AfrOil 19th Oct 2010 - Centric’s African rift frontier potential

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Centric Energy CEO on their potential in Mali, Kenya and beyond

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AfrOil 19th Oct 2010 - Centric’s African rift frontier potential

  1. 1. 19 October 2010 AfrOil Week 41 Issue 361 News Analysis Intelligence Published by AFRICA OIL & GAS MONITOR NewsBase COMMENTARY 2 NEWS THIS WEEK… Gabon delay Gabon struggles to sustain plans on auction delay 2 Centric chases rift frontier potential 4 The Gabonese government has announced an INVESTMENT 6 indefinite delay to the launch of its 10th bid round. African refining plans fall short 6 Zuma backs economic case for Project Gabon’s oil production has been declining for Mthombo 6 some years. The country hopes that exploration of Sirius Petroleum shines light on Nigeria’s its ultra-deepwater will turn this trend around. (Page 2) Ke field 7 The country’s reasons for putting off the bid PERFORMANCE 7 round focus on concerns highlighted by BP’s Gulf Spain, Algeria fight on gas pricing 7 of Mexico disaster. (Page 9) Confidence in Libya continues to deteriorate Petroceltic updates North African 8 Refining woes appraisal programme 8 Africa’s refining sector is slow-moving and very POLICY 9 few schemes actually make progress. Tullow continues Kinshasa dispute 9 CITAC has diagnosed the downstream industry Gabon postpones round again 9 and appears unimpressed. (Page 6) Libyan squeeze Obasanjo aide charged over NLNG case10 Abyei talks collapse, jeopardising Sudanese production 10 Tripoli has proved to be a difficult partner in many PROJECTS & COMPANIES 11 ways and this is slowing development. Shell to launch Marsa el-Brega tender 11 Sonangol and PetroSA plot refinery joint A number of companies have dropped licences as venture 11 a result of poor results and tough terms. (Page 8) NEWS IN BRIEF 12 Reports suggest work on Marsa el-Brega may COURSES 20 soon be up for tender again, but it is unclear that CONFERENCES 21 things will be any better this time around. (Page 11) For analysis and commentary on these and other stories, plus the latest oil and gas developments, see inside… Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  2. 2. AfrOil 19 October 2010, Week 41 page 2 COMMENTARY Gabon struggles to sustain plans on auction delay Libreville has announced another delay to its 10th licence round, throwing into question the country’s plans to sustain production levels through licensing the technically difficult ultra-deepwater offshore By Alfonse Dubere The round was due to be held on October 27 but has been postponed indefinitely Environmental concerns are said to be a major factor in the decision to delay the round Gabon needs production from new areas to overcome the decline of the last few years Gabon has postponed its planned 10th Total, which have recently announced Petroleum and Hydrocarbons Minister licensing round yet again. The news will imminent Gabonese commitments. Julien Nkoghe Bekale said on October come as a disappointment to explorers The official line from Libreville is that 12. The minister said exploration costs that have been eyeing the West African the auction of 42 offshore drilling blocks and environmental concerns had changed country’s deeper offshore waters as a – which had originally been scheduled since the Gulf of Mexico spill. new oil frontier opportunity – a view for March and was then put off until “This approach is consistent with our mirrored by foreign majors LUKoil and October 27 – has been postponed hopes to achieve the best standards for indefinitely, risk prevention and industrial safety, and owing to a compliance with environmental number of standards,” he was reported as saying by factors, Reuters. including a The Gabonese authorities want “to be requirement assured of certain guarantees, notably for improved with regard to security, the environment security and and the opportunities for operators,” an environment official said. Libreville is taking into guarantees. account what happened in the Gulf of Africa’s Mexico, where the worst oil spill in US seventh largest history occurred in April 2010. “No one crude supplier is immune from that sort of accident ... increasingly which means that we are taking the time needs to to prepare things in the best way.” combat steep Concerns over environmental issues declines from are on the rise around the world, with a its existing number of company officials reporting fields, but increased interest as a result of the “wisdom has Macondo disaster. prevailed, Mba said some companies had shown since new interest in the new blocks, reiterating past factors and statements from the government that the objectives auction had been delayed to October 27 have arisen,” because of heightened international Gabonese interest. Mines, Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  3. 