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Dangote Refinery Plans Progressing  

Barely four months after announcing his intention to build a 400,000 barrels per day refinery that will effectively double Nigeria's refining capacity, Africa's richest man, Aliko Dangote, has been speaking in detail about the progress of his plans for the $9 billion refinery, revised upwards from $8 billion when it was first announced.

In a record fund-raise achieved at jaw-dropping speed, Dangote has secured finance of $3.3 billion from a consortium of foreign and Nigerian banks. A further $2.5 billion will be provided export credit agencies and development finance institutions. The rest of the funding will come from Dangote Industries, the vehicle for the mammoth project.

NOGintelligence exclusively revealed in June that the refinery is to be sited in Olokola Free Trade Zone (OFTZ) in Ondo State. NOGintelligence gathered that one of the factors considered for the location of the refinery is that it is the biggest deep seaport in the country and other big industries are located there. Besides, Ondo State is one of the oil producing states in the country. In addition, the stable crude oil supply was also a vital element in the choice of the location for the refinery because Chevron and a number of other oil producers have oil fields in the oil-rich region of the state.

The project includes a refinery, petrochemical and fertiliser plant. The refinery will produce petroleum products including diesel, kerosene and flurry. The petrochemical plant will produce polypropylene, while the fertiliser plant will produce urea and ammonia for use in agriculture.  

The construction contract has gone to Honeywell International's subsidiary, UOP, which was commissioned in India's very first refinery in the state of Assam. Honeywell is a Fortune 100 company, which invents and manufactures technologies to address some of the world's toughest challenges linked to global macrotrends such as energy efficiency. With approximately 132,000 employees worldwide, including more than 22,000 engineers and scientists, the company says it has an unrelenting focus on performance, quality, delivery, value and technology in everything it makes and does, qualities which would have stood it in good stead in securing the contract.

On the difficult issue of subsidies, which has created the non-conducive climate that has kept others away from building refineries, Dangote says he does not intended to sell his products from the refinery at subsidised prices. It will be up to marketers purchasing the products, he said, to apply for and obtain their subsidies from the government.  

Dangote Industries has applied for a licence and the project is expected to be completed in 2016.

The price of OPEC basket of twelve crudes, in common with other crudes around the world, shot up to $112.25 dollars a barrel on Wednesday, compared with $109.28 the previous day, according to OPEC Secretariat calculations.  

Prices have been rising steadily since last week but spiked by nearly nearly $3 dollars following talk of military intervention in Syria. Libya is currently creating the biggest headache as port strikes and pipeline shutdowns have resulted in the daily output dropping down to just 200,000 barrels per day (bpd) compared with 1.4 million bpd back in March. Meanwhile, crude oil theft continues to cause declining production in Nigeria with production, reportedly down to 1.9 million barrels per day this summer, the lowest since mid-2009. Nigeria, which is currently Africa's largest producer is in danger of being overtaken by Angola should the decline continue.

US oil prices surged to a two-year high on Wednesday, as the market was also rattled by the prospect of military action in Syria. However, U.S. crude fell $1.50 to a low of $108.60 a barrel before rallying to around $109.40, following a near 4 per cent gain over the past two days.

Brent crude oil rallied above $117 per barrel on news of the impending military strike but dropped below $116 a barrel on Thursday as the possibility of a delay in a U.S. led strike on Syria helped calm nerves over Middle East oil supplies.

As the geopolitical tensions in the area continues to heat up, there is increasing speculation that price spikes taking oil to $128 or even the 2008 peak at nearly $150 per barrel could soon become a reality even if only for a brief period.

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). 

Heritage Oil's Half Year Profits Up   

Heritage Oil Plc, an independent upstream exploration and production company, has just reported its profits for the first half of 2013 and the news is very good for its shareholders. The dual listed company (main market of London Stock Exchange and Toronto Stock Exchange) made pre-tax profits from continuing operations of $84.95 million, as against a $49.86 million loss for the same time last year.

The company experienced very strong growth in revenues in the first half of the year with $238 million generated from operations in Nigeria and Russia. The company's cash position as at 30 June 2013 was approximately $113 million, excluding $51 million used as part security in respect of Oil Mining Lease (OML 30), which was released back to the Company on 22 August 2013 and replaced with alternative security granted by Heritage. The company successfully completed the refinancing of the bridge loan facility with a 5-year $500 million Senior Secured Revolving Reserves Based Lending Facility.

The company says its operations have been transformed by the acquisition of an interest in OML 30, which achieved record gross production, since acquisition, of 44,000 bopd in August 2013, with a first half average gross production of 15,327 bopd. Net average daily production was 7,197 bopd in the first half 2013.

Gross production from OML 30, Nigeria, for the second half of 2013 is expected to average 45,000 bopd, nearly triple that of the first half of the year. This results in a full year are expected average around 30,000 bopd for 2013. The increase in production from OML 30 for the remainder of this year will be achieved by the installation of new equipment, working over existing wells and commencing production from the Uzere West field, which has been shut-in for nearly two years.

