South African independent upstream company, SacOil has obtained some 3D seismic data over its OPL 233 joint venture. SacOil obtained the data from Chevron who acquired it whilst it was mapping a neighbouring area. The company hopes that the data will reveal additional prospectivity to Olobia West, a prospect which had previously been identified. The company will produce a resource estimate once it has completed its analysis of the new data.

SacOil is dually listed on the Johannesburg Stock Exchange (JSE) and the Alternative Investment Market (AIM) in London.

Back to top 

The Gas-fired Captive Power Project which is expected to guarantee uninterrupted power supply to the Port Harcourt Refinery is to be stepped up. The project by Genesis Electricity Limited (GEL) in partnership with General Electric (GE) is to be fast tracked according to the Regional Sales Director, Middle East Africa, of GE, Mr Cees-Jean de Maaker. He said this during a courtesy call on the Group Executive Director, Refining and Petrochemicals, Nigerian National Petroleum Corporation (NNPC), Anthony Ogbuigwe.  

Mr de Maaker affirmed the readiness of the partners to ensure a reliable and qualitative power supply to the refinery. He also stated that GE was excited to be partnering with such a strong local company as GEL and that his company was fully committed to providing technical support on a long term basis in order to guarantee efficient operation of the refinery. GEL is a subsidiary of NNPC.  

Back to top 

OPEC daily basket price stood at $107.08 a barrel Wednesday, 3 October 2012 after falling from $109.32 the previous day, according to OPEC Secretariat calculations. The basket price has climbed overall from $106.84 last week Wednesday.  

Introduced on 16 June 2005,  the new OPEC Reference Basket is currently made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela). 

Back to top 

Reuters reported on Wednesday that Indian state-run Bharat Petroleum Corp (BCPL) is to buy 10,000 barrels per day of Nigerian crude oil from Chevron in a term deal that will run till 31st of March 2013.  

According to Reuters sources, Chevron will supply light sweet crude to BPCL at the official selling price. BPCL which normally buys its crude on the spot market is now more interested in term deals and may be looking for a term contract for a higher volume from Nigeria next year.

BPCL operates two refineries in India, one in Mumbai and the other in Kochi. The Mumbai refinery processes 12 million metric tonnes of crude oil a year while the Kochi refinery has a capacity to handle 9.5 metric tonnes of crude a year, about 190,000 barrels per day.

Back to top 

With petroleum queues growing, the Department of Petroleum Resources (DPR) is now threatening to withdraw the licence of any marketer found to be selling fuel at above the government-approved price of N97 per litre. The DPR was forced to speak out as some try to make a quick profit out of the difficult situation.  

The Director of the DPR, Austin Olorunsola, said: "Any marketer who fixes arbitrary prices shall be sanctioned and the affected facility will be shut down and the operating licence withdrawn."  

He said that products must not be sold from a depot without the issue of receipts. He continued: "All marketers buying products from depots should be issued with certified receipts of purchase indicating the quantity of products purchased and the prices."  

The Director was responding to complaints about racketeering by marketers who were selling above the fixed price.

Back to top 

Shell has shut down a pipeline in Bonny after a fire caused by oil vandals. This resulted in a deferral of 150,000 barrels of production on Monday. According to the company it has shut the 28-inch Bomu-Bonny Trunkline after discovering the fire. In its statement, the company said it would carry out an investigation immediately to discover the cause and carry out repairs to the pipeline.  

Shell has previously suggested that about 150,000 bpd of oil is being lost to oil thieves and pipeline vandals. The company said in a statement that "A burning vessel, thought to be involved in the theft of crude oil from the line, was sighted near the incident site. The line conveys crude oil to Bonny Terminal."

Back to top 

Up to 20 people are believed to have died after a pipeline caught fire. The pipeline carrying petroleum products had been vandalised and, as a result, the fire in the pipeline running through a village in Abia State engulfed those who had gathered to collect the refined products.  

This tragedy is not a rare occurrence with oil companies complaining that they are losing 150,000 barrels of oil per day due to oil pipeline vandals who try to tap into the pipelines to divert the oil. As a result pipeline ruptures remain common and the fires continue to occur.

Back to top 

Dually listed Oando Plc is going back to the market, this time to raise N35 billion. The company, which has recently been shortlisted as one of 21 bidders in the power distribution race, previously raised N21 billion in 2010 from the capital market.  

The company has notified the Nigerian Stock Exchange (NSE) that it is looking to raise N35 billion through a rights issue. The money will enable it to shore up its debt position whilst at the same time enabling it to fund its ambitious plans for upstream expansion.  

The Chief Executive of Oando Plc, Wale Tinubu said of the proposed rights issue: "In today's challenging conditions in the downstream sector, we are enhancing our capital structure and reducing our debt to better position the Group to execute on its Exploration and Production growth strategy."

