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US wants Nigeria out of Sao Tome
There are strong indications that the United States of America (USA) may have initiated moves designed to scuttle investment drives currently being made by some Nigerian companies in the oil and gas industry of Sao Tome and Principie.
Such moves, it was gathered were in line with the efforts of the US government to secure hydrocarbon assets for US –owned companies in the oil- rich nation and also to improve energy supply from the Gulf of Guinea for its domestic use as a result of increasing hostility in the Middle East.
A report signed by the Attorney General of Sao Tome and Principie requested the US authority to investigate contracts awarded to Houston-based ERHC Energy. The report which indicted the federal government of Nigeria- said there were repeated allegations that Nigerian controlled ERHC made improper payments to officials and their families during the award of oil blocks in a joint development area shared with Nigeria.
The US, which accounts for 25 percent of world energy consumption had repeatedly emphasised that energy supply from the Gulf of Guinea was very important and strategic.
Industry analysts believe that the action of the US might strain her relationship with Nigeria.
Experts believe that the increasing presence of US companies at the expense of regional firms is a ploy to frustrate plans to transfer technology in order to make West Africa the hub of deepwater oil and gas technology.
This might also create disunity among the members of the African Union.
At the moment, ExxonMobil, a US company has 40 per cent equity interest in block one in which Chevron, another American company is the operator.
An industry source said Noble Energy; a leading American exploration and production company in collaboration with the US government has commenced the process to displace Nigerian companies in Sao Tome. He said this position of the US government was reinforced by the inability of Noble Energy to win an oil block during the 2005 licensing round as promised by President Olusegun Obasanjo during a meeting with officials of the company.
This was designed to ensure that opposition to the improvement of energy supply through American companies from the Gulf of Guinea was subdued.
"Noble Energy’s plan to win an oil block in the Joint Development Zone (JDZ) during the first and second licensing rounds involving six blocks also failed", he said.
The source said media campaign to discredit the JDZ licensing round was planned to create opportunity to ensure that only US-owned companies are in control.
Senator Lee Maeba, chairman, Senate committee on petroleum resources, however said his committee would discuss the issue of an overriding interest of the US in the Gulf of Guinea this week. He noted that if the American government wants to exploit part of Sao Tome’s oil and gas resources, they should do so but cannot do anything about the treaty on JDZ. "We are quite aware that there are several countries that envy Nigeria’s crude oil resources and that is the reason for a treaty to guarantee the ownership of these resources on the deepwater JDZ’, he said
Big Oil Expected To Go On Spending Spree
by Kevin G. Hall
Knight Ridder/Tribune News Service. 12/21/2005
URL: http://www.rigzone.com/news/article.asp?a_id=27997
After a year of record prices for oil and natural gas, the world's energy companies are stepping up spending on exploration and production. Flush with cash, they'll spend 2006 hunting for both oil and opportunities to expand their businesses.
That's good news for consumers. It means oil companies, private and state-owned, are hunting for supplies to replace what's consumed and to meet surging global demand for oil and natural gas. Global oil consumption is forecast to grow from 82 million barrels per day now to 111 million barrels per day over the next 20 years, so much more fuel must be found simply to keep prices from rising dramatically.
Current high fuel prices have triggered a bonanza of exploration by smaller companies, which are often willing to risk more in hope of getting greater rewards. But PricewaterhouseCoopers, a major consultancy, expects the big players to spend much more, too. The world's 20 largest private energy companies are awash in $75 billion in cash, experts in the firm's Houston office estimate.
"Spending budgets will go up, and M&A (mergers and acquisition) activity will go up, too," said Rick B. Roberge, head of PricewaterhouseCooper's energy acquisitions division.
A wave of consolidation is expected in an industry already led by giant companies.
"This happens to be one of those areas, unlike others, where size really does matter," said Ken Stern, managing director of energy consultancy FTI Consulting in New York. "The sheer numbers of dollars we're talking about are the kinds of dollars that allow large companies to buy other large companies," he said, adding, "I don't think there is such a thing as a big oil company anymore. I think they are mega-companies these days."
Exhibit A: ConocoPhillips, the third-largest U.S. oil company after it was created by merger in 2002, announced on Dec. 12 that it would snap up Houston-based Burlington Resources for $35.6 billion. The move would make ConocoPhillips the largest U.S. natural gas producer. It also would ensure that it becomes a leader in unconventional energy sources, such as liquefied natural gas and Canada's synthetic crude oil, made by separating oil from natural deposits in tar sands.
Wall Street giant Lehman Brothers surveyed 325 oil and gas companies and released a report this month saying these companies expect to increase their 2006 spending on exploration and production by almost 15 percent, to $238 billion. The study predicted double-digit spending increases in U.S. and international exploration.
The stepped-up exploration is sure to increase America's dependency on energy imports. The hunt for gas and oil is happening in faraway places such as Russia's arctic north, remote central Australia and in volatile African countries such as Sudan, Gabon and Nigeria. Africa's west coast is one of the world's offshore drilling hot spots.
Nonconventional energy sources are also being tapped or eyed for development. They include natural gas drilling in Colorado and Wyoming, and oil shale deposits in the Rocky Mountain states. Oil companies also have plans for superdeep drilling in the Gulf of Mexico.
In the quest for oil, private companies are increasingly competing against state-owned oil companies from China, Russia, India and Brazil. The Lehman Brothers survey found that state-owned oil companies are also looking for partners.
Chinese state oil companies this year bought into energy projects in Canada, Ecuador, Venezuela and Kazakhstan. Oil & Gas Corp., India's state-controlled oil company, this month offered $2 billion for a stake in a Nigerian oil and gas field. State oil companies from India and China have announced plans to bid together in some places.
Together, Chinese and Indian government oil firms are spending about as much as long-established Latin America's state oil companies - or about half of what the giant private oil companies spend. Among the biggest state oil spenders next year, said the report, was Brazil's Petrobras. It's projected to increase spending by almost 69 percent as Latin America's biggest nation closes in on oil self-sufficiency.
Of the private oil giants, Chevron Corp. expects to spend more than $11 billion in exploration, production and natural gas projects next year. ConocoPhillips plans to spend $6.7 billion on exploration and production beyond the gas it acquires from Burlington Resources. And Royal Dutch Shell expects to spend $15 billion to find or pump oil and natural gas.
"Global energy needs depend on the industry's ability to sustain high levels of investment as the search for energy leads us to increasingly challenging and technically demanding environments," said Lisa Givert, a spokeswoman for Royal Dutch Shell in London.
The world's largest private oil company, ExxonMobil, which in October posted the highest quarterly profit in history at $9.9 billion, won't detail its spending plans. Spokesman Russ Roberts said ExxonMobil expects to post total capital expenditures this year of $18 billion, but won't disclose exploration plans until March.
The rising trend of exploration is sparking equipment shortages and raising costs. Shell estimates that a full quarter of its increased exploration spending will be eaten by price inflation - mostly the high costs of drilling.
In December 2003, the average day rate for drilling equipment in the Gulf of Mexico was $53,148. Today, it stands at $104,281, according to David Kent, president and publisher of Rigzone.com, a Web site about the offshore oil industry.
"There is a supply crunch for rigs, which is effectively driving up the cost of rigs," said Kent. "Rig costs have definitely been on the rise, and rig contracts are being contracted and signed out as far out as 2009, so there's not really enough hardware to do the drilling."
BTW..that's Mr.Cecil to you lol
#16430 eom
Sonangol Pre-qualifies over 50 Companies
Sonangol has pre-qualified 51 companies to participate in its current licensing round for its offshore acreage. The companies include 29 companies pre-qualified as potential operators and 22 as non-operators.
These companies will be invited to bid for blocks 1, 5, and 6, which are located in shallow water on the shelf of the lower Congo and Kwanza basins; blocks 15, 17, and 18 (excluding development areas) in deep water of the lower Congo basin, and block 26, a deep water block in the Benguela sub-basin.
The announcement follows high levels of interest for oil exploration in Angola expressed at Sonangol’s successful roadshows held in Houston and London. All pre-qualified companies are now invited to submit firm proposals for the concession blocks to Sonangol by March 31, 2006.
Carlos Saturnino, Sonangol’s Negotiations Director, commented on the announcement; “We are very pleased with the volume and quality of responses we have received from the interested Operators, and I would like to congratulate the successful companies invited to move on to the bidding round.”
The successful operators include;
- Addax Petroleum N.V.
- Amerada Hess Corp.
- BP Exploration (Angola) Ltd.
- Centurion Energy International Inc.
- CEPSA- Compaٌia Espanola de Petroleos S.A.
- Chevron
- Devon Angola Corp.
- ENI Angola Exploration B.V.
- Equator Exploration Ltd.
- ESSO Exploration and Production Angola
- Inpex Corp.
- Kerr-McGee Corp.
- Lundin Petroleum AB
- Maersk Olie Og Gas A.S.
- Marathon International Petroleum Ltd.
- Norsk Hydro
- ONGC Videsh Ltd.
