DRILLING UPDATE
FIRST OIL
PROJECT REPORTS
FARM IN FARM OUT
Vol
V
ol 13, No 2, February,
y, 2012
y,
www
www.africaoilgasreport.com
report
MARGINAL
GROWTH
INSIDE:
THE NEW PHASE OF
AFRICA’S INDIGENOUS
E & P OPERATORSHIP
(Ebi Omotshola. Conoil CEO)
FIRST GAS
BOOBY TRAPS ON THE UQUO TRAIL
Africa In Business
HOW SANUSI
WON THE
PRIZE
Farm In, Farm Out
WHO WILL BUILD
UGANDA’S LARGE
SCALE REFINERY?
Vol
V
ol 13, No 2, February,
y, 2011
y,
Publisher: TOYIN AKINOSHO
Editor-In-Chief: FRED AKANNI
Editor: MOSES AKIN AREMU
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Copyright
2012
FESTAC NEWS PRESS LTD.
The African Independent
I
n this first of two editions devoted to the activity of Independents in the African E & P space,
the Africa Oil + Gas Report focuses on homegrown enterprises, and puts its searchlight
specifically on Nigeria, where the private indigenous E & P company has found more room to
grow than anywhere else on the continent.
The Publisher's Kickstarter article examines the production trend of these indigenous
enterprises in the last decade and suggests that a new generation of firms has emerged which is
far more keen on operatorship than hawking licences to foreign partners.
In the inside pages, this issue pays homage to Ebi Omotsola, whose movement from the plum
job of Chief Geologist at Shell Nigeria in 1990, to become CEO of Conoil Producing, helped to start
this trend. A “case story” of Frontier Oil: 10 years of trying to get some production out of the
Uquo field in South Eastern Nigeria, highlights the tenacity of this new breed of African
independents.
As these stories and other articles in this edition show, this magazine is the primer on oil and gas
activity in Africa, providing insight, energy intelligence and insider information to guide everyone
from the prospecting E & P company to the project finance institution.
-Edito r
BOOK EXCERPT
Irreconcilable Emotions
T
he moral keynotes were also changing. Historically
associated with corruption, civic corrosion and civil war, the
relationship between the governments in Washington and
London and the oil companies had been a dominant topic for a
century. Posing as representatives of mankind's interests, but
beyond mortals' control, the corporations' chairmen appeared
detached from national governments. Uncertain who was using
whom, many debated whether the oil companies should be
supported, controlled or investigated. An important theme
explored by Yergin and Sampson was the battle waged by
America's federal and state governments against J.D.
Rockefeller, the creator of America's oil industry. The epic
legal contests against oil companies had usually ended in the
governments' defeat, spurring public anger about Big Oil. 'His
lack of scruple and his mendacity,' wrote Sampson of Rockefeller, 'provoked a
continuing distrust of the oil industry.'
Oil provokes irreconcilable emotions. Moralising sermons about oil have never stopped, but
since Sampson's and Yergin's books, some issues have changed. Destitution in the Niger
delta, the contamination of Alaska's pristine wilderness, the destruction of Canada's forests
and spreading corruption across Africa are all blamed on oil companies. 'African oil did not
create the system or its failings: wrote Nicholas Shaxson in Poisoned Wells, accusing Shell,
ExxonMobil and the French oil corporation Elf of destroying idyllic communities. Serious
authors have claimed that the oil industry is 'among the least stable of all business sectors
and that supplies are utterly independent on corrupt, despotic “petrostates” with uncertain
futures'. The riddle is whether, in pursuing their priority of caring for their shareholders and
their customers, the oil majors should refrain from interfering in he internal affairs of Third
World countries, or accept a duty to prevent the 'institutionalised pillage' of impoverished
populations and to oversee the fate of their nations' oil wealth...
Excerpted from The Squeeze; Oil, Money and Greed In The Twenty First Century
by Tom Bower, published 2009 by Harper Press.
AFRICA OIL + GAS REPORT
FEBRUARY, 2012
3
FROM THE EDITOR
report
K I C K S TA R T E R
Nigeria: A New Phase Of Independent
E
leven Nigerian independents operated a
total daily production of 93, 300 barrels
in December 2011. That's less than 5% of
the country's production of at least 2.2Million
barrels. To some analysts, this is a poor record
of performance.
But the equity production accruable to Nigerian
companies was higher. At 134,615Barrels Of Oil
Per Day(BOPD), the local share was 6.1% of
total daily production. It's not exactly a terribly
high figure too, but we are getting ahead of
ourselves.
What this means is that total operated
production (93,300BOPD)by privately owned
Nigerian companies is roughly 70% of the total
volume attributed to Nigerian companies on
average every day in that month. The key word
is “operated”; the volume of crude mined daily
by Nigerian companies without the benefit of
technical partners.
These two figures are not very different from
the average daily production of Nigerian
independents in 2000, when the Nigerian
Association of Indigenous Petroleum Explorers
and Producers(NAIPEC) called on the country’s
president, to make the case for support of
homegrown E&P enterprises.
In that year, the equity production was around
90,000 barrels of oil per day(BOPD) and most of
the production was non operated. Moni Pulo
was producing 27,000BOPD. Express
Petroleum was producing 20,000
BOPD(Conoco was the technical partner);
Conoil was producing 10,000BOPD, entirely on
its own, Amni had severed relations with
Abacan Resources, its technical partner. It was
producing around 3,000BOPD, entirely on its
own. Atlas Petroleum, Dubri Oil, Allied Energy,
and others made up the rest. In effect, it's been
roughly 40,000BOPD added to equity
production in over a decade. So, why do we now
cheer the so called growth f the Nigerian
indigenous E&P sector?
The reason is the shift in dynamics of
ownership, driven by a certain mentality of self
entitlement and the willingness to pursue the
idea of operatorship
The figures that they produce may be small, but
there are far more companies operating their
own little fields, making all the mistakes, losing
money in the hole, than there were at the time
Nigeria returned to democracy in 1999.
More than half of the 20 companies that earned
money from the production of 134,615BOPD in
December 2011, were operators of their own
fields, in contrast with the group that visited the
President in 2000, who were mostly brokers.
The 11 companies that make up the elite list of
Nigerian operators include –in the order of
performance-Seplat Petroleum and
Development Company, Conoil Producing,
Niger Delta Exploration and Development Plc,
Pan Ocean Oil, Moni Pulo, Allied Energy, Amni
Petroleum, Platform Petroleum , Walter Smith
Petroman, Energia and Dubri Oil(Please refer to
4
FEBRUARY, 2012
Operatorship
by Toyin Akinosho
the spreadsheet on the adjoining page).
Companies that did not operate any field, but
gained equity production include-in order of
size of rent-South Atlantic Petroleum
(SAPETRO), Famfa, Shebah, Oando, First
Hydrocarbon Nigeria, Atlas Petroleum,
Midwestern Energy and Suntrust. These are the
companies listed from the 13th to the 21st on the
spreadsheet on the adjoining page.
But things are a little more complicated than
the list suggests.
Shebah Petroleum, which is listed as a nonoperator, just happened to be out of luck in
December 2011. Shebah is the technical
operator of the Oil Mining lease (OML) 108,
which contains the Ukpokiti field. But as of
December 2011, the field wasn't producing, so
Shebah is working to bring it back to life.
Nonetheless, Shebah is assigned equity
production figure by the virtue of its being a
33% shareholder in Seplat. Some of my
petroleum economist friends have challenged
this. But my argument is that: If Shebah was to
raise a prospectus on which it publishes a
company profile, seeking to attract investors, it
would have to publish its equity production in
all its assets for the purpose. Afterall, Maurel et
Prom, the French minnow which is the majority
shareholder in Seplat, does that on its website.
But I digress.
Oando and First Hydrocarbon Nigeria are two
other companies that would have appreciated
being regarded as operators, but belong
squarely in the non-operators list.
Oando is assigned production from the equity
crude it is getting as 15% partner in Eni
operated deepwater Abo field, and Energia
operated Obodogwa /Obodeti field. Oando has
repeatedly stated that the 5,000BOPD equity
crude it is getting from these two fields is a
significant part of its revenue portfolio. Clearly,
upstream production, at good oil prices, beats
downstream product importation anyday.
Oando would like to do more. But its upstream
portfolio is weak. The assets are ratty. Oando is
keen on getting some production on its own. It
has been struggling to bring on stream the
Akepo marginal field, owned by Sogenal, for
over 12 months now. Oando has raised a loan of
$35Million and probably paying back, but for
some reason, the oil is not yet in the tank. It
must be frustrating. If Oando succeeds in
delivering Akepo, it would be a rare case of a
private Nigerian company succeeding as
“technical partner” to another Nigerian
company. (As a rule, the technical partner is
from Europe or America. Once in the last 12
years, Tuskar resources was technical partner
to a Nigerian company, which owned the Obe
field). Tuskar was registered abroad, but
Nigerian owned. The relationship soured
quickly, even leading to police arrests, but it was
a precedent. I digress again.
First Hydrocarbon(FHN) nets 4,950BOPD from
its 45% equity in OML 26, which it only just
completed purchasing from Shell/TOTAL/Eni a
few months ago. FHN fought hard to be
operator of that acreage, but the government
insisted it would operate. Operatorship is
where the real capacity of an E & P company is
built and for a company whose parent is the
very aggressive Afren Plc, the fact that it is a
non-operating, look-on partner in its only
acreage, is something that it considers less
dignifying. Now FHN, unfortunately, for reason
that is not its own fault, is cast on the line of
non-operating, rent collecting companies on
the spreadsheet on the adjoining page.
But there are companies who are happy
enough to be passive, non operating owners of
producing assets. And they are making most of
the money!
With its 10% in the Chevron operated
250,000BOPD Agbami field, Famfa Oil has
25,000BOPD as equity. That's so cool.
It's also cool for South Atlantic Petroleum,
raking in cash from the 15% (26,500BOPD) it
holds in OML 130, where the Akpo field is
delivering 175,000BOPD. These two companies
didn't even bid for the acreages, when they
were “given” in the 90s.
Nigerian companies are unlikely to be lucky
anymore to gain any foothold in deepwater
acreages, whether in a bid round or outside the
process of competitive bidding, unless they are,
like Oando, willing to pay for getting it.
So things have changed. But let us get back to
the story.
The figures for both operated production and
total equity production for indigenous acreage
holders may be clearly modest, to go by the
aspirations of the Nigerian Association of
Indigenous Petroleum Explorers and
Producers(NAIPEC).
But the difference between operated and
equity production is a key data point in the shift
in dynamics in the ownership of acreage and
production equity in the 20 years since that
body came into being.
Please see pages 30-32 for a related article
regarding the challenges of local enterprises.
AFRICA OIL + GAS REPORT
** Last month we erroneously credited Pan Ocean with 60% equity in the joint venture.
* NPDC is not a private company. It is the state hydrocarbon company and is listed here for the record only.
Editor’s note: These are the nearest to the best figures we could obtain for December 2011 production.
NIGERIA's TOP TWENTY INDIGENOUS CRUDE OIL PRODUCING COMPANIES
www
www.africaoilgasreport.com
report
Vol 13, No 2, February, 2012
©Copyright 2012,
AFRICA OIL+GAS REPORT
CONTENTS
Vol
V
ol 13, No 2, February,
y, 2012
y,
www
www.africaoilgasreport.com
report
IN THIS ISSUE
COVER STORY
4, 30-34
From The Editor
Kickstarter
MARGINAL
GROWTH
THE NEXT PHASE OF
AFRICA’S INDIGENOUS
E & P OPERATORSHIP
In The News
Petroleum People
Oil Patch Sahara
Oil Patch Subsahara
03
04
10
16
20
21
Africa In Business
Farm In, Farm Out
Opinion
Local Content
Last Word
22
25
28
30
36
COVER PHOTO: Ebi Omotshola. Conoil CEO
CO N F E R E N C ES , M E E T I N G S , E V E N TS
3rd SPE (Society of Petroleum
Engineers) North Africa Technical
Conference and Exhibition NATC 2012
February 20- 22 February 2012 in Cairo,
Egypt .
Tel: 00971 0 4 457 5800
Fax: 00971 0 4 457 3164:
http://www.spe.org/events/natc/2012/
12th Nigeria Oil & Gas Conference
&Exhibition
February 21-24, 2012, Abuja, Nigeria
CONTACT: Tel: +442079780083, email:
6
tmillard@thecwcgroup.com
Summit Africa
February 28-March 1, 2012
Cape Town, South Africa
Tel: +44 117 915 4738 Fax: +44
78344 22947
Email:
ed.taylor@gdsinternational.com
6th Africa Economic Forum
March 5-7, 2012
Cape Town,
South Africa
FEBRUARY, 2012
Tel: +31 70 324 6154 Fax:
Email: babette@glopac-partners.com
2nd Annual Shale Gas Conference
Dates: 06 March 2012 - 09 March 2012
Venue: Convention Dynamics, Isando,
Johannesburg
Email: kfrancis@iir.co.za, Tel:
+27117717000
Oloibiri Lecture Forum And Energy Series
2012
March 8, 2012, The Civic Center, Lagos,
Nigeria
Contact:
www.spenigeriacouncil.org/oloibiri,
Tel: 234803790204
Details: www.energyafrica.de
Shale Gas Southern Africa
26th & 27th March 2012 – Town
House Hotel &Conference Centre,
Cape Town, South Africa
Email:
mark.sales@vitaltraining.co.za
The 7th Mediterranean Offshore
Conference and Exhibition(MOC
2012)
May 22-24, 2012, Alexandria, Egypt
Contacts: conference@mocegypt.com , exhibition@mocegypt.com
6th German-African Energy Forum
April 22nd – 25th, 2012
Hamburg, Side Programme (April
22nd)
Hamburg, Hotel Grand Elysée (April
23rd – 24th)
Hanover, Hanover Fair (April 25th)
AFRICA OIL + GAS REPORT
EnerCom's London Oil & Gas
Conference
June 13- June 14, 2012
CONTACT: Tel: +303.296.8834
Email: kgrover@enercominc.com
OML 95
OML 49
OML 40
OPL 274
OML 63
GOLAND PETROLEUM
Oriri
Goland and its technical and funding partner are
waiting on a Transocean rig currently being engaged
by Afren on the Ebok field. They could have been
drilling since November 2010, but Afren extended
the usage time of the rig by another six months.
Goland was one of the earliest members of the
Marginal field class of 2004 to go on a well site. But
community disturbances held the company back,
leading to severance of relations with partne Vitriol.
OML 31
OML 18
OPL 226
(CPC)
OPL 285
OML 25
30
OML
104
OML 99
60
OML
100
OML 70
©C o p yrigh t 20 12,
AF R IC A O IL +G A S R E P O R T
OTHER OPERATORS
AGIP
TOTAL
EXXONMOBIL
SHELL
CNL
LEGEND
GREEN ENERGY
Otakikpo Field
Green Energy, a new local E&P company, has been
awarded the Otakikpo field, located in Shell
operated Oil Mining Lease(OML) 11. The award is,
unusually, outside a bid round and was clinched
through a patronage network. The Beny Steinmetz
Group is technical partner. FOA and FIA are
expected to be signed.
FRONTIER OIL
Uquo Field
Frontier Oil is in advanced stage of
installing equipment for the
hundred million standard cubic feet
per day (100MMscf/d) of gas on the
Uquo Field in Eket. First gas is likely
to be delivered by May 2012
UNIVERSAL ENERGY
Stubb Creek
Seven Energy anticipated first oil from this field
by 4th Quarter 2011. Seven Energy acquired 62%
of Universal Energy (holders of the field), in
2010. Sinopec has been technical partners all
along.
ASSOCIATED O&G/DANSAKI
Tom Shot Bank
Mira Resources, the Canadian operator, has flowed an average of 280 BOPD from a 120 foot
section out of the 210 foot U7 interval in the Lower U7 in Tom Shot Bank (TSB) 1. There was no
formation water and a GOR is in the 850 to 950 range. The flow rates were a small fraction of
the anticipated flow rate, expected to be in excess of 1500 BOPD on a 32/64" choke. Mira will
re-continue the completion as a producer in conjunction with the drilling of TSB 3 in early 2012”.
OML 67
OML13
OPL 290
NETWORK E&P
Qua Iboe Field
Technical Partner, Mart Resources pulled
out after reporting dire finances. There
was a lack of success with the new well
Qua Iboe 3. Network E&P is looking for a
new technical partner.
OML 1
119
19
0
OML 51
OML 52
OML 72
EURAFRIC
Dawes Island
Eurafic is talking to Oilflow Group
for a technical partnership.
30
OPL 090
OPL 225 (ADDAX)
OML 1116
16 (NNPC)
OPL 238
(SUNLINK)
OPL 286
OML 18
OML 1
11
1
MILLENIUM OIL &GAS
Oza Field
Hardy Oil, technical partner to Millenium Oil&Gas, now
has an Australian Bank as partner. Also in talk with
Nigerian banks for a syndicated loan. Hardy had earlier
brought in Emerald Resources for funding purposes but
the company has proven incapable of raising the funds.
Last technical news: On 31 December 2007, Hardy Oil
Nigeria tested, in Oza 4, at flow rates averaging
approximately 600 stbd of oil and average GOR of 5,466
scf/stb.
WALTER SMITH
Ibigwe Field
Walter Smith had a blow out on the rig:
the entire rig went up in flames. The
company is tackling the challenge head
on. It is currently drilling a relief well to
keep the reservoir fluid pressure in check.
There has been at least three side tracks.
