PetroSA upbeat about gas exploration

Despite a slowdown in exploration and an underinvested industry, South Africa still holds great prospects for exploration in gas, believes PetroSA chief geophysicist Peter Dekker. He told delegates at the South African Geophysical Association (Saga) conference, in Somerset West, that there were sound fundamentals to justify hydrocarbon exploration. He said market demand was good given a policy shift away from coal towards renewables and gas, as well as a potentially encouraging investment climate when the Minerals and Petroleum Resources Development Act (MPRDA) is finalised. He said South Africa’s geology was suitable, with “new ideas in old exploration areas”, in particular, coming to the fore, while financiers had shown an interest, although they first want certainty about the regulatory environment. When legislation is enacted, companies that invest in exploration will stand to benefit greatly from tax breaks once production is up and running. “It is likely to be a very positive climate, although we are still waiting. People want to know what they are in for before they make investment decisions. They want stability,” Dekker told Mining Weekly Online following his presentation at the conference. Dekker said certain areas were stirring up interest, including plays up the West Coast near Namibia and the Table Mountain group near Mossel Bay. Four new plays have been identified in the Bredasdorp basin in the Southern Cape. “We’re looking at old places, but [with] new ideas. There must be something in the minibasins. We’re looking at the younger rocks, more on the shelf in Bredasdorp,” said Dekker. The Table Mountain group was another option, with interesting fractured basement volumes off the coast of Mossel Bay coming to the fore again. Another interesting area is the Orange basin near Namibia, where University of the Witwatersrand Geology Masters student Vuyolwethu Mahlalela is studying the hydrocarbon potential, using threedimensional (3D) reflection seismic data. It is the first time 3D data has been acquired in the deep-water environment of the Orange basin. Mahlalela is creating a 3D model of the deep-water environment and comparing it to shallow environment models. “The data will give a deeper understanding of the deep-water environment, which could potentially lead to the discovery of offshore hydrocarbons,” said Mahlalela. Dekker has agreed that Mahlalela’s work is in a fascinating area which still holds promise. Dekker told delegates at the conference that mature basins still held a lot of potential. He used the North Sea as an example, which is now on its third phase of discoveries. He said even after creaming, major discoveries could be made. While positive about exploration prospects, Dekker acknowledged the seriously tough times the global oil and gas industry has faced over the past few years. “The industry is underinvested because of low oil prices. Exploration has virtually stopped and 400 000 people have been made redundant in the industry worldwide.” But, he said, the petroleum industry was a cyclical business and the global drive for cleaner energy would help the prospects of gas. The International Energy Agency has sketched a scenario in which total energy demand will increase by 31% by 2040. While the share of oil and gas is expected to decrease from 52% to 51%, total energy demand will rise. Dekker said 150 exploration wells have been drilled in South Africa to date, resulting in the discovery of three hydrocarbon plays in the country. He said 30% of the wells drilled have produced oil and gas to the surface. This technical success rate was considered good and compared very favourably with that of other countries.

Come and hear from Peter Dekker discussing the prospects for oil and gas exploration in South Africa at the Africa Oil & Gas Summit in Cape Town next week!!!

AMINEX SUBMITS STAGED DEVELOPMENT PLAN FOR THE NTORYA FIELD IN TANZANIA

Aminex has announced that a Development Plan for the Ntorya field, located onshore in the Ruvuma Basin, Tanzania has been submitted to the Tanzania Petroleum Development Corporation (TPDC) for approval. The Development Plan is a key step towards obtaining a development licence and the commercializing of the resources from the Ntorya appraisal area which sits within the Ruvuma Basin.

The Development Plan, which incorporates the findings from oil and gas consulting’s Gascommercialization Study, is a comprehensive review of the existing data and includes the findings of recent mapping and the upgraded unrisked resource estimates threefold from earlier estimates of 466 BCF of approximately 1.3 TCF Pmean GIIP.

The Plan takes into account several options for gas monetisation including Compressed Natural Gas, Gas to Power and directly connecting the gas produced from the Ntorya field to the Madimba Plant in South Eastern Tanzania via an approximately 35 km spur line.

The Company has applied for a staged development of the field to allow for an early production system with existing wells and a programme that drills further development wells based on demand.

“Submission of the Ntorya field Development Plan is a major milestone for the Company as we progress towards unlocking the value across Ntorya and Ruvuma as a whole. The Company continues to work on further well plans in order to maximise development of the field and looks forward to updating shareholders in Q4 on the status of the Ntorya-3 well,” said CEO of Aminex, Jay Bhattacherjee.

