Elcrest, the local company formed by Eland Oil and Gas and its indigenous partner, Starcrest, is poised to take over operatorship of oil mining lease (OML) 40 from the Nigerian Petroleum Development Company (NPDC) which holds a 55 per cent interest in the asset on behalf of the Nigerian National Petroleum Corporation (NNPC). Eland Oil and Gas owns a 45 per cent share of Elcrest.

Eland revealed that the Department of Petroleum Resources (DPR) has been given the go-ahead to start finalising the joint operating agreement that will give Elcrest operatorship for 10 years in the first instance. Eland had to make a payment of $2.3 million to DPR as part of the terms, which paves the way for both parties to finish reviewing the draft agreement before the signing, which will take place in the coming weeks.

Elcrest acquired Shell's interest in the lucrative OML, which is currently producing from the Opuama field. However, NPDC took over operatorship following the divestment by Shell. Many have criticized this operatorship model, which saw the operatorship of the assets divested by Shell being taken over by NPDC. The company is however not sufficiently equipped to handle the number of assets it acquired almost simultaneously in the Shell divestments. As a result, the investors in the divested assets have had to stand by in frustration and watch their investments fail to realize their potential as they wrangled with NPDC over operational decisions on the assets. Raising funds has also been difficult for these investors as financiers baulk at handing over vast sums of money in a situation where a government owned entity makes the operational decisions.

Analysts have given this development the thumbs up saying that even though Elcrest has been very proactive on the development of the block, to step up activities and fully develop the block, a greater degree of management control, which operatorship brings, would be required.

Others in a similar position will be hoping that this is a new policy position that the incoming Buhari government will wish to extend to other NPDC assets. Seplat was the only one that managed to escape the operatorship problem of the Shell divested assets. Recently, however, it seemed that the government was already re-thinking the strategy of taking over operatorship after it was revealed that NPDC would not operate the assets in the most recent Shell divestment. 

OML 40 is located in the Niger Delta, approximately 75km northwest of Warri and covers an area of 498km2. It has gross 2P oil reserves of 81.4 mmbbl in the Opuama and Gbetiokun fields. It has a significant, only partly developed reserve base with outstanding upside of 41.2 mmbbl gross 2C resources and 254.5 mmbbl gross best estimate prospective resources. Opuama field was producing in excess of 3.500 barrels of oil per day. Now Elcrest has a chance to ramp up production significantly.

Shell Declares Force Majeure on Forcados Exports

Shell has issued a declaration of force majeure in respect of crude oil exports from its Forcados terminal due to a series of leaks on the Trans Forcados pipeline (TFP), which is operated by the Nigerian Petroleum Development Company (NPDC), the exploration and production subsidiary of subsidiary of the Nigerian National Petroleum Corporation (NNPC). As a result of the leaks around Odidi, the TFP has been down shut for repairs leading to a shut in of up to about 400,000 barrels of crude per day (bpd), the full capacity of the pipeline.  

Also affected by the shut in is NPDC with production of 100,000 bpd now deferred. Other companies producing to the same pipeline and whose production is now deferred are First Hydrocarbon Nigeria (FHN), Neconde, Seplat and Shoreline. Also affected are the cluster group of producers, Pillar, Midwestern, Platform and Energia.  

The TFP has been plagued by breaches and this year alone it has been closed twice (in January and March). Gas production has also been affected as producers shut down fields whilst waiting for the repairs to be completed.

Afren Defers Interest Payment of $12.8 Million Due on 2019 Bonds

In spite of a $200 million interim funding completed on the 30th of April, London Stock Exchange listed Afren will not be paying the interest due on its 2019 bonds. After the expiration of a 30-day grace period, the Board of the company has decided not to make the interest payment of around $12.8 million in order to "preserve cash" until the full restructuring is completed.

Although the non-payment of the interest on the bonds puts the company in default, it has nothing to fear from the note holders who are c-operating fully. It has been agreed that there will be no immediate obligation to repay the Notes, neither will there be a cross-default under its 2016 and 2020 Notes. The accrued but unpaid interest will be refinanced as part of the reorganisation of the Group's debt facilities.   