3. AfrOil 19 October 2010, Week 41 page 3 COMMENTARY CGG Veritas, which has worked on fresh exploration ventures, as well as the Sud. marketing the round, said in late 2009 oil companies that buy into the blocks. that some industry majors and larger This, now, is in question. Existing plays independents had already shown an Gabon’s attraction as a hydrocarbons initial interest in the acreage. Recent Ultra-deep prospects market remain strong, though, as shown reports cited China’s Sinopec – already Oil remains Gabon’s main source of by recent comments from LUKoil, an existing player in Gabon – as lining wealth, accounting for about 60% of the Russia’s second largest oil company, up major potential bids at the auction. country’s budget, but output has been which is considering joining an upstream Mba underlined that one of the key declining for more than a decade after oil and gas project in Gabon as part of its external concerns – new regulations for hitting a peak of 371,000 barrels per day strategy of expanding in West Africa. No the Gabonese industry – was being in 1997, falling to around 220,000- further details were provided by drawn up, and would lay down a number 250,000 bpd. The new licensing round, LUKoil’s president, Vagit Alekperov, of rules that firms currently operating in which was due to open on October 27 who told reporters on October 13 that Gabon and those hoping to do so would with a grand event in Libreville, was “we’re looking at Gabon.” have to obey. A French law firm, Gide therefore seen as key to Gabon’s Far more specific is French Total, Loyrette Nouel, came up with a draft hydrocarbons future, marking the first which is eyeing a multi-billion hydrocarbons law in 2009, but work on time that Gabon had offered blocks in the investment into its Gabonese oil acreage. this would appear to be ongoing. offshore ultra-deepwater. “We are planning to invest some very It may be significant in this respect Here, untapped subsalt deposits have large sums, nearly US$2 billion in our that, according to Reuters, a Gabonese been touted as offering complex but installations and at the same time get energy official said recently that in potentially highly lucrative opportunities access to new resources,” Total’s head of addition to royalties and production for players prepared to gamble that exploration and production, Yves-Louis costs, Gabon would seek a 50% share of drilling successes across the Atlantic in Darricarrere, told Gabon’s national production for fields producing up to Brazil’s offshore can be replicated. television on October 13. 75,000 bpd, and a greater percentage for The untapped potential of Gabon’s Darricarrere reportedly hinted that fields where output was even higher. subsalt section was recently highlighted Total Gabon’s Anguille oilfield would Whatever Gabon’s rationale for the by Spain’s Repsol, which said it wanted not be the only investment in the years move, the news has, yet again, placed on to “export” the Brazilian model to Gabon ahead by the French super-major, which hold what some market observers have and other West African countries. also controls the 6,000-square km Diaba envisaged will be a potential 10-year Several small subsalt discoveries have block. His comments came after a period of offshore exploration in Gabon. already been made offshore the Republic meeting with Gabonese President Ali It had seemed entirely plausible that a of Congo (Brazzaville), giving rise to Ben Bongo, who took office in August range of drilling activity could begin predictions that this trend could run all 2009, replacing his father. across the newly licensed blocks by mid- the way up to Tullow Oil’s discoveries Bongo has held up a range of targets 2011, bringing opportunities for the offshore Ghana. for economic revitalisation, including the drilling contractors and subsea Data for bidders pursuing this play replacement of gas flaring with re- equipment manufacturers that feed on offshore Gabon have been handled by injection techniques. Like many African CGG Veritas, leaders, though, he has failed to match which has been the ambitious talk with project retained to advise implementation. Analysts said the 10th the Direction licensing round would be seen as a key Generale des gauge of the progress made by the new Hydrocarbures president, given the government’s long- (DGH) on the term need to turn around years of slow promotion of the production decline from maturing licensing round. It shallow-water fields and thereby sustain has acquired its future economic development. almost 13,000 km For the time being, it will be down to of seismic data existing explorers such as Maurel et and reprocessed Prom, Royal Dutch/Shell, Perenco and 5,000 km across Vaalco Energy to prop up production the two levels, but these will only ever swing deepwater regions back past the previous peak if the focus involved, Zone of activities can move out into Gabon’s Nord and Zone deepwater offshore acreage. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  4. 4. AfrOil 19 October 2010, Week 41 page 4 COMMENTARY Centric chases rift frontier potential The company has significant acreage in two frontier countries, Mali and Kenya, and is on the look out for additions By Ed Reed Centric has 88,000 square km of acreage in Mali and Kenya, working with Heritage and Tullow The Kenyan block is under-explored, with plans to investigate the on- and offshore Seismic is to get under way in Mali this year and an exploration well could be drilled in 2011 Success in Uganda has helped drive claim. A hearing is to be held on October Under its licence, Centric has enthusiasm for Kenyan work, a sentiment 27 on the matter. committed to carrying out an airborne corroborated by Tullow Oil’s decision to Exploration has been moving in fits gravity survey and acquiring 200 km of strike a deal with Centric Energy on its and starts in Kenya for many years, 2-D seismic on the block in the first Block 10BA. although there have been relatively few three-year phase. The company has Tullow is to take a 50% stake in wells. received satellite images of Lake Centric’s production-sharing contract Turkana to look for slicks that might (PSC), assuming it gains approval from Kenyan programme have come from oil seeps. the Kenyan government. “We have had Robinson said the sheer size of the area – “The next step is to get out on the lake indications that the Kenyan government Block 10BA covers 16,205 square km – to sample