All posts tagged petroleum people


Angola’s Onshore Kwanza Basin offers an underexplored basin with a world class petroleum system.

By Matt Tyrrell and Alessandro Colla, Trois Geoconsulting BV; Mike Oehlers, Tectosat Ltd

Seasoned explorers of Africa and the Atlantic margins will be familiar with the quandary of choosing between offshore and onshore acreage. Offshore acreage typically offers large, inexpensive seismic datasets with which to identify prospects, but the costs of drilling and developing these require significant inward investment. Conversely, onshore acreage allows numerous wells to be drilled at a low cost, but the ability to locate and de-risk prospects is limited by the expense and paucity of exploration datasets, particularly seismic.

This quandary is particularly apparent in the coastal basins of West Africa, where the Mesozoic sedimentary successions, including salt, extend into the onshore domain. In this basin, seasoned explorers will be tantalised by the opportunity to drill salt-induced prospects within a proven petroleum system and will be seeking the necessary datasets with which to de-risk them.

There are, however, onshore basins where this quandary is not so apparent; where extensive high quality datasets are available and early exploration has suitably de-risked proven pre- and post-salt petroleum plays. One such example is the Onshore Kwanza Basin of Angola – a Mesozoic salt basin with numerous undeveloped fields, a library rich in accessible yet low-cost exploration datasets and local refineries and markets for hydrocarbons once they are produced.

Furthermore, a licence round that opens towards the end of 2020, supported by new oil and gas laws and fiscal incentives, provides the opportunity for oil companies to secure rights to this acreage, appraise discovered fields and potentially fast-track commercially viable hydrocarbon production.

Underexplored Pre-Salt

To understand the future potential of the Onshore Kwanza Basin, we must first understand its exploration history.

A key milestone occurred in 1955 when the post-salt Benfica oil field was discovered just south of Luanda, after which exploration drilling peaked; by the late 1970s 133 wells had been drilled. This era of activity saw the discovery of 11 oil fields, as well as a few gas fields, with the largest containing more than 200 MMboe, made possible by the availability of 11,500 line-km of dynamite 2D seismic data. The last onshore field discovery was in 1972 and the last well was drilled in 1982, from when on interest in the onshore declined, in part due to socio-political stability risks but more likely due to the early successes of offshore exploration. Only nine oil fields have ever been reported as having been put onto production, which include the Cacuaco and Puaca fields, both with pre-salt reservoirs.

Although at first it appears that the Onshore Kwanza has been considerably drilled, analysis of well penetrations and results tells a story of high success rates in post-salt wildcats contrasted with a prospective yet significantly underexplored pre-salt succession. Of the 237 wells drilled, just 28 penetrated beneath the salt; four pre-salt fields were discovered prior to 1971 (Cacuaco, Uacongo, Puaca and Morro Liso) despite only three wells testing a meaningful section of pre -salt stratigraphy. When our seasoned explorers analyse the results of these pre-salt wells they must be left pondering what might have been found had the operator drilled a little deeper.

An initial observation is that the majority of pre-salt penetrations were drilled from wellheads located for post-salt prospects with only a handful of wells spudded with a pre-salt objective. Furthermore, assumptions about 1960s and 1970s technology and know-how suggest that modern field appraisal methodologies could reveal where discovered fields may actually be commercial, whilst advanced well stimulation techniques could lower the commercial threshold.

Updated Datasets Support Exploration

In 2010 and 2011, 2,581 line-km of high quality 2D seismic data was acquired followed by the acquisition of high resolution aeromagnetic data. A new GIS GeoDatabase named KMAP-2020, commissioned by Sonangol in 2015, was then completed as part of the reassessment of the remaining oil potential ahead of licence rounds. This product, available for the whole onshore basin or for individual blocks, includes outcrop information, petrographic studies and palaeontological reports from recent field trips together with seismic profiles, well stratigraphy panels and geosections.

The KMAP-2020 database has recently been further refined by the inclusion of modern satellite imagery supplied by specialist, Tectosat Ltd. Using Landsat imagery, SRTM DEM, ASTER and PALSAR Radar data*, the whole basin has been remapped at a much more comprehensive 1:50,000 scale involving interpretation at 1:25,000 scale, with additional integration of lithological detail from some 3,000 field sample points.

The resulting updates to the surface geology maps within the KMAP-2020 database have positive implications for de-risking the underlying petroleum systems. Halokinetic activity is evinced in anomalous domes and basins showing salt withdrawal and folding adjacent to the main bounding faults of the Tertiary troughs.

Fault expressions mapped at surface have been used to understand structural controls related to various tectonic episodes. Where it is shown that many of the Tertiary-aged faults are soft-linked to deeper syn-rift structures, the charge of post-salt reservoirs with pre-salt oil can be de-risked.

Similarly, areas of Tertiary uplift are observed in the vicinity of Blocks 11 and 12 where present-day river systems are seen to have incised; this uplift may have hinged to the north at the Cabo Ledo fault. These details are key in determining long-distance migration paths from known source kitchens, including the offshore, into pre-salt and post-salt structures; indeed, the presence of basin margin oil seeps together with the pre-salt Cacuaco Field north-east of Luanda suggest that the sub-salt section should be suitably charged.


