Britannia-U reacted yesterday to the widespread reports that it was the highest bidder in Chevron's sale for its 40 per cent stake in oil mining leases (OMLs) 52, 53 and 55. The company is reported to have bid $1.6 billion for the assets.  

The two-page statement signed by Dan C. De La Garza, Managing Director of the company revealed very little about the situation other than to confirm that it had indeed participated in the open bid and that their preparation was "thorough, painstaking, disciplined and well research."

"Thus, Britannia-U's submission of our bid package and our bid price reflected full technical (in-house and independent evaluations) and commercial capabilities," the statement added.

NOGintelligence announced in August that Chevron had chosen its preferred bidders among which was Britannia-U. At the time, NOGintelligence sources revealed that some of the criteria on which the final decision would be made include financial strength and quality of the bids as well as end-user arrangements for the predominantly gas-based assets.

Britannia-U will have to put in a determined effort to pull off the race for the prized assets given some of these criteria for selection. Coming from a 5,000 barrels per day (bpd) marginal field producer some say the company would seem at first blush not to have the technical expertise to manage the three blocks. But its track record stands it in good stead.  

The company is one of the 7 marginal field operators out of the 24 awarded in the 2003 marginal fields licensing rounds that have been able to get production from their fields. It is also the only marginal field operator among those with fields within the shallow waters to bring its field into production. The company also produces 2.2mmscfd of gas from its Ajapa field out of which 1.8mmscfd is reserved to power the production system on board the Floating Production Storage and Offload vessel (FPSO) owned by the company.

However, the issue of technical expertise may have been rendered less important on the criteria scale following the caveat emptor notice issued by the Nigerian National Petroleum Company stating that buyers of the blocks should not assume that operatorship of the block would transfer automatically from Chevron to the buyer.

Sources close to the transaction however say that the most important criteria for the American oil giant is the ability to close the deal quickly. The winning bidder will have to convince Chevron that it is able to pull of the financing of the transaction. The company will have kept a watchful eye on Oando's struggle to complete its $1.8 billion acquisition of the ConocoPhillips assets.

Britannia-U however seems convinced that it will be able to complete the acquisition if it wins, going by the statement it issued. Chevron is expected to close the deal by the end of the year in its hurry to continue its onshore divestment race.

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Shell has sent documents out to prospective buyers of the four oil blocks and pipeline it has put up for sale, as the Dutch giant continues its determined exit from the onshore and shallow water areas of the prolific Niger Delta.  

The latest blocks up for sale are Oil Mining Leases (OMLs) 18, 24, 25 and 29, which together are said to have produced 70,000 barrels of oil last year. Also up for sale is the Nembe Creek Trunk Line (NCTL), a vital oil pipeline, which has frequently been targeted by oil thieves. Shell is selling off the blocks and the pipeline in conjunction with its joint venture partners, Total and Eni.  

The pipeline, which is located in the Eastern part of the Niger Delta, normally transports 150,000 barrels of crude oil owned by SPDC, but is also used by third-parties. The 97 kilometre Nembe Creek trunkline collects crude oil from 14 oil pumping stations across the Nembe Creek, Krakama, Awoba, Ekulama and San Bartholomew oil fields and transports it to the Cawthorne Channel field and Shell Petroleum Development Company (SPDC) of Nigeria's Bonny Export Terminal for dehydration and export.

The 97-kilometre pipeline was shut several times between December 2011 and May 2012. Then it was shut again several times in March this year and again in April. At one time there Shell reported that there were at least 90 tapping points in the pipeline system.

The Nembe Creek pipeline was refurbished in 2010 at a cost of about $1.1 billion. It was the largest single project under the SPDC joint venture's asset integrity programme that has replaced more than 1,000 km of major pipelines and flowlines in the last five years.

