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ANNUAL REVIEW
Contact us NOW to advertise in our 2013 Annual Review of the Nigerian Oil and Gas Industry.
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Greetings!
Welcome to our 76th issue. We are will be releasing our Annual Review before the end of the year. It will be available in print and PDF. You only have a limited time to secure a space for your company in the 2013 Annual Review. This is an annual edition which will be read many times over during the course of the year. Contact us NOW to secure a space for your advert. Please remember that Google has changed the way it sorts emails and will now put bulk emails into the Promotions box rather than the Inbox. That means you must look through your Promotions box to see your NOGintelligence newsletter. Alternatively, and much more efficient is to add remi.aiyela@nogintelligence.com and editor@nogintelligence.com to your contacts or "safe sender list" to ensure that the newsletter lands in your inbox every time.
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DPR Marginal Fields Road Show Begins
It was a full house on Wednesday when the Director of the Department of Petroleum Resources (DPR), Mr George Osahon kicked off the road show for the 2013 marginal fields licensing round at Eko Hotel with a clear, short and succinct presentation.
If the numbers in the room served as an indication of the kind of numbers of bid applications that DPR is likely to receive then the DPR must expect to be inundated for it seems like everyone wants a marginal field.
And, if the nature of the presentation is anything to go by, then you can expect the process to be conducted with equal efficiency and clarity for this is a Director who doesn't mess around. He expects to get the whole thing done in 4 months even in spite of their expectation of some initial 1-2,000 applications. What is clear from that is that a good many applications will go in the bin without a second glance. It is therefore important to ensure that the application form is filled out to the letter and all the requirements met to avoid being one of those that land in the bin.
NOGintelligence has prepared a Briefing Note that is based on Mr Osahon's presentation and his comments as well as some of the published information from the DPR website. Click here for the NOGintelligence Briefing Note.
The DPR website is www.dprnigeria.org.ng
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Shell Shortlists Bidders for OML Sale
Whilst the oil and gas world has been transfixed by the kick off of the 2013 marginal fields licensing round, Shell has quietly been shortlisting bidders for its Eastern Niger Delta asset sale. The company, which has already sold off assets in Western Niger Delta is now looking to sell off its interests in Oil Mining Leases (OMLs) 18, 24, 25 and 29. The four OMLs, which Shell operates, and in which together with its partners Total and ENI it owns a 45 per cent interest, are located in Rivers State. The current round of asset sell-off confirms Shell's determined exit from onshore Nigeria.
To kick off the sale, Shell had written to a small number of companies, for an expression of interest. However, with the shortage of government bid rounds and the numbers waiting to jump on the exploration and production (E&P) bandwagon, news soon got out and NOGintelligence understands that Shell received close to 500 applications.
Keen to avoid a protracted bidding process, Shell, with the help of FBN Capital, which is advising on the sale, has now trimmed the numbers to a more manageable figure. NOGintelligence understands that as further evaluation continues, the figure will still be cut to around 10-15 of the most credible bidders who will then be allowed into the data room for more in-depth analysis of the assets before the submission of final bids takes place. The assets up for sale together produced 70,000 barrels per day last year.
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. The theft-plagued key pipeline, Nembe Creek Trunk Line is also up for sale. Financial analysts believe the sale should fetch between $2 billion and $3 billion for Shell and its partners. Shell is also looking to sell off OMLs 71 and 72 and as it continues its determined onshore exit.
The company continues to maintain that it is not leaving Nigeria, insisting that "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." It has however pulled back on a $30 billion deepwater investment, which it says is now on hold pending while it awaits the passage of the Petroleum Industry Bill into law.
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Oando Gets Extra 60 Days to Complete ConocoPhillips Acquisition
Toronto Stock Exchange listed Oando Energy Resources (OER), the upstream business of Oando PLC has won a reprieve from ConocoPhillips as it continues to look for finance to close the ambitious deal. ConocoPhillips had given Oando a longstop date of 30th November to close the transaction, which Oando was unable to meet. Fortunately, ConocoPhillips has now agreed to extend the closure date by 60 days. That means that Oando now has until the end of January to complete the acquisition.
