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UK Company Ceona Clinches $30m Eni/Shell Contract with Local Partner Marine Platforms

 

Indigenous companies are continuing to benefit from the local content laws after Marine Platforms Limited (MPL), a company offering diverse oil and gas services, including completion and subsea services, won a double contract as local content partner to UK company, Ceona. The contracts from Eni and Shell, together worth $30 million were awarded to Ceona, a subsea umbilicals, risers and flowlines (SURF) services company, which chose MPL as its local partner.

 

But for the local content laws, these kinds of contracts would have gone exclusively to foreign companies, as they had done in the past. Now, the foreign companies have to take indigenous companies as their local content partners, enabling indigenous companies to benefit from the industry as well as gain expertise. In time will enable acquire enough technical expertise to get such jobs themselves.

 

The Eni NAE (Nigerian Agip Exploration Limited) contract is for the Abo12 well completion. Ceona will provide installation expertise for this deal. Engineering has already started on the project with the full scope of work involving the installation of flexibles, umbilicals and a PLEM suction pile system. Offshore work is planned for February 2015.

 

The Shell Petroleum Development Company (SPDC) contract is for vessels to provide support for the Sea Eagle Floating Production Storage and Offloading (FPSO) unit. Ceona, in association with its local content partner, MPL, will be providing vessels.

 

MPL is expected to put its recent delivery, the African Inspiration to use on the project. The newbuild vessel came from Norwegian ship designers and constructors, Havyard. The vessel is a Havyard 857 Subsea IMR (Inspection Maintenance and Repair) ship that was designed to be used for installation, maintenance and repair work on oil installations on the seabed.

 

Mark Preece, executive vice president, commercial and business development at Ceona, said: "These contracts reinforce the high value, all-encompassing subsea construction service that Ceona is delivering to clients."

 

"It also demonstrates the strong strategic partnership we have developed with MPL in the country, and how it is supporting our growing geographical footprint across West Africa," he added.

Ceona is new to SURF and heavy subsea construction and works mainly in the deepwater market, specialising in turnkey engineering, pipelay, construction, project management and execution, including floater installation.

The Abo12 well, a development well with an exploration tail, is located on oil mining lease (OML) 125, 40 kilometres offshore in water depths varying from 550 to 1,000 metres. Production began on the Abo field through the Abo FPSO in 2003 and it currently has four producing wells, two water injection wells and two gas injection wells.

 

OML 125 is operated by NAE under a Production Sharing Contract (PSC) with NNPC signed in 1993 and valid for 30 years. Oando has a 15 per cent interest in the PSC. The partners are currently reviewing recently acquired 4D seismic on the field and no further wells are planned until the review is completed.

 

The contract from SPDC is for the support of FPSO Sea Eagle through which it produces from the East Area (EA) Field. The EA field is located on OML 79, some 15 km off the Niger Delta, south west of Warri in shallow water, with depths of around 25 metres. Shell discovered the field in 1965 and first oil was achieved on December 14, 2002. Shell opted for offshore development requiring minimal servicing from onshore facilities, obviating the need for a land-based terminal.

 

The Sea Eagle FPSO is a huge FPSO with the capacity to store 1.4 million barrels. Designed to separate produced oil, water and gas, the topside facilities can process 170,000 barrels of fluids and 1000 million standard cubic feet of gas per day.

 

GE Begins Subsea Wellheads Fabrication at Onne

 

After investing over $4.5 million in facilities, recruitment and training, GE has begun fabricating wellheads in Nigeria. The project, which has been 4 years in planning will enable the company to fabricate subsea wellheads in Nigeria for its oil and gas customers.

 

This is a major milestone for the company's ambitions in Nigerian. GE says it wants to increase the local capabilities of its operations in Nigeria through ambitious technology programs and human capacity development. Oil and gas companies operating in Nigeria no longer have to import fabricated wellheads for this this facility, a development that will reduce costs and improve delivery time.

 

The development is located at GE's Onne facility in Rivers State. The company believes that the commencement of the facility is in alignment with the Nigerian Federal Government's local content law and desire for increased manufacturing capacity, skill acquisition and technology transfer. However, for GE, this milestone represents a lot more than complying with the laws on local content.

 

"GE Oil and Gas have a vision to "Fuel the Future" by delivering cost-effective customer solutions on-time wherever they are needed across the globe," explained Uzo Nwagwu, Chief Operating Officer (COO) of GE Oil and Gas.

 

"By investing now in the development of our people and facilities we are able to localize subsea wellhead assembly and partner with local suppliers to create a sustainable business for Nigeria."

 

GE's purpose-built facility in Onne has been operating since 2002 providing the only quayside facility of its calibre, employing more than 200 people. The company provides complete assembly, testing and life cycle service for subsea tree systems, subsea control modules, specialty connectors and pipe at the facility. The site includes a dedicated on-site training centre and offers broad business development opportunities for local suppliers. The company says it is planning to continue expanding its capabilities.