these and we will need to do is pleased, so we do not anticipate any meant there was substantial untapped seismic onshore and in the lake. We have difficulties in that regard,” Centric’s exploration potential. On this large also initiated reprocessing of the old CEO and president, Alec Robinson, told expanse only one well has been drilled seismic data and reinterpretation of the AfrOil. Tullow, he said, “will be a strong and around 1,500 km of seismic old gravity and magnetic data,” Robinson partner for Kenya.” acquired. said. One potential concern, though, is a “The latest seismic [on the block] was Should Centric – and Tullow’s – hopes Kenyan court case, under which shot in 1992,” Centric’s CEO said. “We for oil be successful in Kenya, the Interstate Petroleum has sought a judicial feel that the opportunities that are companies would face some challenges review of the block’s award, although demonstrated by the seismic are in terms of exporting the crude, as there Centric has said there is no basis for the significant.” is no nearby infrastructure at present. Robinson, though, was confident a solution could be found, saying success at Block 10BA could piggyback on other export schemes, either from Sudan or Uganda. South Sudan is set to hold a referendum in January 2011 on potential secession. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  5. 5. AfrOil 19 October 2010, Week 41 page 5 COMMENTARY Should independence be approved, as “They are both part of the interior rift were in the blocks. “The survey is seems likely, the new country would face system, although of slightly different sufficiently high-resolution that we can an interesting dilemma over how to ages. The rift basin in Mali is use it to decide where to shoot more export its oil. South Sudan holds the Cretaceous-age and the rift basin in seismic. As I mentioned, seismic is majority of the country’s production but, Kenya is Tertiary, so it is younger. The planned to start later this year. for now, output flows to the north, to rift basin in Kenya is north to south, and Depending on the results, drilling should Port Sudan. crossing it at an angle is the Cretaceous start [in 2011].” Should Sudan break up, this export rift, known as the Anza Graben, that Although Mali has mostly flown under route may come under pressure and continues into southern Sudan,” he said. the radar, a number of high-profile schemes have emerged for a link to be Robinson went on to note the potential companies have signed up to work in the constructed to transport crude through presence of “lake sediment, which forms Sahelian state. Algeria’s state-owned Kenya. Such a plan, which has been Sonatrach, for instance, has Block 20 and backed by Toyota Tsusho, would involve a stake in Block 4, alongside Italy’s Eni. building a pipeline probably passing “The Agadem block, in “The Agadem block, in Niger, is of a through Centric’s block. Niger, is of a similar age similar age and may indicate the Alternately, the plan could tie into a potential of our licences in Mali,” Ugandan scheme. “The export pipeline and may indicate the Robinson said. “One study by another for Uganda’s oil, if it [passes] through potential of our licences in company suggests it has 350 million Kenya, will come very close to our barrels of oil in place. It is reported that a operation,” Robinson said. “The ideal Mali,” Robinson said Chinese company paid a signature bonus solution would be a pipeline network, of US$300 million about two years ago source rocks and generates oil, as seen in bringing together Sudanese, Ugandan to acquire the licence.” Uganda.” Finally, the licence terms in and Kenyan oil.” both states are good and the tax regimes The pipeline would have to be heated Looking to the future are “acceptable. We’re a small company, to more than 40 degrees Celsius, Centric’s strategy is to focus on so we have to go to regions where, Robinson explained, in order to “keep the opportunities in areas “where there is currently, there is less competition.” oil flowing, because of [its] wax evidence of hydrocarbons, in countries Another link, tying Mali to Uganda, is content.” that have favourable commercial terms the presence of Heritage Oil, which Despite the block’s proximity to and that accept direct applications for acquired a 75% stake in the blocks in Sudan, the Centric official was exploration acreage.” 2008, committing to carry Centric unconcerned about security issues. There Robinson said the company was on the through the acquisition of seismic and is a disputed area nearby, he said, but lookout for additional deals and that its the drilling of a first exploration well. there does not appear to be any fighting focus was on sub-Saharan Africa. “We Centric’s two areas, Blocks 7 and 11, there. “It’s important to have strong don’t just look at geology: we look at are in southeast Mali, in the Cretaceous- community programmes in the areas of deal flow, competition, business age Goa rift basin. Between the two operations. It is good common sense. environment and fiscal regime when blocks, Robinson said, is a water well in Local people should see the benefit our considering where to go next.” which oil and gas have been detected. presence – it’s partly altruistic, partly Centric has previously been linked to “BP sampled it in the 1970’s and wise business.” Eritrean opportunities, which have also confirmed that the oil [there] is a seep of been under-explored, appearing to match natural crude oil and not pollution. This Mali the company’s plans to seek up and gives us some indication of hydrocarbons As a result of the Tullow deal and other coming plays. With the completion of the in the basin,” he said. corporate