Oando remains bullish about its chances of closing the deal. The downstream giant which is now looking to change its upstream game says it has $815 million in committed credit facilities from local and foreign banks and having already paid $435 million deposit, is now in a good position to finalise the finance necessary to close the $1.68 billion purchase.
To get the extension, Oando had to agree to pay an additional $15 million making a total deposit of US$450 million by December 6, 2013. OER will fund the extra deposit by borrowing from its parent Oando Plc at an interest rate of 5%. In addition to the extra deposit, the price of the assets will be increased by $10 million per month but calculated pro rata if completion occurs before the last day of the month.
The acquisition is a complete game-changer for Oando. The company says the acquisition is expected to be a "transformational milestone" which will make Oando the largest indigenous E&P company in Nigeria with 50,000 boepd in production, 236 million in 2P reserves and over 500 million in contingent resources. This, Oando says, will be an unprecedented achievement by an indigenous player in the Nigerian oil and gas space.
Dr Alex Iruna, Head, Corporate Communications, Oando Group Plc. said: "OER looks forward to the closure of this transaction in the New Year."
On another note, Oando PLC has announced that it has broken ground on the proposed site for its new head office along Ozumba Mbadiwe Drive in Victoria Island, Lagos. The company has dubbed the project, "The Wings Project" saying it envisions a monolithic, but innovative 21st century structure which will comprise of two identical 15 storey glass towers sitting on a plinth that houses several car park floors, restaurants, gymnasiums, and a jetty.
Rand Merchant Bank Wesport and Stanbic IBTC have both providing long term debt funding while Argentil Capital Partners provided specialised financial services.
The project is scheduled for completion in 2015 according to the 30 month construction plan developed by Cappa & Dalberto.
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NPDC Signs Cooperation MoU With Petrofac, Taleveras for OML 119 Development
The Nigerian Petroleum Development Company (NPDC) has signed a Memorandum of Understanding (MOU) with Petrofac Ltd and Taleveras Energy Resources under which they will provide financial, technical, and capacity and capability building support for the further development of NPDC's offshore block OML119 in a risk-based support agreement. The ownership of the licence will be retained by NPDC.
In addition, under the MoU Petrofac, a FTSE 100 London Stock Exchange listed oil and gas services company will, along with Talveras, an African oil and gas service company, also explore other options that include funding, technical support, training services, and asset development/management support on a risk service contract, production enhancement or similar contract basis.
Petrofac explained that the extendable five-year MOU was reached as part of the promotion of Nigerian oil and gas industry content.
The UK based company says the deal is expected to support NPDC's aims to further build indigenous capacity and technical capabilities of NPDC and its affiliates.
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Total's Ofon Phase-2 Process Platform Sets Sale for Nigeria from Korea
The Ofon Phase 2 process platform (OFP2) is on its way to the Ofon field located in the Oil Mining Lease (OML) 102, 50km off the coast of Nigeria in 40m water depth. The field is owned by Total E&P Nigeria Limited (TEPNG) 40% in partnership with the Nigerian National Petroleum Corporation (NNPC) 60%.
The sail-away ceremony for the OFP2 was performed at the Hyundai Heavy Industries (HHI) yard in Ulsan, South Korea on Friday. The main objectives of the OFP 2 project are to stop flaring, monetize the gas to NLNG plant at Bonny via Amenam (another TEPNG facility), develop additional reserves while producing the remaining reserves in Ofon phase 1 and perform water injection to re-pressurize the different reservoirs.
The Ofon Phase 2 Process Platform (OFP2) project was initially sanctioned in December 2006 and two contracts awarded in 2007: the EPCC1 to Hyundai Heavy Industries (HHI) of Korea for the construction of the OFP2 deck, and T&17 to Technip for the deck's transportation and installation.
