The FT Nigeria Oil and Gas Report 2013 is scheduled to come out on Monday 6th of May and will be distributed at OTC and to the Nigerian exhibitors there.

To find out about advertising opportunities  contact Mr Toke Ibru:

tokeibru@hotmail.com  

1. Visit our archive to read back issues if you have just joined so that you can catch up on all the news you've missed. 
2. Send us your press releases. Click here to contact us and also add our email address: newsdesk@nogintelligence.com to your mailing list.
3. Email newsdesk@NOGintelligence.com to let us know about your events and we'll list them free of charge!
4. Visit our website www.NOGgintelligence.com for more up to the minute news updates and special features. 
5. Advertise your company's services and reach thousands of oil and gas industry executives and professionals. Email advertise@NOGintelligence.com NOW to secure the best position in our newsletter.
6. Add our email address remi.aiyela@NOGIntelligence.com to your address book so every issue of your NOGintelligence lands in your in box and not your spam folder.
7. FORWARD this email to at least one colleague using the forward button at the top. They'll be glad you did! 

Petrobras To Sell $5bn Nigerian Oil Assets 

In a move widely interpreted as a clear departure from foreign markets and considered strategic in realising the Brazilian government's aspiration for the country to become self-sufficient in energy, the country's state-owned oil company, Petrobras is planning to sell its stakes in Nigerian oil fields to raise cash for domestic projects.

The state-controlled company, formally known as Petroleo Brasileiro SA, has hired Standard Chartered Bank to manage the deal that may fetch up to $5 billion, sources close to the deal informed the Reuters news agency.

Asian oil majors are said to be watching the development with interest, a move that could see an increase in their presence in the Delta region, given their interest in accessing producing assets as a way of gaining securing crude oil supplies. Private equity funds are also interested, banking sources said.  

Petrobras will sell its 8 per cent stake in the Nigerian offshore Agbami deepwater field, which is operated by United States energy firm Chevron and its 20 per cent share of the offshore Akpo field.  

The giant Agbami Field is one of the largest deepwater oil offshore discoveries in Nigeria with estimated reserves of 900 million barrels. Crude oil production began from the field in 2008 with a peak production of 250,000 barrels per day (bpd). The cornerstone of the development is one of the world's largest floating production, storage and offloading (FPSO) vessels. Key components of the FPSO were fabricated in Nigeria, setting a benchmark for using Nigerian goods, labor and services. Agbami represents not only a new source of energy supply, but also provides employment and economic opportunities for Nigeria.

Akpo, which began production in 2009 is located 200 kilometres offshore Nigeria in Oil Mining Lease (OML 130) in water depths ranging from 1,250 to 1,480 meters. Its proved and probable reserves are estimated at 620 million barrels of condensate and more than 28 billion cubic meters of gas. With its huge gas reserves, the field has been described as a gas field with oil. It produces to a 310-meter-long, 61-meter-wide and 31-meter-high FPSO weighing 100,000 metric tons and designed to process 185,000 barrels of condensate and 15 million cubic meters of gas a day and to store up to two million barrels of condensate.

Petrobras, which began operations in Nigeria in deep waters off the Niger Delta coast is divesting the assets in a bid to concentrate on exploration and production closer to home. It is now trying to raise funds for the $237 billion that it is expected to spend on developing domestic oil and gas assets. The company's cash flow has been hampered by the fact that it is subsidising local consumption of gasoline and diesel, which the Brazilian government is keeping artificially low through government subsidies.

Petrobras is expecting to help Brazil become self sufficient in oil and gas, as well as refined products. It hopes to double its current oil and gas production within a few years to about 5.2 million barrels of oil equivalent a day.

Following the divestment, it is reported that the company will focus on exploration off the coast of Brazil in the subsalt region. The deep sea region is thought to contain  billions of barrels of crude oil.

It is not yet known whether the assets will be sold piecemeal or in one lot.

International oil and companies (IOCs) have been divesting their onshore assets in Nigeria in the last two years or so, a move that is reported to have yielded them over the $7 billion. Last year, the ConocoPhillips Nigerian assets were sold in one large lot, netting the company $1.8 billion.

