All posts tagged newsgas

Be Bold, Cut Out Entitlement: No One Owes Us Anything

Section: Opinion · December 29, 2020 · No comments |

By NJ Ayuk

In 2021 most opportunities in the energy sector and in business in general will go to those who show up and negotiate better deals and get involved in making African resources work for us. Forget handouts, foreign aid and government handouts.

As I wrote in the second edition of Billions at Play: The Future of African Energy and Doing Deals, in 2021, young African dealmakers, negotiators and lawyers will have to embrace a new mindset to win. They will have to mobilize their resources and advocate for important principles of personal responsibility, smaller government, lower taxes, free markets, personal liberty, and the rule of law.

In 2021, African gas projects are going to be in the news. Companies will push to get them going, from Mozambique to Nigeria and from Equatorial Guinea to Tanzania.

If some extremists have their way, none of these projects should happen and our people should be left in the dark. Question we must also ask is how Africans are going to participate when it comes to jobs and contracts. In 2021, we cannot be bystanders. We all can’t afford to.

Africa’s economic recovery from Covid-19 and our global significance in the era of energy transition and attacks on our energy sector must be driven by the talent and entrepreneurship of its people.

Our continent is still struggling when it comes to establishing democratic and trade institutions, we must push for more democracy. Democracy isn’t perfect but it is the best of all political practices and we must embrace it.

I have a few words of advice for this generation, for Africa’s young attorneys, entrepreneurs, rising stars and dealmakers:

Never lose sight of the significance of your work.

By negotiating effectively for African businesses and governments, you can play a huge role in transforming the lives of hundreds of thousands of Africans. Few things in life are more satisfying.

I am proud of the law group I have built, but I consider the work I have done to get justice for and empower African individuals, businesses, and communities among my greatest successes.

I am the first to advise many young people to avoid feeling entitled to anything. No one owes you or us anything. We have to earn it. Our approach and success in oil and gas negotiations stem from our deep preparation and mindset. More of that is needed in 2021.

I have stated many times: you succeed when you look for mentors and let them mentor you. It’s important to have someone who is promoting you when you are not in the room. Next, be stubbornly loyal. Don’t try to pull a fast one because you know more than others! Further, embrace your trials and shortcomings for they teach you to be a better person and lawyer.

I have seen too many young lawyers or rising stars who get a chance to be on a podium, and then tend to spend more time being celebrities than being around colleagues or supervisors.

Many so-called celebrities have not earned a deal and completed one, so avoid having a big head. For me if you have not closed a deal and are not making money, you need to keep your philosophies to yourself. It is crucial to have a strong focus on building your skills because clients and business partners really want you to be good at what you do. Your writing, critical thinking, commercial mindset and in-depth industry skills cannot hurt you. Most clients want to know who is working on their deals, and they do not care about your race or nationality. They want to know you are qualified and can get the job done.

When you finally get a deal done and you get your first bonus or check, do not fall in the trap of buying that fancy car or getting into fast life. You will get broke so quickly. Spend wisely even when you think you have arrived where you need to be. Always think there is more and stay hungry. Look at the Texas oil boys, they are always hungry. They wear their cowboy boots and continue searching for the next big discovery.

Hashtags do not pay the bills. Get off your phone.

Get offline, social media is nice but it isn’t everything, we have seen people who prefer to seat on their phone even during business meetings rather than engage on real business. How do want a deal when you are busy on your whatsapp group chats? Why have a meeting with someone when you will be on your phone while they are talking? Get out of the room and take the call or send a message. If you decide to work on your Instagram while talking to me, I walk you out of my office or end the meeting. When you don’t get the job or the contract, don’t be so quick on blaming the “White Man” or Racism.

I know this will get the young generation annoyed, but its real. We need to start having a post covid mindset and know we will have to engage again. I am not crazy about Zoom meetings, but we have to do it. Business is not about who had the best tweet two hours ago or who does the best hooting and hollering. Get down on the ground and make money. Do not believe those who tell you money is bad. We know it is bad being broke and we hate being broke. You should never apologise for working hard and making money. To do that, you must be focused and yes, get off your phone.

