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What is Technology Telling Us/Our Latest Issue

Some are cheering: Drill Beby Drill!!!

Others lament the burning planet.

Some are angling for gas monetization; others want to replace “expensive” natural gas with solar and wind power.

Others insist on large, onshore LNG plants; others prefer nimble Floating LNG facility.

The market will lean towards efficiency and affordable pricing, So, once in a while we should look at what is the technology trends, especially in the energy transition. The longevity of the hydrocarbon industry has been determined by technological innovations. Part of our remit, as the primer on oil and gas on the African continent, is to provide as much technical intelligence as we identify market opportunity.

We keep our doors wide open to publishing technical articles by the large tribe of oil service firms whose strides in innovations help this industry along. Technology adaptation will keep determining how profitably companies navigate the constructs of the oil patch.

This edition is one of the infrequent ones we devote, if only tangentially, to the subject.

Read your copy here

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions. Published by the Festac News Press Limited since November 2001, AOGR is a monthly, hardcopy 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 in our West African regional headquarters in Lagos are

2348130733523, 2347062420127, 2348034449079, 2348036525979, 2348023902519,

2348038882629.


American Contractors Rush to Build Drilling Fluids Factories in Namibia’s Key Port

American oil service companies Baker Hughes and Halliburton have announced separate plans for construction of a new liquid mud plant each in Namibia’s Port of Walvis Bay.

A drilling mud or drilling fluid is a heavy, viscous fluid mixture that is used in oil and gas drilling operations to ferry rock cuttings to the surface and also to lubricate and cool the drill bit. By hydrostatic pressure, the drilling fluid helps prevent the collapse of unstable strata into the borehole and the intrusion of water from water-bearing strata that may be encountered.

Namibia is the flavour of the month in the search for new, large scale hydrocarbon resources in Africa, attracting the biggest oil majors who are committing hundreds of millions of dollars to wildcat exploration drilling in the Orange Basin, in the country’s ultradeep waters.

The drilling fluids in use by the operators, Galp, Shell and TOTAL, are imported into Namibia from neighbouring Angola.

Baker Hughes says that apart from its liquid mud plant, it will install a separate assembly, maintenance and repair base at Walvis Bay to cater to booming offshore exploration activities.

While Baker Hughes has named September 2024 as the date for commencement of its mud plant, Halliburton says that environmental clearance process towards its construction of its “liquid mud treatment and completion fluid plant (LMTP)” has been initiated; it plans to invest $10.5Million) in Walvis Bay for the project.

Halliburton says that its plant will be located at Berth 8 in the Port of Walvis Bay, “identified by NamPort as the best location due to its proximity to the pier for shipping materials, ingredients and final products to and from the facility”.

But Walvis Bay is not the Namibian government’s primary choice of a key logistics base for oil and gas activity.

It is the Lüderitz Bay, the country’s easternmost bay, whose surrounding area was made into a trading station by German trader Adolf Lüderitz in 1893. Mr.  Lüderitz concluded treaties with the neighbouring chiefs, who ceded large tracts of country to him and other newcomers.. Namibia’s port authority, Namport is scouting for its own $64.5Million part of the finance for a Public Private partnership construction of an extension of the quay wall of the Port of Lüderitz Bay by at least 300metres, to accommodate more platform support vessels. The total cost is estimated at around $137Million

 


Nigeria: The 11 Year Window/Our Latest Issue

Time is still running out for Nigeria to take the full advantage of its hydrocarbon deposits, which it had largely exported in the raw for over 60 years.

Bola Tinubu’s one year old administration has been running with it; engaging, enunciating reform policies at a rate not seen in the last eight years, but there is the weight of history to deal with and Nigeria does happen, even to the best laid out intentions.

We are far from where we were when we published the first of this annual monitoring edition in 2023; the first products from the gigantic Dangote Refinery (650,000Balrrels Per Stream Day) have rolled out and there is a clear line of sight to ample domestic manufacture of gasoline by a private sector player.