activity much has been made Kenya deal and the start-up of seismic in Heritage is planning to acquire seismic of East African assets in recent times, but Mali looming, Centric seems to have on the blocks in the fourth quarter of this Centric also has two blocks in Mali, proved its ability to sign up frontier year. An aeromagnetic survey, covering covering 72,850 square km. acreage. Now the company needs to 42,000 line km, has already been shot on Robinson told AfrOil that there were a establish its ability to move into the the blocks, “which is about the number of links between Mali and exploration phase and firm up its circumference of the world.” Kenya, including the geology, lake hopes. Robinson said this had given clear sediments and licence terms. indications of where the basins of interest Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  6. 6. AfrOil 19 October 2010, Week 41 page 6 INVESTMENT African refining plans fall short Africa’s refining plans have failed, for company has been instrumental in more support for refining plans and must the most part, to make any progress building plants in Sudan, Algeria, Chad honour long-term commitments. beyond the drawing board, CITAC and Niger, while Citadel Capital is Subsidies can act to distort the market, it Africa pointed out at a recent forum. involved in a facility being planned in continued, and governments must pay The group’s executive director, Gary Egypt. these on time, should they be maintained. Still, speaking at a downstream event in The CITAC official said the Chinese The World Bank and International Lagos on October 14, said that while involvement in these downstream areas Monetary Fund (IMF) should support the there had been 60 announcements of “may lead to the acquisition of prime construction of refineries over product plans for new refineries in Africa, only exploration concessions, which may imports, which would draw in one had actually been built. become future Chinese-controlled crude commercial backing. Finally, CITAC CITAC said that 90% of the proposals reserves for years to come.” Local said, refineries should focus on meeting for refineries fail to make any progress. governments benefit from these domestic demand in land-locked Some make it as far as a feasibility study investments, with the introduction of new countries, rather than marginal exports. but are then dropped once backers try to product capacity as well as securing Still said as long as these factors were raise financing. Slow progress in African upstream commitments. uncertain, African refining plans would refining has been further compounded by Still also said the African refining continue to struggle and “perhaps only weak international margins, with some sector was “desperately searching for CNPC will be prepared to take the experts saying the world needs to cut as financing to improve product quality.” commercial risk of the necessary much as 7 million barrels per day of There would be significant health and investment by supplying soft loans.” capacity. economic benefits for countries Even CNPC, though, would look to The prime driver of downstream switching to clean fuels, CITAC said, but balance its downstream investment risk projects in Africa, CITAC continued, has in sub-Saharan states alone this would through securing upstream been China National Petroleum Corp. require US$10-15 billion of investment concessions. (CNPC), which has been involved in five by 2020. out of seven schemes. The Chinese CITAC said governments should show Zuma backs economic case for Project Mthombo South African President Jacob Zuma has billion rand (US$1.8 billion) per year in The Project Mthombo refinery is given his support to PetroSA's planned energy costs once it was running, and expected to ease some of this pressure, refinery in the Coega industrial “could export oil [products] across with Zuma singling out state-owned development zone, near Port Elizabeth. Africa.” PetroSA’s recent track record as a reason The president said the project would While the refinery would “showcase for optimism. reduce South Africa’s dependency on South Africa’s competitive ability” it “We welcome the fact that PetroSA is energy imports and improve the country's would also help the country escape from making its impact, not only in job image overseas. its current dependency trap, where creation but in empowering the people as Construction of the US$11 billion demand for refined automotive products well. It employs close to 2,000 people, facility, which will have 400,000 barrels relies on imports, he added. while 27,500 more will be absorbed per day of capacity, is expected to start in Despite South Africa's status as one of within the crude oil refinery that is 2012, with the refinery to come onstream the most developed economies in sub- [being] planned,” Zuma said. by 2015. Once completed it will be the Saharan Africa, it has frequently “To be able to reach the markets in largest oil refinery on the continent. struggled to maintain a consistent and Europe, the US, the Caribbean, the Speaking at a visit to PetroSA’s gas-to- secure energy supply, with both domestic Middle East and the Far East is an liquids (GTL) refinery in Mossel Bay on use and its large-scale and resource- important achievement,” the president October 14, Zuma said the project would intensive mining sector regularly said. help South Africa save an estimated 12.6 disrupted. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  7. 