are required by Lafarge”, Savannah says in a statement. “Lafarge’s commitments under the revised GSA will continue to be guaranteed by an international investment grade bank guarantee.

“Overall, the revised terms are expected to have a cumulative positive impact on Accugas’ cash flows over the short and medium term. Following the agreement, Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscf/d to 131.8 MMscf/d.


Wintershall Transfers Operatorship of Libyan Field

The German independent Wintershall Aktiengesellschaft (WIAG) has transferred operatorship of Contract Areas 91 (former Concession 96) and 107 (former Concession 97) in the onshore Sirte Basin to Sarir Oil Operations (SOO), a newly established joint operating company with the National Oil Corporation (NOC).

WIAG had operated the fields for close to a year after the signing of two Exploration and Production Sharing Agreements (EPSAs) in December 2019, while SOO was being established and prepared to assume operational responsibility. Now, the vast majority of WIAG’s Libyan personnel has been transferred to SOO and will continue to work in their previous roles.

Oil production in the fields located in Contract Areas 91 and 107 has been suspended since mid-January 2020 due to blockades of the export infrastructure.

Things however are looking up in Libya now; as a peace process goes vigorously underway, oilfield taps are being opened and hydrocarbon production has increased.

“Although the coronavirus pandemic and the conflict in Libya have posed additional significant challenges during the past months”, the company explains in a briefing, “NOC and WIAG are nonetheless convinced that as a result of a comprehensive and diligent transitional process, SOO has successfully been enabled to operate the fields in a reliable manner and in accordance with good oilfield practices”.

 

 


FAR’s Voluntary Suspension from ASX Continues

Two weeks after it voluntarily asked the Australian Stock Exchange (ASX) to suspend trading of its stocks, FAR has announced that the suspension continues

The request was made on September 14, 2020 to allow ASX to review FAR’s Half Year Accounts and raise certain queries with FAR. It was meant to run for 10 business days.

“Since that date ASX and FAR have exchanged communications and ASX currently expects to complete their process later this week”, FAR says in a release out today September 28, 2020.

Why should we care?

FAR holds equity in the Sangomar project, Senegal’s first oilfield development, operated by Woodside Energy. It also drilled the first well in The Gambia in 40 years, although Samo-1 turned out to be a disappointing dry hole.

But FAR is very broke. It has reported that the COVID-19 pandemic and the falling oil price impacted its ability to finalise financing arrangements for its share of the oilfield development and has made the decision to commence a sale process for all or part of its working interest in parallel with investigating alternative sources of finance. While it is talking with third parties evaluating its Senegal asset for the purpose of sale it has reported that In the event that it is unsuccessful in selling its Senegal asset, “such circumstances would indicate that a material uncertainty exists” that may cast significant doubt as to its continuation as a going concern.

In the meantime, however, FAR says the Voluntary Suspension from trading on ASX  “remains in place until a further announcement in respect of the Half Year Accounts is made”.


Somalia: Past Petroleum Agreements are Null and Void

Somalia’s newly promulgated Petroleum Law, takes a dim view of agreements signed with governments who had ruled the war-torn country for most of the last 30 years.

All agreements pertaining to petroleum that were signed with administrations existing in parts of Somalia or previous provisional governments in the period between December 1990 up to September 2012 are considered null and void”, the law says. “All the agreements signed between foreign companies with the Somali government before 1991 are considered as valid agreements and they will be given good consideration”, the legislation declares. “These companies which had previous agreements before 1991 will have to renew them with the Federal Government of Somalia in accordance with Article 54”.

The new law establishes the Somali National Oil Company (SONOC) “as a commercial enterprise Controlled by the Government to conduct Petroleum Operations in Somalia. SONOC shall be entitled to exercise the right of participation referred to in article 35(1) of the Somali Petroleum Law. SONOC may acquire an Authorization by direct acquisition or pursuant to a bid process conducted by the SPA in the same manner as any other Person.

Each Production Sharing Agreement shall stipulate:

  1. the right of SONOC to participate in Petroleum Operations, up to a maximum participation right of 20%; and
  2. the right of a State-Owned Contractor which is Controlled by the Federal Member State of the Federal Republic of Somalia in which the Authorized Area is located to participate in Petroleum Operations, up to a maximum participation right of 10%.

The decision by SONOC to participate in Petroleum Operations under a particular Production Sharing Agreement shall be made by the Minister, if a recommendation to participate has been made by SONOC. The decision by a State-Owned Contractor which is Controlled by the State of the Somalia Republic in which the Authorized Area is located to participate in Petroleum Operations shall be made by the government of the State in which the Authorized Area is located.