The drilling of new wells is planned to begin in the second half of 2014, and average gross production for 2014 estimated in the range of 60,000 to 65,000 bopd, with the longer term potential estimated at about 300,000 bopd gross.

Tony Buckingham, Chief Executive Officer, commented: "We have started the second half of the year remaining resolutely focused on our existing operations in Nigeria to ensure we extract maximum value from our asset. Our ongoing operations have been transformed with record revenues, profits and cash flows achieved. We expect to see further significant production gains during the remainder of the year from the operational, engineering and comprehensive community programmes undertaken so far."

Heritage operates in Nigeria through Shoreline Natural Resources Limited, a private limited Nigerian company established by Heritage (through a wholly owned subsidiary) and Shoreline Power Company Limited. The special purpose vehicle owns a 45% interest in OML 30 with the National Petroleum Development Company holding the remaining 55% interest.

Afren's Half-Year Profits Down

London Stock Exchange listed Afren's half-year results for the six months ended 30 June 2013 revealed that pre-tax profits fell by 16 per cent from $311 million to $260 million. This was in spite of revenue rising by a slight 2 per cent from $778 million to $797 million.

On an operational front however, Afren believes it has been a first half-year of notable success for the company, which saw production go up a record 13 per cent, principally from the Ebok and Okoro fields. The Group's financial results also reflect the consolidation of First Hydrocarbon Nigeria Company Limited (FHN) following the completion of the acquisition of an additional beneficial interest in FHN. Afren has since further increased its beneficial interest in FHN.

On the exploration front, the "play-opening" discovery in offshore Oil Prospecting Licence (OPL) 310 opened a new oil basin in an under-explored region with targeted resources believed to be in excess of pre-drill estimates (78 mmboe).

The company also continued an active exploration programme with ongoing Ogo-1 side-track and upcoming Ufon South-1 well on Oil Mining Lease (OML) 115.

Afren also completed the farm-out (subject to Ministerial consent) of a 30 per cent economic interest in offshore OPL 310 to Lekoil Limited and the acquisition by FHN of 16.9 per cent economic interest in OML 113. Synergies are expected with OPL 310 development.

The company says it is on track to achieve production of 40,000 - 47,000 boepd.

Commenting on the company's performance, Osman Shahenshah, Chief Executive of Afren plc, said: "Afren continued to deliver strong operational results during the first half of 2013. We recorded a year-on-year increase in underlying net production of 13 per cent, principally from our green field developments offshore Nigeria. Our exploration campaign continues to deliver results, following the play-opening discovery announced at OPL 310 offshore Nigeria, where further exploration drilling is ongoing."

"We are well placed to realise numerous growth opportunities over the remainder of this year," he added.

Nigerian Air Force Joins on War Crude Oil Theft 

The Nigerian Air Force is to join the war on crude theft by providing aerial surveillance support to the Nigerian Maritime Administrative and Safety Agency (NIMASA). The two organisations recently signed a Memorandum of Understanding (MOU) to that effect.  

Speaking at the signing event, the Director General of NIMASA, Mr Patrick Akpobolokemi explained that the collaboration would cover, but would not be limited to piracy, smuggling, illegal bunkering and fisheries. The MOU will operate in a similar way to the one that NIMASA has with the Navy.  

"Nigeria Air Force has always been supportive of our efforts to deliver on our mandate especially in curbing the activity of pirates in our waters," he said.

The Chief of Air Staff, Air Vice-Marshall Alex Badeh said of the collaboration: "We have the capacity to go into the sea and carry out aerial surveillance. We will work in collaboration with the Navy."

AMCON Gains Control of Capital Oil 

The Asset Management Corporation of Nigeria (AMCON)'s determined pursuit of Capital Oil and Gas Industries over a N48 billion debt has finally seen AMCON taking control of Capital Oil.  

According to a statement released by AMCON, it will take over the executive management of Capital Oil for a period of two years. AMCON says the resolution was reached following a settlement by both organisations. This means that the flamboyant Dr Patrick Ifeanyi Ubah has stepped down from his role as Managing Director and Chief Executive Officer of Capital Oil, paving the way for AMCON to put in new management.

AMCON has been in pursuit of the company over debts owed to various banks, which AMCON took over as part of its remit. By December 2012, AMCON said Capital Oil's debt had risen to N65 billion with interest accruing at the rate of N800 - N900 million per month.

In November last year, AMCON obtained an order from an Abuja Federal High Court freezing the assets of the company and those of the Managing Director, Ifeanyi Ubah. Later in the month, AMCON sealed the Capital Oil premises including its 196 million litre capacity tank farm and jetty pursuant to the order. The company was said to be supplying about 30% of the nation's petrol at the time. Over 224 trucks with about 8,151,270 litters of PMS belonging to the NNPC were trapped in the premises of Capital Oil as a result, exacerbating the already worsening fuel crisis at the time.