In September 2011, the remaining five EPC contracts were awarded to Niger dock (EPC2: Wellhead Platforms), Subsea-7/Globestar (EPC3: Sealines), Eiffage (EPC4: Living Quarters), Ponticelli (EPC5: Tie-ins to existing platform) and Saipem (EPC8: OFP2 jacket).
Under the OFP 2 project, the following new facilities are to be added to the existing Ofon Phase 1 facilities.
Total says the Ofon phase 2 project will significantly contribute to Nigeria's local content policy, in terms of not only construction works (with five EPCs located in Nigeria) but also of training for Nigerian personnel, especially engineers and technicians.
Gas flare-out and First Oil from Ofon Phase 2 Project are planned for 2014.
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Agip Extends Abo FPSO Contract
Nigeria Agip Exploration, a subsidiary of ENI has extended the contract for the Floating Production, storage and offloading unit (
FPSO) Abo with BW Offshore, a provider of floating production services to the oil and gas industry. This means the FPSO will remain in place till the end of Q2 2014.
The extension has been agreed to secure operational continuity while joint work to detail longer-term programs for investment and production is completed.
Abo FPSO has a storage capacity of 930,000 barrels of oil and oil treatment capacity of up to 45,000 bopd, a water injection capacity of 30,000 bwpd and a gas compression capacity of 48,4 mmscfd.
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OPEC daily basket price stood at $108.92 a barrel Wednesday, 4 December 2013
The price of OPEC basket of twelve crudes stood at $108.92 dollars a barrel, the highest it has been since mid-September, having jumped nearly $1 compared with the price of $108.08 on Tuesday.
Introduced on 16 June 2005, 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).
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OPEC Leaves Output Unchanged at 30 Million Barrels Per Day
Ministers from the Organisation of Petroleum Exporting Countries (OPEC) meeting in Vienna on the 4th of December at their quarterly gathering have agreed once again to leave their official production target at 30 million barrels per day (bpd) until at least June next year. The Ministers from 12 member nations of the OPEC, which together supply 40 per cent of the world's oil agree that leaving production uncut will keep prices high, something they are keen to maintain.
Crude oil output from OPEC had dropped to 30 million bpd its lowest in two and half years. Geopolitical tensions have led to a drop in production in Libya, Iran and Iraq. Nigeria is also contributing to the production outage as oil theft continues to spiral out of control.
According to Reuters and Bloomberg surveys, OPEC's November output is the lowest since May 2011, and leaves supply below OPEC's nominal target of 30 million bpd for a second month. Supply from OPEC averaged 29.64 million bpddown from a revised 29.70 million bpd in October. The supply outages have left global spare capacity at its lowest in five years driving prices higher.
It had been generally expected that the OPEC Ministers would leave production targets uncut with prices being well above the $100 mark and given the reliance of many of the members nations on high oil prices to meet their annual budgets.
Following the meeting, Saudi Arabia's oil minister, Ali al-Naimi said: "We have rolled it over. We are all satisfied."
The next OPEC meeting is scheduled to take place on June 11, where once again, production cuts will be on the agenda, particularly if Libya and Iran are back in the market by then.
Also, at the meeting, the tenure of Libyan representative, Abdalla El-Badri as Secretary-General was extended by one year, following the oil Ministers' failure to pick a successor at its last meeting in December when three candidates were presented.
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Arco Petrochemicals Profits Rose 166.96%
Listed engineering company, Arco Petrochemical Engineering Company has recorded a profit of N1.7 billion for the year ended March 31st 2013. Profit before tax shot up from N636.79 million in the previous financial year to N1.7 billion for the period under review representing an increase of 166.96 per cent over the preceding year.
The chairman of the Board of Directors, Mr Joseph Akpieyi revealed the financial statement at the company's 31st Annual General Meeting held in Lagos recently. He pointed out that the company has already adopted the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) for its financial reporting. The financial statement for the year was prepared in compliance with the IFRS.
Mr Akpieyi said that the company would be embarking on a five-year development plan to strengthen the growth already experienced across its subsidiaries.