- OXY of Angola, LLC
- Partex Oil and Gas
- Petrobras
- Petronas Carigali Overseas SDN BHD
- Premier Oil PLC
- Repsol Exploration S.A.
- ROC Oil Company Ltd.
- Santos International Operations Pty. Ltd.
- Statoil, Total E&P Angola
- Tullow Oil PLC
- VAALCO Energy Inc.
Successful non-operating companies include;
- Angola Consulting Resources
- Lda, AJOCO’ 91 Exploration Co. Ltd.
- Anadarko Petroleum Corp.
- Angola Japan Oil Co. Ltd. (AJOCO)
- Exile Resources Inc.
- Falcon Oil
- Force Petroleum Group Ltd.
- Grupo Gema S.A.
- Initial Oil and Gas S.A.
- InterOil E&P ASA
- Mitsubishi Corp.
- NIS
- Noble Energy Inc.
- O.C.P. Lda
- Orca Exploration Company Ltd.
- PetroSA
- ProdOil
- SARL
- Soco PLC
- Sonangol Sinopec International Ltd.
- Svenska Petroleum Exploration
- Taiyo Oil Company Ltd.
- Wodege - Sociedade Angolana de Petrَleos e Minas Lda
Nigeria pipeline still blazing
By Upstream staff
Oil workers in boats and a helicopter circled a huge pipeline blaze in remote southern Nigeria on Wednesday, surveying the damage caused by a suspected dynamite attack that killed at least eight people.
Tuesday's attack by unknown gunmen on the pipeline operated by Shell, located in the Opobo Channel in the Niger Delta, caused a major slick and fire, cutting output by 170,000 barrels per day.
"The fire is still blazing. It's as high as a 10-storey building. There is thick black smoke billowing," a Reuters witness said.
A Shell spokesman said work was ongoing to determine the extent of the damage, and there was no estimate yet of how long the outage would last. It represents a 7% cut in output from the world's eighth biggest exporter of crude.
The nearby community of Asagba Okwan Asarama was deserted. About 20 huts, close to where Tuesday's blast ripped through the pipeline, were reduced to blackened ruins. A local fisherman, who was on the open sea when the blast took place, was desperately searching for his wife and four children. He said he did not know if they had fled or been killed in the explosion.
A local government official from Rivers state, where the community is located, said on Tuesday eight corpses had been recovered from the site and other people were missing.
Shell has closed two oilfields to help curb the fire.
Industry sources have speculated that Tuesday's pipeline attack and two other recent security incidents at oil and gas installations in the delta could be part of a coordinated plan, though there is no certainty.
Motives could include revenge by supporters of the impeached governor of neighbouring Bayelsa state, who is due to face corruption charges on Wednesday, or frustration by oil thieves who have been hindered by a recent crackdown, sources say.
The BBC reported that a local governmnet official said he thought the Niger Delta People's Volunteer Force, led by Mujahid Dokubo-Asari, who is in prison on treason charges, may be behind the attacks.
--------------------------------------------------------------------------------
20 December 2005 19:21 GMT | last updated: 21 December 2005 11:08 GMT
The Problem with JDZ Treaty, By ERHC
By Mike Oduniyi, 12.18.2005
Energy
US-based independent oil company, ERHC Energy at the weekend alerted that the Republic of Sao Tome and Principe has been all out to undermine the Treaty governing the Joint Development Zone (JDA) that is being administered by that country and Nigeria.
The ERHC alert came on the heels of declaration on Friday by the Attorney General's Office of Sao Tome and Principe that it found "serious flaws" in the way that five oil blocks in the JDZ of the Gulf of Guinea were awarded last May to oil companies.
ERCH Energy, a quoted company on the New York Stock Exchange in which a Nigerian indigenous oil company Chrome has major equity interest, said that the criticism against the 2004 JDZ Licensing Round, was part of the underground campaign targeted at Nigeria.
A report published by the Sao Tome Attorney General's Office said that several of the companies chosen to explore the JDZ lacked the technical know-how and the financial muscle necessary to carry out the work, and that the procedures used to select the companies which received concessions contained serious flaws and did not satisfy the minimum standards required for the award of such licenses.
The country had been picking grouse against ERCH over the preferential rights granted the company in the awards of the blocks.
However, reacting to the allegations, the Legal Consultant to ERHC Energy, Mr. Steve Ahaneku said the purported investigation by the Sao Tome Attorney General has been orchestrated to create grounds for terminating the valid contract with ERHC, and that of Sao Tome with Nigeria under the Treaty.
Ahaneku noted that the matter of interests in the JDZ awards, is the subject of a Treaty between the two governments, adding that the Office of the Attorney General of Sao Tome could not act unilaterally with respect to such matters.
“The report by the Attorney General of Sao Tome and Principe is a direct attack on the Nigerian government. The Nigerian government should take exception to the claim that the second bid round was a failure, as the Sao Tome government participated fully in all actions leading to the award,” said the ERHC.
“The current Nigerian government led by its fiercely anti-corruption President Olusegun Obasanjo, has shown its commitment to transparency and probity in the awards of public contracts including oil concessions,” the company added.
Five oil blocks were awarded in the second round of bidding in the JDZ conducted in November 2004. The awards followed approval granted by both President Obasanjo and
Fradique de Menezes of Sao Tome and Principe on May 31, 2005, based on the recommendation of the Joint Ministerial Council (JMC) made up representatives of the two countries.
The awards, which attracted signature bonuses totaling $283 million, saw the ERHC Energy granted preferential rights in all the blocks based on the company’s agreement with Sao Tome as compensation for exploratory works carried out earlier.
In Bloc-2 where it emerged operator along with US companies –Devon and Pioneer, ERHC was awarded 65 percent stake, 25 percent in Bloc-3 along with Devon and 60 percent equity and operatorship of Bloc-4 as well as 15 percent each of Bloc’s 5 and 6.
However, it is this rights that the Sao Tomean Attorney General, Adelino Pereira launched investigation upon, securing the services of one Dobie Langenkamp, a professor of energy law at the University of Tulsa in the United States.
In picking holes in the investigation however, the ERCH said Nigeria’s Attorney General was not aware of it, in a matter that was supposed into concern the two countries. The company described the involvement of the US Department of Justice in the matter as a move to scandalize the process.
Also speaking to journalists at the weekend, the Managing Director of ERHC Energy, Mr. Ali Memon said the agreement the company has with the Sao Tome government was to compensate for the huge sums of money the ERHC spent on behalf of the Sao Tome government to get companies carried out seismic studies and also to conduct delimitation of the country’s boundaries.
Said Memon: “This interest is not completely free. Like in Block 2, ERCH has 30 percent interest. All that means is that they reserved 30 percent for ERHC, but when exploration works take place, ERHC has to pay its own share of the expenses. Nigerian government will not pay for it, Sao Tme is not going to pay for it. ERHC is to pay for it. “That is a point that is not really understood.”
“All the value that ERCH has is on the signature bonus. It is just the compensation that the company got in returns for spending so much on the work we did. We have agreements with the Sao Tome government granting us the rights, we did not lie to anybody, our rights are recognized by the JDA, and the JMC, it is transparent,” he added.
South Coast drives ahead
By Upstream staff
Pioneer Natural Resources has started development work on the South Coast Gas project off South Africa.
Pioneer is partnering PetroSA to develop the South Coast gas fields, which will provide feedstock for the South African national oil company's gas-to-liquids plant at Mossel Bay.
Engineering plans are currently being finalised and development drilling is scheduled to begin in January.
The South Coast project will include a subsea tie-back from the Sable field and six other gas accumulations to existing production facilities on the F-A platform for transportation to Mossel Bay.
Production is expected to begin during the second half of 2007.
--------------------------------------------------------------------------------
20 December 2005 15:22 GMT | last updated: 20 December 2005 15:22
Sao Tome: EU gives euros 1mn to help fight cholera outbreak
Sao Tome, Dec. 20 (Lusa) - The European Union announced Tuesday that is giving euros 1 million to the help the authorities in Sao Tome and Principe contain a cholera outbreak that has already claimed two dozen lives.
Bernard François, head of the EU' mission in Sao Tome, announced the emergency aid after a meeting with Prime Minister Maria do Carmo Silveira.
The EU diplomat said Brussels` financial assistance is being channeled through "Médicos de Mundo", the Portuguese branch of Doctors of the World, an international health and human rights NGO.
"Improving the quality of drinking water in the archipelago" is the immediate goal of the EU's emergency relief donation, he added.
Portugal, Taiwan and the United States are among the main aid partners of Sao Tome to have already sent medical supplies and funds to assist combat the two-month-old cholera epidemic in the islands.
Authorities say 25 people have died from over 1,300 cases of cholera, which has spread to most areas of the main island of Sao Tom but not yet hit the smaller island of Principe to the northeast.
In an effort to combat the spread of the highly infectious waterborne disease the authorities have urged increased care to personal and public hygiene.
Rioting broke out in Sao Tome city last week after police tried to enforce a ban on the sale of food at a street market.
RCN/CJB.