7. AfrOil 19 October 2010, Week 41 page 7 INVESTMENT Sirius Petroleum shines light on Nigeria’s Ke field UK-listed minnow Sirius Petroleum said was originally discovered in 1965 by barrels of crude. it had raised GBP15.7 million (US$24.9 Chevron, which retains a small royalty Trading in the company’s shares has million) to help develop Nigeria’s Ke interest in any production income from been halted on London’s Alternative field, a small oil discovery in the the Ke farm-out area. Investment Market (AIM) while the southern part of the Niger Delta. The area, which covers 52 square km, transaction is in play. The company said last week that it was originally part of Oil Mining The move into Nigeria’s oil sector would place about 313.9 million shares at Licence (OML) 55 and was awarded to marks a major strategic shift for Sirius GBP0.05 (US$0.08) per share to raise the Del Sigma in 2003, as part of the Petroleum, which has had no substantive money. Sirius agreed earlier this year to Department of Petroleum Resources trading business since 2007, following a acquire a 40% interest in the field, held (DPR) marginal field round. decision to cease its gaming industry by Nigerian independent Del Sigma Del Sigma presently holds a 100% aggregation software business. Petroleum, in a reverse takeover deal. participating interest in the field. Starting with the Ke field, it now plans The deal is still awaiting Nigerian According to Sirius Petroleum, to focus on marginal oilfields, government approval, which is potential recoverable reserves at the Ke particularly in Nigeria. The Sirius board anticipated later this month. The Ke field field are expected to exceed 25 million said the project “has unrealised value.” PERFORMANCE Spain, Algeria fight on gas pricing The gas price dispute between Spain’s the Paris arbitration court over 2007-09 to 50% from 60%. The 60% level was set Gas Natural Fenosa and Algeria’s gas prices, and must now pay Sonatrach in 2004 by another royal decree. Sonatrach is now a full blown political up to US$2 billion in unpaid costs, which Gas Natural is Spain’s biggest gas conflict between the two countries, is more than Gas Natural’s annual net group, with more than 60% of all Spanish Industry Minister Miguel profit. Spanish gas customers. The economic Sebastian told Parliament on October 13. The legal change to limit a foreign nature of the dispute has become political Sebastian revealed he would be company’s gas market share to 30% for several reasons. One is that Gas travelling to Algeria in the week would restrict Sonatrach’s power in Natural’s debt to Sonatrach could end up commencing October 18 to discuss the Spain. The power the Algerian company being paid partly by Gas Natural’s matter with Algerian Energy Minister wields is set to increase radically when customers. Gas Natural has asked the Youcef Yousfi. the Algeria-Spain underwater Medgaz government to allow some of the huge As the Spanish government angles for gas pipeline comes into operation later debt to be paid through Spaniards’ gas a solution through dialogue, Gas Natural this year. bills. is studying legal measures to limit Almost worse for Gas Natural is that Another reason is the much greater Sonatrach’s power in Spain as the Sonatrach has a licence to trade its gas in power Sonatrach could wield once country’s main gas supplier. One is to Spain, which means it can sell directly to Medgaz began operating, which would reduce by law the 50% maximum gas end users without going through include the power to condition prices. supply market share a foreign company intermediaries, such as Gas Natural, Sonatrach holds the largest stake in can have in Spain to 30%. Sonatrach’s Iberdrola or Endesa. Sonatrach already Medgaz, with a 36% stake. Gas Natural current share is 32%. has a 1.04% trading market share, and has no stake in Medgaz, although Another is to take Sonatrach’s Algeria’s ambassador in Spain has Iberdrola and CEPSA have 20% each, intention of raising gas supply prices for indicated the company may triple this. while Endesa and Gaz de France each 2010-12 by a further 30% to another A Spanish royal decree issued in 2007 own 12%. Sonatrach’s gas currently international arbitration court. In August, had already lowered the gas supply reaches Spain via the Maghreb pipeline, Gas Natural lost a case with Sonatrach in market limit for a non-Spanish company which passes through Morocco. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  8. 8. AfrOil 19 October 2010, Week 41 page 8 PERFORMANCE Confidence in Libya continues to deteriorate Confidence in Libya’s oil and gas November. were lifted in 2005. marketplace took another hit this month The announcements reiterate the Many have looked to the experience of as a series of international firms feeling of general unease surrounding Canada’s Verenex Energy and have announced they would exit the country Libya, with the lacklustre finds of many begun to wonder if the risk of investing because of low returns and an unstable international companies made worse by in the country is worth the hassle. political climate. erratic comments and behaviour on the The Calgary-based company agreed to Following BG Group, which part of the government. Libya had a sale to China National Petroleum Corp. announced its exit in late August after appeared to be moving towards (CNPC) but, following opposition from three consecutive dry wells, Chevron, modernisation but shifting power local interests, was forced to accept an Occidental Petroleum, Woodside balances within the Tripoli regime have offer of 30% less from the Libyan Petroleum and Abu Dhabi-based Liwa swung back towards more conservative Investment Authority (LIA), Energy have said they will not renew figures. Poor results and comments However, while many companies are their licences. suggesting a nationalisation of Libya’s cutting Libyan projects, others