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Nigeria's Petroleum Minister Appointed OPEC President for 2015

 

The 166th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC), which was held in Vienna, Austria, on Thursday, 27th November 2014 has elected Mrs. Diezani Alison-Madueke CON, Minister of Petroleum Resources of Nigeria and Head of its Delegation, as President of the Conference for one year, with effect from 1st January 2015. Dr. Mohammed Bin Saleh Al Sada, Minister of Energy and Industry of Qatar and Head of its Delegation, was Alternate President, for the same period. This appointment comes after Alison-Madueke's election as the Alternate President of the December 4, 2013 OPEC Conference.

 

Alison-Madueke could well be headed for the role of Secretary General, the chief executive officer of OPEC as the seat becomes vacant at the end of 2015 following the decision of the conference to further extend the tenure of Abdalla El-Badri, the Secretary General by another six-months to the end of 2015. At the 165th meeting in June, the tenure of El-Badri, which had previously been extended, had been expected to end in January 2015. It was extended by six months ending in June 2015.

 

Media reports had largely tipped Alison-Madueke to succeed El-Badri at the June meeting of this year and there seemed to have been concerted efforts to make it happen. Sources within the meeting that NOGintelligence spoke to say that Alison-Madueke whose nomination was accepted by the organisation had been well received. There was strong speculation that the deadlock in appointing the next Secretary General, created by the refusal of Saudi Arabia and Iran to back any one but their respective candidates, could have been resolved by adding another candidate, Alison-Madueke, to the mix. OPEC articles require unanimous agreement for all decisions of the conference other than procedural matters. Unfortunately for Alison-Madueke, the timing was most unfortunate, given the accusations of missing funds, use of private jets and the probes that the Nigerian National Petroleum Corporation (NNPC) was undergoing at the time. In the face of the negative press she was dealing with at the time, the meeting decided to extend the tenure of El-Badri.

 

Although the decision over the appointment of the next Secretary General is now, once again postponed, it seems that Alison-Madueke's position is now stronger than ever. If she is appointed to the prestigious role, she will move to Vienna, Austria, as the articles require that the Secretary shall reside at the Headquarters of the Organisation. This would distance her from the controversial issues that her Petroleum Ministry and the NNPC have been mired in for some time. If appointed, she will become the first female Secretary General of the organisation, and the second Secretary General from Nigeria.

 

Oil Prices Tumble With OPEC's Shock Decision to Maintain Production Levels

 

Oil prices have undergone a dramatic slide after the shock decision by the Organization of the Petroleum Exporting Countries (OPEC) at its 166th meeting in Vienna on Thursday to leave production output unchanged at 30 million barrels. Petro politics is behind the risky game that could backfire badly on some of the members of the group, which supplies about 40 per cent of the world's crude oil, although together they own about 80 per cent of crude reserves in the world. The decision taken at the meeting under the Chairmanship of its President, HE Abdourhman Ataher Al-Ahirish, Libyan Vice Prime Minister for Corporations and Head of its Delegation, sent oil prices tumbling, with OPEC basket prices falling nearly $3 from $73.70 the previous day to $70.80. Over supply in the market has been blamed for falling prices.

 

OPEC member nations had been largely expected to cut production, in an effort to halt the slide, as they have done in the past when oil prices have come down. This time, however, the OPEC gathering, influenced by its largest producer, Saudi Arabia, took a different view, choosing to maintain market share. The decision to maintain production at current levels, taken in a tension filled meeting in which only 4 of the 12 member nations were initially in favour of maintaining production, is a bid to outlast the US, whose shale oil boom is being held partly to blame for over supply in the market. The others were persuaded to go along with the Saudi position, in a bid maintain a united front.

 

Shale oil is particularly expensive to produce and with the current slide in oil prices it could become more and more economically unviable for the US to continue to produce shale. OPEC nations are hoping they can hold out long enough for the US shale boom to start to wane, perhaps by 2017. With declining US production, prices can begin rising again.

 

This game of chicken is a risky strategy for OPEC, as only those with deep pockets will be able to ride out the storm. Saudi Arabia, for example, has enough funds in its external reserves to keep it going before it starts to feel the pinch. That is not the case with many producers who based their budgets on much higher prices. Nigeria and Iran, for example, are in for a bumpy ride, especially as some analysts are predicting that oil prices could fall as low as $60. Externally, however, OPEC is presenting a united front. Although confident that the strategy will play out, there is the option of an emergency meeting in February to reconsider the strategy, if prices continue to go south. If things go according to plan, the member nations of OPEC expect to have their next meeting in June next year, at which time they hope that further investment in shale production will be become questionable paving the way for oil prices to begin to stabilise.

