Page 1

February 2012

ISSN 1757-1383


FEBRUARY

VOL. 9 ISSUE 12

2012

CONTENTS On the Cover

25

Source: Petroleum Geo-Services

28 32

PGS’ Ramform Valiant

34 46

D e pa r t m e n t s 2 3 4 6 9 14 16 19 20 21 60 63 64 64

Moving On Recruitment Message from the Editor Africa’s Big Five Africa at Large Around the World Downstream News African Politics Power & Alternatives Market Movers Facts and Figures Conferences Contact Us Advertisers’ Index

52 55 57 59

Monthly Focus

Africa’s Pre-Salt Potential

Downstream Focus Continental Evolution of Power Generation

Local Impact Angola’s Pre-Salt PSC Terms

African Focus Nigeria Overview Namibia Overview

Technology and Solutions Deepwater Real-Time

Oil Security Nigeria’s Other Militants

Book Review Black Market Economy in the 21st Century

New Products & Services Intrinsically Safe Personal Radiation Detectors New Safety Concept in Deepwater Gas Pipelines

We b E x c l u s i v e s ONLY ON WWW.PETROLEUMAFRICA.COM Finding the Right Person for the Right Job – Scientifically The Problem with the Climate Investment Funds Log-on to www.petroleumafrica.com for web only features, all department news items in-depth, a complete events calendar, an oil directory, all the latest news items out of the continent, and much more. Sign up for a risk-free trial to Petroleum Africa today!


Moving On Tarek Elbarkatawy has been appointed general manager of Circle Oil Egypt. Elbarkatway has held several positions with various companies operating in North Africa, including Weatherford and Suez Oil Co., a JV between Shell and EGPC.

Ogunlade Davidson, was released from his position as the minister with Sierra Leone’s Ministry of Energy and Water Resources. President Ernest Bai Koroma replaced Davidson with Oluniyi Robbin-Coker.

Geomage announced that Dr. Marianne Rauch-Davies has joined the company as VP, Applied Technology. Prior to joining Geomage, she served as the chief technical advisor at NEOS GeoSolutions.

Momar Nguer

Momar Nguer was a p p o i n t e d s e n i o r V P, Africa/Middle East at Total Supply & Marketing. He has held a number of positions across Africa within the company including CEO of marketing for Total in Cameroon and Kenya.

TWMA has appointed Danny Murray to the recently created position of business development manager, MENA, to lead growth and development in the region.

Jill Whelan

Franziska H. Dacek

Jill Whelan has been appointed to the position of VP, corporate communications of Swagelok Co. Whelan succeeds Franziska H. Dacek who has chosen to retire. RigNet Inc. reported that Thomas M. Matthews will stand down as chairman at the May Annual Meeting of stockholders. Matthews served as chairman and a director for the last four years, and will continue to serve until his successor is duly elected by the stockholders. SacOil has appointed Willem de Meyer as VP, Commercial and Jordaan Fouché as VP, Technical and New Business. Both have extensive experience in the industry.

Lance Mierendorf

Geoff Bury

Wentworth Resources announced the appointment of Lance Mierendorf to the position of CFO with immediate effect. Geoff Bury, who was both managing director and acting CFO, will continue in the role of managing director. Pasi Lehtonen has been appointed as senior VP of Cargotec’s offshore business segment, effective from the beginning of January. The company also confirmed the appointment of Tom Svennevig as VP for its offshore segment’s advanced loadhandling business, and Ilpo Heikkilä as VP for its offshore segment’s winch business.

Ophir Energy Plc named Lisa Mitchell as the company’s new CFO. Mitchell's previous roles included being CFO at both Pan Pacific Petroleum NL and GCM Resources Plc. Helmerich & Payne announced, with sad regret, that Walter H. Helmerich, III passed away peacefully on January 10. He joined Helmerich & Payne Inc. in 1950 and became president in 1960. He led the company until 1989 when his son, Hans, was named CEO. He retained the role of chairman and served in that position for the last 22 years. TransAtlantic’s board of directors has accepted the resignation of Gary T. Mize as the company’s president and COO and subsequently appointed Mustafa Yavuz as its COO. Yavuz

joined TransAtlantic in June 2011 in connection with the company’s acquisition of Thrace Basin Natural Gas (Turkiye) Corp. Nexen Inc.’s president and CEO, Marvin Romanow, has left the company. Kevin Reinhart, executive VP and CFO, has been appointed as interim president and CEO. Reinhart will serve in this capacity while the company conducts a search for a new CEO. In addition, Nexen announced that Gary Nieuwenburg, executive VP of Canada, is leaving the company effective immediately. Crosco Integrated Drilling & Well Services Co. Ltd. announced that Peter Szekely and Tomislav Tadic have been appointed to the company’s management board. The company also announced that Tadic has also been appointed as Crosco’s CFO. Mediterranean Oil & Gas announced the appointments of Keith Henry as non-executive chairman and Jake Ulrich as a non-executive director. Henry is currently the chairman of Regal Petroleum and Ulrich was senior Energy Advisor to Och Ziff Management Europe Ltd. Both appointments are with immediate effect. The company also said that Matthew Clarke has stepped down as interim chairman and resumed his duties as a non executive director. Stefan vom Scheidt has been appointed managing director of AREVA NP GmbH, the wholly-owned subsidiary of AREVA. The appointment was effective January 1. GeoGlobal Resources Inc. announced that it expanded its board of directors to six persons following the appointment of Ohad Marani. Marani currently serves as CEO of the Israel Land Development Co. Energy Ltd. Russian oil giant Gazprom let go of three of its highest ranked executives: Alexander Ananenkov, the company’s former deputy CEO, along with Viktor Ilyushin and Olga Pavlova who were relieved of their posts. Ananenkov was replaced by Gazprom Invest Vostok general director Vitaly Markelov. Ilyushin and Pavlova were replaced with Vladimir Markov and Elena Mikhailova respectively.

To include a corporate personnel announcement in Moving On, write to info@petroleumafrica.com. Preference will be given to Africa-specific appointments and to those companies who have interests within the continent; all others will be included on a space available basis.

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Petroleum Africa February 2012


Recruitment CA Oil & Gas

CA Oil & Gas

Position: Projeteur Tuyauterie PII Location: Cameroun Position description: Etude de tuyauterie et encadrement de l’équipe locale. Etudes manuelles à mener sur plans existants. Experience & Education: 10-15 ans - Senior avec expérience de mission dans des pays africains - Faculté d’encadrement - Grande expérience en révamp d’unité - Maitrise de l’anglais souhaitable - Excellente lecture des plans de tuyauterie - Connaissance Microstation V8 serait un plus Contact: Sébastien Roger, CA Oil & Gas Tel: +27 21 551 5340 Email: seb@caglobalint.com

Position: Operations Manager – Chemical Sales Location: Congo, Pointe Noire Position description: Our client is currently seeking to employ an Operations Manager for its chemical sales division selling to oil and gas companies. Experience & Education: 10 years relevant experience in the chemical oil and gas industry. Contact: Eugenio Maggi, CA Oil & Gas Tel: +27 21 551 5340 Email: eugenio@caglobalint.com

CA Oil & Gas Posição: Tecnico de Recursos Humanos Location: Angola Discrição: O nosso cliente pretende recrutar um Tecnico de Recursos Humanos para as suas operações em Angola. Posição será baseada em Angola. Experiência & Qualificação: 3-8 5. Licenciatura. Bons conhecimentos da lei de trabalho de Angola. Contact: Moises Padre, CA Oil & Gas Tel: +27 21 551 5340 Email: padre@caglobalint.com

CA Oil & Gas Position: Resident Project Engineer (Upper Completions Installations) Location: Angola Position description: Our client is currently looking for a Resident Project Engineer for the Upper Completions product line. The candidate will be residentially based and will need to have deepwater experience. Experience & Education: Bachelor’s degree with 12 years minimum experience. Experience with production packers, sub-surface safety valves, and intelligent smart completions. Contact: Eugenio Maggi, CA Oil & Gas Tel: +27 21 551 5340 Email: eugenio@caglobalint.com

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Message from the Editor

Deputy Editor Jennifer Nickle jnickle@petroleumafrica.com Associate Editor LeAnne Graves lgraves@petroleumafrica.com Contributing Editor Sarah Abdel-Rahman Senior Correspondent Mark Pabst Contributors Guy Brown Ricardo Silva William Standifird Operations Manager Alan Younes Art Director Mario Saad Events Coordinator Basma Awdan Circulation Manager Silvia Rafaat Circulation Coordinator Amira A. Wahab Database Coordinators Eman Eissa Olabisi Ijeh Senior Accountant Said Adly Advertising/Sales Jina Sellers advertise@petroleumafrica.com IT and Website Jacob M. Sellers Administrative Assistant Dalia Abd El-Wahab Printing by Sahara Printing Company S.A.E. Nasr City - Free Zone Cairo, Egypt

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Petroleum Africa February 2012

Dianne Sutherland Chief Editor

Are words as effective as actions? At first glance Iran’s threat to impose a naval blockade of the Strait of Hormuz where around 40% of the world’s oil supplies traverse would indicate that they are – at least temporarily. Following the EU’s January 23 decision to impose an embargo on Iranian oil, though short-lived, the barrel price spiked to $110 the next day. Ahmad Qalehbani, head of the National Iranian Oil Co., followed up on the Iranian rhetoric in an interview with IRNA saying that oil prices will soon hit $150. “It seems that we will witness prices from $120 to $150 in the future,” he said. If the EU-Iran row was not enough to make oil prices rise, South Sudan began taking its oil off the market, shutting-in production over its own quarrel with Khartoum on pipeline export transit fees and withdrawing approximately 350,000 bpd of Asia-bound crude from the market. And then there’s the shortfall of Libyan crude yet to be completely restored to pre-conflict levels, although it has admirably hit 1.3 million bpd within a relatively short time frame. Adding to the mix are global fears that the Israeli state might launch a pre-emptive strike to put a stop to Iran’s nuclear ambitions, as such, market jitters will remain, leaving the oil price volatile. Despite these situations, at the time of writing, the barrel price had remained relatively stable. But regardless of the barrel price, all of these situations spell bad news for the consumer. While the EU embargo only immediately bans new contracts with Iran, existing contracts can run through July 1. That said, Europeans, already paying between €1.3 and €1.7 per liter around the continent, are likely to see the pump price rise in both the near and longer term if the situation doesn’t improve as they import around 20% of Iran’s crude oil exports. And while a successful blockade of the Strait of Hormuz is unlikely with the US and Saudi Arabia threatening swift action should Iran attempt to do so, speculators will take advantage of the situation which eventually spells bad news for motorists at the filling station. In today’s global economy, any jump in the crude barrel or pump price is highly unwelcome as consumer prices across most commodities rise and rarely see any relief even when the oil price does come down. Already gasoline prices in the US have risen between $0.30–$0.40 per gallon over late January, despite stable crude prices and the fact that the country imports zero Iranian oil. If the December 2010 prediction of John Hofmeister, the former president of Shell Oil, comes true, Americans could be paying $5 for a gallon of gasoline in 2012. This past January Hofmeister reiterated his prediction to Fox News. “It was actually December, 2010, when I predicted $5 gasoline by the end of 2012,” said Hofmeister. “And, I said then, ‘I hope I’m wrong.’ My concern is I won’t be wrong.” Thanks John, consumers are hoping you’ll be wrong too! Now on to our fantastic February issue. In time for NOG 2012 in Abuja this month, Nigeria features in our African Focus section with political briefs and all the latest from its petroleum and power industries. And for a fuller picture on what is happening on Nigeria’s militant front, be sure to read our Oil Security article. Pre-salt is all the rage in Brazil and now the excitement has caught on in West Africa. Our Monthly Focus article explores new developments and opportunities on the pre-salt front while our Local Impact feature looks at contractual implications in Angola’s pre-salt plays. And finally, don’t miss the Technology section where Halliburton discusses real-time digital solutions for deepwater. As always, your comments and suggestions are appreciated and can be emailed to info@petroleumafrica.com.


Africa’s Big Five

Algeria – The Year that Was and Wasn’t

combination with ABRASIJET * hydraulic pipe-cutting and perforating technology was used to bring oil wells on production in Algeria.

The past year has not been one of excitement for Algeria, neither positively or negatively. The Arab Spring, that affected many of its neighbors last year, virtually by-passed Algeria with very little of the protests seen in Tunisia, Egypt, and Libya taking place in the country.

The combined technologies offer an alternative to conventional perforation with the fiber-optic capability of the ACTive system permitting realtime depth correlation in addition to monitoring differential pressure for optimum performance.

ALGERIA

Algeria did see its GDP expand in 2011 by 2.9%, despite all the uncertainty in the region. The North African country saw increased revenues from its petroleum industry; however, this was not achieved through increased investment in its petroleum sector, but from rising oil prices. While the country’s petroleum sector did not diminish over the year, it did not see a wealth of new investment. The country’s production levels, unlike its troubled neighbors to the east, stayed steady with no drastic ups or downs. Algeria only saw its first ‘major’ discovery for the year announced in November. The discovery was made by E.ON Ruhrgas on the Rhourde Yacoub field. The joint development of the discovery with Sonatrach is expected to begin once the extent of reserves is established. The country could see an increase in production over the next year or so as a couple of firms work on their developments. Algeria did see drilling from Petroceltic on the Isarene Permit. The company’s Ain Tsila appraisal drilling was successful. Anadarko Petroleum, the number one independent in the country when it comes to production, is moving closer to completing construction on the El Merk central processing facilities and the associated infrastructure on Block 208. Anadarko said that the project remains on target for first production this year, with significant oil volumes expected near the end of 2012. The slow movement in Algeria’s upstream sector could change over the coming year as its hydrocarbon laws may see a revamp. In October Algeria’s energy ministry recommended to the country’s president, Abdelaziz Bouteflika, that its energy laws be changed in a bid to regenerate interest in its oil and gas sector from international firms. If the laws are reordered Algeria could reemerge as a destination of choice for petroleum investment in pounds, euros, or yuan.

Schlumberger Combines Technologies for Production Schlumberger reported in its Q4 report that its ACTive in-well live performance system in

6

Petroleum Africa February 2012

The work was done on the Hassi Messaoud field operated by Anadarko in partnership with Sonatrach.

Algeria Will Not Aid in Making up Iran Shortfall Unlike some other OPEC members, Algeria will not be increasing oil exports to make up for any loss of crude from Iran in the markets due to US and European sanctions. Some Gulf countries, like Saudi Arabia, said they would pick up the production pace if the Iranian situation caused a shortfall in crude markets, whether due to restrictions or Iran’s threat to block the Straits of Hormuz, yet Algeria has no intention of aiding the industry in making up the shortfall. When asked in parliament if the North African country would help off-set a drop in Iranian exports, Energy Minister Youcef Yousfi said “We have a program with regard to oil exports. This program will not change.”

ANGOLA Jee Tagged by Doris for Block 32 Doris Engineering selected Jee for specialist subsea and riser engineering on a project on Angola’s deepwater Block 32. The project will involve basic engineering design of the Kaombo pipeline system in water depths ranging from 1,450 meters to 1,950 meters. A team of Jee engineers has joined Doris’ head office in Paris for the contract, focusing on the design of hybrid flowloops (one leg of a pipe-in-pipe production line, and the other leg of the service line making up the pigging loop), and water injection lines for the five fields on the block, along with gas export pipelines from the two FPSOs and the design of riser towers and single top tension risers.

Seismic Program Due to Launch TGS reached final agreement with Sonangol EP to commence acquisition of a 3D multi-client survey covering nearly 12,500 sq km offshore

Angola. The survey commenced over Blocks 36 and 37 in late January to continue over Block 35 with acquisition scheduled to be complete during Q3 2012. The high-potential pre-salt hydrocarbon play off the coast of Angola lies between 2,000 and 5,000 meters below sea level. Angola is already Africa’s second-largest oil producer and the conjugate margin pre-salt basins, which are believed to be similar to hydrocarbon rich basins offshore Brazil, open a new frontier in petroleum exploration. TGS has chartered vessel capacity for this project. TGS will process the 3D seismic data in both time and depth using its proven sub-salt capability developed in similar basins. Preliminary products will be available to participating companies in Q4 2012 with a final processed product expected by Q4 2013. The survey is supported by industry funding.

PGS Shoots Pre-Salt Blocks off Angola Petroleum Geo-Services’ (PGS) Ramform Valiant started the acquisition of over 26,000 sq km of GeoStreamer® data on five blocks in Angola’s Kwanza/Benguela Basins. The survey is for a group of oil firms who recently signed agreements for the five blocks. Another vessel is expected to join the shoot in the next month. BP, Total, and Statoil have been made operators of Blocks 24, 25, 38, 39, and 40 with Sonangol as a partner on the blocks. All four oil companies have committed to funding the survey. PGS said that with early access to 3D seismic data based on the most advanced seismic technology, the operators will benefit from clearer images and more time to plan the exploration wells that they are committed to drilling within the next five years.

EGYPT Kuwait Energy Hits Oil in Gulf of Suez Kuwait Energy Co. made a new oil discovery in Egypt on its Area A concession in the Gulf of Suez with the drilling of the Ahmad-1X. The newly discovered Ahmad-1X well was drilled to 2,110 meters depth with the initial test recording a flow rate of 890 boepd from the Kareem formation level. This discovery brings the total number of oil, gas, and condensate discoveries made by Kuwait Energy in Egypt, since 2008, to 14 discoveries, three of which were made in Area A.


Kuwait Energy is the operator of Area A and holds a 70% working interest. Omani independent Petrogas E&P holds the remaining 30% interest.

Dana Brings Production Online in Gulf of Suez Dana Petroleum, a unit of South Korea’s KNOC, saw first production from its Matr-1XST well in the North Zeit Bay PSC area onshore in the Gulf of Suez following the recent approval of the Matr Development lease by the Ministry of Petroleum. Matr-1XST, which is expected to produce 1,200 boepd, is the third well producing oil via the Lorcan Processing Facility. The other two wells are the Lorcan-1XST and Fin-1X wells. Dana is currently planning to bring three further discoveries within the Matr Development lease (Calumn-1X, Abydos-1X, and Omar-1X) onstream over the next year. The company’s latest success follows approval from the Ministry in November for the formation of Petro Kareem, a JV between Dana and EGPC. Petro Kareem will produce oil and gas from the Lorcan development lease, within the North Zeit Bay concession, located onshore in the Gulf of Suez, 320 km southeast of Cairo.

Transglobe Takes West Bakr TransGlobe Energy Corp. has seen the closing of the West Bakr acquisition in Egypt from the Egyptian Petroleum Development Co. Ltd. of Japan. The deal cost the company $60 million. For its funds Transglobe gained operatorship of three oil fields with 28 producing wells which will give it immediate funds from production flows. The company will hold 100% interest in the concession’s 4,350 bopd of production. The West Bakr PSC is located onshore in the western Gulf of Suez rift basin of Egypt adjacent to TransGlobe’s West Gharib Concession. The two development leases are valid until 2020 with an optional five-year extension. Modern 3D seismic covers the leases and the company has identified a number of optimization/ development projects and drilling opportunities that could increase production and recoverable reserves.

Sea Dragon to Acquire Three Blocks Sea Dragon Energy Inc. entered into an “arm’s length share purchase agreement” with Golden Crescent Investments Ltd., where an indirect wholly-owned subsidiary of Sea Dragon will acquire all of the issued and outstanding

shares of National Petroleum Co. Egypt Ltd. (NPC Egypt). As a result of the deal, the company will pick up operated and non-operated stakes in four Egyptian concessions. It will pay a consideration of $60 million in cash and 350 million common shares of Sea Dragon will be issued to Golden Crescent at closing.

LIBYA Libya to Revisit Oil Contracts News that foreign firms operating in Libya have been dreading to hear has been released: oil contracts made under former leader Muammar Qaddafi’s regime will be reviewed by the new government. According to former interim prime minister Ali Tarhouni some, of the contracts agreed by the regime of Qaddafi will have to be reworked. “It is my expectation that most contracts will be honored, but all will be revisited,” Tarhouni said. “Some of these contracts will be disputed; there are some that have these gross violations, there are some that are good,” Tarhouni added.

Production Moves Toward Pre-Conflict Levels Libyan production continues to ramp up towards pre-conflict levels as international firms restore shut-in production and repair infrastructure to their fields. State-run NOC confirmed that the country’s current output had climbed to 1.3 million bpd. Australian firm OMV saw a marked increase in its production levels since November with its output standing at 60% of its pre-conflict levels, up from the 30% it saw in November. “At the moment production is 19,000 bpd, around 60% of the pre-war level,” OMV spokesman Sven Pusswald said. In addition, ENI reported that its production levels in Libya have almost reached pre-conflict levels. The Italian firm’s chief executive, Paolo Scaroni, said that the company was approaching the 260,000 bpd level, just 10,000 bpd short of its output prior to the ouster of Muammar Qaddafi. “Output has now gone back to its pre-war levels. It was 270,000 bpd (before the war), now it’s 260,000 bpd,” Scaroni told journalists in Tripoli. About 12.7 million barrels were expected to be exported from Libya fields between January 26 and February 1.


Africa’s Big Five

NIGERIA

independently estimated at up to two billion barrels of unrisked prospective oil resources.

Afren Hits Big with Okoro Well Afren Plc made a new discovery in Nigeria with the drilling of the Okoro East exploration well on OML 112. The well encountered 549 ft true vertical thickness (TVT) of net oil pay and 41 ft of net gas pay in excellent quality reservoir sands.

Chevron Confirms fire on KS Endeavor

The Okoro East well was spud in mid-December and drilled to a total measured depth of 8,751 ft using the Transocean Adriatic lX jack-up drilling rig. The well successfully encountered oil in the Tertiary reservoir sands equivalent to those that have been developed and are in production at the Okoro main field, in addition to the deeper previously unexplored reservoirs. The discovery of significant pay in the previously unexplored deeper zones opens up further prospectivity at similar levels on the main Okoro field and elsewhere on the block.

There were 154 personnel on the rig and associated barge when the fire broke out; Chevron said that all but two contractors were accounted for. Those personnel that were safe underwent medical examinations at an adjacent production platform. An aggressive search and rescue program was called off on January 20. “After three days of intensive search and rescue activities for our missing colleagues, I am saddened to report that our efforts have proven unsuccessful and, therefore, we have made the difficult decision to transition to a recovery operation,” said Andrew Fawthrop, managing director, Chevron’s Nigeria/Mid-Africa Strategic Business Unit. While a full investigation is still underway, Chevron said initial indications point to the possible failure of surface equipment during drilling operations that led to a loss of well control. The well continued to burn and the rig partially collapsed. At press time, the company said it could not estimate how long the fire would continue. Production from Chevron’s North Apoi platform was shut-in due to its proximity to the incident.

The objective of Afren and its partner Amni International was to explore a separate previously un-drilled structure located approximately 2 km east of the Okoro main field. Okoro East is in a similar structural setting with a fault sealed 3-way dip closure in Tertiary reservoir sands at equivalent intervals to the main Okoro field. In addition, the Okoro East exploration well was targeting a deeper horst block structure, a play concept that had not been previously explored on the block. The prospect was mapped on good quality 3D seismic data. Logging operations were completed and the well was being prepared for testing; once prepared Afren and its partner Amni will determine the optimal development of the discovery.

ENI Unit Sells Oyo Field Agip Exploration, a subsidiary of ENI, entered into a definitive agreement to divest its 40% working interest in OMLs 120 and 121 to Allied Energy. The transaction is subject to customary conditions for closing and is expected to conclude during Q1 2012. Once approved, Allied plans to expedite the development of the Oyo field by drilling two additional production wells over 2012. The wells are expected to significantly increase oil production over current levels. Allied also intends to accelerate exploration activities in the OMLs to fully exploit potential outside of the Oyo field,

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Petroleum Africa February 2012

US major Chevron’s subsidiary, Chevron Nigeria, is currently working to contain a fire on the KS Endeavor. The rig, operated by FODE Drilling Nigeria Ltd., was drilling a natural gas exploration well on the Funiwa field.

Chevron has contracted for and is mobilized the Transocean rig Baltic to commence drilling a relief well. Chevron said the time required to complete the relief well was uncertain, but could extend for some period. The company also deployed additional drilling experts and well control specialists to Nigeria to assist with well control efforts and the relief drilling process.

Bonga Resumes Production Production on Shell’s Bonga oil field offshore Nigeria was restarted on January 5 after an oil leak in December forced it to shut down the facility due to a problem during a tanker loading. Shell and the Nigerian authorities were still investigating the exact cause of the leak although the company reports that the spill has been contained. Shell also reiterated that the oil on the shoreline, reported shortly after the Bonga spill, was not from the Bonga.

Jonathan Orders Industry Audit A new audit of Nigeria’s oil and gas industry was ordered by the government. The audit, which will go back three years, is aimed at cleaning up corruption in the industry. “As part of government’s anti-corruption agenda, council today approved the award of contracts to two audit firms to conduct a thorough audit of the accounts and activities of all government institutions and entities in the oil and gas industry from 2009 to 2011 with nine months completion period,” information minister Labaran Maku said. Maku listed that the firms conducting the audit as Haruna Yahaya & Co. and Sada, Idris, & Co., out of Nigeria. The audit would be carried out in all “government revenue generating institutions and entities in the oil and gas and solid minerals sectors of the country.” He added, “The audit firms shall access production, exports, imports, and unaccounted oil and gas ... and other relevant streams.” The newly ordered audit follows on the heels of a senate joint committee investigation of the management of funds that were set aside for petroleum subsidies. The senate’s investigation is based on a previous audit conducted by KPMG.

Strike Suspended as Jonathan Eases Subsidy Cut The strike threatened by Nigeria’s unions was suspended following negotiations between President Goodluck Jonathan and union representatives. The meeting led to Jonathan rolling back a portion of the subsidies cut from around N150 to N97 per liter. Despite the suspension, strikes could again be on the agenda pending further talks between the unions and government. Jonathan and union representatives met on January 15 to hash out the issues and try to work out compromises, and while they did agree to suspend the strike no real progress was made. “The government will continue to pursue full deregulation of the downstream petroleum sector. However, given the hardships being suffered by Nigerians, and after due consideration and consultations ... the government has approved the reduction of the pump price of petrol,” Jonathan said in a national broadcast.


Africa at Large Puntland Spuds First Well in Decades Africa Oil Corp. said that Horn Petroleum Corp., operator of the Dharoor Block, spud the first well in Puntland, Somalia in over 20 years, when the drillbit dropped on the Shabeel-1. The well will be drilled to a total planned maximum depth of 3,800 meters. Africa Oil also reported that drilling operations commenced on the Shabeel North-1 well with the setting of the 30-inch surface casing and the drilling of a 50-meter pilot hole. The Sakson 501 rig will be used to drill both wells which are expected to take around 90 days eachfor drilling and evaluation. The Shabeel-1 and the Shabeel North-1 wells will satisfy the first exploration period minimum work obligations under the PSC for both the Dharoor and Nugaal blocks.

Mozambique’s Offshore Area 1 Sees Another Success Anadarko Petroleum Corp. reported that its seventh well successfully appraised previous discoveries at Lagosta and Camarao on Offshore Area 1 in Mozambique. The Lagosta-2 appraisal well encountered 777 total net ft of natural gas pay in multiple zones. The well was drilled to a depth of 14,223 ft in water depths of 4,813 ft. The partnership plans to preserve the Lagosta-2 well for future utilization during its planned drillstem testing program in the Windjammer, Barquentine, and Lagosta complex. Once operations are complete, the Belford Dolphin deepwater drillship will be mobilized to drill the Lagosta-3 appraisal well.

Kenya’s Block 10BB Spuds Africa Oil Corp. and Tullow Oil spud their Ngamia-1 well on Kenya’s Block 10BB, located in the Lokichar Basin, part of the East Africa Rift system. The well will be the first well drilled on the block since Africa Oil and Tullow became partners and marks the start of a multi-well drilling program on Block 10BB and adjacent blocks.

South Sudan Signs First Oil Deals South Sudan signed its first oil deals with foreign nations in mid-January, inking agreements with Chinese, Indian, and Malaysian firms, officials said according to a Dow Jones Newswire report. The deals replace contracts signed with Khartoum and cover oil production in the two key petroleum states of Unity and Upper Nile. China, also signed several cooperation deals with South Sudan on January 13 during a visit by Li Yuanchao, a senior member of China’s ruling Communist Party. The agreements signed were

for economic and financial cooperation as well as a training agreement between China’s staterun CNPC and the South’s oil ministry.

