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Chevron Shortlists Preferred Bidders for Assets Sale 

American oil giant, Chevron has chosen its preferred bidders in the race for the acquisition of its interests in Oil Mining Leases (OMLs) 52, 53 and 55. The sale of the assets was announced only two months ago, followed by a further announcement, a week later that another two assets, OMLs 83 and 85 were also up for sale. The shortlisted names that NOGintelligence obtained showed some unsurprising winners and some rather surprising losers.

The bidding process which is being managed from the United States headquarters of Chevron, kicked off in June with a very hush-hush invitation to 20 companies to bid for the assets although the process was later opened up to more candidates. BNP Paribas is advising Chevron on the transaction and Managing Director, Moyo Kamgaing who NOGintelligence contacted previously, remained tight-lipped on the process, except to say that the company is very confident about getting good prices and closing on time.

The bids were submitted in great secrecy but NOGintelligence has been able to obtain information on the criteria the company and its advisers would have relied on to choose the preferred bidders.

A lot of importance would have been placed on financial strength. Chevron was keen to shortlist only those that could show the strongest financial backing or capability. This will make it easier for some who felt they should have been shortlisted on the basis of their exploration and production expertise to understand why they may have been rejected. NOGintelligence gathered that there were a lot of shortcomings in the proof of finance that some bidders submitted. Some were worded very loosely and the company could not be confident that the financial backing for those candidates would materialise if they were successful. Successful bidders would have had much stronger financial commitments which engendered a greater degree of confidence that they could see the process through.

Another distinguishing factor in the assessment of the quality of the bids would have been the expertise of the bidders. The three are operatorship assets so it would have been important to Chevron to choose the bidders with the expertise to operate the assets. Joint venture partners, Nigerian Petroleum Development Company (NPDC) - the exploration and production subsidiary of the Nigerian National Petroleum Corporation (NNPC) - has so far expressed no interest in taking over operatorship of the assets from Chevron. This makes the process infinitely smoother and so the company does not envisage the problems with operatorship which occurred with the Shell divestments where NPDC insisted that it would take over operatorship from Shell. For that very reason, Chevron is keen to choose bidders with the expertise to successfully operate the assets.

Another criterion which would have been considered important in the process was end user arrangements. The assets are primarily gas assets and so bidders with arrangements for gas offtake, such as those that have links to power plants were more likely to be favourably considered. Chevron will also be expecting that those with the need for gas are more likely to offer a higher price.

The company will want to sell the assets as one lot instead of individually especially after the runaway success of the ConocoPhillips asset sale. That means that bidders for all three assets would have been preferred to those bidding for individual assets.

The company is also keen to close the deal quickly - by the end of the year - and so ability to close quickly would have been a criterion that stood successful bidders in good stead. Advisers, BNP Paribas, will probably not want it to become a long drawn out process as with the ConocoPhillips transaction.

After considering the bids, which reached almost 40 in number, a shortlist of 10, mostly Nigerian companies, was initially drawn up although it appears that the number was later increased to 11. Among the winners are Seplat, First Hydrocarbon, Amni International Petroleum, Seven Energy and Britannia U. There is speculation that Sogenal , not being a producer, got in by the skin of its teeth as the 11th successful candidate. The company would have had to present a very strong bid to have convinced the company of its ability to close the deal.

Among those known to have lost out are Shell, Transcorp, Oryx, South Atlantic Petroleum, Niger Delta E&P, Pillar Oil and Frontier Oil. For Tony Elumelu's Transcorp it is yet another blow after it lost out last year in the ConocoPhillips divestment. The company must be wondering what it needs to do to get it right especially given the famous philanthropist's far reaching connections.

Another surprising loser is Niger Delta E&P who have a long history with Chevron, being the operators of the Ogbele field, which was carved out of Chevron's OML 54 and which is continuing to exceed expectations in terms of production and reserves. They would have been hoping to unite their Omerelu Field on OML 53 with the rest of the block. Some commentators think they may have bid for only one block, which if true, would have been detrimental to their chances of success. On paper, they certainly have the right credentials, including a gas processing plant at Ogbele and a gas pipeline to the Nigeria Liquefied Natural Gas (NLNG) company, but something about their bid must have spooked Chevron.