 

In a communiqué following the meeting, recording its concern over the rapid decline in oil prices in recent months, the Conference agreed that stable oil prices - at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand - were vital for world economic wellbeing. 

 

The communiqué continued: "Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011.  As always, in taking this decision, Member Countries confirmed their readiness to respond to developments, which could have an adverse impact on the maintenance of an orderly and balanced oil market."

The 167th Ordinary Meeting of OPEC will take place on the 5th of June 2015.

 

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).

 

FMC Technologies Commissions Subsea Equipment for Bonga Northwest Development

 

New York stock exchange (NYSE) listed FMC Technologies, Inc. has commissioned its first subsea production tree built entirely in Nigeria. In a boost for local content, the company says that the equipment, manufactured for Shell Nigeria Exploration and Production Company Ltd. (SNEPCo)'s Bonga Northwest project, marks the company's first subsea equipment engineered, manufactured, tested, installed and serviced entirely in the country.

 

Oil production from the first well at the Bonga Northwest deepwater development off the Nigerian coast began on August 5, 2014. Four oil producing wells and two water injection wells in the Bonga Northwest Phase 1 development will be connected to the Bonga Floating Production Storage and Offloading (FPSO) vessel from where oil is loaded onto tankers for shipping around the world. FMC Technologies is providing the subsea production systems to support the development, which is led by Shell Nigeria Exploration and Production Company Ltd. (SNEPCo).

 

Speaking at an event in Lagos to celebrate this achievement, Shelagh Daley, the Area Manager of FMC Technologies Africa Region Subsea said: "We have been working with SNEPCo to supply subsea systems for the Bonga Northwest development since 2010. This local manufacturing of equipment marks a significant milestone for the company and for the country's energy industry."

 

The company is particularly proud, it says, to be contributing to the employment and development of skilled local professionals. It says that it has responsibility for more than 2,000 jobs in Nigeria, including employees and through their supply chain.

 

NLNG Increases Production of LPG

 

The Nigeria Liquefied Natural Gas (NLNG) Limited said that it has increased its production capacity at its Bonny facility in a bid to put an end to the shortage of cooking gas. The company said that the six-train LNG plant was now operating at installed capacity. In a statement, the Chief Executive Officer of the company, Babs Omotowa confirmed the increased production, and urged the government to intervene in terminal operation and development, distribution and retail, promotion and awareness and incentives for full maturity of the domestic LPG market. He said that the absence of a functional cylinder, poor transportation network and infrastructure, limited jetty availability and low-priority berthing given to LPG vessels, were responsible for the poor the market in cooking gas.

 

NLNG is owned by the Federal Government, represented by the Nigerian National Petroleum Corporation (NNPC) (49%), Shell (25.6%), Total (15%), and Eni (10.4%). The construction of the 7th train of the LNG plant is still awaited.

 

Design of $5bn Trans-Nigeria Gas Pipeline Begins

 

The Federal Government's commitment to developing the country's gas infrastructure took a big step forward with the announcement that plans have reached an advanced stage for the construction of a N5 billion Trans-Nigeria Gas Pipeline. The 1,200-kilometre pipeline will deliver gas to the northern and eastern parts of Nigeria. The Group Executive Director, Gas and Power of the Nigerian National Petroleum Corporation, Dr. David Ige made the disclosure that design of the pipeline has already begun. The contract for the project is expected to be awarded within the next few months.

 

The project, which is slated for completion in 2018, will be the first gas pipeline to be built under a public private partnership basis in Nigeria. Analysts have long been advocating the need for the government to partner with private enterprise to develop the expensive infrastructure needed to ensure adequate gas supply and distribution around the country. Explaining the work that has been done so far, Ige said: "We have done the right of way survey for the entire pipeline length, we have progressed with the engineering and we hope to cross a major threshold by the end of the month."

 

Ige went on to explain that the plan fits in with the government's plan to grow the economy with natural gas. Currently, half of the country is not connected to any gas infrastructure. He expects to see a major boost to the North once that region is connected to gas supply. This, he hopes, will industrialise the region as energy sources become more cost effective.