The project involved the construction of three sections of pipeline including 5 km of 12 inch diameter pipeline from the Nembe Creek III manifold to the Nembe Creek tie-in manifold; 44 km of 24 inch diameter pipeline from Nembe Creek to San Bartholomew; and 46 km of 30 inch diameter pipeline from San Bartholomew to Cawthorne Channel. Following one shutdown in March, the Country Chair of Shell Companies in Nigeria, Mutiu Sunmonu, warned that he might shut the pipeline permanently if the level of illegal connections to the pipeline continued.  

Given the history of the pipeline, it is not surprising that Shell has put it up for sale together with the oil blocks that feed into the pipeline.

The Shell joint venture has sold a series of blocks since 2010 for more than $2 billion, but the latest sales will represent the largest so far in terms of production.

Shell has repeatedly denied that it is divesting from Nigeria, saying earlier in June that it was conducting a strategic review of operations in the Eastern Niger Delta. In a statement the company said: "Nigeria remains an important part of Shell's portfolio, where we will continue to have a significant onshore presence in oil and gas, and which has clear growth potential, particularly in deepwater and onshore gas."

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The Shell Petroleum Development Company of Nigeria Ltd (SPDC) has lifted its force majeure declaration on Bonny Light exports following the latest repair of the Trans Niger Pipeline (TNP). The force majeure was declared on October 10 as a result of production deferment from the spills recorded on the 24-inch line of the TNP at B-Dere and Nonwa-Tai.

According to Shell, production was switched to the 28-inch line of the TNP, which was also briefly shut down for repair following a fire at Patrick Waterside, Bodo and reopened on October 16. Repair of the 24-inch line is progressing and it remains shut in.

Shell Spokesperson, Precious Okolobo said: "Joint investigation of the spills has now been completed and the various reports signed off by all participants including representatives of the regulators, SPDC, security agencies and communities. "

The company says that the result of the investigations reveal that the spill at B-Dere came from a hole drilled by unknown persons while pipeline failure was responsible for the incident at Nonwa-Tai.  

According to the company, the investigations also revealed that about 2,200 barrels of oil were spilled, of which more than 1,500 barrels have since been recovered. Further remedial measures, clean-up and repairs are continuing it says.

SPDC issued a statement saying: "SPDC again regrets the unfortunate incident and is carrying out a detailed investigation of the root cause of the pipeline failure. Arrangements for payment of compensation are being made in conjunction with people in Bunu-Tai and Nonwa-Tai, the two communities which the joint investigation confirmed were impacted by the spill."

"SPDC is committed to paying compensation in line with provisions of the law," he added.

Environmental groups have long accused Shell of failing to disclose the true number of spills caused by pipeline failure. They say that the company is using old and corroded pipelines that are leading to more spill incidents. The company meanwhile continues to maintain that most spills are caused by oil thieves. saying that most of the spills are as a result of: "widespread and continual criminal activity, including sabotage, theft and illegal refining, that leads to the vast majority of oil being spilled."

Last year, Shell said that sabotage and activities of crude oil thieves accounted for 81.3per cent of oil spills suffered by the company across the Niger Delta in 2012. In the company's 2012 Spill Incident Data, which was obtained by NOGintelligence, Shell said it suffered 198 incidents of oil spills last year, with 161 incidents or 83.3 per cent resulting from sabotage and theft. Of the 198 cases, equipment and manpower failure, corrosion and aging of pipeline accounted for 18.7 per cent, representing 37 incidents.

Shell recently began 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.

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.

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. Shell has reportedly offered about significantly less, which the residents are said to have rejected outright. The negotiations are continuing.

The recent fire at the Warri Oil Refinery has been dismissed as a "minor incident" by Nigerian National Petroleum Corporation (NNPC) spokeswoman, Tumini Green. She said the fire, which caused no injuries was promptly extinguished.

The fire, which the Movement for the Emancipation of the Niger Delta (MEND) has claimed responsibility for, has raised concern that the Movement is beginning a new wave of attacks on the oil and gas industry.

Under a general amnesty deal in 2009, MEND agreed to lay down its weapons and has since benefitted from a programme of education and employment by the government.

A statement purportedly from MEND warned that the fire is part of a new campaign against the government's "unsustainable and fraudulent" amnesty program.

