Category: Production

Edo State governor, Godwin Obaseki, yesterday, called for increased cooperation among stakeholders and host communities to foster prosperity in oil and gas-producing areas of the state.

Obaseki made the call during a one-day stakeholders’ forum organised by the Edo State Commissioner for Mining, Oil and Gas, Ethan Uzamere.

The event was aimed at rallying oil and gas stakeholders on effective implementation of the Petroleum Industry Act (PIA) and developing Edo State’s policy for the industry.

Obaseki, who was represented by the Commissioner for Local Government, Monday Osaigbovo, said the purpose of the engagement was to freely discuss the implementation of the PIA for sustainable peace.

He said: “The oil and gas sector, to date, is the mainstay of the Nigerian economy. And as such, there is a need to evaluate its contributions to communities and the state. This forum will afford stakeholders opportunities to discuss ways to strengthen the process of PIA implementation.”

Obaseki further reiterated the commitment of his administration to improving the lives of residents in the three oil-producing local councils of Orhionmwon, Ikpoba-Okha and Ovia North-East.

In his opening remarks, Uzamere said the state government is at the forefront in the implementation of the PIA and that the ministry is utilising the forum to set a foundation for the development of a comprehensive working policy for the sector.

He said: “The Act seeks to promote ease of doing business in the oil and gas industry, regulating the midstream and downstream sector, as well as making clear the roles of all players in the sector.

“It provides for fast approvals of licences to investors, removes bureaucratic bottlenecks to fuel importation and subsidies, while strengthening the value of the naira and creating job opportunities in the petroleum value chain, among

Investment, infrastructure challenges as well as historic government-induced bottlenecks may continue to make Nigeria miss out as demand for long-term LNG contracts continue to soar.

While Nigeria’s proven gas reserves already moved to 208 trillion standard cubic feet, policies, according to the Nigerian Upstream Petroleum Regulatory Commission, investment and infrastructure to make the reserves of economic benefits remain in limbo.

Although the Nigeria LNG train seven project is on track, most LNG projects that should have improved the country’s LNG portfolio and revenue like the Brass LNG and Olokola LNG have been elusive for decades without positive signs of final investment decisions.

Instead of economic benefits, the World Bank, last week, named Nigeria as the seventh on the list of top 10 countries worldwide involved in gas flaring in 2021.

While there are hopes from the Federal Government’s decade of gas policy and provisions in the Petroleum Industry Act, electioneering activities stand in the way despite the opportunities and changing dynamics created by the Russia and Ukraine war.

This is coming as a report released Monday by Wood Mackenzie, a Verisk business, noted that large volumes of LNG have been signed as prices for oil-linked deals under negotiation are rising.

Long-term contracting is off to a fast start this year with more than 10 million tonnes per annum (mmtpa) signed to end-market users. In 2021, the group noted, while adding that the volume of long-term LNG contracts signed to end-user markets returned to its highest level in the last five years.

Wood Mackenzie principal analyst, Daniel Toleman said: “The Russian invasion of Ukraine has had a dramatic impact on long-term LNG contracts. Many traditional LNG buyers will neither procure spot gas or LNG nor renew or sign additional LNG contracts with Russian sellers. Spot prices have also been high and volatile, pushing many buyers towards long-term contracts. Additionally, some buyers are returning to long-term contracting on behalf of governments to protect national energy security.”

According to the report, the prevailing situation will result in rising prices for long-term oil-linked contracts under negotiation. Between 2020 and early 2021, WoodMac said long-term oil-linked contract prices fell into the 10 per cent range, levels not seen in the last 10 years.

Toleman said: “The Russian invasion of Ukraine has pushed prices higher. Middle East sellers are now asking for deals above 12 per cent. These deals have limited flexibility, seasonality and are fixed to a market so the slope of a ‘normal’ contract is higher, between 12.5 per cent and 14.0 per cent.