Arco Petrochemical Engineering Company Limited provides maintenance engineering support, marine logistics, and pipelines and facilities inspection services to the oil and gas industry.
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NEITI Postpones Forum to Review Key Petroleum Industry Reports
The Nigeria Extractive Industries Transparency Initiative (NEITI) has postponed a key oil and gas forum intended to review crucial petroleum industry reports. The event, which NEITI's Director of Communications, Ogbonnaya Orji, said was shifted due to "unforeseen circumstances," will now hold in the first quarter of next year.
The forum is to be held in partnership with Revenue Watch Institute (RWI), which this year launched the 2013 Resource Governance Index which measured the quality of governance in oil, gas and mining sectors in 58 countries including Nigeria.
NEITI intends for the proposed forum to use its findings to improve Nigeria's rating in the next survey through deepened public knowledge and democratic debates about transparency and good governance in the oil and gas sector.
The forum will review the several audit and probe reports conducted recently in the oil and gas industry, among them:
- The NEITI oil and gas audit reports covering 1999 - 2011
- The Nuhu Ribadu-Petroleum Revenue Special Task Force report
- The KPMG Audit of NNPC
- The Kalu Idika Kalu reports on the refineries.
- The House of Representatives Ad-Hoc Committee report on fuel subsidy (2009-2011)
- The Magnus Abe-led Senate Joint Committee on Petroleum Resources (2005-2011)
- The Aig-Imoukhuede-led Committee on Subsidy Claims and Payments
- The Aig-Imoukhuede-led Technical Committee on verification & reconciliation of findings of Ministry of Finance investigation reports on subsidy claims and payments
- The Dotun Sulaiman Committee on Governance and Global Best Practices in the NNPC
- The Nigeria Natural Resource Charter benchmarking report
- The Resource Governance Index 2013
Another key NEITI oil and gas related event that has been postponed till the first quarter of next year is a Policy Dialogue on metering. The forum being held in collaboration with the Civil Society Legislative Advocacy Centre (CISLAC) will create an opportunity for a dialogue on the installation of metering infrastructure to adequately measure the quantity of crude produced in Nigeria.
Yet another postponed event, a Roundtable for Civil Society Organisations scheduled for Tuesday and Wednesday this week has now been shifted to December 16 and 17. This event will be held to elect a special committee of the civil society that will help NEITI to strengthen public education, enlightenment and information on its activities.
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Joint Task Force Accused by NGO of Complicity in Oil Theft
A non-governmental organization (NGO) has accused members of the Joint Task Force (JTF) stationed in the Niger Delta of complicity in oil theft, the very activity they are there to fight. A report published by Stakeholder Democracy Network (SDN) specifically points the finger at top military brass, accusing them of colluding with the oil thieves.
SDN says that it based its report on undercover research by a team that it planted in various illegal mining operations in Rivers, Bayelsa and Delta States. In addition, the group says it obtained interviews with 120 informants from oil companies, government representatives and members of civil society groups. They estimate that about 150,000 barrels of oil a day is being lost to theft.
SDN accuses JTF on two levels. Higher up on the food chain they say are the higher ranked JTF officers who own shares in the illegal tapping of crude pipelines. "This research suggests that a relatively small number of senior officers must have criminal ties to the tap point owners, unions and camps managers as these are where most profits are made", the report said.
On a lower level on the food chain, junior officers, says the report, are involved in extortion from vessels carrying illegal crude or refined products. They call the payments "transportation taxes". The report explained: "Essentially a kind of protection money, these fees grant vessels open passage through the transport corridor. During their routine patrols of the inland waterways, officers will stop vessels and demand payments in cash."
Whilst denying the accusations, the JTF has released a statement on its latest successes in the war against oil theft. Spokesperson for the JTF, Colonel Onyema Nwachukwu, revealed that the JTF destroyed 134 illegal refineries and seized two barges from oil thieves in operations, which took place between 22nd and 30th November in Rivers, Bayelsa and Delta States.
