Nigeria could plunge into a fuel crisis soon

Yes we all look forward to the weekend presidential elections in Nigeria and our hopes stand in it's achievable credibility (yes, it's possible). Most times the common man on the street is the least involved and most affected as per effects by governmental policies but hopefully that will change soon. 

One major populace dependent commodity is petrol. We need it in our cars, bikes, generators, etc. It moves a large part of the small-medium scale enterprises and in a country such as Nigeria it can bring productivity to a stand still if not readily available.

What I'm about to share is a perspective to a possible (serious) fuel crisis in Nigeria come the second quarter of this year.

Shell, Total, ENI Complete $1.1 billion Nigerian Oil Field Sale

Royal Dutch Shell said on Friday it had completed the sale of its 30 percent stake in a Nigerian oil field for $737 million as the Anglo-Dutch oil major nears the completion of a strategic asset review in the West African country.

Oil and Mining Lease (OML) 18 and "related facilities in the Eastern Niger Delta" were sold to Eroton Exploration & Production Company Limited.

Eroton is a a special purpose company owned directly or indirectly by a consortium. Eroton also acquired French oil major Total's 10 percent stake and Italy's Eni's 5 percent stake in OML 18, giving it a total 45 percent holding, Shell said in a statement. The remaining 55% is owned by the Nigerian National Petroleum Corporation, NNPC. The total purchase price for the interest was US$1.1 billion, not including acquisition costs. All approvals required for the completion of the acquisition of OML 18 have been received from the relevant authorities of the Federal Government of Nigeria.

Nigerian Petroleum Minister denies the N1.329trn subsidy money given to NNPC from CBN

The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, has denied that Nigerian National Petroleum Corporation, NNPC, received N1.329 trillion as subsidy payments between 2009-2011 from the Central Bank of Nigeria, CBN, as alleged by the ad-hoc committee of the House of Representatives on Subsidy Regime.

The committee report had alleged that “NNPC directly deducted N408.255 billion, in addition to the payment of N81.648 billion by CBN, in 2009; N407.801 billion, in addition to the payment of N402.423 billion by CBN, in 2010; and N847.942 billion, in addition to the payment of N844.944 billion by CBN, for 2011, contrary to Section 162 of the 1999 Constitution, as amended.”

The minister argued that this claim is “totally baseless, false and without foundation.”

Nigerian Petroleum Minister sues media houses over missing NNPC oil funds

The Nigerian Minister of Petroleum Resources, Diezani Alison-Madueke, has sued 11 organizations and individuals over the missing $20billion oil funds.

The funds were reported missing from the coffers of theNigerian National Petroleum Corporation (NNPC), by formerCentral Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi.

Mrs Alison-Madueke has filed a suit before the Federal High Court in Abuja to restrain members of the media from linking her with the missing money.

The defendants in the case are the All Progressives Congress (APC), Vanguard Media Limited and its editor, Mideno Bayagbon, Leadership Newspapers Group Limited and its editor Ekele Peter Agbo, Premium Times Services Limited and its editor in chief, Dapo Olorunyomi, and Vintage Press Limited and its editor, Lekan Otufodunrin.

Alison-Madueke Pledges aggressive implementation of Gas-to-Power Initiatives As NPDC/Seplat JV Invest $200m on Azura-Edo IPP Gas Infrastructure

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has committed to an aggressive and robust implementation of the various initiatives designed to accelerate the provision of adequate gas supply for power generation in line with the Federal Government’s aspiration for the power sector.

The Minister who recently announced the N213bn inter-agency initiative to facilitate the liquidation of legacy gas debts in the power sector stated that the Nigerian National Petroleum Corporation alongside its Joint Venture Partners are determined to surpass its mandate of providing the required fuel gas as well as gas infrastructure for the smooth operation of power plants in the country.

Minister: Low Prices Will Hamper Nigeria's Bid To Boost Output

Consistently low oil prices will hamper Nigeria's bid to boost output to 4 million barrels per day (bpd), Oil Minister Diezani Alison-Madueke was quoted as saying on Tuesday at an oil and gas conference in the capital Abuja. "Flexibility in capex and funding in general will be further constrained in the year 2015," the minister said in a speech read out by Joseph Dawha, group managing director of the Nigerian National Petroleum Corp. 

Africa's biggest oil producer has been hit hard by global oil prices that have around halved since June, because it accounts for up to 80 percent of government revenues and about 95 percent of foreign reserves. "Consistently depressed oil prices will limit the industry's scope to manoeuvre, start-up key projects and revitalise marginal field production thus hampering the set target of 4 million bpd," the minister said. "The industry must challenge itself to raise funding in order to meet these targets." 