Lusa
India halts investment plans for Nigeria's oil, gas fields
By Sulaiman Salu
INDIA may have halted its plans to invest $2 billion (N260 billion) in Nigerian Akpo oil and gas offshore fields, going by indications from official quarters. The state-owned Oil ad Natural Gas Corporation of India (CONGC) had earlier expressed interest in the project.
The Asian country's finance minister, Palaniappan Chidambaram who stated this over the weekend did not disclose raison d'etre for discontinued interest in the project.
"I cannot give you details of commercial negotiations," he said adding in terse language "the decision is not approved."
However India's cabinet at the same meeting, approved a separate plan by the same corporation to invest about $820 million to acquire Exxon Mobil Corporation's unit in Brazil.
"Approval is granted in the event of it being a successful bidder," a government statement said. Report showed that ONGC may buy the unit for $330 and on and invest another $490 million in the project.
The boss of Mittal Energy, a sister outfit of ONGC, Mr. K.K. Mittal described the action as way of avoiding the huge risk involved in the Nigerian project.
It makes sense for the government not to approve an investment after foreseeing the risks involved," he said, adding, "The government would like to ensure the safety of its investments."
ONGC had recently won the auction to acquire a 45 per cent stake in the Akpo deepwater field at an estimate offer price of $2 billion. The field, which is operated by French oil, majors; Total South Atlantic was said to have reserves of 1.6 barrels of oil.
South Atlantic is owned by the former minister of defense, Theophilus Danjuma.
The Akpo field which is about 200 kilometres off the coast of Port Harcourt is expected to pump 225,000 barrels a day after 2008, which is about nine per cent of Nigeria's current production.
India is making moves to acquire energy businesses to raise its output which is stagnating as its domestic fields recently.
India had recently signed a separate Memorandum of Understanding with Nigerian government to invest about $6 billion (N840 billion) in Nigeria's refining and power sector.
The project, which is expected to start yielding results in "five to seven years time" will be jointly handled by India majors, ONGC and Mittal Energy.
The joint venture has proposed to build an export refinery of 180,000 barrels per day capacity, "based on Nigeria's crude, subject to technically and financial viability." And the $6 billion on 2,000 megawatts coal or gas railway systems and capacity building.
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FG, 15 bidders in final talks on oil licences
By Tokunbo Oloruntola
On-Line Editor with agency reports
The Federal Government has entered into final talks with 15 consortiums which have paid up for their oil and gas licences in the last August oil licensing auction, preparatory to signing the contracts in January 2006.
The 15 companies going ahead with the signing include Korea National Petroleum Corp, India's ONGC , Nigeria’s Conoil , Brazilian Petrobras and Norwegian Statoil, which all secured drilling rights in deep water areas of the Gulf of Guinea
Breaking the news on Monday, The Department of Petroleum Resources (DPR) said that the payment represent about $1.1 billion of the $2.6 billion bid in signature bonuses in the August licensing auction.
“We are finalising the production sharing contract with those who are committed to paying and those that have sent the money already which is about 15 companies,” DPR Director Tony Chukwueke said.
Another 13 or 14 consortiums, which paid their signature bonuses only partially by the December 15 deadline, will be referred to President Olusegun Obasanjo for a decision on whether they have defaulted, he added.
A further 13 areas, which were awarded at the licensing, but whose winners have failed to make any payment, will be retendered, Chukwueke said.
Minister of State for Petroleum, Edmund Daukoru, said last week that some Nigerian companies bid "foolish" prices for some onshore areas where there were only marginal prospects for oil production.
Chukwueke declined to name the defaulters, but privately-held Nigerian companies which bid the most were Sapele Petroleum, Technical Systems Engineering and Chasewood Consortium, each bidding $200 million and above.
To my fellow longs: TY for the support..Happy Holidays! Hi Balance..67 in PHX right now! Ken
Re. # 16209..Joe, I post under Mrken on the RB board...I'm sure a number of longs will vouch for me...Can you make the same claim?
Sao Tome: Parliamentary oil commission wants gov't view of oil award probe
Sao Tome, Dec. 19 (Lusa) - The head of Sao Tome and Principe's parliamentary oil commission, which is studying an official report on alleged wrongdoing in the awarding of oil licenses, said Monday that he wants to hear the government's reaction to the official probe.
Carlos Neves, speaking after a session of parliament`s oil commission, told reporters: "We want to know the position of the government on the report and also in relation to the production sharing accords for the blocks".
The specialized parliamentary body began analyzing a report last week on purported irregularities in the awarding of five offshore blocks in the archipelago's Joint Development Zone (JDZ) operated with Nigeria.
After receiving the report from the Attorney General`s office, Neves, who serves as the 55-seat legislature's deputy speaker said his commission would analyze the report with "great precision".
The Reuters news agency reported last week that the official report, prepared over two months at the request of the oil commission, had uncovered strong evidence of "serious failures" in the May 31 awarding of the JDZ blocks.
The US-registered but Nigerian-controlled ERHC oil firm was also reportedly fingered as having possibly made irregular payments or provided other benefits to Sao Tomean officials ahead of the awards, whose yet-to-be-paid signature bonuses amount to some USD 400 million to be split 60:40 in Nigeria's favor.
ERHC was awarded control of two of the five blocks, in partnership with other companies, including US mid-tier Pioneer, and gained significant interests in the other three blocks.
Production sharing contracts to operate these blocks were due to have been inked last week by Sao Tome, Nigeria and the energy companies involved.
The Attorney General's office will "refer the matter to the US Department of Justice and Security and Exchange Commission to seek their assistance in investigating whether violations of American law have occurred," according to Reuters.
When the investigation into possible wrongdoings in oil contract awards was launched in Sao Tome, the country's attorney general said he would seek cooperation from Nigeria in the process.
Abuja's authorities, however, did not cooperate in the investigation and Nigeria's top oil official said last week that the call by Sao Tome for a US corruption investigation could jeopardize the bilateral treaty that set up the JDZ in disputed Gulf of Guinea waters.
RCN/SAS/CJB.
Lusa
ERHC alerts Nigeria over Sao Tome's threat to JDZ Treaty
ERHC Energy has alerted the Federal Government that
the Republic of Sao Tome and Principe has been all out
to undermine the Treaty governing the Joint
Development Zone (JDA) that is being administered by
that country and Nigeria.
The ERHC alert followed the declaration at the weekend
from the office of the Attorney General of Sao Tome
and Principe that it found "serious flaws" in the way
that five oil blocks in the JDZ of the Gulf of Guinea
were awarded last May to oil companies.
ERCH Energy, a quoted company on the New York Stock
Exchange in which a Nigerian indigenous oil company
Chrome has major equity interest, said that the
criticism against the 2004 JDZ Licensing Round, was
part of the underground campaign targeted at Nigeria.
A report published by the Sao Tome Attorney General's
Office said that several of the companies chosen to
explore the JDZ lacked the technical know-how and the
financial muscle necessary to carry out the work, and
that the procedures used to select the companies which
received concessions contained serious flaws and did
not satisfy the minimum standards required for the
award of such licenses.
The country had been picking grouse against ERCH over
the preferential rights granted the company in the
awards of the blocks.
However, reacting to the allegations, the Legal
Consultant to ERHC Energy, Mr. Steve Ahaneku said the
purported investigation by the Sao Tome Attorney
General has been orchestrated to create grounds for
terminating the valid contract with ERHC, and that of
Sao Tome with Nigeria under the Treaty.
Ahaneku noted that the matter of interests in the JDZ
awards, is the subject of a Treaty between the two
governments, adding that the Office of the Attorney
General of Sao Tome could not act unilaterally with
respect to such matters.
"The report by the Attorney General of Sao Tome and
Principe is a direct attack on the Nigerian
government. The Nigerian government should take
exception to the claim that the second bid round was a
failure, as the Sao Tome government participated fully
in all actions leading to the award," said the ERHC.
"The current Nigerian government led by its fiercely
anti-corruption President Olusegun Obasanjo, has shown
its commitment to transparency and probity in the
awards of public contracts including oil concessions,"
the company added.
Five oil blocks were awarded in the second round of
bidding in the JDZ conducted in November 2004. The
awards followed approval granted by both President
Obasanjo and Fradique de Menezes of Sao Tome and Principe on May
31, 2005, based on the recommendation of the Joint
Ministerial Council (JMC) made up representatives of
the two countries.
The awards, which attracted signature bonuses totaling
$283 million, saw the ERHC Energy granted preferential
rights in all the blocks based on the company's
agreement with Sao Tome as compensation for
exploratory works carried out earlier.
In Bloc-2 where it emerged operator along with US
companies -Devon and Pioneer, ERHC was awarded 65
percent stake, 25 percent in Bloc-3 along with Devon
and 60 percent equity and operatorship of Bloc-4 as
well as 15 percent each of Bloc's 5 and 6.
However, it is this rights that the Sao Tomean
Attorney General, Adelino Pereira launched
investigation upon, securing the services of one Dobie
Langenkamp, a professor of energy law at the
University of Tulsa in the United States.
