The Nigerian National Petroleum Corporation (NNPC) has issued a notice warning buyers of Chevron's interests in five oil blocks that operatorship of the assets does not transfer automatically to them on acquisition. The first three of the Chevron assets to be put up for sale are Oil Mining Leases (OMLs) 52, 53 and 55, for which the bidders have already been shortlisted.  

Although a minority interest holder (40 per cent interest) in the assets, Chevron is the operator of those assets. However, in a move, reminiscent of the Shell asset sale in 2011, NNPC has issued a "Caveat Emptor" notice to buyers who might be under the impression that the operatorship of the blocks will transfer automatically to the buyers of Chevron's interests. 

According to NNPC, under the terms of the joint venture agreements, it has the right to operatorship of the blocks following divestment, because it is the majority shareholder.   

The Corporation said in the notice: "Chevron shall cease to be the operator upon assignment of their participating interest."

"Therefore prospective buyers should note that automatic operatorship does not come with the acquisition of any of these blocks," it continued.

BNP Paribas, the investment bank running the sale, had hoped that operatorship would not be an issue. Unfortunately, with spectacular timing, the issue of operatorship, which threatened to derail the earlier Shell divestments, has reared its ugly head.

The shortlisted 11 will now have to chew over this problem as their financial backers may not be keen to provide funding where the investor does not have operatorship rights. This is particularly problematic because NNPC, working through its subsidiary, Nigerian Petroleum Development Company (NPDC), does not have the expertise to work the blocks effectively, especially as the number of blocks grows with each divestment.

It remains to be seen whether the investors lining up for the Chevron assets will be deterred by this operatorship issue, which could very well have an effect on the final bids but at this crucial stage in the bidding process, all parties are saying very little.  

Commentators are suggesting that it will be a different matter for OMLs 83 and 85 which are to be put up for a spot auction following the lukewarm interest they have attracted as a result of their relatively under-developed state. The operatorship issue could now crash the prices of those assets.

In the past NPDC has had to bring in external parties to operate the blocks on their behalf, leaving many to wonder why the Corporation still insists on operatorship in these circumstances.  

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CAMAC Energy has an encouraging news update following its Q1 13 net loss of $3.8 million. The U.S.-based exploration and production company owned by Nigerian business man, Dr. Kase Lawal, has been informed by its partner, Allied Energy Plc that drilling operations at the Oyo-7 well commenced on September 9, 2013 using Transocean's Sedneth 701 drilling rig.   

The drilling of the pilot hole to assess shallow hazards around the Oyo-7 location was successfully completed. The rig is being positioned over the actual Oyo-7 location after which drilling operations will continue.

Oyo-7 is expected to both significantly increase oil production from the currently producing reservoir and de-risk much of the unrisked resource potential in the field. Oyo, the first deepwater discovery in Nigeria, has been online since December 2009.

The Company's principal assets include interests in OML 120 and OML 121, offshore oil and gas leases in deep water Nigeria, which include the currently producing Oyo Oilfield. The company says it is currently pursuing further additions to its exploration portfolio in East and West Africa and was recently shortlisted in the Chevron sale.

The price of OPEC basket of twelve crudes stood at $109.40 dollars a barrel on Wednesday, compared with $109.26 the previous day as the downward price trend since 06 September continues. There is increased market confidence as the international community mull over Russia's diplomatic solution to the Syrian crisis and the chances of military intervention continues to recede.

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).   

Eland Oil and Gas which is listed on the London Stock Exchange's Alternative Investment Market (AIM) has received a buy recommendation from broker Canaccord on the back of news of first oil which is expected next month. Eland Oil, which is focused on Nigeria, expects to restart the 2 wells on Oil Mining Lease (OML) 40, which were shut in more than 6 years ago.

The company is targeting production of 2,500 barrels a day from both wells although they will ramp up to 3,000 barrels a day from each well by drilling another 6 wells in the final quarter of this year.

Canaccord's buy recommendation is based on a cost estimate of around $4 per barrel with payback on each new well expected within 3 months at $100 per barrel oil giving the block a potential to be extremely cash generative once production begins.

In its note to clients, Canaccord said: "We look forward to production from two existing Opuama wells this autumn at an anticipated combined 2,500 barrels a day and this will clearly be an important milestone for the company."

Eland Oil bought its 45 per cent stake for £112 million, which it raised from AIM last year. At 11.50am on Tuesday, the stock was changing hands for 113p, valuing the group at a £153mln.

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: "The momentum of OML 40 development work is now gathering pace."

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The seven-man committee which represents different groups of players in the downstream petroleum industry is to be chaired by the Executive Secretary of the Major Marketers Association of Nigeria  (MOMAN), Mr. Thomas Olawore, whose deputy is Mr. E. Kanawa of MRS Oil and Gas Limited.
 

Representing the Ministry of Petroleum Resources in the committee are Mr. G.O Komolafe of the Pipeline and Products Marketing Company (PPMC), a unit of the Nigerian National Petroleum Corporation (NNPC), and Mr. O.O Agbaje of the Petroleum Products Pricing Regulatory Agency (PPPRA), who also serves as the secretary of the committee.
 
