| Tullow heads for Big Oil |
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| Wednesday, 03 March 2010 12:22 |
 India will become the third largest oil importer after the US and China before 2025Demand for African oil and gas has hit an all-time high only days into the new year. Asian buyers, led by Chinese refiners, have bought a record 1.9 million barrels per day (bpd) of crude from Angola, Nigeria and smaller West African producers in January, up from 1.58 million barrels per day in December. With increased demand, the importance of building a strong and reliable infrastructure to support the booming business expected over 2010 has become paramount. A meeting including 50 visionaries – such as chief executive officer of Dana Gas Egypt Yassin Darwish; chairperson of Nigeria’s House of Representatives Joint Committee on Petroleum Resources, the Hon. Bassey Edet Otu; CEO of Petrodel Michael Prest; Alvaro Racero, executive director: Asia, Europe and Africa (Repsol Upstream); Babs Omotowa, regional vice president: Africa at Shell; and Tullow Oil’s Andrew Windham, managing director: Africa – has been called at the Next Generation Oil & Gas (NG O&G) Summit Africa in Kenya, organised by GDS International. India will become the third largest oil importer after the United States and China before 2025, with its energy demands expected to almost double by 2030, according to the International Energy Agency. Support is being offered now from India to help build infrastructure to secure access to oil and gas from energy-rich Africa. India depends on imports to meet its oil needs, and being the fifth largest energy consumer, it must import 78% of its fuel so that strong relationships with Africa will be beneficial to both. India is keen to capitalise on the opportunities already being used to the advantage of energy-hungry China. Having struggled to devise a cohesive, economic diplomacy policy in Africa, it is now in a position to support and grow its opportunities within the continent. India’s trade with Africa is now worth around $39 billion. Research from the NG O&G Africa Summit analyst partners IHS Global Insights CERA has predicted that emerging markets within countries such as Africa will outpace those in developed economies. The year 2010 is set to be a huge success for the growing industry in Africa and summits such as the NG O&G are set to be the hub for such transformation. Angola Subsea 7 has completed the Girassol Pipeline Repair Project successfully for Total E&P Angola. The project was an entirely diver-less pipeline repair in 1 350 metres water depth and was based on a technical design competition issued by Total, which resulted in Subsea 7 being awarded the contract for the design, manufacture, testing and operation of a new deepwater pipeline repair system (PRS). The system would then be used on the repair of a damaged 12-inch water injection pipeline in the Girassol Field, offshore northwest Angola. The PRS system comprises a set of permanent equipment such as the spool deployment frame, rigid spool piece, end connection skids and two mechanical pipeline connectors together with a suite of remotely operated vehicles deployed or operated tools for preparing and aligning the pipeline prior to the connector installation. The PRS is the latest addition to Subsea 7’s extensive pipeline repair capabilities that include both grouted and hyperbaric welded solutions. The project management and engineering was performed at Subsea 7’s office in Aberdeen, United Kingdom and the in-country works supported from Subsea 7’s facilities in Luanda, Angola. The offshore phase comprised two separate phases: in the first phase, the permanent works equipment was installed on the seabed at the damage location. In the second phase, the ends of the damaged pipeline were lifted, prepared and aligned before the mechanical connectors were installed, set and tested with annulus tests onto the previously installed spool piece. Final confirmation of the repair was achieved by a pipeline leak test from the Girassol floating production storage and offloading unit, and was completed in December 2009. The Girassol Field is located approximately 210 kilometres northwest of Luanda in water depth of approximately 1 350m. Total E&P Angola stated, “For Total E&P Angola, it was essential to repair this damage which could have resulted in lower performance in drainage of the reservoir. “The Branch contributed a lot for this project, in particular on the manufacture of the largest structures [e.g. SDF – spool deployment frame].” Cameroon Victoria Oil & Gas (VOG) has provided an update on its Logbaba gas and condensate project in Douala, Cameroon. Open-hole logs have been run at Well La-105 and the well has been cased with a seven-inch production liner between 5 950 and 8 750 feet measured depths. The logs have indicated the presence of at least 65ft of very good quality gas-bearing sandstone reservoir plus at least an additional 260ft of gas-bearing sands that may prove to be productive when tested. La-105 is being completed now as a production well. Immediately following the La-105 completion, the rig will be moved about 8m to the adjacent surface location on the Logbaba drilling pad and the La-106 appraisal/development well will be spudded. La-105 will be flow tested during the La-106 drilling operations. La-106 is to spud in early February. It will be deviated to target the productive sands of the Logbaba formation, twinning La-101. Well La-101, the first Logbaba exploration well, blew out when drilled in 1955 by Elf SEREPCA when it encountered the overpressured gas sands of the Logbaba formation. During the blowout, the well produced an estimated 0.9 billion