San Leon Progresses Tarfaya Project San Leon Energy established connectivity between its two test wells in its Tarfaya Oil Shale project in Morocco. The company said that injection water was observed in three wells, including pilot Well A and Well B drilled as part of the pilot project, and the pre-existing Star 12 core hole. The company performed several transmissivity and static formation pressure tests to identify the origin of the water which confirmed connectivity between the two pilot test wells which are about 10 meters apart. San Leon went on to say that the water samples suggest that the water from the deep permeable zone is similar to the shallow aquifer. The water contains primarily sodium chloride (78-91% of dissolved solids by weight), with small amounts of magnesium, calcium, potassium, sulfate, and nitrate. Despite establishing hydraulic connection between the two pilot wells, the company has decided not to risk contaminating the shallow water aquifer. Further analysis will be performed prior to resuming operations either at the same location or at an alternative site.

gas discoveries; Gazelle, Hippo-1, Bubale, and Addax, all located in water depths of 50 to 100 meters. These discoveries are assessed to have mean contingent resources totaling 50 million barrels of liquids and 396 Bcf of gas. Rialto is moving to develop and commercialize the Gazelle field later this year. In addition to the development opportunities which exist within CI-202, the company has identified an exciting inventory of exploration prospects and leads which will be the subject of future drilling. Toward its move to commercialize the Gazelle field the company submitted its Field Development Plan to the government and has received approval; it will commence with the drilling of two development wells during Q1. Initial production from the field is planned for Q4 2013 at 8,000 bpd of liquids and 100 Mmcf/d of gas. To facilitate commercialization of Gazelle’s gas resources, the company has recently executed a gas sales MoU with the government. The MoU contains the essential terms for a final, binding gas sales agreement for deliveries of gas of up to 100 Mmcf/d. The gas sales agreement is planned to be executed ahead of the Final Investment Decision for the Gazelle field in mid-2012.

Total Picks up Two Mauritanian Blocks At the end of January, San Leon announced that it hadcompleted the acquisition of 608 line km of high density 2D seismic data on the Tarfaya License. The data was acquired by the company’s wholly owned subsidiary, NovaSeis. The survey was acquired across the J North prospect and adds to the existing 2,289 line km of existing 2D seismic across the license. The Netherland, Sewell & Associates 2008 CPR placed 156 million barrels of recoverable prospective oil resources in the J North prospect with upside potential of more than half a billion barrels.

Rialto’s Cote d’Ivoire Survey Complete Following the announcement that the International Finance Corp. would be investing approximately $20 million in support of drilling operations, Rialto Energy completed its block-wide full-fold 3D seismic survey over Block CI-202 offshore Cote d’Ivoire. The company said that the processing and interpretation of the newly acquired data is expected to begin shortly and will provide Rialto with a full suite of 3D data over the entirety of Block CI-202. Block CI-202 covers an area of 675 sq km and contains four significant under-appraised oil and

Total signed two exploration licenses with the Mauritanian government that gives it a 90% interest and operatorship in the country’s ultra deepwater Block C 9 and Block Ta 29 onshore in the Taoudeni Basin. Maruritania’s state-run SMH will hold the remaining 10% in the blocks. Block C 9 is located approximately 140 km offshore western Mauritania, covering an area of more than 10,000 sq km, in water depths ranging from 2,500 to 3,000 meters. Block Ta 29 is located in the Saharan desert, 1,000 km east of Nouakchott and north of Block Ta 7 where Total is already conducting exploration activities. For both blocks, a seismic acquisition campaign is planned as the first phase of the exploration program.

Sudan’s Licensing Round Begins The data room containing information on the six exploration blocks put up on offer by Sudan opened on January 15, with international oil companies gathering to study the available information. Interested firms received a briefing on each of the blocks on offer. Sudan is offering blocks bordering Egypt, in Darfur, onshore and offshore along the Red Sea, south of Khartoum, and in eastern Sudan. Those blocks are 8, 10, 12B, 14, 15, and 18.

Petroleum Africa February 2012

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Africa at Large Over 150 foreign and local industry representatives as well as government officials gathered in Khartoum to begin the process of narrowing down which blocks hold the most potential. Once bids are submitted for the blocks it is expected that winners will be announced in May.

(MIGA) suspending a $225-million political risk insurance policy on the vessel. It is not clear how significant the suspension of the political risk insurance has been to the operation of the FPSO and its subsequent sale.

Meanwhile, the government expects a substantial jump in production in the coming year, with an increase to 180,000 bpd from the current 115,000 bpd. The country will use advanced technologies to improve its recovery rates according to Azhari Abdalla, director general of the Oil Exploration and Production Administration (OEPA), speaking at an investor conference.

The Sierra Leone Petroleum Directorate, pursuant to Section 30(1) and 32(2) of the country’s Petroleum Exploration and Production Act 2011, is launching a licensing round that will cover nine blocks totaling about 21,242 sq km in acreage.

Abdalla said the increase would mainly come from Block 6 adding 40,000 bpd, while Blocks 2 and 4 would add 15,000 bpd, and Block 17 around 10,000 bpd.

Circle Completes Moroccan Seismic Program Circle Oil completed its 2D and 3D seismic acquisition program in the Lalla Mimouna and Sebou permits in Morocco’s Rharb Basin. A total of 154 sq km of 3D seismic data with a 12.5-meter bin size were acquired. In addition, 22 line km of 2D seismic data were acquired in the Sebou block. Circle said that the acquisition parameters and shooting techniques were similar to those employed very effectively in the previous 2D/3D survey, completed in the Sebou permit in 2007/2008, generating the targets for the drilling programs undertaken in 2008/09 and 2010/11, during which 10 successful wells were drilled. Processing of the acquired data has now commenced and preliminary results indicate the presence of both expected, and a number of additional potential targets for drilling, subject to further interpretation, in the forthcoming drilling campaigns in the Rharb permits. The interpretation of the data is expected to be completed by the end of the H1 2012.

Jubilee Partners Buy Kwame Nkrumah FPSO Ghana’s Jubilee Oilfield partners Tullow Oil, Kosmos Energy, Anadarko Petroleum Corp., GNPC, and Sabre Oil bought the FPSO servicing the field’s production, valued at $750 million. The partners bought the FPSO despite the World Bank’s Multilateral Investment Guarantee Agency

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Petroleum Africa February 2012

Sierra Leone Puts Acreage on the Table

Sierra Leone’s 2011/2012 Petroleum Bid Round offers Blocks SL-4A-10, SL-7A-10, SL-7C-10, SL-8A-10, SL-8B-10, SL-9A-10, SL-9B-10, SL10A-10, and SL-10B-10 to interested bidders. The bid round commenced on December 29 and parties interested in submitting bids must have them in by March 30. About 5,800 line km of reprocessed 2D seismic, 3,200 sq km of 3D seismic data covering some of these blocks, well information, and regional interpretation are available for purchase from the offices of seismic firm TGS. Other bidding documents and details of the process and criteria for evaluation of bids are obtainable from the Petroleum Directorate. The Sierra Leone government reserves the right to withdraw the bid round and is not bound to choose the highest bidder.

Cameroon Plans for Crude Boost Daily crude output in Cameroon is expected to rise by about 59% by the end of 2012 as a result of the development of new fields, according to Bernard Bahiya, the director of production at the country’s state-run SNH . New oil fields, notably Dissoni, will contribute to the increase in daily oil output from the current 63,000 barrels to 100,000.

African Petroleum Gains More Acreage in West Africa African Petroleum’s wholly-owned subsidiary, African Petroleum Cote d’Ivoire, entered into an agreement with state-run firm Petroci to acquire one offshore exploration permit covering Block CI-513. The block is located in the western offshore area of Cote d’Ivoire and covers a total surface area of 1,440 sq km. African Petroleum will hold the block with a 90% interest and operatorship. Petroci will hold the remaining 10%.

The company’s exploration program in Cote d’Ivoire will target deepwater Upper Cretaceous submarine fans, which are considered to have similar high impact potential as discoveries in the Jubilee Oilfield in Ghana and the Mercury discovery in Sierra Leone.

SouthWest Energy Expands Ethiopian Position SouthWest Energy signed a PSA with the Ethiopian government for exploration of oil and gas in the Gambella region in southwestern Ethiopia. The PSA gives the company rights to conduct exploration operations on a block that covers approximately 17,000 sq km along the border with South Sudan near a field that holds an estimated 900 million barrels of proven reserves. The terms of the Gambella PSA include an obligation to complete 4,000 km of FTG surveys and 500 line km of 2D seismic. These commitment activities are intended to occur during the first exploration period, which is scheduled to last four years.

Aminex Updates Ntorya-1 Drilling Aminex Plc spud the Ntorya-1 exploration well in the Ruvuma Basin onshore Tanzania on December 22, with its target interval at approximately 1,800 to 1,900 meters depth which was expected to be reached by February. The well is designed to test the high quality Basal Tertiary and Upper Cretaceous sands previously encountered in the Likonde-1 well, 14 km to the north. Aminex estimates that the Ntorya prospect has a probability of success of around 20%, with mean recoverable resource potential of 100 million boe.

TVI Pulls out of Niger Niger will have one less oil and gas explorer in its oil and gas arena as TVI Pacific Inc. decided not to participate in the second exploration phase of the Tenere block with partner CNPCIT. The decision was made after analyzing the final well data and reports from the Facai-1 exploration well drilled in August 2011. The company has withdrawn entirely from the contract area.

Vanoil Receives Extension on Kenyan Blocks Vanoil Energy Ltd. reported that Kenya’s Ministry of Energy accepted its request for an 11-month extension of the initial exploration period for the company’s 100% owned blocks 3A and 3B.


The granting of the extension is conditional upon Vanoil meeting additional PSC commitments including acquiring an additional 25 sq km of 3D seismic to increase the seismic program to 75 sq km, increasing surface and training fees, and drilling one well. Additionally Vanoil is required to provide a 50% bank guarantee and 50% parent company guarantee.

combating money laundering and terrorism financing, to promote compliance with international norms in respect to anti-money laundering and terrorism financing, and to provide assurance to the international community about the country’s resolve to fight the menace.

Spectrum’s Namibian Shoot Underway Ghana Ready for Corruption Fight The advent of oil production can bring an increase in corruption in some countries and according to a report by Ghana’s Financial Intelligence Center (FIC), set up in 2010, the West African country will not be spared. The FIC said that oil production will fuel money laundering and illicit financial transactions as the country’s economy expands. In January the FIC, under the Bank of Ghana, issued guidelines for anti-money laundering and the fight against the financing of terrorism. The guidelines laid out by the FIC are designed and aimed at achieving three key objectives: to provide clear guidance to bank and non-bank financial institutions to the laws relating to

Spectrum, in partnership with CGGVeritas and Namibia’s state-run NAMCOR, commenced a new 2D multi-client seismic survey covering the deepwater Orange Basin, offshore Namibia. The program includes the acquisition of around 7,000 km of long offset data covering both held and open blocks in the Orange Basin. A good level of prefunding has been obtained from companies to provide support for the program. Seabird Exploration is providing acquisition services through its Northern Explorer vessel which has recent experience operating in Namibian waters. The data will be processed through full pre-stack time migration and include added-value products such as angle stacks and AVO products. Due to the frontier nature of the area, Spectrum will also be offering a ‘Fast Model’

Pre-Stack Depth Migration (PSDM) sequence, provided as part of the standard deliverables for the project. Final deliverables are expected to be available in June 2012.

EMAS Scores Contracts in West Africa and Asia Pacific EMAS announced that it has won two contracts covering Asia Pacific and West Africa worth up to $120 million for the group. EMAS subsea construction division, EMAS AMC, was awarded a variation order for additional SURF (subsea, umbilicals, risers, and flowlines) installation work. The scope of work, worth approximately $13 million, will involve the installation of mooring lines offshore West Africa.

Kosmos’ Footprint in Cameroon Increases US independent Kosmos Energy Ltd. and state-run oil concern SNH signed an agreement authorizing Kosmos to explore for oil in Cameroon’s Fako Basin. Kosmos Energy Cameroon SA will invest an estimated $17 million to explore within the 1,289 sq km block over a period of six years.


Africa at Large Kenya Offshore Seismic Duo Complete Pancontinental and partner BG Group (operator) completed their 3D and 2D seismic survey acquisitions on Blocks L10A and L10B offshore Kenya. Pancontinental said the 3D seismic survey was carried out in the eastern portion of the blocks commencing mid-November 2011, followed by a 2D survey in the western portion of the blocks. The surveys cover 10 strong leads identified under a ‘fast track’ exploration program by project operator BG Group. The leads are in diverse geological ‘play’ types and some of the leads are on-trend and similar to the giant Mbawa prospect to the north in license area L8, where Pancontinental holds a 15% stake.

CAMAC Enters Gambia CAMAC Energy entered into an agreement with the Gambian Ministry of Petroleum on the provisional award of two offshore exploration blocks, A2 and A5, located in water depths of between 600-1,000 meters. CAMAC Energy will be the operator with an 85% interest in both blocks, which cover a total surface area of 2,666 sq km. Gambia National Petroleum Co. will be carried at 15% through first oil. The agreement sets forth the negotiated fiscal terms and work program for the two blocks, and the award is subject to submission of an Environmental Impact Assessment (EIA) and signing of final petroleum exploration licenses within 90 days.

Ophir Secures Eirik Raude for Equatorial Guinea Campaign Ophir Energy contracted the Ocean Rig drillship Eirik Raude to drill its Equatorial Guinea exploration campaign, scheduled to kick off in April including three firm wells plus one contingent well on Block R. The first well will be located close to the earlier Fortuna discovery and will test stacked objectives. Its primary target will be 541 Bcf of mean prospective resources in the Fortuna fan, but it will also test additional secondary exploration targets at other stratigraphic levels. The second well in the sequence will be Tonel-1, recently upgraded to 650 Bcf mean prospective resources, and the third well will be the Silenus East-1, which has 437 Bcf mean prospective resources. The final well location is currently being determined. A well located on the eastern lobe

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Petroleum Africa February 2012

of the Fortuna fan would in addition test the Viscata prospect with 354 Bcf mean prospective resources as a secondary target, while a well on the western lobe would test the Felix prospect with 470 Bcf mean prospective resources as a secondary target.

Guinea’s Sabu-1 Sees Another Delay Hyperdynamics Corp.’s Sabu-1 exploration well was drilled to a total subsea depth of 2,224 meters, putting the well near the top of Cretaceous age sediments. The next string of 13-3/8 inch casing was successfully set. Following retesting of the blowout preventer, the well was drilled to a depth of 2,304 meters. Drilling equipment problems were encountered, and drilling was suspended while repairs are being made. This is not the first delay Hyperdynamics has seen in drilling the Sabu-1 well; the company saw mechanical and technical issues in mid-December.

Dolphin Readies for Senegal Shoot Dolphin Geophysical and Senegal’s Petrosen reached an agreement which will have the seismic company acquire a 3D multi-client survey covering nearly 3,600 sq km offshore Senegal to commence in early March. Further, Dolphin Geophysical received a Letter of Agreement for additional 3D contract work and combined with the existing backlog and multi-client commitment, Polar Duke will have a firm backlog until the end of Q3 2012. Additional details will be disclosed as part of the Q4 earnings release on February 21.

Ethiopia’s South Omo Results Encouraging

Gravity data and seismic data from the adjacent Lake Nyasa suggest the presence of a thick sedimentary section with the potential to generate oil. The block covers an area of 1,934 sq km and has never previously been targeted for exploration. Gravity data over the area suggests the presence of a sedimentary section of sufficient thickness to allow for the generation of oil. While this area is a frontier exploration play it potentially shares certain geological similarities with the prolific Albert Basin of Uganda and Heritage’s recently awarded Rukwa PSA in Tanzania. Heritage expects to commence the work program with the acquisition of around 1,500 sq km high resolution gravity survey followed by the acquisition of 2D seismic.

Morocco’s Zag Survey Completed Longreach Oil and Gas Ltd. reported that the 2D seismic program across the Zag license was completed, reaching a total of 1,674 km, which is considerably greater than the amount required under the terms of the license. The program covered a regional grid of around 10 km spacing over the eastern half of the license and is the first of its kind in what the company believes is a highly prospective basin. The initial field processing of the seismic data has shown the configuration and fault trends of the basin. When the processing is completed, a comprehensive review of the Paleozoic Basin will be undertaken to assess the potential of a variety of plays, such as reefs in the Devonian, conventional reservoirs throughout the section, and an unconventional gas play in the Silurian shale section.

Chinese firm BGP Geo Services Plc, on behalf of Tullow Oil, delivered a significant seismic data report to Ethiopia’s Ministry of Mines which indicated the presence of some oil sources in the South Omo Valley, according to an Ethiopian business news report.

ERHC Moves on Chad Work Program

BGP will continue collecting seismic data over the next two months. Once the seismic is complete a determination on where to drill will be made based on the data collected.

The company is currently working to submit to the Chadian authorities the details and budget for its proposed work program for the first year of exploration.

Heritage Scores another Tanzanian PSA

The submission will also include an overview of the rest of the work planned for the initial exploration term. The timeline that guides the exploration program will start to run following requisite administrative approvals and authorizations to be issued by the Chadians.

Heritage Oil expanded its position in Tanzania with the award of a new PSA for the Kyela block, holding a 100% stake, in the northern onshore area of the Lake Nyasa Basin.

Following evaluation of available data related to ERHC’s three blocks in Chad, BDS 2008, Chari Ouest III, and Manga, the current indications are that its initial focus will be on the first two blocks.


Around the World

AMERICAS Magellan Makes Discovery in Montana Magellan Petroleum Corp., through its whollyowned subsidiary, Nautilus Poplar LLC, completed its EPU 117 well within Montana’s East Poplar Unit. It is the latest producer in the Amsden formation at a depth of approximately 4,800 ft. The well has just recently been completed and is currently producing approximately 106 bpd with no appreciable water on a 10/64th choke with a flowing tubing pressure of 95 psi.

Gas Shows Identified in Canada’s Montney Well Blackbird Energy Inc.’s Donnybrook Energy Bigstone Hz 15-32-60-22 W5M well in Canada encountered 9,003 ft of high quality Montney reservoir with strong gas shows and excellent penetration rates. The reservoir encountered is comparable to the Montney interval that was successfully completed in Blackbird’s first Bigstone Montney well. The 15-32 well is currently flowing natural gas, natural gas liquids and hydraulic fracture fluids undergoing clean up operations after completion of the 23-stage hydraulic fracture operation. During the hydraulic fracture operation 460 tons of fracture propant and fluids were placed. Donnybrook is currently waiting on surface approval to commence construction of two drilling pads that will facilitate the drilling of up to six more wells. Surveys have been completed for five of these development locations. Construction of the first surface lease is expected to be complete by mid-February and Donnybrook has informed Blackbird they have located a rig suitable to commence drilling the next well as soon as the third week in February.

US District Court Judge Carl Barbier ruled that BP must indemnify Transocean for compensatory damages related to pollution that did not originate on or above the surface of the water, even if the claim is the result of Transocean’s strict liability or negligence. Transocean had asserted that BP was required to do so under their drilling contract for the Deepwater Horizon rig. BP did not contest it was required to indemnify Transocean for some claims, but disputed the scope of indemnity. Barbier said that BP is not obligated to fund Transocean’s defense against third party claims at this time.

AUSTRALASIA Chevron Makes Discovery in W. Australia Chevron Corp. announced a natural gas discovery by its Australian subsidiary in the Exmouth Plateau area of the Carnarvon Basin, offshore Western Australia. The Satyr-3 well, located 113 miles north of Exmouth in the WA-374-P permit area, encountered approximately 243 ft of net gas pay. The well was drilled in 3,688 ft of water to a depth of 13,369 ft. Chevron’s Australian subsidiary is the operator of the WA-374-P permit area and holds a 50% interest, with ExxonMobil and Shell each holding 25%.

Landslide Halts Work in Papua New Guinea A landslide on January 24 has halted the Papua New Guinea (PNG) LNG project, according to ExxonMobil affiliate Esso Highlands Ltd. The landslide covered the Hildes area in the Southern Highlands. The $16-billion project is expected to begin production in 2014, projected to double PNG’s GDP.

Lucas Energy Spuds Well in Texas Lucas Energy, Inc. announced that it spudded the Hagen Ranch Unit No.1HST well in Gonzales County, Texas. The Hagen Ranch No.1HST well is a new lateral from an old horizontal well in the Austin Chalk formation and is being drilled with JV partners. Production and testing should commence in February.

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Unconventional Wells for Australia’s Cooper Basin

BP to Indemnify Transocean in Macondo Spill

Strike Energy Ltd. will participate in two unconventional evaluation wells in Australia’s Cooper Basin during Q1. The Marsden 1 well will test the Permian sections of the Battunga Trough within PEL 95 and is scheduled to spud in February. The Davenport 1 well will follow immediately afterwards and will test the Permian sections of the Milpera Trough within PEL 94.

BP is required to indemnify Transocean for compensatory damages related to the Macondo oil spill, but a US federal judge ruled that Transocean would still be liable for punitive and civil damages related to the incident.

The wells, both operated by Strike’s partner Beach Energy, will provide comprehensive data on Permian coal and shale formations and will enable the company to refine its resource model and

Petroleum Africa February 2012

develop the next stage of the evaluation and development program for the resource.

New DNV Deepwater Tech Center in Singapore DNV opened a new Deepwater Technology Center in Singapore to focus on three core sectors within the country. Managing director of the center Alex Imperial said: “The first of these sectors includes subsea, umbilicals, risers, flowlines, and pipelines. Secondly we will focus on floating systems, including production and drilling. Finally, it will work within the fields of drilling and wells. Our ambition is to have 55 highly qualified professionals at the center five years from now.” The Deepwater Technology Center will collaborate closely with the industry, universities, and governmental R&D institutes. With the facility, Singapore will become DNV’s first and only deepwater hub in the Asia-Pacific region.

EUROPE/CIS ENI Makes Discovery in Barents Sea ENI announced that it made an oil and gas discovery in the Barents Sea, about 200 km off the Norwegian coast. The Havis 1 NFW exploration well, drilled at a depth of approximately 1,750 meters, revealed between 190 and 315 million barrels of recoverable oil and between 4 and 6 GScm of gas. Havis field represents the second major success in a row obtained by the company in the PL 532 license, after Skrugard’s 2011 discovery drilled just 7 km away. Recoverable oil reserves unveiled in the PL 532 license area, now amount to around 500 million barrels. ENI plans to carry out further exploration activities in the Barents Sea this year, where the company will drill the Bønna prospect in the PL 529 license area and the Salina prospect in the PL 533 license area. In autumn 2012, ENI will also start drilling 22 production wells for the Goliat project.

Romania’s 1st Deepwater Well Spuds ExxonMobil Exploration and Production Romania Ltd. (EEPRL) and Petrom started exploration drilling on Domino-1, the first deepwater exploration well in the Romanian sector of the Black Sea. The Domino-1 well is located in the Neptun block, 170 km offshore in water about 1,000 meters deep, and will be drilled using


state-of-the-art industry technology. The well is being drilled by the world-class, sixth generation drillship, Deepwater Champion, which recently transited to Romanian waters after completing its drilling program offshore Turkey. Drilling operations are expected to take about 90 days.

survey duration is estimated to be a minimum of 70 days and the estimated contract value is around $14 million, depending on final survey design.

MIDDLE EAST Iraq Delays Bid Round

FoundOcean Wins Two More Jackets in the North Sea FoundOcean won two North Sea pile grouting contracts for a total of five jacket structures, the installation of which is due to start in H1 2012. The contracts were awarded as FoundOcean and Saipem enter the second year of a three-year agreement between the two companies. The first award consists of pile sleeve grouting for three jackets as part of planned extension works. Two jackets each have four legs and three pile sleeves per leg, and the third jacket is a four-legged steel structure with one pile sleeve per leg. The three-jacket project is located in the southern part of the Norwegian North Sea in water depths of between 70 and 80 meters. A 10-man crew will be mobilized to undertake the grouting operations. The second award consists of two four-legged jackets: the first has two pile sleeves per leg, and the second has one pile sleeve per leg. The field is located in the UK sector of the Central North Sea at water depths of between 75 and 82 meters.

ENI Adds New Barents Sea Exploration License ENI was awarded a new exploration license (PL657) in the Barents Sea, located just east of the Goliat field, by the Norwegian Ministry of Petroleum and Energy as part of the 2011 APA. The area of the license covers 431 sq km in water depths ranging from 400 to 450 meters. In 2013, the Italian firm will be the first operator to produce oil from the region with production commencing at the Goliat oil field. ENI will also be the only company other than Statoil, to be involved in the recent Skrugard and Havis oil commercial discoveries.

Statoil Tags RXT for Survey in Norway The seismic company Reservoir Exploration Technology ASA (RXT) received a contract award for an Ocean Bottom Seismic (OBC) survey for the Kvitebjørn field in Norway for Statoil, to be completed in Q2 2012. The main objective is to improve structural interpretation and achieve better illumination of fault planes to improve fault interpretation. The

Iraq postponed its fourth oil and gas bid round to April from its previously announced date in March. The auction will see 12 exploration blocks being offered to international companies. The head of the Oil Ministry’s Petroleum Contracts and Licensing Directorate, Abdul Mahdy Al-Ameedi, told Dow Jones that the delay was due to company requests to allow for more time to study the conditions of the licensing round and the draft contract model. The official said that 37 foreign firms have paid participation fees and bought data packages for the 12 blocks. About 46 energy companies qualified to participate in the bidding round, which is projected to add 29 Tcf of gas and 10 billion barrels of oil. Among those qualified for the auction are BP, Shell, ExxonMobil, Lukoil, Total, the China National Petroleum Corp. (CNPC), ENI, Occidental Petroleum Corp. (OXY), and Chevron. Seven of the blocks are believed to contain natural gas, and five are believed to contain crude oil. The blocks range in size from 5,500-9,000 sq km, officials said.

to block the Strait of Hormuz. Although the EU said it was not seeking a full-scale embargo, payments could be made difficult as a result of the stringent banking conditions and US pressure on any bank that continues to deal with Iranian matters. Iran also sent a warning to Saudi Arabia after the world’s largest producer said it would boost output by 2.6 million bpd if needed to compensate for curbed Iranian exports. Saudi Oil Minister Ali Al-Naimi said the world will not permit Iran to close the Strait of Hormuz. Analysts don’t believe the blockade will actually take place and the threat was more like a last bullet. While the threats may not actually result in action, the mere mention of a blockade of the Strait has had crude markets in a volatile swing which in turn has affected gas prices in the US, despite the fact that the majority of Iranian crude heads east to Asia. Over January gasoline prices in several major US cities jumped from $0.25-$0.45 per gallon.

Iraq Develops New JV with Shell and Mitsubishi Iraq has partnered with Royal Dutch Shell Plc and Mitsubishi Corp. to capture and process high volumes of gas flared from its southern oil fields, expected to start production this year. A senior Iraqi oil ministry official told Dow Jones that the country was expecting to produce about 50 Mmcf/d in 2012.

ENI, Repsol Give up on Saudi Saudi Arabia’s state-owned Saudi Aramco invited foreign companies to explore for gas in the country’s Empty Quarter in 2003-2004, and two players have since officially pulled out. The JV established by oil heavyweights Saudi Aramco, ENI, and Repsol, saw the Italian and Spanish firms making a departure.

A tender could be held soon to build an LNG facility near Iraq’s main oil export terminal Basra. Under the JV agreement, Iraq will supply the Basra Gas Co. with at least 2 Mcf/d. The 25-year JV is made up of state-owned South Gas Co. holding 51%, Shell 44%, and Mitsubishi a 5% stake.

The project, also known as Rub Al-Khali, was reported to be on stringent terms and would prove difficult to turn a profit from even if gas was discovered.

Spectrum Gets Extension in Lebanon

The JV established between Saudi Aramco and Royal Dutch Shell is currently the only team to find substantial quantities of gas in the region; however, the sulphur-rich gas could be too costly to develop.

Iran Faces EU Sanctions The European Union (EU) released new sanctions for Iran on January 24, including a planned oil ban effective July 1 as well as banking and shipping restrictions as a result of Iranian threats

Officials from the Lebanese Ministry of Energy and Water signed a contract extension with Spectrum for the licensing of the highly successful LEB-02 and EMED-00 Multi-Client seismic datasets offshore Lebanon. The extension includes an additional five years on top of the existing arrangement, and Spectrum announced that it will be reprocessing the LEB-02 seismic survey in time for the forthcoming Lebanese bid round expected during H1 2012. Reprocessing of the LEB-02 survey is due to commence in early 2012 with the final products scheduled to be available for purchase on a multi-client basis in Q1 2013.

Petroleum Africa February 2012

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Downstream News Kenya and South Sudan Sign Pipeline Agreement South Sudan and Kenya have signed an agreement to build the much talked about pipeline to connect South Sudan’s oil fields with the Kenyan Port of Lamu, the Kenyan government said in a statement. “The pipeline will be developed through Kenyan territory and will be built and owned by South Sudan,” said the statement released on January 25. There was no timeframe given for the project; however, South Sudan’s deputy petroleum and mining minister Elizabeth James Bol said that the project would take 11 months to complete. The pipeline to Kenya became increasingly bandied about when South Sudan seceded from the north, but at the time South Sudan’s president Salva Kiir said that the project would put an undue strain on the newly-formed country’s budget. The row between the north and south over transit fees for the crude shipped to the north for export appears to have tipped the scales toward the pipeline. The two sides have been in negotiations but there has been no luck in reaching an equitable solution for both sides.

Taiwan’s CPC Corp. and Japanese companies Chubu Electric Power and Toho Gas signed agreements with Japanese company Inpex and France’s Total. They build on existing offtake agreements totaling four million tons per year involving five major Japanese gas utilities.

Ophir Sees Milestone Agreement on Equa G’s LNG

Energy Partners LP, to purchase an additional two million tons of LNG over a 20-year period from the Sabine Pass terminal in Louisiana. In October 2011, BG Group announced it had signed a fully-termed sale and purchase agreement (SPA) with Sabine Liquefaction for the purchase of 3.5 mtpa of LNG over a 20-year period. The additional volumes have been incorporated into the SPA.