A surprising bidder but not altogether surprising loser was Shell. The company is said to have put in a bid and industry watchers are scratching their heads over the motive of the company that has led the exodus from the onshore scene and who have only just announced the imminent sale of another round of assets. Some say they may have been after information, but there must surely be an easier way to access the information they may have been after about the assets. It is all the more surprising because it was generally understood that these international oil company (IOC) divestments provide an e&p entry opportunity for indigenous companies, which will generally be preferred to IOC bidders.

The winners will now go forward to the data room for more detailed information on the assets and for management presentations. Final bids are to be submitted by the end of the September and the company is expected to close the deal by the end of the year before it then turns its hands to OMLs 83 and 85, as the IOC onshore divestment race continues.

Eland Oil has extended its estimates for first oil in oil mining lease (OML) in which it has a 45 per cent stake. The Scottish company, which is quoted on London's Alternative Investment Market (AIM) bought the stake for £112 million which it raised from AIM last year.  

Eland Oil had expected to bring one of the two wells on the field, which were shut down in 2006, on stream this summer but has now revised the estimate to October.  The flow from both is expected to come in initially at 2,500 barrels per day although the plan is for an incremental production. First oil will trigger its existing debt facilities.

Chief Executive of Eland, Les Blair said: "Field refurbishment is progressing well and, despite earlier delays, indications are that the facilities are in good condition, which bodes well for the long-term development of OML 40. We are looking forward to gaining entry to the two previously shut in wells and our first production revenues."

"We are very excited at the prospect of drilling our first new production well. The momentum of OML 40 development work is now gathering pace," he added.

It is understood that NPDC is finalising contract negotiations for the Depthwize-owned swamp rig Imperial, which is planned to mobilize to OML40 in Q413.

The price of OPEC basket of twelve crudes climbed a steep $1.27 to $107.96 a barrel on Thursday, the highest since February this year, compared with $106.69 the previous day, according to OPEC Secretariat calculations.  

On the world oil market, Brent crude also rose on reports of supply disruptions from Nigeria, Libya, and Iraq while in the US, crude oil prices rose on expectations that weekly US government inventory reports would show crude oil inventories at a 7-month low.

Libya's biggest crude export terminals were shut August 13 because of striking security guards while the worsening political situation in Egypt continued to cause concern. Yesterday, Brent was trading at $111 representing a 91 cents rise on the previous day.  In the US, the September contract for benchmark US light, sweet crudes climbed 72 cents to $106.83 on the same day.

Introduced on 16 June 2005, the new OPEC Reference Basket 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). 

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has commended the Pipeline and Product Marketing Company (PPMC) for successfully monitoring kerosene vessel discharges through the electronic tracking of the vessels.  

Mr Mike Osatuyi, the National Secretary of IPMAN - an organisation that controls over 85 per cent of Nigeria's petroleum products retailing - made the commendation at the National Executive Council meeting of the IPMAN. He said that PPMC ought to be commended as some marketers who were found to have diverted DPK vessels were detected through PPMC's electronic vessel tracking system. Electronic tagging by PPMC was introduced to prevent to cut down on round-tripping by importers of kerosene.  

Responding to calls for the removal of the leadership of PPMC over kerosene scarcity, Osatuyi said that IPMAN had investigated and confirmed that "paid agents" not PPMC were to blame. He estimates the total daily supply of kerosene products (also known as DPK) to the system to be in the region of 10 to 11 million litres of DPK. He called on all stakeholders to determine the current national consumption of Kerosene.

House Committee To Assist DPR on Revenue Generation

The House of Representatives Committee on Petroleum (Upstream) has concluded an oversight function visit to the Department of Petroleum Resources, which the Chairman of the Committee, Mr Muraina Ajibola, said had become necessary due to the increasing operational expenses of the agency. He called on the Department of Petroleum Resources (DPR) to find ways of increasing its internally generated revenues.  