"We have also recovered 12 illegal oil dumps used by oil thieves in Igbematoru, Oyeregbene, Lasukugbere, Mbikiba and Ewesusho communities in Southern Ijaw, Brass and Nembe local government areas (LGAs) of Bayelsa," he stated.
Click here to read the SDN Report on illegal oil refining in the Niger Delta.
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NOSDRA Reports Oil Spill from Agip Facility
The National Oil Spills Detection and Response Agency (NOSDRA) has reported an oil spill, which it said was discharged into the Atlantic on Saturday from the Brass Oil Export Terminal operated by Agip. The spokesperson for the organisation, Henshaw Oguwike, said community residents who noticed the spill alerted them to the incident, which occurred around Yenagoa.
He said that NOSDRA had despatched its response vehicle to the scene and that the resultant investigation will reveal how the spill occurred and how much oil was spilt.
"The incident occurred on Thursday and our team is already at the spill site, so, I can tell you that investigations have commenced and by the time our men come back from the site, more facts will be made available," Mr. Oguwike said.
Agip was unavailable for comment.
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NLNG Finance Scheme To Enhance Local Content
The Nigeria Liquefied Natural Gas Limited (NLNG) Limited has announced the launch of a $1 billion financing scheme to aid local vendors. The scheme will enable registered contractors to have access to funding at competitive rates.
Five banks are involved in the scheme after signing a Memorandum of Understanding (MoU) with the company to provide the finance. The banks involved are Access Bank, First Bank of Nigeria, Standard Chartered Bank, United Bank for Africa and Zenith Bank. The scheme enables contractors registered with NLNG to apply for the soft loans as long as they have a purchase order or contract document from NLNG.
Managing Director of NLNG, Mr Babs Omotowa explained the rationale behind the acquisition. "NLNG recognises the many challenges limiting the sustainable growth and development of local content in Nigeria, a key one being lack of access to adequate funds. A significant number of willing contractors struggle to get financing. Banks in Nigeria often find it challenging acceding to loan applications from local contractors with little or doubtful assurances of repayment. An enterprise may have little track record, credit history or illiquid collateral and thus risks are therefore perceived to be high and this makes it more difficult for local contractors to find finance," he said.
The company explained that the facility would not function as a grant and that the participating banks would be monitoring the scheme effectively to ensure that it is not abused.
NLNG is owned by a consortium which comprises Nigerian National Petroleum Corporation, NNPC (49 per cent), Shell Gas (25.6 per cent), Total LNG Nigeria Limited (15 per cent) and Eni International (10.4 per cent).
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Chevron - Provision of Pipe Recovery Services Offshore
Chevron Nigeria Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of pipe recovery services offshore. The scope of service covers the provision of full tools and personnel for all ranges of open hole and cased hole pipe recovery services. Only tenderers who are qualified in the NJQS Product/Category 30412 (Fishing/Wireline Fishing) shall be invited to submit technical bids. The closing date for this opportunity is 11th December 2013.
NAOC - Provision of Charter and Operation of Medium Weight Helicopters
Nigerian Agip Oil Company Limited (NAOC) invites interested and prequalified operators to respond to the opportunity for the provision of charter and operation of medium weight helicopters. The scope of work includes the provision and operation of four (4) medium weight helicopters each of 12/15 seater capacity capable of onshore and offshore operations. Only tenderers who are registered with NJQS Product/Service category 30803: air transport services of passengers and freight shall be invited to submit technical bids. The closing date for this opportunity is 27th December 2013.
Addax - Provision of Equipment Rental and Well Engineering Support Services
Addax Petroleum Development (Nigeria) Limited invites interested and pre-qualified contractors to respond to the opportunity for the provision of equipment rental and well engineering support services. The contract is proposed to commence in the fourth quarter of 2014. The scope of work includes the provision of equipment rental and well engineering support services suitable for use in an onshore /offshore operation. Only tenderers who are registered with NJQS product/category other drilling services (3.04.99) shall be invited to submit technical bids. The closing date for this opportunity is 30th December 2013.
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Best wishes 
Remi Aiyela
Editor-in-Chief
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