NOGintelligence Technology Edition 2014 by NOGintelligence Magazine

UPSTREAM

MIDSTREAM

www.NOGintelligence.com

DOWNSTREAM

Vol. 2 Issue 3

REGULATORY

FINANCIAL

Technology Edition

THE INTELLIGENT OILFIELD

CONTENTS

Upstream & other news

Editorâ&#x20AC;&#x2122;s Message

Events

Upstream

Midstream News

Downstream News

Financial News

Regulatory News

Legal News

Local Content News

Environmental News

Corporate Social Responsibility News

Employment and Labour News

Health and Safety News Leveraging Innovative Technology

Minister Commits to Restoration of Ogoniland 52

OTC Awards 2014

Recent Developments in Oil Spill Clean Up Techniques

Statistics

Facility Development 63

Innovative Use of RFID in Oil and Gas Operations

Oil and Gas Circuit

Industry Moves

Book Review - Nigerian Oil

EDITOR’S MESSAGE Dear Readers

“WE ARE NOW ABLE TO BRING YOU NOGINTELLIGENCE MAGAZINE BIMONTHLY FOR ALL OF NEXT YEAR, STARTING WITH OUR ANNUAL REVIEW, WHICH COMES OUT AT THE BEGINNING OF JANUARY”

Welcome to the Technology Edition of NOGintelligence magazine for this year. The magazine is bigger and better than ever before at 80 pages thick. This edition comes to you a little later than we had hoped but we have now ironed out some internal issues. As a result, we are now able to bring you NOGintelligence magazine bimonthly for all of next year, starting with our Annual Review, which comes out at the beginning of January. This edition covers news from the last three months. Upstream News includes the current round of Shell divestment, in which 3 of the 4 assets on offer have completed, subject to Ministerial consent. Once these 4 complete, Shell intends to put some more assets up for sale. We also cover the closure of Oando’s acquisition of ConocoPhillips Nigerian upstream business Sahara, Sirius, Eland, Network and Tenoil, amongst others. It is clear from the upstream news section that Nigeria remains of great interest to investors and not even the scourge of Ebola has been able to keep investors away. that IPMAN is to build not one, but two, found to have operated at 10 per cent of capacity in June. All this and more are covered in the Midstream News section. Downstream News is dominated by oil prices, which are currently in free fall and almost below $80 as we went to press. Oil producing nations are hoping that the trend will reverse before it reaches $70, the point at which most of the member nations of OPEC will begin to struggle to balance their budgets. Other news is that Oando may be selling part of their downstream portfolio while Aiteo denied any intention to acquire them. The fallout from the Afren CEO and COO sackings continue to reverberate and we transactions that took place under the two executives. Oriental Energy has issued strong rebuttal statements after some of the shock about these in the Financial News section.

The Ebola Virus Disease dominates CSR News as we detail the contributions of the oil With the declaration by WHO that Nigeria is now Ebola free, everyone is breathing a sigh of relief, although the public must still remain vigilant to prevent its recurrence. Our in-depth technology focus in this edition becomes more evident as we move into the second half of the magazine. Our main story is about creating an intelligent production and lower costs. We also cover the winners of the OTC Awards for this year in great detail and Uwem Udoh, engineer, founder and CEO of WellManned, assists our readers with some commentary on which of the winning technologies could be relevant to the local operating environment here in Nigeria. Other features on technology include recent developments in oil spill technology and the innovative use of radio frequency

This is a packed issue that will keep you going until our next edition, the Annual Review 2014 comes out at the beginning of January. We expect advertising for the Annual Review to be oversubscribed, as with last year. Do make sure you book early to be guaranteed the best position in the magazine. We never like to turn down advertising but we had to last year as many companies left it too late to book their advertising spots. All our contacts are below. Don’t forget, we want to hear from you – send us your industry press releases and comments on any of our articles. Most importantly, please choose to advertise with us because we can only continue to distribute the magazine free of charge (and therefore guaranteeing advertising to offset the cost of production. Do contact us for your own copy of this by appointment.

Some oil and gas events are also featured whilst engineer and consultant, Alex Ogedegbe reviews the book, Nigerian Oil and Gas: A Mixed Blessing?; written from an NNPC insider’s perspective by MA Olorunfemi, Akin Adetunji and Ade Olaiya.

With best wishes,

Remi Aiyela Editor-in-Chief

NOGintelligence is published by: NOGintelligence Limited Suite G5, Regency Suites, 17 Ahmed Onibudo Street, Off Adeola Hopewell Street, Victoria Island, Lagos. Telephone: +234 805 579 9401; +234 807 839 1416 To subscribe to our newsletter: mailinglist@NOGintelligence.com To advertise in our newsletter, magazine or on our website: advertise@NOGintelligence.com To send your press release: newsdesk@NOGintelligence.com General enquiries: info@NOGintelligence.com Our website: www.NOGintelligence.com

EVENTS ENERGY INSTITUTE DOWNSTREAM FORUM Lagos, Nigeria 07 November 2014 www.energyinstitute.org

21ST AFRICA OIL WEEK

Cape Town, South Africa 3-7 November 2014 http://www.petro21.com/events

32ND ANNUAL INTERNATIONAL CONFERENCE OF THE NIGERIAN ASSOCIATION OF PETROLEUM EXPLORATIONISTS Lagos, Nigeria 09-13 November 2014 www.nape.org.ng

FPSO VESSEL CONFERENCE

ANNUAL OIL & GAS CYBER SECURITY CONFERENCE

15TH WORLD LNG SUMMIT AND AWARDS

MOZAMBIQUE GAS SUMMIT MAPUTO, MOZAMBIQUE

Houston, United States 11-13 November 2014 http://www.wplgroup.com

Paris, France 18 November 2014 www.world.cwclng.com

PRACTICAL NIGERIAN CONTENT YENAGOA, NIGERIA 18-20 November 2014 http://www.ncipnc.com/

London, United Kingdom 24-25 November 2014 http://www.smi-online.co.uk

2-5 December 2014 http://www.mozambique-gassummit.com/

INDIGENOUS OIL & GAS SUMMIT LAGOS, NIGERIA

2-4 December 2104 http://www. afrikinternationalnetworks.com/

EVENTS OIL AND GAS SAFETY CONFERENCE Houston, United States 2-3 December 2014 www.oshasafetyconference.org

MOZAMBIQUE GAS SUMMIT

Maputo, Mozambique 02 December 2014 http://www.mozambique-gassummit.com

NORTH AFRICA OIL & GAS SUMMIT

Algeria , Africa 7-9 December 2014 http://www.northafricasummit.com/

PIRA NATURAL GAS MARKETS CONFERENCE

New York City, United States of America 8-9 December 2014 www.pira.com

BOTTOM OF THE BARREL TECHNOLOGY CONFERENCE

Abu Dhabi, United Arab Emirates 9-10 December 2014 http://www.europetro.com

OFFSHORE WEST AFRICA CONFERENCE AND EXHIBITION

Lagos, Nigeria 20-22 January 2015 www.offshorewestafrica.com

WORLD LNG FUELS CONFERENCE HOUSTON, UNITED STATES OF AMERICA

02-04 February 2015 http://www.worldlngfuels.com

NIGERIA OIL AND GAS CONFERENCE AND EXHIBITION Abuja, Nigeria 16-19 March 2015 www.cwcnog.com

GHANA SUMMIT CONFERENCE AND EXHIBITION Accra, Ghana 21 April 2015 www.cwcghana.com

OIL, POWER AND MINING

Orlando, Florida, USA 12-14 August 2015 www.oilpowermining.com/

UPSTREAM NEWS SHELL DREW CLOSER TO FINALIZING AGREEMENTS WITH WINNING BIDDERS Dutch major, and Nigeria’s largest producer, sales purchase agreements (SPAs) with the buyers of its assets in its latest round of onshore divestments. However, ahead of the pack it seems is the consortium that bid for oil mining lease (OML) 29 along with vital Nembe Creek Trunk Line. It appears that Shell has already signed the SPA with the consortium led by Aiteo. Clarifying details of the deal, Aiteo explained that it owns an 85 per cent stake in the deal, while Tempo Energy Resources has a 10 per cent stake and Taleveras holds only a 5 per cent stake in the consortium. In a statement issued by Aiteo Group, it was revealed that the total cost of acquisition of OML 29 along with the 60-mile Nembe Creek trunkline was $2.562 billion, although the consortium expects to spend $2.7 billion, including working capital. The deal, according to Aiteo, is expected to create over 20,000 jobs in the exploration and production sub-sectors of the oil and gas industry.

consortium made up of Mart Resources, Midwestern and Suntrust Oil, all partners in bidding $1.2 billion. OML 18 produces of gas. Pan Ocean is understood to have put in the highest bid of $900 million for OML 24. As a long-term indigenous producer of 7,500 barrels per day from its OML 98, it had the credibility to pull off a bid although they are understood to have found funding to complete the deal. OML 24 has 25,000 bopd gas. Crestar, made up of a consortium led by the founders of James Bay Resources is said to have won OML 25, currently producing

Shell and its joint venture partners are divesting their interest in OMLs 18, 24, 25 and 29 (including Nembe Creek trunkline). Shell owns a 30 per cent interest, while Total owns 10 per cent, and Eni 5 per cent in each of the assets. The international oil companies (IOCs) are in joint ventures in the assets with the Nigerian National Petroleum Corporation (NNPC), which owns the remaining 55 per cent interest in the assets.

of gas, with a $500 million bid. There are reports that this bid may have run into trouble after disagreements with partners and other internal issues may have caused the transaction to stall.

OML 29 is said to have reserves (P1+P2) of about 2.2 billion barrels of oil equivalent (BOE) remaining and is expected to yield peak production of as much as 160,000 barrels of oil per day and 300MMscfpd of gas. of the bids for the assets. It is however known that OML 18 was won by Erotron, a

CRUDE OIL PRODUCTION AVERAGED 2.26 MILLION BPD IN Q1 2014

NIGERIA TOPPED WORLD OIL THEFT LEAGUE TABLE theft league table for the world. With an estimated 400,000 barrels of oil lost to oil theft every day, Nigeria is ahead of Mexico, Iraq, Russia and Indonesia, website pointed out that the staggering level of theft in Nigeria (which equates to about $1.7 billion monthly losses) represents about 7.7 per cent of its GDP.

Despite the Government’s often-touted intention to increase production to 4 million barrels per day, Nigeria’s crude oil output in Q1 of 2014 recorded a drop in production over the corresponding period in 2013, according to the National Bureau of Statistics. Production in Q1 of 2014 was 2.26 million barrels per day (bpd) a drop of 30,000 barrels compared to the 2.29 million bpd it achieved in the same period in 2013. The picture has improved from the end of last year, however, when production had dropped to 1.87 million bpd. As a result, the Bureau said, the growth rate of real GDP was recorded at 6.21% in Q1 2014, higher than 4.45% recorded in the corresponding quarter of 2013.

UPSTREAM NEWS SIRIUS PETROLEUM RAISED $20 MILLION FOR ORORO FIELD DEVELOPMENT Nigeria focused Sirius Petroleum, an independent oil company listed on the Alternative Investment Market (AIM) of the London Stock Exchange in July announced it had conditionally raised $20 million, which it will use located in OML 95. The fund raise was achieved by the conditional placing of 63,530,215 Ordinary Shares and Subscription of up to 326,333,333 new Ordinary Shares, being an aggregate of up to 389,863,548 new Ordinary Shares at 3 pence per share to raise up to £11,695,906 (approximately US$20,000,000) before expenses. The company said it would use the which is estimated to cost $25,100,000. The company said it was therefore seeking further funding of $5,100,000 to meet the remaining well cost. In a more recent update the company said that a longstop date of 7 November 2014 is set for the placing and subscription. The company is also exploring an alternative

re-entry scenario, which may reduce the overall Capex and therefore the further funding required. Under the funding terms, Sirius Petroleum was required to beef up its technical capabilities and, as a result has now formed a Technical Advisory Committee (“TAC”) to advise on the technical aspects of its operations on Ororo and any further asset acquisitions and developments. The responsibilities of the TAC include monitoring geological and geophysical interpretation, acquisition and development planning, economic modelling studies and engineering activities. It has also entered into an agreement with Havoc Partners (“Havoc”) to become technical advisers to the company. Havoc is staffed by

geoscientists and is equipped with the latest geological and geophysical software to enable the team to undertake technical and commercial evaluations and to develop and evaluate projects in-house. Havoc is expected to appoint founders and executive directors of Ophir Energy, Jon Taylor and Alan Stein to the TAC. the London Stock Exchange in 2011 was the biggest ever exploration and production company IPO in London. Sirius has a 40% economic interest it acquired from Owena Oil (the state government vehicle owned by Ondo State set up to hold interests in Ondo State’s oil and gas assets) and Gas Limited and Guarantee Petroleum (an indigenous company designated as the Operator) pursuant to a July 2011 Finance and Technical Service Agreement. The total drilling of three wells, targeting daily total

SAHARA GROUP DOUBLED 2P RESERVES IN OPL 274 The rising success of Nigerian independents continued with the announcement that Sahara Group had completed its third well in onshore Oil Prospecting Licence (OPL) 274 with very encouraging results. The company, which operates OPL 274 through its wholly owned exploration and production subsidiary, Enageed Resources, has completed the third of a three-well drilling programme on the block. After testing, the company said in 2P reserves on the block. The block is operated under a Production Sharing Contract. Sahara had already drilled two successful appraisal wells, Oki-Oziengbe South 4 and 5 before its latest Oluegi-1 exploration well on Oki-Oziengbe South Field. OkiOziengbe South 4 drilled directionally to TD at 12,520 feet MD 1.1 km SW from the well head, logging 211 feet of net pay in

nearly two-million man-hours LTIfree operation. The company explained that it had managed to drill all three wells back-to-back in just 10 months all of which discovered commercial

13 hydrocarbon bearing zones, seven of API oil to surface on two tests at rates of 2400 and 3200 barrels of oil per day, with no water, on a one-half inch choke. OkiOziengbe South 5 also drilled directionally, to TD at 12,873 feet MD 1 km south of the well-head. It logged 298 feet of net pay in 19 reservoirs, 15 of which were oil-bearing and seven of which were new. Sahara’s successful drilling program followed a two year-long, two-phase, landswamp 3D seismic survey in the 871 sq km license. The company says it achieved

rates in excess of 5600 barrels of oil per day. Sahara’s CEO and MD Tonye Cole said of the remarkable achievement: “This portends well, with years of future drilling activity ahead and sustained growth for Sahara’s Upstream.” Up till now, Sahara had been known mainly for its downstream footprint as one of the country’s largest independent suppliers of petroleum products. Now, as is the case with other downstream giants, the company is looking to increase its upstream footprint after following an aggressive drilling campaign over the last year.

UPSTREAM NEWS EXXONMOBIL AND TENOIL PETROLEUM REACHED AGREEMENT FOR ATA FIELD APPRAISAL WELL DRILLING Tenoil Petroleum and Energy Services, a subsidiary of Heirs Holdings, reached agreement with Mobil Producing Nigeria Unlimited (MPN), an ExxonMobil subsidiary, to commence drilling on Ata Field. They will drill an appraisal well on Ata Field in order to evaluate whether there is an opportunity company said in a statement. Ata Field, which is located on Oil Mining Lease (OML) 68 in shallow water offshore of the Eastern Niger Delta was discovered by MPN in 1964. MPN is the operator of OML 68, which it owns jointly with the Nigerian

National Petroleum Corporation (NNPC). Ata Field straddles the borders of OML 68 and Oil Prospecting Licence (OPL) 2008 also owned by Tenoil. The agreement means that

emergence as one of Nigeria’s leading said that, together with the development of OPL 281, which Tenoil operates on behalf of Transnational Corporation of Nigeria

be commercially viable. The commencement of drilling at Ata Field, the company said in a statement, represented a further milestone in Tenoil’s

were important steps in Heirs Holdings’ integrated energy strategy, encompassing petrochemicals and fertilizer production.

ELAND RECOMMENCED PRODUCTION ON OPUAMA FIELD Nigeria and West Africa focused Eland Oil and Gas announced the recommencement of production on the Opuama Field, with gross production stabilising at an average rate of over 3,500 barrels of oil per day (bopd). In an operational update in September, London Stock Exchange’s Alternative Investment Market (AIM) listed Eland said its joint venture company, Elcrest Exploration and Production Nigeria had received payment for its August lifting from Shell Western Supply & Trading. Elcrest has now sold and received funds for a total of 46,022 barrels of crude up to September according to Eland. Elcrest’s next lifting was expected to take place in early September with about 38,000 barrels of crude scheduled. Opuama Field, located onshore on Oil Mining Lease (OML) 40 initially restarted production under the Elcrest joint venture in partnership with the Nigerian Petroleum Development Corporation (NPDC) in February 2014 but was soon beset with problems including the closure of Shell’s Forcados export terminal and some pipeline breaches. It had repipeline with a capacity to export as much as 30,000 bpd as it prepared for production. Production was soon halted after the closure of Forcados terminal. has gross recoverable 2P reserves of 54.2 million barrels. It was original in production in 1975-2006 before SPDC undertook a controlled shutdown of the facilities at the height of its troubles in the Niger Delta. the company recently received approval for a

company expects its end of year exit rate on Opuama to reach 7,000 bpd. Not long after, Eland Oil announced a

was due to the changed structural location of the Polobo-1 well on the reprocessed seismic data.

resources of OML 40, following a new competent persons report (CPR) provided by Netherland, Sewell & Associates Inc. (NSAI). The results, said Eland, demonstrated a material increase in the value to Eland of the reserves and resources of OML 40 as at 30 June 2014 as compared with the previous Report dated 30 June 2013. The values in the new report takes into account the

In the light of an ongoing review of operations and some consequential changes to the company’s work programme and delays in dredging, the Company now anticipates that development drilling on new production wells will begin in Q1 2015. As part of the review, the company will also evaluate the potential for additional production through the re-entry of existing non-producing wells (Op-4, 5 and

incentive, awarded to Elcrest in May 2014,

carried out before or in conjunction with the revised development drilling programme.

means that until 30 April 2019 Elcrest will only be liable for withholding tax and VAT but not PPT.

The company is currently in production and working towards satisfying debt accessibility, which is anticipated in the near-term. Eland, which on 30 September 2014 had cash reserves of $18.2 million, has no immediate need to draw down the debt facility. However,

Listed on the London Stock Exchange’s Alternative Investment Market (AIM), Eland Oil said that OML 40 gross Proved plus Probable (“2P”) reserves had been upgraded from 54.2 million barrels (mmb) to 81.4 mmb, with 25.3 mmb net to Eland (before royalties), and 20.2 mmb net to Eland (post royalties). Eland’s Net (Entitlement) Present Value at 10 per cent 2P amounts to US$649 million, an increase of 52.4%. The values were based on a base Brent oil price of US$100 per barrel and is adjusted for a regional price differential where Nigerian crudes typically trade at a premium to Brent.

and optionality with regard to the work programme, the company said. Resumption of production on Opuama came just after Eland’s acquisition of a 40 per cent interest in Ubima Field located onshore on Shell’s OML 17. 2C resources are estimated resource estimate of 66.9 million barrels of oil with an extra 2C resource estimate of 97 billion cubic feet (bcf) of non-associated gas.

The contingent resources were also updated of additional off-block well data as well as the reprocessing of 3-D seismic on the Western

UPSTREAM NEWS QUA IBO FIELD GOT CLOSER TO FIRST OIL Lease (OML) 13 being developed by Network Exploration and Production and Oando appeared to be on course to become the indicated that work was progressing at a good

of 2014 and recent developments indicate

Almost immediately after the termination, Network signed farm in agreements with Oando for the acquisition of a 40 per cent participating interest by Oando. At that time, 2P reserves were estimated at 11.3 million barrels of oil. Two further development wells (Qua Ibo-4 and Qua Ibo-3 ST1) were drilled in 2012 soon after Oando came on board as technical and

Qua Iboe River in Akwa Ibom State could come onstream by the end of the year. Qua Ibo was awarded to Network E&P in the out from OML 13 held by Shell Petroleum Development Company (SPDC) and its joint venture partners. Five wells have been drilled Qua Ibo-2) were drilled by SPDC in 1960 and 1971. In 2005, Network entered into a Finance and Technical Service Agreement (FTSA) with Mart Resources, a Canadian company for the joint the work programme 100 per cent. Network and Mart drilled an appraisal well (Qua Ibo-3) in 2008, which was suspended in January 2009. As a result of funding issues, Network parted company with Mart early in 2012 with

oil and D5 containing light oil. A successful production test was conducted on D5 and oil production from D5 is expected to commence this quarter while production from C4 is 2015. Commissioning of the crude processing facility, which is said to be nearing completion is expected to take place soon. Pipelines Producing Nigeria (MPN) Qua Iboe Terminal located about 2 kilometers away. Frontier Oil’s of surplus associated gas. If the joint venture partners hit their target for commencement of production this year they 2003 licensing round to enter into production.