Afren Targets New Ebok, Okwok Production in 2015

 

Independent upstream oil and gas exploration and production company, Afren has provided an operational update on its Ebok and Okwok fields, as well as Oil Mining Lease (OML) 115 as it tries to bury bad news with good, following the fallout from the discovery of unauthorized payments to its former chief executive and other directors and officers of the company.  

 

Following the sacking of the chief executive and chief operating officers, interim chief executive of the London Stock Exchange main market listed company, which is also a constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies, Toby Hayward, has his work cut out with the company's plans for a five-year double-digit production growth.

 

On Ebok, the company's plans for production from the Ebok Central Fault Block Extension (CFBx) by the end of 2015 is on target. It has been able to install the jacket for the platform, with installation of the decks and bridge to follow and hook up and commissioning expected in January 2015. The company's work programme involves the drilling of up to 9 new wells all targeted to be on stream and producing by the end of 2015.

 

Meanwhile, on the North Fault Block (NFB), the company continues to make good progress and is targeting completion of a third new producer on the field by mid-December 2014. An additional 5 wells are expected to be added by the end of 2015.

The company has however failed to achieve its ambitions of achieving 40,000 bpd this year. It remains on-track to deliver full year net production at the lower end of guidance between 32,000 to 36,000 bopd.

 

Work is also progressing well on OML 115. Afren and its partner Oriental, has spudded its Ameena East well on that block with Shelf Adriatic 1 drilling rig. The Ameena East prospect will be targeting 65 mmbbls of gross unrisked resources in zones of prospectivity. The drilling campaign at Ameena East is expected to be completed in December, 2014.

 

In addition, drilling at the Ebok Deep exploration tail targeting 50 mmbbls of gross unrisked resources in the deeper Qua Iboe and Biafra reservoirs is expected to commence in Q4 2014 following the completion of the third new producer at the NFB.

 

Toby Hayward said: "With incremental new production to be brought on stream from both the CFB and NFB platforms, as well as from the Okoro FFD, Okwok, OML 26 and OML 113 developments, Afren is expecting to deliver strong production and cash flow growth in 2015 and beyond.

 

Afren has a portfolio of assets spanning the full cycle exploration and production value chain. It is currently producing from its assets in Nigeria and the Kurdistan region of Iraq and holds further exploration interests in Nigeria, Ghana, Côte d'Ivoire, the Kurdistan region of Iraq, Congo Brazzaville, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa.

 

 

Many were hoping that sliding oil prices would deter US producers of shale oil given particularly high production costs for tight oil. So far, it hasn't worked as US production continues to surge, in spite of the low market price for oil.

 

An uncoordinated approach by OPEC members who supply 40 per cent of the world's oil requirements is not helping matters. Recovery by Libya and Nigeria are adding to oversupply, while Saudi Arabia and Iraq are not keen on cutting production and instead have been price-cutting to increase their market share. All eyes are on OPEC as the next scheduled meeting on 27 November approaches.

 

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).

 

New Domestic Gas Tariff Begins January 2015

 

The promised upward review of the price for domestic gas has been announced. As from the 1st of January 2015, the price for domestic gas will be $2.5 per thousand cubic feet. The previous price was $1.5 per MCF, making it extremely uneconomical for exploration and production (E&P) companies to invest in the production of gas and its expensive infrastructure.

 

The new price was announced by the Group Executive Director (GED) of Nigerian National Petroleum Corporation (NNPC), in charge of gas and power, David Ige, after getting approval from the Nigerian Electricity Regulatory Commission (NERC). An increase in gas output is critical for the Federal Government transformation agenda's Gas-to-Power initiative. This requires a lot of investment by operators who say they will not produce more than they are obliged to under their domestic gas obligation terms unless the price is right.

 

The government will be hoping that $2.50 is just about right to encourage an increase in investment in gas production but without making the cost of gas to electricity generation companies so high that they have to pass on the price hike to consumers. It remains to be seen whether operators will find the $2.50 price attractive enough to begin to look at producing for the domestic market. It is certainly a far cry from the $5 to $7 that the same gas will fetch on the US market. So far, the slow price increments, to $1 in 2010, then $1.5 in 2011, $2 in 2013 have not provided enough of a sweetener to change the mind set of producers.

 

The Minister of Petroleum Resources, Diezani Alison-Madueke said that her Ministry was working with the NERC, Central Bank of Nigeria (CBN) and NNPC to collectively find a solution to the endemic problem of the shortage of gas supply to power plants.