Commit to work. Pay your dues. Your time to shine will come.

Always ask yourself, “Am I adding value to the firm or the company?” Don’t think you are in the firm to be the labour union representative or the head of diversity.

Do not walk around the firm or even a negotiation with arrogance or give off a sense that you are entitled, or that your opinion matters on every subject. You are not owed anything. It is important not to cry over discrimination on every issue, whether it is sexism, racism, or xenophobia.

You beat them with excellence and success. We see it every day and you will be surprised it comes from the same liberals who claim to love all humans and want to save the world. They will love to patronize you and put you in your place. I have experienced it myself. I just work harder, and success follows.

You must understand that building a successful practice or business calls for something not taught in law school or business school or any school: the ability to hustle and deliver on deals. I have always had run-ins with young lawyers because I can be a tough, goal-oriented taskmaster. I have a fierce sense of urgency that many others don’t share.

Working for Centurion is not for the naïve or the fainthearted—we don’t tolerate young lawyers viewing Centurion as merely a job. Everyone has to give their maximum effort all the time.

The truth is, I am harder on myself. I am never satisfied, and I just believe I can win bigger and do the deal better. The most important outcome for me is to have people around me achieve more than they ever thought they could.

Lean in and take the heat for your client or causes you believe in, and for Africa

In 2021, you will have to visible, be vocal in defending the African energy sector from those that want to end it and you must capitalize on the opportunities that you see. One of the key things you must do in 2021, is take the heat for your clients. I have never had a problem being called an ambulance-chaser in the past. Today I am that ambulance that is being chased and many know i will always stand with them and I built a strategy of taking the heat for them. Don’t let them push on your client or kill your issue. Develop a thick skin and let them hit you. If I can’t take the heat, I have no business being in the kitchen.

I have been pushed, been kicked, sometimes been spat on, lied on, demonized, talked about and even derided in the media. Its does not bother me one bit, I always know I am going to outlast my distractors or competition. In 2020, we made more money than any other year with Centurion Plus, our latest on-demand service. I have also been invited to meet with Presidents, Ministers, CEO’s and even Royals. But I never lost my way.

Never take your eyes off the prize. Be patient, play chess, keep smiling, be ready to take a punch and definitely hit back and do it harder. Maybe a combination of Jabs, Uppercuts and Hooks. That’s going to be you in 2021. Its going to be a fight to stay alive, stay employed, stay in business, stay relevant and stay sane when everything and everyone around you is going crazy.

You are going to be tested. They are going to come after you. sometimes even your own friends and those who laugh with you then stab you in the back. You will be called a traitor to most of your liberal elitist friends who feel entitled, drink latte with soy or almond milk. They sometimes cannot believe that this kid who was their darling and their best boo does not buy into their tree hugging, cry me a river ideology. You and I will have to believe and fight for Africa first, against energy poverty, and for personal responsibility, free markets, limited government and yes we must not be ashamed of being people of faith.

The wisdom and advice my law school mentor and professor John Radsan, who used to serve as the CIA’s assistant general counsel and Ron Walters shared with me hold true for you today: each one of us has a mandate to use our education and skills to impact communities and to promote economic growth and empowerment.

So, yes, seek career success and prosperity in 2021. But, in the end, choose to do good: use your skills to make sure that everyday Africans receive their fair share of the benefits the continent’s natural resources can provide.

NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including ‘Billions at Play: The Future of African Energy and Doing Deals.’

DPR’s Abuja Move Will Be Expensive and It Comes at a Bad Time

Section: In the news · November 25, 2020 · 1 comment |

By the Editorial Board of Africa Oil+Gas Report

The relocation of the Department of Petroleum Resources, Nigeria’s hydrocarbon regulatory agency, from Lagos to Abuja, will cost about 900Million Naira (about $2.4Million). That is for a start.