TOTAL’S $2.5 BILLION USAN DEEPWATER FIELD WENT BACK ON THE MARKET French oil giant Total’s Usan Deepwater Field located some 100 kilometres offshore in Oil Prospecting Lease (OML) 138 went back on the market after the failure of its 2012 deal with Beijing based

provisions in the Petroleum Industry Bill (PIB), which the international oil companies (IOC)’s are also worried about should the PIB is passed into law, may be behind Sinopec’s decision to pull out. Sinopec may have baulked at making the kind of expenditure a deepwater development will require with the uncertainty of the PIB hanging over it.

sold to China Petroleum Corporation (Sinopec) for about $2.5 billion and it is expected that Total will be seeking a similar sum in the new sale. Total appointed BNP Paribas to advise on the sale. With depressed oil prices analysts said Total might not be able to achieve that price especially given the view that Sinopec paid over the market value at the time to secure the assets. However, such is the interest in Nigerian assets in recent times that foreign investors and Nigerian independents likely be reaching for their wallets immediately. Nigerian banks are likely greater appetite for Nigerian oil and gas

upstream ventures. Neither Total nor Sinopec was willing to divulge the reason for the failure of the deal. Analysts are speculating that

Sinopec bought Total’s 20 per cent stake in OML 138 in 2012 as it sought to shore up its declining oil reserves. At the time, it was expected that the deal would bring Sinopec an additional 36,000 barrels a day of oil production at peak output. Sinopec paid a high price to secure Usan after analysts estimated it had a net value at the time of $2.1 billion. Sinopec paid $21.93 a barrel for each barrel of oil equivalent in the block, twice the industry analyst said at the time.

UPSTREAM NEWS LEKOIL SHARES WERE BOOSTED BY “SIGNIFICANT UPGRADE” OF OTATIKPO MARGINAL FIELD RESERVES acquisition of the interest in Otakikpo in May 2014. The CPR increases the estimated unrisked oil resources net to Lekoil by over 45%.

The London Stock Exchange, Alternative Investment Market (AIM) listed exploration and production company, Lekoil saw its share upgrade to its 2C oil reserves estimates for Otatikpo Marginal Field. The Nigeria and West Africa focused company holds a 40 per cent participating interest and has a 90 per which is located in oil mining lease (OML) 11, offshore Nigeria, adjacent to the shoreline in the eastern part of the Niger Delta. The competent persons report (CPR) was provided by AGR TRACS International

Ltd, which carried out a comprehensive review of the surface and subsurface data provided by Lekoil. Following the review, AGR TRACS reported that the gross unrisked 2C Contingent Resources for Otakikpo were estimated to be 56.75 million barrels (mmbbl). This compares with the 36 mmbbl of gross oil resources in the most recent 2C resource estimates available at the time of the company’s

The CPR has also estimated Stock Tank Oil Initially In Place (STOIIP) ranges for four exploration prospects within the onshore part of the Otakikpo acreage giving unrisked P50 potential gross aggregate Oil in Place volumes of 162.8 mmbbl. Lekoil intends to conduct further studies in the southern shallow water area of the acreage where it believes that additional prospectivity exists.

OANDO CLOSED THE ACQUISITION OF CONOCOPHILLIPS NIGERIAN BUSINESS Consent for its transformational acquisition of the ConocoPhillips Nigerian upstream assets. The long-stop date for Oando said in a statement that: “The parties extended the outside closing date for completion of the ConocoPhillips activities required to complete the transaction.” Ministerial Consent to the acquisition had delayed closure of the transaction for many months, costing Oando millions of dollars in extensions. When closing was eventually announced on the 30th July, Oando said that it had completed the acquisition of the Nigerian upstream oil and gas business of ConocoPhillips for a total cash consideration of US$1.5 billion “after customary adjustments plus a deferred consideration of US$33 million.” The

(NNPC) with a 60% interest and NAOC (20% and operator). The 20 per cent working interest in the NAOC JV, includes 40 discovered oil prospects and leads, 12 production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale-Okpai 480 MW combined cycle infrastructure.

approximate 50/50 debt-equity ratio. The transaction, which was undertaken by 93.6 per cent owned Oando Energy Resources (OER), which is listed on the Toronto Stock Exchange, involved the following assets:

Gross production to Oando from these onshore assets averaged 36,494 barrels of oil equivalent per day (boe/d) in 2013 and 39,266 boe/d in H1 2014. The Onshore Assets contain 211.6 million barrels oil equivalent (mmboe) of Proved plus Probable Reserves, 217.0 mmboe of Best Estimate Contingent Resources and 333.6 mmboe of Unrisked Best Prospective Resources, gross to OER.

a) The Onshore Business: a 20% nonoperating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited (NAOC) Joint Venture (NAOC JV). The other partners in the joint venture are the Nigerian National Petroleum Corporation

b) The Offshore Business: a 95% operating interest in OML 131 located 70 km offshore in water depths of 500m to 1,200m.; and a 20% non-operating interest in Oil Prospecting Licence (OPL) 214 located 110 km offshore in water depths of 800m to 1,800m. The other joint venture partners are ExxonMobil

(20% and operator), Chevron (20%), Svenska (20%), Nigerian Petroleum Development Company (15%) and Sasol (5%). In June 2014, the Honourable Minister of Petroleum Resources for Nigeria approved the conversion of OPL 214 to OML 145 for an initial period of 20 years.

and 8 separate prospects and contain a total of 281.6 mmboe of Best Estimate Contingent Resources and 323.3 mmboe of Unrisked Best Prospective Resources, gross to OER. The total reserves and resources associated with this Transaction are: Proved plus Probable Reserves of 211.6 mmboe; Best Estimate Contingent Resources of 498.6 mmboe; Unrisked Best Prospective Resources of 656.9 mmboe. Upon completion of the Transaction, OER will be positioned as one of the leading E&P players in the Nigerian Oil & Gas sector, as measured by end-2013 Proved plus Probable Reserves of 230.6 mmboe, Best Estimate Contingent Resources of 536.8 M mmboe, Unrisked Best Prospective Resources of 2,051.8 mmboe and H1, 2014 production of 44,512 boe/d, all gross to OER.

UPSTREAM NEWS

TRELLEBORG WON A CONTRACT TO SUPPLY THERMAL INSULATION MATERIAL FOR ERHA NORTH PROJECT UK company, Trelleborg Group’s offshore operation won a contract to supply its high temperature thermal insulation material for phase two of the Erha North project. Appointed by subsea engineering, construction and services company, Subsea 7, Trelleborg will supply several tonnes of its high temperature advanced silicone insulation solution, vulcanization technology, the coating is ideal for the Acim Rezig, SCM Engineer at Subsea 7, commented: “As the offshore industry continues to get more complex, we’re more frequently searching for products

the ideal choice for the project, as it caters to the assurance.” Lee Roskell, Proposals Team Manager within Trelleborg’s offshore operation, said: “We developed a high temperature, microsphere free product to improve overall performance of the insulation system. This provided an added assurance that the product verifying both the cast insulation and substrate.” In a statement, Trelleborg said it had designed the product to cater to the harsh environment at the Ehra system can operate at ocean depths of 9,832 feet / 3,000 meters and temperatures as high as 300 compromised. The Erha and Erha North projects consist of 32 subsea wells tied back to a Floating Production, phase two development sits at 3,960 feet/ 1,200 meters deep and is an extension of the existing Erha subsea system and infrastructure, which is currently Nigeria. Trelleborg is expected to complete its supply of thermal insulation by quarter four of this year.

MART RESOURCES AND PARTNERS COMPLETED UMUGINI PIPELINE Toronto Stock Exchange listed Mart Resources and its co-venturers Midwestern Oil and Gas Company (the operator) and SunTrust Oil Company recently completed the Umugini pipeline tie-in at the Eriemu

Mart said in a statement, have been completed.

commence shipment of oil to the Trans-Forcados crude oil export pipeline and onward to the Forcados oil export terminal and the inspection of the Umugini pipeline facilities by the Operator of the Umugini pipeline was successfully completed by the end of September 2014. Accordingly, the company said, Umugini pipeline is ready for injection of crude into the Trans Forcados crude pipeline and Shell Petroleum Development Company’s (SPDC) pipeline system connected to the Forcados oil export terminal.

Clean-up and testing of the UMU12 well will commence after the rig has been moved from its current location to the new UMU East drilling pad where it will drill UMU-13, an exploration well intended to appraise the eastern prospect on the licence. The UMU-13 exploration well is to be drilled as a vertical well to penetrate the crest of the east prospective structure. Earlier (in July) Mart had provided an operational update in which production averaged 6,793 barrels of oil per day (“bopd”) during June 2014 based on calendar days while on production days was 10,871 bopd during the same period. Net deliveries into the export line

occur following the receipt of the formal authorization of oil injection by the operator of the Trans Forcados export pipeline. The authorization is apparently expected imminently. Mart also gave a drilling update on Umusadege, stating that the drilling and completion of the UMU-12 well has been concluded. The well was drilled into the VIII sand, landing a 1,200 foot lateral drain hole at a measured total depth of 10,010 feet. The average oil column is approximately 40 feet.

203,786 barrels of oil (“bbls”) the month of June 2014 before pipeline losses and approximately 157,433 bbls after deducting pipeline and export facility losses. Pipeline and export facility losses reported and allocated to Mart and its co-venturers for May were 73,237 bbls, or 22.7% of total crude oil deliveries into the export pipeline whilst aggregate downtime during the month of June totaled approximately 11.3 days.

PRODUCTION ENGINEERING SERVICES Production Metrology Well Intervention and surveillance services

PRODUCED WATER DISPOSAL / INJECTION DESIGN AND SUPPORT SERVICES

FORMATION EVALUATION Cutting edge & Precision quantitative mineral analysis (non XRD) including wellsite services Fast quantitative rock & cuttings analysis Chemostratigraphy 3W *(Wellsite Wireline Witness) Core analysis advisory services (RCAL & SCAL) - Digital Core services (passive 3D rock analysis) -Petrophysical (single & multi well) evaluation Services

EARTH SCIENCE AND RESERVOIR MANAGEMENT CONSULTING

MIDSTREAM NEWS REFINERIES OPERATED AT LESS THAN 10.5% CAPACITY IN JUNE Harcourt and Warri operated at an average of 10.46 per cent of their combined capacity of 445,000 barrels per day in June, according to data from the monthly report of the Nigerian National Petroleum Corporation.

169,301MT but did not process any crude. Nigeria’s oil industry contributes a large share to gross domestic product and accounts for the bulk of federal government revenue and foreign exchange earnings. Although Africa’s largest crude oil producer, yet Nigeria does not have the

In the period under review, total crude oil available for processing was 672,000MT, out of which 221,000MT was processed. The respective average capacity utilisation during the month was 0.00 per cent, 17.96 per cent and 13.44 per cent for the Kaduna, Port Harcourt and Warri,

nation.

processed 152,889MT out of 289,852MT while Warri processed 68,098MT out of

Africa’s richest man, Dangote is planning

has already got off the ground after the a contract worth $139 million with Engineers India Ltd (EIL). EIL will provide Project Management Consultancy (PMC) and Engineering, Procurement and Construction Management (EPCM) as well as commissioning services for the 400,000 600,000 TPA Polypropylene Plant.

combined capacity of 450,000 barrels, petroleum and fertiliser products for its domestic needs.

Oil workers in NNPC recently called off an industrial action after demanding that the which has been delayed year after year, be carried out immediately. They also adequate crude supplies to enable them to begin to function at full capacity.

AFRICA CAPITAL ALLIANCE-BACKED GAS UTILITY COMPANY ACQUIRED EGBAOMA PLANT An investment by leading independent on Nigeria and the broader West African region, enabled Gas Train Limited (GTL), a gas utilities company operating in Nigeria to acquire Egbaoma Gas Plant. Egbaoma is a 30 million scf per day gas processing plant located in the gas-rich Niger Delta region. GTL plans to refurbish, optimize and ultimately expand the plant. When completed, the plant will process Asuokpu/Umutu Field, which is estimated to contain 1P gas reserves of over 150 bcf. The processed output from the plant will Petroleum Gas (LPG) (used primarily as cooking gas), Propane (for power generation and absorption chillers) and Natural Gas Liquids (blended with Crude Oil). GTL was set up by the Owel-Linkso Group, provides services to the oil and gas. It has an active pipeline of over 800 mmscf/d of associated gas supply processing projects in Nigeria.

Speaking on the investment, Charles Osezua, founder and Chairman of the Owel-Linkso Group said: “The acquisition of the Egbaoma plant is a developer, investor and operator of gas infrastructure projects in Nigeria. We are excited to partner with African Capital Alliance and look forward to achieving of our organizations and indeed for the Nation.” The investment in GTL makes sense for ACA as the gas midstream space is central to their overall power and oil & gas strategy. Cyril Odu, Partner and Head of Energy at ACA, said: “We are pleased to partner with the Owel-Linkso Group, a development success. We look forward to a long and successful relationship.”

Formed in 1997, ACA has, to date, obtained aggregate capital commitments of over $750m across several funds raised from proven track record of successfully exiting investments and delivering strong returns to investors. investments. In 2008, it provided growth funds to Linetrale Gas Limited, a company that provides integrated gas sale and distribution services including trading, Petroleum Gas (LPG). Also, in 2008, ACA similarly provided growth capital to DWC Drilling, a company that provides landdrilling services to oil companies in Nigeria and the Gulf of Guinea. ACA is currently investing out of its third fund (CAPE III), a $400 million private equity fund.

MIDSTREAM NEWS IPMAN ACQUIRED LAND FOR $3 BILLION REFINERIES IN KOGI AND BAYELSA STATES In July, the Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) Bestman Inekwe, announced Bayelsa States. Inekwe said that the organisation would partner which will have the capacity to process 200,000 barrels of oil per day and will take two years to complete. Inekwe who revealed this during a visit to the Kogi State governor said he was hoping that they would get the licence quickly enough to enable them to meet up with their 2-year time frame. By October, IPMAN had acquired 1,000 hectares of land in Itobe in Kogi State and Abbe in Bayelsa State on which to site the said that the foreign investors had conducted feasibility studies on the project in August. He said that they had received the support of the Minister of Petroleum Resources, Diezani AlisonMadueke for the project.

NNPC FAST-TRACKED THE ABUJA-KADUNAKANO GAS PIPELINE PROJECT As it struggles with the critical need for major gas infrastructure development, the Federal Government showed its commitment to improve the situation with its decision, in September to fast track the Gas Revolution Agenda. To this end, the Nigerian National Petroleum Corporation (NNPC) has set up a Steering Committee for the Abuja-Kaduna-Kano (AKK) Gas Pipeline Project. The Steering Committee has been given the mandate to accelerate the delivery of the project. The AKK project will provide crucial transport of gas for power and manufacturing in the north of the country. The project, which is part of the Gas Master Plan, has already received the approval of the Federal Executive Council. Newly appointed Group Managing Director (GMD) of NNPC, Dr. Joseph Dawha said the project was one of the country’s National Priority Projects and is a vital plank of the transformation agenda of the administration of President Goodluck Jonathan. Other projects, which are part of the Gas Master Plan, the OB3 gas pipeline project and the looping of the Escravos Lagos Pipeline System (ELPS) are currently progressing well. The Steering Committee for the AKK Project is expected to bring that project, which is lagging behind, up to speed. A Project Support Team has also been inaugurated from various divisions of NNPC. Mallam Rabiu Bello, General Manager, Corporate Planning and Strategy, will be the Team Lead. The Project Support Team will review all existing contractual, technical,

NPDC, SEPLAT JV UNVEILED PLANS TO INVEST $200M IN AZURA POWER PLANT Nigerian Petroleum Development Company (NPDC) and its joint venture partner, dually listed (London and Nigeria) Seplat Petroleum Development Company are to invest $200 million in

in the country. The power plant, which is located in the Ihovbor/ Orior Odemwende communities of Edo State, is being developed by the NPDC and Seplat. Speaking at the foundation laying ceremony, which was performed by President Goodluck Jonathan, the Minister of Petroleum Resources, Diezani Alison-Madueke, disclosed that the Nigerian Gas Company would be providing gas transportation to the power plant using the 50-kilometer stretch of the Escravos Lagos Pipeline. According to the Minister, the Azura-Edo power plant gas transaction is a pioneer in the two-tier gas pricing arrangement as proposed in the gas master plan, which envisions a willing buyer-willing seller pricing. She maintained that through the NPDC and the Seplat joint venture, 450 megawatts (mw) of power would be supplied with 120mmscf/per day of gas from the new gas processing facilities at the Oben Gas Plant. the success stories of President Goodluck Jonathan-led administration in the power and oil and gas sectors.

SHELL NIGERIA GAS BEGAN A CAMPAIGN AGAINST BUILDING ON GAS PIPELINES Shell Nigeria Gas (SNG) launched a campaign to alert members of the public of the dangers of encroaching on the pathway of gas pipelines. Its campaign is targeting its business areas in Ogun, Rivers and Abia States. The exercise has already been held in Ogun State, with SNG and its Right-of-Way campaign partner, the African Foundation for Environment and Development, sensitising communities in Ijoko, Itoki and Ota in Ado Odo-Ota Local Government, on the dangers of vandalising pipelines, bushburning, and construction of structures on and around gas pipelines.

“The campaign goes beyond our business interests,” pointed out SNG Managing Director, Toyin Adenuga. “It is rather more about safety of lives and property. People who build on gas pipelines risk losing everything including their lives and things they’ve worked hard for. The campaign is to make them to realise that the risk is not worth it.” SNG is a wholly Shell-owned gas distribution company, which began operations in 1998. The company distributes gas to industrial consumers in Ogun, Rivers and Abia States.

DOWNSTREAM NEWS

$ $ $ $ OIL PRICES WENT INTO FREE FALL

The price of the Organisation of Petroleum Exporting Countries (OPEC) basket of twelve crudes stood at $107.17 a barrel on the 3rd of July. It continued dropping through August and September and by the 15th of October it had dropped to $81.89 sending shockwaves through the industry. Global bench mark crude, Brent and the American benchmark crude, West Texas Intermediate (WTI) have seen a 20 per cent slide slide since early in the summer. OPEC member nations, which supply 40 per cent of the world’s oil have begun tightening their belts after analysts predicted that member nations will begin to feel the effect once the price dropped below $90 and most will be in trouble if it drops to $70. Many OPEC member nations, including Nigeria, rely on oil exports to balance their budget and had been lulled into a false sense of security after seeing prices soar over the last 2 years. Many analysts predict that it is likely to get worse before it begins to get better. As the date for the next scheduled meeting of OPEC Ministers approaches on the 27th of November member nations are divided on what to do about halting the slide. The OPEC Secretary General Abdullah al-Badri said in September that he expects that production will have to be cut to around 29.5 million bpd in 2015. Saudi Arabia has said in recent times that it will not cut production, having decided on a strategy of gaining market share and along with Kuwait, Iran, Iraq, and the United Arab Emirates, it has cut prices sparking fears of a price war that could drive prices down even further. Venezuela has called for an emergency meeting of OPEC to discuss the issue and Iran has now joined the voices calling for an immediate production cut.

Oversupply has been blamed for the softening of oil prices. The boost in OPEC production comes mainly from Libya, which has seen production rise by 280,000 bpd. Nigeria has seen production rise on a steady basis, increasing from 2.006 million barrels per day in August to 2.030 million barrels per day in September.

Angola and Iraq have also seen an increase in production. The dramatic rise in US shale oil production has added to the glut, with US production at its highest in 3 decades. “Tight” oil production has turned the U.S. into the world’s largest producer of liquid petroleum. The International Energy Agency (IEA) recently estimated that there is about 1 million barrels of worldwide daily oil production in excess of demand currently. In addition to oversupply, slow economic growth is also being blamed. The International Monetary Fund (IMF) recently lowered its estimates for global economic growth for 2014 and 2015. A slowdown in manufacturing in China and Japan, as well as the strong dollar, are said to be helping to keep prices depressed. The high production cost of tight oils - as much as $90 per barrel as against $10 to $25 per barrel for conventional oil - may make it uneconomic for the level of shale production to continue at current rates in the US. The question however is whether it is likely to slow production soon enough to make a meaningful impact on current prices. As producing nations continue to watch the free falling prices, in Nigeria, the Federal Government has ruled out borrowing, even though the 22 per cent drop in crude prices over the last four months could erode external reserves by about $4.5 billion. The Federal Government says it is putting contingency plans in place to avert any shocks on the economy from the decline in oil prices. The OPEC Reference Basket of Crudes comprises Saharan Blend from Algeria, Girassol from Angola, Oriente from Ecuador, Iran Heavy, Basra Light from Iraq, Kuwait Export, Es Sider from Libya, Bonny Light from Nigeria, Qatar Marine, Arab Light from Saudi Arabia, Murban from the United Arab Emirates and Merey from Venezuela.

