All posts tagged oil-blocks


Rystad Predicts Massive Plunge in Libyan, Nigerian Reserves

By Ahmed Gafar, in Lagos

Rystad Energy is revisiting the concept of Peak Oil.

The Norwegian consultancy is arguing that the effects of COVID-19 will ultimately force significant reduction in appetite for frontier exploration.

The company has startling predictions for the growth or decline of crude oil reserves in African jurisdictions, especially the Top Four holders of crude.

Rystad says of Libya, where the warlord Khalifa Haftar has only just been stopped in his drive to take Tripoli: “With no imminent peace in sight, future production potential falls further by 4Billion barrels”.

About Nigeria, Rystad says: “after a decade-long debate on oil policy reforms, potential reserves are expected to fall further by 6Billion barrels”.

Rystad acknowledges positive news on oil policy reforms in Algeria, but in spite of that, it expresses the gloomy view that “shale exploration potential is expected to fall by 7Billion barrels of oil”.

For Angola, Rystad forecasts “less deepwater exploration as peak oil demand comes sooner due to COVID-19”.

But it does not say how much future reserves increase Angola will lose.

 

 


In Uganda, The Winner Takes All

By Toyin Akinosho

TOTAL’s announcement of a half-a-billion-dollar purchase of Tullow’s entire equity in a Ugandan oilfield development, last April, sounded like a loud, symbolic statement of optimism.

In a dry white season, during which over four billion people were in lockdowns across the globe, the statement seemed to assert: “Uganda, we got you”.

At the heart of the transaction is the 230,000BOPD (Barrels of Oil Per Day) Lake Albert upstream and midstream project.

Tullow will receive $575Million, with an initial payment of $500Million for its 33.3334% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. It will pick up the remaining $75Million cheque when the partners take the Final Investment Decision to launch the project. In addition, the Irish independent will receive conditional payments linked to production and oil price, which will be triggered when Brent prices are above $62/bbl.

Tullow got to reduce its debt and command an immediate surge in its share price. TOTAL secured such a prize for less than $2 a barrel and for Uganda, finally, a clear line of sight to Final Investment Decision for a development that had been on the drawing board for over a decade.

As I see it, TOTAL has prevailed in Uganda in the eight years since it first entered the country’s E&P sector, via the acquisition of 33.3% of what was then Tullow’s Blocks 1, 2 and 3A for $1.45Billion. It had gradually stamped its authority, muscled out Tullow and raced past the sure footed, hard-tackling energy bureaucrats at the country’s Petroleum Authority and Minerals and Energy Ministry.

The French major is the decisive winner.

Tullow, which helped to nurture East Africa’s potential as a prolific oil producing region, and proudly displayed a badge describing itself as “Africa’s leading Independent”, now had to pack its bags.

I started having the nagging suspicion that TOTAL had taken charge in late 2015, when I witnessed, first hand, a very public argument between two ranking Ugandan and Kenyan civil servants regarding which was the optimal route to lay the EACOP, the pipeline that will ferry the crude oil produced in landlocked Uganda to the Indian Ocean for export.

“The route through Kenya is the one we have always known,” Hudson K. Andambi, (then) senior principal superintendent geologist at the Kenyan Ministry of Energy and Petroleum, said at the Africa Oil Week in Cape Town.

“We are still evaluating the routes and the least cost route is what we will consider”, declared Fred Kabagambe-Kaliisa, (then) Permanent Secretary at the Uganda’s Ministry of Energy and Mineral Development, at the same conference, minutes after the Kenyan had spoken.

It was the second public hint that the Ugandans might jettison the long- anticipated, widely expected pipeline route from Hoima, in Uganda’s oil rich province, to the Kenyan coastal town of Lamu.

I walked up to Mr. Kabagambe-Kaliisa after his presentation and asked him, pointedly, if TOTAL was behind the change. “We will take on board any concerns by our partners,” he responded, carefully weighing his words.

