The long awaited marginal fields licensing round has finally kicked off. The Minister of Petroleum, Mrs Diezani Alison-Madueke made the announcement today, which comes 11 years since the first marginal fields licensing round. This time there will be 31 marginal fields, 16 of which are onshore while the remaining 15 are in shallow water offshore.  

According to the Minister, the Department of Petroleum Resources, DPR, will, within the next two weeks, undertake a road show to different parts of the country to brief the investing public about the opportunities.

The road show will be followed by a competitive bidding process that will take place over three and a half months which Alison-Madueke said will be open and transparent.   She said as part of the process proper technical and commercial due diligence will be undertaken on prospective bidders.  

The first marginal field licensing round which was held in 2003 is generally considered to have been far from successful. However, the Minister sees it differently. She said that she was proud of the achievements of the indigenous companies awarded 24 marginal fields out of which 8 are currently producing while others are in various stages of development.  

"The successful companies currently contribute about one per cent to the country's daily production capacity, with additional discoveries in excess of over 100 million barrels to the national reserve," she said.

This announcement has been long coming with Mrs Alison-Madueke confirming that the government took the decision in 2010 to hold a second marginal field licensing round. The government continued to delay the announcement, leading to feverish speculation over the last three years. As pressure mounted on the government to make an announcement, a new Director of Petroleum Resources, George Osahon, was appointed in June to replace the genial former Director, Osten Olorunshola.  

Industry insiders roundly believed that Osahon was brought in to spearhead the new licensing round. With this announcement it appears that they were correct in their analysis.

The government says it expects the process to be over by mid 2014. 

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Although Chevron has refused to confirm the winner of the sale of its interests in the Oil Mining Leases (OMLs) 52, 53 and 55, sources close to the deal have told NOGintelligence that Britannia-U, the widely reported highest bidder is not yet out for the count.  

Britannia-U is said to have bid $1.6 billion for all three assets, several hundred million dollars above the next highest bidder. Chevron had previously stated its preference to sell all the assets in one lot rather than break them up. Whilst many have written off Britannia-U's chances of securing the funding to back its bid, NOGintelligence gathers that the successful marginal field operator cannot be ruled out just yet.

The situation is that Chevron will have to make a decision whether to give Britannia-U time to raise the finance, which some believe is possible, given enough time. Alternatively, Chevron may choose to break up the assets and sell them to the highest individual bidders, Seplat (OML 53), Amni (OML 52) and Belema Oil (OML 55). What it boils down to is whether to sell individually and close the deal quickly or hold out for more money, which will take much longer to close.

American giant, Chevron is likely to have one eye firmly on the Oando acquisition of the ConocoPhillips assets, which has taken some time to close, but which may very well be worth waiting for given the difference in the bids.

A private equity investor familiar with these kinds of transactions told NOGintelligence that Chevron would have given Britannia-U a long-stop date within which to put up the finance or back out. So whilst Britania-U's ambitious CEO, Uju Ifejika, scours the world's financial centres to raise the funding, all those wishing to write off the company's chances would do well to remember the saying in the world of opera: "It ain't over till the fat lady sings." It seems that the fat lady hasn't sung yet!

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Shell Petroleum Development Company (SPDC) has shut down Obigbo Gas Plant in Oyigbo Local Government Area of Rivers State as a safety precaution after discovering that buildings and other facilities have encroached on the right of way of the gas pipeline. According to SPDC buildings and structures have been erected directly above buried high pressure gas pipelines.

SPDC took the shutdown decision in the interest of public safety saying that "the buildings and structures, being directly above buried high pressure gas lines violate the pipeline design conditions and pose an unacceptable safety risk to the occupants."   

As a result of the closure of the gas plant, 40 million standard cubic feet of gas per day (MMscf/d) is now shut in. The situation is a huge blow to the industrial consumers and power plants that are reliant on the supply of gas through the pipeline.

The SPDC Joint Venture in which the Nigerian National Petroleum Corporation (NNPC) is a partner, is working with the Rivers State Government to restore production to the plant but there is no information on when it is expected to reopen.

Rivers State Governor, Hon. Rotimi Chibuike Amaechi, who declared the situation an "economic urgency," has pledged to ensure that the occupants from the Umuebulu Community are relocated. He has instructed that a valuation of the properties and structures affected be undertaken before demolition begins.

The Obigbo Gas Plant kicked was set up in 2000, and produces 30 - 44 mmscfd. The plant makes use of both associated and non-associated natural gas. It supplies natural gas through the Nigerian Gas Company (NGC) and counts the Aluminum Smelting Company of Nigeria and the PHCN Power plant at Afam & Alaoji among its large clients.

SPDC began a public enlightenment campaign in 2011 to draw attention to the dangers of encroaching on the right-of-way of pipelines and facilities. In spite of the campaign structures are continuing to be erected. The latest phase of the campaign began on radio and television stations in the two states this month.

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Dangote Group has taken a step further towards making the construction of its refinery a reality after reaching agreement with Engineers India (EIL) for the provision of Engineering, Procurement and Construction Management (EPCM) services for its 400,000 BPSD (20 MMTPA) Petroleum Refinery and 600,000 TPA Polypropylene Plant. EIL will provide Project Management Consultancy (PMC) services to the Dangote Group in a deal that valued at $139 million.

EIL, an Indian company which is executing projects around the world, provides EPC and Total Solutions Consultancy Organization in oil and gas and other infrastructure projects.