Underexplored Area in New Licence Round

An integration of past exploration results, available seismic and well datasets with the KMAP-2020 database (which includes the satellite imagery interpretation) demonstrate that the Onshore Kwanza Basin is a world class petroleum basin that in recent decades has been considerably underexplored.

The post-salt section has numerous anticlinal closures that are untested; where these have been drilled the structures exhibit good reservoir qualities and host viable oil fields, such as those at Quenguela and Benfica. Where sampled, the pre-salt is shown to exhibit good quality carbonate reservoirs formed by coquina.

Exploration 

shoals with vuggy porosities as well as fluvial-deltaic sandstones. The hydrocarbons encountered here are light oils with gas and with no known encounters of CO2 or high sulphur content.

When the results of the updated ArcGIS geological study are combined with available seismic and well datasets, conclusions can be drawn that suggest that the upcoming licence round may be the trigger for the first commercial production of oil from onshore Kwanza.

Recent announcements by the newly formed ANPG (National Agency of Petroleum, Gas and Biofuels) have defined a strategy for the allocation of petroleum concessions including open acreage within all of Angola’s basins. Concessions will be awarded through a process of public tender, restricted public tender and direct negotiation over a period of seven years, starting in 2019 and culminating in 2025. 

The blocks offered by public tender are those that are deemed exploration blocks that have not formerly been abandoned and restored to the state. The blocks of the Onshore Kwanza Basin have been announced as a part of the 2020 licensing round, which will open in the fourth quarter of 2020. Blocks KON5, KON6, KON8, KON9, KON17 and KON20 are offered by public tender and these blocks all offer excellent potential for exploration as well as opportunities to appraise and develop discovered fields.

In August this year, the ANPG held a Clarification Session as a precursor to the opening of the round; during this session senior members of ANPG gave informative presentations and clarified the timeline for the submissions of bids and signature of the contracts.

Exceptional Opportunity 

The history books of exploration bear witness to a multitude of junior exploration companies that secured onshore acreage, within a known petroleum province, yet were unable to successfully demonstrate to investors and potential farm-in partners that they could cost effectively de-risk a drilling location.

The Onshore Kwanza Basin is different in that it offers the opportunity to secure acreage containing a post-salt field or prospect that can potentially be appraised and brought into production, providing cash-flow to fund further pre-salt exploration where the prize may be bigger. The 2020 Angola Licence Round, which kicks off April 30, 2021, should therefore be in the plans of all junior and mid-sized oil companies. 

* SRTM DEM (Shuttle Radar Topography Mission – Digital Elevation Mapping), ASTER (Advanced Spaceborne Thermal Emission and Reflection Radiometer), PALSAR (Phased Array type L-band Synthetic Aperture Radar)

This paper was first published in the October 2020 edition of GEOExPro magazinehttps://www.geoexpro.com/articles


Andrew Mackenzie Is the Next Chairman of Shell

The Board of Directors of Royal Dutch Shell plc has announced the appointment of Sir Andrew Mackenzie as the new Company Chair with effect from the conclusion of Shell’s 2021 Annual General Meeting, scheduled for May 18, 2021.

He will succeed Chad Holliday who will step down on May 18 having served as Chair for six years and as a Board Director since September 2010.

Mackenzie, a British national, joined Shell’s Board in October 2020, after a distinguished career in the energy, petrochemicals and resources sector, latterly as Group CEO of BHP from 2013 to 2019. From 2004 to 2007, at Rio Tinto, he was Head of Industrial Minerals and Diamonds. Prior to this, over a 22-year career at BP, he held senior leadership roles in exploration, research and development, and chemicals.

“His contributions to geochemistry and earth science led to his appointment as a Fellow of the Royal Society in 2014”, Shell says in a statement, “and he received a knighthood in 2020 for his services to business, science and technology”.

The statement adds that Mackenzie is bringing to Shell “his experience of leadership, his global outlook, and a deep understanding of the energy business and climate action”.

The search for the new Chair was led by Euleen Goh, Deputy Chair and Senior Independent Director. The thorough and robust process included engagement with some of Shell’s larger investors, seeking input on the skills, attributes and sector knowledge that they considered important for the role. In addition to proven experience of leading a large, complex international organisation, the requirement was for someone with significant experience in capital discipline and with the ability to balance, and judge the timing, of the transformational changes that Shell needs to make.

 


Stéphane Michel is TOTAL’s New President Gas, Renewables & Power (GRP)

TOTAL has appointed Stéphane Michel as its President Gas, Renewables & Power (GRP) and a Total Executive Committee member, a position previously held by Philippe Sauquet, who has exercised his retirement rights.

Mr. Michel, a former Energy Advisor to a former French Finance Minister, resumed work on March 1, 2021.

