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Uganda: CPF For Installation in 2023, First Oil Expected in 2025

TOTALEnergies is targeting Q1 2023, for the installation of the first equipment for the central processing facility on the Tilengaoil development project onshore Uganda.

The company its land acquisition programme was completed by August 2022 (with all compensations paid) while the last resettlement houses will be delivered in January 2023, the company explains.

The Tilenga development falls within TOTALEnergies strategy to develop resources with low carbon intensity, the company explains in a report. The project design has integrated the best available technologies and as a result it has less than 10 kilograms of carbon dioxide per barrel of oil, which is far below the average for oil and gas developments.
TOTAL says it is determined to deliver first oil in 2025.
Over 400 wells will be drilled in the course of the development.


Baker Hughes Takes the Continent, after a Bruising Loss to Schlumberger in Uganda

By Macson Obojemuinmoin

Baker Hughes has made inroads in winning well contracts and other oilfield and midstream service provisions across Africa, after its heavy loss to Schlumberger in Uganda, where it was twice announced winner, but ultimately wasn’t awarded the contract.

In Angola, the company won the tender for the supply of Turbocompressors for the gas processing plant on the Quiluma and Maboqueiro (Q&M) fields, Angola’s first non-associated gas development project. Project execution activities will start later in 2022 with first gas planned for 2026 and an expected production of 330Million standard cubic feet per day (MMscf/day) at plateau.

In Nigeria, Baker Hughes is to provide a range of drilling and related Integrated Well Services to deliver the initial nine well drilling and services programme in the redevelopment of the Abura field, located in the Oil Mining Lease (OML) 65, onshore western Niger Delta. Those services are contracted by Sirius Petroleum, the technical and financing partner and 30% shareholder in COPDC Petroleum Development Company Limited.

Baker Hughes is also currently assisting Geoplex, a Nigerian contractor, in delivering well services, completion and hook up, on a two well campaign by Green Energy International Limited, on the Otakikpo field, onshore Eastern Nigeria.

In Kenya’s Olkaria Geothermal Complex, the American service provider will supply drill bits, drilling services, wireline, drilling fluids, cementing, completions and cementing services for a project which started in September 2022. The drilling contractor is Ormat.

In Zimbabwe, a two well frontier drilling campaign for gas and condensate, by Invictus is being serviced by Baker Hughes. The first location was spud in October 2022.

Baker Hughes had lost, in controversial circumstances, a huge contract for drilling, completions and production services for the 190,000Barrels of Oil Per Day Tilenga onshore oil development to Schumberger in Uganda. TOTALEnergies received bids, awarded the contract twice to Baker Hughes, and cancelled, then finally awarded to Schlumberger, the world’s largest Oilfield Service provider. The scope of the contract includes the provision of directional drilling services, upper completions, lower completions, artificial lift solutions, and wellheads for the Tilenga development, which comprises six fields with up to 426 wells, which will be developed across 31 wellpads.

But the company’s African team is aggressively marketing its services, making up for the massive miss in Uganda.

The story was initially published in the June/July edition of Africa Oil+Gas Report

 

 


Uganda’s Local Entities Receive 36% of Procurement Spend by Oil Companies

Fifty-two Million US Dollars, out of the $147Million spent by the licensed oil companies on procurement, between 2017 and 2020, was on local entities owned by Ugandans.

This represents 35.75% of the total procurement spend by the lOCs, “1,700 Small and Medium Enterprises (SMEs) had their capacity built in the areas of health, safety and environment, bid management, financing, corporate governance, among others”, reports Jessica Kyeyune, National Content Specialist at the Uganda National Oil Company (UNOC).

546 entities registered on the National Supplier Database (NSD) have so far been contracted in the country oil and gas sector. Out of these 498 (91%) were Ugandan entities while 48 (9%) were non-Ugandan.