Other members of the committee are Mr. Chris Igwe of Mainland Oil and Gas Limited, Mr. Collins Ogbu of Northwest Petroleum and Mr. Richard Eze of Dee Jones Petroleum.
 
While the first four members represent the major marketers and government agencies in the committee, the rest represent independent marketers and depot operators in the market.
 
With the constitution of the Olawore committee, it is expected that all parties in the subsidy arrangement will evolve a workable process of fast tracking claim verifications and payment of reimbursements to marketers within an agreed time frame.

Shell is to begin compensation talks with thousands of residents of Bodo community 5 years after the oil spills from two pipelines in the Bodo and Gokana areas of Ogoniland, which villagers say wrecked their livelihoods.  

London law firm Leigh Day which is representing the communities, say the local environment was devastated by the two spills, depriving thousands of subsistence farmers and fishermen of their livelihoods.

About 15,000 residents of Bodo, in Rivers State, are seeking compensation over the oil spills, which occurred in 2008. They are said to be asking for $200 million in compensation.  

Although Shell admitted liability for the spills in 2011 arguments have continued over the amount of oil spilled and how much damage was caused. While Shell says 4100 barrels were lost in the two spills, Leigh Day maintains it was between 500,000 and 600,000 barrels were spilled. Shell blames most of the spills on "widespread and continual criminal activity, including sabotage, theft and illegal refining, that leads to the vast majority of oil being spilled."

Leigh Day partner, Martyn Day said they would ensure that Shell pays out a fair amount for the damage they have caused and put the Bodo Creek back into its pre-spill state, adding

Shell said it hoped a deal could be reached with the villagers to provide "fair compensation, as well as a way forward on cleaning up the entire area affected by oil spills".

"We're hopeful that an acceptable agreement can be reached with the Bodo community during next week's settlement negotiations in Nigeria," a Shell spokesman said.

Shell Companies in Nigeria say they have reason to pat themselves on the back. They worked 10 months without lost-time injury, surpassing the previous Shell best set in the Pearl Gas-to-Liquid (GTL) project in Qatar in 2010.  

This means that staff and contractors of The Shell Petroleum Development Company of Nigeria Ltd (SPDC), Shell Nigeria Exploration and Production Company (SNEPCo) and Shell Nigeria Gas (SNG) worked between December 2012 and September 2013 without any injury requiring time off work. The record translates to 78 million hours worked by a total of 31,973 people without any significant injury.

Pearl GTL achieved 77 million LTI-free working hours during the construction phase in 2010. At its peak, it brought together 52,000 workers from 60 different countries, which required a major, co-ordinated safety effort.

"This is a truly remarkable achievement, more so when we consider our challenging operating environment," said Markus Droll, Vice President Nigeria & Gabon. "Many have contributed to this, and it feels good to demonstrate safety performance which shows what can be done when everybody is focused on the same goal."

SPDC Invites Tenders for Provision of Oil Spill and Remediation Services

Shell Petroleum Development Company invites interested and registered Nigerian companies to respond to the opportunity for the provision oil spill and remediation Services on a call off basis. The proposed contract will commence in the second quarter of 2014. The scope of service covers the provision of pre-mobbed logistic equipment for evacuation, storage, spill response and haulage of impacted debris/vegetations, recovery and evacuation of free phase oil to designated flow stations and containment of spill site in swamp and land areas.

Only tenderers who are registered with NJQS product/category shall be invited to submit technical bids. The closing date for this opportunity is 30th September 2013.

Chevron Invites Tenders for Provision of Surfer Boats in Support of Offshore Operations

Chevron Nigeria limited invites interested and registered Nigerian companies to respond to the opportunity for the provision surfer boats in support of NNPC/CNL joint venture offshore oil and gas production operations. The scope of service covers the provision of surfer boats in support of Chevron Nigeria/Mid Africa offshore operations at Escravos, Eastern operations, and any other company area of operations.  

Only tenderers who are registered NJQS product/category 3.08.17 (supply vessels) shall be invited to submit technical bids. The closing date for this opportunity is 30th September 2013.

Mobil Producing Nigeria Unlimited (MPN), operator of NNPC/MPN joint ventures invites interested and registered Nigerian companies to respond to the opportunity for the provision of helicopter services at all its locations within the NNPC/MPN joint venture (JV) acreage. The contract is expected to commence in the last quarter of 2014. The scope of service covers the provision of helicopter logistics support services, associated tools and highly qualified specialist personnel.

Only tenderers who are registered with the 30803 - air transport services of passengers & freight product category shall be invited to submit technical bids. The closing date for this opportunity is September 23rd 2013.  

Oil &Money

London, United Kingdom

1 - 2 October

The Africa Gas Association Inaugural Meeting

Nairobi, Kenya

13 - 15 October 2013

www.thefricagas.org

World Energy Congress

Daegu, South Korea

13 - 17 October

6th International E&P Upstream Conference

Houston, USA

16-17 October 2013

www.ziffenergy.com

Deep Offshore Technology International

Houston, United State of America

22 - 24 October

OTC Brasil

Rio de Janeiro, Brazil

21 - 29 October 

www.otcbrasil.org 

Oil and Gas Trade and Investment Forum 2013

Onne, Rivers State, Nigeria

24-25 October 2013

www.nigeriaoilandgasinvest.com