The ad hoc committee of existing note holders hold in aggregate approximately 35% of the principal face amount of the 2019 Notes and 50% of the total principal face amount of the 2016 Notes, 2019 Notes and 2020 Notes. They will not be taking enforcement action regarding the outstanding interest for now.

Nigeria focussed exploration and production company, Sirius Petroleum has just obtained a $2.3 million (£1.5 million) facility from a family office as working capital for its operations. Listed on the Alternative Investment Market (AIM) of the London Stock Exchange, the company obtained the Convertible Loan Facility from Calvet International Limited, an international family investment office. Sirius has an interest in the Ororo marginal oil field, which is located in Oil Mining Lease (OML) 95. The investment company which is focused on oil and gas opportunities, entered into a Financial and Technical Services Agreement (FTSA) with Owena Oil and Gas Limited and Guarantee Petroleum Company Limited in relation to the asset.

The three-year term loan will accrue zero interest but Calvet has the option to convert the loan into new ordinary shares in the company at a price of 1 pence per share. Sirius has negotiated a commitment fee of £100,000 per annum for the full term of the facility to be settled through the issuance of 30,000 new ordinary shares of 1 pence each.  

A drawdown fee will be satisfied through the issuance of new ordinary shares at the same price. An initial draw down of £200,000 has been agreed. Any additional draw down will be at Calvet's discretion. This facility is separate to any project funding and will allow Sirius to continue due diligence in respect of projects that it is currently considering.  

The conversion into shares of the initial fees will give Calvet 5.9 per cent of the company's shares, once the 70,000,000 new ordinary shares are admitted to trading. This follows an issue of 35,000,000 new ordinary shares issued to Juniper Capital Partners Ltd a strategic and financial adviser to the company, in settlement of fees. This gave Juniper 3.1 per cent of the company's issued share capital.

In March, the company won an extension till 30 April for the completion of a £9.6 million Convertible Loan with Nima International Ltd, an affiliate company of Levant Energy Limited. Both companies were considering raising $25 million through a combination of new equity and a convertible loan structure to fund the Ororo-2 well. However, in view of the current economic climate, they decided that there would be significant dilution of existing shareholders interests and this would not be in the best interests of the Company's existing shareholders. On a fully diluted basis, the existing shareholders would own only a small minority of the Company's enlarged equity post investment. As a result both they are now looking for alternative funding including debt structures what would be less dilutive. Meanwhile both parties decided not to extend the deadline for the completion of the Convertible Loan, whilst they review the options.

Indigenous exploration and production company, Brittania-U has taken its battle against the US oil giant, Chevron, to the District Court sitting in Harris County in Texas, United States of America. And already, the move has proved successful after Judge Baker ordered Chevron and its advisers in oil mining leases (OMLs) 52, 53 and 55 divestment, BNP Paribas, to produce vital documents relating to the dispute between Brittania-U and Chevron.

The long running saga stems from the divestment exercise by Chevron, which began in 2013. Brittania-U alleges that it was the highest bidder and that Chevron accepted its offer. In court papers, the company, led by the formidable Uju Ifejika, said that communication from meetings between the two would show that Chevron had accepted its offer. Furthermore, Brittania-U alleges that Chevron was in the process of revising its sales purchase agreement (SPA) for issue to Brittania-U, when the indigenous producer discovered that Chevron had instead signed SPAs with a Seplat consortium, consisting primarily of Seplat as the buyer of OML 53, Amni International of OML 52 and Belema Oil of OML 55.  

Brittania-U challenged the sale in a Federal High Court in Nigeria and sought an interim injunction, which was granted, restraining Chevron and their agents from negotiating the sale of the said OMLs with Seplat Petroleum Development Company (SPDC) Limited or any other bidder, apart from Brittania-U Limited. The injunction also restrained Chevron from declaring Seplat the preferred bidder, ordering it not to execute a definitive agreement with any party other than Brittania-U. The matter remains in the Supreme Court.

Meanwhile, in spite of the fact that the matter is still in court, Chevron has finalized the sale to the Seplat consortium and regulatory approvals for the assignment have also been received even though the Ministry of Petroleum Resources and the Minister were joined in the suit.

