Welcome to our 97th issue.
Our next magazine issue will focus on Technology. Do make sure you get in touch if you have any new technology for the Nigerian oil and gas industry as we will be devoting extensive editorial space to coverage of technology that is available in-country.
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Oando Receives Ministerial Consent for Landmark ConocoPhillips Acquisition
Oando has finally received the consent of the Minister of Petroleum Resources to its proposed acquisition of ConocoPhillips' Nigerian business. The long-awaited consent has been expensive for Oando as the transaction staggered from one long-stop date to another, even after the financial close of the $1.65 billion acquisition. That is now history as Oando and ConocoPhillips prepare for the final close of the mammoth deal that will see Oando moving from 4,500 barrels per day of production (bpd) to 50,000 bpd.
News of the consent of the Minister, which is required pursuant to the Petroleum Act 2004, was contained in a letter from the Department of Petroleum Resources (DPR) signed by the Director, George Osahon, on behalf of the Minister, to Oando. The letter which is dated 18th June 2014 states: "In accordance with Paragraph 14 of the First Schedule of the Petroleum Act, we hereby convey the consent of the Honourable Minister to the Assignment of the interests in all the licences and leases stated in your application."
Oando explained in a statement that the Act stipulates that the Federal Ministry of Petroleum Resources must conduct due diligence to ensure ownership is being transferred to a company that is of good reputation, has sufficient knowledge, experience and financial resources to work the license or lease and in all other respects is acceptable to the Federal Government. Consent of the Minister may only be granted where the Minister is satisfied that the above conditions have been fully met.
Oando still has one more regulatory hoop to jump through before it can close the transaction. It has to pay a premium of $41.25 million, the equivalent of the 2.5% of the transaction value of $1.65 billion, to the Federal Government within 4 weeks of the date of the letter. Failure to comply will vitiate the consent. Oando is not sweating this issue after managing to pay a $435 million deposit when it was declared winner of the strongly contested auction, and then lining up $815 million of bank credit facilities and also adding rights issues, which were oversubscribed, to the mix. $465 million came from a Reserves Based Lending Facility, internationally placed and led by BNP Paribas, Standard Bank, and Standard Chartered Bank. Another $350 million came from a Senior Secured Loan, jointly arranged locally in Nigeria, by FBN Capital and FCMB Capital Markets.
An elated Wale Tinubu, Group Chief Executive, Oando Plc said yesterday: "It has been a long journey, wherein we kept faith with our strategy and executed every milestone diligently. This acquisition satisfies our criteria for assets in production, as well as excellent appraisal and exploration prospects. We will work hand in hand with the management team of ConocoPhillips to immediately complete the acquisition."
The audaccious 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 from 6 producing fields, 236 million in 2P reserves and over 500 million in contingent resources.
The onshore business to be acquired by Oando under the historic deal includes Phillips Oil Company Nigeria Limited (POCNL), which holds a 20 per cent non-operating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited (NAOC) Joint Venture (NAOC JV). Nigerian National Petroleum Corporation (NNPC) holds a 60 per cent interest in the joint venture, while NAOC, which operates the assets holds 20 per cent.
The second onshore business is Phillips Brass Limited (PBL), which holds a 17 per cent shareholding interest in Brass LNG Limited, which is developing the Brass LNG project. Brass LNG is a Greenfield project to develop a two-train of 10 million tonnes per year Liquefied Natural Gas (LNG) facility in Bayelsa State. The other partners are NNPC, 49 per cent; Eni, 17 per cent and Total, 17 per cent.
By the terms of the agreement, Oando will also acquire ConocoPhillips offshore business, which includes Conoco Exploration and Production Nigeria Limited (CEPNL).
The company holds a 95 per cent operating interest in OML 131, with other partners as Medal Oil, 5 per cent; and Phillips Deepwater Exploration Nigeria Limited (PDENL), which holds a 20 per cent non-operating interest in OPL 214.
The other partners include ExxonMobil which is the operator with a 20 per cent stake; Chevron, 20 per cent; Svenska, 20 per cent and the Nigerian Petroleum Development Company, 15 per cent, as well as and Sasol, 5per cent. Pursuant to the proposed acquisition, Oando will indirectly purchase all of the issued share capital of POCNL, PBL, CEPNL and PDENL.
The rise and rise of Oando will be complete when it moves into its landmark 15-story glass towers office development on Ozumba Mbadiwe, dubbed "the Wings Project" in 2015. The Cappa and Dalberto office development will be a befitting edifice as the new upstream giant positions itself as the largest indigenous exploration and production (E&P) company in Nigeria.