Ophir Energy saw a milestone agreement reached with the government of Equatorial Guinea relating to the commercial structure of a second LNG train. The government and all partners on Blocks O, I, and R (Ophir and GEPetrol) announced on January 17 that further principles relating to the commercial structure of the second LNG train in Equatorial Guinea have been agreed to.

Construction of the liquefaction facilities at Sabine Pass are scheduled to begin this year, with an initial two trains. Construction of the second phase, an additional two trains, is expected to commence in 2013, with exports from the initial phase to start as early as 2015, and for the second phase from as early as 2017.

The partners are now moving to the next phase of the project, which will determine the development plan, plant size, and timing. One option being reviewed by the partners would result in the Block R final investment decision being made by the end of 2012, with first LNG being targeted for 2018.

BG Group is also pursuing an expansion of the Lake Charles LNG terminal to provide natural gas liquefaction services. The US Department of Energy has authorized the terminal to export up to 730 Bcf of natural gas per year to countries that have a free trade agreement in place with the US. These purchases, once made, will make the US a net exporter of LNG.

Engen Goes Green The situation between the two came to a head with Khartoum confiscating oil exports from the south and South Sudan in turn deciding to shutin its production rather than let Khartoum “steal” it. By January 25 South Sudan was close to having half of its production shut-in and was looking to have the remaining shut-in over the following week or so.

Algeria to See Refinery Restart The restart of the Adrar refinery in Algeria was imminent at press time. The refinery had been out of action for several months, reportedly due to a dispute over profitability. The restart comes after the owners, CNPC and Sonatrach, signed a new contract in January. The new contract changes the terms and make the plant more profitable for the Chinese firm. Adrar is Algeria’s smallest refinery with an annual output capacity of 600,000 tons.

Ichthys Moves Closer to Green Light The Ichthys LNG project on Western Australia’s northern coast moved closer to a final go-ahead after the partners finalized three new sales agreements. The new agreements bring the total output sold from the planned LNG facility to 8.4 mtpa. The sales agreements include the first binding contract with Taiwan, which opens up a new market for LNG exports.

16

Petroleum Africa February 2012

In a move toward becoming more sustainable, South Africa’s Engen has purchased two new “green” vehicles. Engen’s pursuit of a greener bulk transport fleet and operation was boosted with the purchase of two environmentally friendly vehicles from Scania. According to Engen transport operations manager Llewellyn Snyman, the bulk transport vehicles both contain Euro 4 spec engines, which run on ADO 50 ppm diesel. They also sport exhaust gas recirculation and particulate filter technology which translates into fuel consumption savings. “These are the first vehicles with reduced emissions technology to be owned by Engen. Not only do they offer great fuel consumption and advanced technology but they also have safety features such as driver airbags and pre-tension seat belts, which are unique in the market,” said Llewellyn. These vehicles will be operating out of Engen’s Cape Town and Langlaagte terminals. Additional green vehicles will be purchased in accordance with the company’s fleet replacement program and roll-out of ADO 50 ppm nationally.

BG Purchases Exta LNG from Sabine Pass BG Group reached an agreement with Sabine Pass Liquefaction LLC, a subsidiary of Cheniere

Honeywell Unit Wins Petchem Gig in South Korea Honeywell unit, UOP LLC, has been selected by Samsung Total Petrochemicals Co. Ltd. to provide technologies for the production of key petrochemicals and high-quality diesel and jet fuel at its complex in Daesan, South Korea. The integrated aromatics complex will be the first to employ the latest energy-efficient designs from UOP, allowing Samsung to reduce energy consumption by 33% and offering significant savings in greenhouse gas emissions compared with earlier designs. UOP will provide engineering design, technology licensing, catalysts, adsorbents, equipment, and technical service for the new units, which are expected to start up in 2014. The UOP Distillate Unionfining and Merox processes will be utilized to produce 2.6 million metric tons per year of high-quality distillate products, including diesel and jet fuels. The facility will use several integrated UOP technologies to produce one million metric tons of para-xylene and 500,000 metric tons of benzene per year. Para-xylene and benzene are key aromatics used in the production of synthetic fibers and resins. According to WorldPET, a consultant for the global para-xylene industry, the demand for para-xylene in northeast


Asia will increase by an estimated 80% over the next five years.

Chad Suspends Refinery Agreement with CNPC The government of Chad has suspended its agreement with CNPC for its oil refinery and says it will renegotiate the agreement. The 20,000 bpd refinery produces gasoline and other fuels for the domestic market at prices set by the government, which refinery officials say are too low to cover its crude costs. The pair have been having issues over the profitability of the refinery that came online in June 2011. CNPC suspended production at the refinery in September, after less than three months in operation, saying that the price agreed with Chadian authorities for supplies was driving it into heavy losses. The government at the time, in an effort to make the refinery more profitable for the Chinese firm, raised the price of petrol. “Despite the concessions granted to them by Chad authorities over fuel prices, the Chinese continue to run us around,” Mahamat Allahou Taher, Chad’s minister for trade and industry was cited by Reuters as saying. “An inter-departmental committee will be set up to renegotiate a new agreement,” he added. The disruptions have caused fuel shortages in the country and petrol is now being rationed.

Petrol Runs Short in Egypt Egypt is seeing some petrol shortages at stations around the country according to reports. In an AFP report one Cairo resident said that he had been to over 10 petrol stations and they were all out of fuel. The shortages in the capital city sparked rumors of price hikes on motorists’ subsidized fuel leaving some residents in a panic. The Oil Ministry said on January 16 that it was pumping 21.5 million liters of petrol daily, with over one-third of that going into the Cairo governorate alone. The Ministry denied plans to raise the cost of fuel. Authorities blamed speculators and smugglers for the crisis. “What we are witnessing is an artificial crisis caused by rumors by some people who have an interest in making profit,” said Planning and International Cooperation Minister Fayza Abul Naga. At press time, the shortage appeared to be under control.

Asia Provides Host of CFB Contracts for Foster Wheeler Foster Wheeler’s Global Power Group has been awarded more than a few contracts in various

Asian countries to construct circulating fluidizedbed (CFB) steam generators. In South Korea the company has been given a limited notice to proceed by GS Engineering and Construction for the design of a CFB steam generator for the Green Energy Center BTO (Build, Transfer, Operate) Project of Daegu Metropolitan City. The company will design one CFB steam generator for the project. The CFB steam generator will be designed to burn 380 tons a day of refuse derived fuel (RDF) while meeting applicable environmental regulatory requirements. Foster Wheeler hopes to finalize the contract and to receive full notice to proceed assuming all negotiations with Daegu Metropolitan City are complete in

Q1 2012, at which time the full value of the contract would be booked. Commercial operation of the new steam generator is scheduled to begin by the end of 2014. In Vietnam the company was awarded a contract by Hyundai Engineering and Construction for the design and supply of 4 x 250 MWe (net megawatt electric) CFB steam generators for the Mong Duong 1 Thermal Power Plant for Vietnam Electricity (EVN). Foster Wheeler will design and supply the 4 x 250 MWe clean burning CFB steam generators and provide site advisory services for the project. The CFB steam generators will be designed to burn Vietnamese anthracite


Downstream News coal while meeting applicable environmental regulatory requirements. Commercial operation of the new steam generators is scheduled to begin Q2 2015. The company has received full notice to proceed on this contract. The company scored another contract out of China for the design and supply of one CFB steam generator from Yuen Foong Yu Paper Mfg. (Yangzhou) Co. Ltd. Foster Wheeler will design and supply the 50 MWe CFB steam generator plus auxiliary equipment and provide site advisory services for the project. The CFB steam generator will be designed to burn coal blended with paper sludge while meeting applicable environmental regulatory requirements. Full notice to proceed on this contract has been received and commercial operation of the new steam generator is scheduled for Q4 2013.

Zambia Turns to Angola for Petroleum Products Zambia is looking to Angola to meet some of its refined petroleum product needs. The country plans to begin importing petroleum products from neighboring Angola to help it decrease the amount of its budget spent on fuel. Energy secretary George Zulu told Reuters that Angola was willing to supply Zambia with petroleum. Previously Zambia’s petroleum product supplies had come from the Middle East. Zulu said a technical team led by the minister of energy would travel to Angola to discuss the details of importing finished petroleum products. “We have been looking at ways of bringing down the cost of fuel and so far it seems the answer lies in importing our fuel from neighboring Angola,” he added.

Construction at Kribi Plant Nears Completion

The deal was signed during Nguema’s visit to Swaziland for bilateral talks with Mswati III. The oil transaction was the focal point of the meeting.

The construction of the 216-MW Kribi gas-fired power plant in Cameroon that began in Q1 2010 will be finished by 2013, according to Jean David Bile, general manager for Cameroon’s only power company, AES-Sonel.

CEPA Wants Price Mark for Ghanaian Fuel Ghana’s Center for Policy Analysis (CEPA) has advised the National Petroleum Authority (NPA) to come up with a “reference price mark for crude oil” to serve as a benchmark for future fuel price adjustments. “The NPA should come up with a rule or a reference price mark for crude oil and say if prices of crude oil in the international market rise beyond this mark, we are increasing prices of fuel. If that happens, all of us will then use that price as a reference point, comparing and gauging when to expect an increment so that fuel price increments wouldn’t come as unexpected,” the executive director of CEPA, Joseph Abbey, said in an interview with the Daily Graphic. The initiative is expected to help prepare people for the adjustments and thus lessen the burdens that the sudden upward adjustment of petroleum product prices normally triggers nationwide. Abbey said that it was only through this strategy that Ghanaians could begin to appreciate the dynamics that inform the intermittent upward adjustment of fuel prices. The advice from CEPA follows the recent outcry over the announced 15-30% increment in the price of petroleum products that became effective at the end of December.

There is also a possibility of constructing a pipeline between the two countries which the technical team will explore while it is in Angola. “We will start with lifting finished products and then move on to crude oil, which we plan to process in Zambia,” Zulu said.

Although the CEPA executive secretary does not foresee a total removal of government subsidy on petroleum products soon, he said “the debate that government should subsidize petroleum products in itself is empty unless we are able to clearly tell who benefits from these subsidies.”

Equa G to Supply Swaziland with Crude

“The 2012 Budget and Economic Policy Statement of the government did not include subsidies for petroleum products and we never also cared to ask for it. So if international situations weigh heavily against us, then we will have to pay more by way of increased fuel prices,” Abbey said.

Equatorial Guinea will be supplying Swaziland with crude oil in a deal entered into between its president, Teodoro Obiang Nguema, and King Mswati III of Swaziland. The Equatorial Guinean crude will be shipped to South Africa for refining into petroleum products before it

18

lands in Swaziland as the country has no refineries of its own.

Petroleum Africa February 2012

The project consists of the power plant and a 100 km 225 kilovolt double circuit transmission. Feedstock for the plant will be supplied from the offshore Sanaga-South gas field which is operated by state-run oil firm SNH.

Ghana Gas Plant to Break Ground Ghana’s first gas plant is almost ready for construction to begin according to Sipa Yankey, CEO of Ghana Gas Co. Yankey said that engineers working on the project are close to completion and construction will begin shortly thereafter. The $1.2-billion gas plant will be linked to the Jubilee Field. Speaking to ghanabusinessnews.com the CEO said that a lot of work had been done by the engineers to prepare the stage for the launch of the gas plant, adding that “engineers have almost completed their work and we are going to put up a first class gas plant for Ghanaians.”

Authentix/SGS Renew Partnership in Senegal Authentix saw its partnership with SGS for the fuel integrity program in Senegal renewed. The contract renewal was granted after a competitive tender process. Through this ongoing fuel marking program, Authentix and SGS have helped Senegal recover tax money that would have otherwise been lost to fuel fraud, ensure fuel quality for motorists, and protect the environment. Authentix and SGS combat the sources of fuel adulteration through the addition of Authentix technology to known adulterants such as kerosene and other low tax fuels which are often used to illicitly adulterate legal tax paid fuels. Authentix technology solutions power fuel marking programs globally, including the African countries of Cameroon, Kenya, Côte d’Ivoire, and Togo.


African Politics Sectarian Clashes Continue in Nigeria Violent attacks between Muslims and Christians in Nigeria are escalating and growing more vicious. Following an attack on a mosque on January 9, another mosque and Islamic school were attacked and set afire in the southern city of Benin. Police told news sources that one person was killed and 10 arrested. Throughout January southerners, who are mostly Christians or animists, have been the targets of deadly attacks by the Islamist Boko Haram group; in consequence southerners decided to retaliate. A BBC report said that 7,000 northerners were seeking refuge in police and army barracks in the city. The Nigerian Red Cross confirmed that they were registering northerners at police stations and army barracks. On January 23, attacks by Islamist insurgents in the northern Nigerian city of Kano left at least 178 people dead, a Reuters report said. But violence did not end in Kano as explosions struck two churches in the northern city of Bauchi just two days later. Witnesses said that the blasts completely destroyed one of the churches; fortunately there were no reports of casualties. As a result of the sectarian clashes, Nigeria’s president Goodluck Jonathan sacked the police chief Hafiz Ringim and six of his deputies on January 25. Jonathan approved Mohammed Abubakar as acting inspector general in an effort to reorganize the police force. Nigerian authorities have arrested 158 suspected Boko Haram members to date.

Egypt Could Lose US Military Aid Egypt could lose its $1.5 billion in military aid from the US if it does not stick to a democratic transition. Tensions between the US and the military government in Cairo are growing as the acting government cracks down on democracybuilding groups in the country. At least six Americans were prevented from leaving the country because they are part of what Cairo calls a criminal investigation into the activities of the International Republican Institute and the National Democratic Institute, two American-backed democracy-building groups inside the country.

Prior to the travel ban on the US citizens under investigation, US president Barak Obama warned Egypt’s leader, Field Marshal Mohamed Hussein Tantawi, that American military aid was contingent on Egypt satisfying new Congressional legislation requiring that Egypt’s military government take tangible steps toward democracy, a report in the New York Times said. Specifically referred to by Obama was the inquiry into the democracy-building groups with foreign financing. The Egyptian leader did not seem to take the warning seriously. The Obama administration made the warning public after the US citizens were banned from traveling out of Egypt saying, “It is the prerogative of Congress to say that our future military aid is going to be conditioned on a democratic transition,” Michael H. Posner, an assistant secretary of state responsible for human rights issues, said at a press conference in Cairo on January 26. This is the first time since military aid to Egypt began over three decades ago that it has been in jeopardy. The New York Times article said that Obama had the options of waiving Congressional approval if necessary in the name of national security; however, now Hillary Clinton, the secretary of state, is required to certify that Egypt is making democratic progress – carrying out “policies to protect freedom of expression, association and religion, and due process of law” – before releasing the aid this fiscal year.

Rival Fighters Agree to Ceasefire in Libya While international oil firms are busy putting their operations right and bringing production back online in Libya, fighting still continues. The fighting is not between the NTC and the traditional Muammar Qaddafi loyalist troops this time, but between rival fighters in the country. Clashes between rebel groups have left scores wounded and more than a few dead. Rival Libyan fighters clashed in towns south of Tripoli in January; however, the fighters have allegedly settled their dispute through a prisoner swap and agreed to a ceasefire. The fierce clashes saw Prime Minister Abdel Rahim Al-Kib, Defense Minister Osama Al-Juili, and Libyan mufti Sadeq Al-Gharyani visit the

area in a bid to stop the fighting. An AFP report said their presence helped broker a ceasefire.

Guinea Bissau’s President Dies The president of Guinea Bissau, Malam Bacai Sanha, died while being treated at a hospital in France, according to a statement from his office aired on a local radio station. Sanha, who has been in poor health since taking office in 2009, left his country in late November for treatment abroad. The nature of the president’s illness has not been made public, but he was thought to be suffering from diabetes. Under Guinea-Bissau’s constitution, the speaker of parliament, Raimundo Pereira, should now be sworn in as interim president with presidential elections proposed to take place in three months.

Germany’s Lackluster Support Could Hurt Potential Libyan Ventures Germany is investing throughout the continent, particularly in financing and implementing renewable energy technology in North Africa; however, the European country’s refusal to participate in the NATO-led air strikes that helped oust former Libyan ruler Muammar Qaddafi could hurt Germany’s chances at investment opportunities in the country. German Foreign Minister Guido Westerwelle will visit Libya to pledge support for the new government. He highlighted some issues that needed to be addressed such as disarming but also incorporating rebels into the army and establishing a constitution. Although the European country failed to help in the NATO actions, it has assisted more than 1,000 wounded people giving them treatment in German hospitals. Germany is also a renewable energy powerhouse, but it will be interesting to see if the new regime in Libya maintains a grudge against the European nation’s lackluster support during its revolution. The North African country, one of Africa’s largest oil producers, had difficulty establishing renewable energy avenues before Qaddafi’s ousting. And while the German-conceived Desertec Industrial Initiative continues to gain more speed across the region, implementation in Libya could prove difficult.

Petroleum Africa February 2012

19


Power & Alternatives Ethiopia Supplies Neighbors with Power Ethiopia has been planning to become the first African country to export renewable energy, but in the meantime, it is establishing vital transmission lines to supply its neighbors with power. The East African country began exporting 35 MW of electricity per month to Djibouti at a price tag of $1.5 million. Now the Ethiopia Electric and Power Corp. (EEPCO) has announced that the power transmission line connecting Ethiopia and Sudan would be completed by Q1 2012. The World Bank injected $41 million for the 230 kV transmission line which will span over 296 km from Bahir-Dar and Metema in Ethiopia to Gedaref, Sudan.

Cameroon to Hold Meeting for 100-MW PV Project Cameroon will hold meetings in February to discuss its plans for a 100-MW solar PV project. A source told Alternative Energy Africa that the government hoped to sign an agreement for the construction of the first 60 MW during the meetings. The project is ambitious particularly since the country only inaugurated its first solar village in June 2010, followed by Cameroon’s first high school to receive a kit of six solar panels costing about $13,899. Nearly 95% of its energy is generated via hydropower, garnering the second highest potential in Africa after the Democratic Republic of Congo (DRC). Questions remain such as the seriousness of such a big project when only small scale solar is presently in Cameroon, taking into account that nearly 80% of residents are without access to the grid. While the West African country is estimated to have greater solar resources than the entire state of California, funding for such a major scheme will be a significant obstacle.

Tariffs Threaten Investment in Tanzania’s Power Sector The Energy & Water Utilities Regulatory Authority of Tanzania (Ewura) was granted an electricity price hike of 42.29%, and fears are spreading over the production costs as a result of

the tariff hike. The power tariff became effective January 15 although the utility originally asked for a 150% increase. The cost of production is expected to be affected drastically with the Institute of Management and Entrepreneurship Development (IMED) CEO Dr. Donath Olomi saying that some existing manufacturers could be forced to shut down production while investments in the country’s sector could also take a dive. “I believe 2012 will be a difficult year, much harder than 2011. The situation could be worsened by the anticipated rain floods this year,” he said.

New Online Platform for African Infrastructure Projects Started by Silicon Valley-based company Zanbato and the African Development Bank (AfDB), a new online marketplace monitoring infrastructure projects throughout Africa will soon be launched. Sokoni (Swahili for “marketplace”) offers projects to potential investors which could be sorted via sector, location, size, transaction stage, and other financier criteria. The site aims to increase transparency of the projects and reduces search costs for investors – helping to provide all involved parties a definitive picture of projects in need of capital infusions. The hope is that by increasing transparency, investor interest will heighten and create a network. Zanbato founder Ryan Orr said that this is a new concept that has yet to be seen in Africa. The concept will enhance the speed and efficiency of asset sales and capital raised by using technology to facilitate the work of those looking to sell African infrastructure assets and potential donors and global capital providers interested in investing in Africa. Sokoni will provide levels of pertinent project information to investors that are pre-qualified to take part in the projects. Orr said, “[Sokoni] can radically improve the speed, availability, and quality of information flows between market participants; it can provide a platform for key African infrastructure initiatives to endorse and promote projects, [improving] competition and options.” The site will launch over 50 projects in early 2012, including the Mombasa-Nairobi-Addis

Ababa Corridor (Phase II) and the Lake Victoria Water Sanitation Program. Spokesman for Sokoni Tucker Warren told Alternative Energy Africa that the G20 should be delivering its grant for the project in the very near future.

Local Solar Company Aims to Light Malawi Solar Charge Malawi, the local branch of South African company Solar Charge, will work with the Malawian government to help bring solar energy to rural areas throughout the country. The company also provides street lighting in Mozambique, South Africa, and Zambia. With many villages in the southern African country without access to the national grid, the Solar Charge Malawi director Riaz Aziz said that rural electrification is the main premise of the nearly $367,000 investment. He said that each village will need approximately $200,000 to help power generation, and the government had to help by offering subsidies so that Solar Charge Malawi could cover a large area.

Private Power Producer to Use Biofuels in Kenya Kenya’s first commercial biomass power plant will break ground in February, using the Prosopis Juliflora tree (locally known as “Mathenge”). Private power producer Tower Power plans to produce 11.5 MW of electricity via the biofuel plant in Marigat, totaling around Sh1.8 billion, with another biomass plant planned for Kinango. The company said Kenya has enough of the particular biofuel feedstock to supply its power plant for 10 years, and is in discussions with Kenya Power for a 20-year PPA. Tower Power will raise 70% of its funding for the two projects from local financiers.

Korea Aids Senegal’s Power Ambitions South Korea’s Korea Electric Power Corp. signed an accord with the government of Senegal to supply it with a 250-MW coal-fired power station. Under the agreement, KEPCO and the Korean Development Bank will finance the building of the plant entirely, but in return will have the right to sell its energy output back to Senegal. The power station is expected to be operational by 2015.


Market Movers and integrated IT solutions for risk management. The company will set up a single center of excellence for trading and risk control in full compliance with all national and international rules and regulations.

Independent E&P Companies Top Performers Currency Price as of Jan 23 1 Month % Change

Company

Symbol

Exchange

Groundstar Resources

GSA.V

CDNX

CAD

0.06

62.5

0.04 - 0.067

HDY

AMEX

USD

3.39

52.7

2.01 - 7.15

Tower Resources

TRP.L

LSE

GBP

4.00

48.1

0.99 - 9.15

Gulf Keystone

GKP.L

LSE

GBP

277.50

47.7

87.00 - 350.00

Range Resources

RRS.AX

ASX

AUD

0.17

41.6

0.12 - 0.38

Company

Symbol

Mediterranean O&G

MOG.L

LSE

GBP

4.87

-18.7

Candax Energy

CAX.TO

TSX

CAD

0.07

-16.6

0.04 - 0.10

Regal Petroleum

RPT.L

LSE

GBP

27.50

-10.5

25.25 - 57.20

SEK

153.10

-8.2

65.25 - 185.20

CAD

0.67

-6.9

0.49 - 0.99

Hyperdynamics

52-Week Range

Worst Performers

Lundin Petroleum Arsenal Energy

Exchange Currency Price as of Jan 23 1 Month % Change

LUPE.ST Stockholm AEI.TO

TSX

52-Week Range

3.63 - 24.50

Range Resources came in the top performers’ number five slot with an impresive 41.6% gain. The company has been marked with a ‘BUY’ by Old Park Lane Capital at a target price of AUD $0.50.

Apache to Pick up Cordillera Energy Partners Apache Corp. has agreed to acquire Cordillera Energy Partners III LLC. The acquisition is expected to be accretive to Apache’s earnings and cash flow beginning in 2012. The sellers, including EnCap Investments, other institutional investors, and Cordillera management, will receive approximately $600 million in Apache common stock. The balance of the consideration will be paid in cash to be funded with debt. The effective date of the transaction is September 1, 2011 with closing anticipated in Q2, subject to regulatory approval and customary closing conditions. The acquisition will give Apache substantial operations that include approximately 254,000 net acres in the prolific Granite Wash, Tonkawa, Cleveland, and Marmaton plays in western Oklahoma and the Texas Panhandle for a purchase price of $2.85 billion. In addition to estimated proved reserves of 71.5 million boe and current net production of 18,000 boepd, Cordillera has assembled a leading acreage position with significant resource potential including 14,000 potential drilling locations in liquid-rich Anadarko Basin plays. The acquired acreage is characterized by high working interest and operatorship; approximately half is held by production. The development drilling program is self-funding beginning in 2013.

Simba Begins OTCQX Trading Simba Energy has begun trading on the OTC market’s prestigious tier, OTCQX International.

“The OTCQX platform supports a transparent marketplace with high quality issuers, financial information disclosure, and efficient trading for US investors,” said R. Cromwell Coulson, president and CEO of OTC Markets Group. “We are pleased to welcome Simba Energy to OTCQX.” Soloway Group PC serves as Simba Energy’s Principal American Liaison on OTCQX, responsible for providing guidance on OTCQX requirements.

ENI Sets up Trading Unit Italy’s ENI added a new unit to its portfolio with the establishment of ENI Trading, a new internal business unit which will be responsible for asset-backed trading and portfolio and risk management. The new unit allows ENI to leverage its strong global asset base to become a leader in asset-backed trading. ENI Trading was established to cope with the increased volatility and interrelation among global commodity markets, more sophisticated trading opportunities, and stricter regulation. ENI Trading will optimize the value of ENI’s assets, which include refineries, power plants, oil and gas contracts, pipelines, and storage units. This will be possible through coordination with the company’s portfolio managers, without additional risk exposure, and within the centrally set risk limits. Through the integrated management of its entire commodity price exposure, ENI also expects to achieve the development of global best practices

The establishment of the new trading unit, which will operate in the market through ENI Trading and Shipping (ETS), follows the decision at the end of 2010 to bring all of ENI’s commodities, including crude oil, petroleum products, gas, electricity, CO2, and their derivatives, into ETS. ETS will continue to form alliances to develop its trading and logistics portfolio and to promote integrated business development with leading international commodity players and NOCs also leveraging ENI’s strong relationships in key countries.

TWMA Expands MENA Ops TWMA plans to expand its operation in the MENA region as part of its continuing global growth strategy. The expansion will see a new office set up in Dubai which will complement and support the company’s already established sales and operational facilities in Egypt. TWMA intends to increase its team in the region with the recruitment of experienced sales, engineering, and operational staff over the coming year. Ronnie Garrick, managing director at TWMA, said: “The MENA region is an increasingly important location for us. We are already established and operating in Egypt and have several onshore and offshore projects in the pipeline for 2012. The new Dubai base will allow us to further develop the MENA region by targeting new opportunities.”

Lufkin Industries Acquires Datac Instrumentation and RealFlex Lufkin Industries Inc. has completed the acquisition of Datac Instrumentation Ltd. and RealFlex Technologies Ltd. pursuant to an agreement entered into on December 6, 2011. Datac, based in Dublin, Ireland is a solutions company serving the oil and gas, power, water and waste water, transportation, and marine industries that provides systems integration for supervisory control and data acquisition (SCADA). RealFlex, also based in Dublin, provides real-time server software packages for SCADA and process control applications. John F. “Jay” Glick, Lufkin’s president and CEO, stated, “These two acquisitions are expected to be accretive to Lufkin’s earnings in 2012 and accelerate our strategy of expanding our technical capabilities within our Automation portfolio. They also provide a state-of-the-art solution to

Petroleum Africa February 2012

21


Market Movers Hughes employees bring to each project and provides them with a career path.

Drilling & Service Companies Top Performers Currency Price as of Jan 23

Company

Symbol

Exchange

Cal Dive

DVR

NYSE

USD

3.00

30.4

1.50 - 8.19

Michael Baker Corp.

BKR

AMEX

USD

24.35

26.1

17.30 - 31.99

Flotek Industries

FTK

NYSE

USD

12.65

24.3

3.89 - 13.71

Willbros Group

WG

NYSE

USD

4.31

18.4

3.47 - 12.55

Foster Wheeler

FWLT

NYSE

USD

23.06

17.6

16.40 - 39.75

1 Month % Change

52-Week Range

Worst Performers Currency Price as of Jan 23

Company

Symbol

Exchange

1 Month % Change

52-Week Range

Geokinetics

GOK

AMEX

USD

2.00

-9.5

38.21 - 85.98

RPC Inc.

RES

NYSE

USD

17.53

-7.6

3.47 - 12.55

Superior Energy Services

SPN

NYSE

USD

27.14

-7.2

27.33 - 46.72

Nabors Industries

NBR

NYSE

USD

17.37

-4.3

51.16 - 81.19

Baker Hughes

BHI

NYSE

USD

47.44

-4.0

41.91 - 81.00

Baker Hughes was the first integrated oil service firm to to receive IADC Competence Assurance Accreditation. The company also posted a 0.12% dividend for Q4; however, it did say that its Q4 profit margin declined because it wasn’t prepared for the explosion in hydraulic-fracturing demand in North America. Apparently a shortage of materials to carry out fraccing caused the company’s North America operating profit margin to drop to 15%, down from the 22% it saw in Q4 2010.

Lufkin’s Automation SCADA needs and add very strong R&D personnel and process assets to the portfolio. Datac’s newly developed SCADA information server is designed to integrate into multiple SCADA platforms via industry standard protocols. It represents the next generation of automation and is anticipated to become the future platform for Lufkin’s application server. These acquisitions also expand our Automation footprint into other energy-related industries such as power, water, and waste water.” Glick also said the acquisitions were a good cultural fit with Lufkin and that Ireland provides a business-friendly environment.