Brittania-U has remained undeterred and has doggedly pursued the litigation and now has been able to find some joy in the US courts, after the judge ordered Chevron and BNP Paribas to produce all documents and communication between them and any officer, employee or agent of Amni, Seplat, BNP Paribas or Belema Oil mentioning or discussing the bidding process, the OMLs, the companies or Brittania-U. Brittania-U says the correspondence will show that it had already reached agreement with Chevron before the about-turn by the US company and its Nigerian subsidiary.  

Amni had sought to use the motion of forum non conveniens to have the case thrown out of the US court but the Judge denied it. Forum non conveniens is a discretionary power that allows a court to dismiss a case where another court, or forum, is much better suited to hear the case.

Indigenous Company, Thompson & Grace Unveils Engineering Services Facility

Indigenous Engineering, Procurement, Construction and Installation (EPCI) contractor to the oil and gas sector, Thompson & Grace Investmenthas acquired the WFL M120 machine, the first of its kind in Sub Saharan Africa. The company revealed the machine during the unveiling of its multi million-naira facility in Port Harcourt, Rivers State. The machine combines machining and measuring operations in one single Millturn, which the manufacturers say raises the efficiency of production enormously. It is used in the production of complex high precision machine parts. The facility also includes mega cranes, lifting and fabrication equipment and a training centre.

The former Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Ernest Nwapa, who was there for the unveiling, pledged the support of the Board, saying, "We will ensure that these facilities and others being set up are put to use and sustained for the benefit of Nigerians and the Nigerian economy." He said the engineering facility was a major addition to Nigeria's capacity for manufacturing equipment.

Managing Director of Thompson & Grace, Dr. Isaac Thompson Amos explained that the investment in the WFL M120 machine had unique capabilities for the production of components with complex geometry such as Wellheads and Christmas Trees.

Thompson & Grace provides services in machining and mechanical maintenance to the oil and gas industry. The company said the investment in the facility, which includes an institute of technology, would support the company's innovative strategies.

ADDAX - Provision of Various Marine Vessels

ADDAX Petroleum Development Company Nigeria invites interested and registered Nigerian companies to respond to the opportunity for the provision of marine vessels. The proposed contract is to commence in the third quarter of 2015. The scope of services involves the provision of various marine support vessels for the operation. Only Tenderers who are registered with NJQS product/category 3.08.01 tugs/ROV support/diving support vessels, 3.08.17 supply vessels or 3.08.18 standby vessels Cat A, B, C & D shall be invited to submit technical bids. The closing date for this opportunity is 13th May 2015.

Total - Provision of Waste Management Services

Total E & P Nigeria Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of waste management services for Akpo. The scope of services involves the provision of solid and liquid wastes encountered in the company's operations such as exploration/ seismic, drilling/completion, production, maintenance, logistics, decommissioning and abandonment. Only Tenderers who are registered with the relevant product/service category shall be invited to submit technical bids. The closing date for this opportunity is 21st May 2015.

Mobil - Provision of Pressure Volume Testing (PVT) Analysis and Sampling Services

Mobil Producing Nigeria Unlimited invites interested and registered Nigerian companies to respond to the opportunity for the provision of pressure volume testing (PVT) analysis and sampling services on offshore appraisal and production locations. The scope of services involves sampling and well-site services, sample validation of subsurface and surface samples, compositional analysis and recombination, reservoir condition analyses, surface analyses, water analysis, crude assay analysis to mention a few. Only tenderers who are registered with relevant NJQS Product/Service Categories shall be invited to submit technical bids. The closing date for this opportunity is 21st May 2015.

NNPC/NGP - Procurement, Construction, Installation and Commissioing (PC) Works for the Gas Pipeline System from NAOC to NIPP

The Nigerian Gas Company Limited (NGC), A Subsidiary Of Nigerian National Petroleum Corporation (NNPC) invites interested and registered Nigerian companies to respond to the opportunity for the procurement, construction installation and commissioning (PC) contract of a 24"x22km, Class 600 gas transmission pipeline, launcher and receiver facilities from NAOC OB/OB gas plant in Rivers state to NIPP Egbema in Imo state. The scope of services involves the procurement, supply, inspection, testing, transportation, delivery to site of all materials/equipment, procurement, supply and transportation to site of pig launcher & receiver facilities, drain tank and all associated materials, procurement, supply, inspection, testing, transportation and delivery to site of meters, instrumentation & control materials/equipment and construction, fabrication and installation works. Only Tenderers who are registered with relevant NJQS Product/Category shall be invited to submit technical bids. The closing date for this opportunity is 25th May 2015.