T
report
Vol 13, No 2, February, 2012
2012BIDROUNDPENDING…
NigeriaGrantsM/FieldsInPatronageCircumstances
he Department of Petroleum Resources is finalizing
the arrangements for 2012 Marginal Field and
Acreage Bid Round. Meanwhile, the authorities
have awarded two marginal fields to brand new local E&P
companies, outside the process of a bid round. The
Otakikpo Field was awarded to Green Energy while the
Ubima Creek field was awarded to All Grace. Otakikpo
and Ubima are located in Shell operated Oil Mining
Leases(OMLs) 11 and 17respectively. The awards appear
to have been effected through a patronage network. It's
instructive that the same company: The Beny Steinmetz
Group (BSG) is technical partner for both companies.
www
www.africaoilgasreport.com
PRIME/ENERGY/SUFFOLK
Assaramatoru Field
Shopping for $40million to kicksyart re-entry and field
development work.
ALL GRACE Ubima Field
All Grace, a new local E&P company, has been
awarded the Ubima field, located in Shell
operated Oil Mining Lease(OML) 17. The
award is, unusually, outside a bid round and
was clinched through a patronage network.
The Beny Steinmetz Group is technical partner.
FOA and FIA are expected to be signed.
OML 17
OML 55
OML 23
OML 141 (EMERALD)
OML 66(NNPC)
OML 33
OML 58
OML 53
OML 20 (SHELL)
OML 124
(ADDAX)
INDEPENDENT
OIL & GAS LTD.
Ofa Field
Well work over done
OPL 277 (STERL.) by Afren. Low API
gravity. Flow not
assured. Not looking
good.
PILLAR OIL
Umusati/Igbuku Field
Spudded the Umusati-3 Well in late December 2011. Drilling
with Deutag T57. Pillar was the third company, in the marginal
field class of 2004, to reach first oil. But it has struggled at far
below 1,000BOPD. This well is expected to be a turn around.
MIDWESTERN O&G
(Technical Partner: MART RESOURCES)
Umusadege Field
Commenced production 2008. Produces over 8,000
BOPD. Most sustained steady production of all
operators.
CHORUS ENERGY
(Technical Partner: SEPTA ENERGY)
Matsogo/Amoji/Igbolo Field
Drilled a dry hole looking for oil. The field/s have more potential as gas pools.
P+P is estimated to be 160 billion cubic feet of gas.
OPL 2005/2006
OML 58
OML 61
OML 26
OPL 275
The Cluster
DEL SIGMA
Ke Field
Operator Del Sigma was on site
preparation for most of 2009,
trying to convert a swamp location
into land and move in a rig. Its
partner, Mart Resources, was
suffering from severe cash crunch
at the time. The two companies
have since parted ways.
OPL 288 OML 83
OML 85
OML 86
.)
NT
O
(C
MOVIDO
Ekeh Field
Movido, in partnership with DWC, is in need of funds to
construct a 7km pipeline to Chevron’s Middleton facility.
Movido is one of the earliest starters among Nigeria’s
2004 Marginal field awardees; its Ekeh challenge had
been access to Middleton. It had produced the field for
short periods of time and delivered crude to export
terminal through barges but it was expensive; now it
wants a more permanent solution.
OML 35
6
L5
OPL 289
OM
OM
BALYESA OIL
(Technical Partner: Century E&P Ltd)
Atala Field
Century Exploration and Production Limited has farmed into a 35% equity interest
and 80% working interest in Atala Field. The company will finance a review of
existing technical data on the field, the re-entry and testing of the existing well
and the drilling of a new one in order to put the field on production as soon as
possible. Bayelsa Oil Company Ltd, a state government company which was
awarded the field, has hardly made progress since it was granted in 2004 and has
been accused of using the asset as a vehicle to loot the treasury. The charges
never went to court.
OML 88
6
L5
OPL 263
OML 89
OML 30
OPL 298(CNPC)
OML 66 (NPDC)
OPL 281
.)
LL
E
H
(S
46
82
L
L2
OM
OP
SS
RE
P
EX
7
22
L
79
L
OP
OM
EXCEL E&P
Eremor Field
Excel has dumped the would-be-technical partner and investor it was
negotiating with. The discussions kicked off in May 2011. Now the
company is back in the market. Of the 31 companies awarded 24 marginal
fields in 2004, Excel took an early lead; along with technical partners Mart
Resources; re-entered one of the wells and conducted extended
production test as far back as 2006. But the partnership broke down and
Excel has been with a few other putative partners, including Afren, since.
OML 45
OML 34
OML 41
OML 98
ENERGIA PETROLEUM/OANDO
Obudugwa/Obodeti
Currently producing 1,700BOPD. Constructed a pipeline
to Agip’s facility for evacuation. Completed installation of
a modular Gas processing plant.
OML 43 OM OML 42
L
OML 91 OML 90
64
SOGENAL
Akepo Field
Oando, the technical and financial partner, has
ordered equipment(for a 16km pipeline and
jacket).
BICTA ENERGY
Ogedeh Field
Slow progress. After Afren pulled out, there
have been several “suitors”, but talks recently
broke down between Bicta Energy and
Ofserv, the Houston based firm.
BRITANNIA U
Ajapa Field
Production facility under repair.
Downtime has lasted more than four
months.
GUARANTEE PETROLEUM/OWENA
Ororo Field
Sirius, the AIM listed E&P investor, has entered into a
Financial and Technical Services Agreement with
Owena Oil and Gas Limited and Guarantee Petroleum
Company Limited for a proposed investment in the
Ororo field. Sirius may proceed to acquire a 40 per
cent interest in the Ororo Field. In consideration of
entering into the Agreement, Sirius has agreed to pay
$1MM in aggregate to Guarantee and Owena.
SAHARA ENERGY FIELDS
Tsekelewu Field
EIA has been performed, but neither a reentry, nor new drilling had taken place. This
looks like a huge opportunity overlooked.
PLATFORM PETROLEUM
Egbeoma Field
Plans a 48km gas pipeline to Seplat operated Oben field gas facility, for
domestic gas utilisation. Built a Has completed a gas processing plant a year
ago, but negotiations for gas evacuation to Agip has been drawn out. In crude
oil terms, currently producing around 2,600BOPD, up from 1,200BOPD last
November, the result of a successful re-entry. The first company in the
Marginal Field class of 2004 to reach first oil, Platform has moved from as high
as 1,800BOPD to as low as 600BOPD.
NIGERIAN MARGINAL FIELDS: STATUS UPDATE
2
L3
M
O
PARADISE 1
Hess announced discovery of
490feet Net Hydrocarbon pay
in three sands in June 2011.
Jubilee Plan 1A Submitted
The Jubilee Phase 1A Plan of
Development is awaiting
Government approval and
drilling is scheduled to start
in early 2012 with initial
production commencing in
the second quarter. The
phased approach to field
development will allow these
wells to benefit from the new
completion design
JUBILEE HAS DELIVERED 22
MILLION BARRELS
The Jubilee Field has produced
over 22 million barrels of oil since
production start up in November
2010. The field was producing
around 80,000 barrels of oil per
day from eight wells in early
January 2012, with a ninth
production well, J-07, offline while
it was being sidetracked. The six
water injection wells and two gas
injection wells are now on line,
injecting 230,000barrels of water
per day(BWPD) and 85 million
standard cubic feet per
day(mmscf/d) respectively,
providing good pressure support
to the field.
Operator Tullow Oil says
production rates have been below
expectations “due to mechanical
issues in certain wells related to
the design of the well completions.
The J-07 sidetrack, currently under
way, will incorporate a new
completion design and is expected
to be on stream in early 2012”.
KOSMOS EXTENDS THE POOL IN TEAK
Kosmos has confirmed a northern (updip) stratigraphic extension
of the Teak discovery with the Teak-3A well on the West Cape
Three Points (WCTP) Block. The well encountered approximately
35m of hydrocarbons in multiple good quality reservoirs, i.e.
43feet of 36-39° API oil pay and 72 feet of gas-condensate pay.
AKASA 1
Kosmos penetrated 108feet Net
oil sand in “four good quality
reservoirs” in August 2011.
GAS MONETISATION UPDATE
INTECSEA/Worley Parsons is designing a 36km shallow water, dense phase gas pipeline,
from the Jubilee field production facility to a central processing facility at Domunli, near
Bonyere. (The Jubilee field operator has been re-injecting most of the associated gas from
the field since production start up in November 2010). A 120km onshore gas line will deliver
dry gas to the 550MW Aboadze thermal power station, while another 75km onshore line will
connect to the mining centre of Prestea. Sinopec was working on the final feasibility studies
on the gas plant as of the time of our going to press in early February 2012.
AFRICA OIL+GAS REPORT
Eni has already begun talks with
the Ministry of Energy and the
partner organisation, GNPC
(Ghana National Petroleum
Corporation), aimed at fasttracking the development of
Sankofa.
The discovery is located 16 km
east of the Sankofa gas
discovery, and confirms the
important role of this block in
the development of nonassociated gas resources in
Ghana.
Eni reported encountering
significant thickness of gas and
condensate sands with excellent
reservoir characteristics in Gye
Nyame 1 well, located in the
Offshore Cape Three Points
block 50 km off the Ghanaian
shoreline.. Oil mineralization was
also discovered in the underlying
sands. Its significant potential
will be further assessed through
a delineation programme.
ENI FINDS GAS IN OCTP
ENI/AFREN SPUD NUNYA-1
The ENI/Afren partnership has spud the
Nunya-1X exploration well on the Keta Block
in the Volta River Basin offshore Eastern
Ghana. The Nunya-1X (formerly named
Cuda-2) exploration well is being drilled using
the Marianas semi-submersible drilling rig.
Following the farm out in 2011 of a 35%
participating interest in the Keta Block and
transfer of operatorship to ENI, Afren has a
35% participating interest in the block. Other
partners are Mitsui with 20% and GNPC with
10%.
report
©Copyright 2012,
TULLOW TESTS ENYENRA
Tullow Oil is redrilling the Enyenra-1 (previously known as Owo-1) discovery well, in
Deepwater Tano Block. Plans are to perform a drill stem test at that location. Immediately
following operations at Enyenra-1, the Enyenra-4 appraisal well will be drilled over seven
kilometres downdip from Enyenra-2, on the south flank of the discovery. Results at Enyenra4 are expected in the first quarter of 2012. An Enyenra-5A appraisal well will later be drilled
north of Enyenra-3A to test the updip extent of the field.
TAP OIL
Tap Oil has purchased an
additional 5% to add to its
operated 40%
participating interest in the
Offshore Accra acreage.
GHANA’s UPSTREAM /MIDSTREAM ACTIVITY MAP
www
www.africaoilgasreport.com
Vol 13, No 2 December 2011/January, 2012
Palmeraie,
o
IN THE NEWS
Dana Gas Rides On Egypt To Profit
W
ith production increase of just
19%, Dana Gas made a
whopping 220% increase in net
profit in 2011.
The UAE based operator earned
$138Million profit in 2011, a 220% increase
on the $43MM received a year earlier. The
proceeds came from the company's
production of a net average of 66,200
barrels of oil equivalent per day (BOEPD)
from its interests in Egypt and the Kurdistan
Region of Iraq for 2011, representing a
year-on-year increase of 19%.
Dana Gas Egypt produced an average rate
of 42,500 BOEPD of gas, LPG, condensate
and crude oil in 2011. “This is a figure
similar to 2010 production, despite natural
decline of production from existing fields
and a slower pace of drilling of new
production wells in order to calibrate
capital expenditure with collections”, the
company said in a release. Dana Gas
continued to increase its production In the
Kurdistan Region of Iraq, achieving an
average rate of 23,700 BOEPD
(2010:13,200 BOEPD). The first LPG plant in
Kurdistan was commissioned in January
2011, and the second LPG train in April
2011. The company's 2011 exploration and
appraisal programme were focused on
Egypt, where six wells were drilled, with a
50% success rate. “All of the wells were
drilled in the Nile Delta concessions, with
South Abu El Naga-2, Iris-1 and South
Production Drops In Umusadege Field
N
igeria's most prolific
marginal field is
experiencing challenges
with export pipeline and export
storage facility. Mart Resources, the
Canadian minnow which operates
the field on behalf of Nigerian
partners Midwestern Oil & Gas Co
and SunTrust Oil Company,
reported production from the field
with oil deliveries into the export
pipeline from the field for the
month of January averaging 6,959
BPD of oil. This is a drop of about
1,000 Barrel of Oil Per Day from the
P
7959BOPD in November 2011,
which is itself lower than the field
deliverable of close to 12,000BOPD.
“During the January 2012 period,
there was approximately 12 days of
field production downtime due to
various shutdowns of the export
pipeline and export storage tank
capacity constraints at the third
party export terminal”, the
company complains. “The average
field production based on
producing days was 11,754 BOPD
for the period”.
Faraskur-3 adding new resources”,
according to the statement. The Egypt and
Sharjah Western Offshore Gross Proved
Reserves (1P)remained flat for 2011,
estimated at 88 million barrels of oil
equivalent (MMBOE) (2010: 89 MMBOE).
In 2011, the Gross Proved plus Probable
Commercial Reserves (2P) increased to 159
MMBOE (2010: 152 MMBOE). These 2P
reserves give a total reserves addition of
5% (after 2011 production in Egypt) and
15% (before 2011 production in Egypt).
This represents a production replacement
ratio of 145% for the year. The Company's
hydrocarbon reserves are evaluated
independently by petroleum consultants,
Gaffney Cline and Associates.
Jubilee Won't Make
120KBPD In 2012
T
ullow Oil, operator of the Jubilee field, estimates
average field production for 2012 of between
70,000 and 90,000 barrels of oil per day gross,
dependent on well performance, the timing of
remediation activities, and the implementation of Phase
1A. This is far below expectations of peak production,
prognosed to reach 120,000BOPD gross within one year
of first oil. Producing the massive oil pool located in 1,100
metres water depth off Ghana has come against
technical challenges, notably in the area of completions.
The Ramform Tackles Large Angolan Multiclient Shoot
GS owned seismic vessel,
Ramform Valiant, , has
started acquisition of over
26,000 km² of GeoStreamer data in
five blocks in the Kwanza/Benguela
Basins in Angola. In February 2012,
the PGS Apollo will join the
Ramform Valiant and acquisition
will continue with both vessels until
Fourth Quarter 2012. PGS teams
will start processing data in March,
utilizing the latest depth imaging
technology and building on their
experience of illuminating pre-salt
targets in Angola. Together, the two
vessels will operate 20 vessel
months on this project.
The size of the survey area corresponds to an area slightly larger
than Massachusetts or Wales. Following the block awards made on
December 20th, 2011 BP, TOTAL and Statoil have been made
operators of blocks 24, 25, 38, 39 and 40. Sonangol is a partner in all
10
FEBRUARY, 2012
of the blocks.
All four oil companies have
committed to funding the survey.
PGS already has 2D GeoStreamer
data over this area, acquired in
2010, and good quality
conventional 3D datasets over
blocks 24 and 25 that PGS will reprocess. “Together these datasets
will enable PGS to construct the
best possible velocity model for
p ro c e s s i n g o f t h e n ew 3 D
GeoStreamer data”, the company
says.
“The salts basins of Angola have a
clear geological link to similar
basins offshore Brazil. Recent
advances in tectonic reconstruction point to parallels with the
prolific pre-salt Santos and Campos areas, and PGS will use its
extensive MC library on both sides of the Atlantic to take a closer
look at these links”.
AFRICA OIL + GAS REPORT
P
etrolog Energy, the Canadian registered subsidiary of a
Nigerian owned oil service firm, has been listed on the
Frankfurt Stock Exchange in Germany. The company claims to
be represented in four continents with over 12 offices in six
countries, “with a strong and dedicated workforce (650 employees)”.
Petrolog started life as a mudlogging company in 1981 and has
expanded into other areas, including Drilling, Mud Engineering,
Geophysical Exploration, Engineering Design and Project
Management, largely in the last 10 years. In 2008, it ventured into
E&P acreage holding, acquiring 18% in the Oil Prospecting
Lease(OPL) 917 in Nigeria's Anambra Basin. The acreage's operator is
AGER, acronym for Afren Global Energy, a special purpose vehicle set
up by London listed Afren and Nigerian company Global Energy for
the purpose of winning and operating the asset. OPL 917 contains a
stranded gas and condensate well, Igbariam 1, to which is credited
Stock Tank Oil In Place(STOOIP) of 80MMBls as well as 200billion
cubic feet of gas. Petrolog is currently represented in Nigeria, United
Arab Emirates, Colombia, Costa Rica, Ecuador, & Kuwait.
Tullow Shares Are Slack On The Ghana Stock Exchange
T
rading has been slack in the shares of
Tullow Oil, held in Ghanaian depository.
The Irish company listed some
3.5Million shares on the Ghana Stock Exchange,
S
with great fanfare, in July 2011. It also opened,
on the floor, the entire Tullow Plc offering of
900Million shares, primarily held in London. But
most of those who subscribed to the Initial
FHN Is The Fund Magnet
ome companies know how to
raise money.
First Hydrocarbon Nigeria, the two
year old Nigerian independent, is one
such entity.
Less than a month after it received a
$280Million syndicated loan from
three Nigerian financial institutions,
FHN had another pool of funds
invested in its portfolio by a key foreign
investor. And all these came within
four months of the announcement, by
another major investor of taking a
minority stake in the company.
A week to Christmas in December
2011, First City Monument Bank and
Stanbic IBTC Bank provided FHN a $280
million syndicated loan for the
acquisition of 45 percent interest in the
onshore Oil Mining Lease OML 26 from
Shell, TOTAL and Eni. The first facility
provides up to $230million on
acquisition and development finance
over five years, with FCMB Capital
Markets Limited as a global coordinator and First City Monument
Bank and Stanbic IBTC Bank, as
mandated Lead Arrangers and book
runners.