However, Mr Ajibola commended the agency was for generating N450 billion against its targeted revenue of N380 billion over the last 6 months.  He said: "I am happy to tell Nigerians that after our proper scrutiny of their papers they have generated a total sum of over N 470 billion, of course clearly they the agency had exceeded their target by a total sum of N86 billion," adding that the agency was doing well towards revenue generation. He however commented on the "ever increasing expenses" of the agency and said the DPR would have to find ways of making sure that they generated enough revenue to cover their expenses. He pledged the support of the Committee towards passing a bill to enable the DPR to generate the revenue they need to cover their expenses.

Responding, the Director, DPR, George Osahon said he was particularly grateful to the Committee for recognising the need for the DPR to internally generate the revenue it needs to support its operations, adding:  "We are constrained due to the limited source of fund that we have, which is affecting our operational system; we will appreciate the committee if it can assist the department in addressing silent issues affecting the agency."  

Osahon urged the committee to come up with ways to address the twin issues of crude oil theft and vandalism in the country, adding that DPR alone cannot solve the issues.

Although the House of Representatives Ad-Hoc Committee on the Petroleum Industry Bill (PIB) is publicly saying that it is not keen on "rushing things", sources at the House of Representatives have revealed that the mood internally is that they are on schedule to present their report on the PIB in October, provided they return in September from their annual vacation which commenced on the 25th of July. There is a suggestion that the resumption date of the House may be delayed to October, in which case, the report will not be released till November.  

The Committee which is led by Inuwa Baba appears determined to publish its report before the year-end in spite of the contentious issues such as the powers of the Minister under the PIB, the continued pressure from the international oil companies (IOCs) on the fiscal terms and the opposition to the Host Community Fund.

Bawa said the committee would summarise the memoranda stakeholders submitted to the committee before turning in a final report.

 N4.4 Billion "Missing" from PPPRA Traced  

The sum of N4.423 billion, which the Nigerian Extractive Industry Transparency Initiative had reported in its 2009-2011 Oil and Gas Industry Audit Report to be missing has been traced to the Petroleum Support Fund (PST) account domiciled with the Central Bank of Nigeria.

The sum was reported by NEITI as representing "over-recovery" on payments for petrol subsidy claims between 2008 and 2009.

Immediately after the publication of the report, the Petroleum Products Pricing Regulatory Agency (PPPRA) issued a robust statement denying that any sum was missing. The agency, through its Executive Secretary, Mr Reginald Stanley, said the report was "steeped in inaccuracies and gross misrepresentation of facts."  

Following the stringent denials, both agencies held a reconciliatory meeting and it has now emerged that the sum that NEITI had reported to be missing is in fact domiciled in the PSF account which is administered by PPPRA.  

In a joint statement signed by the Executive Secretaries of two agencies, Mrs. Zainab Ahmed and Mr. Stanley, respectively, it was declared that there was "nothing outstanding against PPPRA on the said amount."

The statement continued, "The joint reconciliation meeting, after exhaustive and useful deliberations, resolved that the sum of N4.423bn in dispute has been reconciled and traced to the Petroleum Support Fund account domiciled with the Central Bank of Nigeria."

The meeting also resolved that there was nothing outstanding against the PPPRA on the amount, while it evolved strategies for both NEITI and the PPPRA to address other issues arising from the report.

DPR to Begin Audit of LPG Facilities in September

The Department of Petroleum Resources (DPR) is to begin an audit of the nation's liquefied petroleum gas (LPG) facilities in September. The regulatory agency says it aims to ensure that licensed LPG (popularly known as cooking gas) plants are complying with statutory guidelines and standards.  

Operations Controller from DPR, Mr Olugbenga Kuku said: "In as much as we encourage the proliferation of LPG plants, prospective plant owners must follow due process to obtain all requisite approvals before the commencement of any upgrade or modifications of the plants."

