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 Chevron To Sell Its Stakes In OMLs 83 and 85  

The International Oil Company (IOC) exodus continues with news that Chevron is putting its interest in Oil Mining Leases (OMLs) 83 and 85 up for sale. Both blocks, which are expected to be sold in one lot are situated in shallow water offshore Nigeria in Bayelsa State in the Niger Delta, have reserves of 250MMBbls of oil and 500 Bcf of gas.  

Chevron acquired OML 83 with its Anyala field and the much larger OML 85 with its Madu field after its acquisition of Texaco. The company holds a 40 per cent interest in each of the two blocks under a joint venture with the Nigerian National Petroleum Corporation (NNPC).

Madu and Anyala fields were originally discovered in 1993 by Texaco, but development was deferred in the 1990s because of cost calculations. However, Chevron began a new development plan in 2004, with the strengthening of oil prices but in spite of the flurry of activity, neither field has been fully developed by Chevron and neither is in production.

Last year, Chevron's net daily production in Nigeria averaged 238,000 barrels of crude oil, 165 million cubic feet of natural gas and 4,000 barrels of LPG. It is the operator of the prolific Agbami deep offshore block.

The sale follows the divestment by IOC trio, Shell, Total and ENI of their joint venture onshore interests. This was followed by the hotly contested competitive auction by ConcocoPhillips, in its case, divesting all of its assets in Nigeria. Total has also confirmed it is selling some of its assets.  

For some the trend is extremely worrying, but the Group Managing Director of NNPC, Andy Yakubu put a brave face on it, insisting at OTC that the multi-billion dollar  IOC asset divestment did not pose any threat to the Nigerian oil and gas industry, adding that the sales were for growth.  

The other spin on the worrisome trend is that it presents an opportunity for indigenous companies to enter the upstream play. This is especially so given the failure of promised licensing rounds to materialise. Whilst analysts worry, indigenous companies are seizing the opportunity the divestment presents. The concern from analysts though is whether they have the financial muscle and technical capability to get the most out of these assets. Only time will tell.

Deepwater Fields Attracted $48billion FDI In 20 Years      

The fields, according to Onyejekwe, delivered over 0.8 billion barrels up to 2012.The SNEPCO boss further said the International Oil Companies (IOCs) would invest about $165bn in the Nigerian oil and gas industry in the next five years, which is twice the value of the Nigerian Stock Exchange.

He further stated that Shell had recorded tremendous success in its Bonga deepwater oil field, saying that as at December 2012, it had exported about 450 million barrels of crude oil. In the same year, Shell produced about 33 per cent of Nigeria's oil production.

If all the deep-water assets in Nigeria are developed, they could generate 200,000 plus jobs, $3bn in GDP and 600,000 barrels oil per day. This is according to the McKinsey Multiplier Model stated a source from the company. Developing 200,000 jobs is equivalent to growing the oil and gas industry by 30 per cent. $3bn GDP will amount to additional 15 per cent of projected GDP growth rate.  Adding 600,000 barrels per day of oil, which would double the production from deep-water fields in the country. To develop and produce five million barrels of oil per day from these assets over $5bn (N790bn) is expected to be required annually.

The company noted that deepwater exploration and production was expensive, complex and risky with long cycle times as current offshore projects take 10-20 years from licence award to production.

 "A typical well in deep water costs about $150m and you will be spending another $500m for further appraisal. And when the project is not good enough, all this money will be lost."

Few operators play in the deepwater space because of the financial outlay and the technology involved.

James Bay Resources Completes Acquisition of Ogedeh Marginal Field Interest   

After nearly a year, TSX Venture Exchange listed Canadian company, James Bay Resources Limited has finally received ministerial approval for the assignment of a 47 per cent interest in the Ogedeh marginal field to the company by Bicta Energy.  

Ogedeh which was carved out of a Chevron block was awarded to Bicta Energy in the 2003 marginal field licensing round. The position for Bicta looked shaky in November 2009 when the government suspended the licences of those companies that had not yet brought their fields to production some 5 years after the awards. However, a lifeline was extended to these companies when they were offered an additional 4 years to bring their fields to production. As a result, Bicta had to look for a partner to assist it in working the field.  

After many months of negotiations, Bicta reached agreement with James Bay in 2012. The normal procedure for a farm in is that the suite of legal agreements including the Joint Operating Agreement and the Deed of Assignment are submitted to the Department of Petroleum Resources (DPR) who will make a recommendation to the Minister. The farm in is only perfected when the Minister approves it, a process that can take up to a year. Part of the delay is due to the due diligence exercise the DPR must do on the technical partner, including an inspection visit to the location of the company abroad. The DPR has to be satisfied that the partner has the technical ability and financial backing to complete the project.

