| China aims to replace “Seven Sisters” in Africa? |
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| Monday, 09 November 2009 10:40 |
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According to the Wall Street Journal, an official with Nigeria’s state oil company said about 20 onshore blocks were on offer and that negotiations were at a late stage with some companies, including CNOOC. He said he was not sure exactly how much crude CNOOC was vying for, but that targeted investment would run into several billion dollars. CNOOC officials could not be reached for comment. The news of the Nigeria talks followed setbacks for China on deals in Angola and Libya. On 8 September, Libya vetoed a $462-million bid by China National Petroleum Corp. for Libya-focused Verenex Energy Inc. Days later, Angola’s state-owned Sociedade Nacional de Combustíveis de Angola (Sonangol) said it wanted to block the sale of Marathon Oil Corp’s 20% oil field stake to CNOOC and China Petroleum & Chemical Corp. (Sinopec). The setback in Angola – China’s largest African partner – is in stark contrast with the enthusiastic reception it found there five years ago, when China was launching a quest for African resources to feed its economic boom. It made a spate of resource acquisitions in the form of oil-for-infrastructure deals. In 2004, Sonangol chose Sinopec over India’s Oil & Natural Gas Corp. for the sale of an oil field stake by Shell. The deal came just after China’s Export-Import Bank had granted Angola a $2-billion loan. In the first half of 2008, Angola became China’s largest oil supplier, covering 18% of its needs. China’s commerce ministry reported Sino-African trade hit a record $106.8bn for the year, up 45% from 2007. But some in Africa are starting to find the Chinese embrace too tight. The formula of bartering oil for infrastructure initially had given China’s oil concerns a competitive advantage against Western companies, whose investors were largely unwilling to fund such projects. But those same projects have become a key factor in China’s setbacks. In particular, the insistence of China state companies on keeping local hiring to a minimum has brewed resentment. In 2006, CNOOC bought a 45% stake in Total SA’s Akpo field for $2.3bn. The field is now the company’s largest overseas asset, with a production capacity of 175 000 barrels a day. But more than $10bn of contracts with Nigeria signed in 2006 – including renovation of a railway, the refurbishment of a refinery and the launch of a satellite – did not produce results. That is partly because of a change of administration the following year, but also because of commercial and technical pitfalls. Chatham House, a United Kingdom think tank, this year published a study on how deals by Asian oil companies with the Nigerian government in 2004-05 in exchange for bankrolling infrastructure projects had generally failed. It concluded that the main reason was the Nigerian government’s lack of “follow-up mechanisms to enforce the deals”. It is unclear whether CNOOC is offering to fund and build more non-oil projects in the latest round of contract negotiations. Angola may not need China as much as it used to. On 29 September, the International Monetary Fund (IMF) signed a tentative agreement with Angola which could lead to new loans from Western banks. And when Sonangol sought $1bn of financing in the same month, the loan was 50% oversubscribed – thanks mostly to European banks. The United States has promised to ramp up investment in both oil and agricultural projects. As a result, China will likely have to pay more for its African oil push. “China and African nations are now in the process of tailoring the high expectations raised over the last few years to the realities of any maturing relationship,” said Christopher Alden, senior lecturer at the London School of Economics and Political Science. Wall Street Journal Angola Sonangol and BP Exploration (Angola) Limited have announced the “Tebe” oil discovery in ultra-deepwater Block 31, offshore Angola. This is the 19th discovery made by BP in Block 31, and is located in the southern portion of Block 31 some 350km northwest of Luanda and about 12km to the southeast of the Hebe discovery. Tebe was drilled by Transocean’s GSF Explorer drillship in a water depth of 1 752m and reached a total depth of 3 325m below sea level. The well results confirmed the capacity of the reservoir to flow in excess of 5 000 barrels a day under production conditions. Sonangol is the concessionaire of Block 31. BP Exploration (Angola) Limited as operator holds 26.67%. The other interest owners in Block 31 are Esso Exploration and Production Angola (Block 31) Limited (25%); Sonangol P&P (20%); Statoil Angola AS, a subsidiary of StatoilHydro ASA (13.33%); Marathon International Petroleum Angola Block 31 Limited (10%); and TEPA (BLOCK 31) Limited, a subsidiary of the Total Group (5%). Operatorship of Block 31 was awarded to BP Exploration (Angola) Limited in May 1999. The block covers an area of 5 349km2 and lies in water depths of between 1 500 and 2 500m. Gabon Perenco has strengthened its position in Gabon with the acquisition of Marathon Oil Corporation’s wholly owned subsidiary, Marathon