Oil Industry Mourns Loss of Former Petroleum Minister Rilwanu Lukman

The death has been announced of former Nigerian Minister of Petroleum, Dr. Rilwanu Lukman in Vienna, Austria at the age of 75 years, following a long period of illness. Lukman who served as Secretary General of OPEC (Organization of the Petroleum Exporting Countries) from 01 January 1995 to 31 December 2000 remained an Honorary Advisor on Energy and Strategic Matters to the President of Nigeria.  

Born in Zaria Kaduna State on the 26th of August 1938, Rilwanu Lukman was a seasoned engineer with a distinguished career and a string of accolades to his name. He held several ministerial positions in the Nigerian Federal government before becoming Secretary General of OPEC.

Following his studies, Lukman returned to Nigeria in 1964 and was appointed Inspector of Mines, rising to become Assistant Chief Inspector in the Federal Ministry of Mines & Power in Jos, Plateau State. He left in 1970 to become the General Manager of the Cement Company of Northern Nigeria. He was later appointed General Manager and Chief Executive Officer of the Nigerian Mining Corporation, Jos. On 18 December 2008, Lukman was appointed Minister of Petroleum Resources by President Umaru Yar'Adua and he held office until March 2010.

Dr Lukman was an engineer by profession and he obtained a string of degrees from prestigious institutions. He attended Ahmadu Bello University, Zaria (then known as College of Arts, Science, and Technology) and then proceeded to the United Kingdom. There he received a B.Sc. (Hons) in Mining Engineering from the Royal School of Mines, Imperial College of Science and Technology, University of London in 1962 and later, a Postgraduate Certificate in Mining & Mineral Exploration in 1968 from the University of Mining & Metallurgy, Leoben, Austria.  

A decade later, in 1978, Lukman received a postgraduate degree in Mineral Economics from McGill University, Montreal, and another decade later, in 1988, he received a PhD in Chemical Engineering in 1988 from University of Bologna, Italy. Dr Lukman also obtained another doctorate degree from University of Maiduguri and a Doctor of Science Degree from Ahmadu Bello University, Zaria. In addition Dr Lukman held two Honorary Doctorate degrees from Moore House College, Atlanta, USA (1992) and University of Benin (2002).

Honorars bestowed on the late Dr Lukman in his lifetime included Knight of the British Empire (KBE) in 1989 and Officer of the Legion d'Honneur of France in 1990. He also won numerous awards for his services to the industry.

President Goodluck Jonathan released a statement saying: "Nigeria, the President firmly believes, will always owe a huge debt of gratitude to the late Petroleum Minister for his very significant contributions to the development of the country's oil and gas industry, and for serving with acclaimed distinction as the nation's representative at the helm of OPEC affairs over many years."

The OPEC Secretariat in Vienna released a statement saying: "He was widely recognized and highly regarded in the global petroleum industry; a loyal and dedicated man, who had the best interests of Nigeria and OPEC at heart. His service to OPEC is a very long list."

Senate President David Mark captured the mood of the industry when he said of Dr Lukman's death: "Nigeria has lost one of her brightest and fertile minds. He was a man of honour and integrity. We shall miss his deep sense of wisdom and knowledge."

NOGintelligence wishes to convey its condolences to the family of the late Dr Lukman. Our prayers and thoughts are with them at this difficult time.

Sirius Petroleum Raises $20 Million for Ororo Field Development

Nigeria focused Sirius Petroleum, an independent oil company listed on the Alternative Investment Market (AIM) of the London Stock Exchange has conditionally raised $20 million, which it will use to finally begin the development of the offshore Ororo marginal field, located in OML 95. The fund raise was achieved by the conditional placing of 63,530,215 Ordinary Shares and Subscription of up to 326,333,333 new Ordinary Shares, being an aggregate of up to 389,863,548 new Ordinary Shares at 3 pence per share to raise up to £11,695,906 (approximately US$20,000,000) before expenses.