Intertek Awarded Shell Framework Agreement Intertek signed an Enterprise Framework Agreement (EFA) with Shell Global Solutions International. The EFA includes for the provision of site, plant, and asset inspection services as well as quality assurance, inspection, expediting, and technical audit support on various projects in select locations. Under the EFA, Intertek may provide support for both new projects and existing operations. Intertek’s contract award followed a competitive tendering process and it reflects the ability of Intertek to offer a strong package of complementary technical support services

22

Petroleum Africa February 2012

after Intertek Group acquired Moody International and combined their capabilities in May 2011. Jan-Jörg Müller-Seiler, president of industry, within the Industry & Assurance Division of Intertek Group Plc, said: “Intertek is proud of this new level of relationship with Shell and looks forward to working collaboratively with Shell in achieving the joint goal of increasing the level of the quality standards within the global oil and gas exploration and production industry.” Baker Hughes to Receive IADC

Competence Assurance Accreditation Baker Hughes has become the first integrated oilfield service company to receive full accreditation of its Competence Management Program (CMP) from the International Association of Drilling Contractors (IADC). IADC’s system for accrediting CMPs reviews and confirms that a company’s program meets accepted practices to develop and evaluate personnel across a wide array of job functions and product lines. The company’s CMP, based on compliance, reliability, and performance, gives employees the training and tools necessary to meet and exceed current and upcoming operating requirements and government regulations. It offers a way to measure the experience Baker

To receive the IADC accreditation, Baker Hughes’ CMP was reviewed during the course of several months, including a review of the performance criteria Baker Hughes has in place through curriculum managers and competency managers, who work closely with those in the technical, engineering, and operations fields. IADC also looked at Baker Hughes’ process for defining competencies, training resources, and methods to support the training and development process, as well as the company’s assessment system for evaluating competency. Documentation and quality assurance were also considered.

Tullow Launches ‘Invest in Africa’ Tullow Oil Plc has started a new business initiative aimed at attracting and facilitating further investment in Africa, dubbed Invest in Africa. The initiative is aimed at encouraging long-term investment across the continent to help build and develop local capacity, boost domestic job markets, develop skills, and stimulate economic growth. The program’s call to action will be supported through a unique partnership with English Premier League football club, Sunderland AFC. As the initial Founding Partner establishing Invest in Africa, Tullow plans to secure five further Founding Partners from the international business community focused on Africa. These partners will help to evolve and shape the program in years to come. Speaking at the launch, Tullow chief executive Aidan Heavey said: “Tullow is investing in Africa for the long-term and we want more businesses to do the same. Africa has been good to us, and we have been successful, but we want that success to bring growth for local people and economies too. Africa’s a great place to invest and this partnership with Sunderland AFC will allow us to get the message to a global audience. There are some great opportunities out there and we want other companies who share our vision to join us.” Niall Quinn, director of international development, Sunderland AFC said: “We are genuinely excited about this ground-breaking opportunity to bring Sunderland into new territories and the global appeal of the Premier League is something that we can harness as a powerful tool for change through our innovative partnership with Invest in Africa.”


Africa, create jobs, and enable Africa’s people to share in the wealth and prosperity that come with it.”

Major E&P Companies Top Performers Company

Symbol

ENI

ENI.MI

Petrofac and Schlumberger Join Forces

Exchange Currency Price as of Jan 23 1 Month % Change

Milan

52-Week Range

EUR

17.28

9.7

11.83 - 18.66

BG Group

BG.L

LSE

GBP

1,472.00

9.1

1,018.53 - 1,741.50

Total

FP.PA

Paris

EUR

40.42

4.0

29.40 - 44.55

Company

Symbol

Worst Performers Exchange Currency Price as of Jan 23 1 Month % Change

52-Week Range

ConocoPhillips

COP

NYSE

USD

70.61

-3.1

58.65 - 81.80

Chevron

CVX

NYSE

USD

106.72

-1.1

72.93 - 109.94

RDSA.L

LSE

GBP

2,315.50

-0.4

1,762.00 - 2,456.80

Shell

Despite coming in as the top performer for the period in the major rankings, ENI did not impress some analysts recently. Standard and Poor’s (S&P) rating service lowered ENI’s long-term corporate credit rating to ‘A’ (outlook negative) from ‘A+’. S&P confirmed the ‘A-1’ on short-term credit rating.

“Africa’s passion for football is both heartwarming and inspirational and as a football club, with community, people, and international aspirations firmly at its core, there is a natural synergy between us and this wonderful continent. We look forward to growing and developing the partnership in the coming months.”

Ike Duker, executive chairman of Tullow Ghana Ltd., added: “While we are delighted to be at the forefront of this innovative and exciting new business program, this is not just about Tullow. This is an initiative that can help to build stable, investment friendly environments to allow businesses to grow across

Petrofac and Schlumberger have joined forces under a cooperation agreement. Petrofac’s Integrated Energy Services (IES) and Schlumberger Production Management (SPM) divisions signed a cooperation agreement under which the divisions will establish a working relationship to deliver integrated and high-value production projects in the emerging and growing production services and production enhancement market. The firms have complementary skill sets and execution capabilities. Both have built these through subsurface knowledge, facilities expertise, and operational experience in integrated asset management with IES having particular strengths in facilities, engineering and O&M, and project management, while SPM has particular strengths in subsurface knowledge, production engineering, well construction, and project and asset management.


Market Movers Both companies will deploy their own capital in these production enhancement projects and neither company will seek to book reserves or production. Market opportunity for the collaboration is significant as major resource holders seek to develop discovered low-risk reserves against an industry environment characterized by a shortage of capability and capacity.

Kürvers Group Opens Office in South Africa

portfolio of supply solutions. Our large range of international projects gives us the buying power required to ensure client pricing levels are met.”

New JP Morgan Presence in East and West Africa US-based investment bank JP Morgan will establish representative offices in two African countries, Ghana and Kenya, according to a Financial Times report.

Kürvers Group has opened an office in Johannesburg to service the burgeoning subSaharan EPC market. The office in South Africa marks the company’s 16th office worldwide. Kürvers Group has over four decades of experience supplying piping and offshore structural materials globally, including to projects in Algeria, Angola, Egypt, Libya, and Nigeria.

John Coulter, senior country officer for the company’s sub-Saharan Africa unit at JP Morgan, told the Financial Times that Africa is being taken more seriously as an investment and business destination, predicting “If we invest now, then we will reap the upturn in Africa, whether it’s in five years, 10 years, or 20 years, but we recognize that we need to make that investment now.”

Tim Booth will be the regional director leading Kürvers’ new South African office. Commenting on business opportunities on the African continent, Booth said: “With vast investments in South African oil and gas and mining projects and a commitment by the government to substantially increase renewable energy usage, companies exploring new frontiers are looking for local knowledge, backed by global expertise, which is what Kürvers delivers. Our focus will also be on servicing the energy, petrochemical, and mining sectors throughout sub-Saharan Africa, where opportunities like Mozambique’s LNG development are gathering momentum.”

“Better governance and macro-economic policies, together with greater political stability in a number of African countries, have contributed to a significant improvement in the overall economic performance of the continent,” Coulter was cited as saying.

Dirk Formella, member of the board of directors of Horst Kürvers Germany, added: “Our business model is simple. Local companies manage incountry requirements and guarantee quality in difficult markets. We provide face-to-face project management teams and a truly global

Other companies named in the bribery scandal were Technip, Snamprogetti, KBR, and JGC Corp. The JV was awarded four contracts valued at more than $6 billion by Nigeria LNG Ltd. (NLNG) to build the LNG facilities on Bonny Island. Since 2009 the companies involved in the JV have paid out hundreds of millions of dollars in fines. Marubeni’s fine was the lowest of all those involved in the bribery case. “With today’s resolution, the department has held accountable all five of the corporations that participated in the massive, decade-long scheme to bribe Nigerian government officials in connection with the so-called Bonny Island project,” said Mythili Raman, principal deputy assistant attorney general of the DoJ’s criminal division, in the US court statement. “As a result of this extensive investigation, the department and our partners have obtained more than $1.7 billion in penalties and forfeiture orders from the JV partners, their agents, and individuals who sought illegally to obtain the Bonny Island contracts.”

Vanoil’s Private Placement Closes Marubeni Settles Nigeria Bribery Charge with US DoJ Marubeni Corp. has agreed to pay $54.6 million in criminal fines for its part in a bribery scheme. The bribery took place in Nigeria and was aimed at securing billions of dollars in contracts by paying off government officials for the awards. The charges, brought by the US Department of Justice (DoJ) under the Foreign Corrupt Practices Act, relate to Marubeni’s actions as an agent for TSKJ, a four-company JV that was seeking contracts to build an LNG plant in Nigeria. Marubeni said it had agreed to pay the fine as part of a Deferred Prosecution Agreement with the DoJ.

Vanoil Energy Ltd. closed its non-brokered private placement. Announced on December 23, 4,755,582 common shares at a price of $0.43 per share were issued for total gross proceeds of $2.044 million. The securities issued pursuant to the private placement are subject to a four-month hold period expiring May 19, 2012. The company paid finders’ fees totaling $60,200. The proceeds will be used for the continued exploration and development of the company’s African properties and for general working capital purposes.


Monthly Focus

By Guy Brown, Technical Correspondent

Pre-Salt Rus Pre-Salt Rush

Recognizing similar geological formation offshore Africa as offshore Brazil, majors and independents are lining up along the West African coast in anticipation of huge pre-salt oil and gas discoveries.

T

he success story of pre-salt discoveries offshore Brazil is leading international oil companies to search for similar geological formations elsewhere. With the continents of the Americas and Africa joined during the Cretaceous period 120 million years ago, particular attention is focused on the coast of West Africa, which has common geological ancestry with Brazil’s Santos Basin.

It follows that all the countries along the West African coast, especially Angola, Republic of Congo, Democratic Republic of the Congo, and Gabon, are pursuing pre-salt oil and gas, and Namibia is touted as a further huge prospect.

ANGOLA

Angola is furthest along in realizing pre-salt gains. Recent advances in tectonic reconstruction qualify parallels between Angola and the pre-salt Santos and Campos areas of Brazil. Petroleum Geo-Services (PGS) has indicated it will use its extensive MultiClient library on both sides of the Atlantic to take a closer look at these links. Source: Cobalt International Energy Investor Presentation – January 2012

The Campos Basin and Blocks 20 and 21 in the Kwanza Basin, Angola for instance, existed in the same depositional basin and were only 50100 miles apart during the Cretaceous period. Analysis by Cobalt International Energy (Cobalt) confirms that the Campos and Kwanza Basins share similar pre-salt histories and characteristics. One of those characteristics is that the pre-salt layer is found at a great depth. Petrobras estimates that oil and natural gas lie below a 2,000-meter deep layer of salt, itself below an approximately 2,000-meter deep layer of rock under 2,000-3,000 meters of the Atlantic. Drilling and extracting pre-salt oil and gas is accordingly expensive, with a ballpark figure for a well that can exceed $150 million – although Petrobas pegs the average well at $100 million. Pre-salt oil is however typically of good quality. The potential jump in reserves for African countries lying along the Atlantic continental shelf is huge. According to the Brazilian oil regulator Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis (ANP), the pre-salt findings on the Brazilian continental shelf indicate reserves of over 50 billion barrels of oil. That is nearly quadruple the country’s previously established reserves of around 14 billion barrels. Bloomberg on January 19 reported on a university study by former Petroleo Brasileiro SA geologist Hernani Chaves, a professor at the Rio de Janeiro State University, that estimates Brazil’s pre-salt deposits to be even greater – at least 123 billion barrels.

Angola had a pre-salt licensing round recently, which resulted in awards announced in December 2011 to companies including Statoil, Total, BP, ConocoPhillips, Repsol, Petrobras, ENI, and Cobalt [see Box: Angola’s Pre-Salt Players]. Cobalt Energy International is drilling offshore Angola, with three blocks and a 40% working interest in each block. National oil company of Angola, Sociedade Nacional de Combust veis de Angola-Empresa Publica (Sonangol), approved the company’s drilling plans for its operated offshore Block 21 in May 2011 – for the Cameia-1and Bicuar-1 pre-salt exploratory wells. Block 21 is located in the deepwater offshore south-central Kwanza Basin, some 200 km southwest of Luanda. The water depth in the block is 300 to 1,600 meters. Cameia-1 was completed and represented Cobalt’s first pre-salt discovery offshore West Africa. In its January investor’s presentation this year, Cobalt reported: A significant oil column; High quality volatile oil recovered through Modular Formation Dynamics Testers (MDTs); Net pay estimates better than expected; No oil/water contact; and High quality carbonate reservoir.

Petroleum Africa February 2012

25


Monthly Focus

Angola’s national oil company Sonangol awarded a number of pre-salt licenses, with production sharing contracts (PSCs) signed in Luanda on December 20, 2011. Companies awarded blocks included several majors and one independent. Italy’s ENI was awarded a PSC for Block 36, under which it will drill two wells and acquire 3D seismic during its first five-year exploration period. Statoil gained its first operated position in Angola with the finalization of the PSC for pre-salt Blocks 38 and 39. The company will also participate as a minority partner in Blocks 22, 25, and 40. Statoil will have a financial commitment of approximately $1.4 billion for its participating interests in all five blocks. Total gained access to three blocks, two as operator. The company will operate Blocks 40 and 25 with a 50% and a 35% interest respectively. It also gained a 15% interest in Block 39. Over an initial exploration period of five years, around 14,000 sq km of 3D seismic will be acquired and five exploration wells drilled. BP added four more blocks to its Angolan portfolio through the pre-salt licensing awards. BP was awarded operatorship of Blocks 19 and 24 with 50% interest, and additional non-operating interests in Blocks 20 (20%) and 25 (15%). Separately BP recently gained a 40% stake in Block 26 in the Benguela Basin, by agreeing to a farm-in deal with Brazilian national oil company Petrobras, which operates the block. The company now has interests in a total of nine blocks offshore Angola. Cobalt International is the only independent firm to gain access to Angola’s pre-salt blocks. The company signed a PSC for Block 20, which is immediately north of its operated Block 21. Cobalt was named operator and will be partnered with Sonangol, BP Exploration Angola (Kwanza Benguela), and China Sonangol International Holding. Cobalt and its partners have initiated the acquisition of a 4,100 sq km 3D seismic, and the first well for the block is planned for 2013. Reflecting the challenges in pursuing pre-salt plays, Cobalt also reported that it experienced mechanical difficulty in setting the liner hanger, and a production test will be completed once mechanical issues have been resolved.

Surge in 3D Seismic Activity

3D seismic is a critical tool in exploring pre-salt potential. TGS-NOPEC Geophysical Co. (TGS) announced on January 18 that it reached final agreement with Sonangol to commence acquisition of a 3D multi-client survey covering nearly 12,500 sq km offshore Angola. The survey will initially commence over Blocks 36 and 37 in late January, then continue over Block 35 with acquisition scheduled to be complete during Q3 2012. “Entry into this market is consistent with our plans for strategic growth. TGS’ commitment to expanding multi-client data in the offshore areas of West Africa has extended over 10 years and we are excited to have the opportunity to now add 3D data in offshore Angola to the TGS data library,” commented Rod Starr, senior VP Africa, Middle East, and Asia Pacific for TGS.

26

Petroleum Africa February 2012

TGS will process the 3D seismic data in both time and depth using its sub-salt capability developed in similar basins. Preliminary products will be available to participating companies in Q4 2012 with a final processed product expected by Q4 2013. The survey is supported by industry funding. PGS is also shooting seismic offshore Angola. The company announced on January 11 that its vessel Ramform Valiant started the acquisition of over 26,000 sq km of GeoStreamer® data on five blocks in Angola’s Kwanza/Benguela Basins. The survey is for a group of oil firms who recently signed agreements for the five blocks. In February, the vessel PGS Apollo will join the Ramform Valiant and the acquisition will continue with both vessels until Q4 2012. BP, Total, and Statoil have been made operators of Blocks 24, 25, 38, 39, and 40 (see inset to left) with Sonangol as a partner. All four oil companies have committed to funding the PGS survey. PGS teams will start processing data in March, utilizing the latest depth imaging technology and building on their experience of illuminating pre-salt targets in Angola. Together, the two vessels will operate 20 vessel months on this project.

Source: PGS

Angola’s Pre-Salt Players

Ramform Valiant

Republic of Congo

Republic of Congo (RoC) is also looking at pre-salt options. Londonbased oil and gas exploration and production company SOCO International reported on December 22 that the Makouala Marine 1 (MKM-1) exploration well spudded on November 19. MKM-1 is in the Marine XIV block, located in the Congo Basin, offshore RoC. The well encountered hydrocarbons in the Tchala, and in the Upper and Lower Sendji formation horizons. The MKM-1 well targeted the post-salt Sendji formation reservoir within a four-way dip closed structure. The well encountered hydrocarbons in both the primary and secondary reservoir targets. However, analysis of the wireline logs indicated that the reservoir sands at the location were not as well developed as predicted and there was insufficient overall pay thickness for commercial flow rates. The well will be plugged and abandoned.


The rig will now be released and drilling of the contingent third well in the program will be deferred in order to incorporate the well results into the interpretation of the remaining prospects. Partners on the block are Soco International with a 29% stake and operatorship, Lundin Petroleum with 18.75%, Raffia Oil SARL holds 18.75%, state-run SNPC has 15%, Africa Oil & Gas Corp. a 10% stake, while PetroVietnam holds the remaining 8.5% stake.

Democratic Republic of Congo

In the Democratic Republic of Congo (DRC), Houston-based EnerGulf Resources is exploring pre-salt potential in the Lotshi block located offshore DRC. The Lotshi block covers approximately 500 sq km of the Les Zones du Bassin Côtier in the onshore coastal salt basin of western DRC. EnerGulf is the operator of the project and has a 90% interest and DRC state oil company Cohydro holds a 10% carried interest. According to a prospective resource report by consulting firm DeGolyer and MacNaughton, the area has a mean estimate of 313.2 million barrels, across seven prospects and four independent plays. The seismic program was completed in 2010, and EnerGulf has said that the block is on trend with the DRC M’Boundi giant field and situated in a similar geological setting. In October 2011, EnerGulf announced it would continue with plans for a mid-2012 drill program on the Lotshi block. It is also commencing construction of a school and health clinic on the block as required by the community improvements provision of the PSC. EnerGulf said it also continues to consider negotiations regarding a farm-in with qualified industry co-venturers for the Lotshi block. Chairman/CEO Jeff Greenblum commented: “We are excited to be in the exclusive club of the West African hydrocarbon elephant hunt. We are on trend with the West Africa/Brazil major hydrocarbon producing play types. EnerGulf’s leadership has recast Block 1711 as a premier exploration opportunity and we are also pleased to increase our interest in Block 1711 and remain as operator until a qualified deep offshore operator joins us. We are also looking forward to drilling our world class potential Lotshi Block in the DRC in mid-2012.”

Subsequently the DRM-1 well was deepened to reach a true vertical depth subsea (TVDSS) of 11,355 ft to test the prospectivity of the Middle and Lower Dentale formations. Analysis indicated that Harvest has discovered a second oil accumulation with approximately 35 ft of oil pay within the secondary objective of the Middle Dentale formation. The Gamba discovery has been appraised by drilling a sidetrack well (DRM-1ST1) 0.75 miles to the southwest to test the lateral extent and structural elevation of the Gamba reservoir. The sidetrack well was drilled to a total depth in the Upper Dentale of 11,562 ft, (9,428 ft TVDSS) and found 19 ft of oil pay in the Gamba reservoir. In August 2011, Harvest announced that a Ruche sidetrack well encountered oil 1.2 km to the southwest of DRM-1. And Panoro Energy announced a further discovery in a second sidetrack well drilled 890 meters northwest of DRM-1. According to Panoro, initial indications are that the oil in place volume for the Gamba reservoir is around 30-40 million barrels, with estimated recoverable volumes of 6-15 million barrels. “Panoro is encouraged by the Ruche Marine oil discovery in Gabon. We now plan to evaluate potential development concepts for Ruche Marine which, if encouraging, may lead to a commercial declaration as early as 2012. Furthermore, the discovery confirms our view of the high exploration potential of the Dussafu block and allows us to refine and upgrade our prospect inventory in preparation for further exploratory drilling,” said CEO Kjetil Solbraekke.

Petrobas & Ophir Energy

Petrobras signed an agreement in June 2011 to acquire 50% of the rights of Ophir Energy’s (Ophir) Ntsina Marin and Mbeli Marin blocks located in the Coastal Basin, offshore the northern region of Gabon. Ophir remains operator of the two blocks. According to PreSalt.com, the acquisition of the blocks is aligned with Petrobras’ 2020 Strategic Plan, which aims to contribute to the discovery and appropriation of reserves in Brazil and abroad, maintaining the reserve/production ratio above 15 years, and to intensify the assessment of the exploratory potential, particularly of the pre-salt section along the Atlantic Basins.

Gabon

International companies are also lining up in Gabon. Royal Dutch Shell, Petrobras, Repsol, and Cobalt have all shown interest in the country, while Harvest Natural Resources (Harvest) has announced a discovery in its Dussafu PSC. Harvest operates the Dussafu PSC, holding a 66.667% interest. Panoro Energy Group holds the balance with 33.33%.

The Ntsina Marin and Mbeli Marin blocks cover an area of 6,683 sq km, with water depths ranging from shallow to 2,400 meters. On January 3, Ophir announced that the PGS Apollo seismic vessel had commenced mobilization from Port Gentil on December 26. The 2,100 sq km 3D seismic program is expected to take 42 days to complete, and is specifically designed to mature pre-salt targets for drilling in late 2012.

Harvest provided an update on its drilling operations in the Dussafu Ruche Marin-1 (DRM-1) well in July 2011, announcing an oil discovery in June in the pre-salt Gamba reservoir with plans to deepen the well to test Middle and Lower Dentale exploration potential and sidetrack to appraise the extent of the Gamba oil discovery.

Elsewhere in Gabon, Cobalt has a pre-salt prospect inventory in the Rabi-Kounga field (940 MMBOE) and Maruba #2 (1982), with a presalt oil discovery in Maruba 2. The company acquired 6,000 sq km of 3D seismic in 2010, and says 3D processing continues to confirm the presence of pre-salt structures. Total Gabon and Cobalt anticipate drilling an initial pre-salt well in late 2012 or early 2013.

Petroleum Africa February 2012

27


Downstream Focus By LeAnne Graves Associate Editor

POWER REFORM As the power generation sector continues to evolve throughout Africa, there are some major projects in the works as well as some big changes on the horizon.

T

he combined power generation of sub-Saharan Africa’s 48 countries is about 68 GW, and the World Bank has stated that about 25% of the installed capacity is not operational for various reasons including aging plants and a lack of maintenance. The installed capacity in most African countries is below 1,000 MW. South Africa has the largest installed capacity standing at 40 GW, and although Nigeria has a population more than three times that of South Africa, it only generates close to 5 GW of power. Nigeria’s largest power plant Egbin Thermal Station, generating an estimated 1,080 MW into the national grid, shut down in December as a result of poor maintenance and a lack of spare parts. The plant continuously breaks down, taking about five days to be re-started. A source from the Power Holding Co. of Nigeria (PHCN) told local news outlets that the plant had been repaired several times, and because it is obsolete, getting spare parts is a major challenge. Most of the continent’s electricity is produced from thermal stations like Nigeria’s Egbin plant and large coal plants in South Africa; however, about 93% of Africa’s estimated hydropower potential remains unexploited. The Democratic Republic of Congo (DRC) had high hopes to combat the looming power crisis with what has the potential to be the world’s largest hydropower scheme. The Grand Inga could produce up to 39 GW of electricity by 2025, although several delays create doubt as to the project’s completion. The DRC is reportedly looking into private participation to accrue the capital required to build such a massive project. The Grand Inga originally came with a price tag of about $50 million, and now continues to propel upwards standing currently at $80 million. The World Bank said that only 66% of the capital budgets allocated to power are actually spent with about $258 million in public investment earmarked for the power sector being diverted elsewhere in the budget.

Privatization Many African countries are actively pursuing private investors to increase energy generation. At the Bloomberg UTV Power Summit 2011, India’s Minister of Power Sushil Kumar Shinde said: “Private players will need to play a bigger role in power production.”

28

Petroleum Africa February 2012

He added, “There is need for modernization and augmentation of thermal power and the power segment is fully open to private investors.” Many comparisons can be drawn from India and applied to various African countries. The Minister said that India’s private sector participation was at 10%, but had increased to 30%. However, more than 50% is needed. “We have added more than 60,000 MW [of power generation to the national grid] during the last 5.5 years. More than 80,000 MW capacity is under construction [currently].” Looking at India as an example could benefit those African nations while modeling a system that suits the needs of individual countries. Analysis released from Frost & Sullivan found that the electricity generation industry presents a significant and lucrative opportunity for private sector participants in South Africa. “Market growth for private power producers in South Africa is being driven by a pressing need for new generation capacity and the associated cost of financing this new build,” noted Frost & Sullivan’s energy and power systems research analyst Gareth Blanckenberg. “Renewable energy generation is set to become the largest area of participation for private power producers in South Africa, with several projects already in the developmental phase.” Nigeria is trying to move forward on privatization plans for its power sector. The government hopes to complete the sale of six power plants and 11 distribution firms by Q1 2012 according to the Bureau of Public Enterprises (BPE). The West African nation is selling four thermal and two hydropower plants, along with 11 electricity distribution firms as part of a drive to end its power shortages. Bringing an end to chronic power shortages is needed to propel the country towards developed nation status. “The hope is that by Q1 2012 we will be able to hand over to the investors,” Bolanle Onagoruwa, director general of the BPE, said. The executive said that 207 firms have been shortlisted; these firms had to pay a fee of $20,000 for each asset of interest by July 15. Following the submission of fees, Onagoruwa said final offers were submitted on November 1 after a due diligence process.


Downstream Focus A New Twist

The World Bank cites utility inefficiencies as one of the major obstacles hampering Africa’s energy generation. System losses, under-collection of revenue, and over-manning result in a major waste of resources adding up to $4.4 billion a year. The Bank said, “Under-collection is the largest component of utility inefficiencies amounting to $1.73 billion, followed by system losses at $1.48 billion, and overmanning at $1.15 billion.” South Africa is continuously working on new methods to generate more power, and while restructuring its national utility Eskom has so far been dismissed, the country has decided to shelve its highly publicized renewable energy feed-in tariff (FIT) model. The National Treasury and Energy Ministry decided to introduce a new financing mechanism which also saw the introduction of a new role for its energy regulator. The IPP Procurement Program is aimed at substantially increasing renewable energy through a two-part bidding process. The difference between this new policy compared to South Africa’s Refit is that instead of bidding on projects based on fixed tariffs, the new approach will have potential investors evaluated on bid price and meeting pre-set qualifications. In addition, the Energy Ministry allocated 3,725 MW instead of the previously determined 1,025 MW that was outlined in the Integrated Resource Plan (IRP). Interestingly, the Energy Ministry and the National Treasury made this decision with only a slight consultation with the National Energy Regulator of South Africa (Nersa). Nersa has been the main body in control of the Refit policy and amendments. Nersa regulator Thembani Bukula told Alternative Energy Africa, “In a way, yes [the Energy Ministry and National Treasury] consulted with Nersa; initially we did not concur, but when the law was changed in a way that rendered the Refit [policy] inapplicable, we had to concur.” And now instead of Nersa deciding the pre-set tariff pricing system, the Energy Ministry,

30

Petroleum Africa February 2012

DRC’s Grand Inga could become the world’s largest hydropower project

assisted by the National Treasury, will conduct the procurement process although Bukula insisted Nersa will still have the final say on the price. Nersa’s role has also changed. Preferred bidders will now be required to apply for a license from Nersa and the regulating body will also facilitate the conclusion of the PPA’s between Eskom and the renewable energy IPPs.

Big Players Africa’s burgeoning power sector is captivating a larger audience of investors. With its eight-prong plan dubbed “Major Energy Strategy,” Senegal has an ambitious plan to generate electricity, including a major Chinese contract. The Sino-Senegalese deal struck in October 2006 will see the Asian superpower injecting $71 million on the construction of a major energy plant in Dakar, boosting electricity supply and capacity by 2015. China will build a 50-MW electricity generation plant and a 300-MW solar-powered plant. In addition, the superpower was set to complete a 250-MW coal-fired plant and signed agreements for 50,000 units of low-cost housing to be built on the outskirts of Dakar. Other projects in the pipeline include wind farms at Taiba Ndiaye (125 MW) and Saint Louis (15 MW), a solar power station at Ziguinchor (7.5 MW), and a biomass facility at Ross Bethio (30 MW). China is also onboard with Ghana’s Sunon Asogli power plant’s second phase totaling $360 million, initially expected to become operational this year. The project was created by Shenzhan Energy Group Ltd. and the China Africa Development Fund with preliminary feasibility Hu Deping, Chairman of China Africa Business Council, announcing China’s support for the studies underway. Sunon Asogli Power Plant in Ghana

Source: Embassy of China

Senegal is doing the same to its power utility, Société Nationale d’Électricité du Sénégal (Senelec), with a recovery plan for the sector to be implemented and monitored by industry experts and professions. The government plans to create a National Energy Council, under the direct supervision of the president, which will monitor and evaluate the country’s plan Takkal. The program aims to up emergency measures by focusing on re-establishing consumer confidence in the utility through the introduction of pre-paid meters; better managing internal demand by implementing more energy efficient technologies (replacing incandescent light bulbs with energy efficient bulbs); increasing shortterm electricity production capacity by renting two power plants; and financial restructuring to help the utility meet its debts.