Oil Gabon, which holds a 56.25% working interest in three offshore production fields. The effective date of the transaction was 1 January 2009, with completion anticipated during the fourth quarter of 2009. Perenco’s acquisition of Marathon’s stakes in the Tchatamba Marin, Tchatamba South and Tchatamba West fields will add approximately 15 000 bopd gross production to Perenco’s current 50 000 bopd operated production in Gabon. Perenco will now be the operator at these fields, from where production is processed on a single facility at Tchatamba Marin, with processed oil being transported through a pipeline to a non-operated onshore facility. Located 15 miles offshore and approximately 100 miles southeast of Port Gentil, the Tchatamba Marin Field was discovered in 1995 and began production in early 1998. The Tchatamba South and West fields were discovered in 1997 and came on stream in 1999 and 2000, respectively. Gabon has been a key area for Perenco for a number of years, and the acquisition of Marathon Oil’s stake in these important fields further consolidates its position in the country. Ghana Oando has been selected as a strategic partner to the Ghana National Petroleum Corporation (GNPC) to develop assets and infrastructure to harness the gas that will be produced from the offshore Jubilee oil field. The oil field is rated as West Africa’s current largest offshore deepwater discovery in over a decade, with proven reserves in excess of 300 million barrels of recoverable oil and a potential for 1.8 billion barrels. GNPC had short-listed companies following a highly competitive bid process involving over 50 reputable local, regional and international corporations. From the initial 50, five companies made the final selection from which Oando (lead developer) and Saipem (a globally renowned oil and gas engineering, procurement and construction firm) and Modec-Itochu (a Japanese oil and gas consortium) were chosen to form a joint consortium with GNPC. The scope of the project includes the development of offshore and onshore high pressure gas transmission pipelines, processing facility, liquefied petroleum gas and condensate storage tanks, as well as other ancillary structures. The US$1-billion ultramodern facility is planned to commence operations in the near future. The Ghanaian government has expressed its commitment to develop a world-class infrastructure that will process natural gas as fuel for existing power plants at Effasu and Takoradi, both in the western region of the country. The development is also planned to enable the sale of natural gas and derivatives to both domestic and international markets. In a proactive step to eliminate gas flaring from the Jubilee Field, the completion date of the project has been scheduled to coincide with the planned First Oil for Jubilee. This will form a model for the development of future oil and gas fields in the country. ExxonMobil has agreed to buy Kosmos Energy’s stake in the Ghanaian Jubilee field, according to a Reuters report that cites three sources close to the matter. Kosmos, which is backed by private-equity firms Blackstone and Warburg Pincus, owns the field with Tullow Oil and Anadarko Petroleum. Financial terms were not revealed, but analysts have said that the stake could be worth $5bn, according to the report. Located offshore Ghana, Jubilee is one of West Africa’s biggest oil finds in recent years, with estimated recoverable reserves in the amount of 1.2 Bboe. Eni has entered Ghana through the acquisition of majority stakes in the Offshore Cape Three Points (OCTP) and Offshore Cape Three Points South (OCTPS) exploration licences. Eni’s entry into these licences follows agreement reached with Vitol Upstream Ghana Limited (VUGL), part of the Vitol Group, to assign a majority interest in both licences, as well as both operatorships, to Eni. The new licence participating interests, which will be the same for both blocks, will be Eni Ghana Exploration and Production Limited 47.22% (and operator); VUGL 37.78%; and state company, GNPC (15%). GNPC will have a back-in option for an additional 5% in OCTP and 10% in OCTPS. During June and July 2009 VUGL, in partnership with GNPC and Eni, drilled the Sankofa-1 well in the OCTP block in a water depth of 850m. The well encountered high-quality reservoir sands containing 36m (net) of oil and gas. Both blocks lie in the prolific Tano/Cape Three Points oil basin, which has recently yielded some of the largest offshore discoveries yet made in Africa. The Sankofa is a significant hydrocarbon discovery located some 35km east of Jubilee Field. Through this agreement, Eni has re-entered Ghana, where it previously had a presence until the 1970s, and has created a significant partnership with GNPC, through which both companies aim to contribute to the economic, industrial and social development of Ghana. Eni’s considerable expertise and leading edge technologies will be available to carry out further significant co-operation projects in the country. Eni has been present in sub-Saharan Africa since the early 1960s and is currently operating in Angola, Nigeria, Republic of Congo, Gabon and Mozambique. Eni’s operated production in the area is around 450 000 barrels