The Development Plan is now subject to review by the Tanzanian authorities and the Company will provide an update on this and the timing for spudding the Ntorya-3 well during Q4 2017.

Join us at the Africa Oil & Gas Summit this month in Cape Town to hear more about important industry news from across the continent. Day Two will focus on East Africa including a case study from the Ministry of Energy & Minerals.

East Africa: Gas and Oil Key in East African Integration

Gas-rich Tanzania hosts a two-day congress aimed at bringing together policymakers and experts in the oil and gas industry. But the country needs to pick its strategic partners carefully, says analyst Anaclet Rwegayura.

For ages, Tanzania's rich underground wealth was unknown. That has kept it safe for the present generation, which needs it to eradicate poverty.

Many prospectors and investors have crisscrossed the country after the government opened the door to mineral extractors, and it seems that many thought the country's wealth was up for grabs.

Did it ever come to their minds that Tanzania was hoping to capitalize on its resource endowments in order to kick-start its industrialization?

Given the country's healthy economic turnaround with a roughly seven percent annual growth rate, the Tanzanian government is keen to see productive investments taking place. Extractive investors who cannot enable the country to create wealth and free the local society from the shackles of poverty, are not welcome.

Join us at the Africa Oil & Gas Summit this month in Cape Town to hear more about important industry news from across the continent. We will also have a South African Corner where you can hear from key figures.

Statoil adds exploration licenses in South Africa

Statoil has completed a transaction with ExxonMobil Exploration and Production South Africa Limited (ExxonMobil), acquiring a 35% interest in Exploration Right 12/3/252 Transkei-Algoa. Operator ExxonMobil retains 40% interest, while Impact Africa holds 25%.The license covers approximately 45,000 square kilometres in water depths up to 3,000 metres.

Statoil has also completed a transactionwith OK Energy Ltd, acquiring 90% interest and operatorship in the Exploration Right 12/3/257 East Algoa. The remaining 10% interest is held by OK Energy. The licence covers approximately 9,300 square kilometres.

Statoil entered its first license in South Africa in 2015, acquiring a 35% interest in the ExxonMobil-operated Tugela South Exploration Right.

Join us at the Africa Oil & Gas Summit this month in Cape Town to hear more about important industry news from across the continent. We will also have a South African Corner where you can hear from key figures.

Uganda and Equatorial Guinea agrees to cooperate on oil and gas projects

The governments of Uganda and Equatorial Guinea have agreed on a joint action plan for the development of both the country’s oil and gas infrastructure

Yoweri Museveni said that the collaboration is expected to increase in the transformation and development of the countries’ oil and gas sector. (Image source: Chatham House/Flickr)

The governments have agreed upon the action plan during a four-day visit of Yoweri Museveni, the president of Uganda, to Equatorial Guinea in the last week of August 2017, according to the KFM.

Under the agreement, the priority activities will include exchange of information on government policies, regulatory structures, capacity building in the areas of operation, production and process control and environmental health and safety, reported the source.

In addition, the countries will also focus on providing training for the construction and maintenance of oil and gas infrastructure.

The delegations further discussed that both countries will take part in hydrocarbon events, which will start with the upcoming 3rd Uganda International Oil and Gas Conference that will be held in Kampala from 27-28 September 2017.

This is the first time that Equatorial Guinea shares its experiences with Uganda in oil and gas sector. While reporting to the press, Museveni said that it is important for both the countries to learn and agree with exploration companies for a more effective collaboration and to avoid selling oil and gas products cheaply.

Obiang Nguema Mbasogo, the President of Equatorial Guinea, welcomed the initiative taken by Uganda and stressed that Equatorial Guinea is looking forward for a successful partnership with the east African country.

The countries have further agreed to appoint joint ambassadors in near future to bolster bilateral relations, said the source.

Join us at the Africa Oil & Gas Summit this month in Cape Town to hear more about important industry news from across the continent. 

PetroSA, Rosgeo partner to develop oil and gas assets in South Africa

PetroSA has collaborated with Russian geological exploration company Rosgeo to develop oil and gas assets in South Africa.

Under the deal, the partnership will invest around $400m to develop the exploration areas of 9 and 11a blocks off the South Coast of South Africa.

As per terms of the agreement, Rosgeo will carry out major geological exploration work at the blocks.

The company will involve in around 4,000km² of 3D seismic operations, in addition to 13,000 km of gravity-magnetic exploration works and drilling of exploratory wells.