With crude oil found in commercial quantities in the Kenyan hinterland, over a thousand kilometres from the coast, operator Tullow had looked forward to an evacuation pipeline, originating from Uganda, that would link up with one that collects Kenyan crude, with both crudes heading for a Kenyan coastal port. The agreement signed by Presidents Uhuru Kenyatta and Yoweri Museveni in August 2015, three months before that public contestation between the Kenyan and Ugandan officials, was anchored on a 1,500 kilometre pipeline from Hoima through Lokichar in Kenya’s border region, and required guarantees from the Kenyan government regarding security, route optimization and financing.

But two months after that Kenyatta-Museveni agreement and a month before the subject spat at Africa Oil Week, Ugandan and Tanzanian officials, as well as staff from TOTAL, signed a separate agreement, creating “a working framework for the potential development of a crude export pipeline from Hoima to Tanga Port of Tanzania,” the Ugandan Ministry of Energy said in a statement, which raised some concern in Nairobi.

And now we were at this conference, I knew that Tullow should be worried, very worried.

The decision to pump the Ugandan crude through a separate pipeline from that with which it planned to pump the Kenyan crude to market, meant that Tullow would be investing in two expensive pipeline projects, each costing no less than $3.5Billion. This, at a time of plunging crude oil price, should unnerve the company, a midsized independent struggling with losses.

It might not be surprising to some, then, that in January 2017, Tullow announced that, for a sum of $900Million, it had agreed to sell, to TOTAL, two thirds of its entire stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. It came to 21.5% of the project’s entire stake. CNOOC invoked its right- of-first -refusal and asked for half of the 21.5%. But Kampala, never in a hurry to close any deal, dragged the timing of grant of the official consent for the sale, which itself impacted the Final Investment Decision.

The sticky point was the Tax that the government would receive from the sale and purchase.

Tullow’s inability to consummate the sale signaled to its shareholders that it wasn’t creating value. Share prices kept falling. Tullow was hemorrhaging worth.

With government still playing hard ball, two and half years after the intent for the 21.5% sale was announced, TOTAL pulled rank and announced the suspension of all activities, including tenders, on the EACOP. The Chinese, not known to express anger in public, decided that this was time to talk. “It is now very difficult to negotiate with government”, Gao Guangcai, CNOOC’s Vice Project Manager, told a conference in Kampala. The implication of TOTAL’s action was that the project could not continue.

The authorities got the message and the parties went back to the table.

By April ending 2020, the global economy had seized up; the Ugandan authorities had come around and Tullow was going to make a distress sale: accept $425Million less for a much larger stake than it had negotiated it would take three years and three months earlier. TOTAL, the European supermajor with piles of cash, is the winner that takes all.


Widespread Interest expressed in Nigeria’s Marginal Field Bid Round

Over 300 companies have applied to be prequalified for the Nigerian Marginal Field Bid Round, with many others unable to gain access to the portal, in the three weeks since the round was launched.

The Department of Petroleum Resources, the industry regulator, meanwhile, postponed the terminal date of registration of Bids to June 21.

Nigerian Ministry of Petroleum sources say it is likely that over 500 companies would have applied by that date.

The ongoing exercise is the first government supervised oil and gas asset sale since the acreage bid round in 2007.

Marginal fields are undeveloped discoveries that have lain fallow in acreages operated by International Oil Companies for at least 10 years.

It would take around $150,000 for a qualified application to get all the way to signature bonus and a number of Nigerian businessmen. “Once you get to the point of being qualified and all you have to pay is the signature bonus, you’re there”, says a retired reservoir engineer who spent over 25 years with a super major in Nigeria. “There is the impression that a marginal field licence has conferred on you some entitlement”.

The entire exercise, up to the submission of technical/commercial bid, ends on August 16, 2020. In between, from June 21 to August 16, the following will happen: (1) Evaluation of submission and preparation of report, June 22 to July 5; (2) Announcement of Pre-Qualified Applicants and Issuance of Field Teasers, July 5; (3) Data Prying, Leasing, Purchase of Reports, July 6 to August 16; (4) Payment of Application and Bid Processing Fee and Submission of Technical and Commercial Bid; July 6 to August 16. The schedule means that the heavy lifting will happen between July 6 and August 16.