DOWNSTREAM NEWS

SIRIUS PETROLEUM TERMINATED ITS OFF-TAKE AGREEMENT WITH GLENCORE Nigeria focused oil and gas company, Sirius Petroleum, terminated its exclusive off-take agreement with Glencore even before production has started on its Ororo Field in Ondo State. The London Stock Market Alternative Investment Market (AIM) take arrangement with Glencore for its crude was ended by mutual consent. Sirius has now entered into an agreement with BTG Pactual Commodites (UK) for the marketing of crude oil from the offshore Ororo Field it owns in partnership with Ondo State owned Owena Oil and Gas and Guarantee Petroleum Company. Under the terms of the agreement, BTG Pactual gets the exclusive right to market all crude oil from the Ororo Field, for an initial period of delivery of crude, and thereafter on a rolling twelve month basis unless otherwise terminated. As a result, BTG Pactual is appointed as Sirius’ exclusive representative to perform all necessary marketing, negotiation, sales and contract execution in relation to the sale of its Crude Oil, subsequently owned by Sirius, the company stated in the announcement. The agreement also gives BTG Pactual the right to market other physical crude oil of Nigerian origin sourced

Pactual to split the proceeds from the marketing of any crude oil from sources introduced by Sirius outside of its own production, equally. The new arrangement with BTG Pactual now its crude marketing allowing it to take advantage of market opportunities. Bobo Kuti, Chief Executive of Sirius commenting on the deal, said: “I am delighted that we have entered into this Marketing Agreement with BTG more advantageous terms to the Company and its Shareholders than previous arrangements and gives Sirius the ability to conclude its funding with other parties.” oil on the Ororo Field after entering into a Financial and Technical Services Agreement (FTSA) with Owena and which is located in Oil Mining Lease 95 in October 2011. Sirius paid US$1m to Guarantee and Owena as consideration for entering into the agreement. Sirius will fund the in shallow water offshore Ondo State, Nigeria, in water depths ranging between 23 ft and 27 ft. Upon production of oil, Sirius will pay a further US$500,000 in aggregate to Guarantee and Owena and will be

which time Sirius’ production cash entitlement will revert to 40 per cent. The Ororo Field was discovered in 1986 with the drilling of the Ororo-1 well by Chevron, which penetrated 197ft of hydrocarbons in twelve sandstone reservoirs at points close to the crest of each reservoir structure. These consist of 72ft true vertical thickness (“TVT”) of net gas pay and 125ft TVT of net oil pay. The Ororo-1 well tested at c. 2,200 barrels of oil per day (“bopd”) from a single zone, and around 600 bopd from another. tTo further zones tested gas, and eight zones remain untested. Chevron acquired both 2D and 3D seismic over the Ororo Field. The recoverable hydrocarbons were estimated to be in excess of 20 million barrels gross in a third party report prepared in 2006. Isan, and West Isan, all of which are operated by Chevron and are situated between 4km and 6km from Ororo providing a low cost tie-in opportunity. position, the company recently put up 63,530,215 ordinary shares and subscription of up to 326,333,333 new ordinary shares, being an aggregate of up to 389,863,548 new ordinary shares at 3 pence per share in a conditional placement, raising £11,695,906 before expenses.

from the production of crude oil to recover its investment, receiving 88

Sirius Petroleum and its partners

until full cost recovery is achieved, at

Ororo.

does not wholly or partially own such

DOWNSTREAM NEWS NNPC ISSUED A WARNING AGAINST FAKE LETTERS OF AUTHORISATION FOR OIL LIFTING

DAMAGED NIGERIAN GAS PIPELINE AFFECTED ELECTRICITY SUPPLY IN GHANA A damaged Nigerian gas pipeline brought misery to Ghanaians as the country began load-shedding electricity due to a reduced supply of gas from Nigeria. The Ministry of Energy and Petroleum in Ghana said it had to do so as the problem had affected power generation output. The problem was exacerbated by other internal issues including low levels of water in two of the nation’s dams and maintenance work on some power plants. Meanwhile, the Nigerian National Petroleum Corporation (NNPC)’s Group Executive Director, Gas and Power, Dr. David Ige, reiterated NNPC’s commitment to the supply of gas to the West African Region. “The outstanding force majeure situation is being addressed by NGC and should be lifted very shortly. Beyond this, major interventions are being implemented to grow supply to meet the full requirements of both WAGP and the domestic power market. It is expected that much of the net supply shortages beyond the FM induced reduction, will be addressed within the next 4-5 months,” he explained. According to Dr Ige, since 2013, there have been some supply disruptions affecting gas shipped through the West African Gas Pipeline. These, he said, have been largely due to force majeure events like the outage of the Escravos-Lagos pipeline and other secondary pipelines such as the Trans-Forcados pipeline. NNPC and its joint venture partners were

Once again, the Nigerian National Petroleum Corporation (NNPC) had to issue a warning to members of the public regarding the proliferation of fake letters of authorisation from NNPC for the lifting of crude oil. In a statement, the Group General Manager, Group Public Affairs Division of the NNPC, Ohi Alegbe, said there were fake letters circulating, in particular one, which refers to contractual arrangements with a Lavi International Corp. The statement drew attention to the usual wording of the fake letters of authorisation, but with particular emphasis to one being bandied around in the name of Lavi International, which reads: “We Petroleum Corporation (NNPC) has entered

into contractual arrangements directly with Lavi International, Corp, to supply Bonny Light Crude Oil to the Lavi International Traders, and that the Lavi International Corp, has the power and authority to sell or otherwise deal with the Bonny Light Crude Oil, the subject of those contractual agreements.” Mr Alegbe stated that Lavi International Corp was not one of the awardees of a term contract for the 2014-15 period and therefore had no such authority. He pledged NNPC’s determination to ensure that guilty parties are exposed. “We are working closely with relevant security agencies to track and bring to book all those behind these nefarious activities,” he stated.

AITEO DENIED ANY INTENTION TO ACQUIRE OANDO’S DOWNSTREAM ASSETS As speculation grew that Oando had may have put its downstream business up for sale in a bid to streamline its activities post the ConocoPhillips acquisition, Aiteo Group was being touted as the front runner in the bid to acquire the assets. Aiteo had acquire the assets assets. The downstream Africa focused emerging powerhouse which has already clinched Oil Mining Lease (OML) 29 from Shell’s current divestment round, said in the statement that it did not bid nor has it indicated any interest to bid for the assets and that it does not have any intention to purchase the said Oando downstream assets. Speculation began after the Nigerian Stock Exchange (NSE) reported that Forte Oil, one of Nigeria’s largest downstream companies, which is listed on the NSE, had informed the NSE, in the interest of

full disclosure of discussions “still in its infancy” for a proposed acquisition. The statement did not mention the target of the acquisition but soon became clear that it was Oando, particularly in view of its recent transformational upstream acquisition. Oando is said to want to concentrate on the upstream business whilst divesting part of its downstream interests. divestment, it also did not deny it, saying cryptically that: “In line with our strategy, we received shareholder approval to partially divest from our downstream business a few years ago and are constantly exploring the best approach to executing this objective.” Forte Oil meanwhile is said to be trying to the 2013 acquisition of Geregu Power Generation Plant in Kogi State.

FG ISSUED SUPPLEMENTARY IMPORT PERMITS TO MARKETERS

shortages.

As the Quarter 4 allocations continued to await approval, the Federal Government issued supplementary permits for the import of 600,000 metric tonnes of gasoline in October under the third quarter import program, the Petroleum Products Pricing Regulatory Agency said.

“Nigeria remains committed to supplying the West African region. The current supply challenge is being addressed aggressively and full contractual supply should be attained within a few months,” Dr Ige insisted.

“The supplementary allocation was approved last week and it will be just for the month of October,” a PPRA source has told Platts. Import permits for October were also issued in the June-July period, but the total volume of those allocations are unclear.

The supplementary allocations were intended to serve as a stopgap measure the Ministry of Petroleum for Q4 allocations. The PPRA source did not state the reason for the delay in issuing the allocations. With the latest permits, trading companies Oando, Conoil, Aiteo, NIPCO and Folawiyo Petroleum, each got allocations to import 90,000 mt of gasoline in October, the source said, adding that other small fuel marketers got permits to import 45,000 mt of gasoline each.

FINANCIAL NEWS AFREN INDEPENDENT REVIEW CONCLUDED THAT $400 MILLION PAYMENTS TO ORIENTAL BREACHED LSE LISTING RULES longstanding dispute over the ownership of certain tax allowances resulting from capital expenditures on the project before and after production began in April 2011. The dispute

London Stock Exchange (LSE) listed exploration and production company, Afren Plc in October announced the completion Willkie Farr & Gallagher (UK) LLP of certain transactions undertaken by its former chief

the $120 million was not paid until late November 2013.

whether such transactions should have been announced at the time they were entered into in accordance with the requirements of the LSE Listing Rules. under review, Afren had failed to comply with its reporting obligations under the listing rules in respect of two of those, whilst there were no disclosure rules in relation to the third transaction. Afren did not suffer any loss as a The transactions that breached the rules were a payment of $100 million in 2012 and another of $300 million in 2013 to Oriental Energy Resources, Afren’s partner in the Ebok Field. Shahenshah had described the two transactions as being in the ordinary course of business. $100 million to Oriental in lieu of oil. The payment was made in two tranches of $95 million and $7 million, representing 5 per cent of Afren’s market capitalisation. In the second transaction, Afren paid $300 million to Oriental, representing 12 per cent of its market capitalisation in return for Afren acquiring rights to certain tax allowances and increasing its share of oil revenues from the

“was not, in reality, an agreement for the prepayment of oil, nor was it a way of funding Oriental’s costs in developing Ebok in a manner which might be considered to be in the ordinary course of business.” The review concluded that: “It was a loan of $100 million to Oriental and was included in Afren’s balance sheet for 31 December 2012 under the line ‘prepayments and advances to partners’. Accordingly it was neither in the ordinary course nor of a revenue nature and should have been announced as a class 2 transaction on 25 July 2012 once the second tranche of $7 million was paid.” With regards to the second payment, the review concluded that due to its size and incidence, it should have been declared. the Financial Conducts Authority (FCA) of the breaches and would make the full report available to the FCA. Following the announcement of the results of

The review by WFG was undertaken as part of the company’s investigations into “unauthorised” payments received by Osman Shahid Ullah and two associate directors, Iain Wright and Galib Virani. the review, Oriental launched a swift rebuttal of the conclusions reached by WFG. denies that the forward sale of crude oil transaction of $100 million in July 2012 was a “loan” as characterized by WFG. Oriental explained that it had entered into a Forward Sale of Crude Oil Agreement with Afren in July 2012, something Oriental said, was a common practice among partners in the international upstream petroleum industry. The Forward Sale Agreement was an agreement for the prepayment of oil. Oriental agreed to sell approximately one million barrels of its future oil production to Afren thereby permitting Afren to book those reserves in 2012. The reason the $100 million payment to Oriental was included, Oriental said, in Afren’s balance sheet for 31 December 2012 under the line “Prepayment and Advances to Partners” was because it was, indeed, a prepayment for Oriental’s future oil production. Afren, as a result of the Agreement, properly deducted $100 million in oil equivalent barrels With regard to the second payment, Oriental explained that it was not in fact one but two payments, one of $180 million and another of $120 million. Under the Joint Operating Agreement (JOA) executed by the parties, Oriental should have received its share of not receive any such payments from Afren until August 2013 when it received the $180 million, half of which was payment in arrears of was the prepayment of approximately four 2013. It is Oriental’s position that this payment could not be characterised as a loan: to the extent that Oriental received prepayment for its oil, Oriental sold those barrels to Afren. A further $120 million payment was made to Oriental in November 2013. Oriental explained that this was in settlement of a

With regards to these unauthorised payments Afren explained in a statement that Shahenshah and Ullah were involved in an arrangement with Oriental that involved Oriental paying 15 per cent of its cash receipts from Ebok for the period from 2013 to 2017 to a British Virgin Islands special purpose vehicle (SPV) Ntiti Ltd. Oriental had agreed to make the payments to Ntiti in return for the unreported $400 million funding from Afren provided by Shahenshah and Ullah. Ntiti, which was owned and/or controlled by the two executives, received $45 million, out of which $17.1 was paid to both of them in the form of extraordinary bonuses. Oriental on the other hand denied that there was anything wrong in the payments, explaining that in October 2013 Oriental entered into an agreement with NTITI, the Oil Field Development Optimization Services Agreement, represented by senior executives of the Ebok Joint Operating Team (JOT). Under the Agreement Oriental agreed to pay proceeds to NTITI for the purpose of providing incentive compensation and retention of key employees who had proven themselves to be essential members of the Ebok JOT, a group reporting to the Ebok Operating Committee and comprised of employees seconded by both Oriental and Afren, as provided by the JOA. compensation to select key employees of both companies upon attainment of annual performance goals set by the Ebok Operating Committee. Afren’s board has now sacked Shahenshah and Ullah for gross misconduct. The associate directors implicated have also been dismissed, all with immediate effect. Disciplinary proceedings against a further seven employees who participated in the unauthorised payments have commenced. Legal proceedings are also underway to recover the sums from them. Oriental on the

Continues on page 22

FINANCIAL NEWS Continued from page 21

of Okwok Field and in 2010 in respect of oil mining lease (OML) 115.

other hand praised “These outstanding men and women [who] have delivered enormous value to the Afren shareholders and it is more than tragic to witness the destruction of the lives and livelihoods of these dedicated Afren employees.”

An aggressive drilling programme in 2010 resulted in the rapid development of the Ebok Field and by the end of 2011 the Ebok

Oriental’s relationship with Afren began in 2008 when they signed a Technical Services Agreement (TSAs) for the appraisal of the Ebok Field, which Oriental had farmed into in 2007. This was followed by joint venture agreements in 2009 for the development

The company’s board says it has now begun an executive search for the replacement of the sacked senior executives. Egbert Imomoh remains executive chairman whilst Toby Hayward has been appointed interim CEO.

million barrels of oil. By January 2012 there were 14 production wells on Ebok.

Afren is hoping its swift action, following the discovery of the actions of the CEO and COO and others will help stabilise its shares on the market. Afren stocks, which were down 30 per cent in the last few weeks rose 2.4 per cent on the announcement of the dismissals. Analysts say that new management team is in place and their strategy and direction become clear. Meanwhile, a tightening of the internal controls will help to settle the market’s anxiety. Most are predicting that, though Afren remains vulnerable, this is not the end for the successful exploration and production company.

AFREN ANNOUNCED HALF-YEAR RESULTS, TARGETING DOUBLE-DIGIT GROWTH Afren announced its half-year results in by 49 per cent from $260 million in the corresponding period last year to $133

is expected to be completed this year. The Ebok deep exploration is expected to spud in Q4 2014, targeting resources of 50 million existing offshore mobile platform unit.

Aje-4 well and a new well drilled close to the Aje-2 subsurface location. First oil is due in 2015 with median reserves of 32.4 million barrels expected although the completion of 3D seismic analysis on the block and on neighbouring OML 310 could lead to further

after tax stood at $62 million, rising to $160 well in Okoro, 3 new producers on OML 26 the tax exemption, which the company won with regulatory authorities, which offset The company insisted that its balance sheet remained strong with net assets of $1.972 billion, up from $1.498 billion for the corresponding period in 2013. Net production to Afren from the assets in which it has interests was down by 25 per cent from 44,712 barrels of oil per day (bopd) to 33,488 bopd. Production for the full year was revised downwards to 32,000 bpd from 36,000 bpd. Highlights from the FTSE 250 company’s operational update include approval from the Department of Petroleum Resources (DPR) for an initial 5-well development of Ogini where a rig is currently on location engaged in development drilling. In addition, 3D seismic acquisition on Oil Prospecting Licence (OPL) 310 is now complete and interpretation is ongoing with further drilling scheduled to commence in Q4 2014. That means that appraisal is now not scheduled to start until 2015 in the gigantic 2013 Ogo discovery. The company said it was targeting a 5-year double-digit growth in production and planned for a production ramp up in the second half of this year. Underpinning this target growth are Afren’s plans for 6 new producers on Ebok, where oil production has been averaging 29,300 bpd. Drilling of four additional wells (including 3 producers) has already commenced and the program

progressing, and the commencement of fast-track development drilling on shallow water Okwok with estimated reserves of 46.6 million barrels. A dedicated production facility and wellhead platform with an export pipeline tied back to Ebok FSO (some 13 kilometres away) are to be installed. The DPR also approved plans for the as the development plan calls for two subsea production wells to be tied back to a leased FPSO. The plan involves the recompletion of the existing

With only 26 per cent of total discovered 2P/2C barrels in production or under development, it is no surprise that the company considers its reserves potential as transformational. Commenting, Toby Hayward, interim CEO of Afren plc, said: “Despite recent challenges Afren is totally committed to delivering on our work programme across the portfolio. With numerous growth opportunities expected to drive a step-up in near-term production, strong position to deliver shareholder value in 2014 and beyond.”

FINANCIAL NEWS

FORTE OIL JOINED THE RANK OF HIGH-PRICED STOCKS ON NSE In July, the Nigerian Stock Exchange (NSE), which has working hard to attract oil companies to list, announced that Forte Oil had joined the rank of high-priced stocks, following the latest review of prices of stocks. Head of Corporate Communications at the NSE, Nwando Ajene, explained that the review followed the introduction of a pilot programme for the NSE’s new market structure. Under the programme, which is intended to deepen the market and improve liquidity, brokers no longer need to have a volume of 50,000

shares to move the price of high priced stocks up or down. They now need just 10,000 shares to do so. The programme is now permanent. Explaining further, Ajene said in the statement: “These high priced stocks are securities that have traded an average of N100 or more per share in four out of the last six months period.” The pilot programme commenced with nine stocks: Dangote Cement, Guinness Plc,

SEPLAT NET PROFIT WAS UP 400 PER CENT

waiver which saw the company’s tax burden go from $95.4 pioneer status under a Nigerian Investment Promotion Commission incentive scheme. The company’s operating in the review period. The all round performer explained that operated crude oil production had grown from 11.5 million barrels in 2011 to 18.8 million barrels in 2013. Average daily production for 2013 was 51,400 barrels per day while peak production reached 61,700 barrels per day Speaking at the AGM, Seplat Chairman, Dr. A.B.C. Orjiako said: “Seplat has continued to deliver growth holistically since inception in line with our strategy.” “We shall strive to maintain our leadership position in the indigenous E & P industry in Nigerian and focus on following our growth strategy to seek to ensure delivery of our commitment not only to capital growth but also to remain

NSE stated: “With this development, Forte Oil Plc has now become the 12th stock on the programme.”

2.3%

Annual General Meeting (AGM) since its dual listing in London 2013 compared with $109.1 million in the corresponding period in 2012. This represents an increase of 404 per cent.

Nestle Plc, Nigerian Breweries, SIM Capital Fund, Skye Shelter Fund, Nigerian Energy Sector Fund and Total Plc. Lafarge Cement became the 10th stock on the programme. The strong debut showing of Seplat Petroleum Development Company took it straight in, as it was priced above N100.00 at the time of listing on the Exchange.

MCKINSEY REPORT PREDICTED OIL AND GAS SECTOR TO GROW JUST 2.3 PER CENT PER YEAR A report by McKinsey Global Institute, the business and economics research arm of McKinsey, which was established in 1990 to develop a deeper understanding of the evolving global economy, found that Nigeria’s oil and gas sector was expected to grow just 2.3 per cent per annum at best in the period from now till 2030. With the right reforms in place, said McKinsey, Nigeria could increase production from the current 2.35 million barrels per day (bpd) to 3.14 million bpd. This is bad news however for the government, which has been talking for many years of a target of 4 million bpd by 2020. This target is increasingly looking unachievable. The good news however, is that natural gas could grow as much as 6 per cent per year, adding $13 billion to GDP by 2030. That means that the oil and gas sector, which McKinsey found is still crucial to the economy, could, in total, contribute $108 billion per year by 2030, up from $73 billion in 2013. The report warned that the prediction is based on the government managing said McKinsey, is vital to attracting investment, without which the sector will not be able to grow.

OANDO PLC PUT UP 60 MILLION SHARES IN OER FOR SALE TO “ENCOURAGE MARKET LIQUIDITY” In September, Oando Plc put up 60 million of its directly and indirectly held 746 million shares in Oando Energy Resources (OER) up for sale. OER, which is listed on the Toronto Stock Exchange (TSX) announced that a wholly-owned subsidiary of Oando Plc had to 60 million shares of OER through the TSX

facilities. Oando said that the proposed sales are intended to encourage market liquidity. Oando Plc currently owns 93.8 per cent of OER shares, but assuming it exercises the common share purchase warrants issued in February, July and August of this year for additional shares, it will then own

1,071,500,707 shares representing 95.6 per cent of the issued and outstanding shares of OER following such exercise. However for regulatory reasons, Oando is restricted from the exercise of the warrants to the extent that such conversion would result in its direct and indirect ownership of OER exceeding 94.6 per cent.

