London Stock Exchange listed Afren Plc and its indigenous partner, Amni International Petroleum Development Company, continue their success story with the commencement of production from their Okoro Field Extension, offshore south east Nigeria, some 9 months after the initial discovery in the new field extension. Production from the field has stabilised at the rate of 5,000 barrels of oil per day (bpd) making it the most prolific well on the Okoro field to date. With this new field, the total production from the Okoro fields now stands at approximately 21,500 bpd.

The well was drilled by Afren from its existing Okoro main field and was completed and brought onstream via their existing Okoro floating production storage offloading vessel (FPSO). The Adriatic IX drilling rig has now returned to Ebok field after completing the work on the Okoro Field extension. Afren is putting the rig to work in the Ebok field where it is hoping to also bring in early production following the discovery in the Ebok North Fault.

According to the company: "This is clear evidence that we are creating tangible value and volume growth from our ongoing exploration drilling campaign, and further testament to the Afren team's fast track development capabilities."  

The Okoro field is located in OML 112 in shallow water offshore Nigeria, and was originally awarded to Amni - an established indigenous oil company - in 1993 as part of the Nigerian government's indigenous licensing programme.

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Fresh facts have emerged in the race for the ConocoPhillips assets. Nigeria's integrated energy solutions provider, Oando Plc appears to be leading in the battle for the acquisition of the Nigerian assets of United States oil major, ConocoPhillips.

NOGintelligence gathered that a consortium formed by Transcorp Plc and the Midwestern Oil and Gas, is also in the race with Seplat Petroleum Development Limited.

Conocophillips recently unveiled plans to sell all of its Nigerian assets including on-shore and off-shore oil and gas fields and a stake in the Brass Liquefied Natural Gas (LNG) project in Brass Island in Bayelsa State.

The Nigerian National Petroleum Corporation (NNPC) holds 30 percent equity in Brass LNG, while Bayelsa State government has 10 percent. ConocoPhillips; French firm, Total and Italian company, Eni hold a 17 percent stake in Brass LNG. LNG Japan has 4 percent; Itochu Corporation three percent, and a joint venture between Nigerian indigenous company Sahara, and France-based Sempra Energy holds two percent. The shareholders have vowed to push ahead with the  Final Investment Decision (FID) of the two-train, 10 million metric tonne per year (mmt/y) Brass Liquefied Natural Gas (LNG) project despite plans by ConocoPhillips to sell its stake in the asset.

ConocoPhilips also plans to sell its 20 per cent stake in the ENI operated Oil Mining Lease (OMLs) 60, 61 62 and 63, which deliver between 90,000 and 100,000 barrels of oil equivalent per day.

A source familiar with the deal told NOGintelligence that Oando submitted a bid worth about $1.3billion; while the Transcorp/Midwestern consortium and Seplat submitted bids less than $.2billion each.

NOGintelligence also learnt that a committee was evaluating the bids submitted by the three indigenous giants and their capacities to pay.

Oando has interests in four licenses and has a 40% and 95% working interest in OML 13 (Qua Iboe) and Oil Prospecting License (OPL) 236, which are currently near term and exploratory assets respectively. The company is also a Nigerian Content Partner with AGIP Oil in OPL 282. Following the reverse takeover of Exile Resources, Oando Plc owns 94.6% of Oando Energy Resources which recently listed on the Toronto Stock Exchange.  

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The nation's crude oil production is back to normal levels following the disruption to operations caused by the flooding. According to the Department of Petroleum Resources (DPR), production is nearly back to pre-flood levels standing at about 2.3 million barrels per day (bpd). At one stage during the peak of the flooding, production dropped by up to 500,000 bpd.  

In August, NOGintelligence reported that the nation's crude oil production had peaked at an all-time high of 2.7 million barrels per day, the first time Nigeria achieved such a high output since production began more than 50 years ago.  

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The price of OPEC basket of twelve crudes inched up to $106.12 dollars a barrel on Tuesday, compared with $105.97 the previous day, and $105.94 a week previously, according to OPEC Secretariat calculations.

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). 

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OPEC oil output rose from 31.09 million barrels of oil per day (bpd) to In September to 31.15 in October. This was in spite of the decline in Nigerian production partly as a result of the floods that have devastated some of the main oil producing areas of the country and also due to oil theft. The floods led Shell to declare force majeure on its Bonny and Forcados grades. At the same time, Total had to suspend some of its onshore production.  

Nigeria's oil sales fell from 2.05 million bpd in September to 2 million bpd in October according to OPEC sources. However, the calculations do not apply to sales from storage.

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In a bid to reposition the Nigerian National Petroleum Corporation (NNPC) and its key Strategic Business Units, the management of the corporation has sacked the Managing Directors for the Port Harcourt Refining Company (PHRC) and Warri Refining and Petrochemical Company (WRPC).  

It also approved the appointment of new managing directors for the ailing refineries. The new Managing Directors are Mr Ian Udoh for PHRC and Mr Paul Obelley for WRPC. Announcing the changes, Acting Group General Manager, Group Public Affairs Division of NNPC, Mr. Fidel I. Pepple, said a number of other management staff were also promoted while others were redeployed.