Italian energy major ENI said on Saturday it had suspended its activities in the Swamp Area in Bayelsa State in southern Nigeria and ordered the closure of its onshore activities in the State.

The company said the decision was made due to the intensified bunkering it was experiencing, consisting of the sabotage of pipelines and the theft of crude oil. They said the levels have now reached unsustainable levels regarding both personal safety and damage to the environment.

The company, which has been in Nigeria for over 50 years, has over 154,000 barrels of oil per day (bpd) production of although in the Swamp Area, covered by the declaration of force majeure, its production is about 35,000 to 40,000 bpd. The company said the level of theft and losses due to the sabotage had now reached up to 60 per cent of its production.

"The decision was taken due to an intensification of bunkering activities, or sabotage of the pipelines," the company said in a statement.  

The loss to the Nigerian nation due to oil theft has been estimated at around $7 billion a year. The oil theft is reported to have reached unprecedented levels and is reported to be conducted by highly organised gangs.

Shell has announced that it will shut down the 150,000-barrel-a-day Nembe Creek oil pipeline temporarily in April to clear illegal oil tappings on the line.  The shutdown, comes after the Country Chair of Shell Companies in Nigeria, Mutiu Sunmonu, warned that he might shut the pipeline permanently if the level of illegal connections to the pipeline continues.  

In a press briefing, Jurgen Janzen, a pipelines asset manager at Shell Petroleum Development Company (SPDC) said the temporary shutdown illustrates the deepening impact of oil theft on the Nigerian industry and is Shell's response to the increasing numbers of illegal taps designed to steal oil from the pipeline.

"In the coming April, we will shut down the entire Nembe Creek Trunk Line to remove tapping points for an estimated nine days," he said.  

The pipeline, located in the Eastern part of the Niger Delta, normally transports 150,000 barrels of crude oil owned by SPDC, but is also used by third-parties.  The 97 kilometre Nembe Creek trunkline collects crude oil from 14 oil pumping stations across the Nembe Creek, Krakama, Awoba, Ekulama and San Bartholomew oil fields and transport it to the Cawthorne Channel field and Shell Petroleum Development Company (SPDC) of Nigeria's Bonny Export Terminal for dehydration and export.

Mr. Janzen said the Shell joint-venture is now losing 60,000 barrels a day to oil theft, an increase from 50,000 barrels a day previously. "Since the beginning of this year, it's going up again." Speaking of illegal tappings on the oil pipeline, he said that there were "at least 90 still in the system now that we are aware of."

The Nembe Creek pipeline was refurbished just over 2 years ago at a cost of about $2 billion. It was the largest single project under the SPDC joint venture's asset integrity programme that has replaced more than 1,000 km of major pipelines and flowlines in the last five years.

The project involved the construction of three sections of pipeline including 5 km of 12 inch diameter pipeline from the Nembe Creek III manifold to the Nembe Creek tie-in manifold; 44 km of 24 inch diameter pipeline from Nembe Creek to San Bartholomew; and 46 km of 30 inch diameter pipeline from San Bartholomew to Cawthorne Channel.

The installation required six major river crossings, the longest being approximately 1.1 km. Another 44 river and creek crossings of various sizes required extensive dredging activities, and the fabrication and site installation of one main tie-in manifold, six block valve platforms, four pig traps and associated piping.

Mr Janzen said the illegal refineries which, some say are refining about 150,000 bpd, are so inefficient that 70% of their oil is wasted and ends up contaminating the environment. A flyover of the area shows the environmental degradation caused by oil spills. Environmental activists insist that majority of the oil spills are caused by the use of aged and equipment rather than illegal taps.

Governors of the northern States are hoping that the search for oil in the north will gather pace in 2013 after the Federal Government confirmed that is earmarking $100 million for exploration for oil and gas this year in the Lake Chad and other northern hydrocarbon basins. This was disclosed during the Northern Economic Summit at which the Chairman of the Northern Economic Summit, Professor Jerry Gana, reported on the economic progress of the group since its last summit two years ago.