On New Year's day in 2012, Prince
Alwaleed bin Talal, chairman of
Jeddah, Saudi Arabia based Kingdom
Holding Company (KHC), announced a
$50 million investment into FHN. The
transaction was through the second
Kingdom Zephyr fund, PAIP II. "We
invest in the gas and oil sector based on
a strategic investment approach," the
Prince commented. PAIP II's investor
base includes KHC, African
Development Bank, International
Finance Corporation, European
Investment Bank, and Netherlands
Development Finance Company.
To receive all of $50MM from PAIP II is
quite a significant achievement: Since
its inception in 2008, PAIP II has only
invested about $100 million in all of
three ventures: Thunnus Overseas
Group, a seafood canning and
processing business based in Cote
d'Ivoire and Madagascar; Mixta, S.A., a
builder of affordable housing,
operating in five North African
countries; and Buildworks, a South
Africa based company listed on the
AltX division of the Johannesburg
Stock Exchange, that provides heavy
building materials and constructs
electrical power substations and
transmission lines throughout Africa.
But Kingdom Holding's bet on FHN was
itself coming on the heels of
investment by another, rather
conservative private equity firm. The
African Capital Alliance (ACA)
announced in late September 2011,
that it had acquired a minority equity
stake in FHN. Paul Kokoricha, a partner
in ACA said the company's decision to
buy into First Hydrocarbon was
informed by the need to demonstrate
the capacity of indigenous companies
to operate successfully in the upstream
sector of the oil industry. ACA's
investment in FHN was done through
one of its managed Funds - Capital
Alliance Private Equity III Fund (CAPE
III). CAPE III was set up in May 2009 to
mobilize capital, technology and
management resources from local and
international sources to unlock Africa's
private sector potential. The Fund
seeks to tap into deregulating sectors
such as financial services,
telecommunications, oil & gas, power
(electricity) supply, manufacturing,
and logistical services. CAPE III
partners with local businesses and
foreign strategic operators poised for
regional growth from a base in Nigeria.
AFRICA OIL + GAS REPORT
Public Offering have been keeping them, hoping
to take dividends. This has created a huge
arbitrage between Ghana and London because
there's no active trading in the shares in Ghana.
Rialto Seeks More Money
For Gazelle
H
aving secured $20Million equity investment from the International
Finance Corporation, Australian minnow, Rialto Energy is going
ahead to raise more funds through a two-part placement of
around 200 million ordinary shares. The share placement is being priced at
AUS$0.30 per share, a 14% discount on Rialto's last closing price. Existing
shareholders will also be invited to invest in a total of up to $8.51 million in
additional shares at this price.
Rialto is planning to list on London's Alternative Investments Market by the
end of March 2012, meanwhile, as part of plans to relocate its head offices
to the UK.
Some of the money raised in the share increase will be spent on pre-front
end engineering and design(pre-FEED) costs for development of its Gazelle
Field, offshore Cote d'Ivoire. The development is subject to a final
investment
d e c i s i o n
expected by July
2012. Some of
the funds would
also go toward
the operator's
three-well
d r i l l i n g
programme in
the same permit
area, expected to
start in the
current quarter.
Rialto plans to
fast-track Gazelle
into production
by the fourth quarter of 2013.
The field, located in the CI-202 block, is expected to produce at initial oil
rates of 8000 barrels of oil per day and at gas rates of up to 100 million
standard cubic feet per day.
Rialto will drill two appraisal and development wells at the Gazelle Field to
target 2C resources of 14 million barrels of liquids and 266 billion cubic feet
of gas. Rialto will also drill an exploration well to test the Chouette prospect,
which is estimated to hold gross mean prospective resources of 84 million
barrels of liquids and 42 billion cubic fet of gas.
The 675-square kilometre block contains four discoveries in all – Gazelle,
Hippo-1, Bubale and Addax – which have been assessed to hold mean
contingent resources totalling 50 million barrels of liquids and 396 billion
cubic feet of gas.
Rialto holds an 85% working interest in CI-202 and is partnered by stateowned Petroci, which has a 10% carried interest.
FEBRUARY, 2012
11
IN THE NEWS
Petrolog Lists On The Frankfurt Stock Exchange
IN THE NEWS
Ghana Mulls Alternative Import To WAGP
W
ith the West African
Gas Pipeline
continuing to
deliver lower than expected
supplies of gas to Ghana, the
country has launched a
feasibility study into a floating
storage and re-gasification unit
(FSRU).
The weekly publication LNG
Unlimited reports that Ghana is
hoping it could receive liquefied
natural gas (LNG) imports from
the international market by
2013. The publication notes
that Ghana's Energy
Commission has invited bids
from companies interested in
the viability of installing an FSRU
off the country's coast and its
accompanying mooring and
pipelines.
The exercise is being funded by
the US Trade and Development
Agency (USTDA) with an
amount of a $691,000 grant.
The project is expected to result
in significant business
opportunities for U.S. firms.
Ghana also is currently working
on a gas master plan, meant to
monetize its own gas.Designs
PIPELINE ISSUES
and feasibility studies are
o n g o i n g r e ga rd i n g ga s
processing plant and a two
trunk gas line to deliver dry
gas to both thermal plant and
an industrial cluster.
In the meantime, The USTDA
says that the project will
significantly reduce, if not
eliminate, the fuel shortages
and supply disruptions which
are plaguing the Ghanaian
energy sector. This project
will enable Ghana to import
liquefied natural gas from the
international market,
maintain a buffer supply, and
regasify the fuel at a significant
cost savings over liquid fuels.”
The LNG Unlimited cited an
unnamed spokesperson at stateowned Bulk Oil Storage and
Transmission (BOST) Company,
who are overseeing the project
on behalf of government saying
Ghana is pursuing “a very
aggressive” timetable for the
FRSU and ideally would like to
see LNG imports by 2013 as gas
from Nigeria expected to suffer a
growing shortfall by 2020.
SUDAN CRUDE CONFLICT
South Sudan and Kenya Sign MoU
S
outh Sudan and Kenya have signed a
memorandum of understanding on the
building of a oil pipeline from South Sudan
to the Kenyan port of Lamu.
The agreement comes in the aftermath of South
Sudan passing a resolution in cabinet to shut
down the oil operations through the pipeline
which passes through Sudan to its sea port of
Port Sudan.
South Sudan accused Sudan of stealing its oil
while Khartoum claimed it was confiscating the
oil for unpaid fees.
The South Sudanese government also passed
another resolution seeking an alternative oil
pipeline to another neighboring country.
A high level delegation from Kenya, led by the
prime minister, Raila Odingo, went to Juba, the
South Sudanese capital to negotiate the
memorandum with their counterparts, which
resulted in the signing ceremony at J-One
Palace.
The Kenyan delegation also included its minister
of foreign affairs, Moses Wetangula, minister of
public service, Dalmas Otieno and minister of
energy, Kiraitu Murungi, among others.
South Sudan's president, Salva Kiir, and vice
president, Riek Machar, witnessed the signing
ceremony. Minister of foreign affairs, Nhial
Deng and several other ministers and
ambassadors were also present.
The, Stephen Dhiew Dau, minister of
petroleum and mining in South Sudan
and Kiraitu Murungi, signed the
memorandum on behalf of their
respective governments.
The memorandum also provided for the
installation of fibre optic connections
between the neighbouring countries. The
memorandum explained that the two
countries will negotiate transit fees for
the oil pipeline which will be based on
international practice.
Circle Completes Pipeline In The Rharb
C
ircle Oil has completed construction of the new gas pipeline and
associated infrastructure for its Rharb Basin permit in Morocco,
Africa.
The 55 km, eight inch diameter Sebou (DRJ)-Kenitra pipeline has a
design capacity of 23.5 million standard cubic feet per day(MMcf/d)
and has been connected to seven of the ten potential producing wells,
with tie-in for the remaining wells scheduled for completion during the
first quarter of 2012. These wells were discoveries made during Circle's
12
FEBRUARY, 2012
two previous drilling campaigns in 2008–09 and 2010–11. The
pipeline, which was completed on budget, is currently undergoing
pressure testing prior to commissioning and the start up of increased
gas delivery to local industry, which is expected to be completed by the
end of this month.
Circle is 75% operator of the new pipeline with the remaining 25 %
held by the state hydrocarbon company ONHYM.
AFRICA OIL + GAS REPORT
IN THE NEWS
Why We Shut Down South
Sudan Oil Production
President Salva Kiir Speaks To His Country's
Parliament On The Sudan/South Sudan Oil Crisis
I
am here today to brief this
august house about the current
crisis in our oil industry. The
crisis has reached a stage that is
unacceptable. On the 6 t h of
December 2011, the Minister of
Finance of the Republic of Sudan
informed our Minister of Petroleum
that based on their Petroleum
Transit and Service Fees Act of
2011, as from 25 December 2011,
all shipments will be allowed to
leave Port Sudan only after paying
fees amounting to 32.2 dollars per
barrel.
I m m e d i a t e l y fo l l o w i n g t h i s
warning, they proceeded to block
four ships with 3.5 million barrels of
Dar blend from sailing out of Port
Sudan.
They have further
prevented four other ships from
docking at Port Sudan. These ships
have purchased 2.8 million barrels
of Nile and Dar blends but are
unable to collect their purchases. To
date, these eight vessels remain
under the control of the
Government of Sudan with oil
worth 630 million dollars.
In addition to that, they have
forcibly taken another 185 million
dollars worth of oil. In total, the
revenue that the Government of
Sudan has looted since December
amounts to approximately 815
million dollars. Furthermore, they
have completed constructing a tiein pipeline designed to
permanently divert 120,000 barrels
per day, which is almost 75 percent
of our daily entitlements, to their
refineries in Khartoum.
Right Honorable Speaker and
Honorable Members,
The diversion of South Sudan crude
has disrupted revenues that are
vital to the security and welfare of
the people of South Sudan. At this
14
time, we have no guarantee that oil
flowing through the Republic of
Sudan will reach its intended
destination. We cannot allow
assets which clearly belong to the
Republic of South Sudan to be
subject to further diversion.
Therefore, during the second
Council of Ministers of 2012
meeting on January 20, we
unanimously decided that all oil
operations in South Sudan should
be halted with immediate effect
and no crude oil belonging to South
Sudan shall flow through the
pipelines on the territory of the
Republic of Sudan.
The government stands ready to
handle this situation; however, we
are mindful that it cannot be done
without the collective support of
this august house. We have
reached this point only after
exhausting all avenues including my
sending envoys to Kenya, Uganda,
and Ethiopia last week. The
presidents of those countries
reached out to Bashir to ask him to
stop taking unilateral decisions
regarding our oil.
The response from Bashir is that he
will not stop taking oil until we pay
the exorbitant amount of 32 dollars
per barrel, something that is
completely out of international
norms and a precedence that we
are unwilling to set.
Insomuch as the duration of
revenue disruption is unknown and
to ensure the continued operation
of our national government and to
provide for our people, we will need
to find other sources of funding.
In doing so, I have instructed the
Ministry of Finance to initiate
contingency plans for revenue
collection and allocation. This will
a c c e l e ra t e t h e i n c r e a s e i n
collections of non-oil revenues. It
also will prioritize the allocation of
FEBRUARY, 2012
existing revenue, allowing us to
make the most of what we have.
The Ministry of Finance will also
look into other options for
replacing the lost revenue. On
existing cash reserves, rest
assured that the government can
operate for the immediate
future, depending on which cuts
are made.
Right Honorable Speaker and
Honorable Members,
The safety, security and health of
our citizens remain our priorities.
Whatever austerity measures are
required, we are confident that
we can continue to meet critical
obligations for national security
and public welfare.
Meanwhile, we will continue to
do everything possible to resolve
the impasse with Sudan and to
restore the flow of South Sudan
crude oil. We remain in intensive
discussions, in coordination with
the African Union and our allies,
to arrive at an agreement that is
fair to both parties.
To date, however, the Sudanese
government has refused to
negotiate in good faith. Given our
history with the administration
of President Bashir, we realize
that, unfortunately, we must
prepare for a disruption of
revenue that could last many
months. However, I want to
assure the people of South Sudan
that all measures will be taken to
ensure that any disruption is
minimal.
Right Honorable Speaker and
Honorable Members,
This crisis comes at a period that we
have internal challenges, particular
the recent tribal conflict in Jonglei
State. This latest challenge will add
to our already volatile environment.
It is our collective responsibility to
manage this situation with patience
and perseverance. This is a time
Ogbelle
Plant
when we as South Sudanese
needTopping
to
speak with one collective voice and
avoid inciting statements which will
further fuel the situation.
For this reason, I call upon this
august house to support the decision
of the Council of Ministers to stop
the flow of oil and search for
alternative sources of funding to
manage government projects. I
have no doubt that this august house
will seriously and critically consider
all available options and make the
appropriate resolutions in the best
interest of the Republic of South
Sudan immediately.
Together, as South Sudanese, we will
endure this hardship. We are a
nation built on resilience, vigilance
and pride. Through discipline and
focus, I am confident that our young
nation will emerge stronger and
more united.”
Thank you and God bless you all.
Sudan has completed constructing a tie-in
pipeline designed to permanently divert 120,000
barrels per day, which is almost 75 percent of our
daily entitlements, to their refineries in Khartoum.
Sudan has blocked four ships with 3.5 million barrels
of Dar blend from sailing out … and prevented four
other ships from docking at Port Sudan. These ships
have purchased 2.8 million barrels of Nile and Dar
blends but are unable to collect their purchases.
AFRICA OIL + GAS REPORT
L
M
O
O
46
PL
7
22
O
M
L
L
OM
OM
82
L2
SS
RE
P
EX
6
13
56
OML 85
OML 86
ADDAX/OML 126
Addax was drilling
Okwori 24 on OML
126.
OPL 226
(CPC)
report
AF R IC A O IL +G A S R E P O R T
©C o p yrigh t 20 12,
0
119
OPL 1
19
30
OML
104
OML 99
OML 1
112
12
OML 52
OML 51
OML
100
60 Kilometers
OML 70
OPL 290
OML 1111
OPERATORS
OTHER OPERA
OPERAT
ORS
AGIP
TOTAL
OT
OTAL
EXXONMOBIL
NPDC
SHELL
CNL
LEGEND
TOTAL/OML 100
TOTAL was testing Ime12 T1
ADDAX/OML 123
Addax was mobilizing the Jack
up rig Adriatic X for drilling
Kita Marine-7PH
OML
102
OML 67
OML 13
EXXONMOBIL/OML 67
ExxonMobil operated four rigs and drilled
six wells; the Baltic-1 drilled Ubit 168M;
Percy Johns batch drilled Ubit 172K and
173K; Lloyd Noble batch drilled Ubit
170J&J10. Ed Noble was on wokovers.
STOP PRESS
Chevron was working to contain a fire that ignited on
January 17, 2012 aboard the jack-up rig K.S.
Endeavor, operated by FODE Drilling Nigeria Limited.
The rig was drilling a natural gas exploration well,
located in the Funiwa Field approximately six miles
(10 kilometers) offshore and in approximately 40 feet
(12 meters) of water. One hundred and fifty-four
personnel were on the rig and an associated barge.
Two contractors were still unaccounted for as of the
time of our going to press.
SHELL/OML 23
Shell has recorded 247km2 of a planned, ninety
fold, 250 km2 Swamp 3D Reshoot in the Soku
field in OML 23. The contractor is BGP/CNPC
crew 9912.
SHELL/OML 17
Agbada 67 in OML 17, was
completed at 3361mMD
TOTAL/OML 58
Completed Obagi- 126 in
OML 58, as gas producers
ADDAX/OML 124
Addax was drilling Ossu 22P as deviated appraisal well at
2588mTVD
TOTAL/OML 100 & 102
Total completed a High Definition 3D seismic programme on blocks
OML 100 and OML 102, in July 2011. The programme consisted in an
ocean bottom cable survey covering 170 sq km over the Nkarika field
and a 620 sq km conventional survey over the Etisong and Emem
structures in the southeastern part of OML 102. The data acquisition
started on 5 January 2011.
30
OPL 090
OPL 225 (ADDX)
OPL 285
OML 25
OML 1
1
11
OML 72
OML 18
OML 17
OML 55
OML 23
OML 141 (EMERALD)
OML 1
116
16 (NNPC)
OPL 286
OML 18
OML 66 (NNPC)
OML 33
OML 58
OML 53
OML 20 (SHELL)
OML 124
(ADDAX) ORL 277(STERL)
OPL 2005/2006
OML 28
EXXONMOBIL/OML 70
ExxonMobil completed Usari
48BC as oil producer.
OPL 288 OML 83
OPL 289
OPL 263
79
OML 88
OML 63
OML 66 (NPDC)
OML 35
OML 61
OML 26
OPL 275
STATUS QUO ANTE
www
www.africaoilgasreport.com
Vol 13, No 2, February, 2012
NIGERIA RIG COUNT:
TWENTY EIGHT (28) RIGS ON NIGERIAN SHELF IN NOVEMBER, 2011
Shell was on Five locations with five land rigs while Addax Petroleum was on four locations with four
rigs, three of them in shallow water in November 2011. ExxonMobil and TOTAL utilized three rigs each
for drilling, though ExxonMobil had a fourth for workover. Agip (Eni) deployed two rigs on two land
locations. Chevron brought up the rear of the major IOCs with a rig on one shallow water location.
These are all Shelf wells. NPDC and private indigenous operators add the number to 28.
NEW DEVELOPMENT
AGIP(ENI)/OML 61
Agip was completing Oleh2 in OML 61, in two
reservoirs (dual
completion) at 3728mTVD.
OML 31
OML 30
OML 65
OML 34
L
36 OM
L
M
O
.)
NT
O
(C
ADDAX/OML 137
Addax Plugged and
Abandoned Udele 6 at
2008mTVD
OPL 281
L
)
L.
EL
H
(S
32
AGIP(ENI)/OML 61
AGIP(ENI)/OML 61Agip was
drilling ahead in Ashaka 4.