Ugandan nationals directly employed by the oil companies as of September 2021 stand at 81%, with 59% at management, 75% technical and 100% of their support staff, according to data by UNOC.

4,435 Ugandans have been trained by the Oil companies in various technical disciplines to competitively participate in the oil and gas sector.

“The companies are creating many spin-offs in areas such as employment and secondary industrial services”, Kyeyune explains. “This has created direct benefits to the economy through generating tax revenues and improvement of infrastructure, such as roads, leading to a decrease in the cost of doing business in the country”.

It is the view of UNOC as well as the Petroleum Authority of Uganda (PAU) that local gains from oil & gas investment will be bolstered by further field development and exploration, joint ventures and farm-in arrangements in existing licenses, the production and processing of the crude oil, transportation facilitates and services related to this field (engineering, pipelines, storages facilities and refinery construction).

“The impact created by oil companies is on a growth trajectory and we believe the companies are contributing to the eluviation of poverty in the country by providing employment that pays higher than a living wage, improving the standards of living for many Ugandans and impacting the indirect and induced sectors of the economy like Agriculture, education, tourism, to mention but a few”, Kyeyune says. “All these are achieving National Content on a direct, indirect and induced aspects of the Oil & Gas value chain”.

 


NPDC In 800% Profit Surge Despite Lower Crude Oil Sales, Weaker Operating Performance

With revenue from its core business relatively unimpressive year to year, how did NPDC manage to achieve such spectacular rise in Profit after Tax?

By Macson Obojemuinmoin

NPDC’s 800% increase in profit after tax, literally made all the difference in the “spectacular profit” that that the NNPC Group reported that it made in 2021.

There are 28 subsidiaries in the NNPC Group, but NPDC (Nigerian Petroleum Development Company), the upstream operating subsidiary, is the jewel in the group’s crown.

NPDC’s net profit after tax of ₦747Billion, a 792% jump in 2021, was more than a dramatic recovery from a 21% loss in revenue in 2020. (NPDC’s Profit after tax in 2020 was ₦ 84Billion. Far down from ₦478.5Billion in 2019).

Curiously, the difference in NPDC’s “overall revenue” year on year was only 32%, from ₦1.029Trillion in 2020, to ₦1.362Trillion in 2021.

As NNPC Group ‘s Profit after tax was ₦674Billion, it goes without saying that the contribution was largely from NPDC’s significant profit surge.

But how much of this runaway financial success was derived from the income from the actual work-related performance in the year of review?

As NPDC is primarily in the business of oil prospecting and production (as well as gas and power production and sales), it is logical to assume that its profit surge was significantly underpinned by the sharp increase in the price of crude oil in 2021. Average 2021: $70.54 (2020: $39.95).

But this surge in profit didn’t essentially come from crude oil sales.

Take a look at the numbers. NPDC’s crude oil revenues relate to liftings of the company’s equity interest in its various oil assets. However, in terms of direct lifting, the company lifted 26Million barrels of crude from a total of 16 oil mining leases (OMLs) in 2021, a sharp drop of almost half of the 47Million barrels it lifted from the same properties in 2020.

Its indirect liftings were higher; some 348,000 barrels from the ENI operated OMLs 60-63 in 2021, compared with 150,000Barrels in 2020. This is a minuscule fraction of the overall liftings.

In sum, this is weak operating performance; for a company to sell, in a year of soaring prices, half of what it sold in a year of depressed prices.  The company thus increased its income only slightly, from ₦683Billion in 2020 to ₦749Billion in 2021.

The volume of marketed natural gas also fell, from 530Billion standard cubic feet in 2020 to 248Billion standard cubic feet in 2021, largely as a result of diminished supplies to the Nigerian Liquefied Natural Gas Limited from 256Billion standard cubic feet to 78Billionstandard ubic feet.  Revenue from natural gas was, however, almost flat: from ₦211Billion in 2020 to ₦223Billion in 2021.