In picking holes in the investigation however, the
ERCH said Nigeria's Attorney General was not aware of
it, in a matter that was supposed into concern the two
countries. The company described the involvement of
the US Department of Justice in the matter as a move
to scandalize the process.
Also speaking to journalists at the weekend, the
Managing Director of ERHC Energy, Mr. Ali Memon said
the agreement the company has with the Sao Tome
government was to compensate for the huge sums of
money the ERHC spent on behalf of the Sao Tome
government to get companies carried out seismic
studies and also to conduct delimitation of the
country's boundaries.
Said Memon: "This interest is not completely free.
Like in Block 2, ERCH has 30 percent interest. All
that means is that they reserved 30 percent for ERHC,
but when exploration works take place, ERHC has to pay
its own share of the expenses. Nigerian government
will not pay for it, Sao Tme is not going to pay for
it. ERHC is to pay for it. "That is a point that is
not really understood."
"All the value that ERCH has is on the signature
bonus. It is just the compensation that the company
got in returns for spending so much on the work we
did. We have agreements with the Sao Tome government
granting us the rights, we did not lie to anybody, our
rights are recognized by the JDA, and the JMC, it is
transparent," he added.
December 19th, 2005
Peak/Equator drilling begins offshore Nigeria
Peak Petroleum an indigenous oil company in conjunction with Equator Exploration company have commenced drilling their first well in the OML 122 license area, offshore Nigeria.
Patricia Nwabunwanne
While commenting on the spudding of the first well on OML 122, Wade Cherwayko, Chief Executive officer of Equator, said:
"Both Peak and Equator are pleased with the rapid progress made in the evaluation and appraisal of this high potential block considering the joint venture agreement was only signed in April 2005.
The B-1 DX exploratory-appraisal well is aimed to prove significant volumes of gas and additionally targets a potentially larger pay zone in an oil reservoir that previously tested high quality crude oil at significant flow rates in the B-1 well.
"We are optimistic about the prospects for success given the largely appraisal nature of this first well".
The purpose of the agreement, which was signed earlier this year, was to undertake the potential development of two oil and gas discoveries and drill a significant exploration prospect in Oil and Mining Lease OML 122 offshore Nigeria.
OML 122 has two suspended oil and gas discoveries that were drilled in the 1970s (the Bilabri-1 and Orobiri discoveries). In addition, there is a large structure on OML 122 (the Owanare prospect) covered by 3D seismic that has significant gas and oil potential. OML 122 has additional "deepwater playtype" exploration potential not tested to date, which Equator plans to evaluate.
OML 122 is located 25-60 km offshore and covers an area of 1,295 sq km on the Western Niger Delta, east of Shell's giant Bonga Field on OML 118 and southwest of Shell's EA Field on OML 79. Which commenced oil production in November this year.
The well currently being drilled, B-1 DX, is an exploratory-appraisal well on the field discovered by the B1 well drilled by Deminex Oil in the 1970's. The B-1 well tested an oil zone and encountered several gas zones, which recently reprocessed 3D seismic suggests are of significant size, said the pair.
It will be the first of two wells to be drilled by Peak and Equator on OML 122 over the next three months, with a second exploration well planned for next year.
Sogenal, Afren sign JV agreement
Sunkanmi Oriyomi and Clara Nwachukwu
Two indigenous oil and gas companies, Sogenal Limited and Afren Energy Resources, a subsidiary of the United Kingdom-listed Afren Plc, have signed a joint venture agreement on the Akepo oil field situated in Oil Marginal Lease 90.
Under the terms of the agreement, which was signed between the chief executives of Sogenal and Afren, Chief Funso Lawal and Mr. Egbert Imomoh, respectively on Friday in Lagos, Sogenal is the operator of the field with 60 per cent equity, while Afren retains the balance of 40 per cent as the technical partner.
Lawal said, “We are happy to sign this agreement with Afren Energy Resources, which will allow Sogenal to develop Akepo. We look forward to a relationship that will grow in time and in other areas of our exploration and production initiatives in Nigeria.”
Sogenal boss also said that the Memorandum of Understanding signed between the JV partners was based on three key areas; the exchange of letters signifying the technical and commercial terms of the partnership; the farm-in agreements indicating the ownership structure; and the technical agreement, which would be signed after approval has been obtained from the Ministry of Petroleum Resources.
Explaining the choice of Afren as the technical partner which was chosen from a list of five shortlisted international companies, Lawal said it was based on the company’s expertise as an indigenous exploration and production company, its financial capabilities, technical expertise and integrity.
He added, “We (Sogenal), wanted a company that is forward-looking, friendly to the Nigerian environment and also a company that would fast-track the development of the field rather than acquire it and keep it for more than five years. Besides, we know the personalities behind the company, which gave us the confidence to enter into partnership with them.”
Imomoh, one-time Deputy Managing Director, Shell Petroleum Development Company, described the thrust of the JV as early drilling, early production and looking at having economies of scale in developing the oil wells in the field.
According to him, “We are delighted to have reached agreement with our new partners and to have the opportunity to contribute to the growth of production in Nigeria. With two fields within our portfolio, we are well placed to generate first oil in the first half of 2007 in a cost effective manner.”
The idea, he said, is to get the well into a cluster to reduce development costs and make the project attractive to financial supporters.
He stated, “Due to the proximity, the Akepo field would be developed alongside Ogedeh field, which is also in OML 90, as a cluster in order to maximise low cost development options, thus allowing the benefit of the economies of scale in the development of both fields.”
He added that development drilling was expected to commence in the second quarter of 2006, while both fields are expected to produce at a combined initial rate of over 10,000 barrels per day on full development.
Meanwhile, Afren has signed a financial and production sharing agreement with Bicta Energy and Management Systems Limited, on August 15, 2005, to jointly develop the Ogedeh field.
The Akepo field, which formerly belonged to Chevron Nigeria Limited, was awarded to Sogenal in February 2003, with 100 per cent equity, while the farm-out agreement with Chevron and the Nigerian National Petroleum Corporation was concluded in 2004, thus transferring the ownership of the field to Sogenal.
The oil field is located in the shallow water offshore Niger Delta, which was discovered by Chevron in 1993, and estimated to hold between 10 and 20million barrels of recoverable resources.
THE PUNCH, Monday, December 19, 2005
No Approval from India for ONGC Nigeria Play
The government of India squashed ONGCs hopes of scoring a 45% interest in Nigeria’s Akpo field. According to India’s Finance Minister, P. Chidambaram, the company failed to get the government's permission to buy the stake in the Nigerian oil field. Chidambaram didn't say why the government rejected the plan at the Cabinet meeting, but did say that the reason the government ‘may’ have rejected the plan was because the political instability in Nigeria may jeopardize the investment.
ONGC was in the midst of buying a stake in the Akpo deepwater oil project from South Atlantic Petroleum Ltd. for $2 billion, but without state backing the company’s plans may be hampered. The company is trying to bulk up its reserves overseas as its domestic fields age, investors such as R.K. Gupta said. ``The political situation in countries that ONGC is investing in is a concern,'' Gupta said. ``If there is political imbalance then there will be a serious concern over the company's investments. There is a limit to which government-to- government ties help in sorting out a crisis.''
South Atlantic is owned by Nigeria's former defense minister Theophilus Danjuma. The field will pump 225,000 barrels a day after 2008, equal to 9% of Nigeria's current production
ERHC fires shot in licence row
By Barry Morgan
Houston-based ERHC Energy has described reports by the Sao Tome & Principe Attorney General calling for a US probe of the award of oil blocks under the 2004 licensing round of the Nigeria-Sao Tome Joint Development Zone (JDZ) a direct attack on the Nigerian government.
Speaking for the first time on the issue, ERHC, through its counsel, Steve Ahaneku, urged the Federal Government to view seriously claims in the report that the bid round was a failure, as the Sao Tome government participated fully in all aspects of the process that led to the final award of the five blocks on offer.
ERHC, which had preferential rights in all the blocks in the zone by virtue of its involvement in exploration activities in the area prior to the creation of the zone, was awarded equity ranging from 15% to 65%.
In Block 2, where it emerged operator along with US companies Devon and Pioneer, ERHC was awarded a 65% stake. It won a 25% stake in Block 3 along with Devon, and 60% equity and operatorship of Block 4 as well as 15% in block's 5 and 6.
However, the Sao Tomean report is claiming that ERHC's participation in the bid round deterred qualified companies from the exercise, an allegation Ahaneku dismiss as factually incorrect, since the company brought into the bid process major US companies such as Devon, Pioneer and Noble, with experience in deep-water operations.