The project holds a capacity to extract up to four million cubic metres of gas per day, which will be supplied to PetroSA’s gas-to-liquids refinery in Mossel Bay.

Rosgeo CEO Roman Panov said: "The signed agreement is aimed at developing bilateral relations and will strengthen Rosgeo’s presence in the African market.

PetroSA’s interim chairperson Luvo Makas said: “South Africa’s oil & gas potential remains largely unexplored. This exploration effort presents significant upside to both the country and PetroSA.

“The upside for PetroSA is the possible expansion of our depleting gas resources. Discovery of hydrocarbons on our shores has the potential to bring significant revenues to the country and prove the country’s oil and gas prospectivity.”

PetroSA is engaged in the exploration and production of oil and natural gas as well as marketing of petrochemical products to the South African oil companies. It also exports petrochemical products to the international markets.

Join us at the Africa Oil & Gas Summit this month in Cape Town to hear more about important industry news from across the continent. Hear from PetroSA and many other National Oil Companies.

Government gives green light for shale gas fracking in Karoo

Cape Town – The government has given the go-ahead for shale gas development in the Karoo region, Mineral Resources Minister Mosebenzi Zwane said on Thursday.

He revealed this during a community engagement on shale gas development in Richmond, in the Northern Cape.

"Based on the balance of available scientific evidence, government took a decision to proceed with the development of shale gas in the Karoo formation of South Africa," he said in a speech.

He said the regulatory framework would ensure that shale gas was "orderly and safely developed" through hydraulic fracturing, commonly known as fracking.

"The finalisation of Mineral and Petroleum Resources Development Act (MPRDA) amendments will also help to expedite the development of shale gas," Zwane said.

The department estimated that up to 50 trillion cubic feet (Tcf) of shale gas was recoverable in the Karoo Basin, especially in the Eastern, Northern, and Western Cape provinces.

He said it was in their interests to ensure all South Africans benefited socially and economically from the mineral wealth.

The country had been largely dependent on coal as a single source of energy for many years.

Government had decided to diversify the energy basket to provide "cost-competitive energy security" and to "significantly reduce the carbon footprint".

"Government will ensure that you are kept up to date about the exploration method and benefits that can be realised from the development of shale gas and informed about the mechanisms and instruments that seek to augment existing laws for the protection of water resources and for the protection of the environment," he said.

A year ago, government ended speculation over the project after it announced that exploration for shale gas would begin in the next financial year, according to the AFP.

Zwane said on Thursday that they were mindful of the risks and challenges of the development, especially on water and the environment. 

He said a socio-economic and environmental assessment had been conducted beforehand.

"This was necessary to enable a process of data and information collection for informed decision-making on shale gas development."

He said they were committed to developing the resource sustainably.

Assurances were made that the farming community would benefit from shale gas development, while the Square Kilometer Array would not be affected.

Join us at the Africa Oil & Gas Summit this month in Cape Town to hear more about important industry news from across the continent.

What entry of Total into Turkana oil basin means

Last week it was announced that Maersk Oil are selling to Total all their global upstream oil business which includes assets in the North Sea, Gulf of Mexico, Central Asia, Algeria and Kenya.

The Kenyan piece is the 25 per cent interest in Turkana that Maersk acquired from Africa Oil. Since this was an “all assets” sale package, it is too early to point out Total’s specific intentions on Turkana assets.

Total will have to make assessment of each Maersk asset and decide on keepers and divestitures, based mainly on value addition to Total global and regional portfolios.

Total is a company with strong investor capacity which includes capital, technology and markets and is the fourth largest global upstream player after ExxonMobil, Shell and BP.

Total Exploration & Production already has several offshore exploration blocks in the Lamu Basin and was in the news early last year when together with the Uganda government they tilted the decision on the route for Uganda oil exports in favor of Tanzania.

The company has become the dominant upstream investor in the Rift oil basins of East Africa.

In Uganda, Total is the main upstream player after it acquired a significant stake from its partner Tullow Oil early this year .The company is currently the key driver for the crude oil export infrastructure project.

Across Lake Albert in the Democratic Republic of Congo (DRC), Total has interests in oil blocks which are geologically similar to those in Uganda. In South Sudan, Total continues to discuss with the government their long-standing interests in Block B.

If oil is ultimately produced in all these prospects it will most likely be transmitted via the Uganda-Tanzania pipeline where Total will have a significant interest.

In respect of Turkana oil, Total may decide to boost their bargaining power by acquiring controlling interests through farm-ins from partners Tullow Oil or Africa Oil both with 50 per cent and 25 per cent interests respectively.