With revenue from its core business relatively unimpressive year to year, how did NPDC manage to achieve such spectacular rise in Profit after Tax?

The answer lies in some of the small print.

NPDC obtained a Presidential waiver, it says in the report, of ₦173Billion on its outstanding tax liabilities. It also raised income by reducing the cost of sales: from ₦837Billion in 2020 to ₦445Billion in 2021. The details of the so called reduction in the cost of sales show that the reduction in royalties and rental charges to the Nigerian government was around ₦200Billion year on year. This is an evolving story.

 

 


Our Latest Issue/Southern Africa: New Hot Spot, Old Habits

This is our fifth Southern Africa Special since we started dedicating an edition to the annual gathering in Cape Town.

There are two such conferences now and this year, the Southern African hydrocarbon story is more compelling.

It all happened quickly, one after the other, at a time of great anxiety in the world.

Just before the year of COVID, TOTALEnergies opened a new petroleum province offshore South Africa. The discovery of the Bullfrog (Brulpadda), in the legendary “Cape of Storms”, in deepwater Outeniqua basin, was followed up late the following year, in 2020, with the discovery of the Leopard (Liuperd). The unveiling of these significant gas and condensate tanks indicate that Africa’s most industrialised economy has no more excuse for indifference in growing a gas-based industry.

But as you’d find out in those pages, the more things change, the more they stay the same.

To Namibia: In 2021, a rank unknown Canadian minnow delivered screaming headlines from around the drill bit in a rank unknown onshore frontier. ReconAfrica drilled two stratigraphic test wells onshore the country’s north, and confirmed that the Kavango or the Owambo (Etosha) Basin, a very large, previously unregarded sedimentary basin, exists beneath the sands of the Kalahari Desert.  The 6-1 and 6-2 wells intersected over 300 metres of oil and gas shows and 200 metres of oil and gas shows respectively.  The two were drilled to provide stratigraphic, sedimentological, reservoir and geochemical information.  Neither of them was tested, but Reconfrica had made a point: “There’s something here!”. As we went to press with this edition, the company was drilling three seismically defined exploration wells whose primary zone is a Permian-age Karoo rift fill sequence of sediments.  Based on the two stratigraphic wells and recently acquired high-resolution seismic, the Kavango basin is now viewed as highly prospective for conventional light oil and gas.

The bigger story from Namibia however is that two wildcats, spud back-to-back in late 2021 by two of the world’s biggest oil companies, made significant oil and gas discoveries. Shell’s Graff 1 and TOTAL’s Venus-1, drilled in deeper water Orange Basin, have been described by Rystad as some of the largest finds on the planet in the last one year. The once “disappointing” Namibian hydrocarbon scene, has certainly turned the corner.

Elsewhere in the south, Zimbabwe is currently hosting a two well campaign; a rare drilling activity, while Angola looks to two projects to top up its output by 300,000BOPD by 2026.

There is always a spoilsport: TOTAL has not returned to the site of the largest hydrocarbon project in Africa; the 13Million Metric Tonne Per Year Mozambique LNG project. The company blames the Islamist insurgency, which it says is still raging. The government pleads in response: “We are winning the war”.

Read your copy here…

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions, for useful analyses of Africa’s oil and gas industry. Published since November 2001, AOGR is a monthly publication delivered to subscribers around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers at the headquarters in Lagos are +2347062420127, +2348036525979 and +2348023902519.

 

 

 


GNPC Holds on to $100Million Oil Proceeds Meant for the Ghanaian Treasury

Ghana National Petroleum Corporation (GNPC) is holding, in its account, about $100Million that should otherwise have been paid to the country’s Petroleum Holding Fund.

The money is part of the proceeds of crude oil export in the first half of 2022.