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16 December 2005 16:28 GMT | last updated: 16 December 2005 16:31 GMT
Offshore West Africa - oil & gas development conference
March 14-16, 2006 - Abuja, Nigeria
Exhibitor List
Search For Exhibitor Listing by Keyword or Company Name:
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Addax Petroleum Development (Nigeria) Ltd. 47, 52
Ariosh 130
Bluewater Energy Services B.V. 20 & 21
Cameron 100 & 101
ClampOn AS 109
Det Norske Veritas 116
Easy Well Solutions 102
GE 107, 108
Global Industries 77
Gulf Agency Company 99
KM Europa Metal AG 115
Oiltest Services Limited 98
Panalpina Group 27, 28
Siemens 79, 80
Tilone (Nigeria) Limited 35
Vetco 111, 112
WECO Engineering & Construction Co. Ltd. 76
Addax eyes IPO
By Upstream staff
ADDAX Petroleum has filed a preliminary prospectus with the Canadian authorities for an initial public offering and also applied to list all its common shares on the Toronto Stock Exchange.
At some $400 million, lead underwriters RBC Capital Markets and Merrill Lynch will handle what is billed as Canada's largest IPO in more than a year.
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16 December 2005 00:01 GMT | last updated: 16 December 2005 00:01 GMT
Short-listed bidders in line for round off Angola
By Upstream staff
Angola has short-listed about 50 companies to bid for seven promising blocks in its first offshore licensing round, writes Iain Esau.
Twenty-nine companies pre-qualified as potential operators including ExxonMobil, BP, Total, Chevron, Eni and also Shell, which quit Angola recently.
Potential newcomers include Amerada Hess, Cepsa and Repsol YPF of Spain, Brazil's Petrobras and India's Oil&Natural Gas Corporation plus existing Angolan players including Devon, Kerr-McGee, Maersk, Marathon, Norsk Hydro, Occidental, Malaysia's Petronas and Statoil.
Smaller independents and juniors passing muster are Addax, Calgary-based Centurion Energy, Equator Exploration, Japan's Inpex, Lundin of Sweden, Portugal's Partex, Premier Oil, Roc Oil, Santos, Tullow Oil and Vaalco.
The non-operator list runs to 22 and covers Anadarko, Japan's Ajoco, Mitsubishi and Taiyo Oil, Noble Energy, South African state oil company PetroSA, Soco and Svenska. An Angola-Chinese joint venture dubbed Sonangol Sinopec International has also been given the go-ahead to bid.
Others are Toronto-listed Exile Resources, Falcon Oil, which previously held a stake in Block 33, and Force Petroleum, which was a partner with Roc in Cabinda.
Local players that may enter the fray include Grupo Gema, Wodege-Sociedade Angolana de Petróleos e Minas and ProdOil which last year established a joint venture with Amec-owned Paragon Engineering.
Bids are due back by 31 March for shallow-water blocks 1, 5 and 6 and deep-water blocks 17, 18, 19 and 26.
Terms for sought-after blocks 17 and 18 are heavily weighted to participation in the planned Sonaref oil refinery.
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http://www.latimes.com/news/nationworld/world/la-fi-opec13dec13,0,5942199.story?coll=la-home-world
THE WORLD
Signs Point to Prolonged Trend of High Oil Prices
By Elizabeth Douglass
Times Staff Writer
December 13, 2005
OPEC ministers and the U.S. Energy Department delivered a chilling message to consumers Monday: High energy costs are here to stay.
At a meeting in Kuwait, members of the Organization of the Petroleum Exporting Countries hinted at possible production cuts next year — a move that would boost oil prices. Federal energy forecasters, meanwhile, issued revised projections showing sharply higher crude prices extending until at least 2014.
The combo helped roil energy futures trading and sparked fresh fears of another oil-fed assault on the economy, which has weathered record prices with little damage.
"The best you can hope for is that oil maintains an erratic uptrend rather than a spiky uptrend," said Stephen Leeb, president of Leeb Capital Management in New York. Leeb, author of the Oil Factor, a book predicting an era of turbulent oil prices, echoed other petroleum prognosticators Monday in outlining a future in which oil will see more ups than downs.
In New York, the U.S. benchmark oil for January delivery responded by rising nearly $1.91 a barrel Monday to close at $61.30 a barrel, short of the peak daily closing price of $69.81 a barrel reached Aug. 30. The reaction was exacerbated by a weather forecast showing colder temperatures, which would increase energy demand. An explosion Sunday at an oil terminal near London added to traders' skittishness.
Heating oil and natural gas futures also climbed sharply, and a government survey showed that U.S. retail gasoline prices reversed course in the last week and rose 3.8 cents to an average of $2.185 for a gallon of self-serve regular on Monday.
Economists point to higher energy costs as the biggest menace to the economy's resilience, according to a survey released Monday by the Bond Market Assn., a securities trade group.
"Energy prices were cited as the dominant risk to the outlook for [economic] growth and inflation forecasts, as continued declines in oil prices would spur growth but price hikes would slow spending activity at the consumer and business levels," said Michael Decker, the association's senior vice president and head of policy and research.
That risk may have increased Monday, based on the interpretations of OPEC's typically shrouded workings.
As expected, the 11-country organization decided to keep its official production quotas steady at 28 million barrels a day.
However, the ministers surprised some by suggesting that they could cut output levels as early as March if demand for oil eased and prices fell. The cartel will meet Jan. 31 in Vienna to discuss the matter further.
"We are preparing ourselves for the second and third quarters of next year, because in these two quarters demand is usually less," Libyan Energy Minister Fathi ben Shatwan told reporters after the OPEC meeting, according to Reuters. "We have to comply with the ceiling now, and maybe we will discuss a cut in the future."
Several times in the last two years, OPEC officials have made a point of publicly denouncing the high price of oil — sometimes trying to defuse criticism by blaming speculators, unrelenting demand and other factors for the surges. After hurricanes Katrina and Rita disabled Gulf Coast oil rigs and refineries, the ministers offered up additional oil to help offset lost production, but Monday they said the offer would be allowed to expire as scheduled at the end of the year.
Although OPEC's new stance wasn't explicitly stated, the cartel seems to have changed its tune, said OPEC watchers, who sift through post-meeting statements to glean messages not contained in authorized communiques. Instead of working to lower prices to reduce political pressure and head off an economic downturn or a shift to cheaper fuels, OPEC members are openly embracing production cuts to keep crude costs up, analysts said.
"OPEC is obviously happy with prices as high as they are," said Chris Mennis, owner of New Wave Energy, a trading company based in Aptos, Calif.
Leeb said OPEC was telling the world that it probably would cut production if the group's collection of target oil prices fell to the equivalent of about $57 or $58 a barrel for the U.S. benchmark crude.
"This is a cartel that a few years ago was arguing for $20 to $28 oil," Leeb said. "It's an admission that the world has changed in a dramatic way.
"You can enjoy paying $2.25 to $2.40 a gallon for gasoline for a while," he said, "but sometime in the next 18 months, you'll be paying $3 again."
Officials at the federal Energy Information Administration issued their own bleak projection Monday, forecasting that heavy demand would cause the average cost of oil imported by U.S. refiners to rise until 2014. Then, new supplies from Saudi Arabia and other countries are expected to ease the supply crunch and cause a decline in crude costs, the Energy Department's statistical arm said in its latest long-term energy outlook report.
The respite won't last, however. Oil prices will resume their upward climb, hitting $54.08 a barrel in 2025, up 34% from 2004 levels. The agency's multiyear projection, issued annually, was more optimistic last year, pegging oil at about $33 a barrel in 2025. These figures are all expressed in 2004 dollars.
Chronically higher prices probably would trigger an increase in domestic production as well as increased use of hybrid vehicles and alternative fuels, the energy agency said. Nonetheless, "the United States and emerging Asia — notably China — are expected to lead the increase in demand for world oil supplies, keeping pressure on prices through 2030," according to the report.
During the same period, OPEC oil production is forecast to increase but not as much as the energy administration had previously thought. OPEC members are expected to pump 43.6 million barrels a day in 2025, which is 11.5 million barrels a day less than the agency had forecast last year for 2025.
$50-a-barrel oil seen as standard What happened: The Energy Department's long-range forecast calls for at least $50-a-barrel oil. Why: Demand is only expected to grow, while future supply growth is limited. What it means: Big cars and trucks will give way to more fuel-efficient vehicles.
By H. Josef Hebert
THE ASSOCIATED PRESS
12/13/2005
WASHINGTON
Crude-oil prices will remain near or above $50 a barrel for years, forcing a shift to more fuel-efficient cars and alternative fuels, the government said Monday. Officials discarded their earlier predictions that oil would drop to about $30 a barrel.
The Energy Department forecast was more positive on the price of natural gas. The department said it will retreat from the recent spike - to more than $15 for 1,000 cubic feet - and settle at less than $5 in the long term as demand weakens, especially for electricity production.
The analysis reflected a significant change from the department's projections a year ago. Then, it predicted oil prices in constant dollars - not counting normal inflation - would retreat and settle at about $31 a barrel by 2025.
Advertisement
Again, FG Delays PSC Signing on New Oil Blocks
By Mike Oduniyi, 12.13.2005
The signing of Production Sharing Contract (PSC) agreement between the Federal Government and winners of oil blocks awarded in the 2005 Bid Round, which is billed for tomorrow, has again been postponed.
