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Greetings!
Welcome to our 57th issue. We're sorry to be bringing you your NOGintelligence weekly read so late in the day. The breaking news of the sudden replacement of the Director of DPR has taken everyone by surprise which has meant phones ringing non-stop all day.
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George Osahon Is New DPR Director
|  The Department of Petroleum Resources (DPR) has a new Director. He is Mr George Osahon. Osahon, whose appointment was approved on Thursday by President Goodluck Jonathan is to take over from Osten Olorunshola who was appointed to the position in 2011. Osahon, who is the current President, Nigerian Association of Petroleum Explorationists (NAPE) is to bring to the new position his over 30 years experience in the petroleum sector. Previous positions held by the new DPR director include Group General Manager, National Petroleum Investment Management Services (NAPIMS); Managing Director, Nigerian Petroleum Development Company (NPDC). George Osahon is the Managing Director of Geo Concept Technical Limited, a company devoted to assisting assets holders and service companies in the upstream sector of the industry. The company is involved in manpower supply, market trends and forecasts, HSE and community management and other advisory services. Mr Osahon obtained a BSc degree in geology from Ahmadu Bello University, Zaria in 1974 and an MSc degree in Petroleum Geology from Imperial College, London in 1981. He joined NNPC in 1976 and rose to the position of Chief Geologist before leaving for the private sector in 1992. Mr Osahon returned to NNPC in 2005 as the managing director of NPDC then Group General Manager (GGM) of NAPIMS and lastly GGM Nigerian Content before exiting the Corporation in July 2009. Industry insiders have welcomed the appointment. Biodun Adesanya, CEO Degeconek Nigeria Limited, a fellow of NAPE said of the appointment: "It is a welcome development. I am sure the new Director has the capacity to deliver on the mandate given to him, given his long years of experience in the petroleum sector."
Former NAPE President Jide Ojo commended his appointment urging him to brace up for the new challenge. "The task before him I would like to say is enormous but I am sure he is up to the task. So I would like him to start by hitting the ground running so that he would be able to make an indelible mark in his tenure as the DPR director," he said. |
Chevron to Sell Three More Oil Blocks
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Barely a week after confirming that it is disposing of its interest in Oil Mining Leases (OMLs) 83 and 85, Chevron Nigeria Limited, the Nigerian subsidiary of U.S. Chevron Corporation has revealed that it is divesting its interest in another three blocks.
The company says that its decision to put up its 40% interest in OMLs 52, 53 and 55 in addition to 83 and 85 for sale is a move to prioritize its portfolio. According to the company, they are looking to offer these assets, which they do not consider of sufficient commercial interest to indigenous companies. They have stringently denied any suggestions that there is a policy move out of Nigeria. The General Manager, Policy, Government and Public Affairs, Deji Haastrup, says: "Our interests in oil and gas continue to grow with new projects such as the EGTL coming on stream soon."
There is bound to be a huge bidding war for what is looking like a summer bonanza for Chevron, after instructing BNP Paribas to run the sale. BNP Paribas managed to secure a bid of $1.7 billion for ConocoPhillips from Oando, a winning bid that most analysts believe to be far in excess of the true worth of the ConocoPhillips assets. Chevron must be hoping that BNP Paribas will be able to do for them what they managed to do for ConocoPhillips.
The recent exodus of international oil companies (IOCs) from the onshore and shallow water areas of the Niger Delta has opened up great opportunities for indigenous players in the absence of new marginal field rounds. Already, First Hydrocarbon is said to be interested, after whetting its appetite with the Shell OML 26, which it acquired barely a year ago. Niger Delta E&P Omerelu field is on OML 53 and the company must surely be in interested in putting in a bid to consolidate the gas reserves on the block. It had to pull out of the ConocoPhillips race to concentrate on finalising the OML 34 acquisition, as part of NDWestern. Oando's determined bid to up its game in the upstream sector could see it getting into the race. Certainly, its oversubscribed rights issue for the ConocoPhillips acquisition has given it real credibility. They are however pleading the Fifth Amendment on whether or not they will be bidding.