Prior to the promotion, he was Senior Vice President Middle East & North Africa, Exploration & Production. Laurent Vivier succeeded him in that position in January 2021.

“The Gas, Renewables & Power segment has a key role to play in the growth, value creation and transformation of TOTAL into a broad energy company. We are very pleased to welcome Stéphane Michel to the Executive Committee,” commented Patrick Pouyanné, the company’s Chairman & CEO. “

TOTAL’s Executive Committee now consists of:

  • Patrick Pouyanné, Chief Executive Officer
  • Arnaud Breuillac, President, Exploration & Production
  • Helle Kristoffersen, President Strategy-Innovation
  • Stéphane Michel, President, Gas, Renewables & Power
  • Bernard Pinatel, President, Refining & Chemicals
  • Jean-Pierre Sbraire, Chief Financial Officer
  • Namita Shah, President, People & Social Responsibility
  • Alexis Vovk, President, Marketing & Services

 

Before Stéphane Michel became TOTAL’s SVP Middle East & North Africa, Exploration & Production in January 2014, he was the Managing Director of TOTAL E&P Qatar (2012-2014) and TOTAL E&P Libya (2011). He joined the Group in 2005, working for Downstream Asia, based in Singapore.

Stéphane Michel was born in 1973 and is a graduate of École Polytechnique (1994) and École des Mines de Paris (1997). He served as Energy Advisor to the French Finance Minister (2002-2004).

 


Yetunde Taiwo Takes Charge of Seplat’s ‘New Energy’ Portfolio, with the Gas Business

Yetunde Taiwo has been appointed the General Manager for New Energy at Seplat.

It is a position that comes with the company’s Gas Business, which she had managed before, so it’s an expanded portfolio.

Seplat is Africa’s largest homegrown E&P company.

Until January 2021, Taiwo was Chief Executive Officer of the ANOH Gas Processing Company (AGPC), the incorporated Joint Venture owned equally between Seplat and the Nigerian Gas Company (NGC), which manages a $700Million midstream development that will monetise 300Million standard cubic feet produced every day from the Assa North /Ohaji South fields, straddling Shell operated Oil Mining Lease (OML) 21 and Seplat operated OML 53, onshore eastern Nigeria.

Taiwo took the AGPC job after three and half years as the first GM Gas (or Head of Gas Business as it is called), where she oversaw the development of one of the fastest growing domestic gas businesses in Nigeria.  On her watch, Seplat grew its operated gas production capacity from 300Million standard cubic feet per day (300MMscf/d) to 525MMscf/d.

Her new role of superintending the New Energy unit involves the increase of gas products to be monetised in the form of LPG, CNG and other gas derivatives, with opportunity framing in the renewable energy space. “A different set of skills is required to get into renewables”, Roger Brown the company’s CEO, told London South East last November, but he added that the New Energy unit, would provide guidance for the company.

“We are looking at LPG, Liquid Petroleum Gas on all of our gas plants and that can be utilised in the local market”, Mr. Brown told London South East. “We’re looking to Compress Natural gas (CNG) and, we are looking further down the value chain potentially into supplying smaller scale, probably not retail but certainly, smaller scale wholesale and customers. And then, through that, we look at what renewable energy means for Nigeria into the future and it’s got huge potential, particularly, in solar. We’ve got a lot of the sun all year round here. That will be a great renewable fuel source for the country. And what we really want to do is that we need to get the grid system up to a level we are having more of the gas going through it and then, the grid will rely on grids solar power rather than, off grid small scale. So that’s something we are looking at”. That statement, effectively framed Mrs. Taiwo’s key job responsibilities

Taiwo started her career as a reservoir engineer with Chevron Nigeria Limited in 1991, straight from National Youth Service. By the time she left the American major, for BG, in 2007, she was a planning advisor at the company’s Asset Management Division. She worked for BG as Economics manager before she showed up at Seplat in May 2011 as head of planning and economics. She joined NNPC, the state hydrocarbon company, in 2013, as General Manager, Planning at NAPIMS, the Investment arm. She was appointed head of Gas Business when she returned to Seplat in 2015.


Gbite Falade is Niger Delta’s New CEO

Niger Delta Exploration & Production PLC (NDEP Group) has announced the appointment of a new Chief Executive Officer (CEO) – Managing Director with effect from 10th February 2021.

Adegbite (’Gbite) Falade will join the company, bringing along some Twenty-five years of impactful and successful career across multiple sectors and continents in the energy Industry, according to a statement by Ladi Jadesinmi, NDEP’s Chairman of the board.

NDEP is a fully Integrated Energy Company which operates the 12,000Barrels of Oil Per Day (BOPD) Ogbele Marginal field, Nigeria’s first officially designated marginal field, in eastern Niger Delta basin. It runs an 11,000BOPD capacity three train modular crude oil refinery as well as a 100Million standard cubic feet per day gas processing plant, which delivers gas to the NLNG system.

“Gbite will succeed the pioneer Managing Director – Layi Fatona (Ph.D.)- who in an Interim position, had supported the running of the affairs of the company from October 2019”, Mr. Jadesinmi’s statement added.