While no official reason has been given for the shift, the third time since the award of the oil acreage last August, the Department of Petroleum Resources (DPR) however, said last night that any operator of the 44 oil blocks that did not pay the signature bonus posted on the blocks, will forfeit the acreage.
The DPR has in the meantime, commenced negotiations with some of the operators that had already paid in full, their signature bonuses including Conoil which paid the $100 million (N13 billion) signature bonus for its deepwater block OPL 257.
“The signing of the PSC will not take place again on Thursday as we earlier planned,” a senior official of the DPR said last night.
“We are still putting finishing touches to the agreement. The government is considering a new date which may be in January for the signing.
“But companies that won oil blocks at the bid conference held last August in Abuja, which failed to pay the signature bonuses by Thursday, will lose forfeit the block. We are sending out letters to
operators today to inform that anyone of them that his money does not come in by Thursday is out,” the official added.
December 12th, 2005
US, Nigeria partner on Gulf of Guinea
Nigeria and the US have entered into partnership to provide security in the Gulf of Guinea for the common good.
US ambassador to Nigeria, John Campbell, told a joint press conference with NNPC Group Managing Director, Funsho Kupolokun, today in Abuja on the Gulf of Guinea security.
"America will pursue an active partnership with Nigeria for peace and prosperity in the Gulf of Guinea and the Niger Delta," Campbell said.
He said US had agreed to ongoing engagement with Nigeria in the area of security cooperation, international financial crimes collaboration, agricultural enterprise development, jobs and business development.
According to him, US and Nigeria have agreed to continued consultation action on disrupting illicit small arms trafficking; bolster maritime and coastal security, promoting community development as well as combating money laundering.
"Success in any of these area will go long way in improving the lives and livelihood of the people of the Niger Delta," the Ambassador said.
Campbell said US was interested in putting a base in the Gulf of Guinea.
"US has never and is not contemplating setting up a military base in the Gulf of Guinea" he said.
Earlier, Kupolokun had said President Obasanjo had set up Gulf of Guinea security working group of which he was heading.
He said the group would collaborate with international agencies and other governments to design a highly coordinated campaign to prevent illegal oil bunkering and other crimes.
"The Nigerian government is doing its best to address identifies challenges in the Gulf of Guinea and the Niger Delta," he said.
He thanked the American government for showing interest in energy security in the Gulf of Guinea.
Bonga, Erha, Akpo to add 640,000 bpd to Nigeria’s oil production
By Charles Okonji
Senior Business Correspondent
Bonga oil field, Akpo deepwater oil block and Erha field will add about 640,000 barrels per day to Nigeria’s crude oil production, says Minister of State for Petroleum Resources, Dr. Edmund Daukoru. He spoke while appraising Bonga field, which has just started production.
Daukoru pointed out that with 225,000 barrels per day of oil coming from Bonga field, Nigeria was closer to the increase of 0.5 million barrels per day target by first quarters in 2006. Besides, he said ExxonMobil’s Erha field, which would be on stream equally in first quarters of next year, would also raise Nigeria’s crude oil production by 150,000 barrels per day.
According to the Minister of State for Petroleum Resources, a tieback to Erha North would also add approximately 40,000 barrels per day to production in third quarters of 2006.
Daukoru’s prediction that Nigeria’s crude oil production would also increase from its current 2.5 million barrels per day to 4.0 million barrels per day in 2010 was equally on track, as Total’s Akpo deepwater oil development had been on gear to achieve its projected 225,000 barrels per day after 2008.
However, oil industry experts had said that the soaring oil and natural gas prices and increased pressure to drill and develop reserves worldwide had pushed operators to pursue field development solutions, which had resulted in the widespread use of floating and sub-sea production systems to develop deepwater fields.
Floating production solutions, they stated, would continue to be the lifeblood of field development offshore Nigeria and other West African countries, while sub-sea production would remain a critical tool for exploiting marginal fields in shallow waters.
From the recent survey conducted on the use of floating production, storage and offloading vessels, West Africa would continue to host the largest number of these projects, with operators planning to install 22 units in the region.
According to these experts, Southeast Asian operators are planning to install 19 units in the region, while 16 units are slated for installation in Brazil. Operators equally are to install 14 additional units in the Gulf of Mexico.
Engineering work on Chevron’s Agbami FPSO would be complete early next year. The floater, which would be installed in Oil Prospecting Lease (OPL) 216 and OPL 217 offshore Nigeria, had been scheduled for delivery in early 2008 from South Korea’s Okpo Yard. Chevron awarded Daewoo Marine & Offshore the engineering, procurement, installation and construction contract
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Indian company to buy 45% in Nigeria’s Akpo oilfield for $2bn
An Indian oil company — ONGC Videsh (OVL) is very likely to land an estimated $2bn deal to acquire a 45% stake in the Akpo oil and gas field, which is said to have an estimated reserve of 1.6bn barrels of oil.
OVL will be partnering with Total SA in this oilfield, if it manages to seal the deal. The government is set to give the final clearance for the investment shortly. This could be a major victory for India if the deal goes through as Chinese oil companies have been lobbying hard to get a share in this field.
OVL has been in negotiations with Nigerian firm South Atlantic Petroleum. Talks have also been held with the Nigerian government to pre-empt any objection from that quarter.
South Atlantic Petroleum is selling the stake in the field, which after ’08 will pump 225,000 barrels a day, which is equal to 9% of Nigeria’s current production.
Earlier this year South Atlantic Petroleum had offered for sale, a stake in the Akpo field which is about 200 km off the coast of Port Harcourt. Total SA, based in Paris, holds 24% of the field and Brazil’s Petroleo Brasileiro SA owns 16%. The rest is held by South Atlantic and the state-owned Nigeria National Petroleum Corporation.
Total is the operator in the field and it is expected to begin production by ’08. OVL’s bid to acquire the block comes close on the heels of its sister outfit ONGC Mittal Energy (OMEL) signing an MoU with the Nigerian government for operating rights of at least two blocks and assured supplies of 650,000 barrels of oil per day for 25 years.
ExxonMobil 'confidence' in Africa oil
By Upstream staff
A senior ExxonMobil official told a high-level gathering of energy ministers and oil company executives in Washington DC last week that his company has "great confidence" in Africa.
Neil Duffin, the US supermajor's vice president for Africa, said ExxonMobil is "excited" about the continent but bemoaned the the outside world's perception of the region as a repository for bad news.
Speaking at the Corporate Council for Africa's annual oil and gas forum, Duffin said: "We are disappointed that the picture that many people have about the continent continues to be based on the bad news, the problems and the challenges."
Even though those difficulties are "real and need to be addressed", he said, many of those challenges are now being worked on.
Duffin added: "What many of the critics miss is the dynamism of the people, the resources of the land and the efforts of many of (Africa's) leaders to make things better."
Duffin said ExxonMobil is now producing more than 700,000 barrels per day of oil in Angola, Cameroon, Chad, Equatorial Guinea and Nigeria. He added: "In terms of our company this means we are producing more oil in the Africa region than any other region in the world. ExxonMobil has great confidence in Africa's ability to grow."
He said that last year the company spent 22% of its new capital expenditures on developing and further expanding its business in the continent.
"Over the past five years we have invested $12 billion in Africa, and our plan is to continue that pace of investment through the rest of the decade and into the foreseeable future."
Duffin said ExxonMobil is improving local content provisions, enhancing community support activities, supporting an initiative to fight malaria and another focusing on educating women.
However, he stressed that: "The ultimate success of the oil and gas sector will depend on the success of…other sectors in building the businesses and enlarging the capabilities of…(African countries) to play an even larger role in the global economy."
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09 December 2005 12:14 GMT | last updated: 09 December 2005 12:14 GMT
Gulf of Guinea: Nigeria, US unveil strategies to secure oil supplies
By Hector Igbikiowubo &Laku Binniyat
Posted to the Web: Friday, December 09, 2005
DELTA—Nigeria and the United States of America have unveiled strategies aimed at securing oil supplies in the Gulf of Guinea, as well as a multi-facet approach towards solving the unrelenting security problems and the issue of poverty in the Niger Delta.
The US government also explained that it does not have a permanent military presence or a military base in the Gulf of Guinea, adding that it only has a military training arrangement with the Nigerian government.
Speaking at a Press Conference in Abuja, yesterday on the progress made by the Gulf of Guinea Energy Security Strategy Initiative, Dr. Funsho Kupolokun, the Presidential Envoy on the Gulf of Guinea Energy Security mentioned some of the initiatives taken by the present government towards, addressing the social, economic and security problems of the Niger Delta and asserted that a significant measure of success has been achieved.
The presidential envoy pointed out that the challenges in the Niger Delta are many and multi faceted, ranging from oil spills with criminal origin, oil theft, production deferment, environmental challenges, armed conflicts and money laundering.
“The major challenge therefore is how to transit from a state of conflict to that of sustainable peace. All stakeholders must therefore cooperate to bring about reduction in conflict to foster social and economic development,” he said.
