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 Energia To Begin Production From Ebendo 6 Well in July

Energia Limited, the operator of the successful Oando/Energia-owned Ebendo/Obodeti marginal field, has announced that it is on course to complete its Ebendo 6 well this July. Speaking at NOG Tech, the Managing Director/Chief Executive Officer of Energia, Mr. Felix Valentine, said:

"We are presently preparing to complete this well, which we expect will add additional 2,000-3,000 bpd in July 2013. This is following another successful drilling and completion of our Ebendo well-five in March 2013. Upon completion of well-six, Energia is expected to produce 8,000-9,000 bpd in July 2013."

He added that the company intends to increase production through aggressive drilling, saying: "We expect to ramp up field production to more than 10,000bpd with these new opportunities in 2014."  The company also plans to drill three more wells on Ebendo after drilling opened up new prospects. Wells seven, eight and nine will be drilled in the next few months. With this ambitious drilling programme it expects to ramp production up to 15,000 bpd by 2015.  

In preparation for the anticipated scaled up production volume, Energia has begun a major facility upgrade in line with its field development programme.

The company also has plans to overcome the challenge it faces in terms of the evacuation of its crude. Currently, it uses the export line to Brass terminal, which does not have sufficient capacity. As a result, the company is working on the construction of a 53-kilometre pipeline from Umusadge to Eriemu in partnership with Midwestern Oil as an alternative. The pipeline should be ready in time for production for its proposed 7, 8 and 9 wells.

Mr Valentine also disclosed that the company intends, together with the marginal field cluster group of Midwestern Oil and Gas, Pillar Oil, Platform Petroleum and Chorus Energy, to build a refinery with an initial capacity of between 10,000 and 15,000 barrels of crude oil per day. He said the company was in discussions with consultants on the viability of the project. He explained that the idea of the refinery was in response to the staggering level of crude oil theft they had experienced.

He said: "Our cluster group lost about $72 million to crude theft in 2012 alone and at the rate we are going, this might increase to $100 million (N15.9 billion) in 2013."

The successful indigenous company also has a 30 MMSC.lllFD gas processing plant constructed in partnership with Xenergi.

Baker Hughes To Offer Integrated Solutions In Oil, Gas Operations

World leading international oil service company, Bakers Hughes is set to offer one stop integrated services, that will help in enhancing time and cost reduction and accuracy of results, including reservoir results, logging results and data acquisition for the Nigerian oil and gas industry.

Baker Hughes Nigeria says the intention is to ensure that where its integrated services are engaged, the company is responsible for every operation from reservoir to production.

The Manager, National Content, Government Relations and Business Development of the company Mrs Charlotte Essiet-Oduah at a press conference said the company's series of technologies, which will be showcased later this month in Lagos at Bakers Hughes' Techno Day, will  provide oil industry operators with accuracy of reservoir, logging and data acquisition results.

She said, "When you have various contractors, who are doing all these for you, it becomes very expensive and that is the truth. But if you have one contractor, who is doing all of these for you, one of the major advantages that you will get from these integrated services that we are proposing is discount."

She said the two-day event will be a platform for experts and facilitators  to discuss major topics including Bakers Hughes integrated solutions; finding and producing bypassed hydrocarbons in Brownfields, project economics, artificial lift technologies and geo-mechanics solutions.

 "We have facilitators inside Bakers Hughes and we have 96 per cent local facilitators who will be delivering on the technologies. We also have two facilitators, who will be coming from the United Kingdom," she added.

Essiet-Oduah identified cost/time reduction and accuracy of results as the major advantages of the technologies.

"We have real time information; you will have shorter scheduling time for your production, which is very important. Every time you spend in the oil field is money. So, we have reduced that time for you. For me, those are the major advantages - time and cost reduction and accuracy of results, including reservoir results, logging results and data acquisition results," she said.

Afren's Fast Track Development Model  

The just concluded fourth annual Nigerian Oil and Gas Technology Conference and Exhibition (NOG Tech) drew participants from the oil and gas industry to discuss the issue of the important role of technology in driving efficiency, cost reduction and production increase. 

The Deputy Assets Manager, Afren Plc, Mrs Obehi Eremiokhale who spoke on the experience of her company said that while the conventional development model could take more than 5 yrs to get to first oil, the new fast track development model deployed by Afren takes 2-3 yrs.

She said the elements of the model which include, planning, regulatory, high technical capacity, quick access to funds, financial discipline, understanding risks and uncertainties make it possible for parallel activities like discovery and approval to happen concurrently.

Some of the benefits of the new model she said include early cash flow, minimum long-term capital exposure, technological edge and opportunities for partnerships to build capacity.

She said the model could however face some significant challenges but which can be overcome by pro active planning, early engagement with governments, communities and partners.

Other steps include forming joint teams with contractors to achieve timelines, making flexibility and effective communication a key tool and a firm, discipline and common sense approach to spending.

