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Heritage OML 30 Back On Track

London Stock Exchange FTSE 250-listed Heritage Oil Plc, an independent upstream exploration and production company, has issued an update regarding production levels in its oil mining lease (OML) 30. This comes barely one month after the shares of the company, which is dually listed on the Toronto Stock Exchange, fell following revelations that OML 30 was not performing as expected. The company had been expecting to maintain production at the 35,000 barrels per day (bpd) pre-acquisition level but production had to be cut back due to repairs to a faulty manifold.  Labour issues exacerbated matters with production eventually down to 20,350 bpd prompting a share fall.

Gross production from OML 30 has now returned to rates of over 35,000 bopd and all of the key fields are in production. The company said that the temporary factors which caused lower than expected production levels over the first quarter had been successfully addressed. 

The company confirmed that work was now underway to ramp up activities with the objective of optimising existing facilities, including gas lift, to enable production rates to increase in line with management forecasts during the remainder of the year.  However, in view of the earlier set back it is still expecting that gross production from OML 30 will average 35,000 bopd this year.

The company plans new wells for the second half of the year with the long term aim of reaching an ambitious 300,000 bopd gross which existing infrastructure, capable of handling 395,000 bpd, will easily accommodate.

Tony Buckingham, Chief Executive Officer, commented: 

"We are delighted that production levels are back over 35,000 bopd gross for the licence and that the issues encountered earlier in the year have been resolved. The work schedule is progressing in line with our update last month and we are on track to meet our production target for the full year." 

The company acquired an interest in OML 30, Nigeria, through Shoreline Natural Resources Limited, whose ownership interests are held by Heritage Oil SNR, a wholly owned subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company. The acquisition provided a material change in proved and probable reserves for Heritage, which RPS Energy Consultants Ltd independently estimate at 412 MMbbls, for interests in Nigeria and Russia, as at 31 March 2012.

 Chevron OPLs 83, 85 Sale Shrouded In Mystery 

Chevron is refusing to shed any more light on its sale of oil prospecting licences (OPLs) 83 and 85. The company remains tight-lipped about the sale, saying only that the divestments were "part of a continuous process of portfolio evaluation and business prioritisation."

The Chevron proposed divestment follows a pattern by International Oil Companies (IOCs) in the last two years or so. While some industry players are concerned, indigenous companies are seizing the opportunity to enter the industry at a level that would not otherwise be possible given the lack of licensing rounds. A case in point is the ambitious Oando acquisition of ConocoPhillips' entire Nigerian assets at $1.7 billion.

20 companies have been invited to bid for the OPLs. There is speculation that companies invited include the larger indigenous operators like Oando (who of course may be too busy with their fund raise for the ConocoPhillips acquisition) and Afren but no one is saying anything.

Industry watchers are saying that there is general disappointment that Chevron is not being open about the process as this kind of sale which is shrouded in secrecy can easily generate an impression that sweetheart deals are taking place behind the scenes.

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).

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 and also has interests in the Usan field, also offshore.

Shell Lifts Force Majeure On NLNG Gas Supplies

The force majeure declaration by Shell Petroleum Development Company (SPDC) on its gas supplies to Nigeria Liquefied Natural Gas (LNG) has been lifted. In a statement to NOGintelligence, Shell spokesman, Previous Okolobo confirmed that the force majeure was lifted at noon on Monday, repairs having been completed. He added  that normal gas supplies to NLNG had resumed.

SPDC declared the force majeure on the 15th of May following a leak in its Eastern Gas Gathering System (EGGS-1) right-of-way (RoW) pipeline near Awoba in Rivers State. As a result of the leak, SPDC shut down its gas production at Gbaran Ubie gas plant in Bayelsa State and reduced production at its Soku gas plant in Rivers State and consequently issued the force majeure declaration.  

At the time of the declaration, Shell said the pipeline, which carries some 1.5 billion standard cubic feet per day (SCF/D) of gas, would necessitate the shutdown of the Gbaran Ubie plant, "until the source of the leak is identified and necessary remedial actions are completed by SPDC, to ensure safe operation."