FINANCIAL NEWS CAMAC CLOSED $100M LOAN FROM ZENITH BANK FOR THE OYO FIELD DEVELOPMENT Johannesburg and New York Stock Exchange listed oil and gas exploration company, million loan from Nigeria’s Zenith Bank for the development of its Oyo Field located offshore in Oil Mining Leases (OMLs) 120 and 121. loan providing initial borrowing capacity of up to $100 million. U.S. dollar borrowings under the term loan facility will bear interest at the 9.5%. The security package for the term loan facility includes a legal charge over OMLs 120 and 121 and an assignment of proceeds from oil sales. Proceeds from the term loan facility will be used for the further expansion and development of OMLs 120 and 121 offshore Nigeria, including the Oyo Field. Only last month, the Houston headquartered company announced that it had found four new oil and gas reservoirs in its Oyo-8 development.

kilometres offshore Nigeria in water depths of approximately 300 meters, was one of the Production from Oyo-8 is expected in the fourth quarter of this year and is expected, together with the Oyo-7 well, which will be completed

CAMAC Energy, founded by Nigerian, Dr Kase Lawal, is the operator of the block in which it has a 100 per cent interest. The company is listed on the New York Stock Exchange and recently listed on the Johannesburg Stock agreement for a $270 million equity investment by South Africa state-owned Public Investment Corporation (PIC). CAMAC was required to list on the Johannesburg Stock Exchange as part of the deal with PIC. Prior to the deal with PIC, CAMAC Energy had entered into an agreement to acquire additional interests in its wholly owned

INDEBTEDNESS OF OIL AND GAS FIRMS TO NIGERIAN BANKS STOOD AT N2.45 TRILLION IN DECEMBER 2013 The Central Bank of Nigeria (CBN) released its Financial Stability Report which showed that the stood at N2.644 trillion at the end of December 2013. The report revealed that total bank loans and advances to the various sectors of the economy grew by 13.9 per cent to N10.043 trillion at the end of December 2013. The oil and gas sector recorded the highest growth rate, with a share of 24.4 per cent, followed by manufacturing 12.9 per cent and the general sector at 11.6 per cent. The CBN, however, warned: “The continued dominance of short-term deposits constrained the ability of banks to lend long term loans and especially to the real sector, which typically has a preference for longer loan maturities. Thus, the observed mismatch system.” With oil prices in a downward trend, the report warned that the continuing decline in oil revenues as a result could elevate market risks in 2014. The report stated: “Notwithstanding the stable rates, the continued decline of foreign reserves and decrease in oil receipts due to challenges in the oil sector, coupled with possible foreign portfolio investment reversals following the tapering of the US quantitative easing programme, could elevate market risk.”

subsidiary, Allied Energy, which enabled it to get a 100 per cent economic interest in the production sharing contracts covering Oil Mining Leases (OML) 120 and 121 offshore Nigeria. To acquire the interests, CAMAC Energy issued 497,454,857 shares of common stock, paid US$170 million in cash and issued a US$50 million convertible subordinated note. OML 120 was awarded in 2002 and appraisal wells were drilled between 2006 and 2007. Initial production from the two wells began in natural gas. Early seismic data estimated the probable and proved recoverable reserves at crude oil. The proven resources were later revised to 50 million barrels. In April 2011, Netherland, Sewell & Associates produced a reserves of 1.9 billion barrels of crude with a high of 6.3 billion barrels of oil-in place. Recoverable and prospective oil resources are estimated 626 million barrels with a high of 2.2 billion barrels.

NSIA SIGNED $100M AGREEMENT WITH SEVEN ENERGY TO FUND GAS TO POWER PROJECTS The Nigeria Sovereign Investment Authority (“NSIA”), Nigeria’s sovereign wealth fund, signed an agreement with Nigeria focused indigenous integrated oil and gas development, production and gas distribution company, Seven Energy, to invest at least $100 million in gas to power projects. The investment is to be made through NWIA’s Gas to Power Funds managed on behalf of Nigeria’s commitment is for an investment of at least $100 million in aggregate principal amount of senior secured notes due in 20121 is to be issued and placed privately by Seven Energy Finance Limited. Uche Orji, Managing Director and CEO of the NSIA explained that through this investment and future projects, NSIA is contributing to the transformation of the gas and power sectors. He said: “We expect that this investment will support the development of Calabar NIPP, Ibom Power, and other power stations. This is a further example of Nigeria’s successful publicprivate investment in infrastructure.” Abraham Nwankwo, Director General of the DMO said they were pleased to partner with Seven Energy calling the company one of Nigeria’s gas champions. Other highlights from the Seven Energy’s recently announced half-year results for 2014 include a 29 per cent growth in

revenue, an increase of 80 per cent in earnings before tax and an increase in period last year to $26.6 million this year. $255 million facility from the International Finance Corporation (IFC) to develop its growing portfolio of assets. An additional enabled it to complete the acquisition of the East Horizon Gas Company, which operates the 128 km 18-inch East Horizon pipeline from Ukanafun to Mfamosing, near Calabar, and has an existing gas sales agreement to supply up to 25 MMcfpd, to Nigeria’s second largest cement plant. Its bulging wallet enabled it to acquire SRL 905 Holdings Ltd, which holds a 40% licence interest in OPL 905, a gas asset located in the Anambra Basin north of the Niger Delta. It has entered into a conditional share purchase agreement to acquire a further 50% interest in OPL 905. Seven Energy has interests in two gas-rich Creek Field in the South Eastern part of the Niger Delta and seems keen to continue to develop its gas portfolio. The company’s commitment to championing the development of gas cannot but help endear it to a government that has now woken up to the criticality of the lack of gas in its gas to power plans.

FINANCIAL NEWS

NIGER DELTA ANNOUNCED PLANS FOR $450M CAPITAL RAISE THROUGH PUBLIC OFFER Successful Nigerian independent, Niger Delta Exploration and Production (NDEP) recently announced plans to raise $450 million through a “public offer or special placement of shares.” The company intends to use the funds to redevelop and ramp up production in Ogbele

existing debt and look at new projects and acquisitions. The company, which says it has a pan African outlook, is said to be considering international acquisitions, particularly in South Sudan and Zambia. NDEP, which operates some assets through its subsidiary Niger Delta Petroleum Resources (NDPR), is one of Nigeria’s independent indigenous success stories. The company was formed by a number of seasoned oil and gas professionals and they

in Nigeria with the acquisition of Ogbele from

The Company’s growing portfolio includes a 100 per cent interest in Ogbele marginal onshore producing OML 34 in 2012; a 100% participating interest in the onshore Omerelu Field located within OML 53 and currently under appraisal; and a 6% participating interest in OPL 227. Other assets are a 25,000 barrels per day currently the only privately owned and MMscf/d gas processing plant; and a 20 km 12” gas pipeline built to deliver gas from Ogbele through the NLNG manifold at Rumuiji to the Bonny NLNG plant.

In 2013, the average gross operated and nonoperated oil and gas production from Ogbele 346 MMscf/d respectively. Based on current performance and production levels, NDEP is on track to increase gross oil production As of 31 March 2014, based on internal management estimates, the Company had total working interest 2P oil and condensate reserves of 80 MMboe. The war chest of $450 million that it now seeks will enable NDEP, which has been able to transform itself into a fully integrated oil and gas company, to make some transformational acquisitions. FBN Capital Plc and Chapel Hill Denham have been appointed will be done on local and international will be raised before the end of 2014.

LEKOIL DENIES SPECIAL PLACEMENT TO RAISE $37.5M Africa-focused exploration and production company, Lekoil has issued a statement denying media reports that it is set to raise $37.5 million through a special placing of 33,000,000 ordinary shares. Various media organisations had reported that the company was hoping to raise funding for the which Lekoil acquired a 40 per cent stake earlier this year. The Alternative Investment Market (AIM) listed company, which currently holds interests offshore Nigeria and offshore Namibia, said it has no such plans currently. The company said in a statement: “Lekoil wishes to make clear that the Company is not undertaking an equity placement at present and the reports are erroneous and

refer to events that occurred earlier this year in May.”

consists of the re-entry of the existing wells on

Located in oil mining lease (OML) 11 in the

Lekoil will also fund all costs, estimated at approximately $67 million, until commencement of production. It will recover the expenditure on the initial work programme from a preferential 88 per cent of production

was awarded to Green Energy International Ltd in 2011 in a discretionary allocation. Lekoil signed a farm in agreement with Green Energy under which it acquired a 40 per cent participating interest in Otatikpo. Lekoil was required to pay a signing bonus of $7 million to Green Energy as well as a production bonus of $4 million. The latter is contingent on production as well as receipt of ministerial consent to the transfer of the participating interest. Lekoil entered into the joint venture as Green Energy’s technical partner. Under Lekoil’s agreement with Green Energy, it will fund the initial work programme, which

terminate the agreement if Lekoil fails to follow through on its obligation to pay $11 million for the acquisition or to fund the initial work programme. Although the transfer of the equity participation interest is contingent on Ministerial Consent to the transfer, the parties also signed a Financial and Technical Services Agreement, enabling Lekoil to commence work immediately.

FINANCIAL NEWS JACKA RESOURCES WAS GRANTED A HALT PENDING NIGERIA UPDATE Australian Stock Exchange (ASX) listed Jacka Resources, holder of a 5 per cent net revenue interest in oil mining lease (OML) 113, which contains the Aje Field was granted a trading halt by the ASX. The trading halt will remain pending an announcement to the market relating to an update on the Final Investment Decision on the Aje Field, offshore Nigeria (licence OML 113). Jacka holds a 2.667 per cent participating interest in the licence, a 6.675 per cent contributing interest and a 5.0006 per cent revenue interest in the Aje Field. In August

The Aje Field joint Venture consists of Yinka 25 per cent (Operator), Chevron 33.75 per cent (Technical Advisor), Vitol 24.05 per cent, Panoro 12.19 per cent and Jacka.

million barrels of gross 2P oil reserves for the Aje Field. This gives Jacka booked net 2P reserves of 1.3 million barrels of oil, with the company looking to book a further 12.1 million barrels of oil equivalent (boe) contingent resources, an increase of 1.6 million boe.

with wells Aje-2 and Aje-4 available for use in future developments. The JV is currently assessing development options, which could include an early oil scheme as well as a larger gas/oil development. Jacka Resources also holds oil and gas assets in Australia and Tunisia and is currently looking at assets in Tanzania.

RENCAP RATED AFRICAN E&P COMPANIES IN HIGH GROWTH POTENTIAL GROUP Leading international investment banking and research organisation, Renaissance Capital, has rated oil exploration and production (E&P) companies in Africa high within companies with growth potentials. In its recent report titled “African Oil and Gas, Think Local, Be Selective” RenCap said there are upside potentials in most of the African E & P companies that should necessitate investment considerations.

“We see the greatest upside for Seplat coming from possible merger and acquisition (M&A) transactions, and believe it is strongly positioned to capture upcoming non-organic growth opportunities thanks to its indigenous status. Our investment case for Lekoil is based on an attractive and undervalued asset base offering both high cash returns and material exploration upside; strong delivery by management since its Initial Public offering and its indigenous status,” the

and increases its chances for future asset Seplat enjoys prominence, according to the report, because it has the biggest upside risk to its valuation from possible M&A transactions, and therefore it is strongly positioned to capture upcoming non-organic growth opportunities.

Eight African oil company stocks comprising of Afren, African Oil, Caverton Offshore Support Group Plc, Eland Oil & Gas, Lekoil, Mart Resources, Oando Energy Resources, Savannah Petroleum and Seplat Petroleum and Development Plc were covered by the report, out of which Seplat and Lekoil whose target prices for the stocks imply 50-100 per cent upside potential, were among the top three.

Lekoil is expected by RenCap to post one the highest returns in the medium term. “Our positive investment stance on Lekoil is based on the combination of an attractive and undervalued asset base offering both high cash returns and material exploration upside; strong delivery by management since IPO; and indigenous status, which should allow the company to receive additional tax breaks

“African E&Ps have tended to show more robust economics than their peers, breaking even at a $40/bl oil price, while North American shale E&Ps require a $60-70/bl price. Correlation with key indices has been declining, while beta has been increasing. We believe a buy-andhold strategy no longer works in this universe: stock selection - now, more than ever - drives performance,” the report said.

The report also said the African exploration and production (E&P) universe spans 27 companies with a combined market cap of $30 billion.

REGULATORY NEWS

PTDF ANNOUNCED ITS PLAN TO CREATE 6 NEW ZONAL OFFICES THE PETROLEUM TECHNOLOGY Development Fund (PTDF) announced country. The new Executive Secretary of the Fund, Femi Ajayi who made this disclosure recently, said that creating zones of the country would make the closer to the people. Explaining the vision behind the “My dream and what I am going to work towards is a PTDF that is more result oriented, PTDF that gives value for the money that is invested in the organization and a PTDF that is closer to the people, because at the moment we have only PTDF in Abuja, and for a big country like Nigeria, I think we need agency being a national one and that is why I am so passionate about it and I believe it will serve the greatest good of the greatest number of people if we decentralize a bit.” Ajayi intends to put the plan into progress immediately and expects two of beginning of next year. In other news, the PTDF reported that the Executive Secretary, Ajayi commenced a tour of all the training centers being utilized for the Fund’s Welding Training inspected welding training facilities in Port Harcourt, Lagos, Minna and Benin, expressing satisfaction with their training facilities.

Justifying the PTDF’s expenditure on the programme Ajayi said that the Fund is committing so much money to welding to exploit what he termed as “the low hanging fruit” because at the level of the country’s development, it is imperative to invest more in quickwin projects having more impact in the industry and capable of satisfying the President’s agenda of addressing youth empowerment and unemployment. Whilst visiting the training centre in Minna, Ajayi also revealed details of a new initiative, the Entrepreneurship Development Training Program (EDTP) that will enable participants of the WTCP to acquire robust entrepreneurial skills capable of empowering them with business skills that will make them self following the completion of their training, to become employers of labour in the to participate in bridging the industry’s gap, and contribute to economic growth and sustainable development. Ajayi said that it was regrettable that, although over 1700 young Nigerians have been trained by PTDF to qualify as International Welding Practitioners and Specialists as well as in the basic welding programmes, the trainees have not been able to get employment decision of the Fund to integrate the EDTP as a compulsory component of programme.

“I BELIEVE IT WILL SERVE THE GREATEST GOOD OF THE GREATEST NUMBER OF PEOPLE IF WE DECENTRALIZE A BIT.” FEMI AJAYI

REGULATORY NEWS FINANCE MINISTRY PROCESSED $275 MILLION SUBSIDY CLAIMS IN JULY In July, amidst continued complaints of the slow processing of subsidy claims by marketers, the Federal Ministry of Finance announced it would shortly release another batch of payments to marketers. The Special Adviser to the Minister of Finance on Media, Paul Nwabuikwu, said that the Ministry was currently processing N45 billion ($275 million) worth of subsidy claims. The payment came after the last batch of payments of N41 billion to 27 marketers in March 2014. Nwabuikwu stated that payments had already been made to some marketers who had presented their letters of indemnity. The letters of indemnity are part of a new procedure that the Federal Government has instituted to ensure that it is not held liable in any dispute between the marketers and their banks. As a result marketers submitting their subsidy claims

are now required to produce a letter of indemnity from their banks in addition to have to go through before clearance for payment. Last year, the Ministry of Finance said it had reduced the total subsidy bill by 56 per cent from N2.2 trillion in 2011 to N971 billion after the Ministry worked hard to clean up the process of subsidy payments following on from the Aig-Imoukhuede led committee investigation into subsidy claims which uncovered $6 billion worth of oil subsidy fraud. The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi OkonjoIweala, explained last year that the government had brought in new auditors and put in place more stringent checks and balances.

The Nigeria Natural Resource Charter (NNRC) is part of a global initiative which aims to support governments and societies of resource-rich countries to harness the economic opportunities of extractive resources. For the effective management of natural resources the Charter has developed a set of 12 Precepts, encompassing the entire chain of decisions faced by governments in relation to resource extraction.

Precept 1: Maximizing benefits for all citizens Precept 2: Promoting transparency and accountability Precept 3: Better fiscal regimes and contracting Precept 4: Better sector governance Precept 5: Environment, society and local benefits

The Charter could eventually be the basis for a more formal agreement among governments and, possibly, companies. Such an agreement would represent a new kind of international compact â&#x20AC;&#x201C; one that is not dictated from above, but is instead built upon a critical mass of informed opinion from citizens and civil society groups in resource-rich countries which have demonstrated success by adopting the Charter s principles. Programme Manager: Ademola Oshodi Website: http://nigerianrc.org/ Twitter: @NigerianNRC Facebook: Nigerian Natural Resource Charter

Precept 6: The role of national resource companies Precept 7: Investing the revenues Precept 8: Smoothing revenue volatility Precept 9: Better public spending Precept 10: Encouraging private investment Precept 11: The role of international governments Precept 12: The role of international companies

REGULATORY NEWS DPR COMMENCED ELECTRONIC ISSUANCE OF OIL AND GAS INDUSTRY SERVICE PERMIT The Department of Petroleum Resources (DPR) announced that it was to commence electronic processing and issuance of statutory Oil and Gas Industry Service Permits (OGISP) in its quest to simplify its process for “more enhanced service delivery.” As a result, it has advised that applications for new permits and renewal of expiring permits be submitted online. Companies seeking to render services in the oil and gas industry are required to get the OGISP, which is normally issued

in three categories: General, Major and Specialised. The new online system requires applicants to log onto the DPR website www.dpr.gov.ng to create a company account. They can complete the requisite application forms online and the application fees of N500, N2,500 and N7,500 for the different categories of services can also be paid online using Verve, Mastercard and Visa credit and debit cards, as well as Quickteller and other payment platforms. DPR, in the statement, stressed that it

had taken necessary security precautions to safeguard the information to be submitted online. The Head of Public Affairs, DPR, Ms Dorothy Bassey said that the online issuance of the OGISP is the beginning of “digitalisation of our entire licensing and permitting system geared to remove bottlenecks and ensure delivery of improved quality service.” Note that Offshore Safety Permits are still required for companies wishing to provide offshore services and will be required before application for the OGISP.

SENATE ADOPTED COMMITTEE REPORT FINDING THAT “UNREMITTED” $49 BILLION WAS NOT MISSING The fall out from the allegations of the former governor of the Central Bank of Nigerian (CBN) continued into July. Senate had asked its Finance Committee to look into the allegations. The Committee issued its report in July, concluding that the sums, though un-remitted, were not in fact missing. Clarifying the conclusions of the Committee, Senate President, David Marks, said the sums were “funds yet to be remitted or funds yet accounted for.” NNPC was however ordered to pay the sum of $927 million to the Federation Account, made up as follows: $447 million: Gross Liftings of NNPC on behalf of NPDC from January 2012 to July 2013 was $6.815 billion. Government share of revenue to the Federation Account was $2,175,635,436. The Accountant General payment to the Federation Account by NPDC as US$1,727,817,552. Therefore, NPDC should remit to the Federation Account the sum of US$447,817,884 being the balance with interest. $218 million: Gross lifting under the Third Party Financing was US$2,430,750,973 out of which the share for the Federation Account was US$1,588,242,004. The AGF showing the sum of US$1,370,172,650.36 was remitted to the Federation Account. Therefore, NNPC should remit the balance of US$218,069,354.32 to the Federation Account. $262 million: being expenses it could not satisfactorily defend in respect of

Holding Strategic Stock Reserve; Pipeline Maintenance and Management Cost and Capital Expenditure. Therefore NNPC should refund and remit to the Federation Account the sum of US$262 million.

other measures it deemed necessary. It also added that NNPC should not pay operational expenditures direct from the Federation funds without appropriation by the National Assembly.

Regarding NNPC’s claims for the amount it spent on subsidy for petroleum products, the Report said that no proposal was made in the 2014 Appropriation Bill for subsidy on Kerosene (DPK) and that the one for PMS looked inadequate. Therefore, the Executive should only spend what was appropriated. The Report said that the President should prepare and present to the National Assembly a supplementary budget to cover the expenditure in the sum of N90.693 billion ($585 million) for PMS subsidy for 2012 and N685.910 billion ($4.430 billion) for kerosene subsidy expended without appropriation in 2012 and 2013.

NNPC however came in for scathing criticism from the Committee over its “poor record keeping and nonchalant work attitude by not rendering returns on subsidy claims on a monthly basis from January 2012 to date,” which the Committee said was what contributed largely to the creation of the problem.

The Committee said that it was for the National Assembly to approve or not approve such request or take any

While the Minister of Petroleum Resources and NNPC appeared to have been largely exonerated by the Senate Committee’s report, it remains to be seen whether the forensic audit of NNPC ordered by the government will also come to the same conclusion. The forensic audit is being undertaken by the Auditor General and PriceWaterhouseCoopers (PWC) and is due to be completed in November.