ADDAX - Provision of Meet and Greet Services

ADDAX Petroleum Development Company Nigeria invites interested and registered Nigerian companies to respond to the opportunity for the provision of provision of meet and greet services for all locations in Addax petroleum operations. The proposed contract is to commence in the third quarter of 2015. The scope of services involves the provision of all necessary personnel, labour, security personnel, suitable vehicles and materials required for the provision of Meet & Greet Services at the international and local airport at Port Harcourt, Owerri and Abuja. Only Tenderers who are registered with NJQS product/category 3.99.05 security services and 3.99.10 travel agency, car rental services (product/service) category A, B, C and D shall be invited to submit technical bids. The closing date for this opportunity is 30th May 2015.

SPDC - Provision of Deepwater Remotely Operated Vehicles (ROV) Services

Shell Nigeria Exploration and Production Company Limited (SNEPCO) invites interested and registered Nigerian companies to respond to the opportunity for the provision of deepwater remotely operated vehicles (ROV) services. The scope of services involves the provision of contractor's ROV unit, equipment and personnel services for 2 (two) number deepwater rigs. Only tenderers who are registered in the NJQS service category 3.07.07 diving / ROV operations (Cat A-D) shall be invited to submit technical bids. The closing date for this opportunity is 1st June 2015.

NNPC/NAPIMS - Provision of Hardware and Supplier Management Application Software

Nigerian National Petroleum Corporation - National Petroleum Investments Management Services (NNPCNAPIMS) invites interested and registered Nigerian companies to respond to the opportunity for the provision of hardware and supplier management application software. The scope of services involves the Provision of system software, hardware requirements, processes and manpower for the day-to-day activities of the NipeX Joint Qualification System (NJQS); develop and deploy document management solution where all contractor/supplier attachments are uploaded and available for review and report generation, develop and deploy single sign-on (SSO) and data exchange between NJQS and e-marketplace, an sap based solution, develop and deploy Nigerian content module, develop and deploy performance feedback module, develop and deploy health, safety, environment and quality (HSEQ) module. Only Tenderers who are registered with relevant NJQS Product/Category shall be invited to submit technical bids. The closing date for this opportunity is 5th June 2015.

NNPC/NAPIMS - Provision of Consultancy Services

Nigerian National Petroleum Corporation - National Petroleum Investments Management Services (NNPCNAPIMS) invites interested and registered Nigerian companies to respond to the opportunity for the provision of hardware and supplier management application software. The scope of services involves the Provision of consultancy services for the day-to-day activities, develop, implement and execute in conjunction with NipeX, the annual plan and manage all resources efficiently to the benefit of the stakeholders. Only Tenderers who are registered with relevant NJQS Product/Category shall be invited to submit technical bids. The closing date for this opportunity is 5th June 2015.

West Africa Oil and Gas Security Summit to Proffer Solutions to Oil Theft

The date of the 2nd West Africa Oil & Gas Security Summit, organised by IRN, has been announced. The event, which will take place from the 10th to the 11th of June, will discuss the present post-election period in Nigeria, and examine solutions that will secure the oil sector and eventually reverse the sharp decline in oil revenue.

One of the main challenges that newly elected president, Buhari will have to face is the security of the oil sector. Oil production in Nigeria accounts for 70% of the economy but the natural resource is much less profitable than it once was because of widespread corruption and vandalism.

According to the organisers of the conference, from the $600 billion in oil revenue that has flowed into the Government's account since the country's independence in 1960, an estimated $400 billion has been diverted, misspent or stolen. On the other hand, security forces are not being given adequate resources to ensure the safety of oil and gas infrastructure. However, investors expect the recent Nigerian elections to be a turning point for the oil industry.

The Forum will also assess proposals for achieving an effective company security system in light of the post election situation and highlight the benefits and challenges of the political regime for Nigeria and its oil industry.

More information can be found on the website www.waoilgassecurity.com