Britannia-U's Enhanced Marginal Field Operations

During her presentation at NOG Tech on challenges faced and synergies created in saving costs and enhancing marginal field operations, Chairperson/Chief Executive Officer, Brittania U, Uju Ifejiaka, said her company had to brave all odds to be able to achieve the milestone of being the only marginal field operator among those with fields within the shallow waters to bring its field into production.

She noted that the $23m loan received from Union Bank was the lifeline the company needed to make this possible, adding that securing a loan was initially a major challenge as most bank employees do not understand that a proven and certified reserve is always a bankable asset.

She added that the company is also faced with drilling challenges, as rig owners try to exploit and take undue advantage of marginal field operators by giving out rigs that are not in good shape.

Notwithstanding that, she said the company has been committed to addressing the twin issues of flaring and communities engagement by adopting sonic flare tips to avoid flaring and having direct interface with the host communities (Oghulagha Kingdom) which comprises of seven communities to meet their infrastructural and economic empowerment needs.

She explained that currently the company produces 2.2mmscfd of gas from its Ajapa field out of which 1.8mmscfd is reserved to power the production system on board the FPSO owned by the company.

To address some of the challenges she called for more interface between the government and management, tax holidays for fields in production, providing funding support at a low interest rate for those operators who are yet to get into production as well as more opportunities for those who have demonstrated capabilities.

On future plans by the company, she disclosed that the company intends to drill more wells. She also said that a new FPSO with at least 50,000bbls daily production capacity with a gas solution is to be built. The company also intends to acquire more assets for exploration and production across the sub-region and is seeking new partnerships.

Dangote Refinery Likely To Be Located In Olokola FTZ, Ondo State  

NOGintelligence can reveal that Aliko Dangote, the richest man in Africa, plans to locate the refinery he is set to build, which he believes will double Nigeria's capacity, in Olokola Free Trade Zone OFTZ in Ondo State.  

A senior official of the company, who asked not to be named, said that one of the factors considered for the location of the refinery is that it is the biggest deep seaport in the country and other big industries are located there. Besides, Ondo State is one of the oil producing states in the country.

The source added that stable crude oil supply was also a vital element in the choice of the location for the refinery because Chevron and a number of other oil producers have oil fields in the oil-rich region of the state.

The source explained that necessary approvals had been secured for the refinery, adding that the Dangote Group was just waiting for the equipment to begin to arrive.

Another source said that Dangote, who was listed on Monday as the first African entrepreneur to lay claim to a $20 billion fortune and one of the 25 richest men in the world, intends to put down $4 billion of his personal fortune to build the refinery, while international financial institutions were to raise the balance. He has since confirmed that he has secured $4.25 billion loans from two offshore banks and some Nigerian banks to build his $8 billion refinery.

Dangote had, on his 52nd birthday in April announced plans to invest up to $8b billion in building an oil refinery with capacity for around 400,000 barrels a day by late 2016.

On why Lagos was not chosen, industry analysts said that Lthough the state was a coastal state, Dangote would have had to build extensive pipelines to transfer crude from the oil fields to the refinery, thereby making it uneconomical.

The price of OPEC basket of twelve crudes stood at $100.93 dollars a barrel on Thursday, compared with $101.09 the previous day, according to OPEC Secretariat calculations.

EITI Approves New Oil Reporting Standard To Ensure More Transparency

The 6th Extractive Industries Transparency Initiative (EITI) Global Conference, which took place in Sydney on the 6th of June, has come to an end with the new EITI Standard agreed and launched. The group believes the new Standard will ensure more transparency in the years ahead. The meeting was focused on how transparency and EITI is leading to change in 39 implementing countries, particularly Nigeria, which won an award at the event. Speakers from 16 of the 39 EITI implementing countries made commitments on how they will develop the EITI process to enhance governance of the extractive industries in member countries.

EITI has a robust and flexible methodology, known as the EITI Standard that ensures that a global standard is maintained throughout the different implementing countries. Implementation itself, however, is the responsibility of each country. The EITI Standard establishes the methodology that countries need to follow to become EITI compliant.

Claire Short, EITI Chair, had previously explained the rationale behind the changes in the EITI Standards: "There is an emerging consensus on changes that will ensure higher quality EITI Reports, simpler implementation and use of the EITI as a platform for wider reforms."

The revised Standard to be implemented will require more than just the disclosure of revenue data. EITI will now be required to obtain and publish information:

• How extractive industry revenues are recorded in national budges
• An overview of licences and licence holders
• Payments to government broken down by each company and by revenue stream
• Production volumes
• Transfers from central to local governments
• Volumes sold and revenues received
• Quasi-fiscal expenditures
• Sale of state-owned assets
• Financial transfers within the state

Industry watchers believe the new Standard will make the oil and gas industry much more transparent. In Nigeria, where the EITI Standard is implemented by the Nigerian Extractive Industries Initiative (NEITI), it is believed that the industry will finally have to clean up its act as government will have to come clean on volumes of oil being sold, to whom they are being sold and for how much. Licence awards will have to be made public through NEITI reporting which will throw the spotlight on previously opaque "discretionary" licence allocations.

