All posts tagged oil


Kuwaitis Target A Second Discovery in Abu Sennan

Kuwait Energy Company is moving the ED-50 rig to the north of the Licence, to drill another well, after the moderate success of the last one, which will soon be brought to production.

The next probe is the ASD-1X exploration well, located close to the producing Al Jahraa field. The well is targeting the Abu Roash reservoirs in the Prospect D structure and, if successful, can again be quickly be brought into production.

The last well, ASH-3, a step-out development well in the ASH Field, penetrated a gross hydrocarbon column of 59metres in the primary Alam El Bueib (AEB) reservoir target, 27.5metres of which is estimated to be net pay. The well recorded a maximum flow rate of 6,379 bopd and 6.7 mmscf/d (c. 7,720 boepd gross; 1,700 boepd net), during testing, on a 64/64″ choke, from the AEB reservoir. On a reduced, 30/64″ choke, expected to be more representative of the producing flow rates, the well flowed at 3,561 bopd and 2.9 mmscf/d (c. 4,140 boepd gross; 910 boepd net).

It was spud on the 4th January, and it reached a total depth (TD) of 4,087m MD (3,918m TVDSS) on 8th February.

“The partners, Kuwait Energy and United  Oil and Gas when brought on production over the coming days, ASH-3 will provide a significant boost to the concession-wide production rates that averaged 10,500 boepd gross (2,310 boepd net) during January 2021.

“We look forward to the spudding of the forthcoming exploration well and the remainder of our 2021 work programme,” the partners say.

 


Sapura’s Not Going Down with Seadrill

Malaysian driller Sapura Energy Berhad has declared that its joint venture with Seadrill, namely Sapura Navegacao Maritima SA (SNM), is not impacted by the recent Chapter 11 cases filed by several Seadrill subsidiaries operating in Asia.

In a clarification to Bursa Malaysia, the country’s Stock Exchange, Sapura  states the Chapter 11 filing by Seadrill, which is an internationally renown Scandinavian drilling company, does not involve Sapura or entities related to the corporate structure of the joint venture, stressing  that the filing has no financial impact on Sapura Energy’s business plans and financial strength.

Sapura Navegacao Maritima SA (SNM) is the only joint venture between Sapura Energy and Seadrill.

Headquartered in Rio de Janeiro, SNM is one of the leading subsea services operators in the Brazilian market, with a fleet of submarine service vessels providing support, installation and flexible pipe laying expertise to clients in the region.

The company has a workforce of more than a thousand professionals, from 21 different nationalities. SEB’s clarification was in response to a media report linking Seadrill’s Chapter 11 filing of its Asian units, to the Brazil-based SNM. In the clarification, SEB also explained that the filing has no effect on its contracts with Petrobras, which forms the main revenue for SNM; and does not trigger any cross default for the joint venture’s business financing.


Savannah Inks Revised Gas Sales Agreement with Lafarge

New deal comes with a price of $7.5 per thousand cubic feet of gas

Savannah’s Accugas subsidiary has entered into a revised Gas Sales Agreement GSA with Lafarge Africa for the supply of gas to its Mfamosing cement plant in Cross River State, Nigeria.

The company says the new deal “establishes a more sustainable long-term contractual position for the benefit of both parties”.

The revised GSA sees the contract term with Lafarge extended for a further five years to January 2037, giving a remaining contract life of 17 years.  The new agreement also allows for an increase in the gas sales price from 2027, with additional US-Consumer Price Index indexation from 1 January 2029.

The revised GSA has a reduction in the daily contracted quantity (DCQ) of gas from 38.7 MMscf/d to 24.2 MMscf/d. This reduction in the DCQ will allow Accugas to release approximately 12 MMscf/d of currently reserved gas processing capacity at its Central Processing Facility (CPF), enabling Accugas to enter into additional long-term GSAs for these volumes, which will increase the business’ future revenues and cashflow potential.

To compensate Accugas for this reduction in DCQ, the revised GSA includes an advance payment of $20Million and a prepayment structure over the period to 2027, which effectively results in a gas price of $7.50/Mscf on take-or-pay volumes during this period.  “This revised structure also allows Lafarge to utilise its accumulated make-up gas balance of approximately $58Million, whilst we have preserved the capacity to supply higher volumes when these are required by Lafarge”, Savannah says in a statement. “Lafarge’s commitments under the revised GSA will continue to be guaranteed by an international investment grade bank guarantee.

“Overall, the revised terms are expected to have a cumulative positive impact on Accugas’ cash flows over the short and medium term. Following the agreement, Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscf/d to 131.8 MMscf/d.