UK Envoy: Nigeria In Need of Robust Gas Policy

The British Deputy High Commissioner in Nigeria, Mr. Peter Carter, has called on Nigeria to review its gas policy if the country is to harness its abundant gas deposits. He was speaking at the Climate Change Retreat organised by the Policy Advocacy Project Partnership recently in Lagos.  Carter said the country was in dire need of a robust gas policy backed by a strong legal framework.

The envoy said that the monumental environmental degradation going on in the Niger Delta Region was as a result of the absence of a clear-cut gas policy to guide utilization of the product.

On the issue of gas flaring, he said the multinational oil companies operating in the region should be exonerated from blame as the country itself had not taken pro-active measures to address the issue.  Carter said that even while the  IOCs are flaring the gas from oil  fields, it is the duty of the government to identify key economic areas where this could be put into proper use.

In the area of power, he noted that there is also the need for the right policy to provide the necessary framework that will ensure the right environment for operators to maximize  and utilise the commodity for pure economic value.

On the global climate change efforts, Carter acknowledged the measures initiated by government towards addressing climate change. Reaffirming his government's commitment towards Nigeria, he said: "The UK is keen to work with you in the public and private sectors in addressing the local challenges faced due to climate change."

Carter revealed that  UK Trade and Investment will be sponsoring a Nigerian delegation to attend the Green Technology Road Show in London where forward-looking Nigerian businesses will be able to increase their knowledge of the challenges and opportunities of climate change. 

The price of OPEC basket of twelve crudes stood at $100.89 a barrel on Wednesday, compared with $100.72 the previous day, according to OPEC Secretariat calculations.

International oil companies (referred to as IOCs) have roundly criticised the bill to amend the National Oil Spill Detection and Response Agency (NOSDRA) Act saying that it imposes penalties on the oil companies, even in the case of incidents that are beyond their control. Among other fines and penalties, the Bill imposes a fine of N5 million naira a day for failure to report an oil spill within 24 hours and N50 million for failure to clear up an oil spill.

The Managing Director, Mobil Nigeria, Mr. Mark Ward, chair of the Oil Producing Companies arm of the Chamber of Commerce, generally assumed to be the voice of the IOCs made his views known at the Stakeholders Session on the Bill. He said that the it does not take into account situations where oil companies could legitimately declare force majeure. Ward who was represented by Mr Jide Ayo Vaughn, an Executive Director with Mobil, argued that it would be unfair for NOSDRA to impose a penalty in such situations.  

Ward also argued against the imposition of the same fine for different kinds of spills.  According to Ward, the Federal Government seems to be trying to fund NOSDRA through penalties. He argued for a fairer and transparent system.  

Ward also takes exception to the lack of clarity over which agency between the Ministry of Environment, the Department of Petroleum Resources and NOSDRA has responsibility for oil spills, a situation which is likely to lead to confusion, a duplication of roles and which will make compliance much more difficult.

In his response, the Director General of NOSDRA, Peter Idabo, insisted that the penalties and fines are fair.  

Jonathan Orders Recovery of $9.6 Billion Uncovered From NEITI Audit

President Goodluck Jonathan has directed all agencies affected by the Nigerian Extractive Industry Transparency Initiative (NEITI) audit reports to recover the outstanding $9.6billion uncovered by the audit of the Oil and Gas sector.  The President gave the directive in Abuja while receiving the Board and Management of NEITI at the State House according to a statement released by the Executive Secretary, Zainab Ahmed.

According to the statement, the President has directed the Secretary to the Government of the Federation, Anyim Pius Anyim to set in motion the process of reconstituting the Inter Ministerial Task Team on the implementation of NEITI findings and recommendations. The team is to include requisite high ranking officers with the appropriate levels of authority.

The President also commended NEITI for its courage, diligence and commitment to transparency and accountability in the management of the extractive sector which has resulted in the exposure of under payments and under assessments of what companies in the sector ought to pay to the Federation coffers.   

In spite of all its successes, however, NIEITI is facing funding constraints. The Chairman of NEITI Board, Mr Ledum Mitee used the occasion to make a direct appeal to the President to intervene and ensure that the funding challenges are resolved.  According to Mr Mittee, there has been a 50 percent reduction in the agency's budgetary allocation from 2011 to-date.