James Bay had intended to immediately re-enter the existing well on the block and had been hoping for commercial production by the middle of this year. The company intends to waste no time making good on its stated intentions given that 3D seismic has already been acquired over the block. In any case there is still the looming November deadline when the extension of time on the field will expire. It is however expected that they will easily get an extension, if they have not already done so, in view of the time it has taken to get Ministerial approval.

After re-entry of the discovery well and an expected Long Term Test (LTT) the company expects to immediately commence on an appraisal well to define the in-place volumes.

Knut Sovold, President & CEO of the Nigerian arm said: "We are excited about the opportunity for the asset and look upon this as a good building block in establishing a balanced portfolio of assets in Nigeria."

"The asset will most probably be developed through a tie-back to either of the neighbouring fields however if the next well confirms the upside case, a stand-alone development will be considered," he added.

In compliance with the stringent reporting requirements of the TSX, the company has revealed details of the financial deal. The company paid a farm in fee of $2.5 million for its 47% interest. Of that sum, $100,000 is to be paid in five monthly instalments from the date of successful conclusion by the company of its due diligence. $500,000 is to be placed into escrow of which $200,000 is to be released upon Ministerial approval, while $300,000 is to be released upon the arrival of the drilling rig to the drill site.

A further US$1,000,000 is to be paid upon the completion of a final independent report of P1 reserves of 7 million proved recoverable barrels of oil, appraised in a manner satisfactory to the Company. If the reserves fail to reach that amount, an alternative payment structure has been worked out. $0.10 royalty per barrel will be paid on produced oil sold over the term of the award up to a maximum of $1million. The final sum of US$900,000 will be paid on the completion of 60 days commercial production.

The Company will be get an economic interest of 80% of the available crude until cost recovery while the remaining 20 per cent will be divided between both companies proportional to their participatory interest.

James Bay will be the operator of the project.

OPEC daily basket price stood at $101.11 a barrel Tuesday, 28 May 2013

The price of OPEC basket of twelve crudes stood at $101.11 dollars a barrel on Tuesday, compared with $99.56 the previous day, according to OPEC Secretariat calculations.  Meanwhile, OPEC Ministers will meet in Vienna on the 31st of May for the first of their two annual meetings. Among the issues at the top of the agenda will be whether or not to cut production in order to maintain prices.  

Many OPEC nations are heavily reliant on oil for their revenues and many will be struggling to balance their budgets with the recent trend below $100. There is the added complication of US shale oil, which is helping to put pressure on the price of OPEC oil. Some OPEC producers who were traditional suppliers to the US, particularly Nigeria and Algeria, have had to drop their prices to make their crude more attractive to distant Asian consumers as US imports continue to drop dramatically.  

Traders appear unworried saying the odds are that output is unlikely to be cut as US production of shale oil could prevent a production cut from having the desired effect of raising prices.  

The other issue on the table is the appointment of the new Secretary General. There are reports that Saudi Arabia and Iran are spoiling for a fight as each refuses to back down on their nominated candidate. The current Secretary General has had to stay on beyond the end of his term due to this conflict. A compromise candidate may be necessary to break the deadlock. It all makes for a rather heated meeting.  

NEITI Is Best Extractive Industry Transparency Implementing Country

The Nigerian Extractive Industry Transparency Initiative (NEITI) has been recognised with an award by the global Extractive Industries Transparency Initiative (EITI) as the "best extractive industry transparency implementing country."

The award, created by the world body is to encourage resource-rich countries to embrace the principles of transparency, accountability and prudent management of revenues from oil, gas and mining to aid national development and support poverty reduction.

A statement from the agency signed by the Director, Communications, Orji Ogbonnaya Orji, stated that Nigeria was voted the best implementing country among 39 member countries that have so far embraced the initiative across the world.

At the award ceremony in Sydney, Australia, the Chair of the International Board of EITI, Claire Short, commended NEITI's implementation of the principles of transparency in the oil, gas and mining sectors describing it as the most comprehensive, courageous and ambitious. Short said the award was in recognition of the increasing demands by Nigerians for accountability and massive reforms in the extractive industry.

According to Short, international commended NEITI for the timely provision of information and data through regular and independent audits of the oil, gas and mining sectors in Nigeria. She stated: "While implementation by other member countries was limited to reconciliation of revenue flows of what companies paid against what government received, the Nigerian government through parliamentary legislation extended the mandates of NEITI to include independent physical and process audits."