Neconde, Shoreline, Lose > 50% of Crude Oil Output to Workers’ Protest

Local contractors and staff working for the NPDC/Neconde Joint Venture in Oil Mining Lease

(OML) 42 and NPDC/Shoreline’s OML 30, in Nigeria’s Delta State, have caused disruption in crude oil output on the assets, ensuring drastic drop by over 50% in each of the OMLs.

They were protesting unpaid salaries and emoluments.

In November 2020, the NPDC/Neconde Joint Venture averaged around 18,000BOPD, a drop of more than half of the JV’s optimal output of 38-42,000BOPD. The same month, the NPDC/Shoreline Joint Venture plunged in output from around 50,000BOPD, to 18,000BOPD, according to field data available to Africa Oil+Gas Report.

OML 30 recorded no production between November 8 and 15, 2020, as a result of the protest, according to the report.

In OML 42, output stoppage occurred from November 22 to 28, record shows.

Reports say that the protesters on OML 42 numbering over 200, escalated things to above-surface level on Tuesday December 8, converging at the main gate of Neconde Energy Limited, located at the Berger

Yard, Warri, in Delta State in the mid-west of the country, vowing not to leave the premises until they were paid. They accused Nestoil and Neconde oil firms of owing them salary arrears and emoluments spanning between 2007 and 2020.

The protesters asserted that “communities, contractors and community staff have been working for Naconde and NNPC, yet they have decided to ignore us”.

Some of the protesters displayed placards with inscriptions such as “We want our total payment today”; “Nestoil pay all our money, stop being wicked to us”; “Stop intimidating us with your security agencies,” among others.

 

 

 


Harouge Oil Operations Tenders for Materials for Well Tie in Project

Harougue Oil Operations, a joint operating company on behalf of National Oil Operation, Libya and Suncor Oil (North Africa) GmbH invites tenders for the supply of material for tie-in of production wells.

The project s to be executed on Amal field,

  • The material request to be utilized for tie-in of Three new oil production wells at Amal field. All materials to be supplied to the specifications addressed in the material’s requisition.

Announces an invitation to participate in tender No (03/2020) for Companies which have the required Legal and valid License documents.

SCOPE OF SUPPLY:

 


Assala Has Vivid Plans Post COVID-19

Assala Energy increased production of the Shell assets it bought in Gabon from 40,000BOPD to 55,000BOPD in the space of two years.

The London headquartered company claims it installed new equipment and brought down the cost per barrel to $12.

It is hoping to ride the storm of steep drop in prices, exacerbated by COVID-19, even with all the volatility.

Assala pumped $60Million into the five acreages in 2018 and spent $240Million more in 2019, in the process, drilling 20 new wells and optimizing 60 existing wells.

It had a war chest of $300Million for 2020, of which it had spent $70Milion in the first quarter alone.

So what will happen now?

If it survives the next 12 months, its plan is to continue from where it stopped.

The company was raring to go before COVID-19 happened. In late 2019 it acquired three onshore exploration licences from the Gabonese authorities: Mutamba-Iroru II, Nziembou II and Ozigo II, in addition to the five licences it purchased from Shell: Rabi Kounga II Toucan II Bende M’Bassou Totou II, Koula/Damier and Gamba/Iyinga. It also holds interests in four non-operated licences (Atora, Avocette, Coucal and Tsengui.

This story was originally published, for the competitive benefit of paying subscribers, in the May 2020 issue of the monthly  Africa Oi+Gas Report.

 


Technip Gets the $2.5Billion Contract for Egypt’s Assiut Refinery

TechnipFMC has now signed the much-anticipated major Engineering, Procurement, and Construction (EPC) contract with Egypt’s state owned Assiut National Oil Processing Company (ANOPC) for the construction of a new Hydrocracking Complex for the Assiut refinery.

The $2.5Billion hydrocracker will upgrade residual oil from the 90,000BOPD Assiut refinery, in the town of Assuit, in Upper (southern) Egypt.

The work also involves Egyptian state-owned contractor ENPPI.

“This EPC contract covers new process units such as a Vacuum Distillation Unit, a Diesel Hydrocracking Unit, a Delayed Coker Unit, a Distillate Hydrotreating Unit as well as a Hydrogen Production Facility Unit using TechnipFMC’s steam reforming proprietary technology. The project also includes other process units, interconnecting, offsites and utilities.

The complex will transform lower-value petroleum products from Assiut Oil Refining Company’s (ASORC) nearby refinery into approximately 2.8Million tons per year of cleaner products, such as Euro 5 diesel.

 


Brahms To Build A Modular Refinery in Guinea-Conakry

Africa Finance Corporation has signed a Joint Development Agreement with Brahms Oil Refineries Limited to act as co-developer on the development and subsequent financing of a petroleum storage and associated refinery project in Kamsar, Guinea-Conakry.

