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Nigeria’s Bid Round Minister’s Discretionary Powers Restrained By New Laws

The forthcoming licensing round for Nigerian oil acreages will be influenced by two new laws : the Public Procurement Act and the Local Content Act.
Both were signed into law after the country’s last competitive bidding round. The PPA came into effect in June 2007, two months after the country’s last acreage sale. The Local Content Law was signed into law in April 2010. Nigeria scheduled a bid round for June 2012, which failed to take place. Still, officials at the Department of Petroleum Resources(DPR), the regulatory agency, insist that the round will be announced sometime later in the year.

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NPDC Increases Production In OML 26

Crude oil production has ramped back up in Nigerian state company NPDC operated Oil Mining Lease (OML) 26.
The production returned to 11,000BOPD, as of August 6, 2012. This is just about the volume that Shell was delivering on the same property as of the time it exited in early 2011. The acreage is one of the three recently given up by Shell and partners and acquired by Nigerian indigenous companies. NPDC holds 55% of the
equity and is operator.

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New Discovery May Lead To Fourth Field Development Offshore Ghana

Tullow Oil may have set off a chain of events for a fourth field development plan offshore Ghana.
The Wawa-1 discovery in the Deepwater Tano licence, announced on July 17, is located 10 kilometres north of the Enyenra-3A well, testing the previously undrilled, updip portion of the licence. More crucially, however, pressure data shows that it is a separate accumulation from TEN(Tweneboa, Enyenra and Ntomme), a cluster of fields whose development plan is on course for submission to the Ghanaian authorities.
Another such cluster of fields, the MTAB(Mahogany, Teak, Akasa and Banda) is in pre-development plan stage. These two developments, each of which is predicted to deliver at least 100,000Barrels of Oil Per Day at optimum when completed, are separate units from the Jubilee field, currently producing 70,000BOPD, and scheduled to be scaled up to 125,000BOPD by 2013.

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South Africa Wants A Share In Ghana And Mozambique

PetroSA is hoping to buy up Sabre Oil & Gas’s stakes in the Deep Tano and West Cape Three Points Block, which contain the giant Jubilee field, offshore Ghana.
The South African state hydrocarbon company is also negotiating for equity in ENI’s share of  Mozambique’s deepwater gas finds.
Sabre Oil & Gas holds 4.05% in the Deepwater Tano block and 1.85% in West Cape Three Points. The 600Million barrel Jubilee Field straddles these two blocks. Those equities were the very target of proposed buy over by Kosmos Energy, an American minnow which is one of the four partners in Deepwater Tano and West Cape Three
points. The selling price, as of March 2012, was $365Million. The fact that the South Africans are now talking about the same asset, simply means that the Kosmos-Sabre deal didn’t sail through.

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Africans Don’t Export To Africa

By Fred Akanni

Qf  the four top oil producing countries on the continent, only Libya exports crude oil to energy starved African countries.

Algeria doesn’t export to Africa. Neither does Angola or Nigeria, according to figures from the latest edition of OPEC Statistical Bulletin (See chart).

On the contrary, the much vilified Iran ships 127,000 Barrels of oil every day to African destinations. Saudi Arabia does a little more, exporting 165,000BOPD) to needy countries in the east and west of the continent.

Nigeria, which is Africa’s largest producer, delivers almost half of her crude to North America (1.42MMBOPD) and sells 652,000BOPD to Europe. It exports 85,000BOPD to Asia Pacific region, which includes the voracious China.

Angola exports around half of its crude production (933,000BOPD) to North America, with 300,000BOPD to Europe. This southwest African country exports 537,000BOPD to the Asia Pacific region. This confirms several commentaries that Angola is Africa’s largest crude exporter to China.

Algeria refines almost half of its production into petroleum products for domestic consumption and export. Of the remaining 744,000BOPD, the country sends 393,000BOPD to North America, 203,000BOPD to Europe and 125, 000BOPD to the Asia Pacific region.

Apache’s Production Surges in Egypt

In 2008, Apache Egypt accounted for 21 percent of the company’s global production revenue. We completed 215 of 238 wells drilled during the year and achieved record daily production in the first quarter of 2009 of over 161,000 barrels of oil per day (bopd) of gross oil and condensate and daily gross gas production of nearly 685 million cubic feet per day.

South Africans May Produce Oil In Venezuela by 2012

PetroSA, the South African state hydrocarbon company, expects first oil from its joint venture mature oil fields projects with Venezuela’s PDVSA within 24 months of concluding a technical study.

PetroSA ‘s CEO Sipho Mkhize says the company was investing $10million to have the study finished within six months, and “we could be producing from that field within 18-24 months after the completion of the technical study,” Mkhize told journalists.

In September 2008, PetroSA signed an agreement for participation in exploration and production activities in the Orinoco Oil Belt, in Venezuela, where the company would conduct a study to quantify and certify reserves in the Boyaca 4 Block.