But the fact doesn’t change that there is just about 11 years to the beginning of the end of the fossil fuel era.

Nigeria still desperately needs to convert its vast gas resources into products that enrich the economy; the state hydrocarbon company remains a chokehold to development;one crucial grid length, natural gas pipeline, which should enable evacuation to power plants and industries, has been under construction for close to 15 years. A second one, for which installation started three years ago, is facing severe headwinds.

The electricity supply system remains inchoate. Generation is a superbly weak part of the chain.

As oil majors leave the country’s onshore and shallow water assets, Nigerian independents are coming in. With very few exceptions, the overall performance of the Independents is poor and is a large reason for the continuing low crude oil output.

Bola Ahmed Tinubu has done more than a bit. The issue is that there is so far, still far. We revisit the agenda we set for him in the April 2023 issue.

Read your copy here.

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. Published by the Festac News Press Limited since November 2001, it is a paid subscription based monthly, hardcopy and pdf publication delivered around the world. Website is www.africaoilgasreport.com. Contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are +2348130733523, +2347062420127, +234803652979, +2348023902519.

Editor

 

 


Italy’s Largest Oil & Gas Contractor Gets the Most of the French Major’s New Angolan Project

Italian engineering firm, Saipem, says it has clinched three new contracts awarded by TOTALEnergies E&P Angola Block 20 for the 70,000Barrels of Oil Per Day (peak) Kaminho project for an overall amount of $3.7Billion

TOTAL itself, in announcing the Final Investment Decision for the Angolan deepwater facility, cost the project at $6Billion.

In effect, Saipem has been awarded contracts worth 62% of the full project cost.

“The first contract refers to the Engineering, Procurement, Construction, Transportation and Commissioning of the Kaminho Floating Production Storage and Offloading (FPSO) vessel”, Saipem announced. “The second contract entails the Operation and Maintenance (O&M) of the same vessel FPSO for a firm period of 12 years with a potential 8-year extension, leveraging on the expertise acquired from three other FPSOs currently operating in Angola”, the company explained.

“The third contract involves the Engineering, Procurement, Supply, Construction, Installation, Pre-Commissioning and Assistance for the commissioning and start-up of a Subsea, Umbilicals, Risers and Flowlines (SURF) package which includes approximately 30 km of 8” and 10″ subsea flowlines and risers, and umbilicals”.

Saipem says that the associated structures will be fabricated in Saipem’s local (Petromar) yard in Ambriz, a municipality in Bengo Province located 180 kilometres north of the capital Luanda

“For the offshore campaign, and specifically for the J-lay vessel, Saipem will deploy its FDS and will widely involve the local supply chain for logistics and fabrication activities”, the company notes.

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Block 20: TOTAL Takes FINAL Decision on Angola’s “Symbolic” Pre-Salt Reservoirs

By Toyin Akinosho, Publisher

TOTALEnergiies, its partners and Angolan authorities, have announced the Final Investment Decision (FID) of the Kaminho deepwater project in the country’s deepwater Kwanza Basin.

The first large deepwater development in the Kwanza basin will develop the Cameia and Golfinho fields, located in 1,700 metre water-depth, 100 kilometres off the Angolan coastline.

Production start-up is expected in 2028, and although the peak output is a mere 70,000 barrels of oil per day, the Kaminho development is significant for the sheer difference in geological make up, compared with all the previous oil developments in deepwater West Africa.

It’s the first deepwater development targeting oil and gas reservoirs located below the salt layer (such accumulations are geologically termed ‘Pre-Salt’) in the region.

It is also the only development that has come to fruition, from the Angolan Kwanza Basin Pre-Salt drilling campaign of 2010-2014.

The idea of Pre-Salt Exploration in the Kwanza Basin came in the wake of the massive discoveries of hydrocarbon in Brazil’s deepwater Campos Basin, widely regarded as conjugate to Angola’s Kwanza Basin. But the Angolan twin has essentially shown signs of deformity, it could be argued.