 

Amid the euphoria, however, industry watchers are pointing to the reality of the situation. The security issue is bound to deter some contractors, given some of the areas that the pipeline will pass through. A South African firm is said to have been contracted to undertake a detailed security risk assessment of the country, especially in areas that the pipeline will pass through.

 

Russian Major, Lukoil to Partner with Chevron in Nigerian Oil Project

 

Lukoil, the second largest oil company in Russia has struck a deal with American oil major, Chevron, to jointly develop an oil project in Nigeria after the board gave its go-ahead. In spite of the interminable delay in passing the Petroleum Industry Bill into law, investors, it seems are continuing to line up to have a shot at Nigeria's rich oil fields.

 

Chief Executive Officer of Lukoil, Vagit Alekperov, who owns a 20 per cent stake in the company, broke the news saying: "We have decided to enter a joint block with Chevron in a project in Nigeria, which we consider to be promising." He however declined to say which field or block they were looking at and did not give any more details about the deal. He did however admit that it is a prospective field where further geological work will have to be carried out.

 

Moscow Stock Exchange listed Lukoil has been Russia's second largest oil company and its second largest producer of oil since 2005. In 2012, the company produced 89.856 million tons of oil at 1.813 million barrels per day. Oil production in the first nine months of 2014 had risen to 1.975 million barrels per day, an increase of 5.9 per cent on the same period in the previous year. The increase is mostly due to the West Qurna-2 project in Iraq as the country looks to expand its interests outside Russia.

 

Lukoil's decision to get into Nigeria is unsurprising given its other interests in West Africa. In 2013, the company brought in its first well on the Savannah Prospect in the SL-5-11 block located in deepwater off the coast of Sierra Leone. In 2014 Lukoil took a 37.5 per cent stake in a near producing asset, the Etinde Field in Cameroon, adding to its assets in Cote D'Ivoire, Ghana and Siera Leone.

 

In spite of the difficulties of operating in the Nigerian oil industry, such as security, long contract cycles and other issue, investors looking to Africa are continuing to head for Nigeria with the near certainty the oil rich fields of the Niger Delta bring. The company's cash flow in the first nine months of 2014 amounted just over $1 billion but in view of declining oil prices, the Russian giant says it is cutting its investment budget back by $2 billion to $14 billion.

 

Nestoil Gives SGS Safety Award for Nembe Creek Trunkline and Other Projects

 

Nestoil has presented SGS Inspection Services with a Safety Award for its provision of non-destructive testing (NDT) services on contracts including the new 12"/24" Diameter, 49 km long Nembe Creek-Cawthorne Channel Trunk line (NCTL). The award recognises SGS's expertise on the NCTL pipeline replacement project, running from 2007 to 2010 to which the company provided the following services:

• Use of X-Ray Crawler Equipment for Radiographic Testing of Welds
• UT/MPI on repaired Welds

The project lasted from November 2007 to 2010, with SGS Nigeria mobilising qualified personnel plus the equipment required to successfully complete the project, without any Lost Time Incidents (LTI). Also taken into consideration for the award nomination was the successful execution of the NGC Alaoji NDT Services project, again without LTI. The scope of work involved X-Ray services on a 2.5 km pipeline located at Alaoji and another 6 km pipeline located at Owaza in Abba.

 

In addition to these projects, the safety award also applies to SGS's work at the Nestoil fabrication yard at Abuloma, Port Harcourt, Nigeria.

 

Commenting on the award was Chris Woolley, Business Manager, SGS Industrial Services, who said: "I was delighted my division was nominated for this award. For our efforts to be recognised by a prestigious Nigeria EPIC Engineering company such as Nestoil and Gas can only been seen as a major accolade to the management and staff of SGS Nigeria."

 

Nestoil is the leading EPCC firm in the region and first choice for industry leaders such as Shell, Mobil and the Nigerian National Petroleum Corporation (NNPC). Nestoil has become a successful enterprise with over 2,000 employees in the Group (at least 95% indigenous) capable of world-class project execution.

 

The safety award comes hot on the heels of another award, a technology award. The Energy Institute awarded Societe Generale de Surveillance (SGS) its prestigious 2014 Innovation Prize in recognition of the development of the AutoGORTM, the first fully automated fluid analyzer that can operate at a well site.