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Dangote Signs $139 Million EPC Contract with EIL for Refinery Project
Africa's richest man, Aliko Dangote's plans to build a new refinery at the cost of $9 billion has taken a step forward with news that the Dangote Oil Refining Company of Nigeria has signed a contract worth $139 million with Engineers India Ltd (EIL). EIL will provide Project Management Consultancy (PMC) and Engineering, Procurement and Construction Management (EPCM) as well as commissioning services for the 400,000 BPSD (20 MMTPA) Petroleum Refinery and 600,000 TPA Polypropylene Plant. This project will be the largest single consultancy assignment for Indian firm, EIL.
The main facilities of the project comprise of a Crude Distillation Unit, Single train Residue Fluid Catalytic Cracking Unit, Diesel Hydrotreating Unit, CCR unit, Alkylation Unit, Poly-Propylene Unit, Utilities and Offsites including captive power with other enabling infrastructure facilities. Crude and product handing facilities through Single Point Mooring (SPM) will also be integrated with the refinery which is now to be located in the Lekki Free Trade Zone, near Lagos, after Lagos State Governor, Fashola, managed to steal the project from Ogun State where it was previously mooted the project would be sited.
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.
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OPEC Daily Basket Price Spikes to $110.26 a Barrel Thursday, 19 June 2014
The price of OPEC basket of twelve crudes continued to spike, standing at $110.26 a barrel on Thursday, compared with $109.60 the previous day, according to OPEC Secretariat calculations. The gains of the insurgent group, ISIS in Iraq have continued to drive oil prices high amid a growing threat of an all out civil war. Iraq is a key oil producer, and is No. 2 in OPEC rankings after achieving that position last year when Iran's position dropped to 5th as international sanctions took hold. Now Iraqi crude supplies are threatened as the Baiji oil refinery comes under attack from Isis fighters.
Output from Iraq had reached an all-time high of 3.5 million barrels a day earlier this year. Output remains high but export facilities have been affected by the northern pipeline that was blown up in the fighting.
Prices have been rising continuously since 5th June when the basket price stood at $104.73. The steepest daily rise came on the 17th of June when the basket price stood at $108.81 rising nearly 3 dollars from the previous day when the basket price stood at $105.38.
The threat to oil reserves is now leading to soaring prices worldwide as Brent crude stood at $115.06 at the end of the day on Thursday while WTI Crude stood at $106.43.
The new OPEC Reference Basket of Crudes (ORB) is 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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India Now Nigeria's Largest Crude Oil Importer
India has emerged as Nigeria's largest crude oil importer after the United States' imports of Nigeria's crude dropped to an all time low of 250,000 barrels per day. According to the Nigerian National Petroleum Corporation (NNPC), India is now importing about 750,000 barrels per day, about 30 per cent of Nigeria's daily production making it Nigeria's largest crude oil importer, while China and Asia follow a close second and third respectively.
US imports of Nigerian crude have been dropping steadily in view of the shale oil boom, which the International Energy Agency predicts will make the US energy sufficient by 2035. Nigerian authorities have however remained unperturbed by the development, seemingly confident of finding alternative markets. Now it appears that its confidence has been rewarded as demand for Nigerian crude continues to rise in Asia.
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IEA Releases Oil Market Report for June
The International Energy Agency has released its Oil Market Report (OMR) for June. Highlights of the OMR for June include:
- Non-OPEC production growth of 2.1 mb/d in the year through May compensated for OPEC declines.
- Accelerating global demand to reach 94 mb/d by end of year; non-cartel output more than offsets lacklustre OPEC production
The IEA Oil Market Report for June forecast a 1.3 million barrel-per-year (mb/d) rise in global oil demand for this year, to 92.8 mb/d, a modest acceleration on 2013 as the macroeconomic backdrop improves. Global oil demand is set to increase sharply from a low of 91.4 mb/d in the first quarter to a high of 94 mb/d in the fourth.
Global supplies rose 530 000 barrels a day (530 kb/d) in May, to 92.6 mb/d, mostly on an increase in non-OPEC production of 440 kb/d, the monthly report informed subscribers. On a yearly basis, world output was up 1.0 mb/d for the month, as non-OPEC growth of 2.1 mb/d compensated for OPEC declines.
OPEC supplies inched up by 85 kb/d to 29.99 mb/d in May, with increased Saudi output offsetting declines in Libya. The "call" on OPEC crude and stock changes was raised by 150 kb/d for 2H14 to an average of 30.9 mb/d.
