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TNP Shutdown Forces Shell to Shut Afam VI Power Plant

The Shell Petroleum Development Company (SPDC) has shut down its 624 mega watt capacity Afam VI Power Plant due to shortage of gas as a direct result of the closure of the Trans Niger Pipeline (TNP). The TNP was closed last week due to crude oil theft related leaks. Power supply to the national grid had dropped to 105 mega watts at the time of the shutdown.

The latest shutdown of the TNP system, barely days after it had re-opened, comprising the 28inch and 24inch streams resulted in the deferment of 150,000 barrels of oil per day, and also led to tank tops and non-evacuation of condensate from Okoloma Gas Plant which supplies Afam VI Power Plant with feed gas. As a result, SPDC had to shut down Okoloma Gas Plant as it could not continue to produce gas without the evacuation of condensate.

The latest leak on the TNP occurred on the 24inch stream at Owokiri on 11 July. A Joint Investigation Visit comprising government agencies, community and civil society representatives and SPDC personnel found that a 6inch crude theft valve had been installed on the facility. SPDC repaired that leak and says it is working to remove other crude theft points that were discovered in the process. The 28inch TNP had earlier been shut in for removal of similar oil theft connections.

The company said in a statement that it is striving to repair the TNP as quickly as possible, and restore operations that will enable power generation to resume at Afam VI.

The company's Corporate Media Relations Manager TonyOkonedo said: "SPDC is deeply concerned about the negative impact of incessant crude theft activities on lives and environment in the Niger Delta, and also the loss of electricity to businesses and households across the country. The total daily loss from the TNP shutdown alone comes to about $15 million (N2.4 billion)."

The oil major has said that it is losing $15 million in daily revenue due to the frequent shutdowns.

Total Awards Egina Field Umbilical Supply Contract to Technip

Total is continuing to award contracts for the development of its Egina Field on Oil Mining Lease (OML) 130, with the announcement that the contract for the supply of umbilicals to the Egina field has gone to French oil services company, Technip.

Technip relased a statement to confirm that its wholly-owned subsidiary DUCO Ltd was awarded the important contract by Total Upstream Nigeria Ltd to supply umbilicals to the Egina field approximately 200 kilometers offshore from Port Harcourt, at water depths ranging from 1,150 to 1,750 meters. Umbilicals are a vital component of offshore oil field development and consist of an assembly of steel tubes and/or hydraulic hoses, which can also include electrical cables or optic fibres used to control subsea structures from a platform or a vessel. Although Technip did not say how much the contract is worth, they have indicated that an "important" contract for the company is one ranging from between €50 to €100 million.

The contract covers Project Management, Engineering and Manufacture of about 76 kilometers of steel tube umbilicals including production, water injection and subsea isolation valve (SSIV) umbilicals.

As part of project execution activities, significant amounts of project management (80%) and engineering (30%) will be carried out locally in Nigeria, although the umbilicals will be manufactured in their entirety at DUCO's facility in Newcastle upon Tyne, United Kingdom. The project is scheduled for delivery in 2016.

Jean-Louis Rostaing, Managing Director of DUCO, said: "This award is recognition of the quality and performance of the umbilicals provided by Technip as well as our ability to continuously innovate to better answer our clients' needs."

Total Upstream Nigeria Limited is the operator of OML 130 and owner of a 24 per cent interest. The deepwater field which was discovered in 2003 is located 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.

The price of OPEC basket of twelve crudes stood at $106.11 a barrel on Thursday, compared with $105.28 the previous day, and $104.82 the previous week. The basket price has reached a four-month high on the strength of concern over Libya and Nigeria. The unsettled political situation in Egypt with protesters on the streets and many reported killed and wounded, is worrying traders amid concern that the situation could disrupt supply. In Nigeria, the astronomical levels of oil theft have cut production to under 2 million barrels per day. 

The Minister of Finance, Ngozi Okonjo-Iwealla will be hoping that prices hold high long enough for the depleted Excess Crude Account (ECA) to be replenished. The balance in the ECA is said to have decreased by more than US$4bn this year, to US$5.3bn at the end of May.  