He named some of those who were promoted and these include Farouk Ahmed formerly Executive Director in charge of Commercial at the Pipeline Products and Marketing Company (PPMC), now managing director of Nigeria-Daewoo Shipping Company (NIDAS). NIDAS is a joint venture between Daewoo Shipbuilding & Marine Engineering and NNPC. NNPC holds 51% of the joint venture, and Daewoo holds the remaining 49%.

Also promoted were Mr Samuel Babatunde, formerly Executive Director Operations of the Warri Refining and Petrochemical Company, now Project Director Olokola Liquefied Natural Gas Project; Mr Abdullahi Dandume formerly Executive Director Operations, NNPC subsidiary, Nigerian Engineering and Technical Company (NETCO), now Managing Director NETCO.

The list also includes Aliyu Z. Sambo who was General Manager M&P and now becomes Group General Manager Accounts and Aholu Don Beks who has been promoted to Group General Manager Information Technology Division from his previous position of General Manager Information Services Department.   

Also promoted are: Dr. Edwin Bako as Group General Manager Medical; Mr Sylvester Idemudia as Group General Manager (GGM)Greenfield Refineries, and Okhes K. Jonathan as GGM Power, Benjamin Obaigbena as GGM Research and Development and Dan Efebo as GGM Human Resources.

Those who were redeployed include Gabidon Meheux formerly Senior Technical Assistant to the Honourable Minister of Petroleum Resources, now Managing Director, NNPC Services; Chris Osarrunwese formerly Group General Manager Human Resources, now GGM Downstream Business Development; and Engr, Bayo Ibirogba formerly GGM Greenfield Refineries, now GGM Engineering.

The appointments take effect immediately.

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At the recently concluded Global Gas Flaring Reduction Conference in London, Mr Gbite Adeniji, an oil and gas lawyer, has predicted that setting up small-scale projects at gas flare sites will reduce flaring.  

Mr Adeniji said the country has approximately 180 tcf of proven natural gas reserves - the 9th largest globally and the largest in Africa: He explained while we are still lagging behind in associated gas utilisation: "A large portion of the country is poorly served with infrastructure. Fiscal regimes have been counter-productive, with pricing barriers. As a result, there has been very limited gas penetration with 65% of gas production flared."  

In his presentation, Mr Adeniji described journey to gas flare reduction in Nigeria starting with the Drilling and Production Regulations which was promulgated under the Petroleum Decree in 1969. It provided that licensees must produce a plan for gas utilization within 5 years of operation. In 1973, production of associated gas was exempted from royalty payment, with the Government reserving the right to take gas at the flare free of cost. In 1979 a deadline of 1st of January 1984 for outlawing gas flaring was set. It came and went without any advancement in the policy. Then the stick approach came in with a penalty of 2 kobo per Mscf whichhad little impact. In 1990, the penalty was increased to 50 kobo.  

In1992, fiscal incentives for gas utilization were introduced under the Associated Gas Framework Agreement. In 1998, the gas flaring penalty was dramatically raised to N10 per Mscf. Then in 2007 under an industry and Government initiative flaring was to be outlawed by the 1st of January 2008. This date again came and went without incident, although in 2009, the National Domestic Pricing and Supply Regulations introduced a new flare penalty, this time in a punitive $3.50 per mmbtu.

Following some policy and regulatory reform proposals in 2004 and 2005, the Nigerian Gas Master Plan was finally unveiled in 2008. Under that plan, a new National Domestic Gas Pricing & Supply Policy was introduced and the National Domestic Gas Pricing & Supply Regulations were brought in. The new rules to address gas flare down required that new projects be designed and operated on start-up without continuous flaring. Permission would no longer be granted for gas flare in new projects. No permission for the utilization of non-associated gas would be granted whilst the associated gas was being utilized in the concession. The Regulations also brought in the punitive penalties of $3.50 per mmscf for gas flaring.  

Mr Adeniji advocates supplementing the carrot and stick approach with the following measures to ensure gas flare down:

• A domestic gas supply obligation
• Unprecedented funding for upstream gas projects and new gas transmission infrastructure
• World Bank Partial Risk Guarantees to underpin gas sale to the power sector
• Fiscal incentives and anti flaring penalties to supplement the "carrot & stick" approach to gas flare down
• Accession to the Kyoto Protocol

Mr Adeniji recognized that there is a growing utilization of natural gas with a number of projects already undertaken (such as the Nigerian Liquefied Natural Gas Projects/Escravos Gas - to Liquids and a number of others) and several others (fertiliser plants/methanol plants/gas transmission projects/petrochemical plants/Gas processing plants/gas re - injection) in development or at an advanced stage. He also predicts exponential demand from the power sector following reforms in the electric power sector and the development of several new power plants by the Government.

Gbite Adeniji blieves that the trend for increasing utilization of natural gas (instead of flaring) will continue as the effects of the de-bottlenecking of the sector barriers improve. However, he feels that something more than just the "carrot and stick approach" is required, because, without more, there will be no disincentive to flare. According to him: "The evidence shows that a comprehensive approach to tackling the barriers and the creation of a climate for investment in the sector is what ultimately works to reduce the flares".  

Mr Adeniji is calling on investors to bring small scale LNG, LPG and methanol industries to gas flaring sites to end the wasteful process of gas flaring. "I expect to see new investors in Nigeria coming to develop a number of small scale projects at gas flare sites," he said.

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