The participation rights under Section 35.1 may occur during any phase of Petroleum Operations in accordance with the terms and conditions established in the Production Sharing Agreement.

This piece was originally published, a full month ago, in the August 2020 edition of Africa Oil+Gas Report

 


Nigerian Independents Feel Abandoned by Regulators

By Jackson Jo- Mthembu, Lagos

Nigerian regulators have treated the country’s independent E&P companies, quite shabbily, at a critical time for both the nation and the players themselves, according to Layi Fatona, CEO of Niger Delta Petroleum Resources.

“We indigenous independents are like orphans”, he said at a recent webinar on the Pandemic-Induced downturn and Nigerian Petroleum Industry, adding that while the entire group of Oil and Gas producers was left out of various palliatives sponsored by the Federal Government and its agencies, “not one regulator stands to be recognized for the Nigerian Independents, sadly.”

Fatona argued that “Nigerian independents own the future. We are the only ones to ensure Nigeria’s Future Energy Independence. Nigerian Independents account for c.20% of Total Oil Production Combined, we are the largest suppliers of Domestic Gas to the Nigerian Economy. We continue in all circumstances to INVEST in Nigeria’s Energy Industry and among the over 15 of us that truly operate our fields, we take the everyday brunt of Insecurity (Pipeline Vandalism, Illegal Bunkering & Kidnapping). Perhaps – We Are the “Stone” the Builder is Rejecting or Neglecting”.

The webinar was organised by Centre for Petroleum Information, a 20-year-old Policy Think Tank.

With a global pandemic forcing travel restrictions that have held down crude oil prices, Nigerian independents have been challenged by the “inability to operate and produce at break-even cost, some shut in of production operations, difficulty in meeting Royalty, Taxes and Debt financing obligations, disengagement of staff and employees in some cases”.

Fatona asked Nigerian regulators to “act as critical enablers and support for advancing the case of the Nigerian Independents”, and called on “agencies such as the CBN need to engage local financial institutions on the possibility of restructuring existing debt obligations to facilitate survival of the industry”. He argued for “more emphasis to be placed on Operational and Cost Efficiency”,  and declared that “the Petroleum Industry Bill is needed NOW to create the right fiscal environment for new development investments”.

Nigerian independents, by Fatona’s definition, are Indigenous oil and gas companies with holdings of marginal fields or oil blocks. The assets are in the Niger Delta province in Nigeria, comprising Land, Swamp and Offshore locations. Their gross and equity production, individually, range from 1-85,000BOPD. They are purely indigenous or, in some cases, with minority foreign interests. They operate under JVs, PSCs and TSAs. They are funded by Nigerian/International Lenders OR carry arrangements from IOCs.

 

 

 


Assala Has Vivid Plans Post COVID-19

Assala Energy increased production of the Shell assets it bought in Gabon from 40,000BOPD to 55,000BOPD in the space of two years.

The London headquartered company claims it installed new equipment and brought down the cost per barrel to $12.

It is hoping to ride the storm of steep drop in prices, exacerbated by COVID-19, even with all the volatility.

Assala pumped $60Million into the five acreages in 2018 and spent $240Million more in 2019, in the process, drilling 20 new wells and optimizing 60 existing wells.

It had a war chest of $300Million for 2020, of which it had spent $70Milion in the first quarter alone.

So what will happen now?

If it survives the next 12 months, its plan is to continue from where it stopped.

The company was raring to go before COVID-19 happened. In late 2019 it acquired three onshore exploration licences from the Gabonese authorities: Mutamba-Iroru II, Nziembou II and Ozigo II, in addition to the five licences it purchased from Shell: Rabi Kounga II Toucan II Bende M’Bassou Totou II, Koula/Damier and Gamba/Iyinga. It also holds interests in four non-operated licences (Atora, Avocette, Coucal and Tsengui.

This story was originally published, for the competitive benefit of paying subscribers, in the May 2020 issue of the monthly  Africa Oi+Gas Report.

 


Kenya’s Post COVID-19 Oil & Gas Future: Some Insight

Kenya’s oil and gas industry is in a state of transition, as its major oil and gas development — Blocks 10BB and 13T in Turkana — has been put on hold, with Tullow Oil submitting a notice of force majeure to the Kenyan Ministry of Petroleum and Mining, citing complications from COVID-19.

Meanwhile, Uganda’s Lake Albert Project is moving ahead, with TOTAL announcing plans to acquire Tullow Oil’s stake in the project. The massive development in Uganda, which is set to include a pipeline and refinery, could easily have an impact on regional oil and gas developments and opportunities.