He said some of the measures already taken to reduce the observed challenges includes: implementation of the 13 per cent derivation, efforts of the states in the Niger Delta to curb the activities of criminal elements and the efforts of the Non Governmental Organisations and donor agencies including USAID, UNDP, IFAD, and DFID.
The Nigerian oil industry chieftain also noted that the NNPC and its jooint venture partners have contributed immensely through the move from community assistance through community development to sustainable community development which places more emphasis on innovative and proactive strategies.
Also speaking, Mr. John Campbell, the American Ambassador to Nigeria disclosed that his country and Nigeria have agreed to continue consultations and sustained cooperation to promote improved development and stability in Nigeria’s energy producing region.
Campbell disclosed that four special committees will be established to coordinate action on disrupting illicit small arms trafficking, bolstering maritime and coastal security, promoting community development and poverty reduction and combating money laundering and other financial crimes.
BPE lists condition for evaluation of Port-Harcourt refinery bids
By Yakubu Lawal
THE Bureau of Public Enterprises (BPE) has said that it had listed the condition for evaluating the technical bids submitted by prospective bidders for the Port-Harcourt refinery.
This development the Enterprise said followed the submission of bids for the sale of the Port Harcourt Refinery which closed last weekend with four consortia affirming their interest to buy the plant.
Statement issued by the Head of Public Communications, Mr. Chigbo Anichiebe, however, said this would be subject to satisfactory evaluation of the above developments. The BPE will proceed with the technical evaluation of these submissions to determine bidders who qualify to have their financial bids opened.
He stated that the technical evaluation would be carried out in accordance with the following broad criteria:
Experience in the ownership, operation and management of a crude oil refining plant;
quality and credibility of the bidder Post Acquisition Plan for the refinery;
demonstrated financial capacity to finance up to US$200 million of capital expenditure by PHRC within the next three years; and
adequate measures for addressing labour and other social considerations.
According to him, at the close of the deadline for submission, only four submissions were received from the following consortia: These are Chrome/Chinese Petroleum Corporation/Essar Oil Consortium, Oando Group, Refinee Petroplus Consortium and Transnational Corporation Consortium.
He stated that the bids were submitted in three offices contemporaneously namely, Director General, BPE, Director, Energy, BPE and Credit Suisse First Boston (CSFB), London (Transaction Advisers for PHRC privatisation) duplicate copy only of technical bid
Anichiebe explained while two prospective bidders issued with bid documents entered into an alliance and submitted a joint bid while two other prospective bidders wrote to request for an extension of the bid submission deadline. No response was received from the remaining three prospective bidders.
However, contrary to speculation that some companies who submitted their bids failed to do so within the stipulated time frame, Anichiebe said: "We understand from CSFB, London that one of the bidders who had in fact submitted to BPE, did not meet the deadline for submission of the duplicate copy of the technical bid. Also one of the bidders who met the deadline for submission of the duplicate copy of the technical bid to CSFB, London, did not meet the deadline for submission to the BPE. The BPE is presently evaluating the implication of these developments."
The Guardian gathered that at the close of the bid at the weekend, those companies who submitted their bids include, Essar Oil Limited, Starcrest Energy, Chrome Energy, Rivgas Petroleum and Energy Limited, and the China Petroleum Corporation (CPC) and Bauchi State government.
Others said to have submitted their bid include Oando/Shell Group. Of all the bidders, the Asian Group and the Oando/Shell consortium are said to have met the 5.00pm (Friday) deadline. The two others are said to have delivered their bids to the BPE much later.
The Asian Group is bidding on the strength of its expertise in all sectors of the oil and gas industry as well as an independent producer of power in India.
As an integrated oil and energy company, Essar is said to have competencies in various sectors of the oil industry from exploration, drilling to retailing. It has a 300,000 per barrel ultra-modern refinery, about 500 filling stations, and plans to increase the outlets to 5000 by 2008. The company is also operating in Myannar, (Burma), with a production-sharing contract signed for the operation of one onshore and one offshore bloc.
Mr. Raj K. Varma, the chief executive officer (Marketing Division) of Essar, who led the consortium to submit the bid for his company, which is believed to have competencies in exploration, production, refining and marketing, is using the refinery as a bridgehead to enter into the Nigerian oil and gas industry
"The first step that we have taken here is to bid for the Port Harcourt Refinery. Later, we will certainly go into the upstream and downstream sectors," he said.
He said his group is aware of the problems of the refinery, which he claimed the companies are competent to handle. "Our first priority as a consortium would be to rehabilitate all equipment that are not operating at the moment and ensure the certainty of the plant operating at between 80 and 90 per cent in the immediate future and peaking at 100 per cent or beyond."
The group, he said, does not foresee any difficulties in rehabilitating the refinery, which has hardly operated at 60 per cent capacity since it was built and managed by the Port Harcourt Refinery Company Limited, a subsidiary of the Nigerian National Petroleum Corporation (NNPC). "It is not very difficult, because all you need to do is refurbish the equipment, replace what cannot be repaired, put in money, allocate something like $230 million to be spent in the first couple of years on top of whatever we pay to buy the equity."
He said Essar, which has assets of about $4.4 billion, and has steel, telecommunication, oil and gas, shipping, and energy arms is shopping for land to an Independent Power Plant (IPP).
Varma said beside the availability of capital, the consortium has the technical expertise to operate the refinery. "We have a large number of very experienced people in the refinery, processing and maintenance and projects," he said. "The China Petroleum Corporation (CPC) has a large number of refineries in Taiwan."
Varma said the consortium took into consideration, the operating environment, by including the Rivgas Petroleum and Energy Company, owned by the Rivers State government. The idea is that "given the history of this refinery and the problems with the community, taking on the company owned by the state government will create a conducive operating environment." That synergy was conceived to give the host community a stake in the resources in its area, and also empower the people of the area, through local content packages, which the consortia have consciously conceived.
Mr. Ndubuisi Nwankwo, who is special adviser to the Rivers State governor on Energy and Natural Resources said his state was happy with the consortium, although he would not disclose how much the state is investing in the business. "When we win the bid, the partners will sit down and decide who brings what." He was confident that the bid would succeed. "We are most qualified. We are more experienced in refining business and we have a strong capital base."
BPE said only bidding consortia that score above the minimum technical score of 60 will be eligible to have their financial bids opened. In accordance with BPE procedures, public opening of financial bids will take place at a date, in the immediate future, to be announced shortly.
'
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Gulf of Guinea: FG, US collaborate to combat security threats
By Bassey Udo,
Energy Editor
As world attention increasingly shifts to the Gulf of Guinea as the hub of hydrocarbon exploration and production, the Federal Government and United States on Thursday announced their decision to collaborate towards combating security threats in the region.
The region considered as one of the most prolific is reputed to hold 30 billion barrels reserves, with only six billion barrels equivalent already discovered in deep offshore waters operations.
At a joint media briefing yesterday in Abuja, Presidential Envoy on the Gulf of Guinea Energy Security, Funso Kupolokun, and United States Ambassador to Nigeria, John Campbell, said the two governments were ready to work together “to promote improved development and stability in the Niger Delta region”, particularly concerning the social, economic and security issues in the region.
The collaboration which is a product of talks held in Washington between the two governments identified areas of security cooperation, international financial crimes collaboration, agricultural enterprise development, job and business development, conflict mitigation and management, HIV/AIDs prevention as well as treatment and education for Niger Delta region.
In pursuit of the collaboration, four special committees are to be established to coordinate action on disrupting illicit small arms trafficking, bolster maritime and coastal security, promote community development and poverty reduction as well as combat money laundering and allied financial crimes.
Kupolokun, who is also the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), said the Niger Delta, which a major part of the Gulf of Guinea, is faced with multi-faceted challenges, including oil spills with criminal origin, oil theft, production deferments as a result of communal crises, environmental problems, armed conflict as well as money laundering.
Though he said government’s intervention efforts through the payment of 13 percent derivation and creation of the Niger Delta Development Commission (NDDC) have helped reduce the above challenges in recent times, Kupolokun pointed out that the major challenge is “how to transit from a state of conflict to a state of sustainable peace.”
Said Campbell: “America will pursue an active partnership with the EFCC (Economic and Financial Crimes Commission), the Office of the Accountant General (of the Federation) and the ICPC (Independent Corrupt Practices Commission) to bolster Nigerian capacity to combat financial crimes and increase economic accountability.”
Though he denied any plan by the UC government to intervene in Nigeria’s internal problems concerning specific cases of money laundry outside what is covered by the existing understanding by the two countries on the issue, the envoy pointed out, however, that “America is considering how best to respond to the request for Assistance from the Nigerian National Committee on Small Arms and Light Weapons and will identify areas of technical support and capacity building.”
He said the US, through the United States Agency for International Development (USAID), would continue its existing partnership programmes with major stakeholders in the Niger Delta in support of social and economic development in the region, adding that the resource of the Ambassador’s “Special Self-Help Fund” programme would be directed towards the promotion of community development in the region.
Addax plans Toronto debut
By Upstream staff
Explorer Addax Petroleum, which is owned by Geneva-based holding company Addax & Oryx Group, has filed for an initial public offering of shares in Canada.