OML 52 is a 246 square kilometre block, while OML 53 is a huge 1,554 sq kilometres and OML 55 is 722.40 sq kilometres. The original licences were granted in June 1967 and are due to expire in June 1927.
Chevron operates and holds a 40 per cent interest in 13 concessions, predominantly in the onshore and near-offshore regions of the Niger Delta. The concessions cover approximately 2.2 million acres (8,900 sq km) and are operated under a joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC), which owns a 60 per cent interest. The company also holds acreage positions in four operated and six non-operated deep-water blocks, with working interests ranging from 18 per cent to 100 per cent. In 2012, net daily production averaged 238,000 barrels of crude oil, 165 million cubic feet of natural gas and 4,000 barrels of LPG.
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Shell To Sell More Onshore Assets
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As International Oil Companies (IOCs) continue the scramble to exit the troubled Niger Delta's onshore and shallow water areas, Shell Petroleum Development Company (SPDC) has announced that it has begun a strategic review of the interests that it holds in selected onshore leases in the SPDC joint ventures. The company intends to exit more onshore leases from the Easter part of the Niger Delta, subject to approvals from its partners and regulatory approvals.
SPDC says it has been following a "strategy of selective divestment" of its onshore portfolio. The company says it is "concentrating the operating footprint into a smaller, more contiguous area," as well as, "supporting the Government's policy of encouraging investment by indigenous companies in the Nigerian oil and gas industry."
Whilst their underlying reasons have nothing to doing with altruism and everything to do with the commercial reality of dealing with community issues and oil theft, the IOCs continued onshore divestment has provided significant opportunities to indigenous companies as they rush to pick up the discarded assets.
Since 2010, SPDC has sold its interest in eight OMLs for a total of $1.8 billion but Managing Director, Mutiu Sunmonu stresses that: "Nigeria remains an important part of Shell's portfolio, with clear growth potential, particularly in deepwater and onshore gas. This strategic review marks another step in re-focusing the SPDC portfolio." It seems that the IOCs are all singing from the same hymn sheet.
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Total Begins Egina Field Development
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Total Upstream Nigeria Limited, the operator of the OML 130 block and owner of a 24 per cent interest has obtained the necessary approvals from Nigerian National Petroleum Corporation (NNPC) to award the main EPC contracts for the development of the offshore Egina field.
The deepwater field was discovered in 2003. It is located in water depths of around 1,600 meters, some 200 kilometers offshore Port Harcourt and 20 kilometers southwest of the Akpo field, which is also located on the same licence and has been in production since 2009.
The field development plan will see 44 wells drilled, which will be connected to a 330 meter-long floating production, storage and offloading (FPSO) vessel with a storage capacity of 2.3 million barrels. The design of the FPSO includes capacity for future developments of nearby discoveries. First oil is expected end of 2017, with output expected to reach 200,000 barrels of oil per day at plateau.
Total's joint venture partners in OML 130 are NNPC (Nigerian National Petroleum Corporation), SAPETRO (South Atlantic Petroleum) of Nigeria, CNOOC Limited of China and Petrobras of Brazil.
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FID Taken On Trans Niger Pipeline Loop-line and Gbaran-Ubie Phase 2
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The Shell Petroleum Development Company of Nigeria Ltd (SPDC), the operator of the Nigerian National Petroleum Corporation (NNPC)/SPDC joint venture (SPDC JV) announced today that final investment decisions (FIDs) have been taken for the Trans Niger Pipeline loop-line (TNPL) and the Gbaran-Ubie Phase Two projects. The total capital investment for the two projects is around $3.9 billion.
SPDC Managing Director, Mutiu Sunmonu said: "Today's announcements demonstrate our long term commitment to Nigeria by clearly signalling our intent for the strategic direction of Shell in Nigeria."