M
O
L
OML
122
O
CHEVRON/OML 86
Plugged and abandoned Funiwa
Deep A due to hole problems.
Relocated to drill Funiwa Deep1A,
with the rig KS Endeavour.
OML 45
OML 4
OML 38
OML 98
OPL 2007
OML 41
OML 42
64
OML 89
OML 43
OML 91 OML 90
OML 49
OML 40
OML 1
111
11
OML 96
O
NPDC/OML 65
NPDC is acquiring 250sq km of
three dimensional (3D) seismic
data on Abura South East field
in OML 65. An IDSL/UGNL Joint
Venture is the contractor.
OML108
OML 95
OML 1110
10
OML 103 OPL 274
NPDC/OML 111
NPDC is acquiring 200 sq km of
three dimensional(3D) seismic
data in Oghama field area. IDSL is
the contractor.
UPDATE ICONS:
NIGERIA/NNPC: INTERNATIONAL OIL COMPANIES(IOCs) ACTIVITY MAP
M
L
62
.)
IP
G
(A
M
P E T R O L E U M P EO P L E
AFRICA OIL + GAS REPORT SPECIAL
The Kickstart Champion At 70
Ebi Omatsola is the lead protagonist in the club
of African homegrown E&P independents...
E
bi Omatsola led the way into
the present growth phase of
Africa's indigenous private E&P
business.
He celebrates his 70th birthday,
sometime in 2012, in his 22nd year at
Conoil Producing, the first private
African enterprise to take a crack at
operatorship on the continent's E&P
space.
Before he took charge of Conoil,
Omatsola was widely known in
Africa's oil industry as one of the few
who wrote the books that several
generations of geoscientists read to
understand the continent's petroleum
basins.
He took the job a year after he was
promoted Chief Geologist at Shell
Nigeria, at the age of 48. His head
was boiling with ideas he had
explored during his three year cross
posting, in the Hague, where I had
met geoscientists form all parts of
the continent, trying to make sense
of the data on the various African
basins”, he remarks. He evaluated data
from East, South, West and North Africa
and concluded that some of the
underexplored basins were likely to
become oil gushers, with the right
thinking and technology.
He knew, aeons ago, that Ghana might
hold 5billion barrels and somebody
only needed to come and probe it as a
transform margin. His position had
always been a variation on the theme of
“follow the money and you'd nab the
criminal”. He proceeded from first
principles, where was this location
during the Cretacious; what sort of
environment, what could flourish?”. He
speaks highly of Kenya and Somalia,
places where the oil majors seem to be
returning to.
He has a pet theory about Nigeria's
Niger Delta, which he thinks has been
misnamed. “It should be the Benue
Delta.” he explained
The Niger river had shrunk considerably
by the time it got to make a confluence
with the Benue, which had more force.
“The primary deposits of the Niger
Delta come from the Benue…”
But we hold the information, until we
publish his full story: A LIFE OF
KNOWLEDGE, in a mid year edition of
this magazine.
We are running these little snippets of
information about him here, because
this edition is dedicated to the grit of
the Nigerian independent E&P
enterprise
We salute the man, whose ability to put
together a technically honed team, led
to the Bella “discovery” of Christmas
1993 and began to convince other
technical professionals that they could
set up E&P companies with aspirations
to build a portfolio similar to Shell.
P E T R O L E U M P EO P L E
Médori, Chedid, Sit At Petrofac's High Table
René Médori (54) has joined the
Board of Petrofac, the oil and gas
service provider, as a non-executive
director.
Petrofac has also appointed Marwan
Chedid (51) as an executive director.
Médori is finance director of the
Mining Corps., Anglo American PLC, a
role he has held since September
2005 after joining the company in a
Rene Medori
senior executive role in June 2005.
Previously Médori was group finance director of The BOC Group PLC
between June 2000 and May 2005, having held several finance
appointments, including as finance director of BOC's gases business
in the Americas, from 1997. He is also a non-executive director of
Scottish and Southern Energy PLC and Anglo Platinum Limited.
Médori will join Petrofac's Audit, Nominations and Risk Committees.
Chedid joined Petrofac in 1992 when the international business was
first established in Sharjah, and is now the chief executive
responsible for Petrofac's Engineering, Construction, Operations &
Maintenance (ECOM) division. He has extensive oil & gas industry
experience, having previously worked for Consolidated Contractors
Company (CCC), a major civil and mechanical construction business
based in the Middle East, for eight
years. Prior to his role at CCC, Chedid
spent two years with Kettaneh in
Lebanon. Chedid holds 1,288,924
shares in Petrofac Limited and also
has an interest in 72,939 shares under
the Company's Performance Share
Plan and 90,496 shares under the
Company's Deferred Bonus Share
Plan.
Marwan-Chedid
Tarek Is Circle's Man In Cairo
C
ircle Oil has appointed Tarek
Elbarkatawy as its General
Manager in Egypt. The Petroleum
Engineering graduate of Cairo University
also holds a Management and Business
Administration diploma from the
Cambridge International College, UK. Mr
Elbarkatawy has approximately 24 years
of diversified Oil and Gas experience in
Tarek-el-barkatawy
both E&P and Service Companies, starting
his career as a petroleum engineer in Suez Oil Company, a joint
venture between Shell and the Egyptian General Petroleum
Corporation (EGPC). Between1999 and 2011, Tarek held several
senior management positions with Weatherford International
including Region General Manager in North Africa and Vice President
in the Middle East. He has been chairman and board member of
three joint ventures between Weatherford and Algeria's state
owned energy company Sonatrach, a board member of the
International Algerian Petroleum Institute and is a member of the
Society of Petroleum Engineers. Tarek will manage Circle's Egyptian
operations from Cairo and liaise with its partners, Egyptian
Government entities and the State energy company, EGPC.
Chevron Nigeria Gets A New Communications Manager
A
desola Adebawo is the new
Communications Manager at Chevron
Nigeria's Policy, Government and Public
Affairs (PGPA) Department.
The graduate of Mass Communication (major in
Journalism) from the University of Lagos holds a
Certificate in Reputation Management from the
Reputation Institute of New York. “He joined
Chevron in 1996 as a Public Affairs Field
Representative, and has held various positions of
increasing responsibilities in all the core
f u n c t i o n s o f P G PA , i n c l u d i n g
communications, government relations,
corporate responsibility and community
engagement with a good knowledge in
strategy planning”, according to a release by
the company. “Mr. Adebawo replaces
Temitope Idowu who passed on recently”.
Harris Takes Charge Of HR Affairs At Apache
A
pache Corporation has elected
Margery M. Harris as executive vice
president of human resources. She
joined Apache in 2007 as vice president of
human resources and was promoted to senior
vice president in 2011.
Harris' extensive experience leading HR teams
includes assignments as executive vice
president and senior vice president of human
resources with Texas Genco LLC , a wholesale
power generator company; senior vice
p re s i d e nt o f h u m a n re s o u rc e s a n d
18
FEBRUARY, 2012
administration of Integrated Electrical
Services, Inc.; and vice president at Santa Fe
Snyder Corp. , an independent exploration and
production company.
Harris began her professional career as a land
man at Shell Oil Co. She holds a bachelor's
degree from the Ohio State University and a
master's of business administration from the
University of St. Thomas .
AFRICA OIL + GAS REPORT
P
atrick Olufemi Balogun has moved on from the position of
Finance Controller to assume the function of Executive
Director- Finance, at the Niger Delta Exploration and
Production Plc.
The Chartered Accountant with more than thirty years of working
experience, is taking over the seat of David Richards, who had just
retired, from the board. Balogun graduated from the University of
Ibadan in 1973 with a BSc. Hons Degree in Chemistry and Geology.
Which means that he was part of the elite “Geology Class of 1973” at
Ibadan, Nigeria's premier University. That Class ran the upstream
sector of the Nigerian petroleum industry for most of the lates 80s
through mid 2000s. Balogun dropped the sciences very early, and was
admitted as an Associate of the
Chartered Institute of Taxation in
London in 1979. He joined NDEP in
2003, after working with Shell Nigeria
as a Senior Internal Auditor from
1980, Yinka Folawiyo Group as
Financial Controller from 1983, IITA
as Finance Manager from 1988 and
Oil Scan Limited from 1994 as
Executive Director Finance and Administration. He joined Niger Delta
Exploration & Production Plc in 2003 as Group Finance Controller. He
is a Fellow of the Chartered Certified Accountants London since 1987.
….Adaji Is Technical Director
N
uhu Adaji, Gas
Development Adviser at
the Niger Delta
E x p l o r a t i o n
a n d
Production(NDEP)Plc, has been
appointed as the company's
Executive Director-Technical. It's
the closest function to the
Managing Director's job. (NDEP's
M
CEO, Layi Fatona, also comes from
the technical ranks). It's also a job
that is newly created and likely to
have been highly contested; given
that there are at least two other
thoroughly honed technical
operatives, with over 30 years in
the industry, working in NDEP, who
could have taken the job. But Adaji
himself won't be tarrying too long.
The future of the NDEP, to go by the
words of Ben Osuno, its chairman,
belongs to the young: “ The
appointments mark the start of a
self regeneration process, which in
itself, brings new energy and
further will serve as stimulus to
revitalize …and also prepare and
position the company for the
vigorous demands in managing the
growth path and the diversity of
new opportunities ….”. Osuno,
himself at 76, no spring chicken,
says that Adaji and Balogun(the
new Executive Director of
Finance), have “a charge and
mandate to facilitate and
implement in the immediate
future, a progressive internal
growth and maturation process
for a new crop of future
managers from within its ever
growing young workforce,
identifying those who show
significant promise and
supporting their development
through active mentoring for
senior level responsibilities”.
Adaji began his industry career
in 1976 as a Well Site Petroleum
Engineer at the Shell Petroleum
Development Company after
graduating from the University of
Manchester. In 1978 he became an
Operations Engineer, and became a
Production Technologist in 1981,
responsible for well completion
designs, well surveillance and
preparation of work over proposals.
He went on cross posting to Shell
Brunei in 1989, and returned, five
years after as Head of Production
Technology Information Technology
(PT IT). He was appointed as Head
Area Development (the powerful
Shell Chief Petroleum Engineer) in
1999 for the Southern Swamp
District, and in 2003, became the
C o r p o rate C h i ef P ro d u c t i o n
Technologist for Shell.
Miles Steps Aside From SBM Offshore
ark Miles will not be standing for reelection as a member of the SBM
Offshore board of directors at the next
Annual General Meeting on 16 May 2012.
“The Supervisory Board will take steps to arrange
for Mr Miles' succession”, the company said in a
press release. “Until such time Mr Miles has agreed
to continue as CFO of the Company”.
Safmarine Annoints Grant Daly Its New Boss
S
Grant Daly
hipping line Safmarine has appointed
Grant Daly as its new CEO, effective
February 1, succeeding Tomas Dyrbye,
who is stepping down after two-and-a-half
years on the job.
Daly, who was head of the multipurpose vessel
unit, would be based at the new Safmarine
headquarters in Copenhagen, Denmark, where
he will report to global shipping company
Maersk Line chief commercial officer Hanne
Sørensen.
This follows the announcement that Maersk
Liner Business intended to integrate the
AFRICA OIL + GAS REPORT
corporate and regional management
activities of Safmarine into those of the
Maersk Line, while retaining and growing a
separate Safmarine brand and operating
model.
Safmarine will continue to have its own
independent pricing, capacity, sales and
customer services structure, supported by
more than 1 400 Safmarine employees
located in 130 countries
FEBRUARY, 2012
19
P E T R O L E U M P EO P L E
Balogun Ascends To NDEP's Exec Directorship
O I L PATC H S A H A R A
Longreach Concludes Shoot In The Zag
MOROCCO
T
oronto listed Longreach Oil&
Gas has completed its
1,674km, two dimensional(2D)
seismic survey on the Zag license in
Morroco. The company says that the
survey is considerably greater than
the amount required under the terms
of the license. The programme
covered a regional grid of around 10
km spacing over the eastern half of
the license and is the first of its kind in
what the company believes is a highly
prospective basin.
The survey began in early-October
2011 and was completed on January
23 2012, following a high-resolution
aeromagnetic survey. The data was
acquired by NovaSeis using a
cableless recording system, a
Vibroseis source array, and in-field
processing to monitor data quality.
“The technologies used will allow
further assessment of the petroleum
potential of the basin”, Longreach
says in a statement.
“The initial field processing of the
s e i s m i c d ata h a s s h ow n t h e
configuration and fault trends of the
basin”, Longreach contends in a
statement. “When the processing is
completed, a comprehensive review
Zag Basin
of the Paleozoic basin will be undertaken to assess the potential
of a variety of plays, such as reefs in the Devonian, conventional
reservoirs throughout the section and an unconventional gas
play in the Silurian shale section”.
Circle Completes Seismic Shoot In The Rharb
I
rish minnow Circle Oil has completed acquiring 154 square kilometres of (three
dimensional)3D and 22 line kilometres of two dimensional (2D) seismic data in the
Lalla Mimouna and Sebou permits in the Rharb Basin, Morocco. A total with a 12.5
metre bin size were acquired. In addition, seismic data were acquired in the Sebou
block.
Acquisition parameters and shooting techniques were similar to those which were
employed in the previous 2D/3D survey, completed in the Sebou permit in
2007/2008, which generated the targets for the drilling programmes undertaken in
San Leon Finalises Tarfaya Coverage
U
K based San Leon Energy
has completed its
acquisition of 608 line
kilometres of high density 2D
seismic data on the Tarfaya License
in Morocco. The data was acquired
by San Leon Energy's wholly owned
subsidiary, NovaSeis.
The survey was acquired across the
EGYPT
C
2008/09 and 2010/11, during which 10 successful wells were drilled. The company
says that preliminary results from ongoing processing of the acquired data “ indicate
the presence of both expected and a number of additional potential targets for
drilling, subject to further interpretation, in the forthcoming drilling campaigns in the
Rharb permits”. The interpretation of the data is expected to be completed by the end
of the first half of 2012.
Circle holds a 75% interest in the Sebou and Lalla Mimouna Permit Concessions with
the remaining 25% held by Office National des Hydrocarbures et des Mines (ONHYM).
J North Prospect and adds to the
existing 2,289 line km of 2D seismic
across the license. “ The
Netherland, Sewell & Associates
2008 Competent Persons Report
(CPR) placed 156 million barrels of
recoverable prospective oil
resources in the J North Prospect
with upside potential of more than
for the company's NW Gemsa
concession is expected to consist of the
drilling of four producer wells and three
water injectors and a gas conservation
project. The work programme for the
company's Kom Ombo concession is
expected to consist of the drilling of two
exploratory wells, three producer wells,
one pilot water injection project and
three recompletions.
Sea Dragon has included the work
Dana Gas Finalises PLUTO 1 in the Nile Delta
AE-based Dana Gas
completed the drilling
of a new exploratory
well in the Nile Delta. PLUTO-1 is
a gas-producing well, drilled with
the EDC-66 rig to a vertical depth
of 7,300 feet. The cost of drilling
averaged $2MM.
Dana gas reported their 2011
20
of the new 2D seismic data. “The
new seismic data quality is
significantly improved compared to
previous 2D seismic data in the area
as a result of longer offsets and
higher density acquisition. The new
data is currently being processed
and interpreted by the company in
its Warsaw office” San Leon says.
Sea Dragon Caught In 12 Wells For 2012
anadian operator Sea Dragon
will be participating in drilling 12
wells in Egypt in 2012, it is
official. The company will also be
involved in the completion of the
installation of an offshore production
platform and the pipelines needed to
bring first oil from the Muzhil field on
stream. The SAZ-2 prospect is expected
to be tested with an exploration well,
planned in 2013. The work programme
U
half a billion barrels”, San Leon says.
In total the company claims it
currently has 12 leads and
prospects across the Tarfaya license
with net prospective resources of
711 million barrels of oil equivalent
(BOE) based on the CPR. Several
new adjacent leads have also been
identified around J North as a result
full-year profit to be $138MM, a
220% increase over the $43MM
earned after all taxes at the end
of 2010. The substantial rise in
profit is largely attributable to
the rise in oil prices, since
production increase was only
19%.
FEBRUARY, 2012
programme for these blocks in its
capital expenditure program (Capex)
for the 2012 financial year and Q1 2013.
The Capex Programme contemplates
$75,000,000 of expenditures for the
following: (i) a US$12,000,000 work
programme for 2012 required for the
Company's existing assets; (ii) the
expected development costs of the
Muzhil field up to first oil being reached
in the amount of $60,000,000, which
management anticipates will occur
during the first quarter of 2013; and (iii)
up to $3,000,000 in exploration studies
related to the NEM Concession. The
Capex Programme is anticipated to be
financed by the Company's credit
facility and funds from operations. The
company also anticipates partially
funding up to $15,000,000 in general
and administrative expenses from
other sources.
Petrobel Concludes Well Operations
In The Sinai
B
elayim Petroleum Company (Petrobel) announced the
successful drilling of a new development well in its
concession area of the Sinai Peninsula. The new 113-181 well
was drilled according to the company's 2011/2012 developmental
plan. Drilling investments in the new well have reached $3 million.
Petrobel is one of the EGPC companies jointly owned by the Italian
operator Eni.
AFRICA OIL + GAS REPORT
TGS To Commence 3D Survey Offshore Kwanza
GS has reached final agreement with Sonangol E.P. to
commence acquisition of a 3D multi-client survey covering
2
nearly 12,500 km offshore Angola. The survey will initially
commence over blocks 36 and 37 in late January, then continue over
block 35 with acquisition scheduled to complete during Q3 2012.
These are highly prospective deep water pre-salt blocks awarded by
state-owned Sonangol to E&P companies in late December 2011.