6 Months' Ban for Oil Marketers in False Bridging Claims 

Some oil marketers currently undergoing investigation for false bridging claims have been banned from all bridging and equalisation transactions for a period of six months, the Petroleum Equalisation Fund Management Board (PEFMB), has said.

Although the board did not give the names of the affected marketers as investigations were still going on, it disclosed that staff of 12 oil marketers were found to have made false bridging claims.

"Staff of about 12 blacklisted companies were fingered in the stealing of tags affixed on petroleum tankers under the Project Aquila meant to monitor the loading and delivery of products," a statement from the Board said. "All the directors of the companies have also been barred and will not be accepted under different company names," the statement continued.

The Board, worried by the theft of the tags had started massive sensitisation to warn marketers of the dangers of the theft of the tags issued free.  

It has therefore imposed penalties for the loss of tags, as well as introduced new processes for the registration and tagging of trucks. Marketers with damaged tags will pay a replacement fee of N50,000 and those who lose the tags will pay N50,000. Tagging of new trucks will continue to be free, PEFMB said.

The Board said it is collaborating with security agencies to ensure the full prosecution of offending marketers, who if found guilty in the law courts will be blacklisted and their names published in the media.

LPG Supply Resumes as NLNG Vessel Docks in Lagos

The blockade of Bonny Channel by the Nigerian Maritime Administration and Safety Agency (NIMASA) has now been lifted following the payment of $140 million, in addition to the initial $20 million paid earlier, to  by the Nigeria Liquefied Natural Gas company (NLNG) in their long running dispute over the non-payment of NIMASA levies. The blockade prevented NLNG vessels from entering or leaving the channel, leading NLNG to declare force majeure on exports of Liquefied Natural Gas (LNG) and also Liquefied Petroleum Gas, popularly known as cooking gas, which it supplies to the domestic market. NLNG sets aside a production of 150,000 metric tonnes of LPG yearly for domestic consumption.

At the height of the dispute, one of the vessels detained in the NIMASA blockade was the Gaz Providence, which was laden with LPG (cooking gas) for domestic consumption. As the blockade continued to prevent the Gaz Providence from departing Bonny for Lagos, the Nigeria Liquefied Petroleum Gas Association (NLPGA) made an urgent call to the government urging it to do something to avert a crisis in domestic gas availability. By last weekend, LPG suppliers to the domestic market were unable to supply the domestic market, with most suppliers' stock down by 90%. As a result, prices began to escalate and the 12.5kg cylinder of gas, which was sold at N2,800 was being sold at between N3,500 and N4,500.

The LPG laden vessel has now docked in Lagos and is discharging at the NAVGAS jetty in Apapa. It will return to the North Oil Jetty belonging to the Nigerian National Petroleum Corporation (NNPC) on Saturday to continue discharging there, after initially being turned away on arrival due to lack of space for the vessel to berth.

The NLNG/NIMASA 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 the payment of such levies by the NLNG Act, under which it was established. NIMASA then mounted a blockage to prevent vessels from leaving or entering the Bonny Channel.

Despite the payment of the outstanding levies, which NLNG says it paid "under protest", the company will continue its substantive case in court for a judicial interpretation of the apparent conflict between the NLNG Act and the legislation on which NIMASA is relying in its claim.

Police to Investigate Controversial OPL 245 Deal

The controversy over Oil Prospecting Licence (OPL) 245 which is being investigated by both chambers of the National Assembly took on a new dimension yesterday. The House of Representatives Adhoc Committee investigating the controversial 2011 deal in which OPL 245 was sold to Shell Nigeria Exploration and Production Company and Nigeria Agip Exploration and Production Limited by Malabu Oil and Gas directed that the matter should now be remitted to the Police. The Committee decided that the Police should be called in to look into certain aspects of the transaction particularly the allegations by some former directors and shareholders that documents had been forged or altered to indicate the resignation of their positions and the transfer of their shares.

The background to the transaction was that Malabu was allocated OPL 245 in April, 1998 and in accordance with the terms of the grant, it appointed Shell as its technical partner. The two companies executed relevant agreements, including a Joint Operation Agreement in 2001. Shell took a 40 per cent participating interest in the venture in a farm-in- agreement and also signed an agreement with Malabu as its technical partner for the venture. The licence was subsequently revoked by the Federal Government on July 2, 2001.