Joint Ventures (JVs) in the oil and gas industry have been developed but JV partners appear to prefer to seek external debt funding for their operations in Nigeria according to one oil and gas industry specialist, Dr Wumi Adegoke.  

As a result, he said, banks are now more disposed to lending for joint venture oil and gas operations that are undertaken on the basis of the third party external debt financing model according to the oil and gas specialist.

Adegoke attributes this preference to the fact that this financing method guarantees the availability of sufficient funds for the execution of major oil and gas projects.

The Third Party External Debt project financing arrangement was introduced in Nigeria in the early 1990s to fund specific growth projects with robust cash flows that would not have been funded otherwise due to the paucity of JV equity funding.

Under the arrangement, JV partners approach lenders/financial institutions for non-recourse loans to finance oil and gas projects. With these arrangements, the lenders do not have any claim to any JV facilities and are repaid strictly from the revenues associated with the volumes derived from the financed projects.

Dr Adegoke noted that relieving partners of the burden of the initial financial responsibility helps to give a sense of collectivity to the share of funding, risks and profits of JV operations by the partners.

Besides, he added, the arrangement also gives the lender a sense of inclusion in the entire operation as the loans are repaid from the revenues generated from the financed projects.

"I think one of the major reasons why the third party arrangement is currently being more embraced is the feeling that it gives the partners a balanced and fair share of the good, bad and ugly situations of the JV operation unlike the other JV arrangements," Adegoke said.

The lender appears to be indirectly involved in the entire JV operation because its loans are to be recovered from the revenues generated from the projects, he continued.

He explained that the earliest JV arrangements mandated partners to contribute funds periodically in proportion of their equity holding to execute the operations of the venture.  

The Carry Agreement/Modified Carry Agreements (MCAs) model, on the other hand, requires one party to pay all the cost incurred for approved JV operations on behalf of another party but with an understanding that the first party will be reimbursed through a combination of tax relief and incremental oil production derived from the JV operations.

The Federal Government has reconstituted an Inter Ministerial Task Team (IMTT) to implement the reports of Nigeria Extractive Industries Transparency Initiative (NEITI).

The Secretary to the Federal Government of the Federation, Senator Anyim Pius Anyim announced this in Abuja at a Dinner in honour of the International Chair of the Extractive Industries Transparency Initiative (EITI), Clare Short.

Senator Anyim explained that President Jonathan's decision to reconstitute the committee was as result of Government's decision to fully reintegrate the NEITI mandates into the country's economic policy agenda. "In the wisdom of Mr. President, it is necessary to strengthen the Inter Ministerial Task Team with high ranking officers from all key agencies covered by NEITI process who have requisite authority to take decisions on NEITI Audit Reports findings and recommendations and ensure that these recommendations are implemented".

The members of the reconstituted Inter Ministerial Task Team on NEITI Reports were listed as follows; Director, Department of Petroleum Resources; Group Executive Director (Exploration and Production) Nigeria National Petroleum Corporation (NNPC); the Governor, Central Bank of Nigeria; the Chairman, Revenue Mobilisation, Allocation and Fiscal Commission; Permanent Secretary, Ministry of Mines and Steel Development; Permanent Secretary, Ministry of Petroleum Resources; the Accountant General of the Federation. Others include; Chairman, Federal Inland Revenue Service; the Auditor General of the Federation; the Chief Economic Adviser to the President; Permanent Secretary, Federal Ministry of Finance; the Managing Director, Pipeline and Products Marketing Company; the Managing Director, Niger Delta Development Commission; the Executive Secretary, Petroleum Products Pricing and Regulatory Agency; the Chairman, Nigeria Miners Association; the Director General, Mining Cadastre Office and the Chairman; and the Oil Producers Trade Section of the Lagos Chamber of Commerce.

The International Chair of the Extractive Industries Transparency Initiative, Clare Short who was on a one-day working visit to Abuja described Nigeria's implementation of EITI in the Country's oil and gas and mining sectors as exemplary.  