The Trans Niger Pipeline (TNP) is important for Nigeria, pumping some 180,000 barrels per day of crude oil to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation (Afam VI power plant) and liquefied gas exports.
Sections of the TNP have been heavily impacted by sabotage and crude oil theft. The design of the TNPL includes improvements which make the pipeline better protected against crude oil theft and sabotage, which should help to reduce pollution related to criminal activity. The total capital investment for the TNPL project bundle is expected to be $1.5 billion.
The Gbaran-Ubie Phase Two project consists of five gas supply and infrastructure projects which are critical for the continued gas supply to the Nigeria Liquefied Natural Gas (NLNG) plant and the Gbaran-Ubie domestic power plant (IPP). The total investment for the Gbaran-Ubie Phase Two bundle is $2.4 billion. The expected peak production from these projects is 215 kboe per day (100%).
Commenting on the projects, Mr Mutiu Sunmonu said: "These investments will help to secure energy supplies for domestic and international markets. The TNPL project demonstrates the tangible steps SPDC and its partners are taking to tackle the scourge of criminal activity - pipeline sabotage and crude theft in the Niger Delta, which is the cause of so much environmental and economic damage in this region."
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Mart Resources Provides Update On Umugini Pipeline Construction
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TSX Venture Exchange listed Mart Resources has released an update on the status of the construction work on its Umugini Pipeline and Trans Forcados Export Pipeline. Mart is involved in a joint venture with Midwestern Oil and Gas (the operator) and Suntrust Oil Company in the Umusadege Oil Field located onshore in Delta State.
According to the company, construction of the Umugini pipeline is progressing from the location near the Umusadege field. Clearing of the right of way, stringing, welding and field joint coating of the pipeline has been completed on approximately 17 kilometers of the 51-kilometer pipeline. The pipeline has two segments. The first segment is from the Umusadege field south to the Ogini flow station on OML 26. This section is 22 kilometers in length and is where the 17 kilometers of pipeline construction has been completed.
The second segment is from the Ogini flow station east to the Eriemu flow station. This section of the pipeline is being constructed along an existing right of way and will be twinning the existing pipeline currently operating between the Ogini flow station and the Eriemu flow station.
The construction of the Umugini pipeline by the joint venture partners is in accordance with their plans to provide a second independent export pipeline for Umusadege field production. The Umugini pipeline's gross transportation capacity will be approximately 45,000 barrels per day and it will connect the Umusadege field to the Trans Forcados export pipeline. The Trans Forcados export pipeline will deliver crude oil from Umusadege field to the Forcados export terminal operated by Shell. Negotiations regarding the crude handling agreement with the export pipeline and terminal operators are nearing completion.
The Umusadege field is a multiple-horizon hydrocarbon reservoir situated in the North Central area of the Niger Delta basin and it contains 13 known reservoirs. Commercial production commenced from 2008 and as at May 2011 the field had reached an average production of 10,525 barrels of oil per day.
The partners had to shut down production from the field earlier this year in February after the export line operated by Nigerian Agip Oil Company was vandalised. Repairs were completed in April and production resumed soon afterwards and has since returned to normal levels.
Crude from the Umusadege field is being purchased by Ente Nazionale Idrocaburi (ENI) under a Crude Sale and Purchase Agreement and exported through the Brass Terminal.
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Shell Shuts Pipeline, Defers 150,000 Bpd Due To Crude Theft
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Shell Petroleum Development Company of Nigeria (SPDC) joint venture has shut the Trans Niger Pipeline (TNP) following an explosion and fire at a crude theft point on the 28" section of the facility at Bodo West in Ogoni land. This is a huge blow to Nigeria as the country's production continues to decline as a result of oil theft.