“Force majeures are reactive for companies, it is something that is beyond their means or the problem there are facing. So, it is unfortunate that this has happened in Kenya”, said Elly Karuhanga, Chairman of the Uganda Chamber of Mines & Petroleum & Chairman, Private Sector Foundation Uganda, “but it is also unfortunate that Tullow had to exercise this in their business. When you think about the reasons they faced, they had no alternative.”

He was speaking at a webinar themed ‘Moving Kenya Forward: Oil Production and New Exploration Under COVID-19,’ organized by Africa Oil & Power and the African Energy Chamber.

The webinar participants noted that Kenya has the most natural resources and is the most explored country in the East African region and argued that in order to have a knock-on effect and attract investors in this climate, East African countries need to keep exploring and looking at other projects. In Kenya, there are offshore blocks operated by ENI and hopefully with a great oil flow they will help the economy.

Toks Azeez, Sales and Commercial Director for Sub Saharan Africa for Baker Hughes, says his company expects the transition into Kenyan deep-water explorations to be less difficult, because it is already involved in offshore projects across Africa and has actively interacted with ENI in Kenya. “For us it is more about, how do we get our local partners in Kenya who have been involved in the onshore activities, to then up their game a little bit to meet the offshore requirements and that’s going to take a lot of back and forth, integration, cooperation to get them to a point where the skillset of that personnel and the equipment that they have and intend to acquire will be able to meet the requirements of deep-water play,” said.

Speakers encouraged synergies and regional collaboration to overcome the challenges faced by the oil and gas industry. Local companies as well as countries need to come together to find a solution to them. According to Mwendia Nyaga, Chief Finance Officer of Oilfield Movers. “Companies can scale up from the location at which they are based and start working in other places. For me it is cooperation, synergizing and not over complication.”

African governments are advised to think about the long-term effects COVID-19 has on oil and gas projects as well as how to regain investors’ appetite, “You should always look at fiscal incentives that allow fair and equitable taxation on revenues, but allow an investment environment that is lucrative, because every dollar in our industry can go anywhere in the world. East Africa, big companies and the small -medium sized oil and gas companies, will look at the investment climate as to where they get greater bang for their buck and that will mean that if the East African region does not have favorable fiscals then the dollars will go elsewhere, where you will get better bang for your buck, so there is a balance. When government is looking at this to be able to enable an environment where investment will be made, knowing that the risk is carried by the investors initially,” said Brian Muriuki, Managing Director & Country Chair of Royal Dutch Shell Ghana.

Doris Mwirigi, Chief Operating Officer of Energy Solutions Africa closed by sharing her belief that the oil and gas industry is in a transition, seeing that oil prices are slowly recovering to pre-COVID-19 prices. “In Kenya we are already at the forefront in terms of green energy and if you look at it, we are still very dependent of fossil fuels. So, you find that we are ahead in terms of green energy, however, I am still an oil girl and believe that oil and gas will recover, and in any case as you can see globally, the oil prices are prices are coming up and if you look at the equity market the oil prices are good for oil companies, so I think oil and gas will still play a major role in the oil and gas mix and we will be here,” she said.

Mwirigi also touched on the involvement of women and how the EqualBy30 initiative will empower more women in the oil and gas sector, “When you talk about adding women, it should not be just about diversity, but a business decision because companies headed by women do better. So, it’s not even a cry for help or diversity but business sense.”

 


Zomo-1; Likely Fifth Success or First Duster

Savannah’s Fifth Success or First Duster?

Savannah Petroleum has moved the GW 215 Rig to drill the fifth well in its exploration campaign in the Niger Republic.

Zomo-1, spudded on September 8, follows Bushiya-1, Amdigh-1 Kunama-1 and Eridal-1, all drilled by the British explorer between March and August 2018, and all of which encountered crude oil bearing zones, considered by Savannah to be of commercial size.

But none of the wells have been tested, so there is no clear handle on flow assurance.

As with others, Zomo-1 is located in the R3/R4 PSC Area in the Agadem Basin, south east of the republic of Niger. It is also, as with the rest, designed to evaluate potential oil pay in the Eocene Sokor Alternances as the primary target.

The well is planned to be drilled to a total depth of 2,438metres Drilling is expected to take between 30 and 35 days.

The Company plans to log all prospective sections within the well, with further logging employed for hydrocarbon bearing sections. “In the success case, the well will be suspended for future re-entry and further evaluation, which could include well testing”, the company says.

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