The first phase of the move is anticipated to end at the end of the year, although there has been no official word from the agency itself.

Nigeria’s oil industry is largely based in Lagos. The headquarters of the major oil companies as well as the independents are located in Nigeria’s top commercial city.

As security challenges have heightened in the Niger Delta region in the last 15 years, the main offices of the service companies have moved to Lagos, with the vast equipment yards left in Port Harcourt and Warri, for ease of logistics. The Lekki Suburb, a growing commercial and residential area in the east of Lagos, is shaping to become ‘the new Trans Amadi‘, a phrase which references the name of the industrial layout in Port Harcourt, where the leading oil service firms have their facility and do their stock control.

“We are relocating our headquarters to Abuja and will be communicating the details to all stakeholders shortly”, declares Paul Osu, the DPR’s spokesman.

There has been push for the relocation, time and again, in the past three years.

But it’s a wonder why such an expensive undertaking, at odds with the trends and realities in the industry, is considered so urgent at this time.

It is expected that 300 staff will leave the Lagos headquarters in the first phase of the move. The average relocation allowance per head is ₦3Million Naira (~$8,000), Africa Oil+Gas Report can confirm.

Mr. Osu, a personable public relations professional, did not respond to follow up questions about when exactly the decision came. There was also no response to whether the cost of the relocation is in the agency’s 2020 budget. The 2020 budget for the entire Ministry of Petroleum Resources is ₦75,548,699,111 (₦75.5Billion, or $198Million) for Recurrent Non-debt expenditure and ₦2,930,776,820 (₦2.98Billion (or $8Million) for capital expenditure).

The Nigerian state is struggling with revenue management, the government has repeatedly lamented, over the past one year. It is certainly is not the best time to spend money on such an item.

Fuller details on the relocation will be published on this platform, on an ongoing basis.

Without a Host Community Trust, You Lose Your Nigerian Oil Licence, PIB Says

Section: In the news · October 6, 2020 · 2 comments |

By Fred Akanni, Editor in Chief

Failure by any holder of a licence or lease to incorporate a trust for the benefit of the host communities in the licence area may be grounds for revocation of the licence or lease, according to the Petroleum Industry Bill (PIB), currently tabled for discussion at the Nigerian National Assembly.

“Each settlor, where applicable through the operator, shall make an annual contribution to the applicable host community development trust fund of an amount equal to 2.5% of its actual operating expenditure in the immediately preceding calendar year in respect of all petroleum operations affecting the host communities for which the applicable host community development trust was established”, says the 252 page draft legislation.

Host community issues are some of the most intractable items in the development of Nigeria’s oil and gas industry. Some companies have robust Host Community plans while several do not.

The Nigerian state has earned 83 Trillion Naira (or $216Billion) in hydrocarbon revenues in the last thirty seven years, according to the Nigerian Natural Resource Charter (NNRC), but many of the communities in which the fossil fuel is extracted are derelict.

In the PIB’s definition, a “settlor” is a holder of an interest in a petroleum prospecting licence or petroleum mining lease or a holder of an interest in a licence for midstream petroleum operations, whose area of operations is located in or appurtenant to any community or communities.

“Where there is a collectivity of settlors operating under a joint operating agreement with respect to upstream petroleum operations, the operator appointed under the agreement shall be responsible for compliance with the law on behalf of the Settlors”.