Angolan officials often cite bid rounds as routes to increased output of hydrocarbons. Just like Egyptian officials, they open bid rounds again and again.

Between 2010 and 2015, over $9Billion was spent on exploration efforts in 11 acreages, by eight international companies chasing massive tanks of oil beneath the layer of salt in the ultradeepwater segment of the Kwanza basin.

The money covered licensing round payments in the 2010/2011 open acreage sale, predrilling and drilling expenses.

As of Christmas of 2015, twenty-one exploration wells had been drilled in the “Pre-Salt campaign” (in the Kwanza Basin, outside of the Congo Basin, where Angolan hydrocarbon is typically produced from). Nine of the wells were outright dry holes, six non-commercial, and five of them considered commercial finds, according to Sonangol, the state hydrocarbon company.

It was during this campaign that Cobalt International Energy, the now bankrupt American independent, encountered the reservoirs that have become the basis for the Kaminho development.

Over the years, the operatorship of Cameia and Golfinho discoveries have changed hands. In December 2018, TOTAL announced it had signed a sale and purchase agreement with Sonangol to acquire interests in Blocks 20/11 and 21/09, which housed the accumulations.

Today, partners for the Kaminho development include TOTALEnergies (40%), the Malaysian state hydrocarbon firm Petronas (40%) and Sonangol (20%).

The project comprises the conversion of a Very Large Crude Carrier (VLCC) to a Floating Production Storage and Offloading (FPSO) unit, which will be connected to a subsea production network. Designed to minimize greenhouse gas emissions and eliminate routine flaring, this FPSO is all-electric and associated gas will be fully reinjected into the reservoirs.

The Kaminho project will involve over 10Million man-hours in Angola, mainly with offshore operations and construction at local yards, TOTAL claims in the press release.


Briefcase Companies, Procurement Scams, Partly to Blame for Decline in Nigerian Crude Output – NNPCL Boss

By Lukman Abolade, Senior Correspondent

Mele Kolo Kyari, Group Chief Executive Officer of the NNPC Limited, the Nigerian state hydrocarbon company, has fingered security issues, ‘briefcase companies’ and the fiscal environment, as parts of a cohort of challenges responsible for the declining investment in Nigeria’s oil and gas sector.

“As we all know, the security challenges are real, it is not just about theft, it is about the availability of the infrastructure to deliver the volume to the market. No one is going to put money into oil production when he knows that the production will not get to the market”, Kyari told a Stakeholders’ Engagement with the National Association of Petroleum Explorationists (NAPE).

Calling out ‘bad actors’ among the ranks of Nigerian indigenous operating companies, as well as the contracting segment of the industry’s upstream class, Kyari said: “the reality is that people create companies, in all segments, around friendships around relationships, not around value and the ultimate impact is that this country is seen not just as a bad investment location, but as a war zone. War means many things: war can be economic war, it is not just gun. So that’s why the issue of contracting both within our own company NNPC and within our partner companies is important to us. The good intention our country has of having local content development is essential, which is to produce locally, build capacity and return value to our country. This is beautiful, but it doesn’t mean that the meaning of this is to enrich a few people. I don’t think so. The combination of those compromises along the value chain resulted in sending most of the critical contractors out of our country today. And the reason is not competition”.

Arguing that contractual issues and “paper companies” were huge challenges wrestling down investors‘ confidence in the country, Kyari, a trained geoscientist who is a card carrying member and Fellow of NAPE, lamented to the group of petroleum explorationists  and C-suite level executives of  oil majors, that by creating shell contracting firms, several companies focus on making the money from procurement than from production, shooting up the cost of production.

But Mr Kyari c kept going back to highlight the security issues along the crude oil pipeline right of way in the Niger Delta.

“Within the last two years, we removed over 5,800 illegal connections from our immediate frontline, we took down over 6,800 illegal refineries. We simply cannot get people to put money into it until we solve that problem,” he said.