Top 5 FPSO Systems in Operation within Nigeria

Written by Oby Amaliri and Ikechukwu Onyegiri; Edited by Ikechukwu Onyegiri

Subsea field layout schematic: FPSO system

FPSO (Floating, Production, Storage and Offloading) system is a converted or custom-built ship-shaped floater, used to process oil and gas and for temporary storage of the oil prior to transshipment. The FPSO is a floating vessel used by the offshore industry for the processing of hydrocarbons as well as the storage of oil. A FPSO vessel is designed to receive hydrocarbons produced from nearby platforms or subsea template, process them, and store oil until it can be offloaded onto a tanker or transported through a pipeline

It is one of the best devised systems to have developed in the oil exploration industry for the marine areas. They will sometimes have production facilities onboard, and are normally used in areas where a pipeline to transport oil to shore isn’t available. Typically a shuttle tanker will moor alongside the FPSO and offload the stored oil periodically.

Innovative technologies, coupled with developments of existing ones, have played a big part in maintaining this standing for so long. The system is foolproof, enables cost efficiency and thus becomes a very major asset when it comes to excavating for oil in the marine areas and provides vast benefits in the production of marginal fields.

Benefits

Technology advancements since the inception of FPSOs have seen the arrival of a host of features, from geostationary turrets to allow the vessel to turn and ride prevailing weather, to the wider inclusion of water or gas injection and gas-lifts.

Also, its simplicity as an offshore production facility, capable of accumulating and storing oil before periodically offloading it to tankers for transport to the mainland – gives it an obvious logistic and economic appeal. Not only does this directly permit the rationalization of shuttle tanker movements but, more fundamentally, it can also allow marginal oil fields, or those in deepwater areas at some physical distance from existing pipelines, to be developed.

The system enables cost efficiency and thus becomes a very major asset when it comes to excavating for oil in the marine areas: it does not require the laying of pipelines and can be moved to new locations.

Finally, FPSOs eliminate the need for costly and expensive underwater infrastructure, they are more environmentally friendly than rigs, and their abandonment costs are less than for fixed platforms.


Top 5 FPSO Systems operating within Nigeria

In Nigeria today, we have about sixteen FPSO systems operating in different fields. Some of these FPSO sytems are used to operate in the top five deep water fields. These five are selected as the deepest base on their recoverable reserves and storage capacity.

Seplat Completes Acquisition of Stakes in OML 53, OML 55 in Nigeria

Seplat Petroleum Development Company Plc (Seplat or the Company), a leading Nigerian indigenous oil and gas company listed on both the Nigeria Stock Exchange and London Stock Exchange, announced Thursday that it has completed the acquisition of a 40 percent working interest in OML 53, onshore north eastern Niger Delta from Chevron Nigeria Limited (CNL). NNPC holds the remaining 60 percent interest in OML 53. The up-front acquisition cost to Seplat, after adjustments, is $254.6 million, of which $69 million had previously been paid as a deposit in 2013 and $185.6 million paid at completion. The adjustments to the up-front acquisition cost include a deferred payment of $18.75 million contingent on oil prices averaging $90 a barrel or above for 12 consecutive months over the next five years. 

The Company estimates net recoverable hydrocarbon volumes attributable to its 40 percent working interest to be approximately 51 million barrels of oil and condensate and 611 billion standard cubic feet (Bscf) of gas (total 151 million barrels of oil equivalent or MMboe). Seplat has been designated as Operator of OML 53 pursuant to the Joint Operating Model approved by the Honorable Nigerian Minister of Petroleum Resources. “In particular, this transaction fits neatly with our strategy of securing, commercializing and monetizing natural gas in the Niger Delta with a view to supplying the rapidly growing and evolving domestic market. In addition to the large scale discovered, but undeveloped gas and condensate resources that are yet to be fully classified through detailed technical work, there are near term opportunities to increase and optimize oil production significantly above current levels,” said Austin Avuru, Seplat's CEO. “We very much look forward to working with NNPC and leveraging our technical and commercial expertise as Operator to realize the full potential of this high grade acreage,” he added. 