"NEITI's budgetary provision has continued to dwindle whilst its activities remain on steady expansion and the situation has worsened to the extent that it now threatens the agency's continued performance of its core functions," said Mr Mitee.

Orosanye Report White Paper: PEF Management Board May Go

The Federal Executive Council (FEC) has begun a review of the draft White Paper based on the report of the Stephen Oronsaye-led Presidential Committee on the Rationalisation and Restructuring of Federal Government Parastatals, Commissions and Agencies. It has emerged that the Petroleum Equalisation Fund Management Board (PEFMB) is one of the federal parastatals, commissions and agencies likely to be scrapped.

The Special Adviser to the President on Media and Publicity, Dr. Reuben Abati said:  "The Oronsaye Committee considered suggestions, recommendations from different quarters and in total, that committee looked at 541 federal parastatals, commissions and agencies. The White Paper Drafting Committee, out of that, accepted 321; noted some recommendations and rejected some."

He gave the assurance that the FEC work would be completed very quickly and the White Paper released and implemented accordingly.

Peak Petroleum Denies New Liquidation Claim

Peak Petroleum has once again denied that it is in liquidation. This follows an advertisement earlier this week by Mr Tamuno Nathan George of Tamumo George Chambers that he has been appointed as the liquidator of Peak Petroleum Industries Nigeria Limited. In the advert, he said that all debtors were directed to pay directly to the Liquidator, while creditors were to send proof of their claims.

Last year, Mr Tamuno George issued the same notice to say he had been appointed liquidator of Peak. At that time, Peak's managing director, Dr Ayo Oluokun during an exclusive interview with NOGintelligence denied that a liquidator had been appointed. NOGintelligence also saw documents relating to a Court of Appeal order which ordered the respondent in the case to cease and desist from taking further steps in the execution of any order of court pending the determination of Peak's application to the Court. Apparently, that application has not yet been disposed of, meaning that no further steps can be taken in the suit.

Responding to NOGintelligence by email, Dr Oluokun said of the latest notice: "It's the same thing. There has been no new development. It is patently illegal and contemptuous."

The company was awarded an Oil Prospecting Licence (OPL 93) in 1993. It was converted into an Oil Mining Lease (OML 122) in 2001. The OML has a 20-year lease expiring in 2021.   

Prest "Oil Money" Divorce Makes Legal History

The divorce case that has titillated London but which has serious implications for corporate law has finally been decided in the Supreme Court. Oil trader, Michael Prest, and his wife Yasmin have been battling over assets owned by Prest's Petrodel oil company in a £17.5 million divorce award.

The first instance decision in the High Court came down to whether as the 100% shareholder of Petrodel, Prest was "entitled" to the assets of the company, which included several London properties, one of which was the £4 million marital home in Maida Vale in London.  If he was "entitled" then she could expect a share of the properties. The question was, what was the legal meaning of the word "entitled"? This would depend on whether the "corporate veil" could be pierced so that Prest could then be treated as the owner of (and therefore entitled to) the company assets.

Usually a corporation is treated as a separate legal person, which is the sole beneficiary of the assets it owns. Common law countries like England, usually uphold this principle of a separate legal personality but in exceptional situations, may "pierce" or "lift" the corporate veil. This amounts to a legal decision to treat the rights of a corporation as the rights of its shareholders.

The question at first instance was whether the properties were "property" to which Prest was entitled. Only if they were did the judge have jurisdiction to make the orders for them to be treated as part of the matrimonial assets. The judge concluded that he was entitled to regard the property as such "property" and went ahead and made the order that they be included, and having decided that Prest was worth £37.5 million, he went on to award Yasmin £17.5 million (approximately half).

On appeal, the Lord Justices of the Court of Appeal decided that the judge was wrong. Allowing the appeal, the Court said: "What needs to be emphasised is that the provisions of s.24(1)(a) of the Matrimonial Causes Act 1973 do not give the court power to disapply the established principles of legal and beneficial ownership or of company law."

Company lawyers had welcomed the ruling after seeing established company law principles continuously eroded over time by family court judges.

However, the Supreme Court has now overturned the Court of Appeal ruling after deciding that the properties were indeed assets to which Prest was "entitled". He has been ordered to turn seven properties belonging to the company over to Yasmin.