 


NDEP, In Historic 25TH Annual General Meeting, To Announce Record Revenue Breaks

Niger Delta Exploration &Production will be releasing some record financial achievements at its 25th annual general meeting next Wednesday June 17, 2020.

The Nigerian integrated oil and gas company, with assets including a marginal field, share in an Oil Mining Lease, a natural gas processing plant and a Refinery (in Nigeria) as well as E&P stake in South Sudan, has been run as a structured organization owned by shareholders since 1996.

Today there are 1,623 company shareholders.

NDEP, in 2019, increased average daily production of its flagship asset, the Ogbele marginal field, to a record 7,500 Barrels of Oil. (7,500BOPD).

The company recorded its highest revenue from crude oil production in the past decade, as a result of three key factors, in the opinion of its management:

  • Strong asset quality
  • Operational excellence
  • Sustained share of profit from our associate (ND WesternLtd, which is a 45% equity holder in OML 34 in the Western Niger Delta).

NDEP is always proud to speak of its midstream to downstream achievements.

Ladi Jadesinmi, the Oxford trained lawyer and latterly accountant who is Chairman of the board of directors, speaks of “spectacular inspired piece of forward thinking” delivered by Management some 10 years ago, namely “ the foray into refining with NDEP successfully investing in a mini refinery”, adding that this was the first of its kind in Sub-Saharan Africa.

The Licence to Operate that refinery was granted by the regulatory authorities in 2012.

2012 indeed, was the year of breaks for NDEP

It was in that year that the company also commissioned “our 100 MM Scf/d Ogbele Gas Processing Plant. It was in that same year that NDEP led a consortium of companies via a special purpose vehicle (SPV)ND Western Ltd, to acquire the 45% equity interest divested by SPDC, TOTAL and NAOC in OML 34. “This our associate remains the leading JV partner to NPDC”, the company claims.

Of the year under review, however, NDPR, the NDEP subsidiary which operates the Ogbele marginal field,  recorded an outstanding total production of 2,162,003 bbls (reconciled injected volume) of crude oil into the Bonny Terminal

Revenue  from crude oil increased to 38.3Billion (2018: 29.4Billion) as a result of an increase in our production despite the market’s volatility, which caused the average realized price to drop to $65/bbl (2018: $74/bbl).

Revenue from diesel dropped in the year to 4.6Billion (2018: 5.2Billion) because of plant maintenance activities and outages due to integration to our Train 2 under construction.

Natural gas revenues dropped to 3.0Billion (2018: 4.4Billion) as a result of lower realised prices. Overall, total revenue grew by 16% to 46Billion (2018: 39Billion), a testament to the resilience of the company, NDEP management says.


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

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

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

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

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

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

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

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

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

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

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

 


Advertisers’ Announcement-Petroboost Technology Enables Viscous Oil To be Readily Produced

Revolution Minerals Ltd has recently introduced a revolutionizing technology in boosting oil and gas well production– PetroBoost®, a patented method for exerting a combined effect on the near-wellbore region of a producing formation.

PetroBoost technology is the result of many years of scientific research and lab testing by leading Russian and Ukrainian scientific institutes focused on research into hydrogen energy.

PetroBoost technology has been successfully tested in collaborations with major oil and gas companies in a broad variety of wells with differing geological conditions. These companies include Gazprom, Novatek, Tatneft in Russia, Eni SPA in Turkmenistan and others.

The PetroBoost technology effectively enhances well production increasing ultimate recovery factors of oil and gas reservoirs. PetroBoost technology is effective in oilfields where traditional stimulation technologies struggle, including viscous oil, those with high paraffin content, oil rims, tight formations, etc.