 This will include a 76Million litre crude oil storage terminal; 114.2Million litre storage terminal for refined products; ancillary support transportation infrastructure, and 12,000 barrels oil per day modular refining facility.

Through this joint development, AFC will invest in the project development workstreams that should ensure the Project reaches financial close in 2020.

Brahms Oil Refineries is a part of Brahms Group, a Switzerland based diversified company with a strong industrial & international finance network and an excellent knowledge of Sub-Saharan Africa.Once operational, the Project will have a refinery capacity that is the equivalent of one-third of the country’s demand for refined products, thereby reducing its reliance on imported refined products, improving the country’s balance of payments, and reducing foreign currency demand. It will also allow for direct & indirect job creation and enhance the development and productivity of other sectors, especially mining, which today accounts for 15.3% of the country’s GDP but could contribute even more if the country had the necessary infrastructure to maximise and locally beneficiate its natural resources. The Project is strategically located in Kamsar, which is one of the larger mining regions in the country.
To increase its impact on Guinea, AFC is considering several projects in the country to create an integrated ecosystem. This would include, alongside this Project, a 33MW solar project port, and other mining projects, all of which will complement AFC’s earlier investment in Alufer’s Bel Air bauxite mine.


Ben van Beurden: His Final Hurrah?

By Gerard Kreeft

 

 

 

 

 

 

Departures in troubling times can be sudden and abrupt. Therefore no one should be shocked nor surprised about the possible resignation or sacking of Ben van Beurden, Shell’s Chief Executive Officer. 

In a lengthy interview in the prestigous Dutch financial publication Het Financieele Dagblad of 4 July 2020,  van Beurden goes to great length to explain the dilemma Shell is facing:

  • The need to re-organize itself so that it can become a greener company;
  • Whether Shell’s headquarters ( now in the Netherlands) should be moved to the UK;
  • The struggle of deciding to reduce its golden dividend (the first time since WW II);
  • Writing down of some $20 billion in assets;
  • How to face the Energy Transition.

Het Financieele Dagblad also reveals that total investments, between 2016 and 2019, were $89Billion, of which

Ben van Beurden,Shell CEO

only $2.3Billion was directed to new energy. In March 2020, Shell’s  share price on the New York Stock Exchange was $25/ share compared to a high of $70/share in May 2018.

Shell is not alone in the dilemma it faces. The other majors, including BP, Chevron, ENI, ExxonMobil, Equinor and TOTAL, face similar hurdles. Instead of (again) having a discussion on how to green Shell and the rest of the sector, it is more relevant to accept the basic premise, long discussed in Africa Oil + Gas Report, that an oil company, by its very nature, cannot be green. 

Oil companies are by their very definition focused on a fossil fuel. Their reserve count (Reserve Replacement Ratio) is purely based on a fossil fuel. Clean energy—wind,sun or hydropower—cannot be part of the mix. The US SEC stock market regulator leaves no doubt about that!  At present the RRR rate for the industry is 7%, a historic 20 year low. The norm is 100%, meaning that oil companies previously were able to fully replace all of the oil and gas that they produced annually. There is no evidence that Shell and the rest of  the E+P sector are making any effort to broaden the basic definition of RRR  to include renewables and thereby also  bolstering fossil fuel reserves.

The concept of the ‘Integrated Oil Company’ has become untenable. The extended oil price crisis between Russia and Saudi Arabia, coupled with COVID-19, have had disastrous consequences for the oil majors as well as national oil companies. Exploration budgets have been frozen, people sacked,  dividends to shareholders reduced or postponed, and assets written down. Future signs are not encouraging as evidenced by:

  • Rystad Energy predicting a write off of 14% of the current world’s oil reserves.
  • Goldman Sachs estimates that borrowing costs for fossil-based projects is as high as 20% compared to as low as 3% for clean energy projects.

In a shrinking E+P market, size and valuation still matters. The three pillars of the value chain- Upstream, Midstream and Downstream-provide enough clues about the tensions facing the sector.

Heightened Integration

There is already an informal integration of sorts within the Upstream portion of the value chain. In most offshore jurdisictions, offshore concessions are shared among the majors and state oil companies in order to minimize project risks.

We will probably witness heightened project co-operation among the majors in an attempt to maintain or reduce project costs. At a regional or country level, we should anticipate increased project co-operation. Areas of co-operation could  Include  seismic surveys, project management, rig-sharing and marine operations. Such integration will also require the buy-in of the drilling contractors, service providers and marine contractors.

Specialization

Deepwater exploration  and project management could perhaps be delegated to companies who are best in class.