Kyari added that the discussions on energy transition, late passage of the Petroleum Industry Act (PIA), poor infrastructure “and the discovery of oil in many places” also contributed to the decline in oil and gas investments in the country.

“Our country struggled to change its fiscal terms since the year 2000 until 2021, when the PIA came into being, it was already 21 years late. New troubles that were created by the energy transition conversation, banks stopped lending to oil and gas and many more things. And secondly, oil started appearing in unexpected places. And everybody decided to throttle down investment in Nigerian oil and gas,” Kyari noted.

Highlighting the enduring demand for oil and gas in the energy mix, Kyari said projections have suggested a continued need for up to 100Million barrels of oil equivalent by 2050. Against this backdrop, he stressed Nigeria’s strategic position in Sub-Saharan Africa, where a substantial portion of global growth is forecasted to occur, with Nigeria poised to play a central role.

While speaking on NNPCL’s effort to increase production and attract investment in the sector, Kyari disclosed that three substantive gas projects are set to take off in 2024.

He stated that NNPC in collaboration with its JV and PSC partners plan to drill up to 26 gas exploration and appraisal wells, over 16 gas development wells and 21 oil exploratory wells as well as come up with a rig-sharing program to reduce the cost of drilling and enhance collaboration among companies.

“We are going to come up with a rig-share programme so that even the rig owners can have an assurance when they come to this country, they don’t have to go away. So that the cost of drilling itself will go down, there’s a visibility about when this will end, you have the assurance that the rig can stay with you for three to five years. We’re going to check this and this industry will align it so that we have a line of sight around our commitments. So that those drilling activities can actually take place at a cost and invest of course, that is possible,” he noted.

During his welcome address, the NAPE President, Abiodun Ogunjobi, said the Stakeholders engagement was to address pressing issues in the oil and gas industry that demand urgent intervention, most especially the declining investment in the sector.

“To restore us to the Two Million plus-barrel per day production will require a deliberate investment in the exploration and production activities. Despite our projections over the years of 40Billion barrel reserves and 600Trillion cubic feet (Tcf) of gas, we have consistently remained at the threshold of 37Billion barrels of oil and 209Tcf of gas”, Ogunjobi said.

The NAPE president added that to tackle these challenges, there must be strong and intentional collaboration between the NNPCL and E&P players.

He also said there is a need to leverage technology and foster a skilled workforce that is crucial for the industry to deliver these objectives.

“For efficient gas production and utilisation, we will need to upgrade all our existing and add more infrastructure to our gas development system. The time to increase your oil and gas production is now and it requires an intentional workforce such that we can use the resources that we have and navigate our way through the transition phase to the new mega-change dynamics,” Ogunjobi noted.

Kyari was asked, in a post-address question-and-answer session, about the status of the NNPCL’s frontier basin drilling as well as update on the Ajaokuta-Kaduna-Kano (AKK) gas pipeline in the north of the country. A summary of his response:

“The Chad Basin, you know that we’ve been around there for over 40 years. Currently, we are drilling a well. I think it’s too early to speak about it due to some NDA issues. I don’t know if I can speak about it. But where we are today is better than what we ever did in 40 years. Now that is sufficient information. So, there is oil in the cretaceous, of course, you know, there are regulatory issues around making declarations but I can tell you with all confidence that there is sufficient oil even in the Chad basin,” he said.

On the AKK pipeline, Kyari said that over 75% has been completed and is expected to become functional by the end of 2024 or first quarter of 2025.

“I can also tell you today, we have almost done over 75% on the AKK line and our target is to complete it by the end of this year. At least introduce hydrocarbon into it, we may not complete some of the associated facility that we don’t need today,” he said.


European Bank Approves Membership of Kenya and Nigeria

By Nibal Zgheib

The shareholders of the European Bank for Reconstruction and Development (EBRD) have approved applications by Kenya and Nigeria to become members of the multilateral financial institution.