The company plans to use the funding to drill an initial well in the field, which is estimated to cost $25,100,000. The company is therefore also seeking further funding to meet the remaining well cost. The funding it has raised so far is conditional on raising the remaining funding on or before the 15th of September 2014.The company says the funding may be in the form of debt, equity or pre-payment for crude offtake.

Commenting, Bobo Kuti, Chief Executive, said: "We have been delighted with the response to the equity raise from the UK market. I would like to thank shareholders for their continuing support and believe that we can now look forward with confidence to deliver on our strategy to develop our first off-shore marginal field and the first step in building a range of development and producing oil and gas assets in Nigeria."  

Sirius has a 40% economic interest economic interest in the field, which it acquired from Owena Oil (the state government vehicle owned by Ondo State set up to hold interests in Ondo State's oil and gas assets) and Gas Limited and Guarantee Petroleum (an indigenous company designated as the Operator) pursuant to a July 2011 Finance and Technical Service Agreement. The total field development plan includes the drilling of three wells, targeting daily total field production of circa 6,000 bopd.  

Schlumberger, the leading oil services company, which has performed a technical analysis, will be conducting the drilling operations for the Company on a turn-key basis. The cost estimate given by Schulmberger will be used to fund the work in 2 phases.  

In Phase 1 the company will use the funds to complete the initial work programme, which includes site surveys, community relations, environmental impact assessment (EIA) surveys, rig, at a total cost of $2.6 million.

In Phase 2, the company will use the balance of the funds raised for the re-entry of the Ororo ST-1 wel. Expected revenues from initial production of 2,000 bopd from the first well, the company says, will be used to develop a second well, adjacent to the Ororo ST-1 well, at a cost of $22.5 million. Sirius is also hoping that it can raise more funds to enable it to accelerate its drilling programme, so that additional wells can be drilled in a shorter time period.

The Ororo Field which is located in shallow water offshore Ondo State, Nigeria, in water depths ranging between 23 ft and 27 ft. was discovered in 1986 with the drilling of the Ororo-1 well by Chevron. It penetrated 197 ft of hydrocarbons in twelve sandstone reservoirs at points close to the crest of each reservoir structure. These consist of 72ft true vertical thickness ("TVT") of net gas pay and 125ft TVT of net oil pay. The Ororo-1 well tested at around 2,200 barrels of oil per day ("bopd") from a single zone, and around 600 bopd from another; two further zones tested gas, and eight zones remain untested.  Chevron acquired both 2D and 3D seismic over the Ororo Field.  

The recoverable hydrocarbons were most recently estimated to be in excess of 20 million barrels gross in a third party report prepared in 2006, which will be the subject of verification by the Competent Person (consultant) to be mandated by Sirius. The closest producing fields are Mina, Isan, and West Isan, all of which are operated by Chevron and are situated between 4km and 6km from Ororo providing a low cost tie-in opportunity.

Sirius is to fund 100 per cent of the development costs.  Upon production of oil, Sirius will pay a US$500,000 bonus to Guarantee and Owena. As a result of having to carry its partners, Sirius will be entitled to a preferential cash flow from the production until cost recovery is achieved, receiving 88 per cent of net cash flows from Ororo. Following cost recovery, its cash flow entitlement will revert to 40 per cent in accordance with its equity interest.

The question of the ownership of Owenna Oil has been the subject of an intense dispute, which may very well have to be resolved in court. The dispute stems from the setting up of Owenna Oil, which was done by consultants who were said to be holding shares as nominees on behalf of the Ondo State Government. Since then the assets of Owenna Oil has been held by nominees. The most recent phase of the dispute stems from the attempt by the State Government to unilaterally transfer the shares to another company, Owenna Energy Company.  

Sirius has convened a board meeting for the 13th of August to seek shareholder approval for the allotment of the new shares, which will equate to 27.66 per cent of the company's enlarged share capital.