For example in Sub-Sahara Africa, TOTAL, with its deepwater track record in Angola Block 17, could certainly play a strategic role in determining how future deepwater projects are managed. Its Brulpadda Deepwater Project in South Africa( drilled to a final depth of more than 3,600 meters), bears testimony to the company’s deepwater agility. In Nigeria, expect Shell, with  its dominant offshore assets, including Bonga to possibly seek more co-operation with other majors. Expect BP’s Orca-1 deepwater play in Mauritania to have a stringent project development budget.

Alliances, Mergers and Takeovers 

What will be the tipping point when cost savings and joint-co-operation have run their course? A matter of the last man standing?

Very unlikely.

Instead, anticipate in the coming months, strategic alliances and acquisitions to ensure market size that matters. The oil majors are notorious in ensuring that energy scenarios are developed and implemented. Think of Shell’s takeover of British Gas in 2015. The planning was meticulous and carefully rehearsed.  Major shakeouts on a massive scale can be expected in the coming months.

The Winners and Losers

Imagine this to be a gigantic  game of high stakes poker. Not necessarily that the winner takes all but the prizes are there for the taking. Some observations.

Deepwater Developments

In Sub-Sahara Africa, TOTAL,  with its Angola Block 17 experience could well be nominated to be the company of choice for exploration, given its technical prowess and ability to innovate.

Nonetheless, other majors also have considerable strengths: Shell’s Bonga Project in Nigeria  coupled with its deepwater  experience  in the Gulf of Mexico. ExxonMobil with its Block 15 experience in Angola and offshore Guyana with its 16 oil discoveries.

Finally, anticipate that one or two of the majors will be become dedicated deepwater exploration companies on behalf of the majors; also look to further integration of oil and gas services.

Natural Gas and LNG

Given that natural gas is viewed as the cleanest  hydrocarbon, this portion of the value chain could become even more competitive and crowded:

Shell’s market share of the gas value chain  extends from the Middle East through to Asia Pacific and the company operates 20% of the global LNG fleet ; Chevron with its Australian Gorgon and Wheatstone LNG projects is an important gas player in Asia-Pacific and is also a key shareholder in Angola LNG; ExxonMobil developed Asian markets with its Arun LNG project in Indonesia and in the 1990s involved with RasGas(Qatar). 

Given that natural gas is viewed as a transitional fuel, all of the majors will want to profile their companies as energy friendly. This scramble could become very ugly as they compete with one another.

Petrochemicals

in its 2019-2020 analysis of the Chemical industry, Deloitte encourages companies to extract more growth out of their existing assets and resources. For example, investing in high-performance plastics for new  vehicle models.

Both Shell and ExxonMobil have key global  positions in the chemical sector. In 2002 Chevron and Phillips merged their chemical operations.

It should not be surprising that  mega-mergers occur  to include the chemical businesses of the majors. Perhaps, not surprisingly BP has just announced selling its chemical business to Ineos for $5 billion.

Finally  mega-mergers leading to more specialization offers the oil and gas sector the best chance for maintaining a large market share with economies of scale. Doing-more-with-less could become the new motto of the sector.

Gerard Kreeft, BA (Calvin University, Grand Rapids, Michigan,USA) and  MA (Carleton University, Ottawa, Ontario, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. He writes on a regular basis for Africa Oil +Gas Report.

 

 

 

 

 


NCDMB Invests in Energy Park, Oil Blending Plant

The Nigerian Content Development and Monitoring Board (NCDMB) has signed equity investment agreements with two companies-Duport Midstream Company for the establishment of an Energy Park in Egbokor, in the country’s midwest and Eraskon Nigeria Limited, for a lubricating oils blending plant in Gbarain, in Nigeria’s south central east.

The planned Energy Park comprises a 2,500BPD modular refinery, as well as a thirty million standard cubic feet of gas a day (30MMscf/d) gas processing facility, which will include a CNG facility and 2MW power plant.

The lubricating oils’ blending plant will have the capacity to produce 45,000litres per day and enhance the availability of engine oils, transmission fluids, grease and other products.

Simbi Wabote, Executive Secretary NCDMB, explained that the investments were part of the approvals granted recently by the Board’s Governing Council chaired by Timipre Sylva, Minister of State for Petroleum Resources, He clarified that the investments were coming under the Board’s commercial ventures programme and were in sync with the NCDMB’s vision to serve as a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors.

The Duport partnership, Wabote indicated, is in furtherance of the Board’s strategy to enhance in-country value addition by supporting the establishment of processing facilities close to marginal or stranded hydrocarbon fields.

NCDMB has already had partnered with the Waltersmith Group and Azikel Petroleum Company for the establishment of modular refineries in Imo State and Bayelsa State respectively.

 

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