“A First Class B.Sc. Electrical & Electronics Engineering (1995) degree graduate of the University of Ibadan, and a 200B MBA graduate of the Warwick Business School, Coventry, UK; Gbite has in the past Fourteen (14) Years, served in various Senior Executive positions in Oil, Gas, Power, and Services Sectors. With responsibilities for Engineering, Operations, Project Execution, Commercial, Client and Stakeholder Management, Strategy and Enterprise Development.

“He was previously the MD and Group COO at OilServ Group of companies based in Port Harcourt.  Prior to his last assignment, he served variously, as GM-Portfolio Development, Chief Operating Officer (COO), at Oando Energy Resources„ and Executive Director at Oando Gas and Power. He was also Petroleum Economics Discipline & Portfolio Lead for Shell EP, Africa Region”.

With the nimble and proven Technical management team, the chairman concludes: “a young but competent operating workforce and a matured Board of Directors, Gbite will be charged with leading the company, in a well charted and structured manner, to deliver the continuation and indeed enhancement of our historical steady growth”.

“We are confident that our position as Nigeria’s No-1fully Integrated Energy Company will remain, unchallenged and preserved for quite some time yet”.

 

 

 


Accugas Agrees to Supply 2.5MMscf/d of Gas to Mansour Group

By Foluso Ogunsan

Nigerian natural gas supplier Accugas has entered into a new gas sales agreement (GSA) with Mulak Energy Limited.

Accugas is a subsidiary of Savannah Energy PLC, the British independent.

The GSA is initially for a seven-year term. It envisages the supply of gas produced by Savannah’s majority-owned Uquo field for an initial two-year period on an interruptible basis (the “Interruptible Gas Delivery Period”) and the subsequent five years on a firm contract basis (the “Firm Delivery Period”). During the Interruptible Gas Delivery Period, Mulak is able to nominate a maximum daily quantity of up to 2.5 MMscf/d (MMscf/d means Million standard cubic feet of gas per day).

Volumes in the Firm Delivery Period will be agreed by the parties before the end of the Interruptible Gas Delivery Period.

The GSA is priced to reflect Mulak’s status as an industrial customer; Accugas, therefore, expects to see its weighted average gas sales price realisation increase as a result of this contract, without the need for any incremental capital expenditure beyond our previously announced plans.

Sales under the GSA benefit from a bank guarantee arrangement from an investment grade credit rated international bank.

Mulak is a member of the Mansour Group, an Egyptian multinational conglomerate which claims operations in more than 100 countries and annual revenues exceeding $7.5Billion.

Mulak says it initially plans to distribute CNG to its industrial customers in Rivers State with the CNG to be substituted for diesel in generators supplied by the Mantrac Group, also a member of the Mansour Group and one of the world’s largest dealers in Caterpillar machinery, power systems and equipment.

“Mulak is in a unique position to exploit the synergies with Mantrac’s business in Nigeria through the conversion of Mantrac’s existing customer base of approximately 400MW of diesel-fuelled generators to CNG-fuelled generators”, Accugas says in a release. “Sales under the GSA are expected to commence in 2022 and, following the initial two-year period, Mulak has indicated that it is seeking to expand its CNG sales on a pan-Nigeria basis to Mantrac customers”.

 

 


Morocco’s Tender for 400MW Solar Project Ends January 31

Submissions for Morocco’s tender for the construction of the first phase of the Noor PV II complex will wrap up on January 31, 2021.

Moroccan Agency for Sustainable Energy (MASEN) called for expressions of interest (EOIs)  for the 400MW project in 2020.

Noor PV II Solar complex involves six locations: Sidi Bennour (48MW), Kelaa sraghna (48MW), Taroudant (36MW), Bejaad (48MW), El Hajeb (36MW) and Ain Beni Mathar (184MW). The given capacity is in direct current (DC).

Winning bidders will be announced in the second quarter. The contracts are due to be signed in the third or fourth quarter of 2021.

Morocco’s Noor solar programme was introduced back in 2009 with the goal of adding at least 2,000MW of solar PV across the country, supporting the Kingdom’s target of growing the proportion of renewables in its installed power mix to 52% by 2030.

Construction of the first phase of the project – Noor I – began in 2013, and reached completion in 2016. On 4th February 2016, King Mohammed VI chaired the commissioning ceremony at the first plant, and officially launched the construction of phase II and III of the solar complex.

While Noor I and Noor II use concentrated solar power (CSP) technology to generate electricity with the help of 12-metre-tall mobile parabolic mirrors, Noor III will introduce a technological variation of CSP technology, by using a solar tower. The fourth phase will use photovoltaic technology.


John Anis is M&P’s New Chairman of the Board

Maurel et Prom (M&P) has announced the appointment of John Anis as Chairman of the Board of Directors

He is the second Chairman since the company, originally a French owned independent, was bought over by Pertamina, the Indonesian state hydrocarbon company.

“He replaces Aussie Gautama, who wished to step down from his positions”, the company statement declares. Mr. Gautama spent four years as Chairman.