Having won best reporting nation award, there's no going back for NEITI now in their quest to make the oil and gas industry transparent.  

Short commended Nigeria at the award ceremony, saying:

One industry source commented on the new Standard, saying: "By including contracts and licenses, beneficial ownership, state-owned companies and production information, the new Standard could make EITI more effective in addressing the vast governance challenges facing resource-rich countries."  

Reserves Based Lending Is Answer To Oil and Gas Financing For Nigeria: Olaniwun Ajayi 

Leading law firm, Olaniwun Ajayi Law practice (OALP) recently organized a seminar for stakeholders including oil and gas operators and financial institutions in Nigeria to keep them abreast with current developments in oil and gas financing.

At the seminar, which focused on Reserves Based Lending (RBL), the firm, together with international law firm, Herbert Smith Freehills, gave presentations on this financing concept, which is yet to gain popularity and acceptance in Nigeria.

The head of the oil and gas practice of the firm, Tominiyi Owolabi, said the objective of the seminar was to educate operators and financiers on the effectiveness of the RBL financing scheme which emerging countries are only just beginning to latch on to.

He said: "RBL is a form of financing that has been used largely in the developed world. But in Nigeria we are not taking this advantage. What we discovered is that there has been attempt at using RBL but those attempts were corporate financing being masqueraded as RBL."

The lead speaker, John Baldson, a partner at Herbert Smith Freehills said that what makes the RBL concept different is that unlike other project finance schemes, RBL is suitable for multiple assets and not restricted to just a single field.  

"The idea is that for contiguous fields and reserves that are not of commercial quantities, they can be brought together as portfolio. So what this implies is that if you have multiple field operators even if one fails, the others can be relied on. Therefore in a way, RBL is seen to thrive on portfolio and not necessarily on one field."

The concept has shorter tenors, more liberal covenants packages and account structures while the cover ratio are forward looking and not backward looking.

The cover ratio for instance, which include the field life cover ratio (FLCR), loan life cover ratio (LLCR) and debt service cover ratio are used to drive debt capacity, repayment as well as margin, expenditure controls and distribution lock up.

He pointed out that the key tool in RBL financing is determining the applicable borrowing base amount. Hedging is rarely a requirement for RBL although it could be used to maximize debt capacity.  

Owolabi explained why RBL has struggled for so long to gain popularity in Nigeria: "There have been technical issues. By this I mean what kinds of deals do come into the market. In terms of spectrum of players there has been big players and small players. The big players have their own source of funding which may be cheaper than doing an RBL. As for the small to medium players, there are issues, one is the knowledge issue and two is their ability to tap into the RBL market."

When it comes to asset bankability, he said: "Clearly lending deals with bankable deals. And so there is always going to be strong cash flow. However, RBL is not looking at cash flows but reserves. If your reserves are good and you structure a deal around it then you are good to go. Most times the challenge is in the awareness in knowledge and that is why we are trying to bridge that gap."

He said that RBL works on the philosophy that reserves or fields that are contiguous can be brought together as a portfolio to raise the fund through the RBL financing scheme.

On the future of RBL in Nigeria, Owolabi said: "I think it can be used as a veritable tool for maximizing production in Nigeria in the immediate and distant future."

Renaissance Capital Report: Shale Oil Poses Great Threat To Nigeria's Oil Industry

Nigeria must make a concerted effort to provide a favourable regulatory environment to encourage more investment in the oil and gas sector or risk losing out in the face of US shale oil, according to Renaissance Capital (RenCap).

In a report entitled: "Crude Times: Thoughts for Nigeria", RenCap said Shale oil is re-defining the oil landscape globally and posing a threat to the conventional oil producers.

"The biggest challenge comes from the biggest energy consumer - the US where the Shale revolution is transforming the global energy value chain. International Environmental Agency expects the US to add another 2.8 million barrels per day of production by 2018 at a break-even price of less than $70 per barrel, which is more than the whole of Nigerian oil output in 2012 (estimated at 2.1million per barrel per day)," according to the report.  

It said such developments put traditional producers at risk and creates an urgent need to bring new technologies and capital to revive stagnating production.

The report said the US has over the years cut its imports from Nigeria by half, and is currently at a 15-year low, forcing Nigeria to find new destinations for its crude.

"With Nigerian Gross Domestic Product (GDP) having grown steadily at about seven per cent per anum over the past ten years and with the population of 160 million, the country energy thirst is increasing (from the extremely low 300,000 bpd level). At the same time, if production remains at current level due to under-investment, the net amount available for export will shrink quickly putting further pressure on the budget and future economic growth," the report added.

RenCap advised the government to develop new areas such as the deep offshore, and increase recovery rates at old oil fields in the Delta region. It said such efforts would help in increasing investment in the energy sector, as well as transforming it.

Commenting on the Dangote Group plans for a new refinery, RenCap said in the report:  "We are encouraged by recent plans announced by Aliko Dangote to build a new local refinery, with a 400,00 bpd capacity, which should improve long-term pricing for both local producers as well as consumers not to mention new jobs and the multiplier effects on the economy."   

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