cubic feet of natural gas over 38 days before being brought under control. Kevin Foo, chairperson of Victoria, said on 19 January, “Well La-105 continues to provide excellent results. The logs show us that the well will be able to produce more than sufficient gas to meet the demands of the local industrial customers that we have signed up. With La-106 spudding in a matter of weeks, the project is getting closer to first gas sales.” Equatorial Guinea Technip has been awarded a lump sum contract by Noble Energy EG Ltd for the development of the Aseng field, located in Block “I” offshore Equatorial Guinea, at a water depth of approximately 1 000m. Technip’s scope includes engineering, supply, installation and pre-commissioning of the 30-kilometre flexible pipe system, including six flexible risers, and flexible flowlines and jumpers. The contract also comprises the installation of the subsea production system, including manifolds, flying leads and umbilicals. These umbilicals will be fabricated by Duco, Technip’s wholly owned subsidiary in Houston, Texas, under a separate contract. Technip’s operating centre in Paris, France will execute this contract. All flexible pipes will be fabricated at the Group’s plant in Le Trait, France. Offshore installation is scheduled to be carried out mid-2011 using the Deep Pioneer, one of Technip’s deepwater construction vessels. Ghana The Tweneboa-2 exploratory appraisal well, being drilled some 6km southeast of the Tweneboa-1 discovery, has intersected a significant combined hydrocarbon column. Results of drilling, wire-line logs and samples of reservoir fluids establish that Tweneboa is a major oil and gas-condensate field. The well has encountered a gross reservoir interval of 153m, containing 32m of net hydrocarbon pay in stacked reservoir sandstones, comprising a 17-metre oil-bearing zone below a 15-metre gas-condensate bearing zone. A combined hydrocarbon column of at least 350m has been established between the lowest known oil in Tweneboa-2 and the top of the gas condensate at Tweneboa-1, demonstrating this is a highly prospective and extensive turbidite fan system that will be evaluated with additional drilling. Following completion of logging operations, the well will be deepened to test further exploration potential beneath the Tweneboa Field. The well will then be suspended for future use in appraisal and development. The Atwood Hunter semisubmersible drilled Tweneboa-2 in the Deepwater Tano block to an interim depth of 3 860m in water depths of 1 321m. On completion of operations on Tweneboa-2, the rig will move to drill an exploration well in the West Cape Three Points block east of the Jubilee Field. Tullow (49.95%) operates the Deepwater Tano licence and is partnered by Kosmos Energy (18%), Anadarko Petroleum (18%), Sabre Oil & Gas (4.05%) and the Ghana National Petroleum Corporation (10% carried interest). Commenting on 21 January, Angus McCoss, exploration director, said: “Tweneboa-2 was a bold step-out which has successfully proven the significant extent of a major new oil and gas-condensate field offshore Ghana. “Such an achievement provides a very good start to our exciting 2010 Equatorial Atlantic campaign. We look forward to further appraising this discovery later in the year.” Kenya Africa Oil announced that an independent assessment of the company’s contingent and prospective resources has been completed by Gaffney, Cline & Associates. The independent assessment was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. The effective date of the report is 1 December 2009. The company’s assets in East Africa contain major oil resource potential. Africa Oil operates production sharing contracts in Kenya, Ethiopia and Puntland (Somalia). It also has a non-operated block in Kenya (Block 9). These blocks contain under-explored plays in basins that have proven and productive analogues, or where the petroleum system is calibrated by existing well and seismic data. Keith Hill, Africa Oil’s president and CEO, commented: “We are very pleased that this independent assessment confirms the company’s view that we have assembled a highly prospective pool of East African exploration properties. The impact of a discovery in any of these countries would be of major significance to the company. “The aggressive seismic and drilling programmes planned across all geographic areas of interest over the next two years are designed to convert these large potential resources into reserves.” Madagascar Spectrum has signed an agreement with OMNIS, the state agency responsible for upstream activities in Madagascar, to reprocess 6 000 line kilometres of seismic data. The surveys include data offshore the west, south, and east coasts, and are located over the Morondava and Majunga basins, the Cap Sainte-Marie and Ile Sainte-Marie (St. Mary’s Island) respectively. Under the Spectrum/OMNIS agreement, Spectrum will produce new datasets for open licensing blocks offshore the south and east coasts, and the west coast – where a long line ties both awarded and open blocks. Spectrum’s executive vice president of Multi-Client Services, Charles Harmer said, “Previous interpretation of these surveys suggests encouraging prospectivity for the occurrence of hydrocarbons. We believe that reprocessing this data with Spectrum’s specialist seismic processing and imaging techniques will improve the quality and definition of the vintage data, particularly in less understood areas such as Cap St. Marie basin and Ile St. Marie.” The reprocessed datasets will be made available through Spectrum’s Multi-Client library when the reprocessing is completed in the first quarter of 2010. Mozambique On 5 January, Cove Energy plc announced