The authorities of Kenya and Nigeria applied for EBRD membership in March and April 2024, respectively. Approval from the Bank’s Board of Governors is the first stage of the membership procedure; the two countries will need to meet some final pre-membership requirements before the process is concluded.

The move follows the Governors’ approval – at the EBRD’s 2023 Annual Meeting in Samarkand – of amendments to the Bank’s statutes to enable the limited and incremental expansion of its operations to sub-Saharan Africa and Iraq.

The applications of Kenya and Nigeria also included requests to become recipients of EBRD financial and advisory services, which the Bank will address once the statutory amendments are in force.

EBRD President Odile Renaud-Basso said: “We are very happy about this important milestone in the process for Kenya and Nigeria to become new EBRD members. With this approval the six sub-Saharan African countries have joined the Bank, a step that reflects our Governors’ historic decision, last year, on the future expansion of the Bank’s operations there. Together with other international partners, our goal will be to help unleash the potential of the countries’ private sectors, create jobs and support sustainable development.”

The successful applications from Kenya and Nigeria follow those from Benin and Côte d’Ivoire (approved in October 2023) and Ghana and Senegal (approved in February 2024). Benin finalised all membership requirements in April 2024, becoming the first sub-Saharan African country to join the Bank and its 75th shareholder.

Since its inception in 1991, the Bank has invested over €195Billion in 7,021 projects and supported policy reforms to develop the private sector in more than 30 economies. Its investments span natural resources, financial institutions, agribusiness, manufacturing and services, as well as infrastructure projects, such as power and renewable energy, and the upgrade of municipal services.


Nigeria’s Central Bank Tightens Grip on Petroleum Export Inspection and Revenues

By Masha Otula, in Abuja

The Central Bank of Nigeria (CBN) has appointed new petroleum export pre-shipment inspection agents. CBN also listed new exemption categories under the restrictions on foreign exchange revenues of petroleum exports that it introduced in February.

CBN distributed 31 oil and gas export terminals to nine inspection agents with each Nigerian company assigned three to five terminals. The Bonny, Forcados and Qua Iboe terminals were assigned to Neroli Technologies while Brass, Escravos and the Abigail-Joseph floating production, storage and offloading (FPSO) vessel were assigned to Offshore Bulk Inspection.

But CBN did not assign the Nembe crude stream or the Galilean 7 FSO from which it is produced to an inspection agent in its latest circular. Production of the Nembe crude stream started last year. Its output averaged 24,000Barrels of Oil Per Day (BOPD) from 25 May 2023 to 31 March and 32,000BOPD in April 2024, according to upstream regulator NUPRC.

“A market participant said Nigeria needs to reduce the “gangs of competing regulators” operating at its petroleum export terminals and unify multiple certifications of petroleum export quantity and quality if it expects to provide genuine ease of doing business.

The Aje, Abo, Okono and Ugo-Ocha streams were assigned to Candid Oil Services even though Aje last produced oil in November 2021, according to NUPRC. And Okono is not producing as we speak. Norwegian independent Petronor said in November 2023 that a 25,000 Barrels of Oil Equivalent Per Day (BOEPD) redevelopment target had been set for Aje as a gas producer. Partners in the asset would soon complete the re-processing of seismic data in preparation for drilling four or five gas wells, constructing a 30 kilometre gas pipeline and getting an FPSO with gas processing capacity, Petronor said. But the company did not provide a restart date. CBN also assigned LNG and NGLs exports from terminals in Escravos and Bonny to Dakee Engineering and Construction.

But CBN is yet to name inspection agents for oil products exports. The 650,000Barrels Per Stream Day (BPSD) Dangote refinery, which started to export naphtha in March 2024, said on May 8, 2024, that it expects to start gasoline (petrol) production in June. An industry source said Dangote has now received approval to start its residual fluid catalytic cracker. The refinery previously said it expected to export 8Million litres/day of petrol when it ramps up production to full capacity.

