ADVERTISE IN
MAGAZINE February Issue Deadline: 20th January
|
 Click to read
Email us to order print copy |
|
|
|
|
Greetings!
Welcome to our 79th issue. This is our first newsletter of the year so let me start by wishing you all a Happy New Year. I wish you all a successful year in 2014! We are pleased to let you know that the next NOGintelligence magazine, the Annual Review 2013 is currently in print and will be released at the end of next week. You can however take a sneak preview by clicking on the front cover in the side bar. Please note that NOGintelligence print magazine is free but due to the increasing costs of distribution, we ask that you pay for delivery. Please email us giving your company name and full address if you would like a copy.
|
DPR: Marginal Fields Bid Round Will Still Go Ahead
Unbelievers were finally silenced when the long-awaited marginal fields bid round was announced on the 28th of November by the Minister for Petroleum Resources, Diezani Alison-Madueke. Many had speculated that the bid round would not happen under this government after some 3 years of "Will they? Won't they?"
Investors were encouraged when the process kicked off barely a week after the announcement with hastily convened road shows in Lagos, Port Harcourt, Abuja and Kaduna to acquaint the investing public with the process. The road shows at which the Director of the Department of Petroleum Resources (DPR), George Osahon gave a clear and succinct presentation of the bidding process was well received by the oil community. The ambitious 4-month process all looked very simple from the presentation. But things are never as simple as they seem.
The application forms which were due to be released mid December to kick-start the process have still not been released, nearly a month later. After pressure from NOGintelligence, DPR released a statement on its website stating that "the impending 2013 Marginal Field Bid Round is continuing as planned," and that "Prospective applicants are assured that the time frame earlier set for the Exercise remains unchanged." Clearly, that can no longer be the case.
What is certain is that the time frame announced is now unlikely to be achieved. A new time frame will have to be announced once the application forms are released. DPR is remaining silent about the reason for the delay. However, NOGintelligence gathered from sources within DPR that there are disputes with at least two of the international oil companies (IOC's) over the marginal fields to be included.
Marginal fields are fields which have been discovered by IOCs but which they have deemed commercially unviable. Ten years after discovery, these unexploited fields can be converted to marginal fields and allocated by the government to indigenous companies under the Marginal Fields Programme. The first bid round was in 2003. Only 7 out of 24 fields awarded in that licensing round are currently producing.
Part of the problem, which the former Director of DPR, Osten Olorunshola highlighted at the NOGintelligence official launch, was that some of the fields awarded were "quite frankly unbankable." He gave the assurance that for the next marginal fields round, care would be taken to ensure that all the fields were "good assets" that would enable awardees to raise finance successfully.
It seems that the "bankability" of some of the assets is now in issue in quite the opposite direction, with at least one prospective field said to have around 50 million barrels of oil in reserves. That for many is not at all marginal. The changing technological landscape, which today allows for more efficient extraction methods means that what was considered uneconomic 10 years ago might not be seen in that light today. In addition, the IOCs have discovered that there is a good amount of money to be made from discreet direct sales of the assets themselves. As a result there are increasingly tense discussions taking place right now over the inclusion of some of the fields. Some trade-offs are likely to take place for a quick resolution.
Until the situation is resolved, the marginal fields programme remains on hold and the Minister's plan to see the bid round finalized by the end of April now looks increasingly unrealistic. The DPR however continues to insist that the bid round will take place. Will it? Won't it? Only time will tell, but given the keenness of the government to hold the bid round before the elections, it seems likely that it will.
NOGintelligence has prepared a Briefing Note on the Marginal Field Bid Round. Note that as a result of the delay the timescale given is unlikely to remain but the bidding process will be the same. You can get a copy from our website or you can Click here.
Back to top
|
Heritage Oil Takes OML 30 Production up to 50,000 bpd
Dually listed Heritage Oil has provided an operational update, which shows that it has been able to increase production significantly. By the end of 2013 production had reached over 50,000 barrels of oil per day (bpd) from the oil mining lease (OML) 30 in which it has an interest.
The company, which is listed on the main board of the London Stock Exchange, said they were able to reach that level of production as a result of continued maintenance and rehabilitation programmes. The company also credits the re-commencement of production from Uzere West Field in December 2013 for contributing to their good fortunes. The field had been shut in for over two years. Net production to Heritage in Q4 2013 averaged approximately 13,300 bpd.
The company expects to further increase production during the first half of the year as it continues its maintenance programme including the installation of gas compressors, statutory inspection and testing of all pressure vessels and inspection of all wellheads and pipelines completed to support well optimisation activities.
The company is also happy with cash flow after four liftings in Q4 2013 generated net revenues of around $170 million to Heritage while total revenues for the year were roughly USD465 million. Liftings should take place on a monthly basis from now, the company noted.