The sum is an increase on the $70 million, which the Federal Government budgeted for each of 2011 and 2012.  

Reporting on the progress of work on exploration in the area, Professor Gana said: "In 2011, NNPC had, through its technical consultants, concluded the search, evaluation and identification of capable Airborne Geophysical Survey companies for hydrocarbon exploration of the inland basin of Nigeria."

However, according to industry experts $100 million will not achieve very much in view of the vast area that is to be explored. Acquisition of 2D seismic, together with the processing and interpretation of the seismic is likely to cost somewhere around $45,000 per kilometre, meaning that the entire sum will only enable the acquisition of less than 2,500 kilometres of 2Ds.  Moreover, drilling a well will cost somewhere between $25 million and $30 million so you could only drill 2 or 3 wells with that sum.

Professor Gana remains optimistic, saying that the government is in the process of awarding contracts for airborne gravity, magnetic and electromagnetic exploration surveys of the basins.

A subsidiary of the Nigerian LNG Limited, Bonny Gas Transport (BGT) has signed a ship-building contract worth $1.6billion with South Korea's Samsung Heavy Industries and Hyundai.

The deal, which was sealed in London involves the construction of six new vessels for BGT. The Acting General Manager, External Relations, BGT, Dr. Kudo Eresia-Eke, said about the deal: "The six vessels, four from Samsung and two from Hyundai, which have a combined capacity of 1,053, 000 cubic metres, will increase BGT's overall shipping capacity by 17 per cent."

"The new ships, which will replace BGT's six oldest vessels were ordered through retained earnings from BGT, additional borrowings from an existing facility and new vessels debt provided by a combination of Korean Export Credit Agencies, international, regional and local commercial banks," he added.

He said the tankers would be delivered over a period of nine months from October 2015 to June 2016.

The deal, according to him, entails BGT supporting more development of Nigerian content through the utilisation of local manpower, services and materials in all elements of the value chain in support of LNG's commitment to increased local productivity.  

"This is in advancement of government's aspiration to increase the country's participation in the maintenance and repair of large ocean going vessels," Eresia-Eke said.

BGT was established in 1989 to provide shipping capacity for NLNG projects. It directly owns 13 of the 24 vessels, which deliver liquefied natural gas for Nigeria LNG to customers across the world. The remaining 11 vessels are owned via long-term leases.

The company had said last year it would seek international loans to expand the operations of its shipping subsidiary, Bonny Gas Transport Limited, which has 24 LNG ships. It was said to be seeking a $1.6 billion loan, which France's BNP Paribas and Guaranty Trust Bank Plc were brokering to fund the acquisition of the new vessels. A bank industry source had previously hinted that the loan would be medium-to-long term, with the deal expected to be sealed by the end of March.

NLNG is a Nigerian joint venture company whose shareholders are the Nigerian National Petroleum Corporation - 49 per cent; Shell Gas B.V. - 25.6 per cent; Total LNG Nigeria Limited - 15 per cent; and Eni International - 10.4 per cent. NLNG was set up more than two decades ago to harness Nigeria's natural gas resources and produce liquefied natural gas and natural gas liquids for export.

OPEC Daily Basket Price Stood At $106.79 A Barrel Wednesday 27th March

The price of OPEC basket of twelve crudes stood at $106.79 a barrel on Wednesday, compared with $105.86 the previous day.

Meanwhile, Reuters has revealed that OPEC output is down to a 16-month low. According to shipping data and other sources, crude oil supply from OPEC is set to average 30.18 million barrels per day (bpd) for March, down from 30.42 million bpd in February. The report is putting the drop in supply partly down to the force majeure declaration for part of the month after the Nembe Creek pipeline leak.  

The progress of the Petroleum Industry Bill remains on course with the inauguration of the Senate Joint Committee on the Petroleum Industry Bill (PIB) in Abuja. The Joint Committee, which was inaugurated by the Senate President, Chief David Mark, will be co-chaired by Senator Dahiru Umaru and Senator Emmanuel Paulker who already serves on the Senate Committee on Petroleum Upstream.