Malabu petitioned the House of Representatives Committee on Petroleum to look into the matter. The Committee found no rational basis for the revocation and directed the Government to withdraw the re-award of the block, which it had, in the meantime, made to Shell Nigeria Ultra Deep Limited, which brought ENI's local subsidiary, Nigerian Agip Exploration Limited into the block.

Malabu also instituted a suit before a Federal High Court in Abuja, which was subsequently struck out, but then lodged an appeal at the Court of Appeal in Abuja. An amicable settlement was entered between Malabu and the Federal Government before the appeal was heard. In compliance with the settlement agreement executed on November 30, 2006, OPL 245 was to be fully and completely restored to Malabu in consideration of Malabu withdrawing its appeal.

When the terms of the settlement were however not implemented and in 2010, when the current administration came to power, Malabu again petitioned the Federal Government to implement the terms of the settlement on the basis of which Malabu had discontinued its appeal.

A new settlement was reached on April 29, 2011 between the Federal Government and Malabu Oil & Gas Limited under which Malabu agreed that in consideration of the company receiving compensation from the federal government, it would settle and waive any and all claims to any interest in OPL 245.

In furtherance of the Resolution Agreement, SNUD and ENI agreed to pay Malabu through the Federal Government acting as an obligor, the sum of US$ 1,092,040,000 in full and final settlement of any and all claims, interests or rights relating to or in connection with OPL 245 and Malabu agreed to settle and waive any and all claims, interests or rights relating to or in connection with the block and also consented to the re-allocation of Block 245 to Nigerian Agip Exploration Limited (NAE) and Shell Nigeria Exploration and Production Company Limited (SNEPCO).

In consequence, there was effectively a purported sale of OPL 245 to the Shell/Agip consortium for the sum of $1.092 billion and immediate transfer of the entire sum to Malabu Oil and Gas Limited, an indigenous oil company as compensation for its alleged prior interest in the Oil block.

The Committee has now concluded that the transaction was in breach of the 1999 Constitution (as amended), the Petroleum Act and the indigenous concession policy guiding the sale of oil blocks in the country.

"They (NAE) insisted that they did not buy any interest in OPL 245, but ended up having 50 per cent equity in the block, and at the same time, a signatory to the dispute resolution agreement. This is worrisome," the committee stated in a report.

According to the report, the transfer of ownership of the oil block ceded Nigeria's national interests to foreigners at huge costs.

It stated, "Indeed, Clause 17 of the resolution agreement commits the Federal Government to indemnify, and even defend SNUD, SNEPCO and NAE from and against all suits, proceedings, claims, demands, losses and liability of any nature or kind, including but not limited to all litigation costs, attorney's fees, settlement payment, damages and all other related costs and expenses, based on, arising out of, related to or in connection with the resolution agreement and or the issuance of the OPL 245."

The Committee called for the cancellation of the agreement and asked the Federal Government to facilitate a new one that would comply with the Petroleum Act and the indigenous concession agreement of the government that guided the initial allocation of OPL 245 to Malabu Oil and Gas.

The Federal Government has consistently maintained that it was not involved in the transaction but was merely facilitating a settlement between Malabu and Shell/ENI.

Ministry Releases N48 Billion Subsidy Repayment to Oil Marketers 

The Federal Ministry of Finance has released the sum of N48 billion to be paid to oil marketers whose fuel subsidy claims have been verified. The payment follows an earlier payment this year of N192.5 billion to oil marketers earlier, bringing the total paid out to marketers this year to N240.5 billion.

In spite of the latest payout, oil marketers say they are still being owed close to N40 billion. They say that the payments were for the arrears of previous years and that the Federal Government is yet to make any subsidy payment for the first quarter of 2013.

Details of the outstanding subsidy claims owed to the Major Oil Marketers Association of Nigeria (MOMAN) members, revealed that Oando has total outstanding claims of N26.736 billion; MRS, N8.506 billion; Mobil, N8.523 billion; Forte, N7.747 billion; Conoil, N6.357 billion; and Total, N7.221 billion.

The Executive Secretary of the association, Obafemi Olawore, the 2013 said the delay in payment of 2012 and 2013 subsidy claims had as at June attracted interest of N13.1 billion.