Anis’s daytime job is President Director at Pertamina Internasional EP. “He has more than 25 years of experience in the oil industry, in particular holding senior positions at TOTAL E&P Indonesie and the Indonesian group Pertamina”, the statement explains. “He will bring his vision and knowledge to support M & P’s development, working closely with Olivier de Langavant, Chief Executive Officer”.

M & P is a key natural gas producer in Tanzania. It is one of the largest shareholders in Seplat, the leading Nigerian independent and a sizeable producer of crude oil in Gabon.

 


The Three – Service Sector- Musketeers of the Energy Transition: The Emerging Energy Value Chain

By Gerard Kreeft

 

 

 

 

 

 

 

 

All- For-One; One-For-All

Musketeer 1 Oilfield Services

Musketeer 2 New Energy Service Companies

Musketeer 3 Energy Service Companies Africa

There is growing evidence of a new convergence between Musketeer 1 Oilfield Services  and Musketeer 2 New Energy Service Companies. 

Perhaps not so much convergence but cross-overs and falling by the wayside of others and in the process creating new alliances.

Little attention has been paid to Musketeer 3- Energy  Service Companies Africa- perhaps viewed as the junior musketeer, but nonetheless playing a significant role.

Their- All- For-One; One-For-All requires  further explanation.

Peak Oil and What to Anticipate From the Majors

Rystad Energy is a preminent independent energy research and business intelligence company, headquartered in Oslo, Norway.

The COVID-19 pandemic, according to the company, has accelerated the global peak demand for oil to 2028, instead of 2030 and cut peak oil demand to 102Million Barrels Per Day. This corresponds with BP’s peak oil analysis of 2025 and demand of 100MMBOPD.

Nonetheless, Rystad  calculated that oil demand,  in 2020, declined to 89.3MMBOPD, compared with 99.6MMBOPD in 2019. This is now termed “COVID-19 induced demand destruction”.  It is only in 2023 that demand will recover to pre-Covid-19 levels and jump back to 100.1MMBOPD.

There is also little evidence from the oil and gas majors to indicate that there will be a quick recovery. In 2021 the sector’s growth in Africa will be halting and slow:

ExxonMobil: Deepwater Offshore Guyana,  Rovuma LNG Mozambique are the company’s key challenges. Expect little else and no plans on renewables.

Chevron: Only $1.5Billion dedicated to possibly Angola, Equitorial Guinea and Nigeria. Attention is focused on Tengiz, Kazakhstan which is receiving 75% of Chevron’s budget outside the USA. Only fossil-based investments.

Equinor: Attention is largely  being devoted to expanding its offshore windpark capacity, all outside Africa.

ENI: With its large African footprint in Angola, Nigeria and Egypt the company is in prime position to expand its African operations. Green energy plans are being made.

Shell: reducing its oil and gas assets to 9 key hubs which includes Nigeria. Green shoots on the horizon.

TOTAL: its Brulpadda and Liuperd (Leopard) prospects in South Africa, together with its Mozambique LNG project will be the focal points in 2021. Little room for further plans. Green plans play a strategic role.

BP: intends to reduce its oil production by 40% .How will this affect the Greater Tortue Ahmeyim  development in Mauritania and Senegal, its Algerian, Angolan and  Egyptian assets? The first green plans are being unveiled.

Musketeer 1 : Oilfield Services

Global demand for oilfield services (OFS), measured in the total value of exploration and production (E&P) company spending, has in 2020 dropped a massive 25% as a result of the Covid-19 caused oil demand destruction, According to Rystad.

Spending in 2020 is at year’s end expected  to be $481Billion and take the first step to recovery will take place in 2021.

“The recovery will accelerate further in 2022 and 2023, with OFS spending by E&Ps reaching some $552Billion and $620Billion, respectively. Despite the boost, purchases will not return to the pre-COVID-19 levels of $639Billion achieved in 2019.”

 

Audun Martinsen, Rystad Energy’s Head of Energy Research, argues that the comeback will not be visible across all OFS segments. Well services and the pressure pumping market will be the first to see a boost, while other markets will need to get further depressed before recovering.

“Despite the recovery in oil prices, it will take many quarters before all segments of the supply chain see their revenues deliver consistent growth. In case of an upturn, operators would prefer flexible budget items with production increments and high-return investments with short pay-back times. Therefore, we expect well service segments to be the first to recover, while long-lead segments will pick up much later.“

  • Maintenance and operations: is poised for consecutive yearly rises in the next three years after slumping to $167Billion this year from $202Billion in 2019.
  • Well services and commodities: is set for a similar recovery, but only after slumping to $152Billion in 2020 from $231Billion in 2019 – the biggest decline among segments in absolute numbers.
  • Drilling contractors: falling to $46Billion in 2020 from $62Billion in 2019, and then rising to $57Billion in 2023.
  • Subsea segment: will fall from $25Billion in 2019 to $22Billion in 2021 – before starting to rebound to $24Billion in 2022 and to $29Billion in 2023.
  • EPCI: fell to $81Billion in 2020 from $105Billion in 2019, sliding further to $74Billion in 2021, before rising back to $81Billion in 2022 and growing to $106Billion a year later.
  • Seismic: declined to $12Billion in 2020 from $15Billion in 2019, dropping to $10Billion in 2021, before rebounding to $11Billion in 2022 and to $13Billion a year later.