The high-potential pre-salt hydrocarbon play off the coast of Angola
lies between 2,000 and 5,000 meters below sea level. Angola is
already Africa's second largest oil producer and the conjugate margin
pre-salt basins, which are believed to be similar to hydrocarbon rich
basins offshore Brazil, open a new frontier in petroleum exploration.
“We look forward to our new, long-term relationship with Sonangol
M
Mart Completes The Umu-9 Gusher
NIGERIA
art Resources was carrying out completion and testing
operations on the 9-5/8 section of the Umu-9 well in the
Umusadege field in Nigeria. That section, drilled to 8,311
ft, indicated 260 ft of gross oil pay from eleven sands based on open
hole logs. The entire hole reached a final total drilling depth of 10,848
ft
Mart said that the lower 8-1/2 inch deviated section of the well
drilled from 8,311 ft to 10,848 ft was open hole logged and indicated
an additional 170 ft of gross oil pay in eight sands. This resulted in a
A
TANZANIA
SOMALIA
A
the north.
Geoscientists at Aminex may have been wrong in putting the probability
of success of the Ntorya prospect at around 25%, with mean recoverable
resource potential of 100 million barrels of oil equivalent. Ndovu
Resources operates the well with a 56.25% interest, while Tullow
Tanzania and Solo Oil hold a 25% and a 18.75% interest, respectively.
Horn Is Batch Drilling In The Dharoor
anadian minnow Horn Petroleum Corp was batch drilling
Shabeel-1 and Shabeel North-1 on the Dharoor block in
Puntland, Somalia.
The company was using the Sakson 501 rig.
The Shabeel and Shabeel North prospects are located on a Jurassic
aged rift system which is part of the same system that has proven to
LIBERIA
total cumulative gross oil pay of approximately 430 ft in the 19 sands
encountered by the well.
Pressure and fluid sample tests were taken on the six deepest sands
in the 8-1/2 inch hole section with preliminary results indicating five
sands containing light oil and condensate and one sand containing
mainly gas. Further analyses were being conducted on the samples
collected over these sands. The deviated 8-1/2 inch section of the
well has now been cemented off, as this hole section was never
intended to be completed in the UMU-9 well.
Aminex Finds Ntorya To Be A Duster
minex drilled Ntorya 1 to a depth of 2,500 metres and did not
encounter its targeted sandstone intervals at the prognosed
depths of 1,800 to 1,900 metres. However sandstone intervals,
containing traces of gas, were encountered at a depth of 2,300 metres.
The Ntorya prospect is located in the Ruvuma basin, onshore Tanzania.
Ntorya-1 is designed to test the high quality Basal Tertiary and Upper
Cretaceous sands previously encountered in the Likonde-1 well, 14km to
C
to support oil and gas exploration in the Republic of Angola,”
commented Rod Starr, Senior VP Africa, Middle East and Asia Pacific
for TGS. “Entry into this market is consistent with our plans for
strategic growth. TGS' commitment to expanding multi-client data in
the offshore areas of West Africa has extended over 10 years and we
are excited to have the opportunity to now add 3D data in offshore
Angola to the TGS data library.”
TGS has chartered vessel capacity for this project. TGS will process
the 3D seismic data in both time and depth using its proven sub-salt
capability developed in similar basins. Preliminary products will be
available to participating companies in Q4 2012 with a final
processed product expected by Q4 2013. The survey is supported by
industry funding.
be highly productive in the Masila and Shabwa basins in Yemen.
The company holds a 60% interest and operatorship in the Dharoor
and Nugaal blocks.
Horn Petroleum president and CEO David Grellman said the
commencement of drilling in the Dharoor Valley block is a major
milestone in the evaluation of the oil potential of northern Somalia.
The Second Coming Of AP
frican Petroleum Corp. spud its second well off the coast of
Liberia. The well, the Narina-1, is being drilled on Block LB-09
where the company has a 100% interest using the Maersk
Deliverer.
The Narina-1 well will primarily target a Turonian prospect similar to
discoveries like Jubilee in Ghana and Mercury/Venus in Sierra Leone.
The company estimates the targeted prospect has potential
recoverable oil resources of 500 mmbbls (Mean) to 1200 mmbbls
(Upside) for the Turonian reservoir plus additional potential
AFRICA OIL + GAS REPORT
resources in both shallower and deeper reser voirs.
Karl Thompson, CEO, commented: “Apalis-1, the first well in deep
water offshore Liberia proved a working hydrocarbon system in the
basin and our second well will target Turonian sands similar to the oil
bearing reservoirs in Ghana and Sierra Leone. The Narina-1 prospect
has potential for very large reserves in this new emerging and
successful Upper Cretaceous exploration play along West African
transform margin.”
FEBRUARY, 2012
21
OIL PATCH SUBSAHARA
T
ANGOLA
AFRICA IN BUSINESS
report
I N
B U S I N E S S
How Sanusi Won The Prize
T
The outspoken governor of Nigeria's Central Bank would not
have got the job if his predecessor's performance had not been
in severe doubt..
he impact of the global financial crisis
grew in intensity as 2008 drew to a
close, and that was a cause of anxiety
for most governments. It was in this context
that former governor of the Central Bank of
Nigeria (CBN), Professor Chukwuma Soludo,
appeared before the Federal Executive
Council (FEC) in early February 2009 to brief
members on the implications of the global
meltdown for the Nigerian economy. His
presentation dwelt on the causes of the
crisis; the impact on national economies;
global and country responses; and threats,
opportunities and the road ahead for the
nation.
With regard to its impact on the Nigerian
economy, Soludo said the crisis had led to the
collapse of commodity prices, especially oil,
causing the revenue to shrink, leading to
declining capital inflows into the economy,
de-accumulation of foreign reserves and
pressure on the exchange rate. Some other
negative features he identified as arising
from the crisis included limited foreign trade
finances for banks (some, according to him,
faced the dire possibility of credit lines drying
up), capital meltdown and divestment by
foreign banks.
To tackle these challenges, Soludo listed a
number of measures already taken by CBN
and afterwards gave a highlight of his
forecast and prospects, one of which was
that the “growth rate of GDP between 7-9
percent is still possible despite the economic
crisis.” He was categorical that “Nigeria
won't experience economic recession.”
quoting Merrill Lynch as having ranked
Nigeria “among ten least vulnerable
economies in the world.”
Although Soludo highlighted several threats,
which included pressure on foreign reserves
and exchange rates, fiscal burden and the
threat of abandoned projects, possibility of
reduced confidence in the business
environment, political pressure to spend the
'excess crude', he nonetheless did not see
any prospect for gloom. Rather, he saw
opportunities for the nation. His optimism
was built on the conviction that while Nigeria
was not insulated from the global economic
crisis, it was better prepared for it than in
22
FEBRUARY, 2012
By Segun Adeniyi
1982 when the crash of crude oil price
pushed the nation to near bankruptcy. Some
of the reasons he gave included the role of
Nigerian banks, which he argued accounted
for over 90 percent of the assets of the
financial system, apart from dominating the
stock market, which he dubbed “the engine
of the economy for the near term, which
must be guarded.”
Are the banks under threat? Soludo asked
rhetorically, and in response replied, “Not
significantly!” He said with about N2.7
trillion as at September 2008, their
cumulative exposure to capital market was
below N900 billion. “Even if you wipe off all
of them, capital adequacy ratio is still higher
than most countries.”
While Soludo conceded that the rate of
profitability could reduce, he argued that the
interbank market was active, just as banking
lending activities were still high and the
aggregate credit to private sector growing
'too high', according to the World Bank.
Not everyone in the Federal Executive
Council shared Soludo's optimism. Many
members indeed raised doubts about the
CBN report on Nigerian banks, but he asked
for evidence to the contrary.
It was then just about three months to the
expiration of his first term as governor, with
expectations that it would be renewed for
another term of four years. 'The threat to his
aspiration at that period, however emanated
mainly from the state governors, most of
whom remained unconvinced that the banks
were as sound as the CBN governor
presented.
There were also many within the organized
private sector whose perception was
somewhat scornful: to them, Soludo was
either not aware of the situation in the banks
or he was deliberately putting a sheen on
their malaise. Incidentally, the president
unwittingly provided a platform for the
expression of these misgivings.
In January 2009, Yar'Adua inaugurated a
presidential steering committee, which he
personally chaired, with a mandate to assess
the impact of the global economic crisis on
Nigeria with particular reference to the
nation's annual budget, financial and
commodity markets. The goal was for the
committee to recommend appropriate
macro-economic policy responses to
stimulate the economy and identify more
practical measures aimed at bolstering the
confidence of investors and increasing
production in the real sector. The committee
was also to examine other related issues
such as unemployment, poverty alleviation,
food availability, and how to ensure a
sustainable debt position. The committee
was also supposed to make
recommendations on any other issues or
actions that may be required.
Members of the Presidential Steering
Committee included four governors:
Babatunde Fashola of Lagos State, Isa
Yuguda of Bauchi State, Adams Oshiomhole
of Edo State and Bukola Saraki of Kwara
State, as well as the ministers of finance,
national planning, and petroleum. Its
members also included the chief economic
adviser to the president, Mr. Tanimu Yakuhu
Kurfi; the president of the National Economic
Summit Group, Mazi Sam Ohuabunwa; Mr.
Bismark Rewane, an economist; Mr. Tony
Elumelu, representing the Bankers'
C o m m i tte e ; A l h a j i A l i ko D a n g o te ,
representing Nigerian industrialists; and CBN
governor, Soludo. Quite naturally, I attended
all the sessions, which held at the villa.
In the early days of the committee, the state
of banks was an issue that dominated
discussion, and I recall that both Yuguda and
Saraki often accused Soludo of prevaricating
with regard to the true state of the banks.
Being former bankers, the two governors
AFRICA OIL + GAS REPORT
president, like Dahiru Mangal, were also diehard backers of Soludo. Somehow, the
handlers of the CBN governor must have also
reached the First Lady, who by then was also
rooting for Soludo. But with Yuguda, son-inlaw to the president, opposed to Soludo's
aspiration, I knew such support could not
possibly endure.
Meanwhile, I did not pretend about the fact to be true. That is why I am yet to make up
that I was also backing Soludo. I felt that his my mind as to what to do.”
regime of consolidation helped significantly The president explained to me that a
to institutionalize banking in Nigeria and situation where journalists were openly
that due to the exigencies of market stability, speculating about the health of our banking
there was need for continuity. Right from my industry, where depositors and creditors
days at THISDAY, I never pretended about my were doubtful of the safety of their savings,
support for Soludo's efforts at CBN. Besides, and where the public was becoming
I also believed that the Igbos of south distrustful of CBN figures on the banks could
eastern Nigeria were not well represented in not be in the interest of our banking
industry.
the top echelons of government.
I have a lot of Igbo friends and often heard I spent considerable time with the president
their complaints, which I could identify with: that morning after I had apologized for my
i n c o m p a r i s o n w i t h o t h e r e t h n i c comments, which he said he appreciated. I
nationalities, there was no equitable asked him about Sanusi Lamido Sanusi,
representation for persons of Igbo origin in whose name had been widely speculated in
the Yar'Adua government. That would the media, and he told me that the man, who
explain my critical intervention in the was then Managing Director of First Bank of
appointment of Mr. Ogbonaya Onovo as N i g e r i a ( F B N ) w a s i n d e e d u n d e r
inspector general of police and Dr. Bernard- consideration along with a few other people,
Shaw Nwadialo as acting customs boss in but added that he had yet to make up his
2009. Beyond the emotional satisfaction and mind about whether or not to renew
sense of belonging, it may confer equity in Soludo's mandate. Surprisingly, as I got up to
appointments. And opportunities in a plural depart, the president asked me, This Sanusi
society such as ours has always been a guy, I have met him but never heard of him
necessity for national cohesion and before, do you know him?”
development. It is even enshrined in the I confirmed that I knew Sanusi by reputation
constitution under the provision of federal and that if at the end he settled for him, it
character. I therefore believed that even if was a choice that would be assessed on
only by virtue of being a Igbo man, Soludo merit because Sanusi was well respected by
deserved to be retained. And when I saw the the media and civil society for his public
move to suggest that he might not, I interventions. I left him feeling that he must
confronted the president in a manner that have made up his mind on Sanusi, but by the
could have cost me my job if he were not so next day, when Soludo's term expired, there
was still no new CBN governor.
broadminded.
It was not until the morning of June 1 that
It was May 28, 2009, and the position of CBN
governor was still vacant after all the the letter nominating Sanusi as CBN
lobbies. So, I waited to see the president the governor was sent to Senate president,
moment we got to the office. I asked: “Sir, I Senator David Mark. In the letter, the
can see that you don't want to extend president also requested the Senate to
Soludo's tenure because the media is awash confirm the renewal, for a second term, of
with stories that you are resolved to give the the appointment of Mr. Babatunde Lemo as
deputy governor of the Central Bank of
position to a northerner..''
I could see that the president was angered Nigeria.
As it would turn out, the president was
by my remark. But there was no bitter retort;
particularly
impressed with Sanusi's
rather, he told me to sit down. He waited a
performance
in
the Senate in the course of
while before saying, “Segun, I am very
his
screening,
which
was relayed live on
disappointed in you. By now I thought you
would have known me enough not to think television. The moment I entered his office,
like that of me. Contrary to what you think, he said, “I watched some of the exchanges
this CBN appointment has become the most between Sanusi and the senators, and I was
difficult decision for me to make. Let me tell impressed. I think the guy is brilliant, but I
you my dilemma: Everyday, people come have also been told about his integrity I hope
here to tell me that the picture of the banks I made the right choice.” Sensing that he was
that Soludo has been painting for me is not indirectly seeking some sort of validation for
the correct one. While I also have my fears his action, I assured him Sanusi was a good
about the banks, nobody has been able to choice. Despite not having renewed
give me any concrete evidence to prove Soludo's mandate, the president still met
Soludo wrong. Now the challenge is, if I with him and also wrote him a nice letter of
approve for him a second term and it turns commendation.
out these fears are correct, how do you think
I would feel? On the other hand, it will also Excerpted From Power, Politics and Death: A Front-Row
be unfair to deny him second term on the Account of Nigeria Under the Late President Yar'Adua,
basis of speculations that may turn out not by Olusegun Adeniyi. Published with permission.
AFRICA OIL + GAS REPORT
FEBRUARY, 2012
23
AFRICA IN BUSINESS
obviously had some insider knowledge
about what was going on within the financial
sector, but Soludo always countered by
asking them to give him proof; which they
never did. From the interactions, however, it
was obvious the duo knew a lot,
Usman, who, until his appointment, first as
finance minister and later as national
planning minister, was one of Soludo's
deputies at CBN, also held cynical views of
the state of the banks. The exchanges
between Usman and Soludo were usually
very interesting as the latter would always
respond to the former's cynical remarks
with: “As if you were not with us until
recently.” What was obvious from the
interactions within the committee was that
almost half of the members would not
endorse a renewal of Soludo's tenure as CBN
governor if they had anything to do with it.
And these were people with access to the
president.
But evidently, Soludo also had a strong fan
base. Nearly all the people close to the
president—from aides to family members
and his personal friends—were rooting for
the renewal of his mandate and each for
different reasons. I know that Edevbie,
himself an economist, had written a brilliant
memo to argue for the retention of Soludo
on grounds that the economy was too fragile
to absorb any market upheaval that could
arise as a result of bringing in a new CBN
governor at that point in time. Friends of the
5.178 "
Are the three private sector partners likely to build a
large scale refinery, even in the long run?
By Fred Akanni
W
ith the Ugandan government having
finally signed two crucial production
sharing agreements(PSAs) with Tullow
Oil, the latter's deal with CNOOC and TOTAL can now
be completed. Prospects for commercial production
of oil in the landlocked country look closer to reality.
Tullow said the licences covered the EA-1 and
Kanywataba licences in the Lake Albert Rift Basin,
and that it had also been awarded the Kingfisher
production licence.
TOTAL, the French supermajor, has been anxious to
get down to business since agreeing, along with
CNOOC, the Chinese behemoth, to pay $2.9Billion in
total, for 33% equity each in Tullow's PSAs in
Uganda.
Christophe de Margerie, TOTAL's chief executive,
had even allowed himself to be dragged into the
conflict between South Sudan and Sudan, over
transportation of South Sudan's oil through
Sudan(See story on page 12). At the World
Petroleum Congress in Doha, in December 2011, he
declared that Uganda could become an oil
distribution hub for East Africa, including South
Sudan's oil exports, if plans for an oil pipeline from
Uganda to the Kenyan coast proceed.
"Just look at the geography. It's easy to see that
Uganda is just next to Sudan with a common
border," he told reporters at the World Petroleum
Congress in Doha, Qatar. "The pipe which is
supposed to leave from our potential blocks in
Uganda could be effectively a hub for different
sources of crude," he said.
Mr de Marguire was apparently asking South Sudan
to stop shipping its oil through its northern
neighbour and look elsewhere, preferably
eastwards.
As if on cue, about a month later, the South
Sudanese government shut down its oil operations,
halted transport through Sudan and signed a
Memorandum of Understanding with the Kenyan
government, to transport its crude oil through the
Kenyan port of Lamu on the Indian Ocean.
Of the imminent transportation of Ugandan crude
out of the country, Christophe de Margerie was also
widely quoted: "We say to Uganda, as part of our
long term view, that you have to take into
consideration what kind of oil could come from
neighbours' countries to make your pipe less
expensive if it can be shared by different players."
But the Ugandan government is not as keen about
export of the crude mined in its country, as it is with
regards to beneficiating the crude in Uganda. In the
PSA agreement with Tullow, the government had its
way: Tullow agreed to the construction of a refinery
- a key sticking point in the talks.
It's not clear how reluctant the partners would be in
committing to a full scale refinery, ratcheting up
from a start of 20,000 BOPD to a peak of between
150 000 to 200 000 barrels per day, as the
government would like.