REGULATORY NEWS

PETROLEUM MINISTER TO UNVEIL NEW GAS PRICING FRAMEWORK IN 3-4 MONTHS As the power industry continued to grapple with the realisation that there is a missing link in the government’s plan for gas to power, the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, gave new hope to the industry after announcing that a new pricing structure for gas would soon emerge. Speaking at the 1st Bayelsa State Investment and Economic Forum, in Yenagoa she said that the new pricing structure would emerge within 3 to 4 months. The Government’s intention for the new Gas Pricing Framework is to ensure that the pricing for gas is made as competitive as possible. She said: “We are working with the Nigeria Electricity Regulatory Commission

(NERC), the Ministry of Power, and the Nigerian Petroleum Development Company (NPDC), in terms of trying to streamline what we are doing to bring gas to power in the very short and medium term. Central to all this will be the right pricing framework which will hopefully be or so.” The Minister added that they are also working with a number of the multinationals, predominantly Shell who have in their acreage the greatest volumes of Nigeria’s gas reserves to ensure that unutilised volumes of gas reserves are made available to the various operators of the independent

NIMASA PROSCRIBED 3 MARINE ASSOCIATIONS The Nigerian Maritime Administration and Safety Agency (NIMASA) issued a notice to all ship owners, operators, masters, agents and oil companies to inform them of the proscription of 3 illegal maritime associations.

power plants that have come into play over the last 18 to 24 months. Whilst the power sector may feel that the critical gas shortage, industry watchers are saying that the Minister will have to high enough to encourage exploration and production companies to explore for and produce gas and at the same time not so expensive as to make the price too high for the gas dependent independent power plants. Many oil companies are saying that they will not produce more than they are required to under their domestic supply obligations unless the price for supplying the domestic gas market is attractive.

FIRS RECOVERED $2 MILLION IN UNPAID TAXES FROM OIL AND GAS FIRMS FIRS recovered $2 million in unpaid taxes from oil and gas

The notice informed the general public that pursuant to the Dissolution and Proscription of Certain Associations Order, the following associations and bodies were dissolved and proscribed with effect from the 28th of August 2013: a) Nigerian Maritime Security Agency (NMSA) b) Nigerian Merchant Navy Corps c) Nigerian Merchant Petroleum Security and Safety Corps (NMNPSSC) The general public was warned not to take part or participate in any activities with the proscribed associations.

THE Federal Inland Revenue Service (FIRS) recovered around $2 million in unpaid taxes from the oil and gas sector in a two-day tax recovery exercise. The News Agency of Nigeria (NAN) reported that the two-day exercise by the FIRS involved Mrs Olaitan Adediran, the

Director, Tax Department, FIRS, able to secure documented promises to pay from some of the companies and that one had made a N148 million payment. Another company promised to pay N70 million following the long holiday weekend. Mrs Adediran vowed that the tax recovery team would continue the exercise to ensure that government received what was due to it through taxes.

LEGAL NEWS ITALIAN PROSECUTORS BEGAN INVESTIGATING ENI CEO OVER MALABU OIL OPL 245 DEAL Prosecutors in Milan, Italy began an investigation of the Italian oil giant Eni over the oil prospecting licence (OPL) 245 oil deal involving Malabu Oil. They are investigating allegations that the company paid a bribe to secure the allocation of the block to it in partnership with Shell. Chief Executive Chief Executive, Paolo Scaroni, are now under investigation. The two have denied any wrongdoing. The allegations relate to the 2011 deal in which Eni and Shell acquired the block under controversial circumstances. The purported bribe concerns the purchase by Eni and Shell of the lucrative OPL 245 oil block in 2011. Eni and Shell insist they paid the Nigerian government directly for the oil block but prosecutors are investigating whether the money went to a front company, believed to be controlled by a former Nigerian oil minister. The transaction took place when Descalzi was Eni’s head of exploration and production.

Italian prosecutors have written to the British Crown Prosecution Service (CPS) requesting the freezing of assets of those involved in the transaction. They allege that millions of dollars were paid in bribes to Nigerian Already, the accounts of some of those involved in the deal have been frozen by the British in response to the request, including $190 million allegedly belonging to Emeka Obi, the main intermediary in the deal. Emeka Obi had previously brought an action in Britain against Malabu for unpaid fees relating to his help in brokering the Shell-Eni deal. In the lawsuit a London court held that former Minister of Petroleum, Dan Etete owned and controlled Malabu Oil “at all material times.” Sordid details of the transaction emerged during the trial in London leading the

British police to begin to investigate the transaction itself to see if any money laundering had taken place. The Malabu Oil deal involves Oil Prospecting Licence (OPL) 245, said to hold reserves of up to 9.23 billion barrels of crude oil, which was original awarded to Malabu Oil before it was revoked and re-awarded to Shell and Eni. Malabu Oil brought a lawsuit against the Federal Government and in the ensuing dispute, a settlement was brokered by the Federal Government. Following the settlement, Shell and Eni allegedly paid the sum of $1.3 billion to the Federal Government and were allowed to keep OPL 245. Malabu was then paid $1.09 billion out of that sum by the Federal Government, the rest being retained by the government, including a signature bonus of $207 million.

SEC SETTLED NIGERIAN CUSTOMS BRIBERY TRIAL AGAINST DRILLING COMPANY EXECUTIVES Anti-corruption campaigners were wringing their hands in frustration after learning that two executives of the Nigerian subsidiary of international offshore drilling contractor, Noble, were able to settle the Securities Exchange Commission’s (SEC) bribery suit action against Mark Jackson, former Chief and James Ruehlen, a director of the company over the company’s activities in Nigeria. In the action, the SEC alleged that Noble and Noble-Nigeria authorized a customs agent to in order to obtain false documentation which Noble-Nigeria needed to obtain Temporary Import Permits. In addition, the SEC alleged that Noble and Noble-Nigeria, through a customs agent, paid bribes to Nigerian Permit (TIP) extensions. The background to the case is that between January 2003 and May 2007, Noble-Nigeria had up to seven drilling rigs that operated offshore in Nigeria. To operate drilling rigs offshore in Nigeria, the Nigerian laws require the owner of the rig to either pay permanent import duties or obtain a TIP. TIPs allow drilling rigs to operate in Nigerian waters without payment of permanent import duties. Under Nigerian law, the Nigeria Customs Service (NCS) grants TIPs for rigs that will be in the country for only one year. NCS may,

in its discretion, grant up to three six-month extensions to a TIP. Upon the expiration of a TIP and any TIP extensions, NCS requires the rig to be exported from Nigeria. If the owner of the rig wishes to continue using the rig after the expiration of a TIP and any applicable extensions, he can either convert the rig to permanent import status and pay the appropriate permanent import duties, or he can export the rig and seek a new rig TIP to reimport the rig. In order to obtain a TIP or an extension, the rig owner must submit an application through a licensed customs agent. NCS does not deal directly with rig owners. The SEC alleged that Noble’s standard procedure in applying for TIPs and TIP extensions would involve obtaining a price proposal from a customs agent detailing the costs associated with obtaining the new TIP or extension. The proposals would indicate those charges that did not have any supporting documentation by labelling them as “special handling” or “procurement.” Noble’s FCPA policy required such unreceipted payments to foreign government by the CFO. Once the CFO approved the unreceipted payments, the customs agent would be authorized to pay the Nigerian price proposal. The customs agent would then submit an invoice to Noble, reimbursing

him for the money paid to the Nigerian

Bringing the action, the SEC charged Jackson and Ruehlen with multiple violations of the Foreign Corrupt Practices Act (FCPA), and other federal securities laws in connection with actions they allegedly took to obtain TIPs and TIP extensions in order to avoid paying permanent import duties. approval of numerous “special handling” and “procurement” to obtain false paperwork necessary to secure TIPs or to obtain discretionary TIP extensions. In addition, the SEC alleged that Jackson and Ruehlen allowed these payments repeatedly to be posted on Noble’s books as legitimate operating expenses. The SEC alleged that a total of 11 illicit permits and 29 extensions were obtained and that bribes of hundreds of thousands of both men participated in the scheme. The matter had been rumbling on for a few years. In 2010, Noble agreed to make a payment of $8 million to resolve the FCPA related civil and criminal charges in the case. Then in 2011 Noble agreed to pay $2.5 million as part of a non-prosecution agreement with the Nigerian government.

LEGAL NEWS LONDON HIGH COURT BLOCKED LONDON LAW FIRM’S BODO SETTLEMENT DEAL WITH SHELL AMID POACHING CLAIMS A London High Court blocked a settlement agreement between the oil giant Shell and be representing thousands of Nigerians in a dispute over oil spills in Nigeria. Leigh Day has been the solicitor on record representing the Bodo Community in the claim against Shell and is alleging that CW Law tried to poach its clients. Mr Justice Akenhead, the President of the Technological and Construction Court blocked the deal and upheld an injunction against CW Law, which prevents them, or anyone representing them, from making contact with the people of Bodo in furtherance of a settlement agreement. The judge made it clear that Leigh Day are proceeding with the case to trial in the High Court next year and that many thousands of claimants are entitled to damages which could be substantial, under the Oil Pipelines Act. In the verdict, the judge also said there may have already been a major breach of an existing interim injunction against CW Law. Leigh Day had presented strong evidence that representatives of CW Law had breached the order by continuing to seek to sign up claimants whilst the order was in place. Contempt proceedings against CW Law could now follow.

of unlawfully entering into settlement talks with Shell Petroleum Development Company (SPDC) on behalf of many villagers of Bodo, in the Niger Delta, who Leigh Day said CW Law didn’t represent and who were not CW Law’s clients. The settlement agreement between CW Law and Shell, given as evidence in Court, sought to settle the claims for £150 each with an additional £390 per claimant going into a Trust. The Agreement also included an incentivised costs structure for CW Law, which would see them paid more by Shell, the more claimants it signed up to the scheme.

“THIS PALTRY DEAL MAY HAVE BEEN LUCRATIVE TO THE LAWYERS INVOLVED BUT IT WOULD HAVE MEANT PEANUTS FOR THOSE OF OUR CLIENTS CAUGHT BY IT.” SENIOR PARTNER OF LEIGH DAY, MARTYN DAY In August 2014 Leigh Day learned that SPDC had entered into a settlement with CW Law, who claimed to represent 7,400 of the villagers. Leigh Day, visited Bodo and spoke to the Chairman of the Council of Chiefs & Elders in Bodo, the Chiefs of the Council and the Village Heads of the 35 villages that make up Bodo a not heard of CW Law or the Nigerian lawyers Egbegi & Co, who claimed to be working with CW Law. Speaking after the judgment, the Senior Partner of Leigh Day, Martyn Day, said: “We are very pleased that the Judge agreed to block the deal between Shell and CW Law as far as our clients are concerned. This paltry deal may have been lucrative to the lawyers involved but it would have meant peanuts for those of our clients caught by it. The Bodo Creek is damaged for decades to come. We will only resolve the claims when Shell is prepared to pay properly for the damage it has caused.” In the substantive case which will proceed to trial next year, Shell is accused of two leaks from its pipelines in 2008/09, which devastated the environment surrounding the community of Bodo, in Gokana Local Government Area, Rivers State, Nigeria. Bodo sq km of mangroves swamps and channels,

With a population of 14,000 adults, the great majority of the villagers are represented by largest environmental legal cases in history following two massive oil spills in 2008 from pipelines operated by Shell.

of 31,000 people who live in 35 villages. The majority of its inhabitants are subsistence spills Bodo was a relatively prosperous town

Leigh Day said it has spent 3 years gathering witness statements and verifying its list of

According to Leigh Day, the spills have

case against Shell in the UK Courts.

indicates 1,000 hectares of mangroves have

been destroyed by the spills and a further 5,000 hectares have been impacted. Although Shell admitted liability for the spills in 2011 arguments have continued over the amount of oil spilled and how much damage was caused. While Shell says 41,000 barrels were lost in the two spills, Leigh Day maintains it was between 500,000 and 600,000 barrels that were spilled. Shell blames most of the spills on “widespread and continual criminal activity, including sabotage, theft and illegal being spilled.” Attempts at settlement so far have failed over the amount of compensation to be paid by Shell. In a preliminary hearing ahead of the trial, which will take place in May 2015, the London high court ruled that Shell’s Nigerian subsidiary could be liable if it were proven that it did not take reasonable steps to protect and maintain the pipeline from thefts, which have plagued the oil industry in Nigeria. Leigh Day partner, Martyn Day said they would ensure that Shell pays out a fair amount for the damage they have caused and put the Bodo Creek back into its pre-spill state.

LEGAL NEWS BRITTANIA-U’S BATTLE FOR CHEVRON OIL ASSETS HEADED FOR THE SUPREME COURT The battle for Chevron’s oil blocks headed for the Supreme Court as Brittania-U sought to be declared winner of the bid for the oil blocks, which Chevron put up for sale last year. Brittania-U is asking the Supreme Court to overrule the Court of Appeal, which had ruled against the extension of the interim orders granted to Britannia-U by a Federal High Court.

A preferred shortlist emerged in mid-August enabling the preferred bidders to do more bids by the 30th of September and to pay 15 per cent of their bids as a deposit. The three blocks are said to have total oil reserves of around 134 million barrels

The dispute in which Brittania-U is claiming wrongful repudiation of contract is over Oil Mining Leases (OMLs) 52, 53 and 55. The Nigerian National Petroleum Corporation (NNPC) and the Minister of Petroleum Resources are joined in the suit against Chevron and Seplat after the Federal High Court in May decided that it had jurisdiction to hear the suit. The judge also found that NNPC and the Minister were necessary parties to the lawsuit. The dispute arose after US oil giant Chevron put up its 40 per cent share of the three OML’s, part

combined values of the three blocks being estimated at between US$500 million and US$600 million. It soon became clear that trouble was brewing of the winners. On the one hand, Brittannia-U was said to have won with a $1.6 billion bid for all three assets. On the other hand, three companies, working in close co-operation were said to have won the bids for the three assets. Seplat, the recently listed company was said to have bid for OML 53, while Amni, recently

of the three onshore blocks in June 2013, was reportedly keen to wrap the process up quickly. After an initial invitation to 20 companies, Chevron had to open the process up to more companies as it was inundated with applications.

was said to have bid for OML 52 and Delta State-owned Belema Oil was said to have bid for OML 55, altogether putting in a reported combined bid of $900 million.

but continued to drag its feet over declaring the winners. According to Brittannia-U, it came to their notice that Chevron was communicating with Seplat. They went to court to ask to be declared winners of the auction after putting in the highest bid. Brittania-U immediately secured a High Court injunction, preventing Chevron from transferring the assets to Seplat or any other bidder. Chevron had sought to have the case thrown out for lack of jurisdiction on the basis that it was a private commercial matter and further that it should be referred to arbitration signed by the parties. The court ruled that there was a triable dispute over which it had jurisdiction. Chevron, who would probably prefer to see dually listed (London Stock Exchange main board and Nigeria) Seplat declared the winner, had appealed to the High Court against the interim injunction granted by the Federal High Court. The Court of Appeal ruled in their favour and Britannia-U is now headed for the Supreme Court to attempt to overturn the Court of Appeal decision.

LOCAL CONTENT

SAMSUNG AND LADOL BEGIN CONSTRUCTION OF N51 BILLION FPSO INTEGRATION FACILITY Following the resolution of the dispute between Samsung Heavy Industries (SHI) Nigeria Limited and Lagos Deep Offshore Logistics (LADOL) over local content partnership, the two companies have formed a new partnership called SHIFloating Production Storage Offshore (FPSO) integration and fabrication facility in LADOL free zone in Lagos. In a development that both the Chairman and founder Chief Oladipo Jadesimi and Managing Director Dr. Amy Jadesimi described as “gamechanging”, LADOL and Samsung broke ground and largest vessel fabrication and integration facility. Samsung and LADOL have now formally kicked off construction of the facility for Total’s $3-billion Egina FPSO. SHI Nigeria Limited, the Korea to be established in Africa, and LADOL, a 100 per cent indigenous logistics and port facility developer, signaled a new beginning in their working relationship with the ground-breaking.

According to Dr Jadesimi, the wealth and income created for the country is no longer contained solely in the oil itself, but in the world-class services around its extraction. “It shows that the lucrative upstream oil and gas development value chain,” she said. integration of the Egina FPSO, a contract Total formally awarded to Samsung in June 2013. The FPSO will be one of the largest in the world, with a storage capacity of 2.3 million barrels of crude oil and a targeted production capacity of 200,000 barrels per day. The project stalled earlier this year when LADOL dragged Samsung, Total Upstream Nigeria Limited and the Nigerian Content Development and Monitoring Board (NCDMB) before a Federal High Court, alleging a plot to exclude it from the execution of the local component of the Egina FPSO vessel. Samsung had won the $3.1 billion contract for the FPSO for the

Egina project, after choosing LADOL as its local content partner. LADOL would under the arrangement, execute the minimum content required under the local content laws to be executed in Nigeria. This meant that the integration of the topside of the FPSO would be undertaken at LADOL’s facilities. Not long after the project was awarded to Samsung, they fell out with LADOL, following which LADOL brought an action to be reinstated as the local content partner on the project. The parties later settled the matter out-of-court and also established a new partnership called SHI-MCI Free Zone Enterprise to build the FPSO integration and fabrication facility in LADOL free zone in Lagos. The facility is set to create 50,000 direct and indirect jobs over the next few years. The move has been seen as a victory for local content in the industry. LADOL, will partially build an FPSO locally.

LOCAL CONTENT NCDMB REVEALED PLANS TO SPEND $50 - $100 MILLION ON OIL AND GAS PARKS The Nigerian Content Development and Monitoring Board (NCDMB) revealed plans to spend up to $100 million developing Nigerian Oil and Gas Parks. The Parks are expected to promote the manufacturing of oil and gas components and provide opportunities for research and development. The Executive Secretary of the Board, Ernest Nwapa disclosed this at the close-out ceremony of the Nigerian Oil and Gas Parks Scheme Training Programme held recently in Yenagoa, Bayelsa State. The training programme was for the training of NCDMB staff that will spearhead the design and operation of the Nigerian Oil and Gas Parks Scheme (NOGAPS). Nwapa explained that NCDMB would spend $10 million on each park for phase one, and up to $50 million and $100 million subsequently, depending on the focus of each park. The Board, he says, already has a budget approval of $10m for each of the parks from the Nigerian Content Development Fund (NCDF). Nwapa said that the Board embarked on the development of the parks to bring Local Content practice closer to the grass roots and integrate oil and gas based entrepreneurs into manufacturing as well as support the growth of Small and Medium Enterprises (SMEs) through mentoring by international Original Equipment Manufacturers (OEMs) and other multinationals. According to Nwapa, “the scheme is for us to succeed, we have to build it in such a way that it will be accessible to rural dwellers. That is the distinction between this and other parks. We will structure it in such a way that it will grow organically so that over a period it will come to maturity.” The oil and gas parks will be sited in Bayelsa, Imo and Cross Rivers States construction activities are about to begin. Nwapa said NCDMB would begin engagement with communities where the parks will be situated and advised members of such communities to always see project promoters as development partners. Nwapa sees the Parks as a lasting legacy to local content.

NCDMB INAUGURATED CONSULTATIVE FORUM COMMITTEES In a bid to generate new ideas for the development of Nigerian Content in the oil and gas industry, the Nigerian Content Development and Monitoring Board (NCDMB) inaugurated 10 sectorial committees of the Nigerian Content Consultative Forum (NCCF). The NCCF sectorial committees are Fabrication; Finance, Insurance and Legal Services; Shipping and Logistics; Education and Training; Petroleum Technology and Multinationals; Materials and Manufacturing; Information and Communication Technology; Engineering and Essential Services, which covers Medical Services, Health, Safety & Environment, Catering & Hospitality. Speaking at the inauguration, the Executive Secretary of the Board, Ernest Nwapa explained that the objective of constituting the NCCF committees was to provide a platform for information sharing on upcoming projects and local capabilities. He said that the committees would also be expected to articulate and recommend strategies for developing Nigerian content. He told them: “You have to help us so that we can get solutions required to move forward.”

NCDMB INVITED AGIP AND ARCO TO TALKS OVER GAS PLANT MAINTENANCE CONTRACT DISPUTE The Nigerian Content Development and Monitoring Board (NCDMB) decided to get involved in the dispute between the Nigerian Agip Oil Company and Arco Petrochemical and Engineering Company over the maintenance contract for the Ebocha/Kwale/Obob gas plants in Delta State. The Executive Secretary of NCDMB is hoping that he can broker a solution in the dispute between Agip and Arco before it gets out of hand. The dispute stems from the award of the award of the contract maintenance of the gas plants by joint venture partners, Agip and the Nigerian National Petroleum Corporation (NNPC). The original 5-year maintenance contract was awarded in 2006 to GE, with Arco, an indigenous company, as its local Technical Partner. When the initial 5-year contract expired in 2011, a 1-year stopgap extension of the contract was issued. At the end of that period another 1-year stopgap extension was granted.