Following the acquisition of 7%, interest in the Jubilee and TEN Oilfields by GNPC in 2021 (later ceded to its subsidiary, Jubilee Oil Holding Limited – JOHL), reports the Ghanaian Public Interest Accountability Committee (PIAC), “JOHL made its first lifting (944,164bbls) on the Jubilee Field in the First Half 2022, amounting to $100,748,907.95. This amount was not paid into the Petroleum Holding Fund (PHF)”.

The PIAC, in its just released 1H 2022 report, recommends that “the proceeds of liftings by JOHL should be paid into the Petroleum Holding Fund (PHF), as the Committee is convinced that the proceedsform part of Ghana’s petroleum revenues”.

The PIAC also notes that “Capital Gains Tax was not assessed and collected by the Ghana Revenue Authority in the sale of the 7% interest by Anadarko in the Jubilee and TEN Fields in 2021”, and when the committee requested for explanation, “the Ghana Revenue Authority referred the Committee to the Ministry of Finance indicating that the Ministry was exclusively in charge of the transaction. The Ministry of Finance in turn referred the Committee to the Ghana Revenue Authority for answers”.

The lack of assessment of Capital Gains Tax of upstream asset sale by revenue authorities in the land was “contrary to Section 6(e) of the Petroleum Revenue Management Act, 2011 (Act 815)”, PIAC maintained.

The 186-page report observes an overall tardiness in petroleum revenue collection in 1H 2022. “Surface Rentals outstanding continue to increase”, it points out. “As at the end of H1 2022, the balance outstanding was $2,774,702.29 constituting an increase of 7.58% percent on the surface rentals of $2,579,170.21 at the end of 2021.

“The Ghana Petroleum Funds received an amount of $390,029,916.55 for the H1 2022, which is 91.43% percent higher than the budgeted allocation of $203.75Mllion for the GPFs for the full year in compliance with Section 4(a)(iii) of the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893).

“The retention of the current cap of $100Million on the GSF for the year 2022 is not in accordance with the formula stipulated in the Petroleum Revenue Management Regulations, 2019 (L.I. 2381). A proper application of the formula would have returned a figure of $460,633,074.02.

The PIAC is an independent statutory body mandated to promote transparency and accountability in the management of petroleum revenues in Ghana.

 


Saipem Wins €1Billion Contracts for Cote D’Ivoire’s Field Development

The ENI Cote d’Ivoire-Petroci consortium, a partnership of Italian explorer ENI and Cote d’Ivoire’s state owned Petroci, has awarded the major contracts for the development of Cote D’Ivoire ‘s large deepwater oil development to Italian contractor Saipem.

There are two new contracts and they are “worth approximately 1Billion euro overall”, Saipem says in a statement released September 27, 2022.

The contracts are for the Baleine Phase 1 Project, for the development of the relative oil and gas field offshore Ivory Coast located at a 1,200m water depth. “The Baleine Prospect represents the largest commercial discovery in the country in the last 20 years”, Saipem explains. The field was discovered in 2021 and it holds over 1Billion barrels of oil in recoverable reserves, ENI itself has disclosed.

The first contract entails Engineering, Procurement, Construction and Installation (EPCI) activities of Subsea Umbilicals, Risers and Flowlines (SURF) and of an onshore gas pipeline for the connection to the distribution grid. The offshore laying of flexible lines, risers and umbilicals will be executed by Saipem’s flagship vessel FDS2 and the development of the project will be on a fast-track basis. The start of operations is planned for the fourth quarter of 2022.

The second contract – also expected to be a fast-track – encompasses Engineering, Procurement, Construction and Commissioning activities regarding the refurbishment of the Firenze FPSO vessel, plus 10 years of Operations and Maintenance services of the vessel.

The award of significant contracts in a new area with great potential such as Cote d’Ivoire represents an important recognition of Saipem’s role as a contractor of excellence for the execution of complex projects requiring the integration of drilling, engineering and construction skills – both onshore and offshore – on a fast-track basis. These contracts also consolidate Saipem’s strategic positioning in West Africa.