The UK has in recent years become the divorce Mecca of the rich and famous after the ruling many years ago that unless there was a "stellar contribution" by the husband, the wife should always be awarded half of the matrimonial assets.  

Corporate lawyers are quaking in their boots as it appears that the ownership of company assets can no longer be safeguarded in divorce proceedings. This has implications in corporate law, wealth management and divorce proceedings. It remains to be seen how courts will apply this principle in future and whether corporate law texts will now have to be re-written in the light of the ruling.

Prest who made his first fortune representing billionaire oil trader, Marc Rich in Nigeria is the owner of Petrodel Resources Ltd, an integrated energy resource company involved in exploration and production, shipping and trading. Petrodel was awarded OPL 258 in 2006. It later exited the block but it has oil blocks in Tanzania, Uganda and Zambia. The company is also involved in oil trading and has a 90,000 barrels per day term contract with NNPC.

One of the world's largest providers of products and services to the energy industry, Halliburton, has opened its new Technology Center at the Federal University of Rio de Janeiro (UFRJ) Technology Park in Brazil. The 7,062-square-meter technology centre will enable the company to work with the country's leading universities and customer research groups to establish a global centre of expertise for deepwater and mature fields.

Founded in 1919, Halliburton has more than 73,000 employees in approximately 80 countries. The company provides services to the upstream oil and gas industry throughout the life cycle of the reservoir - from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.

"Technology has played an important role in addressing our customers' challenges, particularly in Brazil's deepwater as well as mature field environments," said Tim Probert, president of Strategy and Corporate Development for Halliburton.

"This state-of-the-art centre in Brazil, close to our customers, allows us to accelerate new technology development and enable Halliburton to deliver even more innovative solutions to our customers faster," he added.

The Technology centre includes specialized laboratories, a testing area, and conference and training rooms. 

Halliburton recently opened a Completion Technology and Manufacturing Centre in Singapore.

NUPENG Threatens Strike In Dispute With IOCs

The Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) is set for a fight with the International Oil Companies (IOCs). It has issued a 14-day strike notice to oil majors, Shell Petroleum Development Company, SPDC, Chevron Nigeria Limited and Agip Oil Company.

President of NUPENG, Achese Igwe, is demanding a stakeholders' national conference on oil and gas. He wants the conference to deal with labour issues in the sector. The Union is accusing the oil giants of unfair labour practices which it says are worsening.  

A year ago, a looming strike was averted after the Ministry of Labour and Productivity intervened and enabled the parties to reach agreement. Igwe says the agreement reached with the multinationals has not been implemented.

He said : "We are giving the Federal Government, the Ministry of Petroleum, the National Assembly among other well meaning Nigerians and groups, a 14-day ultimatum to intervene and summon an all embracing stakeholders national conference to address all labour issues in the industry failing which, we will declare an indefinite nationwide strike."

Bahrain To Host International Oil And Gas Dispute Resolution Conference

Bahrain is to host the International Oil and Gas Dispute Resolution Conference which will take place in Bahrain from Nov. 17-19. The conference, being jointly organized by the Bahrain Chamber for Dispute Resolution - American Arbitration Association (BCDR-AAA), and the Association of International Petroleum Negotiators (AIPN) - will be an important global gathering for the oil and gas industry and the first of its kind to take place in the Middle East and North African (MENA) regions.

While the conference will focus on emerging issues in oil and gas disputes globally, it will also place particular emphasis on those issues specific to the MENA region in addition to the Sudan, South Sudan and Nigeria.

The event is expected to attract in excess of 450 delegates and more than 30 of the world's leading industry experts, arbitrators and counsel from international energy organizations, governments and law firms to discuss a broad spectrum of legal and commercial issues relating to disputes in the sector. Topics will include boundary disputes, state investment, infrastructure and commercial disputes.

Conference co-chairman Tim Martin said: "The need for effective dispute resolution is becoming increasingly important given the continued expansion of the oil and gas sector including petrochemical and downstream industries in the counties of the Middle East and Africa."

He added that this year's conference will focus on new and existing solutions for the oil and gas industry and their application both on a global and regional basis.

South African Oil And Gas Trade Mission To Nigeria: 9th To 12th July

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