 

 

 

 

 

 

Contacts:

Address: 86-90 Paul Street, London EC2A 4NE, United Kingdom

Phone: +44 (0) 203 695 2948

E-Mail: info@revolution-minerals.com

 


Review of Report on AfDB President Will Take at Most Four Weeks

The Board of Governors of the African Development Bank, while accepting the idea of an independent evaluation of whistleblowers’ accusations against the bank’s president, Akinwunmi Adesina, has determined that such an evaluation will be a review of the report of the Ethics committee, which had cleared the president of any wrongdoing.

The review will be entrusted “to a single person, neutral honest, of high calibre with indisputable experience and a proven international reputation”, the Board said in a release. And the review work must be carried out “within two to four weeks, taking into account the Bank’s electoral calendar”.

The election to the AfDB’s Presidency, for which Adesina is the only candidate to date, is due to take place at the end of August.

The statement says that the “review” of the report of the ethics committee was a decision taken “with the aim of reconciling the different points of view of each governor in the resolution of this case”.

The Board reiterates its confidence in the ethics committee “which has fulfilled its role in this matter”. However, the Bank’s whistle blowing and grievance handling policy “will need to be reviewed within three to six months of the review to ensure that this policy is properly applied and to review it, if necessary, to avoid situations of this nature in the future”.

 


SA’s Top Oil & Gas Conference Venue Converted to COVID-19 Hospital

By Ahmed Gafar

The Cape Town International Conference Centre CTICC is awaiting, not a horde of oil and gas executives in the next three months, but a throng of patients coming under care of the state for COVID-19.

The facility, which hosts Africa Oil & Power in June and the Africa Oil Week in November, has been converted to provide 860 hospital beds to coronavirus patients.

The Africa Oil Week, the most prestigious large gathering of Africa-focused oil and gas executives, has taken place at the CTICC for over 10 years.

The venue has also hosted other top-notch gabfests, including the World Economic Forum for Africa and the Cape Town Book Fair.

But when President Cyril Ramaphosa chose the CTICC as the place to meet with Alan Winde, Premier of the Western Cape Province, last week, it wasn’t as a speaker at a business conference.

The two leaders spoke as co-stakeholders in the war against the rampaging virus that had laid waste the commanding heights of the South African Economy.

“I still think that faced with the challenge that we have of greater infections… “, Ramphosa told Mr. Winde, whose province is host to the highest number of COVID-19 cases and 77% of the deaths from the virus in South Africa.

. “You will need and you do need more beds. We must increase the number of beds. I am not happy and satisfied with the limit you think you are going to have,” Ramaphosa said at the meeting at the CTICC.

Mr. Ramaphosa’s June 4 visit came a day after South Africa registered its biggest daily increase in infections with 3,267 new cases, taking the country’s total number of infections above the 40,000 mark. Of these, 27,006 were recorded in the Western Cape.

While the organisers of Africa Oil Week are still going about saying the conference would hold, President Ramphsa says “the worst (of the infections) is still and yet to come”,  a comment that indicates that physical planning for a November conference at the CTICC, could mean tough logistical challenges, if it happens at all.

 

 


NDEP Gets a Licence to Operate the 5,000BOPD Refinery

The Nigerian Ministry of Petroleum has issued a second license to Niger Delta Exploration & Production (NDEP) to Operate a Refinery in Nigeria.

This licence is for a 5,000Barrels Per Stream Day Train.

The first licence to operate (LTO) such a facility issued to the company, awarded in 2012, was for a topping plant to convert 1,000BOPD of crude oil to diesel.

That topping plant has been the only private refinery operating in the country since.

In those eight years, the plant has output over 140Million litres of diesel.

NDEP’s Train 2, which has now just received an LTO is the first expansion.

Although it had been ready since January, the LTO is the government’s formal sign off on it to start doing business. The train produces Dual Purpose Kerosene (DPK), Jet fuel, more diesel, marine diesel “and there is no Sulphur in it so it meets the international specification of marine diesel already and finally, Heavy Fuel Oil at the bottoms of the distillation column”, says Layiwola Fatona, Managing Director, NDEP.