have The planned exits follow a summer of resources have created an uneasy elected to remain, such as Hess, delays as BP has struggled to move atmosphere for foreign investors. Petrobras, Indonesia’s Medco Energi, Oil forward on a US$900 million offshore In addition to threatening needed India Ltd (OIL) and Algeria’s Sonatrach. drilling project. The company has been exploration and infrastructure In addition, Italy’s Eni has reiterated its criticised by European Union officials for investment, this loss of confidence pledge to invest US$25 billion in Libya planning to drill in the Mediterranean jeopardises the country’s growth rates, over the next decade. Sea. The UK-based super-major appears which have been driven by the promise to be set to begin drilling in Libya in of its oil and gas industry since sanctions Petroceltic updates North African appraisal programme Drilling is to start at Petroceltic appraisal drilling programme lasting six Bir Ben Tartar reservoir unit, a detailed International’s Ain Tsila discovery in months at the gas condensate field, where evaluation of the data indicated oil Algeria’s Isarene permit in November, three test wells have revealed “an saturation and reservoir characteristics but its Tunisian exploration well is to be extensive and probably continuous gas were insufficient to justify fracture plugged and abandoned. accumulation” that, following fracture stimulation and well bore testing. Petroceltic confirmed these contrasting stimulation, is capable of flowing at rates Petroceltic’s CEO, Brian O'Cathain, fortunes from its North African wells in exceeding 850,000 cubic metres per day. commented that, while the ST-4 an operations update issued on October This latest appraisal programme aims exploration results were disappointing, 12. to confirm recoverable hydrocarbon “the extensive modern logging data The Irish-headquartered independent reserves and to optimise development collected” would be reviewed “before said it was making good progress at its plans for the discoveries and gas sales making a decision on whether to Ain Tsila (AT-4) well in Algeria, where contracts. continue with any further exploration” on it holds a 75% stake as operator in a joint that block. venture with state-owned Sonatrach. Tunisia ST-4 is part of a work programme Civil engineering works are now Meanwhile, the Sidi Toui-4 (ST-4) well, agreed when Petroasian Energy Holdings complete and the site is ready to receive at the Ksar Hadada permit in Tunisia, is farmed into the permit, in which the Dalma No 12 rig. Drilling is expected to be plugged and abandoned without Petroceltic is the operator with a 27.03% to begin during the first week of testing. The CTF Rig 06 will be interest. Petroasian’s holding is 51% and November and take around 40 days. demobilised. there are three other partners. This will be the first in a multi-well Despite encountering oil shows in the Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  9. 9. AfrOil 19 October 2010, Week 41 page 9 POLICY Tullow continues Kinshasa dispute Tullow Oil said last week it would companies owned by Khulubuse Zuma, of Hydrocarbons Celestin Mbuyu told continue to pursue a court case in order the nephew of South African President members of parliament that Tullow did to uphold its claims to two blocks on the Jacob Zuma. In June of this year, a not have the right to seek arbitration in western side of Lake Albert, in the presidential decree endorsing the award the Paris court. He asserted that the Democratic Republic of Congo of Blocks 1 and 2 to Caprikat and presidential decree signed in June (Kinshasa). Foxwhelp was signed. invalidated the sections of the Irish Tullow’s vice president, Tim According to the Congolese company’s agreement that provided for O’Hanlon, told Bloomberg that his government, the signing of the arbitration of future disputes. company had no choice but to seek a presidential decree means that the only He also said Kinshasa had sent letters judicial remedy for its claims to Blocks 1 valid contract for the blocks is the one to both Tullow and DIG giving notice of and 2, located in the northeast part of signed with Caprikat and Foxwhelp. cancellation and offering instructions on Congo (Kinshasa). “Since Tullow is not However, Tullow has challenged securing compensation from the in the habit of buying back goods which Kinshasa’s actions, saying that the Congolese Ministry of Finance. have been stolen from us, I defy anybody original deal should stand. It has filed O’Hanlon told Bloomberg that his to show what alternative we had to these cases against Congo (Kinshasa) in the company was not aware of any such legal actions,” he said in an email International Court of Arbitration in Paris letter. However, DIG’s director, Andrea message. and in a British Virgin Islands court. Brown, told the news agency that her Kinshasa had awarded the blocks to The latter court recently made a ruling company had received Kinshasa’s letter Tullow in 2006. Before the project had in Tullow’s favour. On September 21, it and was in negotiations on reached the step of being approved by issued an injunction barring Caprikat and compensation. presidential decree, though, the Foxwhelp from exercising or transferring Tullow also holds rights to several Congolese government announced that it rights to the blocks and from working at blocks on the Ugandan side of Lake had been cancelled. In 2008, it awarded either site. It also said a new hearing on Albert. These blocks contain about 1 the two blocks to Divine Inspiration the case would be held on October 18. billion barrels of crude oil and are set to Group (DIG) of South Africa. As of press time, it was not clear