that following the receipt of the consent of the Government of the Republic of Mozambique, as represented by the Minister for Mineral Resources and Empresa Nacional de Hidrocarbonetos EP (ENH), Cove has now obtained all necessary consents and approvals. As such, the farm-in agreement entered into by Cove for the acquisition by Cove from Artumas Group Inc. of an 8.5% participating interest in the Exploration and Production Concession Contract (EPCC) in the Rovuma Offshore Area No. 1, Mozambique (“Rovuma Offshore Participating Interest”) is now unconditional, and the transfer of the Rovuma Offshore Participating Interest to Cove has been completed. The Belford Dolphin drillship commenced a four-well deep-water programme in the Rovuma Offshore 1 in December 2009 and is drilling currently on the Windjammer prospect. Anadarko Petroleum Corporation is the operator. John Craven, CEO of Cove said: “The acquisition of the Rovuma Offshore 1 interest signifies the successful completion of the third and final transaction with Artumas relating to assets in Tanzania and Mozambique, a transaction which was conditionally concluded in September 2009. “The Board is proud to have guided the company through the negotiation and completion of this complex process, involving a readmission to AIM and associated GBP42 million placing of new shares, and to have achieved all necessary partner and government approvals in such a short time frame. “We continue to work closely with all our partners to realise the potential value from these prospective hydrocarbon assets and, with drilling under way in the offshore, 2010 is set to be an exciting year for Cove,” he added. Craven, a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, March 2006, of the London Stock Exchange, has reviewed and approved the technical information contained in this announcement. He is a petroleum geologist with approximately 35 years’ experience. Cove Energy is an AIM quoted exploration and production company with a strategy to identify and acquire oil and gas assets in the early phase of the upstream life cycle and mature them into marketable opportunities for the medium and larger oil and utility companies. Initial focus is on Africa and the Mediterranean. Current operations in Mozambique include the Rovuma Onshore Area where Cove holds a 10% interest in the EPCC and an 8.5% interest in the recently completed acquisition of the EPCC covering Rovuma Offshore 1. A four-well programme on Rovuma Offshore 1, planned through to the end of 2010, commenced in December 2009. Anadarko Petroleum Corporation is the operator of both Mozambique EPCCs. Cove Energy also has acquired from Artumas a 16.38% interest in petroleum operations (other than exploration operations) and a 20.475% interest in the exploration operations in the Tanzanian Mnazi Bay concession, including the Mnazi Bay Production Sharing Contract that contains the Mnazi Bay and Msimbati gas fields. This transaction was completed together with M&P, with M&P having taken over the operatorship from Artumas. Cove operates with a minimum level of staffing, but with a larger experienced ‘virtual’ skills pool from where it can draw on relevant experience on a case-by-case basis. The company intends to partner and joint venture with investors and associates who will support Cove Energy with commercial skills and influence in areas where the company intends to grow its business. Nambia Chariot Oil & Gas Limited, the Africa-focused oil and gas exploration company, is pleased to announce that the recent 3D seismic programme acquired in the Northern blocks, 1811 A & B, offshore Namibia, has been completed. This data acquisition programme covered 600km, focusing on an area of specific interest over the previously identified Zamba prospect. Processing and interpretation have commenced and will be completed around mid-2010. CEO Paul Welch commented: “We’re pleased to announce that this seismic programme has been finished on time and on budget as anticipated. All work programme commitments across our blocks of interest are now complete. “We look forward to receiving the processed information in due course and welcoming interested parties into the dataroom in the first quarter of 2010.” Nigeria The Nigerian government is in talks with Chevron Corp. (CVX) and Royal Dutch Shell PLC (RDSA) over the renewal of their shallow-water oil licences, according to an official statement on 19 January. Junior Oil Minister Odein Ajumogobia was quoted in a statement by the Ministry of Petroleum Resources as saying, “Chevron and Shell are still in negotiations with the Federal Government... over the renewal of their expired licences.” The statement countered media reports that the renewal of the licences was stalled due to the absence of President Umaru Yar’Adua. Yar’Adua left Nigeria on 23 November last year, and has since been receiving treatment in a Saudi Arabia hospital for a heart ailment. “The Minister of Petroleum Resources has the full authority under extant laws to renew leases and licences,” the statement said. It said no specific authorisation from the presidency was required. In May 2008, the state-run Nigerian National Petroleum Corporation signed an oil-financing deal worth $2bn with Mobil Producing Nigeria, a unit of Exxon Mobil Corp. (XOM). In the same month, the Nigerian state-run company signed a similar deal worth $1bn with Elf Petroleum Nigeria Limited. South Africa On 16 December, the Petroleum Agency South Africa awarded Shell a technical co-operation permit for a one-year study to determine the hydrocarbon potential in parts of the Karoo Basin in central South Africa. The permit covers an area of approximately 185 000 square kilometres. The