Source: Aecom

In addition to seeing more privatization, many national utilities are undergoing major changes. Ethiopia is currently planning to restructure its national utility, the Ethiopian Electric Power Corp. (EEPCo). The East African country plans to strengthen EEPCo’s organizational implementation capacity by increasing the development of electricity and access to services. The government also plans to strengthen regulation of electricity providers for reliable service, expanding alternative energy production, and increasing emergency oil reserves.

Upon completion, the natural gas combining cycle plant could add 360 MW to the country’s power generation enhancing the first phase that produces 200 MW, or about 15% of Ghana’s total power generation. The project’s second phase was delayed as a result of financial constraints


due to an unreliable supply of gas, but Sunon Asogli Power Ghana Ltd. managing director Zhang Haicheng said that there were plans to explore wind energy in the future. Elsewhere Wartsila is looking to supply Africa’s largest purely gas fueled combustion engine power plant. The German company will supply and construct a complete power plant in South Africa for Sasol at the company’s facilities in Sasolburg. It will generate baseload electricity for the company’s own use, with excess production being eventually wheeled through the national grid. Following on the heels of the state-owned utility Nampower’s support for a grid upgrade, Namibia’s Ministry of Mines and Energy announced it will didicate about $200 million for the Tsumkwe Energy Project to fund the rehabilitation and expansion of the grid. The partially-funded European Union project, implemented by the Desert Research Foundation of Namibia, NamPower, and the Otjozondjupa Regional Council, expects to commission a 200-kW solar diesel hybrid power plant in September. Currently, Tsumkwe has nearly 80 solar water heaters with its power generation comprising a 350-kVA diesel generator that feeds electricity into the grid for about 10 hours day. Algeria and Morocco entered into a commercial contract for the delivery of Algerian gas for power plants in Morocco. In March 2011 it was reported that the two countries would begin technical studies into the possibility of supplying natural gas to Morocco for power generation.

The commercial gas contract signed will see the delivery of Algeria’s gas to the Ain Béni Mathar and Tahaddart power plants in Morocco. Under the contract, 640 thousand cubic meters of gas will be delivered on an annual basis over 10 years. Despite the inept power generation capacity throughout the continent, there are some great opportunities. One such area could be emergency power generators, needed to help meet growing demand while positioning them to take a permanent role within the industry. The increase in direct investment into the electricity industry is set to push market expansion. In Tanzania’s drive to keep the lights on, the Tanzania Electric Supply Co. (Tanesco) signed a $37-million contract with Aggreko Plc to supply 100 MW of emergency power for 12 months. The East African country announced that it would begin a 12-hour power rationing schedule after decreased rainfall had put a clamp on the Mtera hydrodam. Under the terms of agreement, Aggreko will provide two 50-MW diesel-powered plants at Ubungo and Tegeta as well as manage the fuel supply associated with power generation. Badra Masoud, the Tanesco communications manager, said that the government is seeking other ways to mitigate the power deficit including a 70-MW power project expected to break ground in a few months. The $700-million hydropower plant, developed by Russian firm Zarubezhstroy Corp., is expected to cover 25% of the country’s power demands once completed, adding 222 MW to the national grid, she added.


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By Ricardo Silva Miranda Correia Amendoeira & Associados*

GOLA

P re

’S

A

Local Impact

When technical challenges lead to contractual and regulatory changes...

t l -Sa

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ike a veteran prizefighter, the oil and gas industry has been declared finished or declining so many times, only to stage a comeback and rise up stronger than ever. The industry’s capacity to reinvent itself and find reserves when production decreases is second to none, with tar sands, unconventional gas, and the pre-salt play being recent examples. The practical outcome resulting from the wildcatter’s gamble can truly change the fate of an oil and gas province, and there is probably no better example at this moment in time than pre-salt. The new play put Brazil on the map, appears to be giving Gabon a second life, and is expected to add decades of reserves to Angola (with estimates between 1.2 and close to 2.0 billion additional barrels of oil). However, the pre-salt play has challenged the creativity of the technical world, with significant difficulties having to be overcome by seismic contractors, drilling companies, and the E&P companies themselves. If obtaining meaningful images below the thick layer of salt and interpreting them wasn’t enough, companies have also been forced to play touch and go on a daily basis to address the complex technical challenges of drilling deep below the salt layer, at sometimes incredible depths of water. On another note, the pre-salt play has also brought about legal and regulatory changes. Some of those changes have been linked to purely political decisions, as is the case with Brazil’s change to a production sharing model and attempt to concentrate pre-salt blocks in the hands of Petrobras. But other significant legal and contractual changes have arisen elsewhere, mainly driven by the increased technical challenges and the oil companies’ attempt to adapt contractual models to better address the commercial and economical concerns brought about by the pre-salt play. Oil companies have been increasingly concerned by contractual aspects that are directly linked to the difficulties in exploring for and producing petroleum from pre-salt reservoirs. In the exploration phase, for instance,

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Petroleum Africa February 2012

companies are increasingly looking for longer and more flexible contractual terms, which will allow them not only to adequately shoot and process seismic data, but also give them time to carry out the necessary drilling campaigns (including time for reevaluation once drilling has commenced, for performing maintenance and improvements to rigs and other equipment). Additionally, due to the need to speed up seismic acquisition (so as to leave time for what could be long and complex drilling campaigns), and to reduce costs with drilling of expensive exploration and appraisal wells, companies are also looking for more flexible contractual models for services, such as multi-client seismic operations, rig sharing agreements, etc. Although these concepts and solutions are fairly common in the modern oil industry, not all legal frameworks are prepared to deal with them. Changes are also required in the development phase, with companies concerned that tight deadlines to bring commercial discoveries online may not be realistic, considering the challenges of studying and producing a feasible and economic development model. One country where existing models have had to be adapted to the pre-salt challenges and opportunities is Angola, where the hype surrounding the recent pre-salt licensing round (PSCs were executed in Luanda in December 2011) has been in part justified by the oil finds in Maersk Oil’s operated Block 23 and in the Cobalt International Energy operated Block 21. After initially experimenting with a risk services concept for Cobalt’s Blocks 9 and 21, the Ministry of Petroleum and Sonangol EP (the national concessionaire) have gone back to the traditional Production Sharing Contract (PSC) for pre-salt Blocks 19/11, 20/11, 22/11, 24/11, 25/11, 35/11, 36/11, 37/11, 38/11, 39/11, and 40/11. This having been said, the traditional PSC model had to be amended, among other issues, to cater for the possibility of post-salt discoveries in pre-salt blocks. Companies were also given greater flexibility in terms of negotiation and bidding criteria, so as to establish the required commercial terms to balance out the risk inherent in pre-salt exploration.


In the meantime, through Presidential Decree 243/11, of September 7, 2011, the Angolan government approved the “General Strategic Framework for Pre-salt Exploration in Angola.” Far from being a strict set of rules for this new play, Presidential Decree 243/11 is aimed – as its name suggests – at setting forth the main principles on which the exploration and exploitation of Angola’s pre-salt potential will be based for the future. In this respect, the oil companies active in Angola’s pre-salt are expected to assist (i) in the creation of a new State-owned company, called “Research and Technology Center”, entrusted with gathering and developing the technical know-how required to carry out exploration and production activities below the salt layer, (ii) cooperating in the training of Angolan nationals to work in the petroleum sector, and (iii) assisting with social development in the country. It is also expected that new changes will be introduced in terms of local content, with the government currently working on the modernization of the country’s regulations in this respect. Additionally, Presidential Decree 243/11 also recommends the creation of a new and independent regulator, which will be separate from Sonangol EP (which currently also holds some regulatory powers), with the latter expected to take on an increasingly business role. Finally, the “Strategic Framework” also makes reference to the need for the new PSCs (those signed in December 2011) to follow the new foreign exchange rules applicable to the petroleum sector. In line with this recommendation, the Concession Decrees covering the new pre-salt blocks were not gazetted with the traditional Annex C that hitherto contained the foreign exchange rules applicable to petroleum operations in each given block. However, this raises cause for concern, as the new foreign exchange rules (recently approved by Law No. 2/12, of January 13, 2012) will only come into force 120 days after publication, meaning that it is still unclear what foreign exchange rules will apply

to the new concessions in the interim. And as we have seen, one aspect that is crucial to the possibility of success in pre-salt exploration is the oil companies’ ability to contract for the goods and services required to commence activities early in the exploration period. On another note, the State of Angola has also improved its environmental supervision instruments, notably through Presidential Decree No. 194/11, of July 7, 2011 which approved the Regulations on Liability for Environmental Damage (please see Petroleum Africa October 2011 and January 2012 editions for more details), which has provided it with modern tools to address the environmental challenges of ultra-deep water pre-salt exploration and production activities. At the end of the day, the good news coming out of Angola is that the authorities, while looking to improve the existing regulatory and contractual model, have also shown concern in preparing a level playing field for hydrocarbon exploration and production in the country’s presalt. By sticking to the traditional production sharing model, giving oil companies increased negotiation opportunities (not only in terms of work programs and bonuses, but also in respect of production sharing, among others), and welcoming suggestions for fine-tuning amendments to the model PSC, Sonangol and the Ministry of Petroleum have, once again, managed to attract the big players to the country. With this environment, if the country’s pre-salt potential is confirmed, Angola may well be the place to be in the near future. * Ricardo is a Partner at Miranda Correia Amendoeira & Associados’ Lisbon headquarters, and is responsible for coordinating the firm’s Houston and Timor-Leste offices. He is Vice Head of the firm’s Energy Practice Group and frequently advises oil companies and service providers in setting up and carrying out their operations in Angola, Equatorial Guinea, and Timor-Leste. He may be contacted at ricardo.silva@mirandalawfirm.com.


African Focus By Jennifer Nickle Deputy Editor

NIGERIA Politics and Economy

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But the problems the Nigerian government, and Jonathan in particular, face are not just of a religious or political nature. The regime has serious economic problems which revolve widely around revenue mismanagement, corruption, and the oil industry, with all the issues intersecting at some point. The economy is based largely on petroleum production and, as Africa’s largest producer of oil, one would expect it to be booming; however, that is not the case as the government throws good money after bad trying to refurbish refineries that operate way below capacity or not at all. There is also reportedly deep corruption at the highest levels of the country’s national oil firm, the Nigerian National Petroleum Corp. (NNPC), which hampers economic growth.

The election that brought Nigeria’s current president, Goodluck Jonathan, to power broke this tradition when the north did not get its full two terms in office due to the death of Umaru Yar’Adua in May 2010. Jonathan, his vice president, succeeded him putting a southerner in the presidential office. With 2011 being an election year for Nigeria, Jonathan was dually elected to the office of president, despite being from the south during the north’s turn in office.

The country’s economy is also top heavy, meaning that the majority of Nigeria’s wealth is seen by only the people in the upper echelon of its society, leaving everyday citizens in Africa’s largest country by population in abject poverty. Under current laws petroleum revenues are dispersed to local governments but the trickle down effect is failing in the Niger Delta leading to the crux of most of the country’s militant problems. The residents of the Niger Delta have been demanding a greater share of petroleum revenues, but this has not yet happened.

North or south, the Nigerian presidency is a tough job and Jonathan’s tenure has been no exception. One of the main thorns in the presidential side, a militant group called the Movement for the Emancipation of the Niger Delta (MEND), has been relatively quiet over the past year except for a few bomb blasts. However, Jonathan has suffered another thorn in his side over 2011 through an Islamic sect in the north. The sect is referred to in the Hausa language as Boko Haram, which translates into “Western education is sacrilege” or “Western education is a sin.” Boko Haram have launched a number of attacks against the government and Christians in the north, as well as taken credit for the bomb blast at the UN building in Abuja. Retaliatory attacks have also taken place in both the north and south, the latest being an attack on a mosque and the torching of an Islamic school in the southern city of Benin.

President: Goodluck Jonathan (since May 2010) Independence: October 1, 1960 (from UK) Population: 155,215,573 (July 2011 est.) GDP (purchasing power parity): $377.9 billion (2010 est.) President Real GDP Growth Rate: 8.4% (2010 est.) Goodluck Jonathan Per Capita GDP: $2,500 (2010 est.) Minister of Petroleum: Mrs. Diezani Alison-Madueke Oil Production: 2.21 million bpd (2010 est.) Oil Consumption: 279,000 bpd (2010 est.) Proven Oil Reserves: 37.5 billion barrels (January 2011 est.) Natural Gas Production: 32.82 billion cubic meters (2010 est.) Natural Gas Consumption: 12.28 billion cubic meters (2010 est.) Natural Gas Imports: N/A Proven Natural Gas Reserves: 5.215 trillion cubic meters (January 2011 est.)

Petroleum Africa February 2012

Source: CIA World Factbook January 2012

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igeria is made up of over 300 tribes, making for conflict in many areas of its political arena with each jockeying for political position; and while the country has hosted multi-party elections the process in which they have been conducted is rather questionable. The government is said to have been modeled after the US, yet the Nigerian election process has one or two idiosyncrasies of its own. In Nigeria, elections are not really about an agenda for economic development but rather about ethnicity, religion, and regionalism. So historically they have been won as a result of either a formal alliance by political parties or an informal agreement within the governing PDP party to alternate the presidency between north and south, or basically between Muslims and Christians.


Inflation in Nigeria is a big threat to the country’s economy and leaves little room for the government to loosen its monetary policy. The Central Bank of Nigeria has kept its benchmark rate unchanged at a record 12%, believing that six percentage point increases since September 2010 will control rising inflation. According to analysts, price pressures may climb in 2012 as the government tries to bring an end to fuel subsidies and the economy expands at an estimated rate of 7.7%. The government devalued its national currency, the naira, and lowered its budget price for oil exports from 2011’s $75 per barrel to $70 per barrel for 2012. The International Monetary Fund’s (IMF) chief, Christine Lagarde, visited Nigeria at the end of 2011 and said that the country’s establishment of a sovereign wealth fund and its emphasis on using oil revenues for stabilization and investment are important advances. While the sovereign oil fund is a good basis to fill the country’s wallet, projects chosen for these funds will need to be carefully considered. Prudent management of natural resource revenues will create room for critical public spending, Lagarde said. “Given the distance still to go to reach the Millennium Development Goals, increasing the resources available to build stronger social safety nets is particularly important, including in areas such as maternal and child care,” she added. It was also noted that Nigeria, like most oil-based economies, would need to diversify to help it withstand economic shocks. Diversification, Lagarde said would “provide for more broad-based growth, with opportunities and jobs for the entire population.”

The Industry and NNPC

Nigeria’s petroleum industry plays a significant role in the country which is the world’s 12th largest oil producer and the eighth-largest exporter, and holds the 10th largest proven reserves. The country is also a founding member of OPEC. Its state-run oil and gas firm, the NNPC, was established well over four decades ago to take charge of Nigeria’s upstream and downstream sectors. Over the years the company has founded a number of subsidiaries to aid it in its endeavors. In addition to the subsidiaries listed below, the industry is regulated by the Department of Petroleum Resources (DPR) from within the Ministry of Petroleum Resources. The DPR is mandated to ensure compliance with industry regulations, process applications for licenses, leases, and permits, and establish and enforce environmental regulations. The

NNPC Subsidiaries National Petroleum Investment Management Services (NAPIMS)

DPR, and NAPIMS, play a very crucial role in the day-to-day activities of the industry. There have been plans to turn NNPC into a money-making proposition for more than a few years but these plans always seem to fall to the wayside. The Petroleum Industry Bill (PIB), which has also been in the works for a long time, has a provision to bring the NNPC plan to fruition, but to do that the PIB first needs to be passed by parliament which does not seem likely in the near future. Before any plans can be made to change the NNPC mandate, the company needs to clear up some hefty charges of corruption. A senate joint committee is investigating the management of funds that were set aside for petroleum subsidies. An audit allegedly exposed massive financial malfeasance and corruption following reports from the government of Nigeria of possible inaccuracies in crude oil and gas revenues remitted to its account by NNPC. The reports arose from allegations of wrongful deductions by NNPC to fund its operations. It was also noted that despite attempts at transparency NNPC procedures for managing and reporting crude oil and gas revenues were opaque and characterized by gaps, overlaps, and inconsistencies. This led to the government engaging KPMG to carry out a forensic review of the state-run company. The KPMG report listed its findings, the implications of these findings, and recommendations on how to go about eliminating the problems. One prominent issue throughout NNPC’s petroleum cycle was non-compliance with regulations and procedures, which has led to a significant loss of petroleum revenues through error or malfeasance. The president recently ordered a new audit of the industry, going back three years. Whether any or all of KPMG’s recommendations from the new audits will be adapted is unclear, and if so, as with most changes, they will take time to implement. And yet legislation that will clean up and simplify the country’s petroleum industry, the PIB, is sadly collecting dust. The bill was introduced to the senate in January 2009, and three years later it still has not been made into law. To say the document is lengthy is an understatement; in its original form it encompassed 244 pages with 527 clauses, covering everything from the government’s objectives to pensions for the upstream, midstream, and downstream sectors. The document also lays out several different bodies to oversee the industry: the National Petroleum Directorate, a Nigerian Petroleum Inspectorate, and a National Midstream Regulatory Agency to mention a few. It also lays out plans, as mentioned previously, to convert NNPC to a self-financing NOC and convert NNPC joint operation agreements to NOC incorporated joint ventures.

Nigerian Petroleum Development Co. (NPDC) The Nigerian Gas Co. (NGC) The Products and Pipelines Marketing Co. (PPMC) Integrated Data Services Ltd. (IDSL) Nigerian LNG Ltd. (NLNG) National Engineering and Technical Co. Ltd. (NETCO) Hydrocarbon Services Nigeria Ltd. (HYSON) Warri Refinery and Petrochemical Co. Ltd. (WRPC) Kaduna Refinery and Petrochemical Co. Ltd. (KRPC) Port Harcourt Refining Co. Ltd. (PHRC)

Last December there was again hope that the PIB would see the light of day. Nigerian Oil Minister Diezani Allison-Madueke, speaking to a small group of reporters at an OPEC meeting in Vienna, said changes had been made to the bill’s fiscal terms and other aspects. The government had taken another look at the most contentious clauses in the PIB and certain modifications were made. These included making the PIB more focused on Nigeria’s domestic natural gas and its deep offshore petroleum resources, particularly ultra-deepwater, which was not included in the original bill. Whether these terms will help it make its way through the legislation process is another matter; Allison-Madueke said it was hoped that by the end of Q1 2012 the National Assembly will have moved forward.

Petroleum Africa February 2012

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African Focus

Nigeria Upstream Production Levels

As Africa’s number one oil producer, Nigeria has a robust petroleum sector. The country’s official totals for 2011 are not in yet but offshore developments combined with the restart of some shut-in onshore production had boosted crude production to an average of 2.17 million barrels per day (bpd) as of July 2011, and planned upstream developments should bring the country’s output capacity even higher once they move forward. The timing of these start-ups will depend heavily on the PIB and the fiscal/regulatory terms it imposes on the oil industry. Many of the planned projects described below have already been on hold due to the delay in passing the bill. Production levels saw a dip toward the end of 2011 when Shell had to shut-in production at its offshore Bonga field due to a spill. Shell reported that the spill released around 40,000 barrels of crude into Nigerian waters. Workers discovered the leak after seeing a sheen of crude in the water surrounding the field. The leak, discovered on December 20, came from a break in a flexible line from the vessel that was sending oil to tankers. The spill was contained and clean up began with ships and aircraft dispensing chemical dispersants. The company also cleaned up another spill it discovered while containing the first. This spill was found around the mouth of a river in Delta State said Mutiu Sunmonu, Shell Nigeria’s chairman. Sunmonu said samples of the oil showed it came from a different source, but added the company would clean it up as well. Aiding the country to maintain its status quo in exploration and production are a host of companies, from the largest of major firms to the most junior of independents, and from state-run firms to indigenous companies. Major oil firms Shell, Chevron, ExxonMobil, Total, and Agip all contribute heavily to Nigeria’s production totals. The country plays host to independents like Addax Petroleum, Afren, and Maurel et Prom, while indigenous firms, including Oando, Platform Petroleum Ltd., and Shebah Petroleum Development Co. Ltd., are also making their mark on the country’s petroleum scene. Indigenous firms are expected to take a bigger role in increasing production totals as the government has a marginal field licensing round in the works. The round was originally expected in 2010 but no further word was released in 2011; however, it is thought to still be on the books and indigenous firms will eventually get their chance to bid. Currently only about 5% of Nigeria’s 2.4 million bpd in production can be attributed to indigenous firms.

A Major Issue Tough Times for Shell Shell, through its various units in Nigeria, is the country’s largest producer despite the fact that it is also the number one target for militant contingents in the Niger Delta. While the past year was pretty quiet for the company, it still had to contend with disruptions to its production by vandals. The troubles Shell has endured over the years due to

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vandalism has led it to sell off some of its assets in the Niger Delta, some during 2011. In November it was reported that a deal for stakes in two onshore oil blocks, previously owned by Shell, Total, and ENI, was completed. First Hydrocarbon Nigeria, majority-owned by Afren, bought a 45% stake in OML 26, and a consortium led by local firm Nestoil bought a 45% stake in OML 42. The company, through its SPDC unit, started off 2012 by tackling a leak at its onshore Nembe Creek Trunkline (NCTL) caused by vandals stealing crude. The pipeline was shut-in on December 24, effectively taking around 70,000 bpd off the market, not all of which was Shell’s as the trunkline evacuates the majority of SPDC and third-party crude oil production from the Eastern Swamp operations to Bonny Terminal. An investigation conducted jointly with the DPR, the Bayelsa State Ministry of Environment, SPDC, and the community showed oil thieves had installed valves at two points near the Tora manifold in Nembe in Bayelsa State. More than 200 barrels of spilled oil were recovered. SPDC was working to repair the line and was expected to be finished by the beginning of February, barring any complications. The company also saw incidents of theft at Imo River over the past year and shutin production in late August due to sabotage activities. Shell said that some 16 oil theft points were discovered in the Imo River field in September. In Q4 2011 the company reported 10 additional oil bunkering incidents. Some of the latest incidents were on the Okordia-Rumuekpe, the Imo River-Ogale, and the Buguma-Alakiri trunklines. Four separate incidents were reported on sections of the Obigbo North delivery line at Komkom and Ogale. An over fly of the area showed that holes were drilled and valves installed to transfer crude to waiting barges and trucks, in the process, causing spills that polluted farmlands and water bodies. SPDC saw its loadings from Forcados under force majeure in October. The pipeline serving Forcados underwent repairs from a leak due to sabotage. As a result of the repairs the loadings for October, November, and December were pulled off the export docket. The company also shut-in the EA field a number of times over the past year. The latest shut-in was for routine maintenance, and production on the shallow water field resumed on December 27. The field was brought back online after completion of the scheduled statutory inspection, engineering, and maintenance work on the FPSO vessel, Sea Eagle. The Sea Eagle was shut-in on November 9 for the exercise, which included repairs to the Soft Yoke Mooring Platform and Relief Valve Recertification. Shell unit SNEPCo. develops Nigeria’s deepwater resources. The company produces oil and gas in water depths up to 2,500 meters and has made some significant discoveries, including the previously mentioned Bonga field, Nigeria’s first major deepwater project. The Bonga has the capacity to produce more than 200,000 bopd and 150 million cubic feet (Mmcf) per day of gas. Petrotechnics was awarded a contract by SNEPCo. for work on the Bonga FPSO. The company deployed its electronic integrated safe system of work Sentinel PRO® on the FPSO. SNEPCo. also tagged BME UK for the provision


Source: Fairmount Marine

Release of Usan FPSO by Fairmount Glacier

of its specialized machinery and reduced flow technology (SMART) for the Bonga. Ready, Steady, ExxonMobil US supermajor ExxonMobil contributes to the country’s production totals through its Mobil Producing Nigeria (MPN) unit. MPN has an output of 290,000 bpd of crude oil net and 100,000 bpd of condensate; it is responsible for roughly 750,000 bpd gross as a project operator. MPN had invested an estimated $11 billion in Nigeria’s petroleum sector through 2011 on its JV and PSCs. The company has holdings both onshore and offshore. MPN was not immune from attacks over the year; in October 2011 it reported that a vessel supplying one of its platforms was hit by gunmen. During the attack one worker was seized while another was wounded. While this was not the only incident to take place, it was the latest. The worker seized was eventually released. On the operational front, ExxonMobil saw some work done on its Oso Re project. Acergy awarded Serimax the welding scope of its contract with ExxonMobil for pipeline replacement. Serimax is removing existing risers and installing approximately 15 km of corrosion-resistant alloy pipelines and associated risers for the project. ExxonMobil’s deepwater Erha development is made up of the Erha and Erha North fields. Erha currently produces more than 150,000 bpd, while Erha North is producing 40,000 bpd. In addition, Erha North Phase 2 is scheduled to come online in 2013. This phase of the development will be a subsea tieback to the existing Erha FPSO and will further develop the Erha North field at a peak production rate of 50,000 bpd. The company also has development of the Bosi and Uge fields in the works. The development is planned as a phased project with subsea tiebacks to a spread-moored FPSO vessel. The Bosi project phases are expected to develop approximately 500 million barrels of oil and 2.5 trillion cubic feet of gas. Esso’s Bosi came onstream in 2008 at 110,000 bpd and is expected to reach 135,000 bpd by 2014 through further development of the field. Shell is a partner in the development with a 44% interest. ExxonMobil, partnered with ConocoPhillips, among others, is also on OPL 214. The OPL contains the Uge field which will be developed

utilizing subsea wells producing to a dedicated FPSO. In 2010, the Uge North location was developed into a drill-ready prospect with drilling planned. The OPL also contains the Orso discovery and a number of other prospects and leads which are being investigated. Chevron Woes Chevron holds a number of operated and non-operated stakes both onshore and offshore Nigeria. While its official production numbers for 2011 are not in, it did close out 2010 with a total average daily production rate of 524,000 bpd of crude oil (237,000 net), 206 gross Mmcf gross of natural gas, and 5,000 gross bpd of LPG through its principal subsidiary in Nigeria, Chevron Nigeria Ltd. Over the past year or so, the company saw construction at its Olero Creek Flowstation project continue, with completion expected in 2013. In August Chevron spud an offshore well on the Agbami field using the Pacific Bora. The Agbami averages just under 250,000 bopd and 16 Mmcf of natural gas. Chevron saw Agbami 2’s 10-well drilling program launched in May 2010; drilling is expected to continue through 2014. The program is due to provide an additional 100,000 bopd which will aid in offsetting the natural decline of the field. Total cost for the program is expected to hit about $1.9 billion. The first well in the drilling schedule was put online in H2 2011. In November a supply vessel servicing the Agbami field was attacked by gunmen who kidnapped three workers. The men were released about two weeks later. The last operated deepwater project in the works for Chevron is the Nsiko field on OPL 249. Discovered in 2003 with the drilling of the Nsiko-1 wildcat well, the development is slated to come online in 2015 or 2016. The company also saw one of its onshore facilities shut-in during December due to an attack on the pipeline servicing it. The shut-in took place on the Dibi-Abiteye pipeline, which the company had been upgrading. The pipeline feeds the Escravos oil stream. 2012 did not start off in the best manner for Chevron. The company saw a rig go up in flames in mid-January on the Funiwa field. The fire started on the KS Endeavor and carried over to the support vessel, the Mako, which was providing excess storage services. The rig, operated by FODE Drilling Nigeria Ltd., was drilling a natural gas exploration well. Chevron said that there were 154 personnel on the rig and

Petroleum Africa February 2012

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African Focus

Total Control French firm Total holds stakes in more than 50 permits in Nigeria. The company’s current operated production sits at around 235,000 boepd, from both onshore and offshore blocks. The company slated part of its 2011 capex for two projects in Nigeria, the Egina field and the Ofon Phase 2. The Egina resides on the same block as the Akpo, OML 130. The field is being developed by Total in partnership with NNPC, CNOOC, Sapetro, and Petrobras. The Egina was initially planned to be developed as a subsea tieback to the Akpo FPSO but major discoveries in the area led to the decision to move it forward as a standalone development. The Egina field is expected to come onstream by the end of 2014 or early 2015 and is estimated to reach a peak production rate of 150,000 bpd, while the new FPSO for the Egina will have a production capacity of 200,000 bpd. Total’s Usan development on OML 138 is moving closer to production. The field saw the delivery of the FPSO in H2 2011 and its safe positioning over the field in October using the Fairmont Glacier. The Usan FPSO can refine 160,000 bopd and 5 Mmcf/d of natural gas, with a two-million barrel storage capacity. The development of the Usan field involves 23 production wells and 19 water and gas injection wells. The field is expected to produce at a rate of180,000 boepd and come onstream later this year. Into ENI Italy’s ENI and its various subsidiaries such as Agip are busy in Nigeria and responsible for about 152,000 bpd gross of the country’s production capacity. ENI has 50 mining concessions with 95 fields currently in production. Its exploration in Nigeria yielded positive results over the year. OML 36 saw a gas discovery with the drilling of the Opugbene 2 appraisal well. In H1 2011, ENI acquired from GEC Petroleum Development Co. a 49% interest in OPL 2009 and was awarded a 50% interest in OPL 245 as well as operatorship. ENI also worked on upgrading the flowstation at the Ogbainbiri field which is expected to start up in 2012. Engineering activities on the Tuomo field took place to link it to the Ogbainbiri treatment plant. Offshore on OML 119, the Phase 2A project moved forward with the drilling of two subsea wells and linkage to the existing FPSO to develop 25 million barrels of additional resources. ENI is the technical partner on OML 119 with NNPC unit NNDC as operator. The gas development plan for the field (Okono/Okpoho) involves the construction of a pipeline to transport gas from the Mystras FPSO to Bonny Island. The scope of work also includes the topside modification of the FPSO to handle gas. Activities on OMLs 60, 61, 62, and 63 were aimed at guaranteeing natural gas production for feedstock to Nigeria LNG (NLNG), and increasing capacity at the Obiafu/Obrikon plant was also geared toward LNG feedstock. Working on its flare-down program, ENI launched an

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upgrade of the flowstation on the Idu field with the installation of a compressor unit. Start up of the flowstation is expected later this year. ENI is also partnered with Shell on OML 28’s integrated oil and natural gas project in the Gbaran-Ubie area. According to the company the drilling program for the project progressed. The development plan for the Gbaran-Ubie provides for the construction of a Central Processing Facility (CPF) with treatment capacity of approximately one billion cubic feet (Bcf) of natural gas per day and 120,000 barrels of liquids per day. ENI and Shell saw the start of production from the field in July 2011 with flow from the first two of 33 planned wells. A second phase of the development is still under discussion.