CBN may also later name inspection agents for the jetties of the NNPC-operated 210,000BPSD Port Harcourt and 125,000BPSD Warri refineries, which are both under different rehabilitation contracts. An industry source said while work is ongoing at both refineries much remains to be done and it would not be surprising if neither Port Harcourt nor Warri restart production this year. But NNPC maintains the two refineries will restart in 2024. Previous restart deadlines have been missed. The Warri refinery was shut in 2019 and Port Harcourt in 2020 but industry sources said that naphtha and fuel oil from the 5,000BPSD Waltersmith and 11,000 BPSD Aradel modular refineries are currently exported from the jetties of the Warri and Port Harcourt refineries, respectively.

Export pre-shipment inspection agents “ascertain the quality, quantity and price competitiveness” of exports, acting as agents of the CBN as it monitors “the repatriation of all export proceeds”. A market participant said that the inspection agents always had a low profile but CBN’s latest announcement may signal their increasing prominence as the central bank continues aggressive foreign exchange reserves management in response to a weak and volatile naira and high inflation.

A separate market participant said Nigeria needs to reduce the “gangs of competing regulators” operating at its petroleum export terminals and unify multiple certifications of petroleum export quantity and quality if it expects to provide genuine ease of doing business. CBN also announced two monitoring and evaluation agents, Arlington Securitas Nigeria and DV Howells Nigeria, to supervise the work of the nine inspection agents.

But an energy lawyer said CBN is only discharging its statutory responsibilities and that the Pre-shipment Inspection of Exports Act, which empowers the central banker, dates back to 1966 and was modified by the military government in 1996 before being compiled as one of the Laws of the Federation of Nigeria (LFN) in 2004.

The paper trail generated in compliance with that law was evidence and the basis of Chevron’s defence in a suit filed by the federal government alleging that a Chevron subsidiary did not declare a cargo of oil that was exported to the US. Therefore the provisions of the law and its enforcement by CBN actually protects oil companies, the lawyer said.

“CBN did not assign the Nembe crude stream or the Galilean 7 FSO from which it is produced to an inspection agent in its latest circular. Production of the Nembe crude stream started in 2023. Its output averaged 24,000BOPD from 25 May 2023 to 31 March 2024 and 32,000BOPD in April 2024, according to upstream regulator NUPRC.”

CBN has also now said the restriction it introduced in February for 50% of oil export revenues to be maintained as domestic bank balances for 90 days by foreign upstream companies, permits withdrawals within the 90-day period for the payment of local corporate taxes, petroleum taxes and royalties, cash calls and contractor invoices, operating loan payments or hard currency sales in the official domestic market.


Nigerian Court Pauses Rig Dispute Hearing Due to Filing Errors

By Lukman Aboolade, Senior Correspondent

A Federal High Court sitting in Lagos could not continue the hearing on the legal dispute between General Hydrocarbons Limited (GHL) and Dolphin Drillings due to incomplete filing from the latter.

The Judge, Akintayo Aluko, had granted an ex-parte motion filed by GHL that restrained Dolphin Drillings from various actions regarding the Rig – Noble Blackford Dolphin, pending the determination of a motion on notice for interlocutory injunction.

The Noble Blackford Dolphin owned by Dolphin Drillings is drilling in the Oyo Field Complex on Oil Mining License (OMLs) 120 & 121 for GHL.

The interim injunction, granted on Wednesday, 8th May, 2024, prohibits the respondents, their agents, servants, or anyone acting on their behalf, from removing, demobilizing, or decommissioning the Rig – Noble Blackford Dolphin from GHL’s field. Additionally, it restrains interference with GHL’s rights under the contract for the use of the rig, along with the respondents’ personnel involved in drilling operations on fields EWO-2 and OYO-8.

Although the court declined a relief from GHL, which pertained to a mandatory interim injunction directing the respondents to continue fulfilling contractual obligations, it granted leave to GHL to serve the second respondent through Frank Fenton, the Rig Manager of Blackford Dolphin Rig, located within the jurisdiction of the court, either personally or via email. The court also mandated GHL to file a formal undertaking as to damages, to indemnify the respondents in case the order was deemed improper.