According to Arco, Agip’s intention was to “forcibly remove an established indigenous contractor like Arco that can prove its mettle in the maintenance of such hi-tech equipment exclusively for six months.” Arco said it had proved its capability when it executed the contract by itself for a period of six months after GE had to evacuate its engineers at the height of the Niger Delta militancy. Arco is a wholly indigenous company, which started business as the only Nigerian representative of Nuovo, the Italian Government owned manufacturer of Steam/Gas Turbines, Gas compressors & Pumps. It has since developed other partnerships and offers a wider range of services to the industry now.

winner. Arco alleged that Agip was trying to award a stop-gap contract to the winning company, without NNPC board approval of the winning bid.

from Arco dated 10th September 2014 from Arco about the matter. A statement from the Executive Secretary of NCDMB, Mr. Ernest Nwapa said: “The Nigeria Content Development Monitoring Board, NCDMB, has invited the Managing Director of Nigerian Agip Oil Company (NAOC), Mr. Massimo Insulla to a meeting in relation to the ongoing business dispute between it and Arco Petroleum Engineering Company Limited over the maintenance of Obob/Ebocha/Kwale Gas plants.”

Arco’s allegations of impropriety against Agip included an accusation that when the extension of the contract was granted in 2011, Arco’s role was reduced to that of a subcontractor rather than a technical partner. They say this was in breach of local content laws.

Whilst hoping to help the parties resolve the dispute, Mr Nwapa said in the statement that the Board “would continue to ensure that the provisions of the Nigerian Content Act are adhered to in relation to any contract or operation in the Oil and Gas industry.”

Meanwhile, a new tender process for the maintenance contract was begun. It is understood that an indigenous company, emerged as the winner of the bid process.

ENVIRONMENTAL NEWS PETROLEUM MINISTER HOSTED FORUM ON THE ENVIRONMENTAL RESTORATION OF OGONILAND In a demonstration of her commitment to the restoration of Ogoniland, the Minister of Petroleum Resources, Diezani AlisonMadueke, recently hosted a forum on the Environmental Restoration of Ogoniland. This comes three years after the report by the United Nations Environmental Programme (UNEP), which said that Ogoniland, ravaged by years of oil pollution and neglect, would require 20 years of restoration work for the harmful effects of the pollution to be reversed. Alison-Madueke insisted that her mission to clean up Ogoniland was a personal one, describing herself as a daughter of the land. She was born in Rivers State and has decided to drive the restoration of the Ogoniland area, large swathes of which have been left desolate and riddled with pollution, after decades of neglect. Three years ago, UNEP released the devastating report, which made a number of recommendations including emergency measures to be undertaken in the restoration of the area. A year and

half later, the government constituted the Hydrocarbon Pollution Restoration Project (HYPREP) to lead the implementation of the UNEP recommendations. In spite of this move, three years later, and not much has been achieved. Now, after inviting executives from government agencies, international oil companies, UNEP, activist groups and other stakeholders to a public forum, she has committed herself to seeking restoration of the devastated area. The Minister hopes that with her renewed zeal the restoration project will stand a better chance of achieving its goals. Alison-Madueke urged stakeholders to create a viable, sustainable road map for the comprehensive rehabilitation, remediation and restoration of Ogoniland. The government, she said, was now prepared to implement the recommendations of the UNEP report. UNEP has made a provisional estimate that $1.6 billion in funding will be required for a full remediation programme.

OIL SPILL TRANSPARENCY AND ACCOUNTABILITY TOOL WAS NOMINATED FOR AN AWARD An oil spill and transparency accountability tool, the Nigerian Oil Spill Monitor, was nominated for an award in the Successful Innovations category of the HiiL Innovating Justice Awards. HiiL is a research and development institute for the justice sector.

can gain strategic insight based on

The tool designed by Stakeholder Democracy Network (SDN) is a digital mapping project that provides open, accessible and interactive mapping and tracking of Nigerian Government oil spill data.

and is designed to work across unreliable mobile data connections. It actively promotes transparency and accountability of oil spills, allowing anyone to analyse the data and take action based on the information.

The state-of-the art web-based tool, used by the National Oil Spill Detection and Response Agency (NOSDRA to manage their data on oil spills, makes this data public and accessible across the world. Citizens and communities can use the oil spill monitor for compensation claims and disputes, whilst government departments

The entire 8,000 oil spill records and all core functions (including editing of spill records) are provided in under 2MB of data to ensure reliable use

SDN’s prototype digital mapping and data visualisation software is used to quickly locate, visualise and gain strategic insight into the data it contains. The system runs

the Niger Delta. More details of the Nigerian Oil Spill Monitor are available on the SDN website, http://www. stakeholderdemocracy.org.

OIL AND GAS FIRMS TARGETED OIL AND GAS METHANE REDUCTION Nigeria was among the major oil producing nations and six oil and gas companies partnering with the Climate and Clean Air Coalition (CCAC)’s voluntary initiative to reduce methane emissions in the oil and gas sector. Called the CCAC Oil & Gas Methane at the United Nations Secretary General’s Climate Summit in New York on 23 September 2014. The founding companies are BG-Group, Eni, Pemex, PTT, Southwestern Energy, and Statoil. The CCAC Oil & Gas Methane Partnership aims to create a global standard in controlling methane emissions in oil and gas systems. CCAC explains that methane is at least 84 times more potent than CO2 over a 20-year time horizon, and the oil and gas industry is the largest man-made emitter of methane after agriculture. The International Energy from upstream oil and gas production as one of four key global greenhouse gas mitigation opportunities, noting that upstream methane reductions could account for nearly 15 percent of the total greenhouse gas reductions needed by 2020 to keep the world on a 2-degree path. CCAC Oil & Gas Methane Partnership aims to provide companies with a credible mechanism to systematically and responsibly address their methane emissions - and to demonstrate to stakeholders that they are doing this. Key technical partners include the Environmental Defense Fund, the U.S. EPA’s Natural Gas Star programme, the Global Methane Initiative and the World Bank’s Global Gas Flaring Reduction Initiative. The CCAC conducted a year-long consultation process with experts from oil and gas companies, IPIECA, NGOs, reporting initiatives and other experts to develop the Partnership. The goal was to create a mechanism that met the accountability requirements of stakeholders and, at the same time, was implementable by companies and supported by governments. It has also won the endorsement of investor groups. In order to promote this new standard and realize IEA and others, the CCAC Secretariat and founding member companies invite additional committed companies to join the Partnership on an ongoing basis by contacting the Oil & Gas Administrator at the CCAC

ENVIRONMENTAL NEWS KOLUAMA 2 YOUTH ISSUED AN ULTIMATUM TO CHEVRON The youth of Koluama 2, one of the communities affected by the K.S Endeavour offshore rig explosion of January 16,2012, gave Chevron Nigeria Limited (CNL) an ultimatum. The youth demanded that Chevron pay compensation for the K.S Endeavour gas disaster before the 15th day of October, 2014 otherwise, they would organize another mass protest at all Chevron per day of crude equivalent. According to their spokesman and secretary, Mr. Leghemo Ebrasin: “Chevron has remained insensitive to the plight of communities whose ancestral land was threatened by ocean surge in June, 2014, following the 2012 incident.” It seems that Chevron was able to assuage their concerns as no mass protest did occur in the event.

SPDC SAID ASSA GAS PROJECT EIA WAS IN ACCORDANCE WITH STATUTORY REQUIREMENTS Shell Petroleum Development Company of Nigeria Limited (SPDC) spoke out in of the conduct of its environmental impact assessment (EIA) into the Assa North-Ohaji South Gas Development Project in Imo State. SPDC, one of the Shell companies in Nigeria, said in a statement that it had been conducting the EIA strictly in accordance with the requirements of the Environmental Impact Assessment Act No 86 of 1992 after accusations to the contrary. These allegations had been gathering force, leading SPDC to issue a denial. Stressing that the company remained committed to health, security, safety and the environment, the spokesman outlined the process they have been undergoing in compliance with statute. The company said: “We registered the project with the Federal Ministry of Environment and the

Department of Petroleum Resources and held scoping workshops with communities in Imo State, regulators, journalists, the National Petroleum Investments Management Services (NAPIMS), and Imo State Government “Field data gathering was conducted with the active participation of regulators, community representatives The draft EIA report was then displayed on July 14 - August 11, 2014 at centres in Egbema, Owerri and Abuja as approved by the Federal Ministry of Environment,” the statement explained. “The Ministry is now collating comments from the various display centres in readiness for a panel review meeting which concludes the EIA delivery process,” it added.

AGIP ORDERED TO CLOSE FACILITY OVER BAYELSA OIL SPILL

MOBIL CONFIRMED THE QUA IBOE SPILL Iboe terminal. The company said that the spill was 12,000 barrels and not 600,000 barrels as was being said in the surrounding communities. Spokesperson for Mobil, Ozemoya Okordion said in unlimited, MPN, operator of the NNPC/MPN joint Iboe terminal facility on Sunday June 29, 2014 following serious weather conditions and lightening strikes over the area in the weekend. We activated our emergency response systems and contained the release. Subject to a detailed site inspection, our current estimate is that approximately 12 barrels of oil was released during the incident.”

After the Kalaba Community in Bayelsa State reported a new spill from an Agip pipeline, Agip was later ordered to close the facility. This came after farmers from the Ayarabele and Kalaba Communities in the Okordia Clan of Yenagoa Local Government Area in Bayelsa succeeded in getting their State government to come to their aid over the alleged oil spill from the pipeline. The communities had complained to the State Government that the pipeline was continuing to discharge oil and gas at high pressure into the area causing environmental damage and affecting the livelihoods of farmers in the area. Responding swiftly to the appeal made by the communities, the state government ordered Agip to close the facility immediately to enable an investigative team to go in and tackle the oil spill. In a statement, the State Commissioner for Environment, Mr. Inuro Wills, said:

“Following the recent gas spillages, which occurred on September 4 at a facility operated by the NAOC in the two communities, the Ministry has asked the company to temporarily shut down operations in the facility.” Mr Wills said the State government intended to use the occasion to signal the start of the “State Government programme of sustained environmental protection and enforcement.”

CSR NEWS

OIL FIRMS JOINED THE FIGHT TO CONTAIN EBOLA The arrival of Ebola in Nigeria saw oil and gas

Health in its effort to contain the Ebola virus disease.

scourge. Among the many oil companies that were: Seplat Petroleum Development Company, whcih donated the sum of N30 million to First Consultants Medical Centre in Lagos, the clinic that treated the index case, Patrick Sawyer, the Liberian-American who arrived in Nigeria on July 21, 2014, carrying the disease. Dr Ameyo Adadevoh and a nurse from the clinic both died after contracting the virus during the treatment of Mr Sawyer. Dr Adadevoh is unanimously credited with preventing the spread of the disease into the wider community after resisting pressure brought to bear on her by the Liberian government to discharge Sawyer from the clinic and allow him to travel to Calabar for a conference. But for her unwavering decision to quarantine him and institute barrier nursing, the Ebola virus would have been team are indeed national heroes. Unfortunately as a result of their decision to treat Sawyer, First Consultants have suffered greatly after it had to be closed to be properly decontaminated to World Health Organisation (WHO) standards. The fund will be of great assistant to the clinic as it struggles to get back on its feet after losing patients in droves contain Ebola. Even after decontamination, patients are taking their time to return to the hospital. The donation will be welcomed by the clinic as it embarks on the long road to recovery in the face of the stigma associated with the virus.

Targeted donations made by Shell Companies in Nigeria included ambulances to the Ebola Emergency Operation Centres in Lagos and Port Harcourt and two trucks with three months fuel supply to the Centre in Port Harcourt. They also donated medical supplies to the health authorities and Ebola Emergency Operation Centres in both cities. In addition, they offered IT support to the centre in Port Harcourt, including six units of 3G Mi-Fi and 6-month subscription fees. These facilities they said, would help back-up internet connectivity at the Centre. Company staff also made voluntary contributions to an internal Ebola Fund, which Shell said it would match and which would be donated to one of the key relief agencies active in combating the Ebola Virus Disease in Africa. ExxonMobil provided $250,000 in emergency Nigeria. The grant to the CDC Foundation will enable the U.S. Centers for Disease Control and Prevention to work with the Nigerian Ministry of Health and the World Health Organization to produce a two-day training program for health care workers to enhance their skills in infection control. “We have a long history in Nigeria and know initiatives,” said Nolan O’Neal, lead country “Our grant enables CDC to train health responders more quickly and to provide them with personal protective equipment. Both of

as a team of experts from Baylor College of Medicine, Houston, who will train health care workers in Akwa Ibom State. Africa’s wealthiest man, Alhaji Aliko Dangote, pledged his support to Liberia, one of the West African countries hardest hit by the virus and from where the disease was transferred to Nigeria. Forbes Magazine reported that he made a commitment to help the beleaguered nation during a telephone conversation with Liberian President Ellen Johnson Sirleaf. According to the report he promised to assist the country with medical personnel and other human and material resources to contain the spread of the disease. Dangote Foundation, he said, would work closely with the Liberian Government to determine what assistance could be provided ranging from medical personnel and other professional healthcare workers. Chevron Nigeria Limited donated two ambulances on behalf of the NNPC/CNL Joint Venture. Total E&P Nigeria donated 5 Ford pick-up vehicles to Mainland Hospital for use of the Ebola Emergency Operation Centre (EOC) to assist in monitoring of people under surveillance and transporting of medical staff and equipment as required. They also gave 1,000 pandemic level PPEs to Kuje General Hospital, Abuja. For Port Harcourt Teaching Hospital, they provided one ambulance and 1,000 pandemic level PPEs. They also set up isolation wards at their clinics in Abuja, Port Harcourt and Lagos. practical measures to limit the risk of spreading the virus, including infra-red thermal scanning

Ebola.” The remaining N20 million will go to the Lagos Isolation Centre, which was crucial in the frontline battle to control the disease and prevent it from taking hold in Nigeria. Shell Companies in Nigeria in cooperation with NNPC and other partners also showed their support for the Federal Ministry of

premises, provision of hand sanitisers and staff awareness sessions. have also provided materials and expert support, including personal protective equipment and non-contact infrared thermometers to the Akwa Ibom State Ministry of Health, vehicles to support the Port Harcourt Ebola Emergency Operations Cente as well

The World Health Organisation (WHO) has now Ministry of Health reminded the general public that continued vigilance is necessary to ensure that the disease does not return.

EBOLA FACTSHEET

PROTECT YOURSELF PROTECT YOUR FAMILY PROTECT YOUR COMMUNITY

from the EBOLA virus DO Always wash your hands with soap Always cook your food properly Go to health facility anytime you have head ache, fever, pain, diarrhea, red eyes rash and vomiting Tell Everyone you meet about Ebola so they can be informed

DON’T Do not touch people with signs of Ebola or who have died of Ebola Do not touch clothes & bed cloths of people who have died of Ebola Do not touch vomit, saliva, urine, blood and poo of people who have signs of Ebola Do not play with monkeys and baboons

Do not eat bush meat Call for help or questions 0886520581 or 0886374733

Do not eat plums eaten by rats

Let’s stop the spread of Ebola together 41

EMPLOYMENT & LABOUR NEWS

NIGERIA JOINED THE LIST OF HIGHEST PAYING CONTRACT JOBS IN THE OIL AND GAS SECTOR Nigeria was included in the list of highest paying contract jobs in the oil and gas sector worldwide in a report prepared by the Swift Worldwide Resources. The report showed that Nigeria was ranked third and fourth among the ten highest paid contract jobs in the world, with Australia occupying

The report showed that a Drilling Manager in Nigeria earns up to $2, 844 per day while a Project Services Director earns about $2, 817 (N450, 720) per day.

featured in Swift Worldwide’s list of

highest paying contract jobs. Chief Read, said: “Both Iraq and Nigeria have seen unprecedented growth in industry activity, and workers there are compensated for the risks that come with working in the more dangerous areas, accounting for the increase in salary ranges. Salaries in the U.S. are climbing, but salaries in these emerging markets are climbing faster.” The list was compiled by analyzing Swift’s 250 contract positions in the oil and gas industry in 30 locations across the globe, for a total of 7, 500 total jobs.

Certain job titles, like Completion Manager and Drilling Manager, are suddenly in demand and wellcompensated due to increases in upstream and drilling activity around the world. Swift experts predict that as exploration becomes more competitive across major oil companies, skilled workers in these positions will be drawing even higher compensations. Swift Worldwide Resources is a leading supplier of manpower resources to the global oil and gas industry, with more than 25 years focusing exclusively in this sector, and a database of 200,000 skilled personnel.

THE TEN HIGHEST PAID CONTRACT JOBS IN OIL AND GAS (PER DAY)

Source: Swift Worldwide Resources

COMPLETION MANAGER

DRILLING MANAGER

SUBSEA MANAGER

PROJECT MANAGER

COMPLETION MANAGER

DRILLING MANAGER

PROJECT SERVICES DIRECTOR

DRILLING MANAGER

$2942 $2844 $2817 $2766 $2715 $2700 $2692 $2631 $2624

DRILLING MANAGER

COMPLETION MANAGER

$3075

EMPLOYMENT & LABOUR NEWS

OIL INDUSTRY WORKERS CALLED OFF STRIKE Oil workers went back to work after their unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG) called off their national strike in September. The strike, which lasted 5 days, was called off after a reversal by the National Pension Commission (PenCom) of its decision to withdraw the operational licence it granted to the Nigerian National Petroleum Corporation (NNPC) to run its own pension scheme. Before it was called off, the strike was already beginning to affect electricity generation as gas supply to power plants dropped following the walkout of oil workers. The unions had been predicting that the industrial action would affect exports of crude oil. The strike began after PenCom withdrew the licence after accusing NNPC of consistently failing to operate the pension fund in accordance with legislation and within the guidelines issued by the PenCom. The pensions regulator complained that NNPC

failed to transfer the funds and assets of the scheme to a licensed Pension Fund Administrator (PFA) as required. In addition, PenCom was concerned about NNPC’s failure to bridge the funding gap in the scheme, which had climbed to about N85 billion between 2010 and 2014. NNPC admitted some of the failings but said it was working to rectify the situation, including the transfer of assets and also bridging some of the funding gap. The unions were also unhappy about lack of progress on the turn around maintenance the country to continue to waste billions of naira on the importation of fuel products. Fuel queues had begun to build up in Abuja as the strike began to bite, but the biggest effect was the noticeable decline in electricity distribution as some power plants, starved of gas due to the walkout, were unable to operate at optimum capacity. Calling on the unions to call off the strike, the Minister of Power, Professor Chinedu

strike had cut off gas supply to major power stations, including Egbin, AES, Olorunsogo, Geregu and Sapele. The strike also disrupted gas supply to the West African Gas Pipeline, which was already reeling from the gas supply shortage from Nigeria earlier this year when gas supply to the pipeline fell by 50 per cent of the volume Nigeria was contracted to supply. Ghanaians have had to cope with electricity outages and were preparing to shut down Asogli Power Plant, which supplies about 180 megawatts of Ghana’s electricity requirements when the strike was called off. With so much at stake the President Goodluck Jonathan and the Minister of Petroleum Resources, Diezani Alisonfollowing the Minister’s intervention, PenCom agreed to reverse its decision to withdraw the licence. After a productive 5-hour long meeting with the unions and NNPC, the Minister said that NNPC’s management would close the funding gap before August 2015. They also promised to address the issue of the TAM internally.

HEALTH & SAFETY NEWS

SHELL AWARDED “SAFETY CONSCIOUS CONTRACTOR OF THE YEAR AWARD” TO CAVERTON Shell Petroleum Development Company (SPDC) of Nigeria awarded Caverton Helicopters its Safety Conscious Contractor of the Year Award in the Medium and High Risk category. They made the award whilst celebrating the achievement of 75 million Lost Time Injury (LTI) free manhours. SPDC said in a statement that Caverton won the award because “Caverton Helicopters developed safety programmes to improve staff safety culture and raised the bar on engagement sessions. In addition, the statement said, Caverton’s “Aim for Zero” Campaign as well as its readiness to learn from previous incidents, were also taken into account in giving it the award. Caverton Helicopters is a subsidiary of Caverton Offshore Support Group Plc (COSG), which recently made history as Exchange (NSE). The service company, which owns two subsidiaries, Caverton Helicopters and Caverton Marine, listed in May with a market capitalisation of just under N32 billion (about $196 million) after an initial offering 3.35 billion shares of 50 kobo each. The shares were listed at N9.50 and just after the listing investors traded 5.549 million shares worth N52.734 million in 42 deals. At the time of listing, Chairman of Caverton, Mr. Aderemi Makanjuola, said: “We are extremely pleased as Caverton enters its next phase of growth as a listed company. Leveraging our expertise and execution capabilities, we development of new service areas in the offshore marine and aviation sectors.” Following the historic listing, the company is now poised to expand across Africa. They are looking to take their two businesses to Congo, Mozambique, Angola and Ghana over the next few years. They are already in Cameroon. Seven listing will give the company access to funding to execute some of the contracts it is bidding for, including an aviation support contract that will require 26 helicopters and three marine support service contracts that will require up to seven vessels.