SON and DPR in Campaign Against Adulterated Lubricants

The Standard Organisation of Nigeria (SON) and the Department of Petroleum Resources have joined hands, together with lubricants operators, in a campaign against the distribution and retailing of adulterated lubricants, which they said is costing the nation N200 billion in lost revenue. According to SON, 70 per cent of products displayed in Nigerian market are sub-standard.

Companies involved in the campaign say they have had to re-package their products to protect them from adulteration. Conoil, for instance has re-packaged its Quatro Ultra lubricant in order to protect it keep it from being tampered with and also to protect the interest of unsuspecting motorists.  The Quatro Ultra now comes in a wrapped and tamper-proof pack of weather-proof cellophane. The company intends to extend the re-packaging to all the products it has in over N1.5 billion worth of investments in lubricant production. Other lubricant producers are likely to follow suit.

Lack of Assault Craft Hampering JTF Oil Theft Operations

A lack of effective assault craft is hampering the fight against oil theft according to the General Officer Commanding (GOC) 82 Division of the Nigerian Army, Enugu, Major-General Adebayo Olaniyi. He disclosed this during a tour in Port Harcourt of the Joint Task Force (JTF) Sector-Two operation formations in Rivers State. It is his view that this shortage is partially responsible for the increase in oil theft in the prolific Niger Delta region.  

Major-General Olaniyi said that an adequate supply of such craft would be needed to support the renewed strategy of round the clock patrol of the creeks.

He said: "If the JTF had adequate gunboats and fast assault crafts, it will improve our patrol and monitoring of the creeks, as well as guarantee quick response of our troops to reported crime scenes.  Constant patrols and monitoring of the creeks will discourage oil thieves and pipeline vandals from perpetrating their nefarious activities of sabotaging the economy of the country."

"Communities can also assist the JTF by providing us timely information that will lead to the arrest of oil thieves so as to discourage youth involvement in illegal oil bunkering activities," he added.

Major-General Olaniyi asked the general public to join in the fight against oil theft. He said it was the responsibility of every Nigerian, irrespective of their class, to ensure the economic growth and prosperity of the country.

Campaign Group Launch Online Petition Targeting Shell

UNEP accused Shell, in its report, of not properly cleaning up oil that had leaked from its pipelines and from other facilities. The group says the report criticises the way in which Shell has handled its contaminated sites in Ogoniland so far as "not leading to environmental restoration nor legislative compliance, nor even compliance with its own internal procedures".

One of the key recommendations made by the UNEP is that Shell, other oil companies, and the Nigerian Government set up an Environmental Restoration Fund for Ogoniland with an initial capital injection of $1 billion.

Other key recommendations by the UNEP included an overhaul of the inadequate clean up method (the so called RENA method) that Shell is applying in Ogoniland and a decommissioning of abandoned oil facilities.

Shell has generally maintained that most of the oil spills in the area of its operations and pipelines are from oil theft and vandalism but the environmental action groups say that the pipelines are easy to break into because they are old and worn and should be replaced.

In a move that will provide a much needed boost to local content expertise in the industry, ndigenous oil services giant, Nestoil has acquired Nigerian subsidiary of German engineering consultancy group, IMPac Oil and Gas Engineering. Following the acquisition, the current chairman of Nestoil, Ernest Azudialu-Obiejesi becomes the new chairman of IMPac Oil and Gas Engineering. The management of IMPac will stay on, enabling a smooth transition and, in due course, transfer of skills to Nigerians.  

IMPAc's parent former parent company, headquartered in German, has been established for 25 years as an international and independent engineering and consultancy company for the offshore and onshore energy industry. The company prides itself on its wide ranging expertise gained in more than 800 oil, gas and power projects coupled with innovative engineering practices and application of new technologies to guarantee the efficiency of their work.

Nestoil said the deal was consistent with its strategy to concentrate its footprint in the oil and gas sector. The company released a statement saying: "This acquisition will add significant resources to our existing portfolio."  