The constitution of the host communities development trust shall contain provisions requiring the Board of Trustees to be set up by the settlor, who shall determine its membership and the criteria for their appointment. The Board of Trustees shall in each year allocate from the host communities development trust fund, a sum equivalent -(a) 75% to the capital fund out of which the Board of Trustees shall make disbursements for projects in each of the host community as may be determined by the management committee, provided that any sums not utilised in a given financial year shall be rolled over and utilized in subsequent year; (b) 20% to the reserve fund, which sums shall be invested for the utilisation of the host community development trust whenever there is a cessation in the contribution payable by the settlor; and (c) to an amount not exceeding 5% to be utilised solely for administrative cost of running the trust and special projects, which shall be entrusted by the Board of Trustee to the settlor. The law also says that host community development plan shall -(a) specify the community development initiatives required to respond to the findings and strategy identified in the host community needs assessment; (b) determine and specify the projects to implement the specified initiatives; (c) provide a detailed timeline for projects; (d) determine and prepare the budget of the host community development plan; (e) set out the reasons and objectives of each project as supported by the host community needs assessment; (f) conform with the Nigerian content requirements provided in the Nigerian Oil and Gas Industry Content Development Act; and (g) provide for ongoing review and reporting to the Commission.

The PIB does not relate this trust fund to the Niger Delta Development Commission (NDDC) which has the legal backing to receive 3% of the total yearly budget of any oil producing company operating onshore and offshore in the Niger Delta area.

But the new law says that “each host community development trust may receive donations, gifts, grants or honoraria that are provided to such host community development trust for the attainment of its objectives”.

S/Sudan’s Nilepet Wants to Be an Operator by 2022

Section: In the news · September 29, 2020 · 3 comments |

South Sudan’s state hydrocarbon company, Nile Petroleum Corporation (Nilepet), has set a target of 2022, to be a leading and competitive integrated oil and gas corporation of choice in South Sudan and beyond.

“We want to have our own block to operate”, says James Yugusuk, the company’s Director General for Downstream. “We want to raise world class South Sudanese technical staff and we want to construct four refineries: one in Bentiu, Paloch, Pagak and Thiangrial. All those are producing blocks. We also want to construct depots in major towns in South Sudan which is a very ambitious plan because we need to have strategic reserves. We want to extend our retail outlets to all the major towns in South Sudan. We want to have a very robust and highly effective JV and this is for companies and people who are willing to do that. We also want to have a strong footprint in the research and development programmes”.

Starting from 2013, Nilepet started participating in Joint Operating Companies in the country, holding stakes on behalf of the government in these JOCs through which it builds capacity of its staff. Between 2015 and 2018, Nilepet established joint ventures with oil service companies “and we continue to build the capacity of our national staff such that between 2022 and 2027, we’ll become a standalone operator, able to work up and develop hydrocarbon acreages by ourselves.

Nile Delta, for one, is a JV with 51% Nilepet and 49% held by Niger Delta Exploration and Production of Nigeria. “The mandate is to work on gas monetization and production optimization. This JV is also operating in the current producing blocks.

SIPET, for another, is an engineering and construction company which is 80% owned by Nilepet and 20% by QDC, a Chinese Engineering company. The areas of service are project management, consultancy, operation and maintenance. It is working on some of the country’s producing fields.

Nile Drilling is open to any international partner. “It is 90% Nilepet and 10% open to any willing investor”, Yugusuk explains. The specialization is drilling, and work over services.

“Nile Services and Logistic Company is 51% Nilepet and 49% from a local investment group and a South African company”, Yugusuk discloses. “It is into logistics and of course, it is still under development”. Another JV that we have is the Nile-Delta Systems which deals in ICT and it is currently operating and it is 51% Nilepet and 49% ASECCO Polland.

“We have SNP Group which is 30% Nilepet and 70% a Russian company called Sufinat it is working on the Bentiu refinery and it is currently operating. We have Dietsmann Nile S.A Ltd which is 31% Nilepet and 69% Dietsmann Technology which is an Italian company that deals on technology. It is operating.

“Again, we have NIYAT which is 40% Nilepet and 60% Eyat-Sudan. It specializes in road construction and maintenance”.

This story was originally published, for the market intelligence benefit of paying subscribers, in the July 2020 edition of Africa Oil+Gas Report. Here’s the link to the subscription portal.

Local Content Fund Is Nigeria’s Energy Bank in The Making

Section: In the news · September 28, 2020 · No comments |

By Adeniyi Adeoloye

There is need for an Oil &Gas Bank in Nigeria, in the opinion of a cross section of stakeholders in the country’s E&P sector.