As a rule, Western investors haven't been building
significant refining capacities in Africa, outside of
Egypt. Angola can't get funding for its proposed
200,000BOPD refinery and the South African
government, prosperous as it is, has, for upwards of
two years, been desperately looking for partners for
the planned 400,000BOPD refinery in the country's
eastern Cape.
China National Petroleum Corporation has only just
had a scuffle with the government of Chad Republic,
located north of Nigeria, over prices of petroleum
products from the 20,000BOPD refinery it built in
that country. Everywhere in the world, return on
investment in refineries are narrowing.
Uganda wants to be the crude oil refining capital of
East Africa. The government is sure that the market
will absorb the products of a 200,000 BOPD refinery,
which it wants delivered by 2016. There’s only one
refinery in the whole East Africa. The Kenyan
refinery in Mombassa processes only 32,000 barrels
of imported crude oil, everyday.
Even if production starts in 2013, the talk of
achieving 200,000BOPD output, let alone reaching
enough to keep aside an equal volume for local
Lynda Biribonwa, Tullow's Corporate, Regulatory Compliance Advisor
for Uganda, with Aidan Heavey, the company's Founder and CEO (Left).
refining, is quite optimistic. The government and the
partners will likely soon be back on the table.
Still, if Tullow Oil and its venturers are not keen on a
large scale refinery, this is clearly an opportunity for
companies that are not as fixated on the upstream.
Tullow has reported finding at least a billion barrels
(P1+P2) of crude oil in Uganda. They are not in one
large field as in Ghana, no. They are in several
pockets of reservoirs. With the waxy nature, the
economics of transportation of the oil for export is
as daunting as the economics of refining. The crude
is heavy and sour. If there's the challenge that it will
wax in the pipeline, there's as much challenge in its
refining.
For now, the feeling all around is good. "It's taken
over 18 months for them to get to this point”, one
analyst is quoted to have said, “and finally it's been
completed. It's positive for sentiment, more than a
change to numbers."
-with additional reporting by Sully Manope, in
Nairobi
THOSE WHO ARE SELLING
NAMIBIA
Chariot Sells Some %To BP in 2714
ALGERIAN
Petroceltic Completes Sale To Enel
ondon based minnow Chariot Oil & Gas
has obtained full approval from the
Ministry of Mines and Energy in Namibia
for its farm-out agreement with BP in block
2714A.
As part of the farm-out deal, BP has committed
to cover Chariot's cost of drilling the first
exploration well in this block as well as past
costs incurred, which have now been received.
As a result, Enigma now holds a 25% interest in
the Southern Block 2714A, while Petrobras
and BP hold a 50% and a 25% stake,
respectively.
The block currently has 11 identified
prospects, one of which - Nimrod - is due to be
tested in the second half of 2012 with the
drilling of the Kabeljou-1 exploration well.
rish minnow, Petroceltic International has
announced the completion of its sale of an
18.375% interest in Algeria's Isarene PSC to
Enel of Italy.
Petroceltic says that Enel has agreed to pay up
to $36.75 million, which equates to 24.5% of all
back costs incurred from signing of the PSC
(Production Sharing Contract) in 2005 until the
end of the exploration period in April 2010. Enel
has also committed to fund 49% of the cost of
the recently completed six well Isarene
appraisal drilling campaign, which costs are
capped, in aggregate, at $145 million; and finally
agreed to pay Petroceltic a contingent cash
consideration, up to a maximum of $75 million,
such amount determined by a number of factors
based on the results of the appraisal
programme, such as the overall level of reserves
and the production profile.
L
I
AFRICA OIL + GAS REPORT
Gulf Keystone Leaves
A
IM listed Gulf Keystone Petroleum has been
granted its wish to sell its Algerian interest. The
authorities have granted all necessary
government approvals to transfer its right, title and
interest in the Hassi Ba Hamou permit to the operator BG
Group and the state hydrocarbon company Sonatrach.
With this development the company finalises its plan to
exit and focus on the Kurdistan Region of Iraq where it
“has made one of the most significant discoveries, holds
one of the largest licence positions and has amongst the
best pre-drill upside in its acreage”, by its own account.
Gulf Keystone executive chairman and CEO Todd Kozel
said the company is firmly focused on its operations
spanning four exploration blocks in the Kurdistan
Region, including the Shaikan discovery, where the
2012/13 high impact drilling campaign is currently
underway following excellent results achieved in 2011.
JANUARY, 2012
25
FA R M I N , FA R M O U T
Uganda Opens For TOTAL and CNOOC
FA R M I N , FA R M O U T
CONCESSIONS, PERMITTING, RENEWA L S
TANZANIA
H
Heritage Wins Property In Nyasa Basin
eritage Oil, the London listed independent, has secured a
production sharing agreement (PSA) for the Kyela block
onshore Tanzania. The 1,934 sq km acreage covers the
northern onshore area of the Lake Nyasa basin.
The block will be operated by Heritage Oil with 100% interest, and
GAMBIA
CAMAC Puts Gambia In The Wheel Cart
G
ambian authorities have provisionally awarded two
offshore exploratory blocks to the Houston based
independent, CAMAC Energy.
The A2 and A5 blocks total 2,666 sq km in 600-1,000 m of water.
They are located in the West African Transform Margin. CAMAC
Energy will be the operator with 85%
interest, and Gambia National
Petroleum Co. will be carried at 15%
through the start of any oil production.
The agreement sets forth the
negotiated fiscal terms and work
programme for the blocks, and the
award is subject to submission of an
environmental impact assessment and
signing of final petroleum exploration
licenses within 90 days. The company
has submitted the EIA and said signing
of license documents is expected in a
few weeks.
Chevron drilled the Jammah-1 well on
Block A2 in 1979 on the basis of sparse
2D seismic data. The well had gas
shows, thereby establishing the
presence of hydrocarbons. More
recently, extensive 3D seismic shot on
gravity data and seismic data from the adjacent Lake Nyasa indicate
the presence of a thick sedimentary section with the potential to
generate oil.
The company said it will begin the work program shortly with the
acquisition of about 1,500 sq km high resolution gravity survey
followed by the acquisition of 2D seismic.
the A1 and A4 blocks immediately west of A2 and A5 has revealed
a number of material prospects and leads, said the operator,
African Petroleum Corp. Ltd.
ETHIOPIA
SouthWest Energy Signs PSA
for Gambella
T
he Ethiopian Government's
Ministry of Mines has awarded
SouthWest Energy the Gambella
concession. This gives the company a
strong potential upside and the added
bonus of a diversification of prospective
resources.
The block is 17,000 km2, half the size of
Belgium, and is adjacent to the South
Sudan border. A field across the border
has 900 million barrels of proven
reserves. This proven discovery and
geology is called the Sobat High and it
extends into the Gambella concession. A
FTG survey is planned for 2012, followed
by seismic acquisition.
26
FEBRUARY, 2012
AFRICA OIL + GAS REPORT
OPL 281
L
L
M
O
O
46
PL
OM
82
L2
7
22
O
SS
RE
P
EX
M
L
L
OM
6
13
OML 63
56
OPL 233/NigDEL
SacOil reported that the JV between it and Energy Equity
Resources Ltd. (EER) has farmed into OPL 233, held by
NigDEL. Under the agreement SacOil acquires a 20% interest
in the acreage, where production is expected to begin during
2013 at a rate of 10,000 BOPD
OPL 226
(CPC)
OPL 238
(SUNLINK)
30
OPL 090
OPL 225 (ADDX)
OPL 285
OML 25
0
OML
100
OML 67
OML 1111
OPL 290/ CONOIL
Conoil is evaluating data,
preparatory to drilling in
OPL 290 in 2011.
60 Kilometers
OPL 119/NPDC
NPDC has encountered
two new pay zones in
Okono Field.
30
OML
104
OML 70
OPL 290
OML 13
Ebok field commenced production
at roughly 17,000 Barrels of oil
per day (BOPD) in the last week
of May 2011. The UK listed Afren,
often perceived as Nigerian
owned, is the operator.
EBOK/ AFREN
OPERATORS
OTHER OPERA
OPERAT
ORS
AGIP
TOTAL
OT
OTAL
EXXONMOBIL
SHELL
CNL
LEGEND
OML 114/MONIPULO
Allied Petroleum has bought PetroSA’s 40%
interest in the Monipulo operated OML 114.
The deal is worth $50Million. Prodiction
from the Effiat/Abana field has been on the
decline since it averaged 18,500BOPD in
2004, around rhe time of PetroSA’s buy out
of Brass Petro. Allied’s payment of the $50
million is likely to be in the form of a swap.
OPL 281/TRANSCORP/SACOIL/EER
SacOil reported the signing of a joint venture
agreement with the Nigerian independent
Transcorp to develop the oil prospecting lease
OPL 281 in alliance with Energy Equity
Resources (EER).
The lease is located onshore in the western delta
region of Nigeria and is adjacent to the widely
publicised Shell divestment block OML 42.
Femi Otedola Moves In On OML 30
Nigerian petroleum marketer, Femi Otedola is
working with the Israeli company Beny
Steinmetz Group(BSG) to acquire
Shell/TOTAL/Eni's 45% stake in the Oil Mining
lease(OML) 30, which is up for sale. Conoil had
won the bid for the three majors' working
interest in the acreage, valued at $1.3Billion, but
walked out when the government insisted it
would not be allowed to be operator. Conoil has
operated three acreages in the country for a
total of 20 years. Mr Otedola and his friends
don't have any track record as operators.
EER Plans A Hub Around Aje Gas Field
Energy Equity Resources(EER) is mulling a
gas gathering and export hub, offshore
Badagry, in the event of its winning the
technical operatorship of the Aje gas field.
EER currently holds 10% working interest in
the field and wants Chevron's 18%, which
was offered in a data room opening.
Chevron is evaluating the terms of EER's
financial proposition.
report
©C o p yrigh t 20 12,
AF R IC A O IL +G A S R E P O R T
OML115/AFREN &
ORIENTAL
Buoyed by successes
of Ebok and Okwok
marginal fields in
eastern OML 67, Afren
has farmed in into the
adjacent acreage OML
115, held by Oriental.
OPL’s 276 & 283/NEWCROSS
Newcross has completed 200 sq/km of 3D
seismic data in OPL 283.
OML 99
OML 1
112
12
OPL 1
19
119
OML 26/AFREN
First Hydrocarbon, the Nigerian
subsidiary of UK listed Afren has
signed a JOA with the state
hydrocarbon company NPDC which
allows the latter to operate the Oil
Mining Lease OML 26.
The company purchased the 45%
stakes belonging to Shell, Agip and
TOTAL on the acreage, for a total
of $147.5MM, but the NPDC, which
took over the 55% belonging to
government, insists it has to
operate.
OPL 275/PAN OCEAN
Pan Ocean has completed
acquisition of 545sq km of
three dimensional(3D) seismic
data over OPL 275. The 156sq
km previously available data
constituted roughly one third of
the acreage. The additional
545 sq km completes a carpet
coverage of the lease.
www
www.africaoilgasreport.com
Vol 13, No 2, February, 2012
OGBELLE/NIGER DELTA EXPLORATION &
PRODUCTION
Daily output from the field is around 6,500BOPD. NDEP
has received a Licence to operate its 1,000BOPD diesel
topping plant on the field. It will deliver 120,000litres of
diesel into the local market, every day.
OML 51
OML 52
OML 1
11
1
OML 72
OML 18
OML 17
OML 55
OML 23
OML 141 (EMERALD)
OML 1
116
16 (NNPC)
OPL 286
OML 18
OML 66 (NNPC)
OML 33
OML 58
OML 53
OML 20 (SHELL)
OML 124
(ADDAX) ORL 277(STERL)
OPL 2007 CONOIL
is scouting for a 2-18 month drilling
sequence in OPLs 2007, OML 103
and the swamp part of OML 59.
OPL 2005/2006
OML 28
OML 61
OML 26
OPL 275
OMLs 4, 38 &41/SEPLAT/NPDC
Seplat , currently producing 37,000 BOPD
targets operated production of 135,000BOPD
by 2015. Three appraisal wells are scheduled
for drilling in Orogho, Okporhuru and Okoporo
fields, all of which are undeveloped
discoveries.
STATU S Q U O AN TE
OML 59/ CONOIL
Conoil encountered 86.2metres Net Oil
sands in six sands in Otuo South(OTS)-2
Redrill, in OML 59. The thickest pay is the
deepest, at 8777metresTVD ss(top) .
OPL 288 OML 83
OML 85
OML 86
.)
NT
O
(C
OPL 289
L
36 OM
L
M
O
OPL 263
79
OML 88
OML 35
OML 31
OML 30
OML 65
OML 34
OML 38
OML 4
OML 66 (NPDC)
)
L.
EL
H
(S
32
OML 136/CONOIL & TOTAL
Gas in OML 136 will reach market in
2017, which is when the Brass LNG
project is scheduled to come on
stream. A crucial reason for farming
out 40% of this gas prone acreage
TOTAL is to ride on the back of the
French giant to monetize the gas
asset.
M
L
OML
122
OML 45
O
SAPETRO
SAPETRO In Benin Republic
SAPETRO, will take final investment decision on re-development of Seme
Field in shallow water off Benin Republic in 4th Qtr 2011. Planned
programme includes four wells producing to production facilities at the
site of existing tank farm. The field has very little gas. Remaining
reserves are about 10MM barrels of oil.
SAPETRO In Juan de Nova(JDN), Mozambican Channel
SAPETRO bought all of Roc Oil’s 75% interest in JDN in July, 2011. Plans
an extensive 2D seismic campaign across the 52,000km2 block by 1st
Qtr 2012.
OML 89
OPL 2007
OML 41
OML 42
64
M
OML 109/ATLAS PETROLEUM
Atlas Petroleum International may increase
production of Ejulebe field to 1000+BOPD,
following completion of the Ejulebe 8
appraisal/development well in OML 109 as an oil
producer. The deviated hole was drilled in the
southern part of the Ejulebe field, targeting the
‘Q’ sand series which had been intersected by an
earlier well. The field is currently producing
about 450 BOPD from two wells.
OML 49
OML 40
N EW D EVELO P M EN T
OML 98/ PAN OCEAN
Pan Ocean has awarded a contract to Fenog, for
bids for the construction of 65km crude oil pipeline
from Amukpe to Escravos. This will tie in to its
existing pipeline running from Ogharefe field to
Amukpe. The award is the clearest statement yet
that the company is changing its crude oil
evacuation point from Shell’s forcados to Chevron’s
Escravos terminal. Incessant attacks on Shell’s
Trans Forcados pipeline have forced Pan Ocean out
of crude oil supply business now and again.
OML 1
111
11 OML 98
OML 96
OML 43
OML 91 OML 90
OML108
OML 95
OML 1110
10
OML 103 OPL 274
OML 98/PAN OCEAN
Pan Ocean has embarked
on a workover campaign, to
bring up its production from
the depressing 6,000BOPD
to which it has fallen in the
last one year. The company
was delivering at least
20,000BOPD as of
December 2010.
M
ABURA FIELD/NPDC
NPDC has acquired 67km2 of a planned 250 km2 of
3D seismic data over Abura field. Operations resumed
in November 2010 after a month of “flooding recess”.
OML 110/CAVENDISH
The Obe field is currently
shut down. Last technical
operator, Transfigura,
walked out in 2007.
OML 103/CONOIL
Conoil Producing has fired the
commissioning shots, in respect of
2
acquisition of 351 km three dimensional
(3D) 60fold seismic data in OML 103.
Contractor is CNPC.
OPL 274/ SAHARA
500 sq km 3D underway.
Sahara Energy fields, the upstream subsidiary of
Sahara holdings, has commenced acquisition of 500
km2 of three dimensional (3D) seismic data on the
Oki/Oziengbe field. The field is the subject of
unitization discussion between Sahara and NPDC, the
operating arm of the state hydrocarbon company
NNPC. Sahara holds 84% of the field to NPDC's 16%.
U PDATE IC ON S:
NIGERIAN INDEPENDENTS: UPSTREAM ACTIVITY MAP
O
L
62
.)
IP
G
(A
O
OPINION
Tullow's Reputation
And Other Dreams
T
ullow Oil has just emerged
from perhaps its toughest
challenge with a
regulatory authority in Africa, a
continent it likes to call its home.
With two Production Sharing
agreements, signed by the
Ugandan Government, in hand,
the company can beat its chest
about having shown remarkable
dexterity in managing issues and
has proven its ability to
overcome the type of challenges
that readily overwhelms less
determined and less focused
players.
It has taken 18 months to come
this far.
The story started in July 2010
when Tullow bought two oil
blocks in western Uganda from
Heritage for $1.45bn. Ugandan
authorities insisted Heritage was
liable for capital gains tax on the
sale – a claim the London-listed
company has denied. In order to
settle the dispute with Uganda's
g o v e r n m e n t , Tu l l o w w a s
required to pay a tax bill of
almost $313.5m.
The fall-out ballooned into
bribery allegations in the
parliament that threatened a
planned farm out of some stake
to China National Offshore Oil
Corporation (CNOOC) and
France's TOTAL, as well as the
very future of the company in
Uganda.
On Friday, February 3, 2012,
Tullow signed Production
Sharing Agreements (PSAs) with
the Ugandan government for the
EA-1 and Kanywataba licences in
the Lake Albert Rift basin, and
was also awarded the Kingfisher
production licence.
“As a result of this signing, Tullow
will now finalise arrangements
with CNOOC and TOTAL for
completion of the farm-down
and the related transfer of
monies as soon as possible” said
the company.
This development is good news
and a relief.