Oil and gas workers associations, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG) have vowed to oppose recently announced plans for the sell-off of the nation's refineries. The two trade unions, which together represent a large number of industry staff, say that the planned federal government sell-off plan is not in the national interest.

The petroleum Petroleum Minister, Diezani Alison-Madueke, recently announced that the refineries would be put up for sale before the end of the first quarter of next year. She made the announcement after admitting that the government had not done a good job of running major infrastructure entities.

Last year, a 22-man National Refineries Special Task Force headed by a former Minister of Finance, Dr. Kalu Idika Kalu, recommended the privatisation of the refineries, saying they were the worst performing of Africa's 42 refineries.

PENGASSAN President, Comrade Babatunde Ogun, attacked the plan, saying: "The proposed sale of the refineries is against the overall national interest but in the interest of a few, who are lurking around the corridors of power to milk the country dry."

Comrade Ogun accused the government of deliberately underfunding and not carrying out Turn Around Maintenance (TAM) on the refineries to justify the decision to sell them off to cronies at a knock down price.

His recommendation is that the federal government adopts the Nigerian Liquified Natural Gas (NLNG) where the national oil company retains substantial minority shares while core investors hold the working majority and trade unions and staff, host communities should hold the remaining minority shares.  

Comrade Ogun also wants the government to give incentives that will help the establishment of private refineries and make them viable.

Nigeria, Africa's top producer is unable to meet the refined product needs of its populous nation and relies on fuel imports to service about 70 per cent of local requirement. Port Harcourt is the largest of the three national refineries with a processing capacity of 210,000 barrels while Warri is next with a capacity of 125,000 and Kaduna can process 110,000 barrels. They have all been functioning at only a fraction of their capacity for many years.

The price of OPEC basket of twelve crudes stood at $107.34 dollars a barrel according to OPEC Secretariat calculations. That is the highest it has been since mid-October. 

Available statistics show that the Federal Government spent N634 billion subsidising the retail price of kerosene over the past three years.

The Chairman, House Committee on Petroleum (Downstream), Mr. Dakuku Peterside, who recently condemned this as wasteful spending, also said N110 billion was spent on kerosene subsidy in 2010, N324 billion in 2011 and N200 billion in 2012, which came up to N634 billion in the three years.

He said, "In the year 2010, we spent N110,068,533,988 to subsidise kerosene. This is not the cost of kerosene but the cost of subsidising the product alone. In 2011, it got worse and the government spent N324,089,961,319 on kerosene subsidy. Although we have yet to reconcile this, we spent N200bn in subsidising kerosene in 2012.

"So, in three years, we have spent N634bn subsidising kerosene. This is one third of what we spend in a year on capital budget."

South African State-owned company, the Public Investment Corporation (PIC) has entered into a definitive agreement for a $270 million equity investment in Houston based CAMAC Energy Incorporated founded by Nigerian, Dr Kase Lawal. The investment will be made through a private placement of 376,884,422 shares of common stock, representing approximately 30% ownership interest in CAMAC after completion of the transactions. New York Stock Exchange listed CAMAC will also list on the Johannesburg Stock Exchange as part of the deal with PIC.  

Established in 1911, PIC is one of the largest investment managers in Africa, managing assets of over US$140 billion, and manages funds on behalf of the Government Employees Pension Fund in South Africa.

Prior to the deal with PIC, CAMAC Energy had entered into an agreement to acquire additional interests in its wholly owned subsidiary, Allied Energy, which will enable it to get a 100 per cent economic interest in the production sharing contracts covering Oil Mining Leases (OML) 120 and 121 offshore Nigeria. To acquire the interests, CAMAC Energy will issue 497,454,857 shares of common stock, pay US$170 million in cash and issue a US$50 million convertible subordinated note.

CAMAC Energy intends to fund the acquisition of the extra interest in the blocks using funds from the equity investment by PIC. It will also have enough spare cash to fund production on Oyo Field within the OMLs. Current production from Oyo Field is approximately 2,000 barrels of oil per day, but there are already plans to raise production to 7,000 barrels of oil per day mid-2014. CAMAC Energy will become the technical operator of the blocks.

CAMAC Chairman and Chief Executive Officer, Kase Lawal said of the transactions: "We are honored that the PIC has placed their trust and confidence in us by investing in our organization."  

Dr Lawal continued: "The Allied acquisition, investment by the PIC and secondary listing on the JSE will completely change the complexion of our Company, and we look forward to beginning 2014 as a stronger organization with increased production, revenues and scale. Being dual-listed on the NYSE and JSE will provide increased liquidity and transparency for our shareholders. With 100% economic ownership of our high-impact, deepwater offshore assets, we will be well positioned to pursue our goal of producing approximately 14,000 barrels of oil per day once Oyo-7 and Oyo-8 are completed next year."

A clearly excited Dr. Lawal added that the acquisition would enable the company to significantly increase production and cash flow.  

"With this acquisition, we will be transitioning our company from a minor economic interest holder into a significant growth platform targeting the prolific Pliocene and Miocene reservoirs in this region," he said.

The transactions are subject to approval by the Company's stockholders, and are expected to be consummated in the first half of 2014.

Maputo, Mozambique

2-5 December

Oil and Gas Environmental Conference

Dallas, Texas

3-4 December

Drilling Waste Forum 2013

Abu Dhabi, United Arab Emirate

8-11 December

Houston, Texas

9-11 December

Houston, Texas

9-11 December