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Greetings!
Welcome to our 51st issue as we all return from the annual sojourn to the Oil Technology Conference which sees the oil and gas world gather in Houston from all over the world for four days of intense networking and deal making.
We are glad that our print version distributed at OTC was a hit. A PDF version is available to download on our website www.NOGintelligence.com.
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SPDC To Test Gbaran-Ubie Gas Wells for Supply To Imiringi Power Plant
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The Imiringi Power Plant in Ogbia Local Government Area in Bayelsa State will soon get a gas boost as the Shell Petroleum Development Company of Nigeria Ltd (SPDC) tests five gas wells with a view to supplying the Imiringi Power Plant once tests are successfully completed.
SPDC, which has just released a progress report on its Gbaran-Ubie project says it is currently testing the potentials of five gas wells as it progresses implementation of the project in Bayelsa State. The exercise, which began two weeks ago involves brief simulated production to determine the potentials of the wells and flaring of released gas in isolated locations.
The company says that once the tests are completed the wells will be hooked up to the Gbaran
-Ubie central processing facility which will process the gas for domestic and export markets with the Imiringi gas turbines as one of the main recipients.
SPDC stressed in its statement that it had engaged the local communities before commencing the well tests. Project lead Gbaran- Ubie Phase 2, Calistus Iwu said: "The testing of the gas wells is standard international practice and the exercise will last about four weeks. As we explained to the communities, the flares from the tests for each well typically lasts only a few days."
The company credits the Gbaran-Ubie project with helping it to significantly reduce operational flares in Gbaran, Kolo Creek, Etelebou and Zarama since it achieved first oil/gas in June 2010.
News of the Gbaran-Ubie progress comes hot on the heels of the announcement by Bayelsa State Governor, Seriake Dickson that the State Government has just signed a Memorandum of Agreement with IPP Energy Limited and GMB Leasing Partners for a new 100 mega watts gas turbine in the area. The Governor hopes that the project, which should be completed by the end of the year, will take his government a step closer to delivering uninterrupted power supply to Bayelsa State residents.
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OPEC Daily Basket Price Stood At $102.75 A Barrel Tuesday 7 May
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The price of OPEC basket of twelve crudes stood at $102.75 dollars a barrel on compared with $102.61 the previous day.
The new OPEC Reference Basket of Crudes (ORB) is 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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WAGPCo Unable To Confirm Gas Supply Resumption Date
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After failing to meet the April 30 deadline it had set previously for the resumption of gas delivery through its pipeline, the West African Gas Pipeline Company (WAGPCo) has decided not to set a new deadline until it has completed all preparatory work. The vital pipeline was shut six months ago on the 28th of August, after incurring extensive damage in the Lome area. The crash occurred when a Togolese naval vessel collided with another craft causing severe damage to the pipeline in the incident.
According to the General Manager,Corporate Affairs, Mrs Harriet Wereko-Brobby, the company is carrying on with maintenance work and is currently cleaning and drying the pipeline, a measure that will protect it against pipeline corrosion.
The delay in resuming operations is causing a great deal of hardship to the recipient nations. Ghana, for example, has been rationing power after the 200 mega watt Asogoli power plant, which relies wholly on gas delivered through the pipeline, ground to a complete halt following the incident.
MrsWereko-Brobby said previously: "The damaged pipeline is receiving intensive repairs and it is being tested to make it leakage-proof.
We have replaced the damaged segments, tested the joins and made sure that there are no leakages. Now the next thing that we have to do is to clean the pipeline to make sure that there is no water and debris." Unfortunately, the April 30th deadline she gave in the statement was not adhered to by the company.
MrsWereko-Brobby explained that the damaged pipes had been replaced and the joints tested and that the drying of the pipeline was now taking place following which, operations along the 656 kilometre long pipeline will resume.
The pipeline project, a joint venture between public and private sector companies from Nigeria, Benin, Togo and Ghana was set up to transport natural gas from Nigeria to the partner countries who make up the customers. The company, which has its headquarters in Accra is owned by Chevron West African Gas Pipeline Ltd. (36.7%); Nigerian National Petroleum Corporation (25%); Shell Overseas Holdings Limited (18%); Takoradi Power Company Limited (16.3%); Societe Togolaise de Gaz (2%); and Societe BenGaz S.A. (2%).
An extension of the pipeline to the Jubilee field in Ghana, to be completed in September will see Ghana adding to Nigerian supply to the company's customers.
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Oryx Raises $249.7 million in Canadian IPO
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Oryx Petroleum's partners in Oil Mining Lease (OML 141) will be pleased to know that the company has succeeded in raising $249.7 million in an initial public offering. The company, which farmed into OML 141 in 2011, is an offshoot of the Addax and Oryx Group Limited (AOG), which was incorporated in 1987. Founder of AOG, Jean Claude Gandur, was the founder of Addax Petroleum, which he sold to Chinese state-owned Sinopec in 2009 for a reported $9.8 billion. Oryx is his attempt to build a new Addax Petroleum and it is made up of key members of the former senior management team of Addax.