Addax is the largest independent oil producer in Nigeria, pumping about 74,500 barrels per day in October, the company said in a Canada NewsWire release.
The offering is valued at about C$400 million ($345 million).
RBC Capital Markets, Merrill Lynch and Scotia Capital are managing the Addax sale, the company said.
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09 December 2005 08:20 GMT | last updated: 09 December 2005 08:20 GMT
Weekly Offshore Rig Review: Go West, Young Man ... West Africa, That Is
RigLogix 12/8/2005
URL: http://www.rigzone.com/news/article.asp?a_id=27606
Worldwide offshore rig utilization dipped slightly this week as only one idle rig started a new contract, while four rigs came off contracts, pushing utilization down 0.5% to 82.2%. This is a very transitory decline, and utilization will likely climb back above 83% soon. Of the rigs coming off contract, TODCO's 200' MC jackup THE 202 is undergoing inspection after a jacking accident, while two other jackups are going into the shipyard for scheduled maintenance and already have subsequent contracts in place.
Among the rigs going into the shipyard is the Trident IV-A. This 300' ILC jackup has been working in the Mediterranean since 2004, but it will be heading back to West Africa (where it had worked previously) in April 2006 to begin a contract with Chevron.
Rig utilization offshore West Africa has reached its highest levels in more than 3 years, when utilization peaked at 95% in April 2002. Since February 2005, West Africa utilization has remained above 90% with a peak of 98% in September, at which point 45 of 46 rigs were contracted.
Over the last two years, the busiest operators offshore West Africa have been Chevron, ExxonMobil, and Total. Between them, they have contracted nearly two-thirds of the rigs working in this region at any given time. Each of these majors has consistently employed a fleet of rigs ranging from as few as 4 to as many as 10 rigs during any given month. Over that period, each of these companies has averaged 6 to 8 rigs working offshore West Africa at a given time.
Through most of 2005, ExxonMobil has taken the lead employing more rigs in this region than any other company. From March through November, ExxonMobil consitently had 10 rigs contracted with day rates ranging from $47,000 to $225,000 and averaging just over $110,000 per day per rig. So, for nine months, ExxonMobil was spending over $1 million per day on drilling offshore West Africa.
Looking forward to 2006, Chevron looks to take the lead in drilling offshore West Africa. The company already has at least 8 rigs contracted per month through almost the entire first half of 2006, with a peak of 10 rigs already under contract for work in February.
But the majors are not the only game in town, and many independents have been active in the waters offshore West Africa, particularly over the last 12 months. Two years ago, there were eight operators with one or two rigs working in this region. During the second half of 2005, as many as 18 different companies have been drilling with two or fewer rigs. Among these are a few majors with a smaller presence in West Africa, such as BP and Shell, but the majority of these companies are independents.
In fact, during 2005, the highest day rate earned by a rig working off West Africa was paid out by an independent. Nexen contracted Transocean's Deepwater Discovery, a 10,000' drillship, to drill a well offshore Equatorial Guinea at a day rate of $318,500, the highest day rate earned by any rig in 2005.
With rigs moving back into the market and more than 60% of the current fleet contracted through 2006, West Africa seems poised to experience strong growth in the size, utilization, and earnings of its rig fleet.
Fuego assets on Pioneer's block
By Upstream staff
US independent Pioneer Natural Resources is aiming to conclude the sale of its onshore assets in southern Argentina's Tierra del Fuego province by the end of the year.
"The sale process is on course and the data room will close on 12 December," said Byron Bahnsen, associate director of oil and gas acquisitions and divestitures firm Scotia Waterous.
Pioneer is offering a 35% interest in a consortium-run cluster of blocks known as Union Transitoria de Empresas Tierra del Fuego.
The consortium, which also consists of Spain's Repsol YPF and BP-controlled Pan American Energy, which operates the blocks, is producing oil and gas from six onshore fields in Tierra del Fuego.
The fields are called San Sebastian, Cabeza de Leon, La Sara, Los Chorrillos, Cabo Piedra-Bajo Grande-Cabo Nombre and Uribe.
Pioneer has said that offloading the assets was driven by a strategic move to focus on core assets in the Neuquen basin.
The company's net production from the fields is 66 million cubic feet per day of gas, plus some condensate, and 1470 barrels per day of oil.
Pioneer has also put up for grabs its operating interest in the much smaller Lago Fuego field, held in a 50:50 split with Repsol YPF.
In addition, Pioneer has touted the upside possibilities in the area, and some insiders have said that the decision to sell was also motivated by a sense of frustration with the more conservative stance taken by the two partners in the project.
"The decision to sell was triggered when the company received an offer that was too good to turn down. It was seen as more correct to open a data room and carry out an open sale process," said one source with the company.
However, there has also been some market speculation that the sale of the southern assets is just the first step in a wholesale withdrawal from Argentina.
"Like other companies, Pioneer has travelled a difficult road in terms of wellhead prices and taxes since Argentina's financial crisis," said another well-placed observer.
Pioneer acquired its interest in Tierra del Fuego in the late 1990s when it took over Canadian player Chauvco.
Gas produced from the blocks is fed into the San Martin pipeline operated by Argentine transport consortium TGS.
A planned expansion of the southernmost section of the pipeline means that established producers in the region are seen as the likely bidders, including Pan American Energy, Repsol YPF, Total and Wintershall.
Petrobras has producing assets in Santa Cruz, and recently backed a pipeline expansion farther north.
A high-ranking Petrobras manager confirmed that the Brazilian company is studying the Pioneer offering.
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09 December 2005 00:01 GMT | last updated: 09 December 2005
Thursday, December 08, 2005 Nigeria explains 30,000 bpd crude to Sao Tome and Principe
From Madu Onuorah, Sao Tome & Principe
MORE light has been shed on why Nigeria allocates 30,000 barrels per day (bpd) of crude oil to Sao Tome and Principe.
According to Nigeria's Ambassador to the oil rich border nation, Mr. Saidu Pindar, it is borne out of a desire to help in the social transformation and improvement of the economy of the tiny island.
Under the deal agreed as part of peace building efforts to ensure the survival of democracy after the unsuccessful coup of 2003, Sao Tome is to trade with the proceeds of the crude oil allocation and use its proceeds to provide basic service to its citizens.
Pindar told a select group of journalists from Nigeria in his office that apart from the interest free loan of $15 million given to the country, a confirmed payment of $37 million being the country's signature bonus from bids for Block One has been paid to the Santomean government.
The $15 million loan is to be refunded on its receipt of the proceeds of signature bonus on the second round of oil licensing which was concluded last June.
Explaining that there was nothing strange in the release of the 30,000 bpd of crude oil, Ambassador Pindar noted that Ghana and South Africa are currently benefiting from the scheme.
He confirmed that Nigeria has already fulfilled all the obligations it made to Sao Tome & Principe shortly after the botched coup of 2003 including provision of ambulance, water tanker, motor cycles, drugs and office equipment.
In addition, three officers of the Santomean military have benefited from training programmes in Nigeria. While two have finished and returned to Sao Tome & Principe, one is still at the tri-service institution - Command and Staff College, Jaji, Kaduna State.
Also, according to Pindar, a total of seven students are currently undergoing training at the Petroleum Training Institute, Effurum near Warri, Delta State in order to help with the provision of trained manpower for the country's oil sector.
Said Mr. Pindar, "in line with the Nigerian government's commitment to improving the country of Sao Tome, we give the government about 30,000 barrels of crude per day to trade and make profit. I understand the government use part of the proceeds to train about 200 students in Portugal and Cuba. In the oil sector, the Joint Development Zone is proceeding well. Sao Tome & Principe received about $37 million, which was transferred to them since July as their share of signature bonus on Bloc One. We are presently concluding Production Sharing Contract on five additional blocks in order to get additional revenue. Just last week, Chevron said it would start oil exploration in January regarding Bloc One."
He noted that there is a remarkable improvement in economic activities between the two countries especially with the involvement of the private sector.
"We have signed Bilateral Air Services Agreement (BASA) though Aero-Contractors is yet to commence operation. The BASA agreement has allowed Afrijet to fly from Lagos direct to Sao Tome twice a week. We now have a small shipping operation between Sao Tome and Calabar where traders go to buy goods and sell here. In fact, informal trade has actually increased and there have been more interactions between Nigerian businessmen and their counterparts in Sao Tome and Principe," he said.
The result of this, he said, is the plans by Nigerian businessmen to build hotels, resorts and a golf course. Already, a Nigerian bank, Island Bank is currently in operation is Sao Tome while NICON Insurance Sao Tome is being incorporated. In the same vein, a second Nigerian bank, Ecobank wants to establish as quickly as possible in Sao Tome.
Pindar also disclosed that Nigeria has rendered quality services to the Saotomean military through the Technical Aid Corps, adding that with the expiration of the current tour of duty of the volunteers, the Santomean government has asked for a fresh deployment of new ones, indicating they would welcome specialists in the medical fields.