SHELL’S FORCADOS TERMINAL ACHIEVED 14-YEAR SAFETY MILESTONE Shell Petroleum Development Company (SPDC) reported a 14year safety milestone in its operation of the Forcados Terminal in the Western Niger Delta. The company said that it operated the terminal, which has a storage capacity of 6.3 million barrels, incident. During that time, the company said some 1.25 billion barrels of oil passed through the facility. The safety milestone translates into a daily average of 300 staff handling nearly two export tankers every week. Activities undertaken at the terminal include high-risk maintenance and

engineering activities such as the rehabilitation of crude oil storage tanks, subsea repairs to the tanker loading systems and upgrade of the jetty. Speaking about the achievement, the Managing Director of SPDC and Country Chair, Shell companies in Nigeria, Mr. Mutiu Sunmonu said: “Over the years, SPDC has improved work processes and trained staff leading to the introduction of the Goal Zero initiative on safety. We’re happy that the improvements continue to manifest not only at Forcados Terminal but also in other installations.”

COVER STORY

THE INTELLIGENT

OILFIELD LEVERAGING INNOVATIVE TECHNOLOGY TO IMPROVE PRODUCTION AND LOWER COSTS The deep waters of the Gulf of Mexico, the frigid regions of Russia, the hot, dusty, undeveloped deserts of the Middle East and some of the volatile regions in subSaharan Africa are merely the geographic challenges facing todayâ&#x20AC;&#x2122;s oil and gas exploration and production industry.

But other challenges - just as serious and as threatening - face the industry as well. Global geopolitical forces are creating a oil and gas market. Global competition for depleting resources continues to drive the need to lower operating costs and increase recovery rates.

The number of skilled resources continues to decline. Shareholders are pressuring companies for a return on their investments that is commensurate with other long-term investment strategies. And while advanced technology, such as 3D and 4D seismic downhole sensors, and bandwidth can provide vast amounts of near realtime information that can help companies be more successful in exploration and production, there is often too much complex information to assimilate and understand in the time needed to make quick, accurate decisions. This convergence of forces, threats and technology is creating a perfect environment for the emergence of the technologies can help companies remotely and automatically monitor wells and measures to help avoid production downtime. The anticipated result is value creation in the billions of dollars each year reduced lifting, production and overhead costs, and increased production.

COVER STORY

The latest information technology (IT) innovation has made the intelligent sensor data can now be stored and searched using advanced visualization technology - allowing data to remain at the source and avoiding transmissions of massive data stores. Complex data patterns can be detected automatically, such as for sanding or carbonite, so the right person can be alerted (or the designated individual can be alerted) and a response can be initiated before a production problem occurs. Visualization, modeling and analytics are making it easier for decision makers to understand the wealth of complex information, leading to improved reservoir management. The technology groundwork has been laid reality. Gathering and analyzing data quickly and effectively in a controlled in an environment such as the North Sea or Sub- Saharan Africa, this can be a monumental task. And while new technology has shown the promise of great things to come, integrating this innovative technology with existing systems, new tools and a global network of diverse business partners can be arduous.

Much of the potentially useful data captured today is not typically stored, nor is it distributed to the people who can use it the most. Complex production problems - such as sanding, wherein solids, sand in particular, intrude and plug wells and adversely affect production - require an understanding of the issues and the tools to critically analyze data and determine historical patterns. Turning this data into useful, relevant information that will help make business-critical decisions is one of the main challenges the industry faces today. Realtime smart surveillance and early warning capabilities are enabling these businesses to support meaningful decisions and timely and accurate actions. Remote monitoring and management allow them to act more predictively to better manage the complex economic, political and environmental challenges of running an business model is helping companies from centralized locations, such as Houston or London. Continued on page 49

Developing Regional Know-How The petroleum technology development fund (PTDF) is Nigeria’s include the Federal Polytechnic of oil and gas, Ekuwe, Bayelsa state. The Federal Polytechnic Bonny, Rivers state, specializing in Environmental Management and Gas Technology. The comprehensive infrastructural and faculty upgrade of the Petroleum Training

the various segments of the oil and gas industry. students for undergraduates and graduate studies in specialized oil

Oil and Gas Research Centre and Museum, Oloibiri, Bayelsa State. The PTDF trains and enhances the skills of Nigerian welders including gas industry.

Through its sponsorship of the annual “Catch Them Young”

PTDF upgrades oil and gas related departments with world class

sustains interest among secondary school students in core science subjects necessary for the study of oil and gas courses and future career in the petroleum industry.

PTDF is also enhancing the teaching, learning and research skills of PTDF conducts and regularly updates skills gap surveys and audit of industry that Nigerians lacked and with a view to providing specialized

industry through the Technology Knowledge Sharing Programme.

ptdfupdate@ptdf.gov.ng,

: @ptdf_nigeria,

ALL THESE AND MANY MORE PROGRAMMES MAKE PTDF THE LEAD AGENCY FOR HUMAN CAPACITY DEVELOPMENT IN THE OIL AND GAS INDUSTRY

: www.facebook.com/ptdf,

: www.ptdf.gov.ng

COVER STORY

TURNING DATA INTO INTELLIGENCE FOR IMPROVED ASSET PRODUCTIVITY The capabilities of recent monitoring to generate more than a terabyte of to data access and analysis is required. composition to temperature and pressure change, the data is complex and voluminous. Moving the data across unconnected, disparate architectures can slow interdepartmental communication. An on demand approach can deliver business value by enabling companies to turn that raw data into information that can be directed to the right person, in the right format, at the right time through remote visualization.

companies to more accurately prevent costly occurrences such as pump failure. By analyzing their data against multiple historical references, on demand oil and gas companies can more accurately predict future performance and proactively solve problems. Anomalous patterns are detected and sent to the appropriate person for investigation and then reprogrammed to help improve future accuracy. Autonomic data and self-adaptive - runs unaided, providing early warnings of critical

- archiving that stores manually annotated and automatically detected patterns - enriches the progressive learning and improvement of detection accuracy over time. Hierarchical analysis of the wealth of learning machine that enables analysts to more accurately predict occurrences and stage interventions based on the historical data that has been captured, analyzed and archived. Reservoir analysis can ultimately occur at any time based on the streams of data, meaning that analysts need not wait for major milestones.

composition changes or gas and water breakthrough. internal and external systems, such

data is not just collected and stored. Itâ&#x20AC;&#x2122;s scrubbed, normalized and calibrated. is transmitted across the infrastructure. Information is fused and analyzed with multiple data streams around the clock, in near real time, helping enable

Spatiotemporal archiving - archiving based on space, time, types of measurement and relationship to detection targets - provides critical historical information for data analysis. Anomalous and failure pattern archiving

an enterprise-wide view of data that dramatically affects long-term strategic planning and performance. This article is taken from an executive brief provided by IBM Consulting Services.

INTERVIEW

PETROLEUM MINISTER COMMITS Recently the Honourable Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke hosted a forum on the environmental restoration of Ogoniland. She spoke about the renewed determination by the Federal Government to step up environmental restoration work in Ogoniland. In this interview she expands on the subject and on her commitment to ensure the restoration of Ogoniland. Question: The issue of environmental degradation in Ogoniland has been a protracted one. Their crusade for social justice appears to have merely created an intractable stalemate. Answer: It is indeed a protracted challenge dating back several administrations. But I don’t agree that it is an intractable challenge. As with many other long standing unresolved issues in our polity, Mr. President has demonstrated the required political will and has put a road map of actions and engagements in place to move the Ogoniland challenge out of a stalemate situation. The challenges had been escalated by an initial break down in trust but we have been able to create a broad base stakeholders involvement approach and have put a structure in place which we are presently of achieving remediation, restoration and reconciliation. You may wish to recall that in July 2012, the President approved the establishment of the Hydrocarbon Pollution Restoration Project (HYPREP) as a Special Unit under the Ministry Of Petroleum Resources. HYPREP is the vehicle for the implementation of the actionable recommendations of the United Nations Environment Program (UNEP) report on Environmental Restoration in Ogoniland. I have signed the draft gazette for the establishment of HYPREP and it has been forwarded to the Ministry of Justice for publication. This document will provide the rule of law guiding the implementation of the UNEP Report.

“I BELIEVE THE TIME HAS COME TO INJECT FRESH URGENCY INTO THIS PROCESS AND ADDRESS COLLABORATIVELY AND COLLECTIVELY, HOW THIS MIGHT BE PROGRESSED AS A PRIORITY.” Question: How is Hydrocarbon Pollution Restoration Project (HYPREP) different from other government initiatives over the years? Answer: The principal difference in our own initiatives is our sincerity of purpose and the solution-focused political will of this administration. Having said that, you also need to know that the HYPREP intervention is private sector driven with funding from major oil-companies operating in Nigeria. Government’s involvement is to the extent of ensuring that funds released are judiciously utilized to fully ensure a robust implementation of the UNEP recommendations. Question: What are the United Nations’ pertinent recommendations for the short, medium and long-term management of the Ogoniland environmental issue?

Answer: The report is in the public domain, I believe. For a start, there are clear suggestions as to institutional structures that will be required to administer remedial actions. The recommendations spread across government, public health, environmental, operational and community issues that need to be addressed. It’s a holistic approach, which brings the views of all the stakeholders on board. In addition, the report suggested eight emergency measures that must be taken during the ‘Transition Phase’ while the institutional framework for implementing the various recommendations is being put in place. The UNEP initiated a survey of all drinking water wells around those wells where hydrocarbons were observed and arranged measures based on the results. Their recommendation includes:

INTERVIEW

TO RESTORATION OF OGONILAND a) Ensure that all drinking water wells where hydrocarbons were detected are marked and that people are informed of the danger; b) Provide adequate sources of drinking water to those households whose drinking water supply is impacted; c) People in Nsisioken Ogale who have been consuming water with benzene over 900 times the WHO guideline are recorded on a medical registry and their health status assessed and followed up; d) contamination exceeding intervention values warning the community not to walk through or engage in any other activities at these sites; e) Post signs in areas where hydrocarbons were observed on surface water warning people not to f) Inform all families whose rainwater samples tested positive for hydrocarbons and advise them not to consume the water; and g) Mount a public awareness campaign to warn the that such activity are damaging their health. The approved HYPREP structure provides for seven Technical Working Groups (TWGs), which will operate under the supervision of a National Coordinator who shall in turn report to me. I provided overall leadership for the restoration project. Also, there is an Advisory committee, Chaired by my colleague, the Honourable Minister of Environment composed of Ministers/CEOs of stakeholder MDAs and members from other constituencies to guide and provide oversight to the activities of HYPREP. A Monitoring and Sustainability Group in partnership with organisations from the United Nations (UNEP, UNDP, etc) will enforce compliance and sustainability. Members of the TWGs are to be drawn from federal and State Agencies, Academia, the oil Industry, and the communities. So you can see there is nothing ad hoc about our initiative. This is a serious commitment to resolve a serious issue in a sustainable way. Question: What is the funding structure and time line for implementation? Answer: The UNEP report recommended an initial capital of $1 billion contributed by the oil industry operators with prevailing interests in Ogoniland and the government to fund the remediation project. NNPC and the oil companies have agreed on a sharing ratio, which I have approved as follows: a) Joint Venture Partners - 80% b) c) Federal Government (through the 15% Ecological intervention Fund)

As for timeline, environmental restoration is not an event. It is a process that involves clean up, building of facilities and planting. Above all that, it involves engaging the communities and other stake holders and getting disparate views into a sustainable alignment before we even get the freedom to implement the remediation. To this end, I wrote recently to Mr. Erik Solheim, the UNEP appointed special envoy for Ogoni Land on the need for a multi-stakeholder workshop on environmental assessment of Ogoniland UNEP report. I believe the time has come to inject fresh urgency into this process and address collaboratively and collectively, how this might be progressed as a priority, to restore these lands and waters and to give the Ogoni communities fresh hope and opportunity. We would like the UNEP to facilitate the workshop. We hope to draw on the expertise of the relevant national and international agencies and the communities to construct a robust roadmap to deliver a comprehensive remediation programme. Delivery and restitution will be the focus of the workshop. Question: At this point, I want to ask about restoration for other Niger-Delta communities who have suffered similar ecological impacts. Are they on the radar? Answer: Naturally, I am expecting that lessons from the Ogoni restoration work can be applied elsewhere in the Niger-Delta and, indeed, other regions of the country that at any time face similar environmental degradation problems. I want all hands on deck. Please join us. We are counting on your support.

OTC AWARDS

WINNERS OF THE SPOTLIGHT SM ON NEW TECHNOLOGY AWARD AT THE OIL TECHNOLOGY CONFERENCE (OTC) 2014 OTC recognizes innovative technologies each year with the Spotlight on New TechnologySM Award. This awards program is exclusively for OTC exhibitors and showcases the latest and most advanced technologies that are leading the industry into the future.

AWARD QUALIFICATIONS

CRITERIA FOR THE TECHNOLOGIES

A committee made up of representatives from the OTC Board and program committee judged the applications. Only information submitted in writing was considered by the judges.

NEW

Less than two years old (between 6 January 2012-6 January 2014).

INNOVATIVE

Original, ground-breaking, and capable of revolutionizing the offshore E&P industry.

PROVEN

Through full-scale application or successful prototype testing.

BROAD INTEREST

Broad interest and appeal for the industry.

SIGNIFICANT IMPACT Environmental impact is an important judging criterion.

OTC AWARDS

And the winners are …

FMC TECHNOLOGIES ISOL-8 PUMP FMC Technologies Schilling Robotics has developed an isolated pump—ISOL-8 Pump—that enables secondary intervention for BOPs in compliance with API Standard 53. The ISOL-8 Pump is tightly integrated with FMC’s UHD III Remotely Operated Vehicle (ROV), and uniquely meets the 45 second requirement for closing BOP shear rams. The ISOL-8 Pump consists of independent pistons allows optimization for a variety of demands and can simultaneously provide up to 50gpm at 5,000psi. Compared to existing industry solutions, this system is depth insensitive and can save operators up to $4-million per rig.

GE OIL & GAS SEALYTICS™ The SeaLytics solution enables drilling contractors to monitor performance and plan maintenance of BOPs using predictive analytics based on actual component performance data. SeaLytics can improve BOP system uptime, reduce unnecessary maintenance, and lead to better cost forecasting all the user.

BAKER HUGHES LAUNCHPRO™ WIRELESS TOP DRIVE CEMENT HEAD The Baker Hughes LaunchPRO™ wireless top drive cement head is a remote-activation system for deepwater applications. LaunchPRO launches balls, plugs or darts wirelessly during cementing of extremely heavy subsea long strings and long, heavy liners. LaunchPRO’s remote wireless operation reduces HSE risk by reducing manual intervention and rig time, while optimizing reliability. LaunchPRO’s operation is powered by rig air through a single pneumatic hose that can be tethered to the cementing line to reduce the risk of damage during cementing operations. A wireless pressure transducer provides real-time data to the cementing operator to allow for adjustments during cementing operations. Commentary: This will be useful in Nigeria as the IOCs move further into deeper offshore plays.

OTC AWARDS

FMC TECHNOLOGIES OFFSHORE FOOTLESS LOADING ARM (OLAF) The Offshore Footless Loading Arm (OLAF) has

GE OIL & GAS ZENITH GFI™ GROUND FAULT IMMUNE ESP MONITORING SYSTEM On average, 15% of ESP well monitoring systems fail to provide data following earth leakage in the ESP cable — an unresolved issue since the 1970s. While the ESP continues to run, interference renders gauge readings unobtainable. Operators are faced with workover or running motors at lower rates, and

between FLNG and conventional LNG Carrier, in side by side moored arrangement, located far from the coast in offshore conditions. The OLAF design is able to accommodate the large elevations difference between FLNG deck, where it is based, and LNG Carrier piping connection at lower level, without overloads. OLAF covers one hundred per cent (100 %) of side by side operability in harsh environmental conditions, thanks to its concept, its targeting system for connection assistance and Constant Position Monitoring System, SIL3, to manage the emergency disconnection.

pioneering Zenith GFI Ground Fault Immune ESP monitoring system from GE offers a solution which cannot be disturbed by ground faults, empowering operators with the ability to maintain well surveillance essential for production optimisation and pump protection, despite fault conditions. as more and more wells are completed with ESPs. The use of ESPs in Nigeria can transform well delivery and improve production in Nigeria for many wells. This technology is currently severely underutilized in Nigeria.

HALLIBURTON DRILL BITS AND SERVICES TDREAM™ TOOL In a traditional reaming-while-drilling BHA the reamer is placed above the RSS and LWD tools, creating a long rathole and requiring an extra trip to enlarge

reliability of the NBR® reamer technology. The TDReam™ tool is Halliburton’s and reach TD in one run.

OTC AWARDS

GEOSERVICES, A SCHLUMBERGER COMPANY FLAG FLUID LOSS AND GAIN DETECTION SERVICE service aims to meet the growing challenges of increasingly complex drilling programs in ever deeper waters with an essential early warning intelligent enough to help prevent false alarms. With uniquely faster response time compared to previous systems, the FLAG service provides and in operating conditions including drilling, tripping, circulating and cementing. *Mark of Schlumberger

OTC AWARDS

SBM OFFSHORE VERY HIGH PRESSURE FLUID SWIVEL Building on SBM Offshore’s unrivalled know-how and experience in state-of-the-art high pressure swivels by using a patented technique to cascade the pressure drop barg (12,000 psig), including long term endurance test runs, and has the potential or water injection from FPSOs into ultra-high pressure reservoirs, such as the lower

SCHLUMBERGER SEISMIC GUIDED DRILLING PORE-PRESSURE PREDICTION AHEAD OF THE BIT Seismic Guided Drilling (SGD*) predicts formation pressures hundreds of meters ahead of the bit while drilling. The SGD service uses both surface seismic and logging-while-drilling (LWD) data to provide a 3D lookahead velocity model with reduced uncertainty. This model leads to better geological and geomechanical description enabling proactive drilling decisions, particularly in deepwater exploration. Velocities ahead

WEATHERFORD CASINGLINK™ The CasingLink™ EM Antenna System was developed to address the signal attenuation encountered while drilling in deeper depths with an EM telemetry system. This method employs an insulated wire that is externally attached to a standard casing string; a borehole receiver typically located downhole and connected to the casing; and a surface transceiver. The borehole receiver picks up the EM signal at the casing connection terminal and transmits it via the external signal wire to the surface transceiver, which decodes the EM signal. The wire exits the casing near the surface and passes cable pass through. There is negligible signal attenuation within the transmission wire, which increases telemetry depth.

using LWD velocities behind the bit as a constraint. Compared with pre-drill predictions, this provides much more accurate results, which can be used in velocityto-pressure transforms to give more reliable formation pressures. Commentary: Technology is useful and deserves local trial in Nigeria to understand responses to the geological sequence in the Niger Delta formations. *Mark of Schlumberger

OTC AWARDS

WESTERNGECO: ISOMETRIX MARINE ISOMETRIC SEISMIC TECHNOLOGY

spatial bandwidth compromises that limited all previous towedstreamer methods. A unique new streamer design that includes measurement of the vertical and crossline gradient of the seismic sampling in both crossline and inline directions provides the most accurate images of the subsurface ever recorded, making the data suitable for many interpretation and reservoir modeling applications in exploration and reservoir development. *Mark of Schlumberger

WEST PRODUCTION TECHNOLOGY AS (PART OF WEST GROUP)

SWARFPAK TECHNOLOGY SwarfPak is a superior technology for P & A rig time and reduced environmental footprint. The most revolutionary characteristic of the SwarfPak technology is that all the swarf particles will be deposited and left down-hole, avoiding the use of surface swarf handling equipment which is a major logistical and environmental milling speed is greatly increased. Typical milling speed with SwarfPak is 3-6 times faster than conventional milling technology.

WINNER OTC DISTINGUISHED AWARD FOR INDIVIDUALS Each year, the OTC Awards Committee considers major technological, humanitarian, environmental, and leadership contributions to the industry.

COMMENTARY

the committee names an individual and an organization as recipients of the prestigious OTC Distinguished Achievement Award. This year the prestigious award went to Carl Arne Carlsen Carl Arne Carlsen, senior vice president and member of the Governing Board at DNV, was safety and reliability of mobile offshore structures, and the practical applications of risk management. Over the course of his career, Carlsenâ&#x20AC;&#x2122;s focus on safety led to important developments in the industry. Chief among these is his work in establishing rules for dynamic behavior of jackup platforms, semisubmersible platforms, and for the FPSOs in harsh environments. He was also instrumental in developing the IMO/IACS Enhanced Survey Program for oil tankers and carriers.

Uwem Udoh, Founder and CEO of WellManned Commentary on the technologies was provided by Uwem Udoh, an engineer and founder of WellManned Company Limited, which provides project management rehabilitation, and production management in the oil and gas industry. As experts in petroleum engineering and project management, their extensive skills encompass all aspects of planning and operations.

TACKLING OIL SPILLS

RECENT DEVELOPMENTS IN OIL Little has changed in oil spill technology since the 1989 Exxon Valdez disaster in which 750,000 barrels of oil was discharhged into Prince William Sound in Alaska. BP’s Deepwater Horizon drilling rig spill of 2010 in the Gulf of Mexico, which released 5 million barrels of crude into the sea, cost it $14 billion in clean up operations and over $8 billion

TRADITIONAL CLEAN UP METHODS INCLUDE: Mechanical containment or recovery using equipment that include a variety of booms, barriers, and skimmers, as well as natural and synthetic sorbent materials. Mechanical containment is used to capture and store the spilled oil until it can be disposed of properly.

are most useful in helping to keep oil from reaching shorelines and other sensitive habitats. Biological agents have the potential to assist recovery in sensitive areas such as shorelines, marshes, and wetlands.