Ondo E&P spinoff, Oando Energy Resources, is now listed on the Toronto Stock Exchange. 

Back to top 

ERHC Energy intensifies fundraising efforts for Africa programme     

The shareholders of quoted Houston-based oil and gas company, ERHC Energy Inc have shown their support for the company's proposed fundraising effort. ERHC is seeking formal shareholder approval of an increase in the Company's authorised share capital as it raises funds for exploration programs in the Company's highly prospective acreages in East, Central and West Africa.

President and CEO Peter Ntephe said: "We are enthused by the level of support so far from our shareholders and exhort those who haven't voted to do so in advance of the closure of voting and announcement of final tallies next week."  

"Our ambitious exploration plans are intended to enhance shareholder value, an objective which we expect our shareholders will embrace."  

The ERHC's management and Board have recommended an increase in the number of authorized shares of Common Stock from 950 million shares to three billion shares and to authorize the Company's Board to create and issue preferred stock.

ERHC currently has oil and gas exploration interests in Kenya, Chad, the Sao Tome and Principe Exclusive Economic Zone (EEZ) and the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ). In the JDZ, ERHC holds working interests in Blocks 2, 3, 4, 5, 6 and 9.

In the statement, Chrome Group chairman, Sir Emeka Offor said: "Chrome Oil Services Ltd. and Chrome Energy LLC are in favor of giving ERHC's management and board the financial flexibility needed to realize the value of the Company's highly prospective assets."

"ERHC has done a commendable job of diversifying its portfolio of assets and we at Chrome believe that shareholder value, which is our overriding concern, can be derived from facilitating the Company's exploration programs and ambitious growth plans."

Back to top 

The Petroleum Club in Lagos hosted a gathering of oil and gas professionals at which Mark Ward, Managing director of Mobil Producing Nigeria presented the industry operators' view of the PIB. He was speaking as chair of the Oil Producers Trade Section (OPTS).

Having reviewed the PIB extensively, Mr Ward said the OPTS could not see any new deepwater projects or gas projects going forward on the basis of the PIB that was presented to the National Assembly. He called on the government to balance increased take with investment viability in the interests of encouraging investment.

Mr Ward stressed that the industry supports the Federal Government aspirations for the petroleum industry. He mentioned how the industry had contributed over the years to achieving those aspirations. For example, he said, gas production had tripled over the last six years, with plans to invest $30 billion over the next five years. In addition, two independent power plants, Afam and Okpai had been built whilst deepwater production had reached 850,000 barrels per day with plans to invest some $39 billion and $23 billion respectively in the Production Sharing Contracts (PSCs) and Joint Ventures (JVs).  

The industry was also providing significant jobs to Nigerians from contracting organisations, and these jobs were being leveraged to impact the broader economy. He said that for every $1 million invested, the direct broader impact was $4m, whilst the indirect impact was about $6 million. That means that every $1 million has the potential to achieve a $10 million impact.

Mr Ward went on to outline the issues that the industry is facing, making the point that the PIB should be addressing them in order to encourage investment. The main issues were the funding constraints of NNPC, the lengthy project and contract approval cycle, under- developed gas to power infrastructure, unresolved contractual issues, security concerns, vandalism and bunkering as well as the global escalation in costs.

Turning to the production cycle of a field, he pointed out that declining production means that there will be a 43 per cent decline in production by the year 2025 if new investment in the industry is not forthcoming. On the other hand, with proposed industry investment of $104 billion, production would rise by about 71 per cent in the same period. He stressed that the figure was based on business plans of the oil industry right now and not conjecture.

Once again, Mr Ward stressed that the PIB as drafted would mean that the federal government aspirations would not be met.  

Go to our website www.NOGintelligence.com for more of Mr Ward's speech. 

Back to top 

Whilst the oil producers are complaining that the tax terms are uncompetitive under the PIB, the Minister of Petroleum, Diezani Alison-Madueke, has defended Government's proposed revenue from deep offshore projects. Taxes and royalties are going up to 73 per cent from about 61 per cent previously.  

The Minister defended the Government take, saying that they are "competitive and considerate" when compared to what obtains in other parts of the world, such as Norway, Indonesia and especially Angola, which has an even higher Government take.

The oil companies are, meanwhile, saying that the taxes are so high that they will stifle investment in the industry. Their argument is that the fiscal terms should take into account the increased risk and consequential costs of operating in Nigeria, including kidnapping, piracy and oil theft. Shell has previously complained that it is losing up to 150,000 barrels a day from oil theft.

The two Houses of Parliament have completed their first reading of the PIB. The bill was read in the House of Representatives last Thursday while Senate had its own reading before that.

Back to top