Capital Oil and Gas later launched a successful application to the Court to set aside the Possession Order made in favour of AMCON. Following the Order, AMCON quit the premises vowing to vigorously pursue the indebtedness of Capital Oil and Gas "in the interest of the economy and in accordance with the Corporation's statutory mandate."

AMCON says that following discussions with Capital Oil, a resolution was reached and consequently adopted settling the suit at the Federal High Court. AMCON says that during its 2-year stint at the helm of Capital Oil, it intends to ensure seamless operations to stabilize Capital Oil and facilitate optimal performance. It also intends to support and drive the turnaround of the company's operations in order to meet various timelines and goals set by the boards of Capital Oil and AMCON.

AMCON was created in July 2010 as a key stabilizing and re-vitalizing tool to revive the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy. AMCON is headed by Mustafa Chike-Obi, Managing Director/CEO of AMCON. He was previously founder and managing partner of Madison Park Advisors, a financial service advisory and consulting firm in New Jersey, U.S.A, specializing in hedge fund and private equity investment advice.

Ocean Marine Launch 2 Crude Oil Tankers

Indigenous company, Ocean Marine Tankers has launched two 45 metric tonnes crude oil tanker vessels. The vessels, named MT Abiola and MT Igbinosa are to take over the supply contract the company has with the Warri and Kaduna Refineries. Previously, the company fulfilled the contracts using foreign vessels but with the acquisition of its own tankers, the first Nigerian-owned tankers in the 17 years since the defunct Nigerian National Shipping Line, the company is now able to put the vessels to use immediately on the existing contracts, ensuring a more efficient and effective delivery of crude oil to the refineries.  

Idahosa Wells Okunbo, Chairman of the company said that they would operate in line with the local content guidelines for job creation.

Speaking at the launch, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa pointed to the loss of over $100 billion in five decades of complete monopolisation of crude oil lifting vessels by foreign companies. He vowed to ensure that indigenous tanker owners are able obtain crude oil lifting contracts in the future. He noted that this was a big impediment to the acquisition of tankers by Nigerians. It was difficult to obtain finance to acquire vessels without any lifting contracts in place, and impossible to obtain a lifting contract without a vessel, leading to a vicious circle for any one seeking to acquire a tanker.  

Nwapa pointed out that the guidelines for the lifting of crude oil by shippers require that a minimum of five slots per cargo are set aside for Nigerian vessels. Also, interested applicants must submit a memorandum of agreement demonstrating a credible strategy to grown Nigerian equity in the tankers nominated to lift allocated Nigerian crude to 25 per cent by 2014 and 90 per cent by 2017. Although Ocean Marine will be the only fully indigenous owned tankers in the country at this stage, Mr Nwapa said that the Board has been approached by many Nigerians with equity arrangements with reputable tanker owners, indicating that the situation is likely to change soon. 

Also speaking at the launch, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Mr Patrick Akpobolokemi said that the acquisition of the vessels by the company, which has applied for National Carrier status, would help stem the capital flight occasioned by foreign involvement in the lifting of Nigerian crude. He said that another 10 such vessels would prevent about $300 million capital flight. He said that NIMASA was pursing the application for National Carrier status by the company with vigour in order to encourage others in the industry.

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.

Shell Nigeria Exploration and Production Company (SNEPCo) invites interested and registered Nigerian companies to respond to the opportunity for the provision of ocean bottom node 4D seismic data acquisition services for SNEPCO Bonga main FPSO area. The proposed contract will commence in the fourth quarter of 2013. The scope of service covers the provision of ocean bottom node 4D seismic data acquisition services over SNEPCO Bonga main FPSO area (undershooting the FPSO area).  

Only tenderers who are registered with NJQS2D/3D/4D Seismic Data Acquisition Services (Product Code 3.10.01) category shall be invited to submit technical bids. The closing date for this opportunity is 9th September 2013.

Chevron Nigeria limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of rope access services for its work within the tank terminal and in the fields offshore Escravos, swamp location. The scope of service covers the provision of access support services for flow-line/riser and pipework repair non-destructive testing (NDT).  

Only tenderers who are registered with NJQS product/category 3.05.16 (rope access services) shall be invited to submit technical bids. The closing date for this opportunity is 13th September 2013.

SEPTEMBER EVENTS 

Oil and Gas Conference & Exhibition

Aberdeen, United Kingdom

3 - 6 September

 www.offshore-europe.co.uk 

OCTOBER EVENTS 

London, United Kingdom

1 - 2 October

Daegu, South Korea

13 - 17 October

Houston, United State of America

22 - 24 October

Rio de Janeiro, Brazil

21 - 29 October

NOVEMBER EVENTS 

Texas, United State of America

4 - 7 November

Galveston, United State of America

5 - 7 November

Lagos, Nigeria

10 - 14 November

Yenagoa, Nigeria

12- 14 November