Nestoil was set up 22 years ago and is part of the Obijackson Group, which is heavily invested in the oil and gas sector including interests in exploration and production, pressure vessel fabrication, power generation, dredging and marine logistics.  

Nestoil recently won a substantial pipeline contract from Shell Petroleum Development Company for the construction of an export pipeline in Niger Delta after a competitive bid. The pipeline will reroute the pipeline from Kolo Creek gas to Soku Gas Plant in Bayelsa State. Under the contract, the company will carry out the engineering, procurement, construction and commissioning (EPCIC) of a 20-inch 40-kilometre gas pipeline with funding provided by Zenith Bank for the the 2-year contract.

The Economic Community of West African States (ECOWAS) is looking to recruit a consultant firm for a feasibility study for the extension of the West African Pipeline Project.  The gas pipeline network was intended to convey compressed natural gas from the areas of production in Nigeria to economically viable markets in Benin, Togo and Ghana.  The project has not met the expectations of the countries due to the low level of natural gas currently available in Nigeria as against the large demand expressed in the sub-region. As a result, ECOWAS has decided to consider a feasibility study for the extension of West African Gas Pipeline.  

The objective of the study is to analyse the current operation of the pipeline, identify all issues (availability of gas, safety of the pipeline, possible non-compliance of contractual arrangements) and to propose solutions for the optimisation of the operation. The study will also prepare a blueprint for the extension and the interconnection of the network of pipelines in the ECOWAS region taking into account consumption points and existing or potential sources of production.

Expressions of interest must be delivered in a sealed envelope to the ECOWAS commission no later than Wednesday 21st August 2013 at 4pm. More details on the tender are available at the website: www.ecowas.int/services 

Shell Nigeria Exploration and Production Company (SNEPCo) as operator of the Bonga Southwest/Aparo (BSW/A) unit area (straddling NNPC OMLs 118/132/140 block boundaries), invites interested and registered Nigerian companies to respond to the opportunity for the procurement of line pipes for the BSW/A field development project.  

The scope of service covers the procurement, delivery, storage and preservation of line pipes. Only tenderers who are registered with NJQS product/category for seamless pipes and tubes and/or welded pipes and tubes, product groups 20101 and 20102 category shall be invited to submit technical bids.  The closing date for this opportunity is 29th August 2013.

Shell Nigeria Exploration and Production Company (SNEPCo) invites interested and registered Nigerian companies to respond to the opportunity for the provision of facilities instrumentation, control & automation intervention works in SPDC East locations (land & swamp).  

The scope of service covers the provision of Design verification, Workshop calibration of instruments, Stroking/function, testing of valves, Yard fabrication, Site mobilization etc. Only tenderers who are registered with NJQS in the 3.05.02 (Electrical/Instrumentation Services) category shall be invited to submit technical bids.  The closing date for this opportunity is 2nd September 2013.

Chevron Nigeria limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of Ago Marine Tanker Vessel Delivery Service to support the supply of its oil field operations at Escravos.  

The scope of service covers the provision of logistic support services for the delivery of AGO to CNL Escravos. Only tenderers who are registered with NJQS in the 3.08.99 supply of other transportation/ supply and disposal services shall be invited to submit technical bids.  The closing date for this opportunity is 4th September 2013.

TOTAL Upstream Nigeria Limited is on a large recruitment drive as it expands its deepwater offshore operations. The company is looking for suitably qualified Nigerians for the following roles within the company:  

Project General Manager, Cost Estimation Coordinator, Contracts Coordinator, Laboratory Technologist, Subsea Expert, Medevac Medic, Project Coordinator, FPSO Manager, Drilling and Completion Coordinator, Inspection Offshore, Development and Planning Expert, Deep Offshore Operations Expert, Installation Manager, Well Performance Experts, Commissioning Manager, Offshore Installations Manager, Petroleum Architect, Contracts Manager, Expert Technical Assistant.  

Descriptions and further details about the roles are on the company's website www.careers.total.com. Click on Vacancies and choose Nigeria in the drop down menu. Applications must be completed online. The deadline for applications is the 19th of August.

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