study will provide a better understanding of the area’s geology and shale gas potential, establishing the scope to pursue natural gas exploration. Shell will have the exclusive right to apply for exploration permits following completion of the study. “This onshore study and the recent award of offshore exploration acreage in the Orange Basin area together reinforce Shell’s interest in exploring for oil and gas in South Africa,” said Ceri Powell, executive vice president for International Exploration. On 25 November 2009, Sasol, through Sasol Petroleum International (SPI) – the wholly owned upstream oil and gas subsidiary of Sasol Limited – announced a joint application with Statoil ASA and Chesapeake Energy Corporation for an onshore petroleum exploration right in South Africa. The exploration right application was submitted officially to the Petroleum Agency SA and it is expected that it will take approximately 12 months to process. The application is subject to the consideration and approval of the South African government. If the exploration right is awarded successfully, the applicants will commit jointly to an exploration work programme. The proposed exploration effort will be focused on finding potentially commercial recoverable shale gas resources in the Karoo Basin in the central region of South Africa. Shale gas is natural gas produced from shale, a type of sedimentary rock formed from clay. The gas has become an increasingly important source of natural gas in the US over the past decade, and interest has spread to potential gas shales in Canada and Europe and now also in South Africa. The Karoo Basin has unproved shale gas potential and significant exploration efforts are required to assess this prospective resource. The companies involved in this joint exploration venture are world leaders in oil and gas exploration. Tanzania Aminex announced that it has been advised by Tullow Oil, operator of the Ruvuma PSA in southern Tanzania, that the Likonde-1 well was spudded at 7.30 on 9 January 2010. Likonde-1 well will test multiple targets in the Tertiary, Cretaceous and Permo-Trias Karoo intervals. Participants in the well are Tullow 50%, Ndovu Resources Ltd (an Aminex company) 37.5%, and Solo Oil 12.5%. New seismic data acquired in summer 2009 to define the Kiliwani North discovery in Tanzania is being integrated into reprocessed data covering the remainder of the Nyuni licence, and the preliminary results of the broader exercise are extremely encouraging for the unexplored prospects on this licence. Aminex increased its interest in Nyuni from 40% to 50% in summer 2009 and the Nyuni Joint Venture has voted now to drill an exploration well in approximately one year’s time. Aminex is not yet in a position to quantify the Kiliwani North discovery, but should be able to do so in the first quarter of 2010. In 2008 Kiliwani North-1 flowed gas at 40 million cubic feet per day (equivalent to approximately 6 000 barrels of oil per day using the industry standard conversion factor) under full production test conditions. Gas commercialisation terms now have been agreed in principle with the Tanzanian authorities and are likely to be finalised early in 2010, while approval for plant upgrading to handle Kiliwani North gas is still awaited. Kiliwani North is still held under an appraisal licence and when appraisal is complete, a development licence will be applied for. Uganda The CEO of UK-based Tullow Oil plc was expected to hold talks with Ugandan President Yoweri Museveni on 22 January to discuss issues related with the company’s exercise of pre-emptive rights to acquire the Ugandan interests of Heritage Oil plc, said officials on 21 January. A company official with Tullow Oil Uganda said to Dow Jones & Company at the time that Aidan Heavey, Tullow’s CEO, would arrive in the country that evening and hold talks with the Ugandan president the next day. “The chief executive will present to the president a list of potential partners to develop Ugandan oil fields,” the official said. An official at the Ugandan president’s office confirmed the meeting. Heritage agreed last month to sell its half-share stake in two Lake Albert oil blocks to Italian oil company Eni Spa – which currently has no presence in Uganda – for up to $1.5bn. Tullow has since exercised its contractual right to pre-empt that deal and buy the assets itself. Tullow already owns the remaining half-share in the two Lake Albert oil blocks where Heritage is selling its stake, and 100% of a third, neighbouring block. A successful pre-emption would give Tullow full ownership of the three blocks, where around a billion barrels of oil have already been discovered. However, Tullow says it would not retain full ownership of the three blocks, and would quickly sell up to half the assets to one or two major international oil companies that could assist in development of oil infrastructure. ExxonMobil Corp. and Total SA are among Tullow’s most likely potential partners, according to people familiar with the situation. News of the meeting followed a warning the previous day from Hilary Onek, Uganda’s Minister of Energy and Minerals Development, that the government could veto Tullow Oil’s pre-emption of Eni’s $1.5-billion takeover deal on monopoly and other grounds. Political analysts said that President Museveni has the power to overrule his Cabinet and will have the final say on the Heritage asset sale. Uganda’s oil committee at the Ministry of Energy and Minerals Development was scrutinising the pre-emption and was expected to advise the Cabinet soon on the way forward, according to certain government officials. David Linsell   |
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