“It is imperative for government to encourage the licencing of an Oil &Gas Bank”, declared Tunde Afolabi, Chairman of Amni International, giving a keynote address at a webinar on funding for the sector. “And Government should have significant subscription in the shares of the bank”.

Austin Avuru, former Chief Executive Officer of Seplat Petroleum, observed that “there is an Energy Bank in the making in Nigeria, if we watch carefully”.

“All of us operators, today contribute 1% of our budget to the Nigerian Content Fund, a fund that is run by the Nigerian Content Development and Monitoring Board (NCDMB”

The fund can act as seed capital for starting out an Energy Bank for the Nigerian hydrocarbon industry. “The local content fund currently has about $200Million and has the chance to grow to about $1Billion in the next 10 years given the proposed legislation that is underway at the National Assembly that seeks to increase the contribution to the fund to 2% from the current 1%”, Avuru explained.

“You don’t need more than that ($1Billion), to seed a bank that will cater solely to the needs of the industry”, especially the needs of the indigenous Nigerian firms who today struggle with funding their operations.

Afolabi’s key argument was that “an oil and gas focused bank will understand the market fundamentals and the rudiments of running an E&P business”. His paper laid out a list of challenges that stand in the way of financing of projects by indigenous Nigerian E&P companies from Nigerian banks. “Facilities granted by banks to the marketers of petroleum products are included in the count of what was given to the oil and gas sector, which comes to 50% of what is granted.

The webinar, entitled Long Term Funding of E & P Business in Nigeria- Strategies for Sustainability, was organized by the Nigerian Association of Petroleum Explorationists.

This story was originally published in the August 2020 edition of Africa Oil+Gas Report. Mr. Afolabi’s full paper is published in the October 2020 edition.

Foot on the Gas – Developers of Matola LNG terminal intensify talks with potential customers to reach 2023 supply date

Section: Paid Post · August 18, 2020 · No comments |

PAID POST

The front-end engineering design phase for a proposed greenfield liquefied natural gas (LNG) import terminal at the Port of Matola, in the Mozambican capital of Maputo, is underway and the developers of the project are now intensifying discussions with potential energy and industrial off-takers in both Mozambique and South Africa.

The project is being developed by the Beluluane Gas Company (BGC), a joint venture between French energy multinational Total and Southern African natural gas group Gigajoule. Mozambique’s State-owned gas company, ENH, also has a share in the project, which is currently scheduled to begin operating in 2023.

In 2019, Mozambique awarded an LNG import concession to BGC and approved the construction of a 16-km, 28-inch pipeline linking the terminal to the existing Matola Gas Company (MGC) transmission network.

The Mozambican market consumes about 30 petajoules (PJ) per year of natural gas to gas-to-power and industrial off-takers. The vast majority is supplied through the MGC network which is also connected to the 865-km Rompco pipeline that currently transports some 150 PJ a year of natural gas to industrial customers in South Africa, including Sasol’s fuels and chemicals facilities in Secunda and Sasolburg.

The gas transported to South Africa is produced at Sasol’s Pande and Temane gas fields, in southern Mozambique.

Supply Squeeze

The development of the LNG terminal is being timed, however, to fill a supply gap that is anticipated to arise when production from those gas fields begins to taper from 2023 onwards. Ahead of the Covid-19 pandemic, the Industrial Gas Users Association of Southern Africa was forecasting a potential yearly gas shortfall in South Africa of up to 98 PJ from 2025 onwards.

The Rompco pipeline has a nameplate capacity of 220 PJ and Gigajoule Managing Director Johan de Vos and Total LNG business development director Shammi Herai report that the Matola terminal is being profiled to eventually match Rompco’s full capacity.

“Initially, we expected that most of the customers would be in South Africa, but we are receiving strong interest in Mozambique, which could shift the terminal’s supply equation materially,” De Vos says.

