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Shell Re-opens Damaged Trans Niger Pipeline (TNP) 

The Shell Petroleum Development Company of Nigeria Ltd (SPDC) has re-opened the Trans Niger Pipeline (TNP) after completing repairs to the Joint Venture pipeline, which it operates.  A damaged valve has been repaired and the crude oil theft points removed. The TNP transports crude oil from Shell flowstations in the Eastern Niger Delta to Bonny export terminal for shipment.  

According to the company, a joint investigation team comprising regulators, communities, independent observers and SPDC found that this incident occurred as a result of unknown persons installing a valve to steal crude oil from the line. The pipeline was shut after the sabotage and crude oil theft activities which led to a fire and explotion on the 28" TNP on the 19th of June.

In the face of severe criticism that the pipeline is being operated beyond its safe operational lifespan, the company was keen to point out that the pipeline is operated in line with the company's Pipeline Integrity Management System (PIMS), ensuring regular inspection and maintenance. They said that the dominant cause of failures on the TNP has been third party damage resulting from sabotage (hacksaw cuts, drilled holes, etc) and illegal crude theft. In the past three years, a total of 25 leaks have been recorded on the facility - 23 of which were due to sabotage and two operational pinhole leaks.

The company was at pains to stress its determination to continue to operate safely and in an environmentally friendly manner, after suggestions from some quarters that it had re-opened the TNP before it was safe to do so. The Managing Director of SPDC and Country Chair Shell Companies in Nigeria, Mutiu Sunmonu said: "Our ability and competence to safely operate the pipeline has never been in doubt. The only way to ensure the TNP operates optimally without being shutdown regularly for repairs is to stop the thriving crude theft activities on both the 24" and 28" streams."

Mr Sunmonu maintains that shutting the vital pipeline down is not the answer. He directed anyone concerned about whether the pipeline is fit for service, to log on to the company's spills website (www.shellnigeria.com/spills) where all the data from the interventions and assessments in the pipeline integrity assessment process can be found.

The company also denied suggestions that it reacted slowly to the fire and spill, saying: "At the earliest opportunity, we quickly mobilised teams to respond to a crude theft spill on the 28" TNP on June 10 and the explosion and fire on June 19. We conducted an assessment of the risks and decided, with the support of the JTF to enforce a restriction of access to the site for safety reasons. Our response and the actions we took at Bodo West were in the best interest of lives and the environment."

The company has not confirmed the amount of oil that has spilled into the environment from this leak, but there are reports that it could be in the region of 6,000 barrels. Shell had previously said it was losing about 60,000 barrels a day of production to oil theft.

Domestic Gas Production Increased by 25 Per Cent in 5 Years

Government's renewed attention to the gas sector has increased domestic gas production by 25 per cent in the last five years, the Nigerian National Petroleum Corporation (NNPC) has said. The Corporation's Group Executive Director, Gas and Power, Dr. David Ige, in a presentation stated this at the 4th Annual General Meeting of the Nigeria Gas Association (NGA) in Lagos yesterday. He noted that Nigeria has invested hugely in gas infrastructure in recent years. Ige told participants at the meeting that Nigeria would connect gas pipelines across its zones in no distant future.

Nigeria is losing $1.789 Billion to flaring annually according to the new Director, Department of Petroleum Resources (DPR), George Osahon.  

The Deputy Director, Gas, Mr. Oliver Okparaojiako, representing Osahon disclosed this Wednesday, at the Nigerian Gas Association, NGA Business Forum, held in Lagos. According to him, Nigeria's daily loss from gas flaring and under-utilisation is $4.8 million. "Utilised gas is 6.6 billion bcfd, the rest is flared, which is 1.4 bcfd. If you take this loss at $3.50/1000scf, the average daily loss is $4.8 million, which is close to N789 million," he said.

He outlined the Government's efforts to address the situation through a concerted effort to increase gas production and utilisation. He said that Nigeria has a robust portfolio of investment opportunities in both power and gas sectors. Among these he said is the exploration effort in the Benue through the Chad Basin and Anambra Basin which have shown that the Inland Basins have the potential to add to the national gas reserve volume.'   

He said the aspiration of the Federal Government is to monetize gas reserve, eliminate gas flare, as well ensure greater private sector investment in gas production, transportation and distribution of infrastructure.   

According to him, there will be a regional gas processing hub and intense use of gas in the sector for automotive fuel after the passage of the Petroleum Industry Bill which is currently before the National Assembly.

He said the era will also usher in a vibrant distribution network, with South to North, Western and Interconnector backbone transmission pipelines.