Olawore explained that the delay in subsidy payments was also causing untold disruption to the operations of major marketers, adding that the volume of products imported by marketers had continued to dwindle. According to him, there was an agreement with the Federal Government for subsidy payments to be made within 45 days after the delivery of imported fuel but the agreement has not been adhered to by the Federal Government.

As a result, said Olawore, marketers were losing a lot of money in bank interest and foreign exchange, making it very difficult for marketers to continue imports of fuel.

Among the 26 companies in line for the latest payout are: Alteo Energy Resources, Ascon Oil, Conoil, Dee Jones Petroleum & Gas, Dozzy Oil and Gas, Forte Oil, Fresh Synergy, Gulf Treasres, Integrated Oil & Gas, Ipman Investment, Masters Energy, Mobil Oil, NIPCO and Oando. The rest are Rainoil, Sahara Energy, Swift Oil, Techno Oil, Total, Bovas, Heyden Petroleum, MRS Oil, Rahmaniyya Oil & Gas, Obat Oil, Shorelink Oil and Linetrale Oil Supply and Trading.

LEE Engineering Wins Shell Contract for Ogbotobo Flowstation Rehabilitation

Indigenous firm, LEE Engineering and Construction Nigeria Limited has been awarded a major contract by the Shell Petroleum Development Company of Nigeria (SPDC) for reviving the power system of the 45,000 barrels of oil per day capacity Ogbotobo Flowstation in Western Niger Delta. This is a first step towards the rehabilitation of the facility, which was down to 10,000 barrels when it was shut down. Operations at the flowstation were suspended in the security crisis in 2006.

The contract covers the replacement of the station's power generation and distribution system. It is planned to resume operations at Ogbotogbo Flowstation once the power system is up and running. The rehabilitation of the flowstation is in preparation for the resumption of oil production from the Ogotobo field.

"This is a major step toward fulfilling our aspiration to re-enter fields that we left in the West in 2006 due to insecurity," said SPDC General Manager, Operated Onshore and Shallow Offshore Projects, Toyin Olagunju, at the contract signing ceremony.

"A significant aspect of the contract is that it is being executed by an indigenous contractor thus promoting SPDC efforts to grow Nigerian capacity in the oil and gas sector. We will support the contractor to deliver the project on schedule in a safe and secure manner," he added.

Chairman of LEE Engineering, Dr. Leemon Ikpea said: "I thank SPDC for the opportunity to be a part of their production delivery goal. As our practice, LEE Engineering will strive to work safely in the delivery of the project."

Kaztec Engineering Wins $84.5 Million EPC Pipeline Contract from Shell   

Indigenous firm, Kaztec Engineering has been awarded an $84.5 million Engineering Procurement and Construction (EPC) contract by Shell National Exploration and Production Company of Nigeria (SNEPCO) as part of the Trans-Nigeria Pipeline (TNP) Loop line Project.  

The one-year contract, and the firm's first from Shell, is for the construction of a 3-inch, 58-kilometre loop line from the Ogale manifold to Bonny Terminal, in the South-south region of Nigeria.

SNEPCO has been experiencing challenges due to constant breaks in the pipeline where crude oil thieves attach connections to siphon oil off. The TNP is currently shut down and has also affected the delivery of gas to Afam VI Power Plant, which has now resulted in the closure of the power plant and a drop of 500 mega watts power supply to the national grid. The project, which was seen by SNEPCO and National Petroleum Investment Management Services (NAPIMS), to be an emergency project, is divided into three packages and this is the first package.

In his remarks, Chairman of Chrome Group, Kaztec's parent company, Sir Emeka Offor pledged Kaztec's commitment to deliver on schedule and to even surpass all expectations of the project. He said he was glad to join the Shell family, and looked forward to a productive partnership in the years to come.

Delta Communities: No Protection for Pipeline Vandals

Two communities in the Niger Delta have pledged to support Chevron's pipelines running through their communities. Community leaders from Benikuru and Kenyagbene communities in the Warri South-west Local Government Area of Delta State have said that henceforth, any one found to be vandalising pipelines in their communities will be given up to the authorities for lawful prosecution.  

In an effort to assure the oil giant of their support and co-operation, the community leaders from those communities released a joint statement warning the communities' youth against getting involved in the vandalisation of pipelines.  