Heritage also revealed that Shoreline Power Company, its joint venture partner in Shoreline Natural Resources (SNR) is to acquire a 30 per cent economic interest in SNR. The interest of the partners in OML 30 is held by SNR. Following the completion of the deal, for which it is to receive a consideration of $31.5 million, Heritage will have a 30.71 per cent working interest in OML 30.
Back to top
|
Eland Oil to Start Production on OML 40 Soon
Eland Oil and Gas expects to start production soon at its Opuama field in oil mining lease (OML) 40. The Scottish company says it has finished testing the final section of the 12-inch export pipeline after successfully rebuilding a flow station tied to the field. The field has been shut in for more than 7 years.
The company hopes to start production from the six wells on the field which it estimates holds 54.2 million barrels of oil reserves. Initial production is expected to exceed the 1,500 barrels of day predicted by Shell, the previous operator of the onshore block.
"We expect commencement of production shortly following the successful completion of pre-commissioning and testing," the company said in a statement.
Back to top
|
Oando ConocoPhillips Acquisition Nearly There
Oando PLC, Nigeria's leading indigenous energy group, listed on both the Nigerian and Johannesburg Stock Exchange has had yet another successful fund raise after a special placement exercise in which it raised N30.7 billion. Of that amount, says the company, N19.3Billion will be allocated to reducing the outstanding balance of Oando's ongoing $1.6 billion acquisition of ConocoPhillips' Nigerian assets. The longstop date for the completion is now the 31st of January after Oando bought a 60 day extension in November.
The Company received approval from the Securities Exchange Commission to raise the full amount through the issuance of 2.5 billion ordinary shares of 50 Kobo each at N15.00 per share. The shares were fully subscribed to, and bring Oando one step closer to completing the ConocoPhillips acquisition.
Meanwhile, Oando Energy Resources (OER) has entered into a second facility agreement with its parent company, Oando Plc, the 94.6 per cent shareholder of the company OER. Pursuant to the agreement, OER will borrow US$200 million, at an annual interest rate of 5 per cent, repayable in cash by February 28, 2014. OER intends to use the proceeds of the loan towards the outstanding payment for the ConocoPhillips Nigerian assets.
Given the arduous route to completion of its mammoth divestment the American giant ConocoPhillips, rather like the child on a seemingly unending road trip, must surely be wondering: "Are we there yet?"
Back to top
|
Oil Theft Down by 60,000 BPD
According to the Governor of Delta State, Governor Emmanuel Uduaghan, oil theft has been significantly reduced, down to 40,000 barrels of oil per day from 100,000 previously.
He explained that when oil theft was at its peak, between 80,000 and 100,000 barrels was being stolen with a shut-in of about 300,000 barrels due to damage to two major pipelines. The two pipelines are now functioning and, he said, oil theft had reduced significantly and that he expects the figure to be reduced even more over time.
Analysts contacted for comment agree that things have improved slightly, they were not rushing to accept these revised figures. In any case, they say, 40,000 barrels a day stolen is 40,000 barrels too many.
Back to top
|
OPEC December Output Down to Two-and-a-half Year Low
OPEC's oil output fell in December to its lowest since May 2011 after continued production disruption in Libya, Iraq and reduction in Saudi Arabian supply according to a Reuters survey. An increase in Nigerian and Iranian production did not improve the position, with output averaging 29.53 million barrels per day (bpd), down from 29.64 million bpd in November, according to the survey.
Nigeria's output, including the Agbami stream but excluding Oso and Akpo condensates rose to 1.88 million barrels per day in December up from its 1.83 million barrels per day output in November according to the Reuters survey. The increase in output came from the Kokori field in oil mining lease (OML) 30 which Heritage says hit a production level of 50,000 bpd from 26,000 bpd previously.
Back to top
|
Federal Government U-Turns over Refineries Sale
The Federal Government has made a dramatic u-turn over the sale of the nation's refineries, insisting that it has no plans to put the refineries up for sale. This comes only a few weeks after the Minister of Petroleum said that the refineries were up for grabs. The Bureau of Public Enterprise also confirmed the proposed sale after the Minister's admission that the four refineries, with a combined capacity of 445,000 barrels per day were to be sold following decades of mismanagement.
Already, oil workers under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) were lining up to take industrial action over the proposed sale which they said was against the national interest.
Now the Federal Government appears to have had a change of mind after a statement from the Presidency revealed that the President has not approved the sale and that the government has no intention of selling the refineries.
The oil workers who were vehemently opposed to the sale are taking credit for the U-turn by the Government over the sale of the refineries.