Besides servicing gas-to-power and industrial customers that are already linked to the gas network, the project includes scope for a cryogenic facility able to load trucks with LNG destined for customers that have no direct access to the existing pipeline infrastructure. “This is a very exciting market segment and we are contemplating a sculpted design that enables us to supply this market with more than 20 PJ of gas yearly as from 2023 onwards.”

Complementing Renewables

Herai, meanwhile, is equally enthused by the prospect of deploying the gas in support of the region’s push to increase the penetration of variable renewable energy into the electricity mix. BGC is also keeping close tabs on Eskom’s plans for the repurposing of four coal-fired power stations in the Mpumalanga province, which could include a gas-to-power component.

In addition, Central Térmica de Beluluane (CTB) secured a concession in 2019 for a 2 GW power plant project in Beluluane Industrial park, which will be supplied by BGC.

“Multiple discussions with interested parties are already under way despite the restrictions imposed by Covid-19 lockdowns, and the project is still on
course to reach final investment decision (FID) in the first half of 2021,” Herai explains.

BGC, De Vos highlights, needs the market to supply information with regards to industrial energy requirements as well as on-site power demand to enable it to progress to an FID as soon as possible and also to improve prospects for the supply of competitively priced natural gas.

“Infrastructure is a fixed component so it is in the interest of all customers that BGC aggregates sufficient volume to have significant economies of scale. The price to each customer will cover the molecule price and infrastructure costs, which means that all customers benefit from higher volumes.”

The process of securing commitments from customers is continuing in parallel with the front-end engineering design, which has been initiated after the BGC technical team resolved the critical technical and environmental issues confronting the project.

Project Progress

The front-end engineering design studies, meanwhile, are being advanced following the signing, in November, of a joint development agreement between Total and Gigajoule. Once completed, BGC will go out on enquiry to secure the services of an engineering, procurement and construction partner.

BGC will install a floating storage and regasification unit (FSRU) at a dedicated berth in the Port of Matola and has received strong interest from shipowners, many of which have been negatively affected by the deferment or delay of projects as a result of the Covid-19 pandemic.

In fact, Herai says the availability of an FSRU is no longer seen as a critical-path item given recent market developments and the focus currently is on securing the best possible commercial value, which could assist in lowering the overall cost of the project.

The harbour itself has recently been dredged to sufficient dimensions for handling the LNG vessels; a fact that has been confirmed through navigation studies and detailed simulations. Most of the Total LNG fleet is made up of vessels able to carry 170 000 m3 of LNG. Some minimal dredging will be required for a new turning circle and berthing pocket as the LNG terminal will be located at a last berthing dock in the harbour.

“We see this project as a game-changer for gas and potentially gas-to-power in Southern Africa. There is currently insufficient natural gas supply for market growth and the power generation needs in Southern Africa; a scenario that is likely to worsen as output from the Pande and Temane gas fields declines,” De Vos asserts.

“The Matola gas terminal is also ideally placed to supply regasified LNG to industrial customers, while its proximity to the existing high-voltage Motraco interconnector means that gas can begin to play a more significant role as a complement to renewable energy power plants in between South Africa and Mozambique,” Herai concludes.

Interested parties can provide their gas and power demand information on the BGC website: www.bgc.co.mz

This post is sponsored by Festac News Press Limited

Petroleum Industry Bill Arrives Again at the Nigerian National Assembly

Section: In the news · August 16, 2020 · 2 comments |

A team of lawyers at the Nigerian Ministry of Justice has finalised the draft of the long-awaited Petroleum Industry Bill and sent it off to the National Assembly, the country’s bicameral house of legislature.

The frame of the document had earlier been approved by President Muhammadu Buhari and the Federal executive council.

The omnibus legislation, which, according to the Ministry of Petroleum, “combines 16 different Nigerian petroleum laws in a single transparent and coherent document ….” has again been consolidated into one single volume.

The first version of the PIB was presented to the National Assembly in 2007. It didn’t make it to law. It has returned, fruitlessly, to two National Assemblies after that.