SPDC had previously shut down the 28" TNP to remove crude theft connections, and has now closed the 24" TNP as a precautionary response to the fire. As a result, the entire TNP system comprising the 28" and 24" pipelines, have been shut-in. The company says it will reopen the 24" TNP when it is safe to do so, while the 28" TNP will remain shut-in until the fire has been extinguished, and investigation and damage assessment completed.
Some 150,000 barrels of oil per day is deferred from the closure of TNP.
SPDC Managing Director and Country Chair Shell Companies in Nigeria, Mutiu Sunmonu, explained: "Unknown persons continued to reconnect illegal bunkering hoses at Bodo West even as our pipeline team were removing crude theft points. It was therefore not surprising that the fire occurred from the continuing illegal bunkering even as a previous crude oil theft point was being repaired by the team." "This is another sad reminder of the tragic consequences of crude oil theft," he added. According Mr Sunmonu, the incident resulted in practically no spill as the oil is burning off. Responding to concerns about the oil that is visible in the water, he explained that it is from an earlier oil spill, which he says was also as a result of oil theft. The explosion also triggered a fire on a nearby barge.
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OPEC daily basket price stood at $103.78 a barrel Wednesday, 19 June 2013
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The price of OPEC basket of twelve crudes stood at $103.78 a barrel on Wednesday, compared with $103.10 the previous day, according to OPEC Secretariat calculations.
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FEC Ratifies Port Facilities Project For Onne Oil and Gas Free Zone
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Phase 4B of Onne Oil and Gas Free Zone is to go ahead following ratification of the President's "anticipatory approval." The project is for the concession and the development of the port complex at Onne for $2.7 billion exclusive of taxes by Deep Offshore Services Nigeria Limited.
The Minister of Transport, Mr Idris Umar said that when completed, the new complex would help de-congest the Lagos and Port Harcourt ports.
"The project is expected to generate 4,000 job opportunities for both professionals during its execution and about 20,000 direct and indirect job opportunities when it is in full operation", he added.
Completion is to take place within 6 years and the concession will be for a period of 25 years. Mr Umar explained that the Deep Offshore Services would amortise the cost from service boats and other port charges
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Four Kidnapped By Pirates Off Offon Field
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Four crew members, 3 Indians and 1 Russian have been kidnapped by armed pirates from their vessel MDPL Continental One. The offshore fuel supply vessel was some 7 nautical miles off the Offon oil field when the boat which was flying a Singapore flag was boarded by 14 armed men who arrived in speedboats. There is no word yet on the whereabouts of the kidnapped crew members.
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OTC Calls For Presentation Of Papers For OTC 2014
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OTC is calling for the presentation of papers for its next Offshore Technology Conference, which has been scheduled for 5-8 May in Houston. They are inviting the submission of papers on latest technical and innovative solutions and advancements. The conference is the largest offshore energy conference in the world. Proposals are being accepted online until 10 September 2013.
Papers are to focus on drilling technologies, facilities operations, HSE management, flow assurance, global governance and regulations, subsea production and processing systems, riser systems, and more. Further details are available online.
If selected, the author will be invited to present the paper at the conference and the paper will become a part of the multi-society library, OnePetro.org.
Submission of papers may be made through the website www.otcnet.org or by clicking here.
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South African Oil And Gas Trade Mission To Nigeria: 9th To 12th July
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WESGRO, a South African Government Agency for Investment and Trade promotion in Cape Town, South Africa will be leading a trade mission to Lagos from 9-12 July. The delegation of 18 companies from South Africa is mostly from ICT and Oil and Gas sectors. The aim of the mission is to facilitate partnerships between South African and Nigerian businesses in these sectors. A business networking session is planned for business interaction. Date: Wednesday 10th July 2013 Venue: Federal Palace Hotel, Ahmadu Bello Way, Victoria Island, Lagos Time: 9:00am For further details please contact: grandieu@gmail.com or julisy2k@yahoo.co.uk Back to top
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Remi Aiyela
Editor, NOGintelligence
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