Oryx Petroleum is understood to have reduced the size of the sale after originally announcing its intention to raise $346 in the IPO. It sold 16.7 million shares for $14.86 each as against the price of $19.81 to $22.78 dollars, which it was initially seeking. The sale was led by Royal Bank of Canada, Barclays, Bank of America Merrill Lynch and Bank of Montreal.
The company had previously announced that it was seeking the IPO to enable it to accelerate work on its assets. It had said that it plans to invest $400 million over the next four or five years and plans to spend $325 million on exploration in 2013 alone.
In spite of its acquisitions in Nigeria, Senegal, Guinea Bissau, Congo (Brazzaville) and Iraq, the company is yet to reach first oil on any of its assets. Oryx has a 38.67 per cent participating interest in the 1400 square kilometre OML 141.
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NNPC: No Government Plans To Establish Pipeline Protection Agency
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Following the call by the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) for the establishment of a pipeline protection agency, the state national oil company, Nigerian National Petroleum Corporation (NNPC) has confirmed that there are no plans to establish any such agency.
The President of the NUPENG, Comrade Igwe Achese had called for special agency that will be responsible for monitoring and protecting the nation's 5,000 kilometres pipeline network.
Speaking at the recent Special Delegates conference held in Lagos, Igwe Achese said: "We are due for an agency like the pipeline protection agency so that the country can address the challenges of pipeline vandalism. The country as we all know is losing so much as a result of pipeline vandalism and crude oil theft. So we can't afford to continue to watch helplessly as large volumes of our crude is being wasted and lost owing to the damage done to our pipelines."
He also wants the Government to enter into a dialogue with illegal refiners as a way of tackling that problem which is partially responsible for the pipeline breaks and environmentally damaging oil spills.
Responding to the call for a new agency, Ms Tuminini Green, speaking to Dow Jones Newswires, said that NNPC has been collaborating with security agencies and local communities and she commended the work being done by the Joint Task Force, the agency set up by the Government to tackle the menace of oil theft, which she said is making great inroads in the fight to end pipeline vandalism.
"We sincerely believe that these efforts and the engagement we are having with the communities will help check and eventually end pipeline vandalism. We neither believe in nor support the establishment of any agency for the specific purpose of protecting pipelines," she said.
Nigeria is said to lose 150,000 barrels a day of oil from illegal tapping of pipelines. Although some of the stolen oil is used by illegal refiners in make shift local refineries, the bulk of it is said to be sold abroad. The government says that it is planning to use fingerprinting technology to identify and track stolen crude to its destination.
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NEITI Board Member Appointed To The EITI Global Board
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A member of the Nigeria Extractive Industries Transparency Initiative (NEITI) National Stakeholders Working Group (NSWG), Faith Nwadishi has been nominated as a full member of the International Board of the Extractive Industries Transparency Initiative (EITI). The move is largely seen as validation of the work being done by NEITI to achieve transparency and accountability in the Nigerian extractive industries, but due to its importance, the Nigerian oil and gas industry in particular.
The EITI International Board, chaired by former British Member of Parliament, Clair Short is the highest policy making organ of the global Extractive Industries Transparency Initiative operating in about forty five countries including Nigeria.
Ms Nwadishi is to represent the Civil Society in the International Board made up of twenty members drawn from member countries across the world. Faith Nwadishi is the National Coordinator of an international Civil Society Organisation known as Publish What You Pay (PWYP). PWYP is reputed worldwide for championing the campaign for companies to disclose publicly what they pay to government in form of royalties, levies and taxes and for governments to also declare what they receive.
The concept of public disclosure, which Faith Nwadishi and her organisation are associated with is based on the extractive industries transparency principles that availability of information and data to the citizens on extractive industries payment and receipts is fundamental to ensuring that resources from oil, gas and mining rich countries aid national development and reduce poverty through transparent and prudent management.
Faith Nwadishi's nomination is expected to be ratified at the 6th Global Conference of the EITI holding in Sydney, Australia later this month.
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Nigeria And South Africa Sign MOU To Boost Oil And Gas Trade
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Nigeria has signed a Memorandum of Agreement (MOU) with South Africa, which is intended to boost oil and gas trade between the two countries. The Minister of Petroleum Resources, Diezani Alison Madueke revealed this during the State visit by the President of Nigeria, Goodluck Jonathan to South Africa which started on Monday.
The Minister had been due to speak at the Oil Technology Conference (OTC) in Houston, the largest annual oil and gas event in the world which she normally attends. She called off her visit to OTC to join the President's delegation for the State visit.