begin production in 2014-15. They may This deal also fell through and whether the Congolese government had come to yield 200,000 barrels per day. Kinshasa later turned the blocks over to commented on the injunction. two British Virgin Islands-registered In early October, Congolese Minister Gabon postpones round again Gabon has opted to push back the start of Hydrocarbons Ministry official, Guy produce 220,000-240,000 barrels per its offer of blocks indefinitely, attributing Martial Mbeang Mba, told AFP on day, are in decline and the country is the delay to security concerns and October 13 that the government wanted seeking to diversify its economic reliance environmental guarantees in the wake of to “be assured of certain guarantees, on oil, which is said to account for BP’s Gulf of Mexico disaster. notably with regard to security, the around 60% of its budget. The sale of 42 Gabonese offshore environment and the opportunities for Earlier this year, an energy official said blocks, which was originally set for May operators.” Gabon would be asking for a 50% share 5 and then delayed until October 27 Without announcing a new auction of production from fields generating up because of greater than expected date, Mba confirmed Gabon was drawing to 75,000 bpd, with a greater amount due international interest, is now in jeopardy. up a code of conduct for companies from those with a higher output, in A government official linked the latest working in its energy industry, taking addition to receiving royalty payments deferral to a need to “adopt a new “international factors” into account. “No and production costs. approach rather than just launch into this one is immune from that sort of The country has also suffered from operation” following the loss of life and accident,” he said, adding the oil-rich numerous strikes and, early this month, environmental damage caused by an state was “taking the time to prepare Gabon said it was to move towards explosion on and the subsequent sinking things in the best way.” strengthening the role of local content, in of BP’s Deepwater Horizon rig in April. Gabon is Africa's seventh largest crude a move that might prove difficult for A Gabonese Mining, Oil and supplier but its existing fields, which foreign investors. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  10. 10. AfrOil 19 October 2010, Week 41 page 10 POLICY Obasanjo aide charged over NLNG case The long-running case centred on bribes Technip, Snamprogetti and JGC. TSKJ is to the government. paid to secure construction contracts at said to have paid around US$180 million The Nigerian government has also Nigeria LNG (NLNG) took a fresh twist in order to secure work on the NLNG been reported as preparing to sue last week as an official close to Nigeria’s project. The US government has also Halliburton, which was the parent former president, Olusegun Obasanjo, chosen to pursue these companies, with company of KBR at the time of the was charged with money laundering. KBR, Technip and Snamprogetti having scandal, for US$2 billion in US courts. A senior aide in the Obasanjo paid out or set aside cash to cover fines. administration, Adeyanju Bodunde, was Charges filed in September had named Panalpina charged with six counts of money a number of participants in the scandal, In related news, the Wall Street Journal laundering on October 14. He pleaded but suits against many foreigners were reported Panalpina, a Swiss logistics not guilty to all the charges and was dropped last week. Among those company, and Royal Dutch/Shell were subsequently freed on bail. previously named and then dropped are nearing a settlement with the US Bodunde was accused of accepting Jeffrey Tesler, George Mark and the government over foreign bribery. around US$5 million in cash from local affiliate of construction giant Panalpina’s actions are being various businessmen. The aide denied Bilfinger Berger. investigated in a number of foreign wrongdoing, saying in local reports that Tesler, who resides in the UK, is states, including Nigeria. The logistics he was merely acting to raise fighting attempts by the US government company is to pay US$85 million, while contributions for Nigeria’s ruling to extradite him, to face charges of Shell will have to stump up US$30 People’s Democratic Party (PDP). contravening the Foreign Corrupt million for using Panalpina’s services in The charges stem from actions taken Practices Act (FCPA). Julius Berger is Nigeria. by TSKJ Nigeria, a consortium of said to have reached an out of court international service companies – KBR, settlement, paying around US$30 million Abyei talks collapse, jeopardising Sudanese production Prospects for the Heglig and Unity US-mediated talks in Addis Ababa be aggravated by the looming dispute oilfields, in Sudan’s Muglad Basin, have collapsed, shattering any hopes by the between NCP and SPLM, both of whom been thrown into question following the Greater Nile Petroleum Operating have agreed to a fresh round of collapse of the latest negotiations over Company (GNPOC), the major operator negotiations later in the month. The two the over the future of the oil-producing of the two oilfields, of boosting the sides are also accusing each other of Abyei region. falling production figures and of amassing troops along the demarcation The Khartoum-based National enhancing the capacity of the Greater boundary. Congress Party (NCP) and the Nile Oil Pipeline. The link runs from the GNPOC oil production in Blocks 1, 2, Government of Southern Sudan’s Sudan fields to Port Sudan, on the Red Sea. 4, which include areas in Unity State, People's Liberation Movement (SPLM) “Despite serious efforts and many Southern