of oil equivalent per day. Kenya East African Exploration, a Black Marlin Energy Group company, has increased its interest in the Kenyan Block L17/L18 Production Sharing Contract by 25% under an agreement reached with Aminex PLC. EAX is a joint venture participant in the Nyuni PSA (“Nyuni”) in Tanzania and also in the L17 & 18 PSC (“L17 & 18”) in Kenya. Aminex held 25% in L17 & 18, while EAX held 10% in Nyuni acreage. The terms of agreement, which have been approved by the governments of both countries, are as follows: • Aminex will transfer its 25% interest in L17 & 18 to EAX – increasing EAX’s interest to 65%; • EAX will transfer its 10% interest in Nyuni to Aminex; • Aminex will make a cash payment to EAX of $1 million; and • EAX will become operator of the L17/L18 concession. This arrangement consolidates EAX’s substantial position in Kenya and adds a further operatorship to EAX’s Block 1 in the Mandera Basin of NE Kenya. Shallow water/TZ seismic acquisition in L17/L18 is planned for Q4 2009, using EAX’s sister company, UPSL, operating from its Mombasa base, to identify new shallow water and land-based leads prior to a commitment to drilling in 2010/2011. Mombasa and its power station and crude oil refinery lie within the L17/L18 concession area, offering an immediate market for any hydrocarbons found. Black Marlin Energy is a privately held Dubai-based oil and gas exploration company with wholly owned subsidiaries, East African Exploration and Upstream Petroleum Services Limited. It has exploration acreage in Seychelles, Madagascar, Kenya and Ethiopia. Liberia TGS has signed an agreement with the National Oil Company of Liberia (NOCAL) to acquire 15 000km of long-offset regional 2D seismic, gravity and magnetic data over the ultradeep waters located offshore Liberia. This new multi-client survey is expected to commence in the fourth quarter of 2009, given sufficient industry interest. Offshore Liberia has attracted significant industry attention due to recently announced discoveries in the Gulf of Guinea. “TGS has been acquiring data along this margin since 2000 and is pleased to expand our data coverage in Liberia. It has been extremely rewarding to see the value being generated from our activities for both the local region and the oil and gas industry in general over this extended period,” said David Hicks, vice president of Africa, Middle East and Far East for TGS. The Liberia Ultra-Deep Programme will extend existing TGS multi-client data out to 4 000m of water. NOCAL is expected to announce a licensing round following the acquisition and processing of the data. Mozambique Offshore Area 1 Rovuma Block, Mozambique: Cove will acquire Artumas’ entire 8.5% participating interest in the block and has accordingly assumed all costs associated with Artumas’ participating interests from the effective date of 1 July 2009. Artumas will, in consideration, receive a royalty amounting to 6.4% of Cove’s profit petroleum accruing to the 8.5% participating interest. Should Cove pay further cash calls prior to completion of the transaction, Artumas’ royalty will reduce by 0.5% per $1m of expenditure subject to a floor of 4% of Cove’s profit petroleum. Onshore Rovuma Block, Mozambique: M&P and Cove will respectively farm-in to a 24% and 10% participating interest in the Block. Artumas’ participating interest will thus become 15.3%. Artumas’ share of costs for the one exploration well, which is an obligation well under the Exploration and Production Concession Contract, will be carried by M&P and Cove. Should M&P and Cove pay further cash calls prior to completion of the transaction, Artumas’ participating interest will reduce by 1% per $1m of expenditure subject to a floor of a 10% participating interest. In addition to the farm-in considerations mentioned above, Artumas will receive a total cash consideration amounting to $10.98m for the three transactions. All three transactions are subject to the approval of the relevant government entities and joint venture partners. In addition, approval by Artumas’ bondholders is required and a summons letter was to be posted to bondholders, calling a meeting to approve the transaction as required by the instrument governing the bonds. A further condition precedent is that Cove’s shareholders approve and Cove’s new shares are admitted to the London Stock Exchange by 30 October 2009. Nigeria Chevron confirmed on 2 October that the oil major’s Agbami oil platform offshore Nigeria reached peak production of 250 000 barrels per day in August, or four months ahead of schedule. Commencing production in July 2008, the Agbami oil and gas field is a $7-billion project containing an estimated 900 million barrels of oil equivalent of recoverable hydrocarbons, the largest deepwater discovery to date in Nigeria. Agbami stretches across 45 000 acres and is located some 70 miles (113km) offshore the Niger River Delta. Situated on Nigerian blocks OML 127 and 128, Agbami’s water depth is 4 500 feet (1 372m). The crude oil found in Agbami is light and sweet, with a 45-degree API gravity and no contaminants. Through its major capital projects worldwide, Chevron, the second largest US oil company, is poised to ramp up production faster