 

 

 


Conoil to Drill New Exploration Plays in OML 103

The Nigerian independent, Conoil Producing. has moved a rig to Oil Mining Lease (OML) 103 in a swampy terrain in North Western Niger Delta, to drill an exploration well and, if successful, appraise it immediately with another well.

The Imperial rig, operated by Depthwize, is on location and about to spud.

The tentative name of the wildcat is AX#4.  The full name will come after the spud. AX#4 and its appraisal prospect are located in an untested fault block in the pan handle shaped, southern part of OML 103, directly north of NPDC/Elcrest operated OML 40.

The wells are to be drilled to as deep as 11,000feet Measured Depth subsea.

There are plans for a possible two more wells, if the campaign is successful.

AX#4 will be the second exploration well to be drilled in the Niger Delta shelf in the space of six months.  The NPDC/Elcrest Joint Venture recently finalized the Sibiri exploration well in OML 40, with initial results indicating 353 feet gross hydrocarbon pay in eight oil-bearing reservoirs, 229 feet being net pay.

Sibiri-1 is, however, located far from the AX#4 probe.

 


‘Strong Governance, Collaboration Has Kept OPTS Relevant after 60 Years ‘

Founded sixty years ago, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce& Industry, has become a foremost advocacy group in Nigeria, helping to shape policies that enhance growth in the country’s upstream value chain while protecting the interests of member companies. Rick Kennedy, Managing Director Chevron Nigeria and incumbent Chairman of OPTS, shares with select journalists including Africa Oil + Gas Report, factors that have kept the organisation going strong as it marks its 60th anniversary.

Sixty is such a milestone, tell us a little bit about the journey so far.

The OPTS really Is a trade group and the intent is to improve the health of the offshore and onshore oil and gas industry in Nigeria by allowing the operators to come together in a forum where we can address common issues.

Obviously, we have to respect laws on competition but, there are a number of common issues that we deal with, so we work collectively and I think the organization has been very successful in moving various things forward on behalf of industry and in partnership with the Nigerian government for the benefit of the country, as well as the oil and gas industry.

This is done through advocacy, providing input on the development of regulations. I think the other big success over that 60 years is not only contributing to enabling the success of the oil and gas industry but also being able as an industry to give back to the country in terms of direct and indirect jobs, revenue to the country and social investments by member companies. For example, we have provided funding for universities, scholarships, and other social investment activities tied to economic empowerment, health, as well as education.

At a high level, OPTS supported the government in moving forward with the oil industry bill and we are now focused on supporting the implementation of the petroleum industry act.

So what have been some of your biggest challenges thus far?

Probably the biggest issue of the day is oil theft, insecurity, and the impact on the industry’s ability to produce safely and reliably. We’ve had infrastructure that has either been damaged or forced to be shut in. And we’re all aware of the impact on production revenue to the government.

I think probably the other challenge that we have more recently given the state of the economy and the reduced revenue coming in due to oil theft, is the ability of the NNPC to pay their share of Joint Venture operating expenses in a timely manner.

And so the outstanding cash calls are building up and lack of reinvestment just further hurts the ability of the industry to deliver…

But there were efforts made by the NNPC to address these arrears, what happened?

There was a significant effort to address the historical arrears. We were able to form a great partnership between industry and the government to come up with an innovative approach to address it. That has been largely successful and I think in a few cases those historical arrears have been fully paid off.

Unfortunately, more recently, with maybe the challenges of the economic environment and then the increasing oil theft,  outstanding cash calls have became an area of concern in the latter part of 2021 and through 2022.

Investments into the Nigerian oil sector have been few and far between and many projects are yet to come on stream. As an advocacy group, what measures do you recommend to attract investments into Nigeria?

That’s a good question. Obviously, there’s probably a long list of things but in general, developing and maintaining investor confidence is key. Are we competitive, relative to other opportunities, globally?