Kordofan and Abyei, generated have been locked in unsuccessful productive discussions, [the delegates] around 175,000 barrels per day in 2009, negotiations over the control of Abyei. did not succeed in reaching an agreement down from an estimated 252,000 bpd in The area is to hold a separate referendum on the eligibility criteria for voters in the 2006. from the south, under which the two Abyei area referendum,” the NCP and Under the Comprehensive Peace dominant tribes in the area – the the SPLM said in a joint statement, Agreeement (CPA) of 2005, the oil Messiriya and Ngok Dinka – will decide quoted in the International Business produced in the country, over 80% of whether to throw in with Juba or Times. which comes from the south, was to be Khartoum. Statistics show falling production from shared equally between Khartoum and Despite frantic efforts last week, the the two fields, a situation that is likely to the Government of South Sudan. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  11. 11. AfrOil 19 October 2010, Week 41 page 11 PROJECTS & COMPANIES Shell to launch Marsa el-Brega tender A new tender is close to being issued to has been operating for around 40 years – a new plant or upgrade. overhaul the Marsa el-Brega liquefaction it was only the second in the world to Libyan expectations about price are facility in Libya, according to a report in begin producing. It originally had a also likely to cause trouble, with a Upstream. capacity of 3.2 million tonnes per year previous tender being scrapped because A note from IHS Global Insight on but this has fallen to around 700,000 contractor quotes were around double October 14 picked up on the report but tonnes per year. NOC’s forecasts. warned that contractors remained The plant lacks the capacity to strip Leading contenders in the new tender, “sceptical and risk-averse” about liquid petroleum gas (LPG) from its Global Insight said, would be similar to operations in Libya. Global Insight feedstock, which restricts its exports to those from the previous effort, with reported Shell and Sirte Oil Co. (SOC) one destination – a Spanish regasification Italy’s Bonatti and the UK’s Petrofac. were close to re-launching the tender, facility run by Enagas. This problem Upstream suggested Greece's noting hopes from contractors that the would be tackled in the first phase of Consolidated Contractors Co. (CCC) project had been carved up into more work, Global Insight said. would also be interested in the deal. manageable packages. Shell’s deal with Libya also involves NOC’s failures with the Marsa el- Shell struck a bilateral deal to work on the company securing sufficient reserves Brega deal demonstrate wider problems the Marsa el-Brega plant in 2005 but to drive the construction of a new LNG with the Libyan regime and its attitude progress has been slow – hampered by facility, as well as new reserves for the towards investments and various Libyan bureaucracy and a lack of clarity existing plant. The note said Shell and fluctuations in the administration. about reserves. Problems at the plant SOC had not disclosed their exploration “Inflexibility and decision-making expose “the organisational problems results but quoted the two firms as saying paralysis have become permanent,” within the structures of the National Oil these had been “encouraging.” Global Insight said, noting the Corporation (NOC) and its subsidiaries,” Upstream quoted industry sources as “micromanaging of the sector from the Global Insight’s analyst, Samuel Ciszuk, saying there was uncertainty about what highest levels [at NOC], in what always said. Libya wanted from Marsa el-Brega – has been a very top-heavy The liquefied natural gas (LNG) plant whether it was to “patch things up,” build organisation.” Sonangol and PetroSA plot refinery joint venture Angola’s state-run Sonangol and South Although no other details were given, PetroSA. Africa’s PetroSA are looking at ways to both countries are keenly interested in “Angola briefed South Africa about its work together in the refining sector and developing new refining capacity. new oil exploration strategy, which will upstream. Angola’s oil ministry said in a Angola has been planning a large be approved at the end of 2010, statement, seen by Bloomberg, that the refinery in Lobito, with a capacity of providing an opportunity for PetroSA to two state energy companies were around 200,000 barrels per day, for take part in licence bidding,” a ministry contemplating setting up a joint venture years. The country’s only other refinery statement said. It said PetroSA wanted to to build and manage oil refineries. is a much smaller facility, with a import oil and liquefied natural gas “The parties are considering the maximum capacity of 41,000 bpd. (LNG) from Angola. possibility of creating a joint venture PetroSA has a refinery of similar size The two sides may sign a between Sonangol and PetroSA to at its Mossel Bay plant, although South memorandum of understanding (MoU) construct and manage refineries and Africa too has been crafting plans for a on energy issues when Angolan President finished petroleum products,” the much larger capacity plant, up to 400,000 Jose Eduardo dos Santos visits South ministry’s statement said. bpd, for some years. Africa, the ministry statement added, It follows recent talks between the two Angola’s oil ministry also said there although it did not specify when the trip sides in the Angolan capital, Luanda. were upstream opportunities too for would take place. Copyright © 2010 NewsBase Ltd. www.newsbase.com Edited by Ed Reed All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

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