The Players- BakerHughes, Halliburton and Schlumberger

Baker Hughes, Halliburton and Schlumberger, the traditional giants of the service providers, have experienced a long trek through the wilderness. Is relief on the way? A mixed bag.

Their stock prices have tanked: in December 2016 Baker Hughes’s share price was $65, now December 2020, it was $21; Schlumberger in December 2016 was $85, December 2020 it had dropped to $21; Halliburton in December 2016 was $55; in  December 2020 it was $19.

81,000 jobs have been lost since November 2019, to go by the report of the Petroleum Equipment and Services Association  (PESA).  In a recent forum PESA President Leslie Beyer stated: “The majors are making carbon reduction and setting net zero goals. Then they’re turning to their OFS sector partners and saying, ‘How are you going to help us get there?’”.  How indeed!

The strategies of both Halliburton and Schlumberger are defensive and show little reason for optimism:

Halliburton on its website talks about further digalization of its services, lower capital intensity and being committed to provide technologies that reduce emissions/environmental footprint.

Olivier Le Peuch, Schlumberger’s CEO, recently announced a major strategic restructuring creating four new divisions- Digital & Integration, Production Systems, Well Construction, Reservoir Performance.

Within the confines of the E&P bubble both major service companies continue on with what they anticipate what the IOCs (International Oil Companies) are dictating: belt tightening, a reduced head count, with the hope for a better tomorrow. Simply re-shuffling the deck chairs on the Titanic.

The one exception is Baker Hughes who has recently unveiled a forward looking strategy focused on CCS (Carbon Capture Storage), Hydrogen, and Energy Storage. Key themes for the Energy Transition.

The Drillers

Hans Hagelberg, Bassoe Offshore, has estimated that in the last 12 months the offshore rig fleet has lost almost 42%, or $30Billion of its total value. A large portion of the global fleet is now cold stacked. Of the 103 cold stacked, 94 have been stacked for 12 months or longer.

West Africa has been one of the hardest hit areas in 2020, according to IHS Markit: the region saw 11 contract cancellations from March to July 2020, the most of any area. Most of those cancellations were associated with jackups.

Jackup utilization in West Africa fell from 71% in September 2019 to 29% in September 2020, while drillship utilization fell from 48% to an abysmal 19% in the same time frame, according to Bassoe.

Dayrates for drillships in West Africa are currently between $150,000 and $200,000 per day, while jackups currently sit between $70,000 and $90,000. Looking to 2021, Teresa Wilkie, Offshore Rig Market Analyst, Bassoe,  rig utilization in West Africa is likely to stay flat, unless there is a marked increase in oil demand. With rig oversupply set to continue in the region, she expects dayrates to remain at the same level in 2021; further reductions are unlikely as the current rates are around operating cost level.

Marine Contractors- Two  key players- TechnipFMC & Heerema

Marine contractors have not been sitting idle. They are demonstrating adaptation and innovation.

The 2017 merger of Technip and FMC featured distinct market segments: subsea, onshore and offshore and surface projects. Now Technip Energies- entailing LNG, sustainable chemistry and decarbonization- is being spun off, creating new innovative options.

Arnaud Pieton, President and CEO of Technip Energies, says that the company is well placed to produce green hydrogen, given  that some  270 plants worldwide have their origin with TechnipFMC.  A strategic alliance with McPhy, a builder of electrolyzers, is expected to help enhance the production of green hydrogen. 

Heerema, which had its own enormous fabrication yard in Angola,  recently announced that it shut down operations citing poor  market conditions and sustained low oil price.  Instead the company is investing in the Offshore Wind Sector.

Heerema Marine Contractors recently signed a contract  to support the construction of the Changhua Windfarm Phase 1 project, Offshore Taiwan. Heerema will take on the installation of 21 jacket foundations (4 legged) for the Changhua project.

Musketeer 2 New Energy Service Companies

Siemens Energy

Siemens Energy has operations in 90 countries offering a full project cycle of services: generation, transmission and storage from conventional to renewable energy. Two examples:

  • Service center and a training academy in Egypt. The service center is the first of its kind in the region, combining a repair center, a tooling center and a spare-parts warehouse under one roof; and
  • Siemens Energy will supply six SGT-800 industrial gas turbines to the Mozambique LNG Project that will be used for low-emissions onsite power generation.

Cummins

Cummins operates in 51 countries in Africa and market leader in fuel cell and hydrogen production technologies. Cummins began developing its fuel cell capabilities more than 20 years ago.

In 2019 Cummins purchased Hydrogenics, a leader in hydrogen technology. This accelerated Cummins’ ability to further innovate and scale hydrogen fuel cell technologies across a range of commercial markets.