If the Ugandan story had gone
28
sour, there may have been ripple
effects right throughout the
continent, where Tullow has
been establishing significant
presence in the last 26 years,
acquiring 55 licenses in 15
countries. It would have inflicted
a huge reputational damage to
the house Aidan Heavey erected
in a small town called Tullow,
about 35 miles south of Dublin,
Ireland.
This is how Heavy himself recalls
the country's coming to Africa:
“In the 80s there were loads of
companies starting off in the
North Sea and Irish Celtic Sea. I
was talking to a friend of mine in
the bank one day and he was
talking about small oil fields in
Africa, which had been left
behind by the majors and had
no-one to work them. That is
where the idea came from.”
Tu l l o w s i g n e d a l i c e n c e
agreement in Senegal in 1986,
and thus started its African
adventure. By May 2004, the
company had doubled in size,
mainly through the acquisition
of Energy Africa which brought
in production from Cote D'Ivoire,
Equatorial Guinea, Gabon and
Congo Brazzaville. In 2006,
Tullow acquired Hardman Oil,
adding to its Ugandan portfolio.
In the same year, it signed a
Petroleum Sharing Contract for
the Deepwater Tano Block in
Ghana.
In 2007, Tullow discovered oil in
Heydua 1, which incidentally
probed reservoirs that straddled
i t s o w n o p e rate d
a c r e a g e ( D e e p w a t e r Ta n o
licence) and Kosmos operated
West Cape Three Points block, in
which Mahogany 1 had also
encountered large pools of oil.
The unitised field was renamed
Jubilee, in recognition of the fact
that the year 2007 was Ghana's
th
50 year since independence
from Britain. Ghana became the
second major oil province for the
company after Uganda, but the
reservoirs in Ghana, which are
FEBRUARY, 2012
contiguous giant sized pools
stored in the Atlantic waters
are much easier to move into
production than the Ugandan
reservoirs, which are stranded
1,300Km from the coast. Still
the Ugandan fields have
added up to over 1billion
barrels (P1+P2) and a 100
percent exploration success
rate has continued in Uganda,
moving the project closer to
the commercial threshold for
development.
Tullow has emerged stronger
after going through the
challenges it faced with the
regulatory authorities and will
surely do better down the line.
The greatest lesson is perhaps
in the learning that all
sta ke h o l d e rs ( i n c l u d i n g
Tullow) can take away in this
Crude Continent (a la Duncan
Clarke).
First, Tullow must set its
agenda for Uganda right. The
company must understand
the socio-political terrain and
ensure that all stakeholders
are properly engaged with no
one left behind. This should
include but not limited to
government at all levels, the
host communities, the media
as well as various human and
environmental rights' groups.
Tullow must assure that such
engagement stems from a
well thought out strategic long
term plan and not lifted from a
hurried negotiation or ad-hoc
arrangement.
In carrying out its social
responsibility, Tullow should
target programmes that are
truly sustainable, make the
greatest impact on the
majority and add the highest
value to improving the quality
of life. Such programmes
should aim at empowering the
inhabitants of the
communities to be self reliant
and grow individual and group
capacity.
The Ugandan government on
By
Adedayo Ojo
the other hand should relate with
Tullow, and of course any other oil
company in its domain, with
lessons learnt from what has
happened in places like Nigeria.
Under no pretence should the
government relinquish its
responsibilities to it citizens to
any company of any shade, oil and
gas or otherwise. Respect for the
sanctity of contract and provision
of an enabling environment as
well as provision of basic
infrastructure all fall in the
category of the responsibility of a
responsible government. More
i m p o r t a n t l y, b o t h t h e
government and the companies
will do a lot of good by embracing
openness, fairness and
accountability in declaring what is
produced, sold, paid for and how
the revenue is utilized.
On the regulatory front, there
should be a clear separation of
roles, responsibilities and
expectations between the
regulator and the regulated. A
situation where the regulator
depends on the companies it is
supposed to regulate for training
or logistics support is a recipe for
systemic disaster. Government
must help the regulatory agencies
to develop capacity to regulate!
Tullow and indeed all companies
that operate in the African oil and
gas landscape should begin to
develop capacity to effectively
manage issues especially those
that may impact “the license to
operate”. The oil and gas industry
is not devoid of technology or
technical expertise. The greatest
vulnerability is in handling social
issues. Social challenges must be
anticipated and capacity built to
deal with same. After all, by the
very nature of oil & gas business,
risk and surprise is the name of
AFRICA OIL + GAS REPORT
reputational challenges will help
companies grow in-house
capacity.
Tullow's story is now an
illustration of what a small but
focused organisation can
achieve in the risky business of
oil and gas exploration in a
challenging region such as
Africa. The Tullow story bears
AFRICA OIL + GAS REPORT
lessons for other
independents, countries as
well as regulators.
Tullow has done well. The way
it flexes its youthful vigor, it
will do greater things. Its first
two decades of existence has
been spectacular. It will, no
doubt, be a company to watch
in the coming years.
Adedayo Ojo is Lead Consultant/CEO
of Caritas Communications Limited, a
specialist reputation strategy and
corporate communication
consultancy based in Lagos. Caritas is
the West Africa affiliate of Regester
Larkin, a pioneer reputation
strategy/management consultancy
with offices in London, Washington
and United Arab Emirates
FEBRUARY, 2012
29
OPINION
the game. If surprises are
anticipated in the rig, why expect
less in the town?
There are today a crop of
professional firms that have
developed expertise in dealing
with reputational issues and
challenges that oil companies
often face. Firms that have
proven expertise in managing
LO C A L C O N T E N T
Hopes and Impediments
Opportunities And Constraints For The
African Enterprise In The E&P Space
B
ritannia U's Ajapa field has been out of
production since October 2011. Its Floating
Production Storage Unit (FPSU) has been
undergoing complete refurbishment on the
Lagoonal stretch off the Lagos Marina, in Nigeria's
key financial city.
Prior to the five month downtime, the company
was doing 2,300 Barrels of Oil Per Day.
At a time that oil prices have averaged $110 per
barrel, this is a lot of money not earned.
The FAPSU itself had only been commissioned in
March 2009.
The challenges that Britannia U is having with its
facility, calls attention to the daily worries that
small, African companies are having as they try to
ingratiate themselves into operatorship of some of
the continent's hydrocarbon fields, and join the
league of foreign, producing companies who have,
for all of the past 55 years been the defacto miners
of African petroleum.
Britannia U is one of the six companies, out of 24
such operators, which managed to get their assets
to some sustained production by 2010, six years
after farm out agreements were signed.
The marginal field exercise was conducted by the
Nigerian government between 2002 and 2004,
with the intent of availing local companies the
opportunity to build local capacity and Nigerian
production on the back of some of the several
undeveloped discoveries lying fallow in acreages
operated by international oil majors.
While the debate has been largely around 6 out of
24 being a pass mark for the exercise or not, the
truth is that, even among those six producers,
there have been daunting financial, technical and
more crucially, experiential challenges. The six
“successful marginal field companies” include
Pillar Oil, Energia, Platform, Britannia U, Walter
Smith and Midwestern. None of the remaining 18
companies have been able to get any sustained
production,
Seye Fadahunsi, Technical Director, Pillar Oil
30
FEBRUARY, 2012
But for these six
“successful”
companies, the
word “success” is
loaded.
While Britannia U
was getting its
FA P S U b a c k i n
order, Pillar Oil was
completing a new
well on the
Umusati field. This
should be good
news; but the
company had been
out of production
for over 14 months.
Pillar's first
producing well,
which was reentered and
completed three years ago, simply died out after
two years of sustained production. Much of the
cash coming from the anticipated new production
will thus be going to recoup investment.
It wasn't only Pillar that had a problem with a well.
Walter Smith was, as of the time of going to press,
struggling to finalise a relief well, drilled to replace
the well that had a blow out and erupted in flames
earlier in 2011. There had been at least three
sidetracks, trying to get into the old hole.
“ Operational challenges are the fact of life in oil
field activity”, says Layi Fatona, Managing Director
of Niger Delta Exploration, a local firm which has
produced on average 5,000Barrels a day without
stop for the past six years. “People must know that
oil wells are like babies: they cry for a change of
diapers, they wet the bed”.
What amplifies the difficulties associated with
these challenges is the limited access to funding. It
took several months for Pillar Oil, after its sole well
died out, to get a $20Million loan to enable it drill a
new well. That's a company that had established
production profile and had facility on ground as
collateral.
There have also been bitter sweet stories: in
January 2009, Platform Petroleum experienced
the collapse of the cellar slab in the course of
drilling the Umutu 6 well. The accident put on hold
the promise of an additional 1,500BOPD, expected
to take the field's production from 2,400BOPD to
between 3,500 and 4,000BOPD, “It is a major
setback in terms of the cost incurred and lost
production in the face of declining production and
dwindling oil prices”, remarked Austin Avuru, CEO
of Platform Petroleum at the time. In four months
the company had spent $16Million on the Umutu6, with rig rate alone costing $43,000 per day at the
time. Almost half of that period was downtime
location reconstruction operations. “This sort of
thing happens to majors and large independents
from time to time”, Avuru told this magazine at the
time, “but for minnows like ours, it can mean the
The Egbeoma field flowstation
difference between life and death”.
Platform struggled with another failed well
before it finally got its production back on the
move up, such that, by December 2011, it had
reached 2,600BOPD, enough to justify a large
Christmas party at the Lagos Civic Hall, a scenic
waterfront facility.
So there you have it: four of the six successful
companies of the marginal field class of 2004
and its not as if these challenges will disappear.
But what's gratifying about this group,
however, is the tenacity and a certain “can do
spirit”. Five of the six companies are operating
without technical partners.
Pillar Oil reached first oil in the Umusati/lgbuku
field, using Nigerian personnel working in
concert with foreign technical partner. It was a
mutual working relationship. Pillar then kicked
out the foreign partner when effective
communication broke down. This new well
that is about to be completed is entirely on its
own steam. The work of building real
indigenous capacity is a constant struggle.
For Walter Smith, with no technical partner,
and using local engineering skills through
contractors, Walter Smith has had an effective
handle on the reservoirs in this field, with
heavy oil (at most 23degree API gravity) once
produced and abandoned by Shell.
Britannia U, headed by a feisty female lawyer
by the name Uju Ifejika managed to source
funds locally, use local expertise to carry out
well re-entry and new drilling, commission a
floating storage production unit (FAPSU). The
field was the first and only offshore marginal
field to go on production. She recently bought
out her foreign technical partner who, she
claimed, wasn't even carrying out the technical
management that it was brought in to do.
AFRICA OIL + GAS REPORT
Nigeria Is A Viable
Rig Market, But…
By Sully Manope
mention was made of the
ownership of the KS Endeavour
in the press coverage of the
event, it is hard to dismiss the
fact that FODE(Field Offshore
Design Services), a local firm
which has worked for over a
decade as supplier of offshore
production facility for
International Oil Companies,
was only recently beating its
chest for “being awarded a two
year contract with one year
extension for one of its 250 feet
rigs by one of the major
Operators in Nigeria”.
The accident, clearly, is a huge
loss, the kind that calls attention
to the fragility of the rig
maintenance and deployment
business for Nigerian
entrepreneurs trying to take
advantage of local content
requirements.
Rig accidents don't have to be
caused by the rig company;
Chevron has not fingered FODE
for creating the conditions for
the accident and no one accuses
NRG for having anything to do
with the pressure issues that led
to the Ibigwe flames.
The challenges that are most
associated with indigenous rig
operations have been mostly
about running them as viable
businesses. But if rig operations
suffer basic cash flow issues, like
many in Nigeria do, then safety
would suffer.
Since the Local Content Act
came into
being, in April
2010, the
space had
been cleared
for Nigerian
companies to
take over
d r i l l i n g
activity on
land and
s w a m p .
About 20
indigenous firms have
muscled out the several
international rig companies
that used to be highly
competent, well known
names in this terrain. The only
company in that class that
remains is Deutag, which is
trying to transform itself into a
Nigerian owned company.
Some of the Nigerian
newcomers have been bolder,
venturing beyond the clearly
delimited land and swamp.
FODE and Seawolf belong in
this group.
But the stories out of the
patch have, if anything,
underscored the very nature
of risk in this business, especially
for these innocents, in an
environment where capital is
scarce and equity funding is
poorly developed.
Seawolf entered the industry
through debt; the company took
a large loan to import three rigs.
Seawolf, at the last count, was
owing 100billion Nigerian naira,
(~$630MM). The debt has been
taken off the balance sheet of
First Bank of Nigeria, which
provided the facility and acquired
by the Asset Management
Corporation of Nigeria (AMCON).
DWC , another local company, is
struggling to stay afloat. So also is
Lonestar, which is now practically
The Funiwa Flames: Chevron has not fingered
FODE for culpability in causing the fire
AFRICA OIL + GAS REPORT
FEBRUARY, 2012
31
LO C A L C O N T E N T
I
t was the least auspicious
time for a Nigerian owned rig
to go up in flames. KS
Endeavour, drilling the gas well
Funiwa 1A, in shallow offshore
for Chevron Nigeria, caught fire
two weeks into the year 2012.
Chevron 's preliminary
investigation indicated a failure
of surface equipment during
drilling operations as likely to
have led to the loss of well
control. 152 workers were
rescued from the K.S. Endeavour
rig and an associated barge,
Hercules Offshore's 175ft
liftboat Mako, but the search for
the two missing workers,
employees of Fode Drilling,
operator of the K.S. Endeavor
were called off after a week.
The Funiwa Fire was only the
second such blazing incident to
occur on a Nigerian rig in the
space of six months.
In mid 2011, NRG 101, a land rig
run by the Nigerian driller NRG,
working on an onshore well on
the Ibigwe field, in eastern
Nigeria, caught fire. The field is
operated by the Nigerian
minnow Walter Smith. It was
less than a year after the Horizon
incident happened in the Gulf Of
Mexico, but the media kept
mum about it, largely out of an
unspoken consensus that the
last thing that two young,
homegrown Nigerian firms
needed was a negative press
associated with safety issues. As
of the time of our going to press,
Walter Smith was battling with
the complications of a relief well,
expending money on four
sidetracks. For a company that
produces just 2,000BOPD of
heavy oil, from a marginal field,
it has been a very expensive
undertaking.
While safety failure is a global
concern for the industry, and no
LO C A L C O N T E N T
Seawolf rig... the company is marooned in debt.
owned by Stanbic IBTC and
Diamond Bank, the two Nigerian
banks whose loans it is servicing.
If you are a multi service, multi
product company with cash
from other segments of your
business, you could escape
looking like a debtor, even if
you're still struggling with one
segment after five years. An
example of this is Oando, the
Nigerian downstream company
which is making a huge effort to
be seen as integrated down the
chain. Since 2007, Oando has
invested $200 million in
acquiring five Swamp Drilling
Rigs namely OES Teamwork, OES
Respect, OES Integrity, OES
Professionalism and OES
Passion. “With these
acquisitions, OESL is the largest
swamp drilling contractor in
Nigeria”, the company boasts.
Yet if you look at Oando's
balance sheet, it is OESL, of its
five subsidiaries, that was
running at a loss as at the end of
2011. Oando is upbeat: “In
2009, the company signed two
contracts worth $150MM with
Nigeria Agip Oil Company
Limited (NAOC) for the
utilization of OES Integrity and
O E S Te a m w o r k .
These
contracts which have a two-year
duration (with the possibility of
a one year extension) have
delivered numerous wells to the
client. Recently, OESL was
awarded a $19MM, 6-month
interim contract by The Shell
Petroleum Development
C o m p a ny ( S P D C ) fo r t h e
utilization of OES Passion “. The
idea is that the company can
spend its way out of the
challenge.
“Any delay in getting a contract,
once you've brought the rigs in,
is a killer”, says Jerry Tolkein, the
subsahara Africa oil and gas
analyst based in Cairo.” It took
about two years(between 2007
and 2009) for Oando to get its
first contract. The company's
cash reserves helped it to
cushion it”.
Mr Tolkein says a rig company
has to be set up like a proper
business, with a low gearing
ratio.
“The rig business is a tight
margin business. So it requires If
you're spending more than 50%
of your day rate earnings to
service debt then you are in
trouble and that's what most of
the local rig service companies
are going through”. Poor
capitalization is what's killing
Lonestar and that's what's
affecting DWC.
Poor cash flow or governance
issues by any rig operator can
drag down its client.Platform
Petroleum, in 2011, had to
import and install two engines
on the DWC rig 20 doing a
workover sidetrack for the
c o m p a n y. “ I t c o s t t h e
company a ten week delay on
that workover”, says Platform
personnel.
“A good chunk of the financing
must be equity”, says Seye
Fadahunsi, technical director
at Pillar Oil, a Nigerian E&P
company. “Debt is not good in
this business. The rule of
thumb is your debt servicing
shouldn't be more than 40%
of the day rate receipt. If it's
more than 60% you'd start
cutting corners and you start
getting into contract problems
with your client”.
Yet Seawolf and Lonestar and
DWC are quite formally
upright companies, who just
happen to misunderstand
cash flow efficiency. A good
chunk of players in the rig
business are, unlike them,
informal players.
Is the rig business so high tech
that Nigerian companies can't
cope?
“There's no rocket science”,
says Seye Fadahunsi,
Technical Director at Pillar Oil.
“Even the foreign companies
have 99% Nigerian staff”.
If you set up a rig business that
is well run as a business and as
a technical company, there's a
lot of scope in Nigeria.
“When you send out
invitation for bids”, says a
manager at the National
Petroleum Investment
Management Services (NAPIMS),
the regulatory arm of Nigerian
state hydrocarbon company
NAPIMS, “if you receive eight
proposals, only two have
completely functioning
equipment. Most companies say:
if you give me the job, I have
people outside, I'd mobilize.”
As companies go back to drilling
after years of just only producing
to catch up with the reduced
production brought on by
militancy, it is the local rig market
that will benefit. And when the
uncertainty around the
Petroleum Industry Bill is cleared,
rig count will go up even more.