than its rivals, according to Dow Jones. Moreover, the industry heavyweight has 40 projects for which it is investing $1bn each, with 15 of these major developments located in Africa and Latin America. Besides operator, Chevron, other partners in Agbami are Petrobras, Nigerian National Petroleum Corp., Famfa Oil Ltd and StatoilHydro ASA. Providence Resources has announced the successful acquisition of a new 2D seismic survey over its Oil Mining Lease 113 (OML 113) in the Benin Embayment, offshore Nigeria. This new 2D survey was acquired by Petroleum Geo-Services (PGS) using the vessel MV Falcon Explorer and extended over a total line length of about 130km. OML113 contains the Aje Field, which is operated by Yinka Folawiyo Petroleum Company Limited (YFP), with Chevron Nigeria Deepwater H Limited (Chevron) acting as technical adviser to the operator. The other partners in OML113 are Vitol, Energy Equity Resources Aje Limited (EER) and PR Oil and Gas Nigeria Limited (Providence). Sierra Leone Anadarko has announced a deepwater discovery at the Venus exploration well in block SL 6/07 offshore Sierra Leone. Drilled by the Belford Dolphin drillship, the Venus B-1 well reached a total depth of approximately 18 500 feet in about 5 900 feet of water and encountered more than 45 net feet of hydrocarbon pay. Venus is the first deepwater test in the Sierra Leone-Liberian Basin. “The Venus discovery confirms the existence of an active petroleum system in the basin and enhances the prospectivity of our vast West Africa acreage position,” said Bob Daniels, Anadarko senior vice president: Worldwide Exploration. “With Jubilee on the east and Venus on the west, we have established bookends spanning approximately 1 100km (700 miles) across two of the most exciting and highly prospective basins in the world. Anadarko and our partners are evaluating the initial results of the well and the forward plan for the prospect, and anticipate additional drilling in the area. “We are optimistic that the continued success of our West African Cretaceous programme will create substantial value for our stakeholders as well as the people of West Africa through continued investment and increased activity. Anadarko plans to drill two to five wells in the trend next year,” said Daniels. The Venus prospect is one of Anadarko’s more than 30 identified prospects and leads on its West Africa acreage position, which includes interests in almost 8 million acres across 10 blocks offshore Sierra Leone, Liberia, Côte d’Ivoire and Ghana. Anadarko operates seven of the blocks and the majority of the identified prospects with an average working interest of approximately 40%. The company plans to continue its West Africa drilling operations in the Cretaceous Trend by drilling the South Grand Lahou exploration well in block CI 105 offshore Côte d’Ivoire once activities are completed at the Venus discovery well. Anadarko operates the Venus well with a 40% working interest. Co-owners in the discovery include Woodside (25% working interest), Repsol (25% working interest) and Tullow (10% working interest). Tanzania Artumas has announced that the farm-out of its Mnazi Bay Production Sharing Agreement (PSA), its Area 1 Offshore Rovuma Block and its Onshore Rovuma Block as referenced in its press releases of 22 July and 18 August 2009, have been executed. Artumas will now seek host government and partner approval of the transfers contemplated by the documents. The commercial terms between the parties include: Les Etablissements Maurel & Prom SA (M&P) will farm-in to a 38.22% participating interest in all petroleum operations save for exploration operations, where M&P will take up a 47.775% participating interest, the difference being due to Tanzanian Petroleum Development Corporation’s (TPDC) 20% participating interest in all, but exploration operations. Cove Energy plc (“Cove”) will farm-in to a 16.38% and 20.475% respectively in petroleum operations and exploration operations. Artumas’ participating interests will thus become 25.4% and 31.75% respectively in petroleum operations and exploration operations. Artumas’ share of costs for a 200km2 3D seismic programme and an exploration well will be carried by M&P and Cove. In the event that a 3D seismic programme does not take place, M&P and Cove will carry Artumas for an alternative exploration or appraisal programme of equal cost to the seismic programme. Artumas may elect that M&P and Cove will fund Artumas’ share of either two appraisal wells, in which case a further 5% participating interest in petroleum operations will be assigned to M&P and Cove per well. M&P will assume operatorship of all petroleum operations under the PSA and accordingly will undertake to fulfill the arrangements currently in place for the supply of gas to the Mnazi Bay Gas to Electricity Project. Uganda Tullow Oil reported that the Ngassa-2 exploration well, which is located in the Kaiso-Tonya region of Block 2, has encountered 7m of oil pay in a 14m gross sand. Pressure data acquired through logging operations indicates the potential for a significant oil column down-dip, which could fill the entire 150km2 closure. Although evaluation is still at an early stage, with further appraisal