Two examples of Cummins’s presence in Africa:

  • Cummins Angola operations, which is a joint venture partnership with Angolan ProjectNet. Cummins Angola currently occupies 1,000-square meters of office and parts outlet space, as well as 1,750-square meters of rehousing.  Cummins is working closely with the Angolan government to maximize the Private Public Partnership Framework to invest in the energy sector.
  • Cummins has supplied a power solution based around four of its 630 kVA generator sets to Standard Chartered Bank in Ghana. The system will provide the bank’s head office in Accra with standby power whenever interruptions to the grid supply require it.

ITM Power

ITM Power Plc designs and manufactures products which generate hydrogen gas, based on Proton Exchange Membrane (PEM) technology. This technology only uses electricity (renewable) and tap water to generate hydrogen gas on-site and can be scaled  up to 100MW+ in size.

Two examples:

  • The REFHYNE project to be installed and operated at the world’s largest hydrogen electrolyser at the Shell Rhineland Refinery in Wesseling, Germany.The PEM electrolyser, built by ITM Power, will be the largest of its kind to be deployed on a large industrial scale.
  • HyDeploy the £6.8Million project, funded by Ofgem and led by Cadent and Northern Gas Networks, UK, is an energy trial to establish the potential for blending up to 20% hydrogen into the normal gas supply to reduce carbon dioxide emissions. HyDeploy will run a year-long live trial of blended gas on part of the University of Keele gas network to determine the level of hydrogen which could be used by gas consumers safely and with no changes to their behaviour or existing domestic appliances. ITM Power is supplying the electrolyser system.

Musketeer 3: Energy Service Companies Africa

Musketeer 3 has huge challenges if Africa is to be lit up by 2025. The African Development Bank envisages:

  • 160 GW of new capacity for On-grid generation;
  • 130Million new connections for On-grid transmission and grid connections;
  • 75Million connections for Off-grid generation, an increase 29 times more than what Africa generates today;
  • Access to clean cooking energy for 130Million households.

There is a strong need to enhance the capability of Musketeer 3- Energy Service Companies Africa- to build coalitions across the sector and the region,  including the oil and gas and the renewable sector.

Some examples

  • Clean Energy Corridor which aims to support integration of cost-effective renewable power options to national systems, promote its cross-border trade and support creation of regional markets for renewable energy. The Clean Energy Corridor initiative has two African components:   (1.) African  Clean Energy Corridor(ACEC) for the member countries of Eastern and Southern African power pools.  (2.) West African Clean Energy Corridor(WACEC) within the Economic Community of West African States.
  • Partners should also include National Governments and their National Power Companies, including companies from Asia, Europe, the Americas, and the Middle East.
  • Finally this should include the oil and gas sector accustomed to carrying out large -scale projects. Providing them an opportunity to participate and be a partner in renewable energy.

The increased speed of the Energy Transition is not necessarily good news for Africa. The greening of Europe by the  majors could  mean reducing oil and  gas activities in Africa.

Why? Simply because the oil and gas majors are choosing  low carbon prospects and natural gas projects on a massive scale  leaving many potential prospects in doubt. Other smaller oil and gas projects will not be treated so kindly.

How will oil and gas prospects in Africa be judged? Do the various governments have the management skills to properly assess their energy scenarios?

Do they have the technical knowledge, capability and expertise to manage and implement oil and gas projects?

Then there is the matter of developing national service companies which have the technical capacity and knowledge to implement projects.

Conclusions

  1. Musketeer 1- Oilfield Services is in the sunset of his youth. Oilfield Services will continue but in a diminished marketplace. With the majors cutting back their oil and gas investments there is little room for optimism. Halliburton and Schlumberger must seriously re-examine their energy scenarios. Baker Hughes is showing investors that they have a Plan B.  Also the marine contractors- both TechnipFMC and Heerema- are making bold energy transition moves.
  2. Musketeer 2- New Energy Service Companies are defining the energy transition. Siemens Energy, Cummins and ITM Power are examples of new companies delivering energy systems for a renewable world.
  3. Musketeer 3- Energy Service Companies Africa could well become an alliance of national oil and gas companies, power companies and service companies in order to meet the requirements of the energy transition. They could well receive assistance from Musketeer 2-New Energy Service Companies.

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

 

 


Shaky Before the Goal Post: Business Lessons from Austin Avuru’s Biography

By Toyin Akinosho

One evening in 2009, Austin Avuru, then CEO of Platform Petroleum, received a call from Nasir Ado Bayero during which the latter asked if Platform would be interested in purchasing Shell’s stake in Oil Mining Lease (OML) 38, in the western Niger Delta.

The offer, it turned out weeks later, was on condition that Platform was willing to go into partnership with Shebah Exploration and Production, then headed by Ambrosie Bryant Chukwueloka (ABC) Orjiako, a flambouyant orthopedic surgeon who was becoming widely known for his interest in oil and gas. Shell could divest its stakes in OMLs 4, 38 and 41 to the partnership.