OECD industry stocks built by 39.8 mb, twice the seasonal average, to stand at 2 624 mb by end-April. As a result, the deficit to average levels fell to 77 mb, its narrowest since October 2013. Preliminary data indicate a further strong 37.4 mb build in May.
Global refinery crude demand fell to a seasonal low of 75.9 mb/d in April on maintenance and weak margins. OECD runs were stronger than expected, rising by 470 kb/d year-on-year, their first annual gain since June 2013. Global runs are set to increase seasonally through August, averaging 76.5 mb/d in the second and 77.8 mb/d in the third.
The OMR is a monthly International Energy Agency publication, which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead.
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Rystand Energy Expects Oil Supply to Grow Faster Than Demand
Independent oil and gas consulting services and business intelligence data firm, Rystad Energy is predicting that oil supply will grow faster than demand. Rystad Energy says it came to that conclusion after comparing the International Energy Agency demand outlook in which the IEA revised its supply outlook with supply estimates from the Rystad Energy global upstream database, UCube. Rystad says its estimates are based on its bottom-up analysis of 30,000 fields and 2,500 oil companies in 150 countries.
According to Rystad, its analysis shows that oil markets have gradually been tightening over the last two years while the outlook indicates a possible inflection point early 2015 and an increasing downward pressure on oil prices for the coming two-three years. The recent geopolitical outages of oil production from the Middle East and North Africa, it says, has until now been perfectly balanced by the increased supply of unconventional tight oil from the United States. This predicted easing of the oil markets is partly driven by an assumption of gradual return over the next two years of oil from Libya, Iran, Iraq and Sudan, while US drillers are continuing their activities with unchanged intensity and increased efficiency.
Rystad Energy now forecasts North American tight liquids production to pass 10 million barrels before 2020 making North America a net exporter of seaborne crude and petroleum products within three years from now.
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Vandals Target NNPC Pipeline at Tarkwa Bay
A deadly explosion occurred when vandals ruptured a Nigerian National Petroleum Corporation (NNPC) at popular leisure destination, Tarkwa Bay. Unverified witness reports said that many were killed and inured in the ensuing inferno. The pipeline in question conveys petroleum products from Atlas Cove at Apapa to Ejigbo and Mosemi depots in Ogun State.
The fire was brought under control after raging from midnight when the incident occurred till about 10am the next morning. The pipeline vandals who were said to have brought some 50 jerry cans for their nefarious activities are still at large. They are said according by the local people to have carted away the remains of their deceased accomplices in the vessels that conveyed them to the scene. The police say that they have not yet recovered any bodies from the scene.
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Japaul Oil Achieves Record Turnover of N13.02 Billion for 2013
The fortunes of Nigerian Stock Exhange listed Japaul Oil and Maritime Services Plc have turned after it achieved a gross profit of N5.9 billion on a turnover of NN13.02 billion for 2013. This signals a return to profitability after a net profit of N239.6 million was achieved in the same period compared with a N6.7 billion loss for the same period in 2012.
The audited accounts showed that the company recorded a gross profit of N5.9bn for the year, from N4.99bn recorded in 2012, an increase of 20.4 per cent.
The company also released its unaudited management accounts which show that it is on track to continue to achieve profitability with Q1 results showing a turnover of N3.2 billion with gross profit of N246 million and net profit of N223 million.
Japaul, which is involved in engineering, procurement and installation (EPC) services, marine logistics, and dredging work, gives credit to its acquisition of vessels and equipment and its repositioning, for the return to profitability. The company now owns a fleet of 9 CSD dredgers, which includes suction-reclamation dredgers enabling it to work to 300-1200m3 /h and deliver dredged sand to a distance of 2 kilometers.
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CORPORATE SOCIAL RESPONSIBILITY
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Agip Invites Applications for 2014/15 Post Graduate Scholarship Award Scheme
Nigerian Agip Exploration Ltd (NAE) Invites Applications from suitably qualified and interested Nigerian graduates for the 2014/15 Post Graduate Scholarship Award Scheme. The award is in two categories - Nigerian and Overseas.