drilling, Ngassa has the potential to be the largest oil field in the basin to date. Ngassa-2 is a deviated well drilled from the Angara spit, 3.5km from the crest of the structure, and to a total depth of 3 392m beneath the lake. Logging, downhole pressure testing and sampling confirmed the presence of moveable oil which has been recovered to surface. Reservoir quality is excellent and the oil is of a similar quality to that encountered in the Mputa and Kingfisher discoveries. A deeper 15m gross sand was determined to be water wet at this location. These, and other sands, however have the potential to contain oil elsewhere in the Ngassa structure and will be tested through future offshore appraisal drilling. Wireline log characteristics indicate that the reservoirs seen in Ngassa-2 are equivalent to those encountered in the Kingfisher discovery some 40km southwest, pointing to significant lateral reservoir extent. This de-risks the down-dip potential, the remaining amplitude-supported prospectivity within the overall Ngassa closure and the neighbouring offshore prospects such as Pelican. The well has been suspended as an oil producer, for future production testing, thereby completing the current Block 2 exploration programme. Exploration drilling activity is expected to recommence in late 2009 in Block 1. Tullow has interests in three licences in the Lake Albert Rift Basin in Uganda. Tullow operates Block 2 with a 100% interest and has a 50% interest in Blocks 1 and 3A, which are operated by Heritage Oil (50%). CNOOC has become the latest company to enter talks with Uganda over a large Tullow Oil PLC-led project, people familiar with the matter said in September. CNOOC company representatives approached the Ugandan presidency and held talks with officials at the state house, said an official in the office of Ugandan president, Yoweri Museveni. The news follows confirmation by Nigerian government officials that CNOOC had sought to enter Nigerian oil blocks underused by major international oil companies. CNOOC’s interest in Tullow’s Ugandan project shows China is also interested in expanding on the continent through partnerships with emerging African oil producers. CNOOC is one of several companies expected to hold future talks with UK independent Tullow over its Uganda project, another person said. Spokespeople for CNOOC, Tullow and the Ugandan Energy ministry declined to comment on CNOOC’s interest. Tullow has made large discoveries in blocks located in Eastern Uganda’s Lake Albert region and has said it wants to “farm down” – or sell a stake to finance the project – to other partners. In an e-mail on 29 September to Dow Jones Newswires, Tullow’s Uganda country manager Brian Glover said the company has kicked off the farm-down process, engaging in talks with the Ugandan government. “We don’t want to confirm a shortlist at this stage, since we are at a sensitive point in the process, and will be engaging with government before approaching suitable partners,” Glover said. Glover would not comment on the details of the ongoing talks with government, but a government official familiar with the situation said the government had insisted on a number of conditions, including allowing only investors with a good oil production track record to partner with Tullow Oil. Commercial production will require a 1 300-kilometre export pipeline to the Kenyan port of Mombasa, and the government would also like the operators to build a local refinery. The pipeline and refinery, plus a share of the oil block costs, could represent an investment of $5bn to $6bn, said industry experts. Apart from CNOOC, China National Petroleum Corp. and Sinopec have been preselected for talks to enter the project, said industry sources. It is unclear whether the Chinese concerns will team up or compete. China is facing opposition in other African countries over some oil acquisitions and criticism over its decision to bring its own labour and technical problems in its projects. A Ugandan official said the government is not necessarily against Chinese companies, but would make a comprehensive assessment before approving any venture. Chinese companies will also face stiff competition from oil majors. CNOOC’s trip came on the heels of a visit in August by Eni SpA’s chief executive officer, Paolo Scaroni. Having ruled out an outright acquisition of Tullow, Eni is interested in buying stakes in its Ugandan oil blocks and teaming up to build the proposed pipeline and refinery, said people familiar with the matter previously. Tullow would like to obtain more information on its Uganda reserves potential – including through further drilling – before it sells a stake to a partner, said the person familiar with CNOOC’s interest. Tullow confirmed in early September that it had made the largest oil discovery yet in Uganda, an area where it already has found more than 700 million barrels of oil equivalent. David Linsell
Jubilee Field
Liberia, Monrovia, North Atlantic
Anadarko's West African Assets
Mnazi Bay, Tanzania
Lake Albert, Uganda, Republic of Congo
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Huge new finds off Ghana and Sierra Leone
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