Back to top
|
Oando to Extend Gas Pipeline Distribution Network in Lagos
Indigenous energy group, Oando Plc, is to extend the natural gas distribution network of its Greater Lagos Area franchise from Ijora to the Marina Central Business District. The project, which will be executed by one of its subsidiaries, Gaslink Nigeria Limited, in conjunction with Oilserv Limited, will increase Oando's current gas distribution capacity of 85mmscf/d, of which 55mmscf/d is currently utilized. Oando says it expects this development to have a socio-economic impact on the district as the availability of natural gas in those areas will attract industrial investors and businesses. The company also says the project will have a positive environmental impact as natural gas, which is more environmentally friendly, will displace diesel/LPFO as the primary fuel source in the industries and power generation plants in the areas the infrastructure extends to. The pipeline extension project is approximately 8km in length, 12 inches in diameter, and is expected to take approximately 18 months to complete.
|
NLNG Records Landmark 3000th Export Cargo
Nigeria LNG Limited (NLNG) has exported its 3000th cargo of Liquefied Natural Gas (LNG) from its Bonny Island Terminal in Rivers State. The milestone was achieved on the 7th of January as the cargo bound for Marmara LNG Terminal in Turkey set sail on board LNG Lokoja, one of NLNG's vessels. The cargo is for Botas Petroleum Pipeline Corporation. The first export of LNG cargo from NLNG was on October 9, 1999. Since then, NLNG has grown to become Africa's largest single private sector industrial investment, supplying about 7 per cent of total world LNG demand. Six-train NLNG currently processes for export and domestic use more than four trillion cubic feet of associated gas, which was previously flared. The company has set aside supplies of about 250,000 tonnes of liquefied petroleum gas (LPG) popularly known as cooking gas for the Nigerian domestic market. Currently, NLNG has 24 LNG carriers, which together constitute by far the largest shipping fleet in the country. In addition the company has 6 vessels under construction in South Korea, due for delivery in 2015 and 2016. NLNG's plans to expand to a seventh train has stalled over the years. The company expects that when Train 7 is finally constructed, it will up the company's total production capacity to 30 million tonnes per annum (MTPA) of LNG and potentially increase Nigeria's supply of world LNG demand to 10%. NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49%), Shell Gas BV, SGBV, (25.6%), Total LNG Nigeria Limited (15%), and Eni International (N.A,) N. V. S. a. r. l (10.4%).
|
OPEC
Daily Basket Price Stood at $104.35 a barrel Thursday, 9th January 2014
The price of OPEC basket of twelve crudes stood at $104.35 a barrel on Thursday, compared with $104.50 the previous day, according to OPEC Secretariat calculations. This continues a downward trend since 27th of February last year when the basket price achieved $109.35.
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).
|
FHN 26 Secures $150 Million Loan from Access Bank
FHN 26's plans for oil mining lease (OML) 26, which it won in a Shell divestment, has just received a boost after the e&p company concluded terms for a $150 million Senior Secured Term Loan from Access Bank. Ahonsi Unuigbe, Executive Director and Chief Financial Officer of FHN 26 commended the Bank for the speed and flexibility with which the transaction was arranged.
Executive Director and Chief Operating Officer of FHN 26, Femi Bajomo, said the finance would enable it to fund capital expenditure. They are planning to drill new wells with the intention of ramping up production capacity within 18 months.
|
AFC to Underwrite $65 Million Loan Facility to Depthwize
The Africa Finance Corporation is to underwrite a $65 million loan facility for indigenous drilling contracting company, Depthwize Nigeria Limited. The amount is part of a $100m senior secured term loan facility, which the company said in a statement that it will use for the acquisition and upgrade of swamp rigs. JP Morgan is the co-mandated lead arranger on the transaction.
Depthwize is a contractor for shallow water and swamp barge drilling rigs and is planning to acquire more rigs with the capacity to drill beyond 30,000 feet depth. Their technical partner is US company, Megadrill Services Limited, which builds swamp rigs.
According to the statement, Depthwize operates the assets of Megadrill in Nigeria with two high temperature and high-pressure swamp rigs currently under its purview. The loan facility will be used to finance capital expenditure related to the acquisition of new HTHP swamp rigs and upgrading of the existing ones.
The Managing Director, Depthwize, Mr. Uche Dimiri, said the new rigs would enhance the company's access to new swamp drilling opportunities in the Niger Delta.
|
NNPC Explains "Missing" $10.8 Billion Oil Revenue
The Nigerian National Petroleum Corporation (NNPC) has released a statement to explain the whereabouts of the "missing" $10.8 billion in oil revenue it had been accused of failing to remit to the Federation Account. The Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, had, in a letter to the President, which was leaked to the press, accused NNPC of failing to remit $49.8 billion in oil revenue to the Federation Account. Since then, Sanusi has retracted the accusations after reconciliation meetings were held with NNPC. He however revealed that $12 billion remained unreconciled (although the Minister of Finance insisted it was $10.8 billion) but he stressed that reconciliation meetings were continuing.