The last time the bill was debated by the legislature-during the first term of President Muhammadu Buhari-it was in four separate volumes.

Out of the four: Petroleum Industry Governance Bill (PIGB), Petroleum Industry Finance Bill, Petroleum Host and Impacted Communities Bill (PHICB) and Petroleum Industry Administrative Bill, only one, the PIGB, made it through to the President’s desk for assent and he didn’t sign it.

It has become something of a cliché to say that the non passage of the PIB, since it was first presented 13 years ago, has deepened the uncertainties in the Nigerian Petroleum industry.

Timipre Silva, the country’s current Minister of state for Petroleum, has repeated the guarantees that the PIB will pass this year.

Nigerian Independents Feel Abandoned by Regulators

Section: In the news · August 10, 2020 · No comments |

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.

High Number of Offshore Fields Increases the Risk in 2020 Marginal Field Bid Round

Section: Farm in, Farm Out · August 6, 2020 · 4 comments |

By Fred Akanni, Editor in Chief

There are 29 shallow water fields among the 52 fields on offer in the ongoing Nigerian marginal field bid round, which wraps up on September 2, 2020.

This represents 56% of the total.

Compared with six offshore fields (or 25%) out of the 24 marginal fields offered in 2003/2004, this current round is enormously riskier.

Offshore fields are more expensive.

An average 20Million barrel field in 30 metres of water will require in excess of $65Million to reach first oil, according to modelling by Africa Oil+Gas Report.

In the last marginal field round, offshore fields represented the highest proportion of the fields that didn’t make it to first oil.

Out of the six offshore fields (all located, incidentally, in acreages operated by Chevron) awarded in 2004, only one made it to first oil.

The fields with the fastest routes to market, in the class of 2004, are located on land. Most of those that struggled to reach first oil, are in swamp terrain.

Details on funding challenges and opportunities in the July 2020 issue of Africa Oil+Gas Report.

Namibian Minister Delegitimises Kudu Field as A Discovery

Section: Oil patch Sub-Sahara · July 29, 2020 · No comments |

By Akpelu Paul Kelechi

Tom Alweendo, the Namibian Minister of Mines and Energy, does not consider the Kudu gas field offshore the country as an asset.

When asked about his country’s contribution to conversations around global crude oil and gas demand and supply, he offered that “Namibia is a relatively new comer to this”. Then he said, surprisingly: “We don’t have a discovery, we have never had a discovery before and over the last couple of years, there have been some Majors doing prospecting in our sectors”.

The statement came in the course of a recent Webinar on Namibian Energy plans. The conversation was organized by African Energy Chamber.

The question that stood un-asked, after the minister claimed Namibia had never had a hydrocarbon discovery was: So, what should the Kudu Gas Field be called if it’s not called a discovery?

The Kudu field, discovered in 1974 by Chevron, is a deep-water field in 600 metres of water. The gas is stored in reservoirs at a depth of 4,400 metres (17,000 feet) and deeper, and they are interbedded with volcanic rock.

A huge challenge is that an estimated 1,3Trillion cubic feet of gas accumulation is not big enough for an LNG project, which is why the development concept has been around gas to power. There’s considerable geologic risk around Kudu, but that’ not to say it’s not sitting there.

There has been a line of investors (including Shell, Tullow), going back the last 30 years who have taken a look at the Kudu field. Till date, the field is undeveloped. But its very presence suggests that Namibia is a hydrocarbon player. Mr Alweendo, instead, prefers to delegitimize the asset. He told the webinar: “I think the prospect of us becoming a player in the upstream is really growing by the day to the extent that now, we have a couple of the major oil companies doing exploration. Therefore, when that time comes when we actually do find something, hopefully we will not just continue to be a consumer but also a producer. But even as a consumer, as small as we are, of consumers have a role to play as well”.

This story was originally published in the June 2020 edition of the monthly, Africa Oil+Gas Report