Independent & Indigenous

While major IOC’s may tally up a good portion of Nigeria’s production totals, independents contributing to making it Africa’s number one producing country are nothing to sneeze at. Independent firms of all sizes are working to make their mark on Nigeria’s production and for the most part have not had to face disruptions from the militant contingent. That is not to say that they operate freely, but the occurrence of such interferences are fewer. There are a multitude of companies, not qualified as majors, in Nigeria’s petroleum scene that it would take a book to cover them all; below is just a small sampling of what some of these firms are doing.

Source: Addax Petroleum

associated barge when the fire broke out; all but two contractors at press time were accounted for. Those personnel who were safe underwent medical examinations at an adjacent production platform. The fire also shut-in the North Apoi platform due to its proximity to the incident. As for the Mako support vessel, its owner Hercules Offshore said it would most likely be a write-off for the company as it sustained significant damage.

Addax Petroleum’s operations in Nigeria

Addax on a Roll Sinopec Group company Addax Petroleum, while not technically an independent anymore being now part of an NOC, tops the chart in the independent contingent when it comes to producing in Nigeria. The company holds stakes in seven concessions totaling around 870,000 net acres. Operating four of these concessions with 100% interest, Addax’s producing assets include 11 field complexes with around 60 production wells in concession OML 123, two fields with 20 producing wells in concession OML 124, and two fields with 14 production wells in OML 126. OML 124 is the company’s only onshore asset and contains one undeveloped field, the Njaba, discovered in December 2008. Addax says that the OML also contains several identified exploration prospects that have yet to be drilled. According to the company ongoing progress with field development planning is expected to result in a significant increase in its production, from the present combined 75,000 bpd from OML 123, OML 124, and OML126 to over 85,000 bpd at the end of 2012. In November Addax saw the installation of subsea pipelines and topsides at the


RECYCLING Saves Time and Money The MOPU used on the Ebok is a former jack-up drilling rig that has been converted to a production facility by removing the drilling package and replacing it with a processing unit. The facility has the initial capacity to handle oil production of 50,000 bpd, and has been designed to allow for onsite expansion and upgrade to accommodate production from future additional development phases. Afren says that the advantages of utilizing a converted jack-up are many; the installation of the unit did not require a derrick barge, and it could be installed while drilling operations were in progress, allowing for simultaneous installation and drilling with minimal interruptions to work. The FSO on the field was converted from a pre-existing tanker; greatly reducing lead times to delivery compared to if a new build was commissioned. The FSO provides a storage volume in excess of 1.2 million barrels, which allows for the sale of million-barrel cargoes that in turn provide maximum flexibility to optimize shipping and crude marketing economics. The opting for the MOPU and FSO development configuration has provided an estimated total cost savings of $51 million in upfront costs and day rate charges compared to alternative FPSO development solutions that were considered.

Adanga field on OML 123 completed. The work was undertaken by Kaztec Engineering Ltd., a subsidiary of Chrome Group, using its Ekulo Cheyenne derrick and construction barge. Kaztec was also contracted for the next phase of the integrated development of the Adanga which involves the installation-focused contract that includes new wellhead and water injection facilities, pipelines, and risers with tie-in and hook-up spools to existing pipelines, as well as modification and repair of existing pipelines. Besides the producing fields mentioned above, Addax has a small stake in the Okwok, partnered with Afren Plc and indigenous firm Oriental Energy Resources. The field’s production will be brought online as a standalone development. A multi-component, ocean bottom 3D seismic survey across the broader Okwok/Ebok area was run. Addax’s partner Afren said that the data will provide additional information to assist with field development planning and optimal placement of one further appraisal well on the field. On Addax’s OPL 227, a 3D transition zone seismic survey was completed. The challenging survey, the first conducted in this region of the Niger Delta in over four years due to the ongoing security issues, was run by Terraseis. Afren – A Nigerian Core Afren Plc, mentioned previously in conjunction with the Okwok development (above), has significant holdings in Nigeria. The company’s main assets are the Ebok, the Okwok, and the OkoruSetu. The Ebok on OML 67, operated by Oriental Energy Resources, has seen a lot of attention by the partners over the past year. February 2011 saw the successful installation of the production, processing, and storage facilities on the field and commencement of

production operations. The field is being developed as a phased development with Phase 1 targeting the Central Area of the field and Phase 2 the West Fault block. Afren said that production experience to date from the Phase 1 development has confirmed that reservoir properties and productivity of the D2 reservoir wells are at the upper end of expectations. The field saw its production rates affected during H1 2011 due to non-reservoir related periods of facility down time, specifically the longer than anticipated commissioning period for the Mobile Offshore Production Unit (MOPU), necessary suspension of production during simultaneous drilling and production operations, fine tuning of the process facilities, and commissioning of the gas turbines and related systems to deliver the water injection capability. As a consequence, production at the field during H1 was 3,300 bpd. As of January 2012 output at the Ebok field had increased to a stabilized rate of around 40,000 bpd following the commissioning and ramp-up of all production wells associated with the initial phases of the development. This production was added to by the onshore Ogini and Isoko fields, where the company is partnered with First Hydrocarbons Nigeria (FHN), and production has almost doubled following technical challenges in early December. Currently development drilling at Phase 2 of the Ebok is underway using the GSF High Island VII rig. Phase 2 is expected to add 20,000 bpd to gross field output once all five wells are onstream. Afren’s development strategy is to systematically bring each proven area onstream and, through ongoing drilling, continue to increase the reserves base and production from the field. The company plans for the MOPU and FSO to become a central facility for not just the area immediately surrounding the Ebok structure, but also for the broader Ebok/Okwok/OML 115 area, allowing for the economical and rapid tie-back of production from potential future developments on the acreage. The year ahead will see ongoing development beyond Phase 2 aimed at the proved undeveloped reservoirs in the Central Fault block and Southern Lobe of the West Fault block. The company is planning further exploration and appraisal drilling at Ebok North, an untested fault block in the northern area of the field, where it is believed the same reservoirs that have been proved to be oil-bearing elsewhere on the field are also present. The company is also partnered with Oriental on OML 115. The license is adjacent to and surrounding the Ebok and Okwok fields. Following a period of interpretation and integration of new seismic with existing data the partners intend to spud an appraisal well and plan to submit a field development plan to the government in mid-2012 targeting the Ufon prospect. Afren and its indigenous partner Amni International, successfully completed a two-well infill drilling campaign on the Okoro Setu development on OML 112, bringing the Okoro-11 and Okoro-12 horizontal production wells onstream, increasing gross output at the field to 21,000 bpd. Elective de-bottlenecking work at the FPSO was undertaken to increase gross liquids handling capacity from the initial 27,000 bpd. This will allow for oil production to be maintained at higher levels for longer. As a result of this work, which included a necessary suspension of production, current gross production on the field is between 18,000 to 19,000 bpd. Its off-take is transported by shuttle tanker to the Amni-operated Ima terminal. To start off 2012 Afren and Amni saw a pretty significant discovery on OML 112 with

Petroleum Africa February 2012

39


African Focus

In July 2009 Afren established FHN to be a majority Nigerian-owned oil and gas company in the indigenous exploration and production sector. The company said this action was in direct response to the government’s call for an increased level of local participation. FHN negotiated to pick up a stake in OML 26. The block contains two producing fields (the Ogini and Isoko) and three undeveloped assets. A three phase field re-development has been defined for the Ogini and Isoko fields. Production is expected to increase to 40,000 bpd, following the first two phases over four years. Afren provides technical and operational management services to FHN under an agreed set of terms. The deal giving FHN rights to OML 26 was finally concluded in December. FHN now has a 45% interest in OML 26 following the conclusion of the deal with SPDC, Total, and Agip. The company has also secured financing facilities totaling $280 million to meet its obligations. Oando Going Strong Oando is blazing a trail for indigenous firms across the continent, showing that it doesn’t take a multinational to bring the oil home or get it to market. The indigenous company has a host of subsidiaries covering almost every aspect of the industry. It has stakes in more than a few licenses and is about to increase those stakes. In 2011 Oando launched a reverse takeover of Canadian-listed Exile Resources Inc., to create Oando Energy Resources Inc. The company said it sees the acquisition as an international platform to fund the substantial investment required for E&P growth. It is the operator of two oil blocks, OPL 278 and OPL 236, is also a Nigerian Content Partner with Agip on OPL 282, and has a 45% interest in marginal field OML 56. These fields are all in different stages of development and are expected to increase Nigeria’s oil and gas reserves. In addition, the company holds a stake in OML 90 which contains the Akepo field. Oando said it should see a production capacity of 15,000 bpd and plans to ramp up further to produce 100,000 bpd by 2013. On OML 56, where Oando is partnered with operator Energia Ltd., a production boost is expected to be seen. Energia said in June that it hoped to reach 10,000 bpd of oil from OML 56’s Obodougwa/Obodeti field by 2012. Production from the field started in 2009 and is currently at 1,800 bpd; however, the company worked to add production over 2011 and expects an additional 6,000 bpd by the end of 2012. Another indigenous firm busy over the past year is Seven Energy. The company’s upstream activities in Nigeria are conducted under the name Septa Energy. It has interests in three discovered onshore fields in the Niger Delta, namely: Uquo, Matsogo, and Stubb Creek. In 2010, the Uquo-3 and Uquo-2 wells were re-entered and tested successfully. Uquo-3 has been completed as an oil producer and Uquo-2 was

40

Petroleum Africa February 2012

completed as a natural gas producer. Development of the processing and distribution infrastructure to put these fields on production is nearing completion. At Stubb Creek, a total of nine wells have been drilled to date and development of the infrastructure necessary to bring this field onto production commenced in 2011. OML 113 contains the Aje field, which is operated by indigenous firm Yinka Folawiyo Petroleum Co., with Chevron acting as technical advisor. The other partners are Vitol, Energy Equity Resources (EER), Panoro Energy ASA, and Providence Resources. Four wells have been drilled on the field, all of which have intersected hydrocarbon-bearing intervals. Following the successful drilling and flow testing of Aje-4, the partners deemed the Aje field commercial and pre-qualification tenders were issued to fabrication yards for a natural gas producing Suezmax-sized FPSO unit. The partnership line-up on the license changed a bit over the past year and could change even further in the coming months. In September 2011 it was reported that Jacka Resources was entering Nigeria with the acquisition of a stake in the license from Providence. Jacka entered into an HoA with Providence whereby Jacka agreed to acquire the direct equity interest in the license. Another possible change in the partnership has Chevron looking to exit the OML. If the deal moves forward Chevron will be selling its stake to EER for an undisclosed amount. EER could not only take Chevron’s stake but potentially the US firm’s position as operator, although Yinka might have a problem with that. The Nigerian firm said that while Chevron is at “liberty” to sell its stake, operatorship would revert to it under the terms of the JV agreement. Maurel et Prom, as part of a JV that includes Seplat Petroleum, operates several OMLs in the Niger Delta and saw increased production over the period. The company said increased production from OMLs 4, 38, and 41 was brought about by the implementation of a well workover program and reconnection of wells. During H1 2011 the JV’s efforts focused on existing wells. A program of works on identified resources (classified as C1 and C2) started in H2 2011. In September NNPC decided to transfer all its participating interest in the OMLs to its subsidiary NPDC. Mart Resources and its partners on the Umusadege field, Midwestern Oil & Gas Co. (operator of the Umusadege field), and Suntrust Oil,

Source: Mart Resources

the drilling of the Okoro East exploration well. The well encountered 549 ft true vertical thickness (TVT) of net oil pay and 41 ft of net gas pay in excellent quality reservoir sands. The Okoro East well was spud in mid-December and drilled to a total measured depth of 8,751 ft using the Transocean Adriatic IX jack-up drilling rig. The well encountered oil in the Tertiary reservoir sands equivalent to those developed and in production at the Okoro main field, in addition to the deeper previously unexplored reservoirs. The discovery of significant pay in the previously unexplored deeper zones opens up further prospectivity at similar levels on the main Okoro field and elsewhere on the block.

Drilling on the Umusadege Field


African Focus

Indigenous firms Eland Oil & Gas Ltd. and Starcrest Nigeria Energy Ltd.’s JV company, Elcrest Exploration and Production Nigeria Ltd., was one of the successful bidders for SPDC’s 45% interest in OML 40. The stake, like the one previously mentioned in conjunction with FHN, was put up for auction by SPDC and its partners Total and Agip. The Elcrest JV officially became the owner of OML 40 in December. The partners plan to work closely with the local communities surrounding OML 40 to ensure that all stakeholders benefit from the successful development of its hydrocarbon resources. Allied Energy, an affiliate of CAMAC International, picked up an interest in OMLs 120 and 121. CAMAC, a partner on the OMLs, reported at the outset of 2012 that ENI’s Agip unit was divesting itself of its interest in the two OMLs to Allied, expecting to conclude before the end of Q1. The OMLs contain the Oyo field and upon conclusion of the deal Allied plans to expedite the development of the field by drilling two additional production wells. These two wells are expected to significantly increase oil production over current levels. Other happenings on the independent front include Sirius Petroleum gaining access to the Ororo field on OML 95 through a Financial and Technical Services Agreement (FTSA) with Owena Oil & Gas and Guarantee Petroleum Co. The Ororo field is part of Nigeria’s marginal field program. Under the agreement Sirius has committed to fund the preparation of a Competent Person’s Report (CPR) and some additional preliminary preparation work including conducting an Environmental Impact Assessment, among other things. Once Sirius completes the tasks it may proceed with the acquisition of a 40% stake in the Ororo field under the terms of the FTSA. Sirius has agreed to pay $1 million in aggregate to Guarantee and Owena. The company will also need to fund 100% of development costs, if development of the field is called for, and will pay a further $500,000 to Guarantee and Owena. Mira Resources Corp.’s wholly-owned subsidiary Equinox TSB Development (Nigeria) Ltd. completed

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Petroleum Africa February 2012

its testing program on the Tom Shot Bank 1 (TSB 1) in December. The testing program was run on a 120-ft section of the 210-ft U7 interval in the Lower U7. Flows over a seven-day period averaged 280 bpd. The company allowed the lower zone four days to clean up and then conducted controlled tests at various choke sizes for three additional days to gather the pertinent information. South African independent Sacoil entered into to a deal that gave it a 20% stake in Nigeria’s OPL 281 in March 2011 from Transnational Corp. EER is the technical partner who will operate the asset on behalf of the JV and Transnational Corp. The JV will pay $20 million upon the Ministry of Petroleum’s consent and $7.5 million upon commercial production declaration. An additional $5 million will be paid within 90 days of first oil from OPL 281 being produced. SacOil reported that it expects to see first production from its newly acquired assets by 2014. The Blacksands Pacific Group extended its indigenous partnerships in Nigeria sealing a deal with Sigmund Oilfields and the Grasso consortium for the development of OPL 2012. Under the terms of the farm-in agreement with Sigmund Oilfields, Blacksands Pacific will acquire a 40% stake and legal interest with an effective 60% economic interest (subject to gross volumes lifted). Blacksands Pacific has undertaken to fund 100% of the work program. As the joint operator and financial partner, Blacksands Pacific will be responsible for the development of OPL 2012 and will be responsible for providing the required funding and technical expertise for the exploration, appraisal, development, and production of any hydrocarbons discovered on the block. Unitization of the Agbara field that straddles OPL 2012 and

Nigeria: Upcoming Projects

Project

Capacity Est. Startup (000 bpd)

Operator

Agbami 2**

100

2011-2014

Chevron

Usan

180

2012

Total

Gbaran Ubie Phase 1

70

2012+

Shell

Ehra North Phase 2

50

2013+

ExxonMobil

50-150

2014+

Shell

140

2014+

Shell

150-200

2014+

Total

Bosi

135

2015

ExxonMobil

Nsiko

100

2015+

Chevron

Uge

110

2016

ExxonMobil

Bonga North, Northwest Bonga Southwest and Aparo Egina*

* Final investment decision was expected in 2011 ** Expansion of existing Agbami field – drilling activities expected to continue through 2014 (Chevron)

Source: EIA

had good news from the field. Drilling of the Umu-7 well commenced in February 2011 and reached a final total drilling depth of 8,715 ft in March. The partners put it on production in May. The Umu-7 was followed by the Umu-8 which reached total depth in mid-July. Mart said open-hole wireline logs indicated a total of 16 hydrocarbonbearing sands, with a cumulative gross pay of approximately 385 ft in the 16 sands encountered by the well. The next spud was the Umu-9 well in November, and by mid-December it had been drilled to a depth of approximately 8,311 ft, concluding the intermediate vertical section of the well. Open-hole wireline logs have been run with results indicating a total of 11 hydrocarbon-bearing sands. The well logs indicate a cumulative gross oil pay of approximately 260 ft; total depth was reached at 10,848 ft.


OML 116, operated by ENI, will also be negotiated. Blacksands Pacific and partners, as well as the DPR, will complete the unitization negotiation(s), agreement(s), and documentation on the Agbara field.

The Subsidy Issue

Fuel subsidies in Nigeria have long been a drain on the country’s budget that the past three presidents have all tried to plug but have pulled back due to the backlash from its citizens. The latest attempt to eliminate subsidies was launched on January 1 and was part of a governmental reform program announced previously by Nigeria’s fuel regulator. Like past attempts the people of Nigeria were not happy with the government’s decision to end the subsidy and took to the streets in protest. The subsidy is seen as the only benefit the majority of Nigerians receive from the bonanza of oil and gas produced in the country; however, economists say the subsidy promotes corruption and is wasteful, unsustainable, and siphons off billions of dollars of public funds to a cartel of fuel importers.

Most Nigerians don’t agree. Reports had hundreds of citizens forming human barriers along motorways to shut petrol stations to protest the removal of the subsidies. More than 1,000 gathered in Lagos’ main market area chanting and waving signs that read “no to fuel price hikes” and “we demand living wages.” A group of demonstrators also set up a roadblock of burning tires on a major Lagos highway. The protests led to Nigeria’s main unions threatening to shut down oil production if the subsidies were not put back into place. When protests began President Jonathan said that he would stand firm on the subsidy issue; however, as in the past, the threats issued by unions, seem to have paid off. While not repealing completely, Jonathan did partially restore the subsidies. Without the subsidies petrol runs at about $3.50 per gallon; with subsidies it comes in at about $1.70 per gallon. Following Jonathan’s partial restoration, petrol will now be $2.27 per gallon, which is much less than developed nations pay for their fuel, but still a large sum for a country where the majority of citizens make less than the per gallon price per day.


African Focus

Pipelines, LNG, GTL, and refineries; whatever you’re looking for in the downstream sector can be found in Nigeria; the country has opportunities for all. The most prevalent movement in the country’s downstream industry revolves around Nigeria’s natural gas production. Six LNG trains are already up and running, a seventh is on the way, and plans for two more LNG facilities are on the books. In addition, a GTL facility should start producing in the coming year or so and a regional gas pipeline is planned to monetize assets. Due to the delay in passing the PIB, which includes clauses for the downstream sector and natural gas, there has not been much in the way of new projects although some progress has been made on various fronts. Nigeria is positioning itself to become a mega LNG producer. The country has the massive six-train NLNG facility, for which India’s state-owned GAIL Ltd. is being considered by the government as a contender for a stake, among a number of other companies. “The Nigerian foreign minister indicated that Nigeria LNG was considering diluting its stake, and GAIL is being considered as one of the parties,” India’s oil ministry said in a statement. There are also the Brass LNG and the Olokola LNG (OK-LNG) plants which could potentially triple Nigeria’s LNG output in the future, although little movement has been seen on either project due to the country’s current need to meet domestic demand for gas. Nigeria may also have a new target for its LNG exports, China. Historically the LNG produced in Nigeria has benefited Western nations, but with the US market tightening Nigeria has had to look elsewhere to send its exports. China and other Asian countries have an ever growing need for energy imports and could become the biggest receivers of Nigerian LNG in the coming years. Nigeria has set some very ambitious plans to increase its gas supply to 13 Bcf per day by 2015, but in order to do so movement must be seen from the OKLNG and Brass LNG projects. In August it was reported that Nigeria intended to take a $2 billion loan from Japanese companies to fund Brass LNG. The project was expected to see the final investment decision (FID) in mid-2011and then again in December but no FID was announced. The 33,000-bpd Escravos Gas-to-Liquid (EGTL) project driven by Chevron is another facility that will monetize Nigeria’s natural gas bounty. The project has seen some delays since its inception. Originally slated to come onstream in 2011, it is now on the books for start up this year. Hopefully that schedule can be stuck to as work on the project had to be shut down temporarily due to protests by members of the Ugborodo community in September. The protests were over what the community says is the non-implementation of agreements reached between their leadership and Chevron. Costs have also risen on the project; expected to hit around $6 billion by the time it is complete, the price tag saw a jump with Chevron saying that it could climb to $8.4 billion. The project is now over 70% complete. Another gas

44

Petroleum Africa February 2012

Source: WAPCo.

Nigeria Downstream

West Africa Gas Pipeline route

monetization project at Escravos, the Escravos Gas Plant, saw Chevron handing out an engineering contract in Q2 2011 for the Phase 3B expansion. Phase 3, originally set to be complete in 2012, is now slated for completion in 2013. As far as pipelines go Nigeria monetizes a portion of its natural gas assets through the West Africa Gas Pipeline (WAGP), which has been up and running for a couple of years supplying natural gas to neighboring countries to the north. Another export pipeline, albeit a little more farfetched, is the Trans-Saharan Gas Pipeline (TSGP). Initially there was a cacophony of calls by companies and governments wanting in on the project. But other than a July statement by Jonathan that the pipeline was still a go, nothing much has been heard for over a year. Jonathan said that the $20 billion TSGP project would now be completed by 2015. The pipeline will transport about 30 billion cubic meters of natural gas from Warri through Niger and then on to Algeria for export to international markets. More work on domestic pipelines has progressed over the past year than export pipelines, including Oando’s completion of a 128-km gas pipeline system that travels from Akwa Ibom to Cross River State. Minister Alison-Madueke said the project marked the successful take-off of the government’s gas revolution program. The pipeline project is aimed at accelerating development in the southsouth region of Nigeria by providing cheaper, safer, cleaner, and environmentally friendly fuel to industries in the region. Nigeria’s refining sector has been deemed a “mess” and while there are always plans in the works to privatize the country’s four refineries they have yet to bear any fruit. Sabotage, fire, poor management, and poor maintenance have led to the refineries’ sad state of disrepair. The latest Nigerian refining dream is the planned $2.5-billion refinery for Imo state. The refinery, if it comes to fruition, will be constructed under a private-public initiative and will support 100,000 bpd. The plan is to ramp up production at Imo to 200,000 or 250,000 bpd in the future, with first refined oil hoped for by 2016. Land for the refinery has already been identified. There are also plans for an indigenous refinery in Akwa Ibom State, although in September hopes were low that the 10,000-bpd project would go through.


Nigeria Power & Alternatives Nigeria planned to generate 5,000 MW of electricity by the end of 2011, but fell slightly short of its target at 4,420 MW. The government had begun privatizing its power sector, and planned to complete the sale of six power plants and 11 distribution firms by Q1 2012. Up for sale are four thermal and two hydropower plants along with 11 electricity distribution firms. And while the country has enormous renewable energy potential, it is slow to incorporate it into the national grid. The Environment Ministry said it would deliver 500,000 solar kits to rural communities throughout the country. Women were to be the first targeted with the kits, going to beauticians and female-oriented restaurants, although the government has failed to update its progress. With the recent turmoil over the potential removal of fuel subsidies, the country could stand to implement renewable energy subsidies to

provide another option for locals. Slowly decreasing the fuel subsidy and providing more incentives for renewable energy applications could help the country’s economic outlook while also freeing up more of its hydrocarbon sector for export. Deputy manager of IMFB, a Nigerian micro-finance institution, said that the energy sector is strategic to the Nigerian economy, and a major driver for growth. Many businesses have resorted to investing in their own power generation, which is costly. At the end of December, the Nigerian ExIm Bank announced that it would invest $695 million to boost the country’s renewable energy sector. Projects that will receive the funding include a $15-million Intol JPI waste-to-energy project and a large sum to Confluence Sugar Ltd. for a biofuel program. Threshold Biofuel Energy Ltd. will receive $12 million to produce biogas from jatropha, while $56 million was appointed to Global Biofuel Ltd. for the cultivation of sorghum feedstock including a new biodiesel refinery.


African Focus By Jennifer Nickle Deputy Editor

NAMIBIA I

n the late 1400s, Namibia’s beaches were a hot spot for Europeans, although the country was not officially colonized until the British and the Germans landed in the 19th century. The British annexed Walvis Bay on behalf of the Cape Colony (South Africa), confirming the settlement of 1797. 1883 brought German trader Adolf Lüderitz and entered Germany into the colonial fray. Believing that Britain was about to declare the whole area a protectorate, Germany claimed its portion of Namibia, establishing German South-West Africa as a colony. While the British and Germans were in the process of setting up their colonies in what is now Namibia, World War I broke out and Namibia, the colony, was pushed to the wayside.

Namibia’s economy, like many developing countries, is heavily dependent on the extraction and processing of minerals for export. Mining accounts for 8% of GDP and provides more than 50% of foreign exchange earnings. Diamonds, uranium, and zinc are the biggest contributors to its mining revenue. While the mining sector supplies a good chunk of foreign exchange earnings, it does not provide a whole lot of employment for the country’s citizens, only about 3%. A larger amount of the population, 30-40% depends on subsistence agriculture for its livelihood. The petroleum industry provides a small boost to the economy and that should increase in the coming years as more companies begin exploring on and off its shores.

During the war South Africa occupied the German colony of SouthWest Africa. South Africa did not officially let go of Namibia until 1988 when it agreed to end its administration in accordance with a UN peace plan for the entire region. In February 1990 the Constituent Assembly drafted and adopted a constitution with Independence Day officially declared on March 21. Sam Nujoma was sworn in as the first President of Namibia and ruled the country for the next 14 years until losing in the November 2004 election to Namibia’s current president, Hifikepunye Pohamba.

Namibia saw its economy take a bit of a hit with the global crisis. It did rebound somewhat during 2010, seeing strong growth, according to the International Monetary Fund (IMF); however, the IMF said that its growth in 2011 was “somewhat subdued.” This was attributed in part to difficulties in the mining sector and a weak global outlook. Several promising investment opportunities in the domestic economy such as construction and mining should help sustain growth of at least

The country’s last elections took place in November 2009 with the incumbent, Pohamba, winning with around 75% of the vote. Pohamba’s South West Africa People’s Organization (SWAPO), which held the majority seats in the National Assembly, hung on to its control of the assembly, although the results were disputed. In February 2010 the High Court dismissed a claim of electoral fraud initiated by opposing parties saying there was not sufficient evidence. The opposing parties filed an appeal but were not organized enough to submit any record with the registrar in the allotted time; judgment of the appeal was set for October 2010 but the Supreme Court came back with a statement saying that the merits of the case would be considered at a later date. Over two years after the election the legal battles are still continuing. The country’s next elections are scheduled for 2014.