Even then, there is already an
uptick. Rig count was 28 in
November 2011, up from 16 in
July. Conoil will be running a
campaign in the swamp. Chevron
was planning a return to fuller
scale shelf activity, beginning
with Funiwa. Shell's rig count has
gone up to five locations by
November.
There clearly is scope then. “It's
t h e t ra n s i t i o n p e r i o d fo r
indigenous operatorship in the
upstream: whether its rig
servicing, subsurface reservoir
evaluation, or E&P acreage
holding”, says the NNPC manager.
“People rush in because the door
is open and there will be a lot of
correction, once investors learn
how to play, the wheat will be
sorted out from the chaff.”
Oando Energy Service (OES) is the loss making subsidiary of the listed energy firm.
32
FEBRUARY, 2012
AFRICA OIL + GAS REPORT
LO C A L C O N T E N T
Booby Traps On
The Marginal Field Trail
By Moses Aremu, in Eket
Thomas (right) points to the construction site of the 100MMsc/d Uquo gas processing plant.
S
olomon Dada Thomas is at heart an E&P
company man.
When he takes a look at the hydrocarbon
activity map of Nigeria, he wishes he were in
charge of one of those 21 companies running
the thousand producing fields featured on the
document. It's been his passion to be at the
head of an E&P company which owns a
producing asset, runs it effectively and build
Nigerian technical and industrial competence
on its back.
But the task has not been anywhere as easy as
purchasing Suya, the barbequed peppered
steak that is Nigeria's favourite food snack.
By June 2012, Thomas hopes that Frontier Oil,
an E&P company he founded, will be
delivering first gas from the Uquo field, which
Frontier is operating in partnership with Gulf
Of Guinea Exploration, a subsidiary of Seven
Energy.
Although SD-as friends fondly call him-spent
the earlier 21 years of his career in Shell, the
country's largest operating company, he
arrived at the helm of a small E&P company via
the service sector,:
He was running an engineering service firm
which he founded with friends after he left
Shell in 1998 four years later, the marginal
field rumour became reality. It has taken all of
10 years for Thomas's Frontier Oil to get
anywhere close to First Gas.
In 2002, the Nigerian government invited
companies to bid for undeveloped
discoveries, ranked as marginal fields, located
in acreages operated by Shell, TOTAL and
Chevron, Fairshore turned to be the incubator
of Frontier Oil, the E&P company he set up to
bid for the marginal field opportunity
Frontier Oil started life as myself, an
accountant, and Wole Adefila (a petroleum
geoscientist who used to be his colleague at
Shell). Fairshore provided all the technical
work to make the bid. “I was wearing two hats,
as Fairshore and Frontier Oil”, he beams. “I'd
just take one hat off and it was Frontier.”
Having honed his career as a project engineer
at Shell…, he'd always preferred to run an E&P
company. “I'd rather be on top of the food
chain. This is where I'd been and where my
skills are”.
The 2002 Bid round was the most transparent
bid round in the country, he contends.” It
wasn't just the government; the International
Oil Companies too ran the show up to a point.
It was a very competitive, very transparent
and progressive bid process. Each company
was allowed to pick six fields. There were over
300 applications. Ultimately there were five
companies per field and the real test came
when we were to select one field we'd like to
operate. Uquo was always our number one.
We stuck to it and we defended it very
th
vigorously in Shell on the 17 floor”. Frontier
was one of the 24 companies offered the
opportunity to operate 24 marginal fields at
the end of the bid exercise in 2003. By 2004, all
AFRICA OIL + GAS REPORT
the companies had signed Farm In
agreements with the IOCs in whose
acreages the fields reside.
Eight years down the line, Frontier Oil is
only just close to delivering First gas from
the Uquo field. It would be the first
“marginal field operator” to produce gas as
a resource and not oil. More crucially,
however, is the partnership. Frontier Oil
has a technical and financing partner in a
company named Gulf Of Guinea
Exploration (GOGE), which is a wholly
owned subsidiary of Seven Energy, the UK
company with strong local management.
On the surface, it doesn't at all look like Mr
Dada is entirely in charge of affairs.
There's some story. “Before we got to
partner with GOGE, we had fallen into the
minefield that most marginal field owners
got into”, he says. “These traps were set by
companies who we got hooked up with
and signed an MoU with then. “It was a
bitter experience. We said we've got to
make the arrangement right. We went to
arbitration, we won the case, but we still
had to pay a lot of money because we've
had to breach a NONCA convention. Sharks
These traps were set
by companies who we
got hooked up with...
FEBRUARY, 2012
33
LO C A L C O N T E N T
entrapped many marginal field people”,
Thomas recalls bitterly.
“By that time GOGE had come into the picture.
We signed the agreement even before we
finalized the arbitration. We paid the
arbitration with..” his voice trails off.
“I hope that in 2012, people won't walk into
that sort of trap. Five years ago, the Nigerian
banking system didn't understand the E&P
space. Therefore, to raise the money, it was
impossible and people had to go and look for
technical partners. I was at a conference in
Abuja and I met a Shell person, and expatriate
European, we started to talk. We had three
suitors then but what clinched this was that
Joshua Udofia (former deputy Managing
Director at Shell Nigeria), joined GOGE as
Managing Director. We said: This is the
company we will go with because once Joshua
is in a team, that team is transparent, honest
and fair. We then found that GOGE was a
group of ex Shell people, both Nigerian and
expatriate. It was a good team that worked
extremely well.” All this time, as Frontier Oil
got into bed with GOGE, the bitter arbitration
dispute with the other partners had been
settled.
F
rontier Oil inherited the Uquo field –an
onshore field in the south eastern
Nigerian state of Akwa Ibom State- with
four wells, the first of which was drilled in
1958, which was an oil discovery. Shell either
didn't consider the oil as economic enough to
do an immediate appraisal or they had several
other options in that year, which was also the
year of the start of oil production in Nigeria. In
any case, Shell didn't return to Uquo field
until 14 years after, in 1972, after the end of
the civil war. The company drilled Uquo2, 3, 4
in that year.
In effect, Frontier and Co are working on well
data that are between 40 and 54 years old and
a very poor quality two dimensional (2D) data.
34
FEBRUARY, 2012
There was no three dimensional (3D) data on
the field.
The first well, which encountered oil, was
plugged aback all the way. And it wasn't
terribly accessible when Frontier tried to
reach it. To construct an access road to Uquo
1, “the contractor spent close to two years”. So
in order to “twin” the Well 1, Frontier drilled
Well 5. “We TD'd in 18days but we found very
small oil updip”. Well 2 had gas and is the main
reason for describing the Uquo field a gas
field. “Well 2 was tested in April 2010. It
flowed enough to assure the company it could
produce 45Million standard cubic feet per
day”. The company was going to re-enter Well
4 in December 2011, to produce more gas. But
by early February 2012, it was just finalizing a
rig contract to re-enter Well 4. So far so good,
but things were not always this certain.
“In 2008 we ran out of money. We'd
constructed two locations, shot 3D seismic
data, drilled well 5, done the sidetrack(from
well 5 into Well 1) and ran out of money. It had
all been going well, been fantastic, a very good
team doing something different, something
with best practices. But no bank would fund
us.
“That's why GOGE went to merge with Seven
Energy. Seven became the parent company of
GOGE. But the contractual and legal
agreement is with GOGE. We had no
relationship with Seven Energy except that
they are a parent company of GOGE.”
So, there Frontier Oil was, with a gas field with
an oil rim, its funding partner being in financial
trouble and being swallowed up by another
newcomer E&P company.
“In 2008 no one would talk to us about gas.
The economics were shitty for gas.
It so happened that Seven Energy itself had
decided its niche business would be full scale
gas transportation. They had been promoting
the idea of a gas pipeline to the Ibom Power
Plant in Ikot Abasi. It was a strategic fit.
Frontier Oil's gas reserves would provide
them the resources. But that was a
different contract entirely.
It wasn't until November 2009 that
funding resumed.”We focused on re-entry.
The road was ready and we resumed
operations by re-entering Well 3. “We
found gas in one layer and oil in the second
layer”. Thomas, not being a geologist, isn't
sure if the oil in Well 3 was the same
reservoir as the oil in Well 1, now replaced
with Well 5. But he gets on with the story:
“Well 3 delivered 30MMscf/d”. That
assured there was a prolific gas engine.
Seven Energy, meanwhile, signed a
contract with the Akwa Ibom state
government, to supply the 185MW plant in
Ikot Abasi with 45MMsc/d of gas. That
suddenly turned Uquo from being a
stranded gas opportunity to a viable gas
field.
Frontier Oil has been talking with Niger
Delta Power Holding Company, the
Nigerian government owned firm
overseeing the construction of power
stations, to supply gas to the Calabar
Power Plant, currently under construction.
It's hoping to get an agreement to supply
150million standard cubic feet per day
(MMMscf/d). That will more than justify its
building a gas processing facility with
100MMScf/d nameplate for starters and
scalable to 200MMscf/d.
When does Frontier Oil itself begin to build
its capacity as an E&P company
considering that most of the gas facility
construction, subsurface evaluation and
other civil work is being done by
GOGE/Seven Energy? Two things first:
frontier runs the field office at Eket, in
South Eastern Nigeria and it was Wole
Adefila, it is GM Operations who planned
and executed the 3D Seismic programme.
But there is more:
“When you're doing a thing like this, you
need a holistic approach”, Thomas says.
“You can't have a middle when you don't
have a hand or tail”. That's quite
philosophical. “We are going to acquire
our own workstation. We're taking charge
of the facility once the construction is
done”.
Thomas lets it be known that the Uquo gas
project is a significant contribution to
mitigating the country’s electricity deficit.
“Because of this plan, the nation can
produce 1,000MW of power”.
Underneath all of that patriotic
commentary is a key ambition. Once we
start production, we join the elite rank of
hydrocarbon producers. We get a life
sentence. Pay starts to come in. Bankers
open their wallet”.
AFRICA OIL + GAS REPORT
L A S T WO R D
Otunba Bakare’s Last Crime
B
By Tony Kan
uzz gave him a minute's lead
before he drained his glass,
slapped a five hundred naira
note on the bar and headed out after
him.
Next-door was standing beside a car
and passing water when Buzz came
out of the bar and began to walk
towards him. Something, a sixth sense
or primordial warning system, must
have set off an alarm, because the
moment Next-door looked up and saw
Buzz crossing the street, he cursed and
began to run, trailing urine as he sped
down the street.
Buzz gave chase but Next-door was
fast and fit and as Buzz increased his
pace to catch up, he cursed all the
cigarettes he had smoked, all the
pinched butt-ends crowding the old
glass bowl that served as an ash tray in
his room.
Next-door tore down the street,
turned the corner and leapt over a
parked car. Buzz burst out just in time
to see him crash into a couple and the
three of them fell in a heap. Buzz
increased his pace, his heart pounding
as he laboured to narrow the lead. But
Next-door was up in a flash and
running with a slight limp. He turned
another corner and burst out on
Bawala Street. Next-door jumped over
the gutter and stopped suddenly. In a
brief moment his body was
illuminated by the headlights of an
oncoming vehicle.
Buzz saw the car hit Next-door, who
flew up and rolled over the roof to land
on the road with a loud thud.
By the time Buzz reached him, a small
crowd had gathered. “Police! Police!”
Buzz said, panting and clearing a path
through the crowd. He felt for a pulse
on the bloody and bent neck, but
found none. The man was dead. Buzz
searched through Next-door's pockets
with one hand, keeping the other on
his gun, his senses alert to the eyes in
the crowd watching him. He pulled out
a wallet and rifled through it. Inside
were naira notes and call cards. On the
back of one of the cards was a phone
number and address, hand-written in
blue ink. Underneath, in a different
scrawl, someone had added Otunba
Bakare in red ink, followed by a phone
number and note in blue that said,
36
'meet Otunba at No 7 by 8pm.' Buzz
was sure Otunba Bakare was the same
Otunba who gave Nana the nccklae,
but he was not so sure that the
number in blue ink belonged to the
name in red.
Buzz pushed the wallet back into Nextdoor's pocket, palmed the card and
reached for his mobile. He dialled a
number and spoke rapidly into it. Then
he put it back in his pocket and began
to walk away.
“Hey, who go carry dis dead body?”
someone screamed, but Buzz just kept
walking.
Back at home, he set the card down on
his table and gazed intently at it, as if
by staring hard at the blue and red
scrawl, the answer he sought would
jump up and smack his forehead with
a thump.
Who was Otunba and why was he
turning up like a bad penny
everywhere he looked? Why did Nextdoor run when he hadn't even been
asked a question? What was Otunba's
name doing on a card in Next-door's
back pocket and on the pendant of a
dead woman? Still ruminating on
these and other questions, Buzz
shrugged off his sweat- drenched
clothes, stepped into the shower and
cursed when the water didn't come
spurting out. He scooped water into a
bucket from the reservoir and
showered with that, while his mind
wandered.
He slept fitfully, rising early to go to the
police station. As he entered, he saw a
young, prematurely-aged girl lying on
the bench behind the counter. She had
on heavy make up and her lipstick was
smudged. Her short skirt had ridden
up to expose blue panties. Buzz
stopped and tapped her on the
shoulder.
“How is your father?” he asked when
her eyes fluttered open.
“Wetin? Abeg leave me alone,” she
snapped, and went hack to sleep.
She was a prostitute, but Buzz had
known her years earlier when he was a
rookie cop and she was a
prepubescent teenager with a
penchant for tight clothes. Her father
was his landlord, then a hard-drinking,
skirt- chasing husband of four wives
and father of fourteen children.
Acknowledging greetings from his
colleagues, Buzz went to his desk,
opened the drawer and updated his
report, adding details of the chase and
the fatal crash that claimed Next-door,
but leaving out every reference to
Otunba. No need to get thrown off the
case. Then, he checked his gun,
holstered it and, picking up the card,
set out for Oyadiran estate in Yaba, the
address on the card.
Buzz asked the okada man, the driver
of one of the ubiquitous second-hand
bikes that serve as quick
transportation for many Lagosians, to
FEBRUARY, 2012
let him off four houses away from
No. 387. Then he walked all the way
down the street before sitting at a
mallam's shed and ordering
cigarettes, even though he had a
pack in his jacket. Pulling his fedora
down over his eyes, he smoked
slowly while his eyes focused on a
house with a small black gate. it was
an insignificant house, made more
prominent by the very reason of its
insignificance. It looked out of place
in the midst of the stately, wellappointed houses that lined the
quiet street, occupied mostly by
expatriates and Indian merchants.
It was the kind of house that
seemed to scream out a
silent warning, the kind of place
where people entered and never
came out again. The gate was set
into a corner of the wall and
someone had defaced it with a
deranged scrawl that started with
an F and ended with what looked
like a k.
Buzz sat and waited for the length
of time it took for him to smoke six
cigarettes and watch two men, one
short and bushy haired, the other
tall and gangly, park an old
Mercedes Benz outside and
disappear through the gate.
Buzz waited until they came out
again. Then he dialled the number
on the call card, and to his surprise,
the short man answered on the
second ring. Buzz ended the call
and dialled again just to make sure.
This time he let it ring and then
heard the gruff voice say, “Haba,
who is
this?” the
questio
n
car
rying across the
road to him.
Buzz ended the call again and began
walking, his eyes scanning the road
for an okada, as he heard the old
Benz cough to life and begin to
move. The Benz was already about
one hundred metres away when he
found a bike.
“Quick. Follow that Mercedes.”
Buzz was just in time to see the Benz
turn off at Atan cemetery and head
towards Customs.
“Just go slow, no run too much,” Buzz
told the okada man as he handed him a
two hundred naira note. The Benz burst
out at Abule-Oja, drove all the way to
the Unilag gate and turned left towards
Akoka. At Pako, the driver turned left
and then made a series of turns until
they were at Fola Agoro.
When the Benz came to a stop, the
short man got out and went to a tyre
shop. He spoke to a beefy man who was
naked from the waist up. Buzz paid the
okada man and watched as they spoke.
Then, when the short man returned to
the car and the car started moving, Buzz
hailed another bike and gave chase.
As the car meandered through the
crowded streets of Shomolu with its
many printers' shops, Buzz had an
overwhelming feeling that he knew
where the Benz was heading and he
gave himself a mental pat on the back
when it came to a halt in front of No. 7.
As Buzz watched the men go into the
bar, he knew at once that this was
where the story was meant to end
because this was where it had all
begun. He paid the okada man and
reached into his jacket to check his
holstered gun. Satisfied, Buzz crossed
the road and approached the bar.
The gate was open. Buzz checked to see
that there was no-one at the door. Then
he entered the compound, pushed the
door open slowly with his right foot and
edged into the dimly-lit space.
He made out three men as his eyes
adjusted to the barely-lit interior. There
was the barman looking cowed as he
stood in front of the two men.
The tall, thin one was
seated, a cigarette
burning between his lips,
while the short one had a
gun in his hand.
“Otunba, make I waste this
guy? He is lying to us,” the
short man said, waving the
gun around like someone high
on very cheap drugs.
“Tell us the man name and we
go leave you alone,” the Otunba
said in a wheezy voice.
“I no sabi the man name. E come
here and e ask for Mr. Next-door.
The first night, e no see Mr.
Next—door, then the day wey e see
Mr. Next-door na im we hear say car
don kill Mr. Next-door.”
'The man come here two days and you
no sabi im name?” the Otunba asked
and the barman nodded.
“E no ask my name and I no ask im
name,” the barman lied.
Excepted from Night of the creaking
Bed, A collection of short stories, by Tony
Kan, Published by Cassava Republic Press,
2008
AFRICA OIL + GAS REPORT
38
FEBRUARY, 2012
AFRICA OIL + GAS REPORT