The Senate Joint Committee on the PIB includes the Senate Committees on Petroleum Resources (Upstream and Downstream), Gas, Legal and Judicial Matters and Human Rights.

Speaking at the inauguration, Senator Mark said: "We are taking this Bill seriously. The world is changing so fast. So is the petroleum industry. This is not a new Bill but a review of the Bill to meet with international best practices."

He called on Nigerians to co-operate with the committee by coming forward with suggestions, advice and recommendations for moving the industry forward. He said: "Nigerians are patriotic enough to know that what we are doing is in the best interest of all Nigerians. We have to update the Bill so that we can encourage investors. The Bill is a win-win situation for all the parties involved."

He stressed that the Bill must show transparency in the industry so that investors can see that they will get a return on their investments.  Senator Mark also stressed the need to explore other parts of the country not just the Niger Delta. He said that the Bill would open up the industry and attract new investors.

The joint committee is expected to take six weeks to submit its report to Senate.

NNPC's $5.6 Billion Pipeline Protection Contracts To Be Probed

As the House of Representatives' Committee on Finance battles the Nigerian National Petroleum Corporation (NNPC) over allegations of failure to remit certain funds to the Federation Account, the national oil company is in fresh trouble over the award of contracts worth N5.6 billion for the protection of pipelines to some private companies, some believed to be owned by ex-Niger Delta militants.

Consequently, the House of Representatives has mandated its Committees on Interior, National Security and Intelligence as well as Petroleum Resources (Upstream) to conduct an investigation into the oil pipeline protection contracts NNPC awarded to firms linked to ex-militants from the Niger Delta.  It was not clear if the controversial oil pipeline protection contracts under investigation involve the one awarded to Global West Vessel Specialist Limited (GWVSL), a firm believed to be owned by a former leader of the Movement for the Emancipation of the Niger Delta (MEND), Chief Government Ekpemupolo, popularly known as Tompolo. The contract is said to be worth $103.4 million for the supply of 20 vessels to secure the waterways.  

The pipeline protection contracts were awarded to ex-Niger Delta militants in a deal meant to solicit their cooperation and provide jobs for them after they had accepted the Federal Government's amnesty in 2009.  However, law-makers believe the contracts have failed to achieve their objective as oil theft and illicit bunkering in the region have been on the increase in recent months.   

They now accuse the Federal Government of awarding the contracts to security firms through NNPC in spite of the fact that the responsibility of pipeline protection falls under the purview of the Nigerian Security and Civil Defence Corps (NSCDC).   

In a motion sponsored by Hon. Robinson Uwak (PDP/ Akwa Ibom), the lawmaker said the action was a violation of the NSCDC Act 2003 and amounted to an encroachment on the statutory responsibility of the NSCDC.   

Senator Uwak said that Section 3 (1) of the Act, states: "The Nigeria Security and Civil Defence Corps (NSDC) shall maintain 24 hours surveillance over infrastructure, sites and projects of the federal, states and local governments." Furthermore, he said, the NSCDC has powers to arrest without a warrant, detain, investigate and institute legal proceedings against any person who is reasonably suspected to have committed an offence under the Act or involved in any transmission lines, or oil pipelines, Nigeria Postal Service (NIPOST) cables, equipment, water board pipes and equipment vandalism.

Uwak said that in spite of this provision in the law, the Federal Government had embarked on spending billions of naira annually on oil pipelines protection contracts.  Uwak said the contracts were in violation of the Act, insisting that the amount of money being spent on contracts could be further invested in the NSCDC, enabling them to do the job they are supposed to do.

"The huge sums of money spent in servicing the pipeline contract could be invested in funding the NSCDC to enable it carry out its statutory function rather than giving it to a private firm in violation of the law," he said.

The motion was adopted without any debate and the relevant committees given four weeks to submit the report of their findings.