The Managing Director of MobilUnlimited and Chairman of Oil Producers Trade Section (OPTS), Mr Mark Ward said Nigeria's huge gas potential can drive development through gas power-based industrialization and export.

Nigeria has consistently ranked second to Russia in global gas flaring for the period from 2007 to 2011.

The price of OPEC basket of twelve crudes continued to soar, standing at $104.69 dollars a barrel on Wednesday, the highest it has been since March. The high prices come as political tensions in Egypt continued to fuel concern about potential disruptions to oil trade in the region with observers worrying that the situation could worsen before it gets better, potentially threatening production and transit of exports through the Suez Canal.

The news is not all good. Despite a previously bullish attitude, OPEC now predicts that the world will need less of its crude in 2014 as a result of competing supply. Nigeria will be one of the hardest hit member nations, as the fifth largest supplier of crude to the US and Western Europe. US imports from Nigeria have all but dried up with no exports to the US so far this year from Nigeria. Nigeria and Angola rely on crude oil for 80 per cent of their oil revenues. The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke admitted during a Conference hosted by Oxford University in May that the United States shale oil boom remains the greatest threat to Nigeria's crude exports.

Meanwhile, in its forecasts for 2014, the International Energy Agency (IEA) is predicting that world oil consumption will climb by 1.2 million barrels a day, up from 930,000 a day in 2013. Supplies from outside the Organization of Petroleum Exporting Countries will jump by 1.3 million barrels a day amid booming output in North America, curbing the need for crude from the 12- member producer group, according to the report. The Paris-based agency also sees oil production in non-OPEC countries expanding in 2014 at the fastest pace in 20 years.

Introduced on 16 June 2005, is currently 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).    

NIMASA-NLNG Dispute Triggers Cooking Gas Crisis

The Nigeria Liquefied Petroleum Gas Association (NLPGA) is calling on the government to do something urgently to avert a crisis in domestic gas availability. The Association said in a statement: "The NLPGA will like to use this medium to appeal to the Federal Government to intervene in this matter. The current face-off between the two organizations has enormous consequences and would most definitely have a negative impact on Nigerians."

The statement warned that the continued dispute between Nigeria Liquefied Natural Gas Ltd (NLNG) and Nigerian Maritime Administration and Safety Agency (NIMASA) is already leading to scarcity of the product. This, says the Association, will result in high gas prices. One of the NLNG vessels detained by NIMASA is the Gaz Providence, which is laden with LPG (cooking gas) for domestic consumption. As a result warns NLPGA, LPG suppliers to the domestic market are unable to supply the domestic market with most supplies down by 90%.   

Already, prices are starting to escalate and the 12.5kg cylinder of gas, which was sold at N2,800 is now being sold at between N3,500 and N4,500. The Association said that if the situation is not resolved it will cause unnecessary hardship to the Nigerian masses.

The Association said: "For a country blessed with abundance of underutilized gas reserves and also seeking to put an end to gas flaring, there should be no reason why government should allow the face off to continue this long, with its attendant consequence on LPG availability for domestic and industrial use."

NLNG is the major producer of LPG for domestic consumption and has been supplying the local market for the last six years after committing 150,000MT per annum of its production to the Nigerian market. As a result of the dispute, NLNG has had to declare force majeure on its supplies of domestic LPG. In its letter to its clients which NOGintelligence obtained, NLNG explained the background to the ongoing face off with NIMASA.  

The dispute arose when NIMASA sought to impose some levies on NLNG, including a Sea Protection Levy, 3% freight levies on cargo exports and a 2% Cabotage levy. NLNG maintains that it is expressly exempted from payment of such levies by the NLNG Act under which it was established. NIMASA then took matters into its own hands by mounting a blockage on the 3rd of May preventing vessels from leaving or entering the Bonny Channel. The blockade was lifted following the intervention of the National Security Adviser who directed NLNG to pay NIMASA the purported levies. NLNG made a part payment to NIMASA of the outstanding claim, but then approached the court for a judicial interpretation of the apparent conflict between the NLNG Act and the legislation on which NIMASA is relying in its claim.

NLNG obtained an injunction from a Federal High Court on the 18th of June, ordering the Federal Government and its agencies, which according to NLNG, includes NIMASA, from imposing any charges or taking any steps to obtain or prevent access to NNLG owned or chartered vessels, whether in-bound or outbound from Bonny Channel.

On the 21st of June, according to NLNG, NIMASA slapped ship detention orders on NLNG vessels and third party vessels restraining them from accessing or departing from NLNG's loading bay and going through the Bonny Channel.   

NLNG advised the third party vessels, including the Gaz Providence, to pay the levies. Those that have done so are still prevented from leaving the Channel. According to the NLPGA statement, "The owners of Gaz Providence have paid the required statutory fees but the vessel is yet to be released."