“I had never really met Dr. A B C Orjiako until that time”, Avuru says in A Safe Pair of Hands, his just released authorized biography, written by Peju Akande and Toni Kan. “I knew him from a distance. I had known people who were working for him and I always saw him in the same mould as Kase Lawal, whom I had worked for: young men who were operating at a very high level in the O&G industry. Now, that itself was an issue because I had to treat him with absolute caution. I didn’t want to go into partnership with somebody that could “swallow” me. My thinking was, I don’t want wahala”.

Considering that Avuru had earned a reputation, already at the time,  as a public intellectual and strident critic of Nigeria’s policy choices, it is quite instructive to find that he harboured a sense of insecurity at the thought of meeting a potential business partner. It’s an enormously useful piece of information for Business students:  knowing that people they see as phenomenal also have their vulnerabilities.

“For a start”, Avuru recalls, “we had to name our new company, so I suggested that we joined Sepcol and Platform together to form SEPLAT”.

That Avuru led the company as CEO for 11 years is a well-documented part of Nigeria’s corporate history. But the story above is one of the many nuggets that make A Safe Pair of Hands, published in Lagos by RADI 8, such a riveting business thriller.

There’s one revealing anecdote after another startling insight.

A few of the passages that leapt at me from the pages:

The authors, Toni-Kan, left and Peju-Akande

Keep your eyes on the ball:

Shell didn’t have faith in Nigerian banks. They wanted Letters of Credit backed with cash guarantees. They preferred to deal with a global player.

ABC Orjiako suggested BNP Paribas, the French bank he usually did business with. Austin Avuru thought it was a good idea but the moment BNP Paribas asked for a $3Million transaction fee, Austin Avuru flew into a rage.

“For what?” he thundered. “How can they charge $3m for merely facilitating a deal? I won’t hear it.”

ABC Orjiako urged his new partner to be calm.

“Austin, I will pay the $3Million myself if need be but we need a bank with global connections, one that speaks the language of global finance and confident enough to get Shell back to the table.”

BNP Paribas turned out to be what was needed. Once the deal was signed they made a suggestion that changed the whole process and saw Seplat buy up OML 4, 38 and 41 without spending one kobo.

How did this happen?

BNP Paribas informed Seplat that a French company had just sold its interests in Congo and was awash with cash. Would Seplat like an introduction?

Maurel and Prom was interested in the deal put forward by Seplat and BNP Paribas and agreed to go with Seplat to London.

BNP Paribas was already earning its fee and Austin Avuru could see clearly now that the move to get a western bank was a smart one.

Deep knowledge will set you free from the tyranny of NNPC

After we had reached agreement with Maurel & Prom, the chairman of Maurel & Prom said he would like to visit Nigeria to see for himself the field his company was investing in.

At this point, Shell did not want their staff to know that they were on the verge of selling their assets. I remember when we made the trip to Sapele and Oben to inspect the facilities, Shell had to tell their staff that Platform Petroleum, which had a marginal field in there was merely inspecting their facility just in case we needed to send our production there.

After that trip, we were meant to take the chairman of Maurel & Prom to go and see the minister. Dr. Rilwanu Lukman was the adviser then. We had spoken to him before and he was very happy that we were doing that transaction. He said “oh, yeah, we will talk to NNPC and once NNPC gives the approval, we will approve it, that’s it.”

But in between giving us that promise and when we physically went to visit him, operatives inside NNPC and the DPR had given him an opinion that he should not allow us to proceed with the transaction.

In fact, some whiz kid head of legal at NAPIMS had given him an opinion which generally said that Shell had nothing to sell, that under the Petroleum Act, everything inside the ground belonged to the Federal Government.

But what he glossed over was the fact that all the operators who have a JV interest have an economic interest. That’s why they can list the value of their economic interest on the stock exchange. So, how can you then say that they have no value to sell?

‘Rags to Riches’ is not a cliché:

“I was very short before I went to the boarding house. When I got to the boarding house, the food they ate was beans and yam, rice and dodo and the occasional swallow. I came in October, then went home for mid-term in December. When I got to Abbi, I just sauntered into my compound. My aunt was visiting and she looked up and asked “who is this o?” I said I was the one. She peered close and exclaimed – “You are tall.” Not understanding what she was saying I went inside. Back then we had all these long mirrors at home. I stood in front of the mirror and looked and saw that it was true. I had sprung up. If I hadn’t go to that boarding school, I would have died a short man. What had happened was simple; I had started eating balanced diet.”

From the backwaters of the Niger Delta, in Nigeria’s oil rich region, to one of Africa’s most influential boardrooms, Austin Avuru’s story of becoming reads like a dream. Despite its being a master class work on the audacity of entrepreneurial undertaking, the 220 page story is an old fashioned, feel good tale. And that’s because it has benefitted from careful research and painstaking delivery by a pair of writers with a keen eye for the diversity of human relationships: our foibles, triumphs, generosity, candor, nepotism.

This book is a must read for anyone who believes in potential.

 

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