"NEITI's recent decision to embark on independent tracking of fiscal allocations and statutory disbursements of extractive revenue funds to various tiers and levels of government was well applauded for its significance in ensuring legitimate utilisation of such funds in areas of citizens' needs. The independence, quality, content, comprehensive and incisive nature of NEITI audit reports is a model for other member countries to emulate."

The EITI International Board also expressed delight that as a result of NEITI's interventions, the agency had succeeded in recovering the sum of $2 billion for the government and uncovering an outstanding sum of $9.6 billion as potential revenues for the federation account.

 Eland Oil Losses For 2012 Narrow To $14.19 Million  

London Stock Exchange's Alternative Investment Market (AIM) listed Eland Oil & Gas Plc. has released its audited results for the year ended 31 December 2012 revealing that the Group has reduced its loss position from $17.7 million (2011) to $14.2 million (2012).

Loss before tax and for the year from continuing operations narrowed to $14.19 million from the prior year's $17.69 million. The major key factors contributing to the loss in 2012 were the $3.2 million of costs relating to admission to AIM, an increase in G & A costs as staffing numbers increased in Nigeria and the UK, additional legal and consulting expenses related to the debt agreement with Standard Chartered Bank and technical costs relating to their Competent Person's Report.

The losses have been partly offset by a reduction in financing costs as a result of redeeming the principal amount of the 2nd round loan notes in 2011, and freezing the interest due on the 1st and 2nd round notes. All of the 1st and 3rd round loan notes have been converted during 2012 including a portion of the interest amounts due to note holders amounting to $2.5 million.

Loss before tax and for the year from continuing operations attributable to owners of the company was $5.35 million, compared to a loss of $8.43 million last year. Loss per share from continuing operations narrowed to $0.12 from $3.07 in the previous year.

Administrative expenses for the year significantly increased to $12.95 million from $1.01 million last year.

Eland concluded a capital raise of £118 million in 2012, and listed on the AIM of the London Stock Exchange. The Company negotiated a bridge debt facility for $22 million with Standard Chartered Bank PLC in London, available to the company on first production from OML 40. The company also negotiated two £10 million equity options with key shareholders available to the company in 2013. The Group is funded for its 2013 work programme through cash balances and debt facilities already agreed.

Eland, acquired a 45 per cent interest in Oil Mining Lease (OML) 40, located in the prolific Niger Delta, through its joint venture company, Elcrest Exploration and Production Nigeria Ltd, on 31 August 2012. The acquisition, secured for $154 million, was purchased from Shell Petroleum Development Company Nigeria Ltd (30 per cent), Total E & P Nigeria Ltd (10 per cent) and Nigerian Agip Oil Company (5 per cent).  The Company agreed a 2013 work programme and budget for OML 40 with the Nigerian Petroleum Development Company (NPDC), the operator of OML 40, which has a 55 per cent equity interest in the lease.

Eland has also secured an option from Amocon to acquire a 40% interest in OPL 452, an exploration block, which is also located in the Niger Delta in Nigeria. The option is open until 31 December 2013.

The company is maintaining a positive outlook, saying that it anticipates first oil from OML 40 in Summer 2013 with initial production of 2,500 bopd expected from the re-commissioning of the Opuama production facility and crude export line.The initial two well drilling programme on Opuama has been agreed with NPDC and an updated Reserves and Resources report will be available mid-year 2013.

Nigerian oil companies have done well in the past 18 months on the floor of the London Stock Exchange (LSE). Notable Nigerian exploration and production companies that have listed on the LSE include Afren with a market value of $2.263bn, Eland Oil & Gas with $257m, Heritage Oil with $587m, Mart Resources with $524m and MP Nigeria with $508m. In total, Nigerian oil exploration and production companies trading on the London Stock Exchange and its growth market, AIM, are now worth $4.2bn (N649bn).

The Director of Canaccord Genuity, Mr. Tarica Mpinga revealed this at an Oil and Gas Roundtable in Lagos recently, where he said that although getting funding from the international investment market was difficult for African oil and gas companies generally, the story had changed for Nigerian companies in the past 18 months.

Mpinga further said Nigeria would play a bigger role in oil and gas development in Africa going forward, but emphasised the need for indigenous players to conservatively plan and map projections so that investors can clearly see and identify a trail for progress before putting their money in.

To corroborate his claim that the mood of investors is changing towards Nigerian oil companies seeking funding in the international market, Impinga cited the example of Lekoil, a Nigerian company that was recently admitted to the LSE and raised $50m to fund oil and gas exploration in Nigeria.