“This is a phenomenal attainment”, Fatona said in a note to the company staff. “It had been a very long and traumatic journey. It was fraught with challenges, hard decisions and much of Human and Financial Capital expensed by your company”, he explained. “Perhaps, it is humbling to say, this must be the only of its type in Africa. Feeding Crude Oil and gas, produced from a Marginal Field into its own processing and Refining facilities. We still have a long way to go and a 3rd Record Breaking Milestone is just around the corner”.

The company is finalizing the construction of Train 3, which will take the entire refining capacity on the Ogbele asset to 11,000BOPD. That facility has the added responsibility of producing the same set of products that Train 2 produces, as well as including the Premium Motor Spirit(PMS), the fuel of land transportation.

“All Mechanical erections in respect of Train 3 are completed”, Fatona explains. “Electrical and Instrumentation has another week or so to go to total completion and full readiness”, he says. “We are now ready for Pre-Commissioning with start of Technical checks.”

NDEP expects the full ceremonial commissioning when the travel bans are lifted, and the Plant Fabrication Contractors (Chemex) are able to return.

 

 


Aker Will Use Two FPSOs For the Pecan Project in Ghana

By Toyin Akinosho, in Lagos

The Norwegian independent, Aker Energy, says it has changed its development concept for the Pecan field in ultra-Deepwater offshore Ghana.

The company will be using two FPSOs to drain the 450Million barrel (probable) reserves.

While the original field development concept was based on a centralised Floating Producing Storage Offshore (FPSO) vessel, supporting the development of the entire Pecan field, as well as tie-ins of all other area resources, the focus has shifted toward a phased development approach.

“This approach will enable Aker Energy to commence with one FPSO for Pecan in the south and expand to a second FPSO in the north after a few years, with tie-ins of additional discovered resources. The first FPSO will be deployed at around 115 kilometres offshore Ghana over a subsea production system installed in ultra-deep waters in depths ranging from 2,400 to 2,700 metres”.. ”, Aker says in a widely distributed release.

There has always been the suggestion of phased development, but Aker never said anything publicly about two FPSOs.

The Pecan field was discovered by Hess Corp. in December 2012. The American independent sold its equity on the asset, along with operatorship, to Aker Energy in 2017. The Norwegian explorer immediately ran with the project, hoping to take the discovery to market by 2022.

Aker concluded an appraisal campaign, involving three wells, in mid-2019 and announced that “reserves, to be developed in the first phase, are estimated at 334Million barrels of oil. Discovered contingent resources, to be developed in subsequent phases, are estimated at 110-210MMBOE, resulting in a combined volume base of approximately 450–550MMBOE. These estimates exclude any additional volumes from Pecan South and Pecan South East, currently being assessed”. Aker further declared it had “identified further upsides in the area that we intend to mature as part of the area development”, adding that “the total resource potential in the area is within the range of 600-1000MMBOE.”

In March, however, the company announced that a final investment decision (FID) had been placed on hold, postponing the project.

Today, it said: “While no new date has been set for the FID, the company is working actively to confirm the feasibility of a phased Pecan field development by executing conceptual studies.

Aker says that the phased development of the Pecan field and the utilisation of a redeployed FPSO vessel will substantially reduce the CAPEX and, hence, reduce the breakeven cost. In addition, it will increase the possibility of reaching a commercially feasible project that will allow for an investment decision. Aker Energy and partners are currently assessing several FPSO candidates for redeployment, and the final selection will be based on technical capabilities and cost.

Aker Energy is the operator of the Deepwater Tano Cape Three Points (DWT/CTP) Petroleum Agreement, with a 50% participating interest in the DWT/CTP Petroleum Agreement. Its partners include the Russian explorer Lukoil (38%), the Ghana National Petroleum Corporation (GNPC) (10%) and the indigenous company Fueltrade Limited (2%).

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