One frustrated domestic supplier of LPG, Felix Ekundayo, of Linetrale Gas Ltd, commenting on the situation said that the blockade was jeopardizing the country's largest gas export business, and the country's second largest foreign exchange earner.  "NLNG processes 1.7 billion standard cubic feet of gas a day or thereabouts into exports; with this blockade that gas will be flared," he added.

West African Gas Pipeline Repairs Complete

Repairs to the West African Gas Pipeline (WAGP) have been completed and gas is expected to begin flowing through the pipeline next week after a positive test run. The vital West African pipeline has been shut since the 28th of August 2012 when it was damaged after incurring extensive damage in the Lome area following a collision between a Togolese naval vessel and  another craft, which caused severe damage to the pipeline.

News of the completion of repairs was given by the Chief Executive Officer of the Volta River Authority (VRA), Mr Kweku Awotwi, in Accra, Ghana. He said the Sunon Asgoli Plant in Ghana, which had been shut since August 2012 will soon begin receiving 50 to 60 million cubic metres of gas for its operations enabling 250 megawatts of power supply to the grid. The situation had adversely affected industries in Ghana, which had to endure load-shedding during the period of repairs.  

Repairs to the WAGP had been slated for completion by the 30th of April but the company was unable to meet the deadline.

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.

Afren Acquires Own Shares as Close Period Ends

London Stock Exchange listed Afren Plc announced that following the sale of all Afren holdings in First Hydrocarbon Nigeria to CSL Stockbrokers in Nigeria, they will be using the proceeds to acquire some Afren shares in the public markets.  The Sale and Purchase Agreements with CSL Stockbrokers are for the sale of 11,819,085 shares in FHN, approximately 10 per cent, at a price of US$2.47 per share. Net proceeds will be used to acquire Afren shares in the public markets, following the expiry of the current H1 2013 close period and the two year period during which the company had to hold its shares.  

As previously reported by NOGintelligence, Afren had announced the acquisition of an additional 23.3 per cent beneficial interest in First Hydrocarbon Nigeria. This follows the recent shareholder approval on the recommended acquisition of a 10.4 per cent interest. The acquisition of the additional 33,966,333 shares from a combination of Capital Alliance Energy Nigeria Limited, Earl Act Global Investments Limited and other FHN shareholders, has been undertaken at an average price of US$3.10 per share in cash.

Afren has also entered into a Put/Call option with Earl Act Global Investments Limited for a further 18,299,993 million FHN shares, representing a further 12.5 per cent at a price of US$3.32 per share. These options may only be exercised after 24 months and for a period of 6 months thereafter.  

FHN has a 45 per cent interest in the OML 26 portfolio of assets onshore Nigeria, which includes two producing fields, with 2P oil reserves estimated at 134.6 mmboe and gross contingent resources estimated at 68.0 mmboe, and three proven but undeveloped fields, with gross contingent resources estimated at 144 mmboe and a further 615 mmboe of gross unrisked prospective resources on the block across multiple prospects.

NUPENG, PENGASSAN Call for Government to Tackle Oil Theft within 60 Days

Oil and gas workers' unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG) have given a joint ultimatum to the government to deal decisively with oil theft and ensure that oil and gas installations, particularly pipelines are secured.  

The organisations said the ultimatum had become necessary because of the extent of the loss to the economy through oil theft and the danger it poses to the survival of the industry, bearing in mind the losses encountered by the industry. The situation now poses a threat to investments in the industry and income and jobs they said.

At their Joint National Executive Council (NEC) meeting the organisations said: "In view of the obvious looming danger to the survival of the oil and gas industry and by extension the nation's economy which has become so endemic, with high sense of responsibility and patriotism, we have resolved to issue the Federal Government of Nigeria, a 60-day ultimatum to effectively and holistically address and find a lasting solution to this massive crude oil theft debacle."

Speaking on the rampant incident of crude theft, the Presidents of the PENGASSAN and NUPENG, Babatunde Ogun and Igwe Achese respectively, condemned the failure of the Federal Government to combat the huge level of crude oil theft.

Achese said that as a result of crude theft, the production of most multinationals had been reduced by over 60 per cent. As a result he said, there were shortages, shut ins, high costs of operation as well as threats to jobs and reduced investment in the industry.  

Achese called on the government to provide adequate protection for installations or the unions would be forced to withdraw its members from those installations.