46

Petroleum Africa February 2012

President: Hifikepunye Pohamba (since March 21, 2005) Independence: March 21, 1990 (by South African mandate) Population: 2,147,585 (July 2011 est.) GDP (purchasing power parity): President $14.6 billion (2010 est.) Hifikepunye Pohamba Real GDP Growth Rate: 4.4% (2010 est.) Per Capita GDP: $6,900 (2010 est.) Minister of Mines and Energy: Isak Katali (March 2010) Oil Production: N/A Oil Consumption: 21,000 bpd (2008 est.) Proven Oil Reserves: 0 barrels (January 2009) Natural Gas Production: N/A Natural Gas Consumption: N/A Proven Natural Gas Reserves: 1.4 Tcf (January 1, 2009 est.)

Source: CIA Factbook January 2012

Politics and Economy


4-5% over the medium term. An increase in uranium output is also expected to contribute to economic growth. Poverty remains a challenge for the government as well as a persistent high rate of unemployment. The IMF said that Namibia needs innovative policies and measures to address these issues in addition to inequality in the economy. The government’s current policy efforts in that regard come largely through the Targeted Intervention Program for Employment and Economic Growth (TIPEEG). The IMF said that TIPEEG includes

potentially useful measures to reduce supply bottlenecks and enhance growth – for example, through addressing infrastructure needs in education, health, sanitation, energy, and transport. There is also a call for the government to enact measures to strengthen the climate for private investment, business development, and job creation. According to the IMF Namibian authorities have included wider-ranging structural reforms as part of the discussions surrounding the fourth National Development Plan.

Namibia Upstream

Source: Namcor

While not an extensive amount of exploration has taken place in Namibia, oil investors are becoming increasingly interested in it’s potential. First explorers in Nambia gained licenses through licensing rounds, but as the years past and interest waned the government switched to an open licensing system. It was recently reported that the government will be reverting back to bid rounds. The bid rounds will allow the country to gain more acreage compared to the open system according to Immanuel Mulunga, petroleum commissioner of Namibia. Mulunga, in an interview with ABNDigital, said that Namibia only went into the open system due to a lack of interest, but since then interest has increased markedly and if the open system continues to be maintained all of its most prospective acreage would be taken, lessening the benefits to be gained from the industry. The commissioner said that an open licensing system is “almost like a come as you go type of approach” and the country “cannot really try and get more for the resources it has under that system.” The country’s industry is regulated by the Ministry of Mines and Energy (MME) in conjunction with the country’s state-owned oil and gas firm, National Petroleum Corp. of Namibia (Namcor). Namcor has facilitated the signing of several petroleum agreements with international oil companies, mostly independent firms. There has also been a bit of farming going on in Namibia since Petroleum Africa last covered the country, with more than one company farming-in on its acreage and others putting their data up for review for possible farm-in opportunities. The country is considered to be under-

explored with very few wells being drilled since it came on the industry’s radar. Five of the wells drilled offshore the country garnered the country’s first booked resource, natural gas. Drilling on the Kudu gas field led to the country booking 1.4 trillion cubic feet (Tcf) of resources, with an upside potential of 20 Tcf; a significant amount of reserves for only one field. Namibia could be just as lucky on the oil side with reports putting its potential at about 11 billion barrels of crude, although that figure is not by any means confirmed as it is basically based on seismic and other geological work, with no drilling to date. When asked about these reserves Mulunga told ABNDigital the numbers had to be but into context, “the ‘proof in the pudding’ in this industry is in the drilling.” He said that only after you drill can you go and determine if you have those kind of reserves available. Although he was quick to add that “theory and science indicate there is big potential… even more than 11 billion barrels.”

Recent Exploration Moves

As stated previously the country has seen a lot of its acreage licensed to various companies, a few of those companies have made forward moves to ascertain their acreage potential over the past year or so. There has been no drilling since Namibia was last covered by Petroleum Africa in August 2010; however, seismic crews have been running rampant. This seismic will lead to a host of drilling campaigns across Namibia’s offshore arena in the coming year or two. The seismic has also led to companies upping the potential of their acreage. Tower Resources, partnered with Arcadia Namibia Expro (operator), has access to Blocks 1910A, 1911, and 2011A which cover an area of approximately 12,000 sq km after the relinquishment in 2009 of approximately 50% of the acreage under its agreement with the government. The retained area contains the Alpha, Gamma, and Delta structures which, collectively, the company says have the potential to contain more than 15 billion barrels of recoverable reserves. The company’s independent Competent Person’s study completed in 2010 had estimated a total resource potential of 9.6 billion barrels of oil equivalent (boe) if the area proves to be mainly oil prone; a recently updated report from June 2011 incorporating 3D seismic data, has

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Source: Namcor

African Focus

increased that best estimate to 15.5 billion boe. The company saw a 1,600 sq km 3D survey completed in September 2010, the interpretation of which was completed in May 2011. Based on the information gained from this survey, and previous surveys shot on the acreage, the company plans to drill in 2012. The exact timing of the well remains uncertain until Arcadia completes its funding/farmout process. Block 1711 was the last block to see drilling in Namibia when partners EnerGulf, PetroSA, and Sintezneftegaz drilled the Kunene #1 well during 2008. While the well was not a commercial success for the partners in the oil department it could add to Namibia’s natural reserves. In September 2010 EnerGulf was named interim operator by the MME and just a little over a year later the company had its stake in the block raised. EnerGulf received an additional 5% to 9% working interest in Block 1711, increasing its interest to a minimum of 15% and a maximum of 19%. Sintezneftegaz relinquished its 70% interest in exchange for a 10% carried interest and its costs will be carried by the new owners of its participating interest for the 2012 work program and the drilling of the next well. Sintezneftegaz will be responsible for its proportional share of costs of any subsequent work programs and any other wells drilled on the block. EnerGulf was granted the authority to market and negotiate terms for the remaining 51% to 55% interest with potential qualified companies.

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EnerGulf presented the results of the 2010-2011 work program on the block to the Ministry. The program involved a complete analysis of data from the Kunene #1 well, and a further evaluation of the block’s exploration potential. EnerGulf said that the studies revealed multiple prospects and leads supported by amplitude anomalies and other hydrocarbon indicators. The prospect portfolio includes a Tertiary Turbidite play and a Syn-Rift play, both of which have giant field analogs in Angola and Brazil. EnerGulf’s study provided significant new information concerning the hydrocarbon potential of the Syn-Rift play, including possible seismic evidence of salt on Block 1711. The Syn-Rift rocks are stratigraphically similar to the pre-salt rocks found offshore Brazil and in the Upper Congo Basin. EnerGulf has submitted the 2012 work program for Block 1711 to the government and partners. The work program calls for the acquisition of a 3D seismic survey over the Hartmann area in the southwest portion of the block in Q1 and Q2 of 2012, as well as continued geological and geophysical evaluation. A couple of Brazilian companies have expressed particular interest in Namibia’s offshore area; HRT Participacoes em Petroleo and Petrobras both hold stakes in several licenses. HRT is partnered with UNX Energy. In February 2011 HRT issued an offer to buy UNX which gave it increased stakes in the blocks they held jointly. HRT was one of the firms that saw seismic on its acreage over the period. Seismic on


Source: Chariot Oil and Gas

The renewal took effect October 27, 2010 and runs through October 26, 2012. The company exceeded its initial exploration phase commitments on these licenses through its acquisition of large 3D seismic datasets. As a result, the well commitments in the first renewal phase were waived by the Namibian government. Chariot was required under the first renewal phase to relinquish 50% of the acreage within each of the licenses in the northern blocks and the southern block. The initial 2D seismic program highlighted the primary areas of interest in the blocks which were then covered by 3D seismic. The areas of less geologic significance will be handed back to the government. The total acreage for all eight blocks held by the company will stand at 30,503 sq km (from 38,725 sq km previously held).

Block 2813A in Namibia’s Orange Basin was launched in April 2011; the 1,232-sq km 3D survey was run concurrently with a 1,428-sq km program over the adjacent Blocks 2713A and 2713B. Following the surveys, the company said that the resource potential of its blocks in the Orange Basin had increased by 12% to 815 million boe. There was also seismic conducted on HRT’s Blocks 2112B and 2212A in the Walvis Basin, partnered with Labrea Petroleum. The company said that this relevant 3D seismic acquisition allows for an in-depth view of rift and drift sequences, which is critical to advance exploration and leads to the drilling stage. The seismic on the Walvis Basin blocks considerably advances and exceeds HRT’s minimum work program commitment to acquire 500 sq km of 3D seismic prior to May 2014. The company said that the Ministry was extremely pleased with the magnitude of the 3D seismic data survey, which was not only the largest in Namibia to date, but also around 26 times larger than originally envisaged in the exploratory commitment. HRT, which has a 40% interest in the block, saw its stay extended two years, taking the first exploration period into June 2013. According to the MME, the extension will give HRT sufficient time to interpret the seismic data so that it can drill its first offshore well in the country. Brazilian NOC Petrobras acquired a 50% exploration stake in Block 2714A; the remaining 50% stake is held by Chariot Oil through its Enigma Oil & Gas subsidiary. Petrobras is committed to undertake geological and geophysical studies that will allow a full model to be developed for the area’s oil system. The company has the option to leave the agreement before drilling any wells. A 3D seismic program, ranging over an area of 2,500 sq km, has already been carried out for the block. The data is being processed and interpreted. After completing the data assessment, the consortium may opt to renew the contract, which includes the commitment to the exploration program to drill an exploratory well. If this occurs, Petrobras has the right to assume operatorship of the block. Chariot, through Enigma, holds stakes in a number of other blocks up and down the Namibian coast: the northern blocks (1811A and B) in the Namibe Basin, the central blocks (2312A and B and the northern halves of 2412A and B) straddling the Luderitz and Walvis Basins, and the southern blocks (in partnership with Petrobras and BP on 2714A) in the Orange Basin. The company entered into its first renewal phase for its northern Blocks 1811A and B and southern Block 2714B offshore Namibia.

The new work programs for the blocks under the first renewal phase include 3D seismic interpretations, economic evaluation, determination of well location and design, and subsequent rig procurement for northern Blocks 1811 A and B. On southern Block 2714B the company will acquire 3D seismic as well as conduct an economic evaluation, determine well location and design, and procure a rig. In April 2011 the company contracted Senergy for the provisioning of drilling and support services. Senergy will undertake full well project management including well operations, well engineering, logistics, contracting, and procurement for Chariot’s Tapir North (Northern License – 1811A and B) and Nimrod (Southern License – 2714 A and B) prospects. The company received the go ahead to drill in November 2011; however, Senergy announced the following month that it would push back drilling until Q2 2012 due to the tightness in the deepwater drilling rig market. Chariot secured a new partner on its central blocks in Q3 2011, farming out a 10% stake to geophysical company PGS in return for funding a portion of the work program. Chariot will retain a 90% equity ownership of the license following completion of the farm out. Under the agreement PGS will fund 50% of the planned 3D GeoStreamer seismic program. Chariot and PGS have agreed upon a 3D seismic program across areas of specific interest within these blocks that were identified by the previously acquired 2D seismic data. The survey will be located in the portions of the license where the Klipspringer, Hartebeest, and Oryx leads have been identified. The survey will cover a minimum area of 2,500 sq km at a gross cost of $25 million. Seismic was launched on the central blocks in mid-November. Pancontinental Oil & Gas raised funds over the period which will be partially used to contract seismic on its acreage. The company holds stakes in 2012B, 2112A, and 2113B. It signed a Petroleum Agreement (PA) and Petroleum Exploration License (PEL – No. 0037) in mid-2011. The location of the PA and PEL was selected over approximately 17,295 sq km which cover the previously mentioned blocks. Pancontinental holds the PA and EL at 85% with Namibian participant Paragon Holdings (Pty) Ltd. holding 15%. In exchange for certain rights under the joint venture (JV) agreement that Paragon signed in March 2011, Pancontinental has agreed to carry Paragon until the commencement of the development of any oil or gas discovery. Global Petroleum launched its seismic campaign off the coast of Namibia in September 2011. The company acquired 2,000 km of 2D seismic on the offshore blocks it picked up when it acquired Jupiter Petroleum. Global’s assets consist of an 85% participating

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African Focus interest in PEL No. 0029, covering offshore Blocks 1910B and 2010A. These blocks cover an area of 11,700 sq km in water depths ranging from 1,200 meters to 3,000 meters. Upon completion of the survey, and its processing and interpretation, Global expects to carry out a 3D survey; this is anticipated in Q1 or Q2 2012. The most recent seismic program was launched by Spectrum, in partnership with CGGVeritas and Namibia’s state-run NAMCOR. The 2D multi-client seismic survey covers the deepwater Orange Basin. The program includes the acquisition of around 7,000 km of long offset data for both held and open blocks in the basin. A good level of prefunding has been obtained from companies to provide support for the program. Seabird Exploration is providing acquisition services through its Northern Explorer vessel which has recent experience operating in Namibian waters. The data will be processed through full pre-stack time migration and will include added-value products such as angle stacks and AVO products. Due to the frontier nature of the area, Spectrum will also be offering a ‘Fast Model’ Pre-Stack Depth Migration (PSDM) sequence, provided as part of the standard deliverables for the project. Final deliverables are expected to be available in June 2012. Over 20,000 km of high-quality 2D multi-client data from offshore Namibia is currently available through Spectrum, in eight individual surveys. Each survey has been designed and acquired to target key structures within the offshore area. The data vintages range from the 1989 regional survey, through to detailed block specific surveys. These include the 2003 survey acquired around the Ondjou prospect in the northern Walvis Basin, a comprehensive suite of surveys around the Kudu field, and those covering the Orange and Luderitz Basins. While the major focus to date has been on Namibia’s offshore acreage, some interest in onshore Namibia has been seen recently. Frontier Resources International picked up Blocks 1717 and 1817 near the Angolan border in October. Frontier signed an exclusive exploration license valid for an initial two-year period with an option for two renewal periods of two years each. The majority of the information on the block is extremely dated; however, Jack Keyes, head of Frontier, told Petroleum Africa that some of this data is of very good quality showing both structural and stratigraphic features that require further investigation. Under Frontier’s contract with the government it must acquire existing data on the acreage. Keyes said that all previous data was made available by Namcor, its partner on the blocks. “As there are no field tapes available for this data, limited re-processing of the older post stack data has begun,” Keyes added. The company has

recently retained the services of GEONYX Seismic Services in Houston for the re-processing. Frontier will re-interpret all existing data, including aerogravity, aeromagnetic, core, and geophysical data. Keyes told Petroleum Africa that based on the results of the re-interpretation the company will attempt to high-grade any leads identified by undertaking a geochemical sampling program. All data would then be reviewed with the objective of selecting the optimal location for a new seismic acquisition program. Canadian independent Eco (Atlantic) Oil & Gas Ltd. has stakes in a host of Namibian licenses, both onshore and off. In December 2011 the company farmed out stakes to Azimuth Ltd., a company jointly owned by Seacrest Capital Ltd. and PGS, from its offshore licenses. Under the agreement Azimuth will acquire a 20% working interest in the Cooper License (Block 2012A), the Sharon License (Blocks 2213A and 2213B), and the Guy License (Blocks 2111B and 2211A) in return for funding 40% of the cost of 3D seismic surveys covering 2,500 sq km across all three licenses, the acquisition of which is expected to cost in excess of $25 million. The country has also seen interest in its unconventional potential with two companies bent on exploring for coal-bed-methane (CBM). Eco holds a 40% stake in Block 2418, partnered with West Bay and Namcor. West Bay will carry Namcor’s 10% working interest and pay Eco $400,000 for past expenses. West Bay will also carry Eco’s 20% through all phases of exploration, development, and production. The program commitment on the block includes an initial desktop study of the resource, selection of an initial drilling target, wireline coring and gas content/volume testing, and Maceral evaluation during the first year. The commitment for the second year involves the drilling of a fivespot pilot well test program. Instinct Energy, formerly CGS Energy, is also on the CBM hunt. The company is involved in the Huab CBM Project on Blocks 1913B and 2013A. The blocks host the Late Carboniferous to Late Permian (Karoo) sediments of the Huab Basin, overlain by younger Cretaceous sediments and volcanics. Numerous NW-SE and N-S trending faults traversing the permit areas have been mapped using outcrop information, aerial photography, and airborne magnetics. They have the potential to act as hydrocarbon traps and/or conduits, and to promote fracture permeability in coal seams and conventional reservoirs. The company is also involved in the Caprivi CBM Project on Blocks 1723, 1724, 1725, 1823, and 1824. These blocks are located in the far northeast of the country and encompass most of the Caprivi Basin.

Namibia Downstream Namibia does not have much of a downstream sector at this point, other than retail. The country relies entirely on imported petroleum products, and imports about 90% of its petroleum needs from neighboring South Africa. Historically there are five main companies that distribute and market fuel products in Namibia: BP, Caltex, Total, Engen, and

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Shell. Shell sold off its retail and distribution units in several African countries through a deal with Vitol Group and Helios Investment Partners, Namibia was one of those countries. BP also sold some stakes in its African retail operations, including BP Namibia. The unit went to Trafigura Group’s Puma Marketing.


The Kudu Gas Project

One positive on the downstream side is the Kudu Gas Project. While it has been on the books for some time, it just might see some light. The project is aimed at bringing the 1.3 Tcf of natural gas discovered on the field to shore to power Namibia and its neighbors. Partners involved in the project include Tullow Oil, Gazprom, a Namcor JV, and Itochu. Namibia has been sitting on the massive Kudu gas field reserves since they were discovered almost four decades ago in 1974. Through the years there have been a number of holders of the field but no concrete moves to monetize the asset until the last decade. Mulunga said that it has been “very problematic” to bring the project forward because gas, unlike oil, is “very difficult to develop if it is not close to markets.” Although the Kudu Gas Project has seen some starts and stops, recent happenings could make the project a reality sooner rather than later. Mulunga in his interview with ABNDigital said that a lot of negotiations have been conducted by Tullow, together with the downstream players to move the project forward. Mulunga said that the government had issued the partners a new 25-year production license and signed a PA giving them the right to produce the gas. He also said that serious negotiations with

NamPower, the state-run power company, have resolved a lot of the old issues that had “ended the progression of the project, although obviously there are still a few more issues to iron out.” The petroleum commissioner optimistically said, “I think there is a really good window of opportunity that exists for this project to take off; however, I think it will take some support, especially government support to really take off.”

Source: Namcor

There is not a single refinery in the country; however, recent moves by Iran could result in one. In late 2011 Iran and Namibia discussed the possibility of the Middle Eastern country contributing a refinery to Namibia. There was also talk of Iran participating in another downstream project, the Kudu Gas Project.

Kudu Field Location

According to Tullow’s latest Factbook posting an agreement was reached between the partners and the country’s utility NamPower on the design of the production facilities and the Kudu power station. As a result, the Gas Sales Agreement and Project Development Agreement negotiations have resumed with significant progress being made. FEED studies for both the upstream and the downstream components are expected to commence, subject to a final commercial agreement. An investment decision is targeted for mid-2012, which could deliver first gas and power generation in H2 2015.

Namibia Power & Alternatives Namibia’s president Hifikepunye Pohamba has asked the country’s power utility NamPower to consider exploring alternative energy sources in order to combat the electricity shortfall in Namibia. The Anixas power station recently inaugurated its third generator, providing an overall power generation capacity of 22.5 MW to the national grid. While the new $44-million power station helps the country inch closer to meeting its electricity demand at 500 MW, NamPower will invest $1.75 billion over the next five years in new power generation projects. New projects currently in the pipeline include the Baynes hydropower project being developed in collaboration with Angola, the Orange River hydro project, and the Arandis Erongo coal-fired power station. Other main sources of electricity currently producing power are the Ruacana hydropower station (240 MW), the Van Eck coal power plant (120 MW), and the Walvis Bay Paratus diesel power station (18.5 MW). The Ruacana plant will receive a fourth hydropower generator that will provide another 90 MW to the national grid by Q2 2012. The country is making strides and is now the home to one of Africa’s largest hybrid solar systems thanks to German manufacturer juwi Solar GmbH. The hybrid solar system supplies all the public buildings and

around 100 private homes in the area with clean solar power. With a total capacity of 200 kW during peak hours, a battery storage unit of 1 MW, and three integrated diesel generators it is considered one of the continent’s largest off-grid power systems. The system was constructed in six weeks with the help of Alternative Energy Systems CC. (Alensy), containing 918 polycrystalline modules. Electricity costs are projected to decrease by 25% with the system operated by NamPower. The country is also trying to complete its first wind park. The Diaz Wind Power Project could be operational as early as 2014, according to Enviro Dynamics. The project is being constructed by local company United Africa Group, Japan’s Sojitz Corp., and Korea Midland Power Corp. Diaz will contain between 18 and 22 large wind turbines generating a capacity of 44 MW. The first phase will see the completion of access roads and platforms for the turbines. The second phase will include the assembly of tower sections and rotor blades. The third phase will involve construction of the substation buildings and internal cabling as well as power transmission lines to bring the energy generated to the national grid.

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Technology and Solutions *By William Standifird Halliburton

Applications of Real-Time Digital Solutions in

D E E P WA T E R

The Evolution of Real-Time Technology To understand what real-time really means, we need to look back to its inception in the early days of mainframe computing. Real-time was a concept born from the development of computer simulations. A computer simulation that could run at the same speed as actual operations was considered “real-time.” For example, if a bottling plant could cap 200 bottles per minute and the computer simulation of that process was 200 bottles per minute, then it could be called a real-time simulation. The first real-time simulations were run in the early 1970s, and although it seems like real-time is much older, even in the 1980s very few of us had access to computer systems with the power to run a reasonable analytical real-time simulation, especially on a drilling rig. As computer processing performance advanced, actual measurements could be fed into a simulation that created a new forecast. This refined forecast finally gave us the power to see slightly ahead of current observations, but the new process had some serious limitations, most importantly lack of a feedback loop to continuously improve the simulation performance. We would need new advances in storage and retrieval technologies to make the next big leap forward.

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Halliburton uses real-time centers to support safety, process assurance, and efficiency

In the mid 1990s, innovations in magnetic and optical disk technologies finally started to erode the data management barriers to the progression of real-time. In our industry, powerful personal computers finally had enough speed and storage to move basic simulations from mainframes and workstations in the office to desktops and laptops that could be used by field operations. This meant we could do a lot more than simply display measurements digitally; we could run reasonably advanced simulations of hydraulics, geomechanics, and drilling mechanics models. This finally gave us the ability to observe a changed condition, digitally design a proposed solution, and model the overall system behavior as a result of its application. We saw great gains in areas such as wellbore placement through geosteering, and trouble avoidance through the modeling of hole cleaning and geomechanical parameters such as the in-situ stress tensor, pore fluid pressure, and wellbore collapse pressure. Once modeled, we could store the actual results for later use and further refinement. We were finally improving upon human experience with science and technology, but the systems created only incremental improvements and were not sophisticated enough to dramatically change how operational decisions were made or conducted in the field – there was still a missing ingredient. The Internet, born in the 1950s as a US Department of Defense project called “ARPANET,” gave us an entirely new means by which to communicate. The Internet was secure, robust, omni-directional, and almost infinitely scalable and adaptable. The Internet didn’t really

Source: All graphics courtesy of Halliburton

R

eal-time has become an all too common phrase in the Digital Oilfield with connotations ranging from making a digital transaction in less than a second to broader definitions that include using data and interpretations to make decisions. Alternate versions have even emerged such as “right-time, rig-time, and even frac-time.” But real-time is much more than digital connectivity, processing, or even decision-making. Real-time is about operational excellence; performing at the highest levels through the use of a digital infrastructure to optimize the risk/reward relationship that is an intrinsic component in the highly uncertain business of petroleum exploration and production. Organizations that master real-time will emerge as industry leaders whereas those who fail to utilize its current potential, and do not invest in the future, will see their prospects deteriorate. In this article, real-time will be examined; where it started, where it is today, and where it is likely headed. Several new applications including the integration of real-time geomechanics modeling with managed pressure drilling (MPD) systems, a completion placement visualization system, and an innovative barrier monitoring solution will be shown as unique examples of emerging real-time workflows that can better support deepwater operations.


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change what or how we could communicate; it just made it much easier. Dedicated rig-to-shore links for data that were historically expensive and proprietary became relatively cheap and universally available. For a few hundred dollars a month, a satellite dish buried deep in the rain forest could be connected to the Internet to send and receive data from around the globe. Finally, the petroleum industry could make proper use of real-time. By early 2000, the only organizations not using real-time to enhance the safety and efficiency of their business were doing so by choice not technical or economic limitation.

14000 ft

New Ways to Use Real-Time

Most of us are now very familiar with basic real-time capabilities such as using logging-while-drilling (LWD) data to compute pore fluid pressures, or streaming back rig measurements such as pressure, flow, and penetration rate to the office in an effort to enhance decisionmaking quality and speed, but there are some emerging innovations that are not well-known. In an open annulus drilling system, the annular pressure is controlled by gravity and the density of the fluid in the annular space. Managed pressure drilling (MPD) systems mechanically influence the pressure in the annulus to create pressure profiles not obtainable through the use of gravity-based systems alone. Especially useful Halliburton’s GeoBalance® managed pressure drilling system for drilling through narrow pore-fluid pressure/fracture gradient windows, MPD systems can improve wellbore quality, extend casing points, and make previously un-drillable wells drillable. The success of these systems depends on the MPD control system having access to the earth’s pressure and stress profile. While these profiles are typically predicted prior to drilling operations, they can be highly uncertain, and require substantial modification during drilling. Using real-time systems to connect the MPD system to the geomechanical models being operated with LWD offers the opportunity to manage the earth’s uncertainties and make better use of the MPD capabilities and benefits. The figure above generally illustrates the data flow for the system now in field trials.

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Geomechanical predications in deepwater can require substantial modification during drilling – planned versus actual PP/FG predictions (SPE 75418 & 78205)

Another new application of real-time involves the installation of complex, multi-zone completion tools in deepwater. These installations have historically been heavily dependent on tally books, experience, and the rig floor Martin-Decker. Hundreds of millions of dollars of production can be lost if the completion tool is not landed properly, and up till recently, these installations have been performed using the basic rig floor readings that have been available for many years. Now, through the integration of real-time surface sensors, with mechanical simulations that accommodate the complex environment, engineers can observe the completion tool installation in real-time, increasing the probability of successful placement and operation. If you work in deepwater, you should be familiar with the term barrier. Barriers prevent unwanted flow from the wellbore, keeping offshore crews safe, the environment clean, and hydrocarbon reserves intact. Downstream operations typically have sophisticated barrier monitoring systems, but well construction activities are highly dynamic, and thus a custom system is required to help ensure safety and compliance. To this end, a new system has been developed to monitor wellbore barriers in accordance with an operator’s prescribed policy. This policy may be based on the soon to be released American Petroleum Institute Recommended Practice (RP) 96, or other internal or governmental requirements. The technology system combines real-time measurements at the surface and downhole with modeling applications in a visualization environment that allows for rapid confirmation of compliance or detection of possible barrier failure.

Real-time link of MPD system with LWD geomechanical models

Halliburton’s Real-Time Visualization System (RTVS) is used to more accurately land deepwater completion tools such as the newly released ESTMZ™Enhanced Single-Trip Multizone completion system

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Technology and Solutions

Halliburton’s barrier assurance monitoring system

Where will Real-Time be Tomorrow?

We can think of the evolution of real-time in four distinct stages, each critically linked to feasibility and adoption of its predecessor. Acquisition and Transmission It is widely accepted that we have moved through the data acquisition and transmission phase in most components of the petroleum industry. We can readily acquire the measurements we need, and transmit them from any location on earth to wherever they are required for processing. It took over three decades to build this capability, but now measurement and connectivity are only restricted by economics. New sensor technologies continue to create While this foundational opportunities for better use of real-time systems step is completed, we must not overlook further refinements that will provide additional advantage such as access to higher transmission speeds and new sensor technologies. Interpretation and Decision-Making The industry is currently building the interpretation infrastructure to optimize remote decision-making and link that back into operations, albeit manually. This can be observed in remote geosteering centers, drilling optimization centers, and production optimization centers. There are major initiatives to make better use of the expertise in offices and link it back to the field. While there are short-term In Halliburton’s Stavanger Real-Time Center, gains to be made here, the engineers and geoscientists can provide reality is that a very large operations support for geosteering, well assurance, and prilling performance number of the experts in the anywhere in the Eastern hemisphere petroleum industry will soon retire, and the centers built to better leverage this expertise will be under increasing pressure to make better use of the limited expertise. This challenge will create the need for smarter technologies such as artificial intelligence systems to aide in pattern recognition and solution suggestion; however, many major technical hurdles remain to the practical application of these concepts today. 54

Petroleum Africa February 2012

Remote Control Incremental improvements in remote real-time interpretation and decisionmaking can be derived from an increase in remote control. Here, the remote expertise controls the field operations rather than communicating with operators in the field to make adjustments. The main advantages of remote control Remote control pressure pumping offers the include the safety and cost opportunity for better safety, service delivery, and efficiency efficiency gains related to reducing both travel and the number of personnel working in hazardous field environments. Remote control is currently being deployed on production platforms, in directional drilling, and it is under consideration for pressure pumping (hydraulic fracturing) and even managed pressure drilling. Autonomous Operation Eventually, humans will gain enough confidence in realtime system integrity and reliability that they can remove themselves from the real-time workflow. Measurements will The evolution of real-time be acquired, data will be processed, interpretations and decisions will be made, and finally action will be taken to optimize the system performance. This closedloop, model-based approach is the ultimate goal of most ‘digital oilfield of the future’ concepts; it seems unimaginable to entirely remove the human experience from operations, but it may be inevitable, and the time horizon is under compression as we continue to see exponential advances in computing and connectivity technologies.