 

Sea Truck Gets $250m Credit Facility from Access Bank

 

As bank lending to the oil and gas industry continues to improve, Access Bank has announced that it is backing Rotterdam-based oil contractors, Sea Trucks Group, with a $250 million credit facility. The group has operated offshore in Nigeria since 1996 and Sea Trucks has a fleet of 43 offshore marine support services vessels on the continental shelf off Nigeria and off the coast of Angola and other West African countries, including Cameroon, Congo, Equatorial Guinea and Gabon.

 

In a statement, the Group Managing Director, Access Bank Plc, Herbert Wigwe, who is out to make his mark, after stepping into the rather large shoes left behind by Aig Aig-Imoukhuede, was very complimentary about Sea Trucks saying: "We will always support the company in its dealings, as we are confident that this mutually beneficial relationship will provide the backbone for future more robust dealings."

 

Access Bank is currently one of the top five in the country, and now has offices in seven countries including the UK and China, with plans to set up shop in Dubai next year.

 

President/Chief Executive Officer, Sea Trucks Group, Jacque Roomans praised the bank chief for the successful close on the transaction.

 

"The manner with which Access Bank handled this transaction is highly commendable. This is a demonstration of how far the bank has come overtime. Sea Truck Group is proud to associate with Access bank and will not hesitate to build on this existing relationship. I admonish other financial institutions to emulate Access Bank," he said.

 

 

Amnesty International Accuses Shell of False Claims over Size of Bodo Oil Spills

 

Amnesty International says that court documents show that Shell made false claims over the size and impact of the two major oil spills at Bodo Community in 2008. The potential repercussions, says Amnesty International, are that hundreds of thousands of people may have been denied or underpaid compensation based on similar underestimates of other spills. In addition, they say that Shell has known for years that its pipelines in the Niger Delta were old and faulty.

 

In the substantive case involving the spills, which will proceed to trial next year, Shell is accused of two leaks from its pipelines in 2008/09, which devastated the environment surrounding the community of Bodo, in Gokana Local Government Area, Rivers State, Nigeria. Bodo is a fishing town, which sits in the midst of 90 square kilometres of mangroves swamps and channels, which are the perfect breeding ground for fish and shellfish. The coastal community consists of 31,000 people who live in 35 villages. The majority of its inhabitants are subsistence fishermen and farmers. Until the two 2008 spills Bodo was a relatively prosperous town based on fishing.

 

According to Leigh Day, a law firm representing the Bodo community in the case, the spills have destroyed the fishing industry. Expert evidence indicates 1,000 hectares of mangroves have been destroyed by the spills and a further 5,000 hectares have been impacted. Although Shell admitted liability for the spills in 2011, arguments have continued over the amount of oil spilled and how much damage was caused.

 

Shell's joint investigation report for the first oil spill in the Bodo area of the Niger Delta claims only 1,640 barrels of oil were spilt in total. However, based on an independent assessment published by USfirm Accufacts Inc., Amnesty International calculated the total amount of oil spilt exceeded 100,000 barrels. Shell denied this and repeatedly defended its far lower figure, they claim.

 

In the court documents, according to Amnesty International, Shell now admits its figure is wrong in both this case and a second spill, also in 2008, in the same area. The admission, they say throws Shell's assessment of hundreds of other Nigeria spills into doubt, as all spill investigations are conducted in the same manner.

 

Audrey Gaughran, Director for Global Issues at Amnesty International, said in the statement: "Amnesty International firmly believes Shell knew the Bodo data were wrong. If it did not it was scandalously negligent - we repeatedly gave them evidence showing they had dramatically underestimated the spills."

"For years Shell has dictated the assessment of volume spilled and damage caused in spill investigation reports, now these reports aren't worth the paper they're written on," said Audrey Gaughran.

"These spill investigation reports have cheated whole communities out of proper compensation," she insisted

Gaughran is concerned that although the people of Bodo have been able to take legal action in the UK, the vast majority of the hundreds of thousands of people in the Niger Delta who suffer oil spills from Shell's operations will never have this opportunity to challenge the oil giant.

Gaughran states that Shell's admission in court documents, makes clear the Joint Investigation Visit forms - which record the cause of the spills in addition to the volume and impact - cannot be used as credible sources of information.

In addition, according to Gaughran, the court documents also show for the first time that Shell knew for years that its oil pipelines were in very poor condition and likely to leak. The court papers include an internal memo by Shell based on a 2002 study that states "the remaining life of most of the [Shell] Oil Trunklines is more or less non-existent or short, while some sections contain major risk and hazard." In another internal document dated 10 December 2009 a Shell employee warns: "[the company] is corporately exposed as the pipelines in Ogoniland have not been maintained properly or integrity assessed for over 15 years".

 

Gaughran did not state the context in which the memos were issued but she concluded that it was outrageous that Shell has continued to blame the vast majority of its spills on saboteurs while knowing full well how bad a state its pipelines were in.

 

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