 

Developed at SGS's Applied Technology and Innovation Center (ATIC) in Houston, the AutoGORTM is the first step toward intelligent wells that stream real-time data. It produces superior quality data and requires no human intervention for the analysis per test. It can operate offshore, onshore and in any climate.

 

Set up in 2009, the ATIC is SGS's Center of Excellence aimed at providing new and innovative solutions in the Oil and Gas sector. The AutoGORTM is one of its latest innovations for the leading inspection, verification, testing and certification company. The company operates through a network of over 1,650 offices and laboratories around the world and more than 80,000 employees.

 

Dr. Lambert-Aikhionbare Scoops Aret Adams Award at NAPE ICE

 

Dr. Daniel Aikhionbare of Ehimade Nigeria Ltd. as the winner of its 2014 Aret Adams Awardm at the recently concluded 32nd Annual International Conference and Exhibition (ICE) of the Nigerian Association of Petroleum Explorationists (NAPE).

The Aret Adams award, named in honour of the Late Chief Aretanekhai (Aret) Godwin Adams, is the highest award bestowed by NAPE. It is given to deserving Earth Scientists in recognition of distinguished and outstanding contributions to, or achievements in science and petroleum exploration.

 

Renowned for his scholarly presentation entitled: "Bridge Building: Oil Industry to University," the 70-year-old Lambert-Akhionbare was presented with the prestigious award on Tuesday, November 11, during the opening ceremony at Eko Hotel, Lagos.

Asked what his advice to upcoming young professionals would be, Dr. Lambert said: "Hard work is the key to success. If anyone desires to be successful or outstanding, then he must work hard."

 

Dr. Lambert-Aikhionbare is presently the Manging Director and Chief Executive Officer of Ehimade Nigeria Limited - an indigenous geoscience consulting company.

 

The theme of this year's conference, which was opened by the Lagos State Commissioner for Energy and Mineral Resources, Engr. Taofeek Ajibade, was "The Future of Hydrocarbon Exploration: Drilling Deeper, Searching Wider." The conference brought together distinguished personalities and experts to deliver papers and discuss the safety, health, security and environmental challenges of hydrocarbon exploration as well as emerging technologies and commercialisation strategies for deep-water plays.

 

Seplat Wins Oil Council Mid-Cap Company of the Year Award

 

Seplat has won the Oil Council's Mid-cap Company of the Year Award 2014 in a glittering ceremony at the Supernova in London, beating other contenders such as Detnorske, Noble Energy and Soco International Plc. The winners of the Oil Council's 2014 Awards of Excellence were announced as 1,100 executives from across the energy, finance and investment communities gathered to celebrate the 10 winners.

 

Seplat was also a finalist for the Deal of the Year Award, while the Chairman of Seplat, Dr. A.B.C. Orjiako, was named Executive of the Year. Apart from the award it won, Seplat was presented in nine other categories. The company's implementation of its model community engagement and corporate social investment was cited for the company's success in avoiding costly community disputes and disruptions.

 

Dr Orjiako who dedicated the award to the management, staff and board of the company said: "Seplat is very fortunate to have a competent and committed management team that is steering the company on the path of growth."

 

Seplat has been a spectacular success story. The oil and gas explorer was born out of the amalgamation of Shebah Petroleum Development Company (controlled by the Chairman of Seplat, Orjiakor) and Platform Petroleum Joint Ventures (controlled by Avuru), formed to acquire Shell's oil mining leases 4, 38 and 41. The company with indigenous roots underwent a stunning simultaneous dual listing on the main board of the London Stock Exchange and the Nigerian Stock Exchange in 2013, acquiring a war chest of over $500 million in the process. The money will be spent in the development of existing assets and new acquisitions.

In its first Annual General Meeting (AGM) since its dual listing in London and Nigeria the company declared a net profit after tax of $550.3 million for the financial year ended December 31, 2013 compared with $109.1 million in the corresponding period in 2012. This represents an increase of 404 per cent. Average daily production for 2013 was 51,400 barrels per day while peak production reached 61,700 barrels per day.

 

The Oil Council is an influential network of oil and gas executives in the world. Their network spans the global oil and gas value chain and comprises Members (individuals connecting into the network) and Partners (companies connecting into the network to promote themselves regionally or globally).

 

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