Chemical and biological methods can be used in conjunction with mechanical means for containing and cleaning up oil spills. Dispersing agents and gelling agents

clean up methods that pass the muster. The website Mother recently developed or in development, which include:

CLAY SPONGE

Researchers at Case Western Reserve University have developed a super-lightweight clay sponge to draw out oil from contaminated water. The extracted oil could then be recycled. The substance, which experts are calling an aerogel, is a freeze-dried mixture of clay with a polymer and air. It works in freshwater, salt water and on plain surfaces.

HIGH SPEED SKIMMING VESSEL

MAGNETIC SOAP

One of the main “cleaners” on the Deepwater Horizon oil spill were dispersants. Almost 3 million litres of dispersants and soaps were used in the cleanup. However, dispersants are problematic because they do not easily break down in the environment. Scientists from the University of Bristol have developed a new, iron-rich salty soap that reacts to magnetic forces once it is in the water. The salts form a magnetic core when placed in a solution. When a magnetic force is applied, the core — with the oil — rises to the surface of the formula.

Booms and skimmers are popular cleanup devices currently used in oil spills, but skimming cannot be done in rough, windy seas, nor is it effective at night when visibility is low. However, the company Extreme Spill Technology has developed a high-speed skimming vessel that the company claims can solve these issues. While traditional skimmers cannot successfully operate in waves higher than 1.5 meters, EST’s boat can skim in waves higher than 3 meters. The lightweight vehicles can operate faster than traditional skimmers, and the machines do not clog as easily.

TACKLING OIL SPILLS

SPILL CLEANUP TECHNIQUES POLYMER GEL

Another team of researchers from Pennsylvania State University have also come up with a novel gel that can absorb 40 times its own weight in oil and forms a soft solid that is strong enough to be scooped up and by Mike Chung and Xuepei Yuan only interacted with oil in tests and the swelled gel contained no water, which solves the sticky problem of separating spilt crude from the water it pollutes.

SKIMMER WITH GROOVE TECHNOLOGY

After the 2010 spill, Wendy Schmidt, president of the Schmidt Family Foundation, which works to create clean energy solutions, launched the Wendy Schmidt Oil Cleanup X CHALLENGE. The $1.4 million competition encouraged the best their solutions. The winner was Elastec/American Marine, an Illinois-based company that developed a kind of barrel skimmer than can separate oil from water, even in waves. The skimmer met the rate of 70 per cent, skimming as much as 2,500 gallons per minute.

NEW AEROGEL

A new aerogel has been developed by Shaoqin Gong, a researcher at the Wisconsin Institute for Discovery, graduate student Qifeng Zheng and Zhiyong Cai of the USDA Forest Products Laboratory in Madison. It can absorb up to nearly 100 times its own weight, so, if you had an oil spill, the idea is you could throw this aerogel sheet in the water and it Once it’s fully saturated, you can take out the sheet, which is re-useable and squeeze out all the oil.

PEAT MOSS MIXTURE

Scientists in Norway have discovered that simple peat moss is extremely good at absorbing oil. The company Kallak Torvstrøfabrikk is developing a product called Kallak Absorbent, which can be placed directly into the oil-soaked water. Ragnar Kallak, the company’s founder, explained: “[Peat moss] absorbs the oil on contact and encapsulates it. Water does not penetrate the peat moss, so the encapsulated oil is trapped in a non-sticky crust, which is easily removed from the surface of the water.”

CARBON NANOTUBES

Daniel Hashim and colleagues at Rice University in Houston have found a way to turn carbon nanotubes - atomthick sheets of carbon rolled into cylinders - into a sponge material that sucks up oil and can either be squeezed or burned to remove it. In can be re-used. The researchers still need to develop a system to deploy the sponge material into an oil spill.

KEVIN COSTNER’S OIL FILTRATION MACHINE Alongside his scientist brother Dan, Kevin

been in development for more than a decade. Costner has invested $26 million of his own money into a device that works on a centrifuge principle, separating and jettisoning clean water from oil. While the devices show some promise, they became easily clogged with the heavier,

MAGNETS AND NANOTECHNOLOGY Researchers at MIT are developing a new technique for recovering oil, using magnets. On it’s own, oil is not magnetic, but MIT researchers say that when mixed with waterrepellent nanoparticles that contain iron, the oil can be magnetically separated from the water. The nanoparticles can later be removed to enable the re-use of the oil. The recovery process would be conducted out at sea after the oil spill. Seawater polluted with oil would be pumped onto a boat treatment facility. Once on board, the magnetic nanoparticles would be added and attach themselves to the oil.

statistics OPLs

RIG COUNT

68 OM Ls

102 BLOCK AWARD

TERRAIN

40 30

170 KS O LOC

20 10

PEN

216 FI E L

LAND

218

APRIL

MAY

JUNE

JULY

AUGUST

SWAMP

SHALLOW OFFSHORE

DEEP OFFSHORE

TOTAL

OPERATIONS

20 10

S/P

OD U

DS N

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

JULY

AUGUST

KEY:

OT I N P

LANTS CT I O N S

EXPLORATION

APPRAISAL (OIL AND GAS DRILLING)

DEVELOPMENT (OIL AND GAS DRILLING)

TOTAL

F IEL

RIG TYPE

G CO

CIN

PA C O M N I ES

MARCH

FLOWSTATION

O P E R AT I N G

FEBRUARY

KEY:

D S IN PR O DUC TI

130

JANUARY

A N IES

PR ODU

2800 Total number of prod wells

30 20 10 0

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

JULY

AUGUST

KEY: LAND RIG

DRILL BARGE

JACKUP

SEMISUB

DRILL SHIP

TOTAL

TECHNOLOGY BRIEFING

BONGA:

MILESTONES IN FPSO FACILITY DEVELOPMENT

Shell has been at the forefront of Floating Production Storage and technology since its earliest days. They installed the

200,000 BARRELS OF OIL PER DAY AND 150 MILLION STANDARD CUBIC FEET OF GAS PER DAY PRODUCTION CAPACITY OF BONGA

of Spain in 1977 and have played a major role in taking this technology into deep water since then. The Bonga FPSO facility, in more than 1,000 metres of water off the coast of Nigeria, stands out for several reasons, not least because stream in 2005, set the benchmark for the industry. At the time, it was one of the largest FPSO facilities in the world, having the capacity Inconel-clad steel catenary risers. Shell made great efforts to maximise the local content of the Bonga project. Various processing modules and foundation equipment were investment in training and developing local operations and production Nigerian. injectors. Further drilling is planned to develop reserves on the seismic surveys in Nigeria in 2008 and again in 2010.

90%

OF BONGA OFFSHORE STAFF ARE NIGERIAN

3 FOOTBALL FIELDS: THE SIZE OF BONGA FFSO’s DECK

10%

INCREASE IN NIGERIA’S OIL CAPACITY WHEN BONGA B EGAN PRODUCING IN 2005

BONGA MILESTONES FIRST DEEPWATER PROJECT OFFSHORE NIGERIA SPREAD-MOORED FPSO FIRST APPLICATION OF STEEL CENTENARY RISERS FOR AN FPSO SHELL’S LARGEST FPSO TO DATE WITH 225,000 BARRELS PER DAY NET PROCESSING CAPACITY

TECHNOLOGY BRIEFING

INNOVATIVE USE OF RADIO FREQUENCY IDENTIFICATION IN OIL AND GAS OPERATIONS (RFID) technology is fast emerging as one of the most pervasive due to its very wide range of applications. Recent years have the most useful technologies with more and more innovative uses of RFID chips emerging. RFID is a method for tagging and identifying objects such as store merchandise, equipment, postal packages and living organisms. Two key components in RFID systems are interrogators (readers) and transponders usually called tags. Using a RFID interrogator, RFID allows objects to be labelled and tracked as they move from are radio bar codes embedded into billions of different things and organisms, including animals and possibly some human beings - sending out radio signals about what they are, where they are, and possibly what they are doing or how their bodies are working. Like other wireless devices, they exchange information via send/receive RFID interrogators. RFID devices work using very small RFID integrated circuit that feature an antenna to transmit and receive radio signals. RFID devices may be attached to objects, or in the case of some RFID systems, injected into objects. The RFID systems come in a large range of packaging options,

they are reusable, and can withstand harsh environments. RFID systems can operate effectively (including retention) also capable of performing under rugged conditions and when they are dirty. Growing demand for the use of RFID by customers is compelling manufacturers to explore the opportunities and challenges of implementing the technology. RFID can help improve production operations, lower costs and streamline the supply chain, but

operations, including the scenarios below: When a tubular string— or drill bit, valve, or joint—is lowered downhole, each tagged element of that string can be tracked over the course of its service life, including data on operating hours downhole and exposure to pressure, temperature, and corrosive environments. Any shop maintenance or repairs can be tracked, and relative position in a tagged casing string can be accurately determined. can help determine the precise arrival

implementation strategy. In the next few years, RFID technology will evolve toward addressing issues, such as tag costs, large scale production, accuracy of sensing, improved read write performance, interrogator costs, and interoperability. Surya Rajan, a director at IHS Cambridge Energy Research Associates (CERA) has suggested some of the innovative uses of the technology within oil and gas

formation face. Smart valves can be open or shut by means of pump-down RFID chips carrying programmed commands. A set of perforating charges can be triggered by an RFID chip. All surface equipment and machinery can be tagged and geolocated. When necessary, spares can be located quickly. When crude is pumped through a pipeline, each operator’s batches can be tracked by RFID chips carried at the interface, thus enabling precise inventory management. The possibilities are seemingly endless as more and more innovative uses for RFID chips are discovered.

OIL & GAS CIRCUIT

PETAN OTC LUNCHEON Petroleum Technology Association of Nigeria (PETAN) Panel Session at the Oil Technology Conference (OTC) 2014

OIL & GAS CIRCUIT

CPI INDUSTRY LUNCHEON Centre for Petroleum Information held their annual Industry Luncheon. The topic was Increasing the Hydrocarbon Footprint: the Oando Style

OIL & GAS CIRCUIT

LAGOS OIL CLUB Q&A SESSION Lagos Oil Club held a Q&A Session featuring Curtis Cohen, COO, Sahara Group

OIL & GAS CIRCUIT

INDUSTRY MOVES

ANTHONY MUONEKE, MANAGING DIRECTOR, NPDC Mr Anthony Muoneke, the new Managing Director of the Nigerian Petroleum Development Company (NPDC), who is from Anambra State, replaces Mallam Hamidu Namtari, acting Managing Director.

DR JOSEPH DAWHA, GROUP MANAGING DIRECTOR, NNPC The new Group Managing Director of the Nigerian National Petroleum Corporation, Dr Joseph Dawha, who is from Borno State, replaces Andrew Yakubu. He has served previously as the Group Executive Director, Exploration and Production, NNPC and Managing Director of Integrated Data Services Ltd (IDSL), a subsidiary of the NNPC. Other board appointments at NNPC were Ms Aisha Mata Abdurrahman as Group Executive Director Commercial and Investment and Dr Attahiru B. Yusuf as Group Executive Director, Business Development.

Called to the Nigerian Bar in 1985, he has over 29 years’ experience at both local and international levels in the oil and gas as well as the energy and power sectors, including serving as Executive Director, Finance & Admin, Niger Delta Power Holding Company Ltd. (NDPHC). NPDC is a fully-owned subsidiary of the Nigerian National Petroleum Corporation (NNPC) and engages in exploration and production activities on behalf of NNPC. NPDC has interests in a number of assets. Its OML 119 is currently producing about 70,000 bopd NPDC’s from the Okono interests in 9 deepwater blocks, namely OPLs 214, 223, 242, 244, 251, 256, 318, 325 and 332. It also holds OML 65 (Abura approximately 12,000 bopd. The company has interests in two swamp assets, OMLs 64 and 66 in partnership with SIPEC, which are still under development.

FEMI AJAYI, EXECUTIVE SECRETARY, PTDF Femi Ajayi was named the 7th Executive Secretary of the Petroleum Technology Development Fund (PTDF) by the Federal Government on Wednesday, June 18, 2014 to replace the incumbent, Dr. Oluwole Oluleye. Femi Ajayi who until his appointment was the Director General of the National Drug Law Enforcement Agency (NDLEA), is coming to PTDF the public, private and international sector organizations. His multidisciplinary credentials as biochemist, journalist and international law expert have been tapped in various capacities for the service of the nation and international organizations particularly the United Nations System. He is from Ekiti State.

President on Development Cooperation, responsible for among others, facilitating programmatic collaboration and resource coordination between the Federal Government and other levels of government, monitoring developments in global affairs and identifying development assistance, foreign investments and technical assistance. PTDF is a parastatal under the Ministry of Petroleum Resources dedicated to the development, promotion and implementation of petroleum technology and manpower development through research and training of Nigerians as graduates, professionals, engineering, geology, geosciences, management,

Before his appointment to the NDLEA, Femi Ajayi was the Senior Special Assistant to Nigeria’s

and solid minerals industry.

INDUSTRY MOVES

CHARLES CHIEDU ODITA, MANAGING DIRECTOR/CEO, MIDWESTERN OIL AND GAS class honours Bachelors of Engineering degree (1984) in Chemical Engineering and a Masters of Engineering (1987) in Chemical Engineering from the University of Benin, BeninCity, Nigeria. Thereafter, he worked as an industrial water technical sales engineer with Pinnacle Holdings Limited in Lagos. Between 1988 and 2007, he worked with Shell Petroleum Development Company of Nigeria Limited (SPDC), with 41/2 years of cross-posting with Netherlands Aardoile Maatschappij (NAM) in Assen, Netherlands (the local Dutch oil producing company) and Shell Research in Rijswijk, Netherlands. He is a member of the Society of Petroleum Engineers (SPE) and a Fellow of the Nigerian Society of Chemical Engineers (FNSchE). He has written various technical papers in the area of Well Engineering and has attended different technical and

management programmes in Nigeria, Netherlands, UK, and US. Odita joined Midwestern Oil & Gas Company as Managing Director/ in July. He had been a Non-Executive Director of Midwestern Oil & Gas Company Limited since 2005. Midwestern Oil & Gas Company Limited commenced operations in 2001 and upstream activities in 2005. The Company is owned by a group of Nigerian entrepreneurs and partially by the Delta State Government. In 2003 the Company was awarded 70% interest in Umusadege Field located in OML 56, which is situated at the northern area of Delta State, Nigeria. Midwestern strategic alliance with Suntrust Oil Company Nigeria Limited and Mart currently producing approximately 15,000 barrels per day.

GEORGE MAXWELL, CEO, ELAND OIL AND GAS Les Blair, founder of Eland, stepped down as Chief Executive way for George Maxwell, formerly of Eland and is a founder director of the company. Blair will remain on board as Strategic Advisor to the company, providing support to the CEO in Maxwell has over 20 years’ oil industry experience in both the producing and service/ manufacturing arena. He joined Addax in 2004 and held the General Manager’s position in commercial activities. Prior to this, Maxwell worked with ABB Oil & Gas responsibilities for Europe and Africa. He held a similar position in Houston, from where the organisation ran its operations in 10 countries. Maxwell graduated from Robert Gordon University in Aberdeen with a Masters in Business Administration. He was appointed to the Board in September 2009 and was September 2014.

LOUIS CASTRO, CFO, ELAND OIL AND GAS Another new appointment at Eland is Louis Castro who comes on board as Prior to his appointment as CFO, Castro was a non-executive director of Eland and chair of the audit committee. He has been a director of the Company since August 2012. He is said to have over 25 years’ experience of investment banking with a focus on advising companies worldwide in the oil & gas and mining sectors. Most recently he has been the Managing Director of Northland Capital Partners. Eland was founded in 2009 by Les Blair and George Maxwell who previously held senior management positions with Addax Petroleum Corporation and played

into a highly successful independent oil company focused on upstream operations in Nigeria prior to its sale to the Sinopec Group in 2009. Since then the Company has assembled an experienced board and management team with over 40 years of in-country experience and successful track records in acquiring and developing oil and gas interests. Eland listed on AIM in September 2012 and announced the completion, by its 45% owned Nigerian joint venture company Elcrest, of the purchase of a 45% interest in the OML 40 licence, onshore Nigeria. It also has a 40% 17.

BOOK REVIEW

NIGERIAN OIL AND GAS: A MIXED BLESSING? REVIEW BY ALEXANDER OGEDEGBE Nigerian Oil and Gas written by three coauthors, Chief Michael Olorunfemi, Mr Akin Adetunji and Mr Ade Olaiya, was recently launched at the Nigerian Institute of International Affairs. The book chronicles the landmark policy events in the many incarnations of the Nigerian oil and gas industry under the various administrations since before independence, using the extensive knowledge of the authors as former NNPC executives. The book pulls no punches as the authors give their candid insider views of what has gone wrong at NNPC. Mr Alex Ogedegbe reviewed the book, subtitled NOGintelligence. He recommends the book as a “must read” and says that the reader should read the entire book including the Forward by Chief Asiodu, CON, and the Introduction by the authors, to gain a full appreciation of the book. Mr Ogedegbe’s review follows below.

Answering this question positively and pursuing the solutions proposed in this book to their logical conclusions, is the ultimate purpose of the authors.

The conclusions, on the subject of the way forward, naturally follows in the last chapter.

I plan to carry out this review by focusing on the book’s purpose, contents and authority.

Generally, I have observed the efforts to present the information as objectively as possible. This is not always possible, especially

THE AUTHORS’ THESIS

biases or commonly held second-hand opinions in the society.

The authors postulate that NNPC Corporate gas industry as a legitimate commercial and operationally (fully capitalized public company) from Government under certain conditions. These conditions relate to removing the deliberately embedded in Decree 51 of 1977 apparently to limit the powers and authority under which NNPC Corporate has been obliged legally to operate. The reasons for the failure of NNPC Corporate

INTRODUCTION

to meet the expectations of the Government and the citizens up till now have been

exploitation of the country’s enormous reserves of oil and gas? Oil and gas constitute depleting (non-renewable) natural resources. If properly

of the book.

result in a permanent improvement in their living standards and employment opportunities.

This book deals essentially with the scope of work and responsibilities of the corporate organization of NNPC and only to a very minor extent, are limited to passing references made to its fully owned subsidiaries.

What would it take, for all Nigerians to get

ALEXANDER OGEDEGBE Alexander O. Ogedegbe is an Engineering Consultant/Director of ILF Consulting Engineers Nig. Ltd, Macmorgan Engineering Ltd and Chairman of Linetrate Gas Ltd (an indigenous gas company). He has held positions as Managing

SCOPE

The reason(s) for this limitation in coverage is not stated anywhere in the book. Any reason one might suggest would be a conjecture. However this exclusion intended, or not, has the effect of limiting the authority of the book, in discussing substantive issues about the roles and or performance of all the NNPC subsidiaries, relative to the Corporate Headquarters’ functions or responsibilities.

Company Ltd, Managing Director, Company Ltd, Group General Manager, Managing Director, National Engineering and Technology Company, Director General, Nigerian College of Petroleum Studies, Kaduna. From 19992003, he was NNPC Group Executive Director (Engineering and Technology) where he retired at the statutory age of 60 years.

ORGANISATION OF THE BOOK

There is a logical chronological sequence, tracing the historical journey of the Federal Government in formally acquiring the rights of ownership, directly performing the regulatory functions, setting up ministries, agencies its interests, as well as full participation in a global and complex industry. The penultimate chapter, returns to the sub theme, to emphasize the problems caused deliberately embedded in the decree setting up NNPC; the continued absence of the crucial political will of the Federal Government to overcome these problems.

OBJECTIVITY

STYLE OF WRITING

Generally, the style of writing has been consistently historical narrative. The exceptions have been few, and where the particular subjects require expert exposition. An example is in Chapter Nine, “ the formation of national oil companies”.

SOURCES OF MATERIAL

Throughout the book, there have been almost no references to third party sources. Although the authors have been quite explicit from the beginning, as stated in the introduction, that “This book provides insiders’ experiences…” nevertheless, the book appears to rely substantially on their personal notes, dairies and other private records available to them. Consequently, there is no list of references in the book.

CONCLUSIONS AND RECOMMENDATIONS This book represents a noteworthy and patriotic endeavour of three Nigerians who

efforts and money to produce. The passion with which they assembled, analyzed the information and wrote the text in such lucid form from their individual experience, in consultation with colleagues in the oil & gas industry, locally and internationally is clearly evident throughout the book. I strongly recommend the book to this audience and the greater audience of Nigerians in and outside the petroleum industry.

earlier: what it would take is for our policy makers, especially, in the Federal Government, the National Assembly and party leadership to read this book, and each group should decide, it is time to remove all the constraints NNPC from reaching its full potential.” Then this country would have taken the our enormous petroleum reserves for the permanent improvement of the living standards of all Nigerians and increase job of the authors would not have been in vain.

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