According to NNPC, the outstanding amount of $10.8 billion is in fact not missing. The Group Executive Director, Finance and Accounts Directorate of NNPC, Bernard Otti explained that the sum alleged to be missing was expenditure incurred on behalf of the Federal Government.
He said, "The $10.8bn is made up of the following: subsidy claim, $8.49bn; pipeline management and repair cost, $1.22bn; product/crude oil loses, $0.72bn; and cost of holding the strategic stock reserves, $0.37bn." Not everyone is satisfied with the explanation however, with critics calling for clarification of how NNPC came to be liable for $8.49 billion in subsidy claims when the Ministry of Finance is the agency responsible for settling subsidy claims. The CBN Governor is yet to confirm that he is satisfied with the explanation given by NNPC for the unremitted amount and that the matter is closed.
|
Inter Ministerial Task Team to Recover $9.6 Billion Outstanding Revenue from Oil Industry
The Federal Government has finally inaugurated an Inter Ministerial Task Team (IMTT) charged with the responsibility of recovering the sums, which the Nigeria Extractive Industries Transparency Initiative (NEITI) audit reports revealed to be owing to the government by the industry.
According to a statement released by the Government, the IMTT's terms of reference are to work closely with NEITI to ensure the prompt recovery of all outstanding revenues due to the Federation from the NEITI audit findings, examine the findings and recommendations in NEITI audit reports and give advice to affected relevant agencies on appropriate steps to address the issues.
The outstanding revenue, which the NEITI audits put at about $9.6 billion, is made up of under payments and un-reconciled differences identified NEITI. About $2 billion has already been recovered since the publication of the NEITI audits.
|
Total - Provision of Unix Hardware Maintenance Services
Total E&P Nigeria Limited, invites interested and registered Nigerian companies to respond to the opportunity for theprovision of UNIX-based Server Systems Maintenance Services. The scope of service covers the setup, installation and configuration of all hardware for UNIX-based servers and workstations. Only tenderers who are registered with 3.11.06 (hardware installations support services) and or 3.11.07 (general IS/IT consultancy services) product service category shall be invited to submit technical bids. The closing date for this opportunity is 20th January 2014.
Total - Provision of Windows Systems and Network Administration Services
Total E&P Nigeria Limited, invites interested and registered Nigerian companies to respond to the opportunity for theprovision of windows network administration support services. The scope of service covers the installation, support, administration and maintenance of all windows-based operation systems. Only tenderers who are registered with 3.11.01 network installation/ support services and/or 3.11.07 operating system installations/support services shall be invited to submit technical bids. The closing date for this opportunity is 20th January 2014.
Total - Provision of Data Network Equipment and Cable Infrastructure
Total E&P Nigeria Limited, invites interested and registered Nigerian companies to respond to the opportunity for the maintenance and routine installation of data communication and cable infrastructure in the company. The scope of service covers the provision of personnel and equipment required to operate, maintain and carry-out routine installations of data communication and cable infrastructure. Only tenderers who are registered with the information technology category (3.11.20- telecommunication, installation/ support services) shall be invited to submit technical bids. The closing date for this opportunity is 20th January 2014.
Total - Provision of Radio Transmission and Installation Infrastructure
Total E&P Nigeria Limited, invites interested and registered Nigerian companies to respond to the opportunity for the provision of radio transmission and installation infrastructure. The scope of service covers the provision of personnel and equipment required to operate, maintain and carryout routine installation of radio and transmission infrastructure. Only tenderers who are registered with the information technology category (3.11.20- telecommunication, installation/ support services) shall be invited to submit technical bids. The closing date for this opportunity is 20th January 2014.
Total - Provision of Telephony Infrastructure and its Installation
Total E&P Nigeria Limited, invites interested and registered Nigerian companies to respond to the opportunity for the operation, maintenance and routine installation of telephony infrastructure of the company. The scope of service covers the provision of personnel and equipment required to operate, maintain and carry out routine installation of telephony infrastructure and related services. Only tenderers who are registered with the information technology category (3.11.20- telecommunication, installation/ support services) shall be invited to submit technical bids. The closing date for this opportunity is 20th January 2014.
ADDAX- Provision of Janitorial/ General Maintenance Services
ADDAX Petroleum Development Nigeria Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of janitorial/ general maintenance services to her Lagos office and residence. The scope of service covers general maintenance and janitorial services. Only tenderers who are registered with the NJQS under theapplicable Product/category 3.05.08 Civil Works/Building Contracting Services and 2.12.06 Cleaning / Sanitary Supplies etc.) shall be invited to submit technical bids. The closing date for this opportunity is 22nd January 2014.
|
Don't forget to join our mailing list if you haven't done so already. Remember, you won't have to look anywhere else for your weekly Nigerian oil industry updates, and it's free to join.
Best wishes 
Remi Aiyela
Editor-in-Chief
|
|
|
|
|