The EITI Chair said she was in Nigeria to exchange views with governments, the civil society and companies on the need for collaboration with NEITI to ensure that revenues from the extractive industries support national development and reduce poverty in the country.

The Nigerian Ports Authority (NPA) has given an award to the Lagos Deep Offshore Logistics (LADOL), the leading logistics company as part of the activities marking the Customer Service Week (CSW) 2013 of the Lagos Port Complex (LPC), Apapa.  

Speaking at the ceremony in which a commemorative plaque was given to the company, Managing Director of LADOL, Dr Amy Jadesimi said the award would go a long way to encourage her organization to continue to expand its investment in maritime and oil and gas ventures.  

Dr Jadesimi said: "Our operation is also a boost to the Local Content Board because more and more Nigerians are now being trained here. We are confident that this would soon multiply in triples when we complete our new phase of investment which would be the building of quay walls to support an Floating Production Storage and Offloading platform."  

She said that LADOL's joint venture with Samsung to build Nigeria's first FPSO facility will make Nigeria, Africa's maritime and oil and gas hub, creating 100,000 jobs in the process.  

LADOL is a fully integrated offshore logistics base. The company developed a greenfield site at a cost of $500 million where offshore oil and gas drilling companies can now get 24/7 logistics support for their vessels, cargo, personnel and projects.

Because LADOL is located in a Free Zone, clients can also benefit from the many advantages Nigerian Free Zones offer, including a highly favourable tax climate to encourage robust economic activity. The company says has made significant investments in infrastructure, facilities and personnel in order to provide world-class service.

The company was recently awarded a vital contract from Samsung Heavy Industries to use its facilities for the construction of a Floating, Production, Storage and Offloading vessel for Total's $15bn Egina deepwater field offshore Nigeria. There have been widespread allegations that LADOL lacks the requisite capacity to execute the contract from Samsung, which is expected to use locally worked hours of about 75 per cent. The Egina project entails 44 wells being connected to a 330-metre long FPSO, which can store 2.3 million barrels of oil.

LADOL has strenuously denied these allegations saying it is able to meet the requirements of the contracts and has been working on expanding it fabrication facility since 2012 in anticipation. It plans to spend $350 million (about N57 billion) on Egina vessel platform integration.

The group's Executive Director, Mr. Bolaji Akinola, said, "After due diligence and consultations, we can categorically state that LADOL's qualification to host this epoch-making project is not in doubt. Technically and commercially, LADOL has been assessed by all the oil majors and received business from most of them. "

The oil and gas industry appears at last to be reaping fruits of the Nigeria Content Act as more indigenous companies are securing more contracts for the execution of Front End Engineering Design (FEED) works. The Managing Director of Global Oceon Engineers, Seun Faluyi, made this known while assessing the impacts of the Act, especially in the area of engineering service provision for the oil and gas industry.

Faluyi is pleased that the earlier situation where engineering design contracts were the exclusive preserve of foreign companies had been reversed as indigenous companies are now given the opportunity to prove their mettle.

He added that contrary to insinuations in some quarters that the Local Content Act had recorded outright failure, the Act had become a reference point particularly with the role it had played in boosting local capacity in engineering design.

He said the Act actually forced the International Oil Companies (IOCs) who had preferred offering such jobs to foreign companies to think differently thereby looking in the direction of the local ones.

"I want to say the Act has really been impactful especially for some of us in the field of technical engineering. Before now it was a common knowledge that IOCs were only disposed to giving out most of their engineering designs jobs to foreign technical service companies. The Nigerian Engineering Technical Company (NETCO) that was established then could only get few jobs as most were given to these companies.

But with the advent of the Act, the situation changed as more indigenous companies came on board and got a look in. So, in a way I believe the Act has really helped to prove the point that engineering design can also be carried out efficiently and effectively by Nigerian engineers just like their foreign counterparts," he said.

He said it is with this realization that indigenous technical service companies came together under the aegis of the Oil and Gas Design Engineering Association of Nigeria (OGDEN) for a platform that would make it possible for them to articulate ideas towards promoting engineering design in the industry.