The Managing Director, FBN Capital, Mr. Kayode Akinkugbe at the roundtable, said, "We consider ourselves to be innovators in the financing space, and if we are able to assist indigenous entities in better understanding what it takes to arrange finance from an early stage, we believe we would have added true value."

"We have focused on equity/mezzanine capital for the oil and gas industry because we believe there is a huge need for this type of capital," he added.

He explained that the event was aimed at facilitating discussion between investors, influencers and other key stakeholders within the industry on ways an indigenous exploration and production company could raise finance and develop into a more substantial business.

Chevron-Contracted Vessel Sinks With 12 On Board

A vessel, the Jascon, belonging to West African Ventures, a subsidiary of Sea Trucks has sunk off the cost of Delta State with a suspected loss of 12 lives. The Chevron-contracted tug boat, sank on Sunday and the men are still missing. Navy divers have been searching for the missing sailors and may soon call off the search. It is not clear what the circumstances or cause of the sinking were. The incident has not been linked to pirates and appears to have been an industrial accident. The seas are said to have been particularly rough on the day of the tragic incident.

Chevron Nigeria Seeks Self-Propelled Barges 

Chevron Nigeria Limited invites interested and pre-qualified companies for the tender opportunity for the provision of self-propelled barges (SPBs) with draft of less than five feet (5ft) in support of NNPC/CNL joint venture onshore production operations, including Non-Rig Work-Over (NRWO). Only bidders who are registered with NJQS Product/Categories 3.08.02 (Barges - including self-propelled) and 3.08.99 (Other Transportation/Supply and Disposal Services) shall be invited to submit technical bids. The closing date for this opportunity is 5th June 2013. More details here. 

Chevron Nigeria Seeks Self-Elevating Work-Over Platform/Jack- Up Barges

Chevron Nigeria limited invites interested and pre-qualified companies for the tender opportunity for the provision of self-elevating work-over platform/jack-up barges in support of NNPC/CNL joint venture offshore operations. Only bidders who are registered with NJQS product category 3.08.04 (Accommodation Platforms/Vessels - Jack-up) shall be invited to submit technical bids. The closing date for this opportunity is 10th June 2013.  More details here. 

Chevron Nigeria Seeks Leased International (IPLC) Communication Circuits

Chevron Nigeria Limited invites interested and pre-qualified suitable telecommunications service provider companies to respond to the opportunity for the provision of international leased circuits services between CNL locations and other Chevron international business units. The contract is proposed to commence by the first quarter of 2014. Only bidders who are registered with NJQS product/category 3.01.12 "telecommunications services" and 3.11.20 "telecommunication installation/support services" shall be invited to submit technical bids. The closing date for this opportunity is 13th June 2013.   More details here. 

EEPNL Seeks Seismic Data Processing Services

Addax Petroleum Seeks Helicopter Services in OMLs 123,124,126 and 137 

Addax Petroleum Limited invites interested and pre-qualified contractors for the tender opportunity for the provision of helicopter services for Addax OML 123/124 and OML 126/137. The contract is proposed to commence in the 3rd quarter of 2013 and continue for a duration of 5 years. Only bidders who are registered with NJQS under the applicable Product/category (3.08.03) shall be invited to submit technical bids. The closing date for this opportunity is 14th June 2013.    More details here. 

Pan Ocean Oil Seeks Telecom Services   

Pan Ocean Oil Corporation Nigeria limited invites interested and pre-qualified companies for the tender opportunity for the provision of telecoms infrastructure for their Lagos and Warri offices. Only bidders who are registered with NJQS Product/Category for Telecommunication Installation/Support Service 3.11.20 Product Category shall be invited to submit technical bids. The closing date for this opportunity is 31st May 2013.     More details here. 

Nigeria Oil & Gas Technology Exhibition

Lagos, Nigeria.

4 - 6 June

www.cwcnogtech.com

Paris, France  

11-12 June 

 www.oilcouncil.com 

Oil Spill Conference

 Accra Ghana

12 - 14 June

oilspillconferenceng.com

4th Eastern Africa Oil, Gas & Energy Conference

Nairobi, Kenya

16 - 20 June

www.petro21.com

North Africa Gas Summit

Rome, Italy

24 June

www.north-africa-gas.com

Understanding Cabotage and Local Content in the Nigerian Oil and Gas Industry (click here for further details) 

Lagos, Nigeria 

PLATTS Africa Oil Forum

Lagos, Nigeria

27 June

 www.platts.com 

Oil Council's Oilfield Development Assembly  

London, United Kingdom 

26 - 27 June