OML 53 covers an area of approximately 612 square miles (1,585 square kilometers) and is located onshore in the north eastern Niger Delta. The Jisike oil field, located in the north western area of the block, is currently the only producing field on OML 53. Current gross production from Jisike is approximately 2,000 barrels of oil per day or bopd (approximately 800 bopd on a 40 percent working interest basis). Existing infrastructure on OML 53 at Jisike comprises flow-lines, phase one separation facilities and a flow station with a design capacity of 12,000 bopd and 8 million standard cubic feet per day (MMscf/d). Oil production is then sent for further processing at the nearby Izombe facilities on OML 124 from where it is then exported via pipeline to the Brass oil terminal. The block also contains the large undeveloped Ohaji South gas and condensate field, the development of which will be coordinated with the SPDC operated Assa North field on adjacent OML 21, together referred to as the ANOS project. The expectation is that future gas production from the ANOS project will supply the domestic market, for which significant work on commercialization terms and development concepts has been undertaken, and that produced condensate will be available for sale into the global market. There is also shallow oil development potential at Ohaji South that could be pursued as a separate, standalone project in the near term. Prior to initiating development of the ANOS project, Seplat expects to focus efforts on increasing oil production at the Jisike field and development of the shallow oil reservoirs in Ohaji South. 

In a separate announcement, Seplat revealed that it has concluded negotiations to purchase 56.25 percent of the share capital of Belemaoil Producing Limited (Belemaoil), a Nigerian special purpose vehicle (SPV) that has completed the acquisition of a 40 percent interest in the producing OML 55, located in the swamp to coastal zone of south eastern Niger Delta, (the Acquisition), from Chevron Nigeria Limited (CNL). NNPC holds the remaining 60 percent interest in OML 55. Seplat's effective working interest in OML 55 as a result of the Acquisition is 22.5 percent. The cost for Seplat to acquire its 22.5 percent effective working interest in OML 55 is $132.2 million. The Company has also advanced certain loans of $132.9 million to the other shareholders of Belemaoil to meet their share of investments and costs associated with Belemaoil. Consequently, the up-front cash outlay to Seplat after adjustments is $265.1 million. The adjustments to the up-front acquisition cost include a deferred payment of $20.6 million contingent on oil prices averaging $90 a barrel or above for 12 consecutive months over the next five years. Under the agreed terms Seplat will recover the loaned amounts, together with an uplift premium of $20.6 million and annual interest of 10 percent, from 80 percent of the other shareholders oil lifting entitlements. 

The Company estimates net recoverable hydrocarbon volumes attributable to its 22.5 percent effective working interest to be approximately 20 million barrels of oil and condensate and 156 Bscf of gas (total 46 MMboe). Current gross production at OML 55 is approximately 8,000 bopd (1,800 bopd on a 22.5 percent working interest basis). Pursuant to the Joint Operating Model approved by the Honorable Nigerian Minister of Petroleum Resources, Seplat has been designated operator of OML 55. The Company will also act as technical services provider to Belemaoil. “The addition of OML 55 to our portfolio, together with the separately announced acquisition of OML 53, expands our footprint in the Niger Delta to six blocks and further cements our position as a leading indigenous independent E&P in Nigeria. OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritizing those that offer near-term production growth, cash-flow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria,” said Austin Avuru, Seplat’s CEO. “We are pleased to have extended our operating partnership with NNPC who we look forward to working with in our capacity as Operator pursuant to the Joint Operating Model,” he added. 

OML 55 covers an area of approximately 324 square miles (840 square kilometers) and is located in the swamp to shallow water offshore areas in the south eastern Niger Delta. The block contains five producing fields (Robertkiri, Inda, Belema North, Idama and Jokka). The majority of production on the block is from the Robertkiri, Idama and Inda fields. The Robertkiri field is located in swamp at a water depth of five meters and has a production platform and utility platform installed. Production capacity at the Robertkiri facilities is 20,000 barrels per day and 10 MMscf/d. Production facilities at the Idama field comprise a jackup mobile offshore production unit (MOPU) and riser platform that have a capacity of 30,000 barrels per day of total fluids and 34 MMscf/d. The Jokka field is produced through a manifold tied-back to the Idama facilities. Production facilities at the Inda field comprise a MOPU with a capacity of 30,000 barrels per day of total liquids and 34 MMscf/d. Other infrastructure on OML 55 comprises four flow-stations, a network of flow-lines and two eight-inch pipelines that connect to third party operated infrastructure. The Belema field is unitized with OML 25 and is produced via a flow-station on that block. All produced liquids from OML 55 are delivered via third party infrastructure to the Bonny terminal for processing and shipping. In addition to the oil potential on the block there is also an opportunity to develop the significant gas resources that have also been identified.