“There has been news about sellers wanting 16 per cent or 17 per cent for 10 years, but we have not been able to substantiate this. Short-term deals can attract these rates. We believe that sellers can get 16 per slope for two- or three- year deals with volumes ending before the end of 2024. The range is slightly lower at 14-15 per cent for four- or five-year deals with volumes that end in 2026.

“That said, prices vary greatly based on the terms, tenure and start date of new deals. The market remains bifurcated with contracts starting before or after 2026, attracting premiums or discounts to this range, respectively.”

The report further stated that Chinese buyers continue to dominate the market signing more than 8 mmpta of new LNG sale and purchase agreements this year.

It added that most new contracts are from US supply as operators move projects forward. All these contracts are linked to North American prices.

The Vice-chairman of FAMFA Oil Limited, Folorunso Alakija, has stated that the current reforms in the oil and gas sector are expected to have a far-reaching impact on revitalizing the Nigerian economy.

Alakija disclosed this while featuring as a guest on a TV programme, where she discussed issues such as climate change, the African economy, and how Nigeria can diversify its economy and focus on other areas that are safer for the environment.

She pointed out that as part of the structural adjustments to ramp up oil production, the government has introduced reforms such as the marginal field rounds, the Petroleum Industry Act (PIA) and the transformation of the Nigerian National Petroleum Corporation (NNPC) into a limited liability company.

Speaking further, she said in view of the last marginal field rounds which is as a result of International Oil Companies (IOCs) divesting from some of their assets in the country, the industry now has more indigenous players, which will help the economy.

On the impact of oil subsidy on the Nigerian economy, she was optimistic that the Dangote Petroleum Refinery, will bring a positive change in the story of subsidy and refining when operational later this year, such that the country will not have to import as much as it currently does.

Alakija also expressed her views on climate change, highlighting the need for the Government to diversify the economy.

Responding to the question on how Africa and Nigeria will successfully move away from the impacts of climate change on their economy, Alakija stated that the only way to reduce the impacts is for Nigeria and other African countries to pay more attention to all the other sectors that will not have damaging consequences on the environment.

According to her, these sectors include the manufacturing, agriculture, services and entertainment sectors among others.

“There would be more demands on us now to look inward and to ensure that we are using our land, water, climate, and human resources to ensure that agriculture is ramped up again as it used to be the case before, we found oil.

“There is the ICT sector that we need to pay attention to, and I believe that Nigerians are making waves in that sector. Our mining is an area that we need to pay more attention to. I think those areas have all suffered because we have relied solely on oil over the years,” she added.

For the Director General of Total Gabon,vaccination will allow his company to consider a “sustainable return to the office, … the resumption of attendance at our conviviality rooms and the holding of face-to-face meetings”.

Affected by Covid-19, Total Gabon, which plans to relaunch its activities, is putting pressure on its employees to be vaccinated against Covid-19. In a note dated June 21, 2021, the Ceo of Total Gabon, Stéphane Bassene informs his staff that all those who will not be vaccinated before September 15, 2021, will not access its oil sites. Because,”we are thus considering the end of lockdowns before accessing the sites from September 15, 2021. It is therefore imperative that all those concerned can have been vaccinated by that date,”he wrote.

To justify its decision, Total Gabon cites the difficulties caused by the containment measures imposed by oil companies on their staff before accessing an oil site. Measures that are not beneficial to the company. “Given the increasing difficulty of experiencing the confinement required of staff before accessing industrial sites, its very high cost and the disruptions that this causes in the rhythms of work, it is now more than necessary to return to normal operation from 15 September. In addition, the vaccination of as many people as possible will make it possible to lift the periods of confinement currently required to go on site and which are felt by our colleagues and partners to be very trying,”says Stéphane Bassene.