To qualify, applicants must possess a minimum of second class upper bachelors degree from a recognized Nigerian university and have secured admission into a Nigerian or overseas university for a one year master's degree programme in any of the following disciplines:
- Geosciences
- Engineeering (Petroleum, Mechanical, Civil, Subsea, Electrical/Electronics, Marine, Chemical
- Petroleum Economics
- Law (Oil and Gas/Petroleum)
Applications should be made through the following website: www.scholastica.ng/schemes/naeshcholarships
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LATEST TENDERS
NPDC - Provision of Civil Construction and Survey Services Closing date: 20th June 2014. NPDC - Provision of Fabrication and Pipeline Repair Services Closing date: 20th June 2014. NPDC - Provision of Engineering Consultancy Services Closing date: 20th June 2014 NPDC - Provision of Facilities MaintenanceServices Closing date: 20th June 2014. NPDC - Provision of HSE Services Closing date: 20th June 2014. NPDC - Provision of Instrument and Electrical Maintenance Services Closing date: 20th June 2014.
Total - Provision of Routine Works Services
Closing date: 27th June 2014.
Addax - Provision of Offshore Scaffolding Equipment & Personnel Closing date: 30th June 2014.
NNPC - Completion of Multi-purpose Hall The closing date for this opportunity is 30th June 2014.
Petroleum Equalisation Fund (Management) Board - Procurement of Kitchen Equipment The closing date for submission of bids is 11am Tuesday 15th July 2014.
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Oil Council's Africa Assembly To Hold in Paris
More than 800 delegates will gather in Paris from June 24 to 25 for the fourth annual Africa Assembly, part of the Oil Council's ongoing series of forums to foster and forge relationships between the continent's industry leaders.
The 2014 event, produced by the Oil Council's Cape Town office after extensive field trips to all the major hydrocarbon regions on the continent, will be held at the iconic InterContinental Le Grand.
The Oil Council, which was founded in Africa, is the world's largest network of oil and gas executives, including chairmen, CEOs, CFOs, bankers, advisors, investors and financiers.
The Africa Assembly is purposefully located close to the international capital markets of Europe to ensure widespread investor participation. It is the only Africa-focused event in the world with widespread global investor support
Keynote speakers include Alastair Milne, Vice-president, Exploration, Sub-Saharan Africa Shell; Carlos Aguilera, Vice President & General Manager, Business Development, Africa and Latin America E&P Chevron; and Dr ABC Orjiako, Chairman Seplat Petroelum.
The Oil Council believes the African Assembly to be "genuinely different", as it pairs oil and gas companies with financiers and investors - Institutional Investors, Private Equity, Investment Banks, SWFs, Hedge Funds, ECAs, Multilaterals and Indigenous African Banks) - looking to invest billions of dollars in Africa.
Important issues on the agenda that will be closely scrutinized include financing trends in African oil and gas, narrowing the gap between buyer and seller expectations, and financing infrastructure development in Africa to facilitate the opening of new reserves.
To register and book for the 2014 Africa Assembly, visit http://www.oilcouncil.com/event/africa
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Nigerian Association of Petroleum Explorationists (NAPE) Special Management Workshop
The Nigerian Association of Petroleum Explorationists (NAPE) Special Management Workshop on Fluid Accounting and Metering Issues in the Nigerian Oil and Gas Industry will take place on Wednesday 2nd July at 9am at Oriental Hotel, Victoria Island Lagos. Chairman of the occasion will be Chief Tunde Afolabi, Chairman/CEO of AMNI International Petroleum Development Company, while the keynote speaker will be the Director of the Department of Petroleum Resources, George Osahon.
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LATEST EVENTS
Nigerian Association of Petroleum Explorationists (NAPE)
Special Management Workshop
Lagos, Nigeria
2 July 2014
info@nape.org.ng
4th Downstream Oil and Gas Expo
Abuja, Nigeria
26-28 August 2014
www.oilandgasexpos.com
Gas Africa 2014
Gauteng, South Africa
26-27 August
http://www.mcnaughtonevents.co.za
3rd International Downstream Conference/Exhibition on Gas, Petroleum Refining, Petrochemicals and Fertilisers
Port Harcourt, Nigeria
27th -28th August 2014
www.cgrpng.org
10th annual Global Local Content Summit
London, UK 22- 25 September 2014 http://www.localcontentsummit.com/
2nd Africa Oil & Gas, Finance and Investment Forum |
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LATEST JOBS:
More details on our website
TRAINING:
Energy Business Fundamentals
Lagos, Nigeria
25 - 27 June, 2014
Samsung Heavy Industries Intensive: Technical Training Programme
University of Port Harcourt Offshore Training Institute: M.Sc. Pipeline Engineering and M.Sc. Offshore Engineering
More details on our website
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Best wishes 
Remi Aiyela
Editor-in-Chief
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