Conclusions

Real-time systems have humble beginnings rooted in the early days of computing. As the underlying technologies have evolved, so has the complexity and value of the available solutions. In our industry, especially in deepwater operations, real-time offers us the opportunity to improve safety, efficiency, and consistency. If we wrap these terms together we might say that real-time offers us opportunities for assurance. Assurance that our people can be safe, and the environment unharmed; assurance that the engineered plan can be executed in the face of uncertainties; and assurance that the reservoir can produce as predicted, delivering stable cash flows and return on investment. As real-time moves further through its evolution, look to it as a tool to provide your organization and its stakeholders with a level of assurance of profitability and sustainability. *William Standifird is Director of Solutions, Consulting & Project Management, in Halliburton’s Europe and Sub-Saharan Africa region.


Oil Security By Mark Pabst, Senior Correspondent

Nigeria’s Other Militants

“News networks report growing unrest in Nigeria, the fifth-largest supplier of oil to the US. Escalating violence in northern Nigeria and the resulting diversion of Nigerian troops away from the oil producing Niger Delta has prompted foreign oil companies to announce that they will be leaving the country immediately. Given Nigeria’s deep religious and ethnic divisions, the intelligence community expects a protracted period of instability.” – Excerpt from a simulation conducted in 2005 by the group Securing America’s Future Energy

The scenario was notable for a number of reasons. While the simulation was designed to emphasize the tight supply in oil markets, it also highlighted a concern, then fashionable in Washington, that global energy supplies might be too dependent on oil from politically unstable oil producers in the Gulf of Guinea region. In addition, it played to a particularly post-9/11 concern about Islamic militancy, using an uprising in northern Nigeria as a stand-in for Islamist-inspired mischief. While the political fault lines in Washington have shifted greatly since the initial SAFE simulation in 2005, fears about tight global oil supplies and Islamic militancy have endured. In fact, along with nuclear proliferation, they are reliably among the top foreign policy bogeymen that haunt the dreams of American politicians. All of this may explain why the Nigerian militant group Boko Haram has been attracting so much attention in Washington recently. In a relatively short period of time Boko Haram has become Nigeria’s most widely known Islamist militant group. Although founded in 2002,

Source: UN Photo# 475403, Photographer Mark Garten

it is unlikely that any of the people participating in the 2005 SAFE simulation had heard of the group at the time. In fact, Boko Haram did not engage in attacks that grabbed international attention until 2009, when it stormed several police Abuja and Washington may consider stations in the northern combining their collective think tanks to address Boko Haram Nigerian city of Maiduguri. Since then Boko Haram (which also goes by the much more formal but infinitely less media friendly name Jama’atu Ahlis Sunna Lidda’awati wal-Jihad, which in Arabic means “Sunni Group for Islamic Preaching and Jihad”) has become well known for attacking a vast array of targets, including army barracks, politicians, moderate Islamic clerics, and Christians. The group has been successful at garnering headlines both domestically and internationally by bombing Christian targets on Christmas day, attacking a military barracks in Abuja on New Year’s Eve 2010, and unleashing a string of explosions when Nigerian President Goodluck Jonathon was inaugurated in May 2011. Source: UN Photo# 485862, Photographer Marco Castro

B

ack in 2005 a United States-based public interest group named Securing America’s Energy Future (SAFE) brought nine former White House cabinet members and senior national security officials together in a Washington D.C. hotel and asked them to craft a policy response to a simulated global oil shortage. In the SAFE simulation the shortage is triggered by violence in northern Nigeria that requires a significant military response from the government in Abuja. With the Nigerian military busy chasing down militants in the north, militants in the south are able to drive away foreign oil companies working in the Niger Delta, taking 800,000 barrels of oil a day off of world markets.

Boko Haram’s tactics have made it a hot topic of discussion both in Nigeria and in the US Congress, where the congressional Committee on Homeland Security’s Subcommittee on Counterterrorism and Intelligence held a hearing entitled “Boko Haram – Emerging Threat to the US Homeland” in November. In December the subcommittee followed up with a report that warned the group could attack US targets and suggested the White House “increase its support for programs that

Petroleum Africa February 2012

55


Oil Security enhance the ability of Nigerian security forces to more energy needs. There is certainly a push in the United In effectively target Boko Haram and counter its States, the country with arguably the most to lose the oil-rich Niger evolution.” Many in the Nigerian government agree (other than Nigeria itself) from a major disruption wholeheartedly with the sentiment. Writing in the in Nigerian oil exports, to handle Boko Haram Delta region, where a conservative Washington Times Nigeria’s national string of militant groups have by supporting Jonathon’s attempts to stamp out security adviser Owoye Andrew Azazi called the group. battled Nigeria’s national the group a “common enemy” of the US and Nigeria, and suggested Washington provide government in recent years, many However, the Nigerian president has a history Abuja with technical and intelligence assistance people bristle at the suggestion of taking the wind out of insurgencies by saying to combat the growing threat. the right thing while greasing the right palms. that Boko Haram has In 2009 the president brought a modicum of order anything in common with Critics contend that the potential for Boko Haram back to the Delta region after several years of Delta militants. to attack the United States is overblown, and they increasing lawlessness by declaring an amnesty for point out that the group is largely motivated by local militants and paying off the right militant leaders. issues. President Jonathon’s domestic policies seem to draw However, he failed to address most of the underlying issues particular ire, and the group’s communiqués largely eschew the topics that led to the increase of militancy in the Delta in the first place, of Iraq, Afghanistan, global jihad, and other themes so popular with leaving the door open for lawlessness to return to the region. more globally minded jihadists. Some analysts even believe that the Now, some observers are worried he will make a similar mistake with wide variety of targets and apparent lack of central coordination of Boko Haram. attacks mean that there are several distinct groups operating under the Boko Haram name. Given that Jonathon is interested in enlisting American help to deal with the group, Washington may be in a good position to demand In the oil-rich Niger Delta region, where a string of militant groups a more nuanced approach to militancy in northern Nigeria. Recently have battled Nigeria’s national government in recent years, many people the Heritage Foundation, a conservative Washington think tank, said bristle at the suggestion that Boko Haram has anything in common as much. A post on the organization’s website noted, “Instead of with Delta militants. Somewhat ironically, a few Delta militants have delivering hollow speeches, Jonathan should develop a comprehensive even threatened their own attacks if the Nigerian government does not strategy that addresses counterterrorism while implementing reforms reign in Boko Haram. In early January the Abuja-based periodical that address the country’s marginalized population in the north. Too Leadership reported that Dan Anderson, leader of the militant group often, Boko Haram finds willing recruits from the north as they are Movement for the Liberation of the People of the Niger Delta (MLPND), outraged by the lack of employment opportunities and unbalanced issued a statement claiming his group would attack the region’s oil government services.” infrastructure “to protest the brutal killing of Christians and southerners by the Boko Haram in some states of the north.” Of course, addressing social marginalization in Nigeria is easier said than done, as is expecting a nuanced approach to Islamist The prospect of attacks on oil installations in the south while the militancy from the United States. However, dealing with the type of Nigerian army is busy in the north trying to contain Boko Haram is situation laid out in the SAFE simulation way back in 2005 may be surprisingly close to the scenario imagined in SAFE’s 2005 simulation. even worse, meaning that both Jonathon and Washington may eventually The idea is no doubt frightening to both oil companies operating in look for a longer term solution to the challenge presented by Nigeria and countries that rely on Nigerian oil and gas to meet their Boko Haram.


Book Review Reviewed by Mark Pabst Senior Correspondent

The Black Market in a Globalized World Deviant Globalization: Black Market Economy in the 21st Century Edited by Nils Gilman, Jesse Goldhammer, and Steven Weber Continuum International Publishing 2011

T

here is a reason economics is nicknamed the dismal science. It may seem like economics permeates our lives, with 24 hour cable news channels, business blogs, websites dedicated solely to financial markets, and even stodgy old print media brimming over with economic news. However, few of us seem truly interested in rolling up our sleeves and peaking behind the curtain to find out what makes the academic discipline of economics tick. This is unsurprising really, considering that the art of making money and the understanding of economic principals often seem to have minimal overlap. After all, making money is infinitely preferable to a rigorous course of study of supply and demand curves. In addition, the science of economics is both difficult to master and deathly boring to most people. Therefore, terms coined by economists rarely make it into the general lexicon. It is even rarer to see such terms make it into the lexicon of multiple languages, and it is the truly exceptional term that survives for any length of time in the popular imagination. The term “globalization” is one of these rare exceptions. First used in its modern sense in the 1980s, it has only increased in popularity through both the go-go 1990s and the rocky first decade of the new millennium. The popular usage of globalization has increased despite the fact that (or perhaps because) there is no clear agreement on what it exactly means. In the vaguest sense of the word, globalization represents a greater economic integration of global markets through the increased mobility of things like goods, services, and ideas. However, the lack of a precise definition has not prevented a mainstream debate about the merits and shortcomings of globalization. Popular authors like Thomas Friedman have produced bestsellers touting the positive aspects of globalization (think The World is Flat, or The Lexus and the Olive Tree), while other mainstream writers like Naomi Klein have slammed the corporate excesses associated with globalization (in books like No Logo). Despite all the ink spilled on both sides of the globalization debate, there are precious few works about globalization’s effects on the burgeoning (and euphemistically named) informal sector. Into that void step Nils Gilman, Jesse Goldhammer, and Steven Weber with their

book Deviant Globalization: Black Market Economy in the 21st Century. The book is a collection of essays about how globalization has changed the shadowy economic landscape that lies outside the formal scrutiny of governments. While the book describes the effects of globalization on unsavory businesses like narcotics trafficking and the sex trade, it also discusses how globalization has affected the movement of commodities less obviously associated with criminal elements. Among these commodities are seafood, timber, and even crude oil. To be fair, the chapter of the book that focuses on oil is relatively short and (unsurprisingly) centers on the growth of oil bunkering in Nigeria. Anyone with solid knowledge of the Nigerian oil industry will probably learn few new facts about the illicit trade in stolen Nigerian oil. Sebastian Junger, the writer who contributed the chapter (unflatteringly entitled “Blood Oil”), hits all the well-known elements that contribute to Nigeria’s position as the world’s premier producer of black market oil. He describes the general corruption and lawlessness of the Niger Delta, the poverty of the Nigerian population, the presence of well armed criminal gangs, and the vulnerability of pipelines that makes stealing oil relatively easy. All of these elements are well known to anyone with more than a passing interest in Nigeria, and they have received their fair share of attention in mainstream periodicals over the years. In other words, Junger’s chapter contains no real news. Instead, the strength of the chapter, and indeed the entire book, is how it places oil bunkering and other illicit activities in the greater context of globalization. In a world where there are almost as many definitions of globalization as there are people writing about globalization, the editors define the term as “the cross border integration of value-added economic activity.” In other words, a globalized economy is an economy where goods, services, people, and ideas flow ever more easily across international borders. The perspective shines a good deal of light on a key driver behind activities like oil bunkering. Certainly elements like criminal gangs and vulnerable pipelines are important drivers behind the growth in bunkering, but equally essential is an economically integrated world

Petroleum Africa February 2012

57


Book Review where black market oil can easily be transported across international borders (and often thousands of miles) to eager consumers.

and ecocide, suppression and slavery.” No apologies are

No made to Paraguay, Dubai, pork bellies, or soybeans. industry, and especially an industry as No apology is necessary, really. The editors point It may not be flattering to Nigeria as a country or maligned as hydrocarbons, out that, despite the moral disgust many in the to the oil industry as a whole to find themselves developed world have for illicit trade, deviant the subject of a chapter in a book about globalized wants to be lumped together globalization is a form of economic development. with stories of human black markets. Other chapters look at illegal It provides jobs and economic opportunity to those immigration, sex tourism, and methamphetamine who are often marginalized to the point of having trafficking and gun manufacturing. No industry, and especially an industry little more than their native guile and an ability to running. hustle. An interesting point, and one that should make as maligned as hydrocarbons, wants to be lumped together with stories of human trafficking and gun running. However, it is at least informative about potential future problems in the global oil markets. Oil was, arguably, one of the keys to globalization in the 20th century, both as a commodity and as an energy source. Now, perhaps unsurprisingly, it is also prominent in the globalized shadow economy. At least both Nigeria and oil make out better in the book than many of the other jurisdictions and commodities discussed in Deviant Globalization. Paraguay is called “a smuggler’s paradise.” The global sex trade is described as “a commodities market as (pure as) pork bellies or soybean futures.” Dubai is characterized as built on “credit

the reader rethink their notions of economic development. However, even if the book doesn’t ultimately make you think, it is still worth picking up. After all, the dark side of globalization turns out to be much more interesting than the aspects described by writers like Friedman or Klein. It is the descriptions of shady practices that make Deviant Globalization a sometimes fascinating and often fastpaced read. Though the editors’ introduction has a decidedly academic bent, many of the actual essays that make up the book are essentially true crime stories, with all the titillation and intrigue that go along with tales of criminal exploits. After all, isn’t reading about the activities of Nigerian oil bunkerers more interesting than reading Shell’s annual report? You bet it is.


New Products & Services Intrinsically Safe Personal Radiation Detectors radiation dose rate measurements. RadEye G-10-Ex has a measuring range from 0,5 •Sv/h to 100 mSv/h, while RadEye GF-10-Ex has a measuring range from 5 •Sv/h to 1 Sv/h. The RadEye G EX series of intrinsically safe handheld devices are designed according to the latest ATEX standards to meet the needs of the operator in and around hazardous areas.

The Thermo Scientific RadEye G EX series of intrinsically safe personal radiation detectors are designed for safe measurements of radiation dose rates in potentially explosive environments, such as petroleum refineries and oil platforms, as well as being ideal for emergency services. In emergency response and in industry, flammable and explosive materials like gas, dust, and fibers can occur. In such potentially explosive atmospheres it is necessary to use ATEX certified devices for gamma

Devices certified as ‘intrinsically safe’ are designed to be unable to release sufficient electrical or thermal energy to cause ignition of flammable materials like gas, dust, or particulates. Beside the ATEX tags, the visual difference between the RadEye versions is noted by the orange color on the front panel of the intrinsically safe versions. The RadEye G EX devices have been re-engineered to reduce energy safety issues, while avoiding the generation of heat and electrical sparks. They are premium products designed for ultimate safety and accurate dose rate measurements. The rugged and reliable devices have a large, clear, and backlit display for error free readings, are lightweight and utilize low power technology.

Deepwater Gas Pipeline Concept Reduces Cost But Not Safety DNV has developed a new pipeline concept, called X-Stream, that can significantly reduce the cost of a deep- and ultra-deepwater gas pipeline while still complying with the strictest safety and integrity regime. X-Stream is based on established and field-proven technologies which have been innovatively arranged. X-Stream can reduce both the pipeline wall thickness and time spent on welding and installation compared to deepwater gas pipelines currently in operation. The exact reduction in the wall thickness depends on the water depth, pipe diameter, and actual pipeline profile. Typically, for a gas pipeline in water depths of 2,500 meters, the wall thickness reduction can be 25% to 30% compared to traditional designs. “It’s essential for DNV that the new concept meets the strict requirements of the existing safety and integrity regime, and I’m pleased to confirm

that this concept does,” says Dr. Henrik O. Madsen, DNV’s CEO, who announced the news at a press briefing in London. “DNV has been instrumental in developing and upgrading the safety and integrity regime and standards for offshore pipelines over the past decades. Today, more than 65% of the world’s offshore pipelines are designed and installed to DNV’s offshore pipeline standard. As the deepwater gas transportation market will experience massive investments and considerable growth over the coming years, new safe and cost-efficient solutions are needed,” Dr. Madsen adds. Current deepwater gas pipelines have thick walls and, due to quality and safety requirements, the number of pipe mills capable of producing the pipe is limited. When installing pipelines, the heavy weights are difficult to handle and the thick walls are challenging to weld. And finally, the number of pipe-laying vessels for deepwater pipelines is limited too.


Facts and Figures

A F RI CA N RI G CO U N T December 2011

Country

November 2011

Variance From Last Month

Oil

Gas

Misc

Total

Oil

Gas

Misc

Oil

Gas

Misc

Total

ALGERIA

23

9

1

33

2

(2)

0

21

11

1

33

ANGOLA

8

0

0

8

0

0

0

8

0

0

8

CAMEROON

1

0

0

1

(1)

0

0

2

0

0

2

CHAD

2

0

0

2

0

0

0

2

0

0

2

CONGO

2

0

0

2

(4)

0

0

6

0

0

6

DRC

0

0

0

0

0

0

0

0

0

0

0

EGYPT

53

18

0

71

1

1

0

52

17

0

69

EQUATORIAL GUINEA

1

0

0

1

1

0

0

0

0

0

0

ETHIOPIA

0

0

0

0

0

0

0

0

0

0

0

GABON

6

0

0

6

0

0

0

6

0

0

6

GHANA

1

0

1

2

0

0

0

1

0

1

2

IVORY COAST

0

0

1

1

0

0

0

0

0

1

1

KENYA

0

0

1

1

0

0

0

0

0

1

1

LIBERIA

1

0

0

1

0

0

0

1

0

0

1

LIBYA***

0

0

0

0

0

0

0

0

0

0

0

MAURITANIA

0

0

0

0

0

0

0

0

0

0

0

MOROCCO

0

0

0

0

0

0

0

0

0

0

0

MOZAMBIQUE

2

0

0

2

0

0

0

2

0

0

2

NIGERIA

14

2

1

17

0

(1)

0

14

3

1

18

SENEGAL

0

0

0

0

0

0

0

0

0

0

0

SOUTH AFRICA

0

0

0

0

0

0

0

0

0

0

0

TANZANIA

1

0

0

1

0

0

0

1

0

0

1

TUNISIA

1

0

0

1

0

(1)

(1)

1

1

1

3

UGANDA

0

0

0

0

0

0

0

0

0

0

0

AFRICA

116

29

5

150

(1)

(3)

(1)

117

32

6

155

***The last report of rig activity in Libya was for February 2011.

WO RLD RI G CO U N T December 2011

Country

60

Variance From Last Month

November 2011

Oil

Gas

Misc

Total

Oil

Gas

Misc

Oil

Gas

Misc

Total

EUROPE

66

32

14

112

(2)

(5)

(3)

68

37

17

122

MIDDLE EAST

177

56

0

233

(1)

(4)

(1)

178

60

1

239

AFRICA

116

29

5

150

(1)

(3)

(1)

117

32

6

155

LATIN AMERICA

381

53

4

438

12

5

(1)

369

48

5

422

ASIA PACIFIC

182

46

19

247

1

0

(1)

181

46

20

247

INTERNATIONAL

922

216

42

1180

9

(7)

(7)

913

223

49

1185

Petroleum Africa February 2012


Africa Production of Crude Oil

OECD Production of Crude Oil

(including Lease Condensate, Thousand Barrels/Day)

(including Lease Condensate, Thousand Barrels/Day)

2011

2011

Country

June

July

August

September

Country

June

July

August

Algeria

1731

1731

1731

1731

Australia

367

358

388

347

Angola

1690

1740

1790

1840

Canada

2631

2824

3010

2952

Cameroon

65

65

65

60

Denmark

225.553

212.717

212.778

210.415

Chad

120

120

120

130

Germany

30

31

31

31

Congo (Brazzaville)

280

280

280

285

Germany (Offshore)

22

24

24

25

Congo (Kinshasa)

20

20

20

20

Mexico

2591.5

2580

2598

2534 13

Cote d’Ivoire (IvoryCoast)

40

40

40

40

Netherlands

12

12

12

Egypt

515

510

510

505

Netherlands (Offshore)

10

10

10

10

Equatorial Guinea

280

278

276

274

Norway

1660

1737

1714

1636

Gabon

220

230

235

245

United Kingdom

Ghana

90

85

90

85

United Kingdom (Offshore)

Libya

100

100

0

100

United States

8

8

7

7

Total OECD

0.5

0.5

0.5

0.5

0

5

10

15

2491

2491

2521

2600

5

5

5

4

460

450

445

425

Mauritania Morocco Niger Nigeria South Africa Sudan Tunisia

80

80

80

80

Africa

8195.5

8233.5

8215.5

8446.5

All other OECD*

(Thousand Barrels/Day)

17

17

17

14

1003

906

734

901

5624.4

5610

5753.581

5641.167

14456.653 14585.917 14776.559

14594.782

263.197

264.197

272.201

280.198

*All other OECD countries with production include Austria, Chile, Czech Republic, France, Greece, Hungary, Italy, Japan, New Zealand, Poland, Slovakia, Spain, and Turkey.

OPEC Production of Crude Oil

Production of Natural Gas Plant Liquids

(including Lease Condensate, Thousand Barrels/Day)

2011

2011

Source: EIA

September

June

July

August

September

494.878

491.52

495.473

501.522

4100

4050

4050

4000

Iraq

2575

2625

2625

2725

Kuwait

2550

2550

2600

2600

150

Qatar

1300

1300

1300

1300

24

24

Saudi Arabia

9640

9840

9940

9540

0

0

0

United Arab Emirates

2720

2720

2720

2720

5

5

5

5

Venezuela

2240

2240

2240

2240

3

3

3

3

Total OPEC Less African Members 25619.88

25816.52

25970.473

25626.522

Total OPEC With African Members 31631.878 31878.52 32012.473

32141.824

June

July

August

September

Country Algeria

350

350

350

350

Ecuador Country Iran

Angola

55

55

55

55

Congo (Brazzaville)

8

8

8

8

Egypt

143

150

150

Equatorial Guinea

24

24

Libya

0

South Africa Tunisia Total Africa

588

595

595

595

Total World

8,522.90

8,578.08

8,602.54

8,479.40

**For OPEC’s African members’ individual production see Africa chart.


Facts and Figures

O I L P RI C ES $ 111.72 113.37 103.40

OPEC Basket

Brent Crude

Nymex

112.23 111.96 101.78

98.95

January 20

January 24

100.87 January 17

98.33

98.88 January 13

101.09 January 11

103.40

101.78

108.38 January 24

111.37 108.80 98.33

January 6

108.50 January 20

110.55 January 17

111.66

109.88 January 13

111.49 January 24

11.96

111.37 January 20

January 6

112.24 January 17

113.37

111.75 January 13

January 4

112.90

112.23

January 11

112.24 110.55 100.87

111.72

111.75 109.88 98.88

January 6

112.90 111.66 101.09

January 4

January 4

111.49 108.38 98.95 January 11

January 4 OPEC Basket Brent Crude Nymex January 6 OPEC Basket Brent Crude Nymex January 11 OPEC Basket Brent Crude Nymex January 13 OPEC Basket Brent Crude Nymex January 17 OPEC Basket Brent Crude Nymex January 20 OPEC Basket Brent Crude Nymex January 24 OPEC Basket Brent Crude Nymex

120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 105 104 103 102 101 100 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 81 80 79 78 77 76 75

G A S P RI C ES January 3

$

Henry Hub

2.99

New York

3.02

Spot Price

Futures Price*

January 5 2.98

Henry Hub

3.02

New York

3.5

January 9 Henry Hub

3.01

New York

3.05 January 11

Henry Hub

2.77

New York

2.80

3.0

January 13 Henry Hub

2.67

New York

62

Petroleum Africa February 2012

2.52

2.39 January 20

January 13

January 11

January 9

January 5

January 18

2.71

2.80

3.05

3.02

3.02 January 3

2.47

2.5

2.34 January 20

Dollars per BTU

January 13

* Contract 2

January 11

2.39 January 9

2.34

New York

January 5

Henry Hub

January 3

January 20

January 18

2.67

2.52

2.77

New York

3.01

2.47

2.98

Henry Hub

2.99

2.71 January 18

2.0


Conferences February 1-2

Gas to Power

London, UK

www.smi-online.co.uk

1-2

Optimizing Bunker Management and Vessel Efficiency

London, UK

www.wplgroup.com

8-10

The Global LNG Forum 2012

Marseille, France

www.oilgas.flemingeurope.com

9-9

Africa’s Future

London, UK

www.petro21.com

Human Capital and Talent Management in Oil & Gas Industry

Johannesburg, South Africa

www.neo-edge.com

2nd Middle East Technology Forum for Gas Processing, Refining,

Dubai, UAE

www.europetro.com

13-16 14-15

Residue Upgrading, & Petrochemicals (ME-TECH 2012)

20-22

International Petroleum (IP) Week 2012

London, UK

www.energyinst.org

20-23

12th

Abuja, Nigeria

www.cwcnog.com

20-22

North Africa Technical Conference & Exhibition (NATC)

Cairo, Egypt

www.spe.org

Next Generation Oil & Gas Summit Africa

Cape Town, South Africa

www.ngoafricasummit.com

5-7

13th Southern African Oil, Gas, & Energy Conference

Johannesburg, South Africa

www.petro21.com

5-7

6th Africa Economic Forum

Cape Town, South Africa

www.petro21.com

5-8

2nd

Johannesburg, South Africa

www.iir.co.za

6-8

Power Generation and Steel Production Exhibition & Conference

Abuja, Nigeria

www.powerandsteelexpo.com

7-8

Deepwater Production Tech 2012

London, UK

www.acieu.net

12-14

Optimizing Enhanced Oil Recovery 2011

Abu Dhabi, UAE

www.v11.vuturevx.com

13-15

Oil & Gas Africa 2012

Cape Town, South Africa

www.exhibitionsafrica.com

21-22

Libya Oil & Gas Summit 2012

Rome, Italy

www.libyasummit2012.com

26-27

Shale Gas Southern Africa

Cape Town, South Africa

www.vitaltraining.co.za

26-28

3rd Eastern Africa Oil, Gas, & Energy Conference

Nairobi, Kenya

www.petro21.com

27-29

3rd Annual

Accra, Ghana

www.cwcghana.com

28-March 1

Nigeria Oil & Gas Conference & Exhibition

March

Annual Shale Gas

Ghana Oil & Gas Summit

April 15th Africa OILGASMINE Trade and Finance Conference & Exhibition

Brazzaville, Republic of Congo www.ogtfafrica.com

17-18

18th Latin Oil Week

Rio de Janeiro, Brazil

www.petro21.com

17-18

4th

Nigeria International Infrastructure and Construction

Lagos, Nigeria

www.cwcnic.com

22-25

6th

German-African Energy Forum

Hamburg, Germany

www.energyafrica.de

24-25

Mozambique Mining and Energy Conference & Exhibition (MMEC)

Maputo, Mozambique

www.mozmec.com

26-27

5th Annual Sub-Saharan Africa Oil & Gas Conference

Texas, USA

www.energycorporateafrica.com

Offshore Technology Conference (OTC) 2012

Texas, USA

www.otcnet.org

2-6

30-May 3

May LNG 2012

London, UK

www.smi-online.co.uk

21-24

9-10

4th African Gas-LNG Conference

London, UK

www.petro21.com

21-24

African Utility Week 2012

Johannesburg, South Africa

www.african-utility-week.com

22-23

12th

London, UK

www.cwcxtl.com

22-24

Mediterranean Offshore Conference & Exhibition (MOC 2012)

Alexandria, Egypt

www.moc-egypt.com

24-24

5th

London, UK

www.petro21.com

25th World Gas Conference

Kuala Lumpur, Malaysia

www.wgc2012.com

East Africa Gas Forum

Dar es Salaam, Tanzania

www.cvent.com

World XTL Summit

Nigeria Upstream Conference

June 4-8 12-14

Petroleum Africa February 2012

63


Contact Us & Index

CONTACT US Office of Registry Petroleum Africa Magazine, Inc. 90 Main St., Road Town Tortola, British Virgin Islands REGIONAL CONTACTS Algeria & Libya Alan Younes Tel: +2 0100 111 5101 Email: ayounes@petroleumafrica.com Egypt Petroleum Africa Marketing 10G Ahmed Abd El-Aziz St., New Maadi, Cairo, Egypt Tel/Fax: +2 02 2517 7454 Email: egypt@petroleumafrica.com Ghana/West Africa RDFC Ltd. Tel: +233 302 767 919 ghana@petroleumafrica.com info@rdfcafrica.com

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AMETrade Argus Media Baker Hughes

23 61 BC

CWC Group

41

Emerson Process Management

29 3

Energyimages.com Exhibition Management Services FMC Technologies Global Pacific & Partners

58 IFC 43 5

INOVA

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Subscriptions subscribe@petroleumafrica.com or visit www.petroleumafrica.com

International Exhibition Services (MOC)

IBC

Oil & Gas Eurasia Magazine

59

Oliver Kinross

45

PennWell

33

Petroleum Ghana

24

Praxis Global Research

31

RDFC Holdings

17

Society of Petroleum Engineers (OTC)

11

SMI Group

56

Surgeteck

7

Swagelok

13

In the March issue The Sudans & Mozambique *Shale Technology

**Petroleum Ghana Issue 2 *Global shale plays have driven industry Research & Development spend. In this feature we cover the latest technology innovations. **For more information on editorial and advertising opportunities in Petroleum Ghana bonus issues, contact advertise@petroleumafrica.com


Petroleum Africa  

February 2012

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