Community leader from Benikrukru Community, Godwin Olufemi said: "It is very disturbing that some of our youths are still vandalising pipelines belonging to Chevron Nigeria Limited at this time when they are supposed to be protecting them and other government property in our various communities," while community leader from Kenyangbene community, Humphrey Bibogha, said: "Pipelines vandalisation is a serious offence and all those involved should desist as we are not going to spare any effort to fish out those bad elements bent on tarnishing our reputation."

For many commentators, the buy-in of the communities is a crucial element in the fight against crude oil theft. One of them said: "Once communities refuse to harbour those illegally tapping into the pipelines, it will make the operations of oil thieves much more difficult."

The astronomical levels of oil theft have left the nation's Excess Crude Account severely depleted with Mr Goodie Ibru, President, Lagos Chamber of Commerce and Industry, recently estimating a shortfall of N10.7 billion ($69 million) daily due to oil theft, bunkering, illegal refineries and the rising spate of insecurity.

Provision and Rental of PVT Sample Bottles

Total E & P Nigeria Limited (TEPNG) invites interested and registered Nigerian companies to respond to the opportunity for the provision and rental of PVT sample bottles. The scope of service covers the provision of necessary equipment, experienced and qualified personnel logistics and facilities in the Port Harcourt area required for PVT services. Only tenderers who are registered with NJQS service category geological evaluation services (3.12.09) and other petroleum technology services (3.12.99) shall be invited to submit technical bids. The closing date for this opportunity is 24th July 2013.   

Provision of USAN FPSO Technical Assistance

Total E & P Nigeria Limited (TEPNG) invites interested and registered Nigerian companies to respond to the opportunity for the provision and rental of PVT sample bottles. The scope of service covers the provision of necessary equipment, experienced and qualified personnel logistics and facilities in the Port Harcourt area required for PVT services. Only tenderers who are registered with NJQS service category geological evaluation services (3.12.09) and other petroleum technology services (3.12.99) shall be invited to submit technical bids. The closing date for this opportunity is 24th 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.

Provision of 2014 Dollar Operational Insurance and Third Party Liability Policies

Provision of 2014 Dollar Operational Insurance/TPL

Agip Energy and Natural Resources (Nigeria) Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of operational insurance cover for its properties and third party liabilities. The scope of service covers the provision of operational insurance and general third party liability insurance policies. Only tenderers registered with NJQS in the non-life insurance service category (3.14.32) product category shall be invited to submit technical bids. The closing date for this opportunity is 7th August 2013.

Provision of 2014 Nigeria Naira Policies

Agip Energy and Natural Resources (Nigeria) Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of 2014 Nigerian naira policies. The scope of services covers the provision of personal accident, group life assurance, motor vehicle, computer transit and marine. Only tenderers registered with NJQS in the life insurance service 3.14.30 and/or 3.14.32 (non-life insurance services) product service category shall be invited to submit technical bids. The closing date for this opportunity is 7th August 2013.

Agip Energy and Natural Resources (Nigeria) Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of 2014 Nigeria naira insurance policies. The scope of service covers the provision of group personal accident, group life assurance, motor vehicle, fidelity guarantee and transit all risk policy. Only tenderers who are registered with NJQS in the life insurance service category (3.14.32) and /or non-life insurance services (3.14.32) product category shall be invited to submit technical bids. The closing date for this opportunity is 8th August 2013.

Provision of 2013/2014 Operational Insurance Policy

Agip Energy and Natural Resources (Nigeria) Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of 2013/2014 operational insurance cover for its properties and third party liabilities. The scope of service covers the provision of operational insurance and general third party liability insurance policies. Only tenderers who are registered with NJQS in the non-life insurance services category 3.1432 product category shall be invited to submit technical bids. The closing date for this opportunity is 8th August 2013.

Addax Petroleum Development (Nigeria) Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of field operation safety case and major hazard assessment & risk register. The contract is proposed to commence in 2013.This scope of services covers the development of safety case and major hazard assessment & risk register for OML 123 field operations. Only tenderers who are registered with NJQS product group3.02.02 Safety, Health and Environment Consultancy shall be invited to submit technical bids. . The closing date for this opportunity is 5th August 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