Back to top 

KPMG: Investments In Oil and Gas Assets Accounted For Significant M&A Deal Value Q2&3 2013

First Bank of Nigeria Limited (FBN), United Bank for Africa (UBA), First City Monument Bank (FCMB) and Stanbic IBTC have jointly sealed a gas infrastructure financing deal worth about $225 million with Accugas Limited, a subsidiary of Seven Energy International Limited.

Details of the deal, which was sealed recently by the banks in Lagos, indicate that the facility is to be utilised towards refinancing the existing $55 million debt secured for the Akwa Ibom gas pipeline project, with the balance of $170 million to be used towards part-financing the cost of expanding its gas processing facilities and building a new gas pipeline to supply gas to the Calabar National Integrated Power Project power plant.

Speaking on the transaction, the Managing Director and Chief Executive Officer of FBN Capital Limited, Kayode Akinkugbe, said: "FBN Capital is very proud of the instrumental role it played in assisting Accugas to structure and arrange the financing for the project."

"The successful signing of this financing shows that lenders see Accugas as a robust project that will bring sound economic benefits to Nigeria," he continued.

Akinkugbe said the bank, as the global facility coordinator Bank for the project is committed to supporting innovative transactions, especially those that can open new boundaries for investment opportunities. He noted that there is a huge gap in terms of funding in Nigeria, adding that the bank is willing to be at the forefront in terms of financing developmental projects.

"We have identified Seven Energy International, Accugas as the institution we want to support. We are willing to support average innovative transactions that can open new boundaries and we have made significant strides in creating flexibility and funding for Accugas."

The Director, Head, Project and Structured Finance, FBN Capital, Patrick Okey Mgbenwelu said the bank, was determined to fund investment projects across all the sectors to enhance rapid economic growth, noting that "government cannot do it alone."

"Nigeria has a lot of gas that can be used for petrochemicals and others and if you build a power station without getting gas, it would not work," he said.

Also speaking about the deal, Executive Vice President of Institutional Banking, First Bank of Nigeria Plc, Bashirat Odunewu, said that First Bank was very proud to invest in Accugas Limited, as the project is uniquely aligned with the Federal Government's vision of harnessing the nation's immense gas reserves, and developing the country's domestic gas supply infrastructure.

The Chief Executive Officer of Accugas, Philip Ihenacho said that the Calabar project was the second phase in Accugas' gas processing and distribution development programme, aimed at bringing the substantial gas reserves from the South East Niger Delta to market to meet the growing energy demand from power plants and industrial users in the region.

The project involves the construction of a 37- kilometres gas pipeline from the Uquo gas field in Akwa Ibom state to Oron for delivery of 131 MMscf of gas to the 560MW power plant in Calabar. Construction of this new pipeline is scheduled to be completed in July 2014.

Chief Financial Officer of Seven Energy, Bruce Burrows, stated: "The completion of the Accugas financing marks a major milestone in the project's evolution. With construction of the Ibom gas pipeline Phase 1, now complete and on track to deliver gas to Ibom Power Plant from April 2013, we are now embarking on Phase 2 with construction of the Calabar gas pipeline already commenced."

Burrows commended the professional and efficient work by the FBN Capital team and other parties, and sincerely thanked all the lenders for their continued support in bringing the company another step closer to finalizing a project of huge importance to power supply in Nigeria.

Nigerian Navy Fingered in Crude Oil Theft

Monrovia, Liberia

9 - 11 April

www.africabusiness.com 

Nigeria Integrated Oil Spill Summit

Uyo, Nigeria

10 - 12 April

www.nosdra.gov.ng

Global Oil & Gas Crisis Management & Emergency Response

Barcelona, Spain 

11 - 12 April

www.3dent-media.com

2ND Africa East Africa Oil & Gas Summit

Nairobi, Kenya

18 - 19 April

www.expogr.com/kenyaoil 

21st Annual Middle East Petroleum & Gas Conference

Abu Dhabi, United Arab Emirates,

21 - 23 April

www.cconnection.org

19th Western Africa Oil/Gas & Energy Conference

Windhoek, Namibia

22 April

www.pr-inside.com

Oil & Gas Libya Exhibition & Conference

Tripoli, Libya

22 - 25 April

www.oilandgaslibya.com