During the resumption of the hearing on Tuesday, the counsel representing GHL, Olasupo Shasore (SAN), told the court that although the respondents served a motion to discharge, only 6 out of 12 pages referenced in the motion was sent. He added that he did not receive the remainder of the copies until Tuesday, the adjourned date for hearing, which made it impossible for the respondent to file a response.

Counsel to the respondents, Olusina Shofola, told the court that it was an error in the rush to file the motion and apologized to the Court. Justice Aluko adjourned the Court to Monday 20th May, 2024, to allow GHL file a response to the motion to discharge.

However, the Judge also fixed Wednesday 15th May, to deliberate and decide upon the appointment of a sole arbitrator for the dispute among the parties.

Earlier in March, Dolphin Drillings and GHL reached an agreement regarding past-due payments and the remaining work under the drilling contract for the rig, which was initially supposed to run until the end of March. However, payment disagreements extended it, having received two instalment payments in 2024, while the next payment was due by late April 2024. Due to a failure to meet the next payment date, Dolphin Drillings announced the termination of its contract with GHL.

“The terms for payment under the agreement with GHL have not been met, and the Company therefore confirms that it has, in accordance with the agreement, today issued a notice of termination to GHL. The Company will now prepare the Blackford Dolphin for transit to India in the near term and intends to pursue the recovery of sums remaining due by GHL. Any further information will be provided in due course,” the company said. The termination prompted GHL to approach the court for an injunction and to appoint a general arbitrator.

The hearing on the motion on Notice is set to commence on Monday 20th May, 2024.


Long Awaited: Nigeria’s OML 13 Reaches First Oil, Looks to Ramp Up to 40KBD

The Indian independent Sterling Exploration has reached first oil in the development of the Oil Mining Lease (OML) 13 onshore eastern Niger Delta.

The company has worked on the project in the context of a Financial and Technical Service Agreement (FTSA), signed with NNPC E&P Ltd (the company formerly known as NPDC), which holds the licence to the acreage.

An NNPC press statement says that production from OML 13, in which the main field is Utapate field, commenced on the 6th of May 2024 with 6,000 barrels of oil per day and is expected to be ramped up to 40,000 barrels per day by May 27th, 2024.

The statement adds that Sterling is working the asset through its subsidiary named Natural Oilfield Services Ltd (NOSL),

The development of OML 13 has been a long, drawn-out project.

When SEEPCO inked the FTSA with the then NPDC in June 2019, close to five years ago, a statement by the NNPC said that the Indian operator, the only non-indigenous independent oil producer operating an asset  in Nigeria, would pump $3.15Billion  to drain the recoverable portion of the 926Million stock tank barrels (MMSTB) and 5.24Trillion cubic feet (Tcf) respectively of oil and gas reserves in place, over a period of 15 years.

First oil of about 7,900BOPD was expected from the project by 1st April, 2020, while production is expected to peak at 94,000BOPD and 542Million standard cubic feet a day (542MMscf/d) within four years, the NNPC statement added.

The terms of the deal was that the $3.15Billion, described as the “ceiling funding”, came with a 10-year capital investment period and five years for cost recovery.

But none of the details of the project, financial or non-financial, have shown up in any of the NNPC annual reports since 2020.

Gas, Is this related?

A week ago, NNPC released a press statement announcing three gas projects expected to be commissioned by President Bola Tinubu. One of those projects  is named AHL Gas Processing Plant 2 (GPP – 2) – which is supposed to deliver 200MMscf/d. “It is an expansion of the Kwale Gas Processing Plant (GPP -1), and will deliver lean gas through the OB3 Gas Pipeline, supporting Nigeria’s industrialization”, NNPC’s statement said. The AHL Processing plant 2 is also expected “to produce 160,000 MTPA of Propane and 100,000 MTPA of Butane, reducing dependency on LPG imports”, the press release added. 

 

 

 

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