Within the company, this decision is difficult to pass on to employees in the oil sector. This is all the more true since in Gabon vaccination is not compulsory. “Until proven otherwise, Total Gabon is not the Gabonese State and cannot impose on Gabonese citizens what the State has not declared mandatory by laws or regulations. This decision is absurd, implausible, unacceptable,” saidSylvain Mayabi Binet, secretary general of the National Organization of Petroleum Employees (Onep).

General strike in prospect

To find out if Total Gabon had the government’s agreement, Sylvain Mayabi Binet questioned the Minister of Petroleum, Vincent de Paul Massassa, on July 12, during the program “Face à vous” on Gabon 1st. The member of the governmentsaid that he did not have that information. “It is you who are communicating it to me at this moment”. Nevertheless, the minister encouraged Gabonese to get vaccinated and reminded them that to date, vaccination remains the best way to protect themselves against the pandemic.

But Onep, the most representative union of the oilsector in Gabon, says it is ready”to call workers to a general strike in the sector if the individual freedoms guaranteed and protected by the country’s constitution are violated by Total Gabon. Because if it goes to Total Gabon, it will inevitably spread throughout the oil sector,” says Sylvain Mayabi Binet.

When contacted, Total Gabon has not yet reacted. During 2020, Total Gabon recorded a 46% decrease in revenue compared to the previous year, and a net profit down 274%.

Source: Agence Ecofin

Oil major, Total has announced an immediate plan to launch operational activities around its Ikike field, offshore Nigeria, by the end of 2021.

Indeed, the oil firm, in its yearly filing with the US Securities and Exchange Commission (SEC), stated that it expects to start up its Ikike field by the end of 2021 and will drill a number of exploration wells across its African portfolio.

The French company took a final investment decision (FID) on Nigeria’s Ikike project in January 2019 and hopes to reach its first oil late this year.

The company had hoped to begin production at the project in 2020. The field will be tied back to the existing Amenam field.

Total singled out two potential projects in Nigeria. The authorities approved a field development plan for Preowei in 2019.

The company is also considering work on the Owowo discovery, which is found in 2012.

Total began drilling an appraisal well on Block 20/11 in January and another is planned for Block 48 this year. It bought the former block in June 2020, following the collapse of Cobalt International Energy, which had made a number of discoveries.

On Angola’s Block 17, Total and the local authorities reached a deal to extend the license until 2045.

Total agreed to drill two exploration wells on the block in 2022-23, adding that it is also working to maintain production from the block and will drill infill production wells this year, which will also begin producing this year. Further out, it is also working on three brownfield projects.

These are Zinia Phase 2, CLOV Phase 2, and Dalia Phase 3 – will begin producing in 2022, it said. It had previously expected to start these in 2020-2021.

Total paid $2.96 billion in taxes in sub-Saharan Africa, of which $1.09bn was paid on Block 17 to the Angolan government.

The French company paused work on Block 0 in April 2020, because of the pandemic. It expects to resume this in 2021.

Meanwhile, in Namibia, Total is planning to drill the Venus well this year, on Block 2913B. The company did not commit to a particular time, but various sources have predicted the third quarter.

Under the Ugandan development plans, the companies will drill around 430 onshore wells and build two crude processing facilities.

Tilenga will require 400 wells, half of which will be water injection, and is expected to produce 190,000 barrels per day. Kingfisher, which is 150 km to the south of Tilenga, will involve 31 wells and produce 40,000 bpd.

Uganda, Tanzania, and Total planned to sign a deal on March 22. However, they pushed this back into April.

The Uganda plan took top billing for the company, with Total saying it would “focus its investments primarily” on the EACOP and Tilenga projects. Other plans named by the company were all post-FID.

The Tilenga, Kingfisher, and EACOP projects will produce oil with 13 kg of CO2 per barrel, ahead of the industry average of 20 kg. As such, Total defended its investment in the project, saying this was in line with its climate ambition plans set out in May 2020.

Angola is at the heart of Total’s production, with an output of 184,000 BPD in 2020, down from 205,000 BPD in 2019. Africa’s reserves contribution to the company was all down last year.