Italians Face Opposition In Ugandan Adventure

By Toyin Akinosho, in Lagos

Italian major, ENI, has encountered its first major opposition in its current acquisition binge across the African continent.

The Sale and Purchase Agreement (SPA) it signed with Heritage Oil, for a share in two of Uganda’s most prospective acreages now mean nothing, as Tullow Oil has exercised a right to buy Heritage’s entire stakes in Blocks 1 and 3A, which contain at least half of the 700Million barrels of oil already proved up in Uganda.

Tullow issued a press release saying it had served notice on Heritage on January 17, 2010, potentially wrecking ENI’s plan to build a new presence in Uganda.

The Ugandan bid was the third of ENI’s petroleum rights agreements across Africa in four months. In August 2009, it signed a strategic partnership with Congo’s Ministry of Petroleum “with the aim to develop the host country’s oil reserves”, according to ENI’s spokesmen. In September, 2009, ENI acquired operatorship of the offshore exploration permits Cape Three Point and Cape Three Point South (Eni 47.2%), off the Ghanaian coast. In December 2009, ENI announced it had signed the Sale and Purchase Agreement for the assignment of Heritage’s 50% interest and operatorship in Blocks 1 and 3A in Uganda, for a total amount of $1.35 billion, following the agreement reached last November by the two companies. About the time of the SPA agreement for Ugandan resources, ENI commenced production in Oyo field in deepwater Nigeria. This was the outcome of an agreement, signed in 2007, with the Nigerian Independent Allied Energy, for joint pursuit of opportunities.

In effect, in four months, ENI had concluded three petroleum rights deals and one field production, in four African countries.

With this bullish run on the continent, it can be assumed that ENI will go ahead to deal with Tullow Oil, to achieve the purpose which its SPA with Heritage was meant to. Only this time, it would be competing bend on with other investors, who have, like itself, been visiting Tullow’s data room. If the speculations were true that Tullow favours dealing with TOTAL or ExxonMobil, then the Italian major faces a real challenge. The treasures in Uganda may well be worth a bruising battle: “Over the last six years, Tullow and Heritage have invested over US$700 million in the Lake Albert Rift basin in drilling 27 wells to prove up over 700 million barrels of oil and identify over 1.5 billion barrels of potential yet to be explored”, Tullow said in its pre-emption statement.

Nigeria’s PIB Fiscus is More Competitive Than Angola and Algeria

The Nigerian fiscal regime is still very competitive in the PIB period, compared with the countries in the Gulf Of Guinea and North Africa.

The PIB (Petroleum Industry Bill) is a comprehensive legislation that aims, in part, to increase Nigerian government take from exploitation of the country’s resources. International Oil Companies have balked at some of the fiscal provisions, arguing that they are less competitive than comparative fiscal regimes on the continent. But a Schlumberger report, released during the last edition of the Nigerian Association

Petroleum Exploration (NAPE) Conference in Abuja, suggests that the complaints are exaggerated. Whereas overall government take in Algeria and Angola each is about 90%, at $70 per barrel, the Nigerian government will receive at most 80% in the PIB era, according to the oil service company.

Highlights of the Schlumberger Report

Onshore and shallow water

Pre PIB                       PIB

PPT 85%                     NHT-50%, CITA -30%

Inland Basins

Pre PIB                       PIB

PPT 5%                       NHT 3-5%, CITA-30%

Under the PIB, a lot of tax is gone..


Pre PIB                       PIB

Gas Capex is               Gas capex is charged

charged against           against gas reserves

oil reserves

Folawiyo’s Aje Field for First Gas in 2017

The Aje gas field offshore Lagos, Nigeria will start production in 2017, with the gas piped directly into the West African Gas Pipeline WAGP, according to the Nigerian authorities. Four wells have helped determine mean recoverable reserves for the field as 760 Billion cubic feet while the upside potential could shoot the figure up to 1.2Trillion cubic feet. Aje was discovered in 100 metres of water in 1996. The field is located in oil mining lease (OML) 133, which is held by Yinka Folawiyo & Sons.

The fourth well, drilled in February 2008, was expected to confirm that the field indeed had 1.2Trillion cubic feet of gas as well as up to 200million barrels of oil, but it wasn’t tested. The first two wells encountered two main hydrocarbon rich reservoirs, each of Turonian and the Cenomanian age, but Aje 3 encountered the Cenomanian reservoir at a level significantly down-dip from the discovery well, as well as below the existing oil-water contact defined in Aje-2.  The well did indeed “see” the Turonian level updip of the two earlier wells and located above the gas water contact encountered in both Aje-1 and Aje-2, but the presence of gas in the reservoir could not be tested due to poor reservoir properties at the Aje-3 location. Participants in the 1,840 sq km OML 113, which contains the Aje field, include Yinka Folawiyo (holding operator 60%),Vitol, Exploration(12.83°o), Energy Equity Resources (6.50%), Providence Resources (2.67°%) and Chevron, which is the technical operator with 18%.

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