Eket Community Demands Direct Payment of N4 Billion Mobil Oil Spill Compensation 

The Eket local communities in Akwa Ibom State have issued a demand to ExxonMobil regarding the $N4 billion compensation to be paid by the company following an oil spill in November 2012 which the communities say caused devastation and injury to their local communities. They want the oil company to pay the fine over to a properly constituted committee rather than the State government. The community says that it is concerned that the payment may be diverted away from the communities directly affected by the oil spill, into the coffers of the State. They are now threatening to force Mobil to shut its operations unless it adheres to their 21-day ultimatum to pay the money over to them.

ExxonMobil said it was up to the National Oil Spill Detective and Responsive Agency (NOSDRA) and the Department of Petroleum Resources (DPR) how the money would be disbursed.

Oil Communities Demand Direct Payment of 13 Per Cent Derivation Fund

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has been told it has no constitutional backing empowering it to pay the 13 per cent derivation fund to any State Government account. This is according to some oil and gas producing communities of Akwa Ibom State, who say that the State Government is not the beneficiary.  

The communities had in a memo petitioned the Commission arguing that the provisions of the nation's 1999 constitution are clear enough on where to pay the fund, insisting that their demands are within the confines of the enabling laws.

In a letter signed by 13 leaders of the oil and gas producing communities namely: Awawa Eka-Enang, Iniobong Willie, Prince Benhur Oduenyie, Chief Unanaowo Akpan, Elder Ufort Udo, Sunday Okon, Mr. Ibanga Asuquo Bassey, Mr. Stanley Etim, Obong Sebastian Okon, Chris Abasi-Eyo, Chief Ime Jack, Engr. Kevin Ibok and Edet Daniel, they said:  "We insist on the provisions of Section 162(2) which state that provided that the principle of derivation shall be constantly reflected in any approved revenue formula as not less than 13 per cent of the revenue accruing to the Federation Account directly from any natural resources."

"We do not need an amendment of the constitution for administrative implementation of that provision," they added.

The community leaders lamented that for 13 years, the governors of oil producing communities have received the 13 per cent derivation fund meant for the development of oil and gas producing areas, but have used the funds to develop their state capitals and non oil producing communities, leaving the actual oil and gas producing communities in abject poverty, hunger and penury.

TOTAL-Provision of One Deep Offshore Drilling Rig for OML 138

Total E&P Nigeria Limited (TEPNG) invites interested and pre-qualified companies to respond to the opportunity for the provision of one deep offshore drilling rig for the USAN Field Development and other drilling activities on OML138. The scope of service consists of drilling and completing mostly deviated and some sub-horizontal wells. Only tenderers who are registered with Drilling Rigs (Semisubmersibles/Jackups/Others) 3.04.01 NJQS Product/Service category shall be invited to submit technical bids. The closing date for this opportunity is 14th July 2013.

Total Upstream Nigeria Limited (TUPNI) invites interested and pre-qualified companies to respond to the opportunity for the supply of One Deep Offshore Drilling Rig for the AKPO Field Development and other drilling activities on the OML130 licence. The scope of service consists of drilling and completing mostly deviated and some sub-horizontal wells. Only tenderers who are registered with Drilling Rigs (Semisubmersibles/Jackups/Others) 3.04.01 NJQS Product/Service category shall be invited to submit technical bids. The closing date for this opportunity is 19th July 2013.

Mobil Producing Nigeria Unlimited, an ExxonMobil subsidiary and operator of the NNPC/MPN Joint Venture is plans to engage contractors for 3D/4D Seismic Data Processing Services over parts of its fields within the NNPC/MPN Joint Venture (JV) acreage for an anticipated term  of two years with a one year optional renewal. The contract is expected to start by the third quarter of 2013.  The scope of work includes but is not limited to the provision of 3D/4D, 1C-4C Seismic Data Processing in Time and/or Depth, using associated seismic processing software tools and highly qualified specialist personnel.  Only tenderers who are registered with the relevant 2D/3D/4D Seismic Data Group 3.10.02 NJQS Product/Category shall be invited to submit technical bids. The closing date for this opportunity is 29th July 2013.

JULY EVENTS 

Lagos, Nigeria

30 July - 1 August

www.spenigeria.spe.org  

AUGUST EVENTS 

International Conference on Petroleum Refining and Petrochemicals

Port Harcourt, Nigeria

28th - 29th August 2013

goddy.igwe@ipsng.org;  

goddy.igwe@uniport.edu.ng;  

goddyigwe@aol.com

Offshore Patrol Vessels (OPV) Africa

Lagos, Nigeria

27th - 29th August 2013

www.offshorepatrolvesselsafrica.com

SEPTEMBER EVENTS 

Oil and Gas Conference & Exhibition

Aberdeen, United Kingdom

3 - 6 September

 www.offshore-europe.co.uk