Speaking about the MOU while in South Africa on the visit, she said: "The MOU will reinforce and strengthen the existing symbiotic relationship between the two largest economies in Africa."
Mrs Alison Madueke also said that the MOU would also help in the transfer of knowledge, skills, capabilities and technology.
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Validity of NIMASA Levy On NLNG
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The Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigerian Liquefied Natural Gas (NLNG) are being urged to resolve their dispute over the payment of levies to NIMASA in court. NIMASA has been demanding a payment of three per cent levies on gross freight and two per cent surcharge due on its cabotage contracts from NLNG. A face-off between the organisations occurred recently after the agency stopped NLNG's vessels from entering or leaving Bonny Channel alleging a failure by NLNG to pay charges which the agency says is in violation of the law setting up NIMASA.
The NIMASA Act 2007 in section 15 stipulates that the agency shall be funded by monies accruing to it from among other sources including the three per cent of gross freight on all international inbound and outbound cargoes from ships or shipping companies operating in Nigeria as part of the funds to meet the operational costs of the agency.
NLNG meanwhile is refusing to pay the fees saying that it is exempted from doing so by the Act establishing NLNG. If that is so then the company will have grounds to seek damages for the economic losses incurred by the company while its vessels were prevented from leaving and entering the port. Even after an intervention by the Presidency, the maritime agency was reported to have again prevented two NLNG vessels Adamawa and Lagos from getting to the buoy.
Commenting on the situation, energy lawyer Gbite Adeniyi says he believes the only lasting solution is for NLNG to institute legal action against NIMASA and get a ruling from the Court on the matter which is far from cut and dried.
In the first instance, he said, there is no doubt that the NIMASA Act gives NIMASA the power to impose fees and charges but he says that NLNG can argue that it is not obliged to pay the fees as the NLNG Act of 1990 provides a waiver from such prescribed levies.
There is in effect a question of which laws and regulations will prevail in these circumstances. On the one hand there is the Act establishing NLNG, which exempts NLNG from paying the fees ad charges. What NLNG will argue is that as this Act came before the one establishing NIMASA and therefore should have overriding influence over the latter.
On the other hand, Adeniji believes NIMASA could argue that the latter NIMASA statute overrules the prior NLNG exemption and that NIMASA is therefore free to impose fees and charges on the company.
"The best way to get this knotty situation resolved is to get the court to give a legal interpretation on the matter. The court would be able to decide whether upon expiration there could be a review for an extension of the exemption or not, he said."
Adeniji explained that the exemptions and fiscal incentives in the NLNG Fiscal Assessment and Guarantee Act came into force in 1992 were intended to attract global interest and further investment into the Nigerian LNG sector.
NLNG operates a liquefied natural gas plant on Bonny Island. NLNG operates six liquefaction units (LNG Trains) producing 22 million metric tonnes of LNG per annum (mmtpa). This amounts to roughly 10% of the world's LNG consumption. Trains 1, 2 and 3 have production capacities of 3.2 mmtpa, whilst trains 4, 5 and 6 have capacities of 4.1 mmtpa each. The final investment decision on Train 7 has just been made.
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GE Awarded $230 Million Contract For 200 Megawatt Kaduna Power Plant
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GE Oil & Gas, a leading company in oil and gas equipment and services, has won a $230 million contract for the construction of a power plant in Kaduna. The contract, which was awarded by the Federal Government to GE and its local partner, Rockson Engineering Nigeria, is for the installation and manufacture of a dual-fired (low pour fuel oil/gas) 150- to 200-megawatt power plant in Kaduna, Nigeria.
The contract will include the design, manufacture, supply and testing of eight GE gas turbines in the 15 to 20 MW range. Rockson Engineering Nigeria will supply engineering, balance of plant, erection, commissioning, site works and a 132-kilowatt substation.
Daniele Scenarelli, GE Oil & Gas region sales executive for Sub Saharan Africa, said: "GE Oil & Gas technology has been selected due to our proven track-record in delivering large-scale projects of this nature, meeting challenging deadlines and efficiency parameters without compromising on quality. We are delighted to be able to support the development of Nigeria's infrastructure and are committed to continued long-term investment in the country."
GE has an agreement with the Federal Government under which both parties seek to collaborate actively in developing critical infrastructure for Nigeria with a view to helping the nation achieve its 2020 Vision plan. The "Country to Company" strategy aims at promoting infrastructure projects including oil and gas.
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May Worldwide Oil and Gas Conferences
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June Worldwide Oil and Gas Conferences
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Once again, please don't don't forget to join our mailing list if you haven't done so already. Remember, you won't have to look anywhere else for your weekly Nigerian oil industry updates, and it's free to join. Do send us your news. And let us know if you want to advertise in NOGintelligence.
Sincerely,
Remi Aiyela
Editor, NOGintelligence
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