If the government can perhaps address and mitigate factors such as the impact of inflation, unemployment, and ease of doing business. Issues around security, for example, increase in the cost of our operation. Cost competitiveness is really critical, and that’s something that we’re  doing a lot of work on.

The Nigerian upstream cost optimization program is an area where the industry is partnering with the government to try to lower the contracting cycle times and drive down costs.

We are working closely with the regulators to try to help the development of regulations that are effective and streamlined hopefully, to minimize some of the administrative burdens that may be placed on the industry which again, leads to cost.

Historically, there’s been a lot of levies and fees and various taxes applied to the industry and we are seeing that continue even in the current legislative activity. There is a discussion on even more taxes to be placed on the industry to help fund various programmes and departments across the country.

So really, this whole area around cost competitiveness and driving down costs is a critical element.

On the plus side, the passage of the petroleum industry Act has brought some clarity to the industry and a certain level of certainty around the fiscal framework. So that’s a real positive in gaining investor confidence.

 What would you say are some of the successes recorded by the OPTS in the past 60 years?

Well, I’m going to point to the passage of the PIB and that’s not all OPTS but I know OPTS was involved. This success goes back to the willingness of President Buhari and the Minister of State for Petroleum Resources and NNPC GMD to collaborate with the industry and this gave us an opportunity to make an input.

The government ended up crafting a very good bill that ultimately got passed and OPTS and the member companies spent a lot of time supporting that effort, providing input and ideas. So that to me is a very recent example of success.

In addition, we’ve had numerous scholarships given to different students in different communities. We’ve built numerous hospitals, in different communities within the nation and around the Niger Delta. During the COVID pandemic, the OPTS put forward about $30 million to support government efforts. We did a lot of vaccination and built health care facilities in the six geopolitical zones of the country.

So for 60 years, you’ve managed to stay relevant as an advocacy group, what is the secret?

I think there’s probably an element around governance. We all have a common purpose and we do have positive intentions for the country, its citizens, and the government. We have very positive working relationships with all stakeholders. The folks that first came together to form OPTS, I think, laid down a good set of governance. It’s very inclusive. It’s very collaborative. We follow all the  relevant anti-trust and competition laws in how we conduct our activities.

It is several factors and right now we have 29 members, including five IOCs, plus some other larger exploration and production companies and many of our indigenous companies. So we work hard to really bring in all the perspectives and collaborate very closely across the member companies.

There is a mindset of true partnership and collaboration, not only within the member companies but with all stakeholders in the country.

 

 


No Guarantees Over Libya’s Return to Daily Output of > 1Million Barrels

There is no assurance that Libya could sustain its return to producing crude oil in excess of 1Million Barrels of Oil Per Day.

Since mid-July 2022, when Khalifa Haftar, strongman of the East of the country, got his wish to replace Mustafa Sanalla with Farhat Bengdara as head of the National Oil Corporation, he has ended the three-month blockade and allowed production to resume at close to optimum.

Mr. Haftar seems to be capable of closing and opening Libya’s crude oil taps at his whim.

He had simply, in April 2022, repeated the 2020 shut-in which crimped more than 1Million Barrels per Day of output.

What this simply means is that Libya will get optimum output only if General Khalifa Haftar wants it.

Between April 2022 and the end of July 2022, Haftar, and his eastern allies, instigated the shutdown of several key oil facilities under the guise of local ‘protests, effectively seeing  550,000BOPD of output shut in.

Mr. Haftar’s blockade caused the closure of

  • The Repsol-led 300,000BOPD El Sharara Field
  • Eastern ports of Zueitina and Marsa El Brega exporting 180,000 BOPD
  • The 70,000BOPD El Feel field operated by ENI

Now production is back and Mr. Bengdara, the new head of the state hydrocarbon company, has visited Rome to see ENI ‘s CEO Claudio Descalzi to assure him of safe investment. But an oil industry that depends on the might of a militia is not sustainable.

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