But before Total raises its stake, the company may want to be sure about the Turkana oil export route. And this would take us back to the familiar and not very comfortable debate on pipeline routing options.

It is possible that Total has not changed its views on the Lamu route, especially in respect of perceived insecurity which was the main deal-breaker during the Uganda crude export routing negotiations.

I also do not see Kenya giving ground on the Lamu Port South Sudan Ethiopia Transport (Lapsset) route because this remains the government policy route.

Kenya still sees security as a manageable challenge. Indeed even before Total entry, Kenya has been progressing modalities for development of the pipeline to Lamu.

It is not improbable that Total would be looking at an option of pumping Turkana oil to some location to link up with the UgandaTanzania pipeline. However, this may be an option coming too late.

Unless re-designed, the 216,000 barrels per day (bpd) line cannot take an estimated additional 80,000 bpd from Turkana.

There is also pressure from Ugandan stakeholders to complete the pipeline on time to pump first oil by 2020.

Either Total joins the Lapsset bandwagon and duplicates its pipeline investments in the region, or they persuade the Uganda-Tanzania pipeline stakeholders to accept project delays and accommodate Turkana oil.

I do not see a case where Kenyans accept this latter option. This then leads to a very likely scenario of Total divesting their recently acquired 25 per cent participation in Turkana oil to concentrate their focus on Uganda, DRC, and South Sudan.

Because of their capital and technology, Total participation in Turkana oil is a major value adding opportunity to Kenya and this should be the starting point for any discussions. It is, however, an opportunity with complications.

There is also obvious value for Total to maintain a foothold in Turkana to benefit from current and future potential of the basin. That is why Kenya and Total should weigh their options carefully and with flexibility strive to clinch a mutually accommodating arrangement.

In the meantime, the government should expedite the pending work on the upstream legal, regulatory and institutional systems which will be required to take Turkana oil to the next stage of development and exportation.

Join us at the Africa Oil & Gas Summit next month in Cape Town to hear more about important industry news from across the continent.

Egypt signs three oil and gas exploration deal with Shell and Apex

Egypt has signed three new oil and gas exploration deals, worth approximately US$81.4mn, with Royal Dutch Shell and the US-based Apex Oil Company, a move which is aiming to exploiting the oil and gas potential in several regions across the country

Tarek el-Molla, minister of petroleum in Egypt, has signed the deal on 29 August 2017, for 16 new fields in the western desert region in the country.

Under the first agreement, Shell will invest US$35.5mn for the development of Egypt’s oil and gas sector, with the two other deals requiring Apex to invest a combined US$45.9mn on two projects in the country. This is the first time that Apex will be operating in Egypt.

Once a leading energy exporter, Egypt currently imports petroleum products from the neighbouring countries as well as international markets as demand for domestic consumption has increased in recent times.

Reporting to the press, El-Molla said that the Egyptian government focuses on attracting more foreign investments for the country’s oil and gas industry. He added that Egypt is facing a large flow of investment from global oil giants in recent years for the development of the country’s oil and gas exploration and production.

On a drive to attract foreign investment, the country has signed 79 new agreements for oil and gas exploration, with a minimum investment of US$15.3bn. El-Molla further emphasised on a speedy implementation of all the agreements.

Roger B. Plank, founder and chief executive of Apex International Energy, said that the company is looking forward to advancing partnership with the Egyptian Ministry of Petroleum and Mineral Resources.

Established in 1932, Apex provides wholesale distribution, storage and transportation of petroleum products including asphalt, kerosene, fuel oil, diesel fuel, heavy oil, gasoline and marine bunkers to international destinations.

Royal Dutch Shell is a British–Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in the UK. It is the sixth-largest company in the world measured by 2016 revenues.

Join us at the Africa Oil & Gas Summit next month in Cape Town to hear more about important industry news from across the continent.

BP appoints first black female CEO

Multi-national oil company BP has appointed South African chartered accountant Priscillah Mabelane as the chief executive of its Southern Africa operation.

Mabelane’s appointment on Monday makes her the first black woman in history to head a multi-national oil company.

“Priscillah’s appointment reinforces BPSA’s pioneering role and strength of commitment to cultivating a diverse and inclusive workforce that will breed creativity and ensure we meet, even exceed customer expectations,” said the BP Southern Africa chairperson Thandi Orleyn.

“Given her proven track record in her previous executive roles, we are confident that Priscillah will be a strong leader for our business, especially as we continue to explore new areas of growth and development,” Orleyn was quoted by local media eNCA.

Priscillah Mabelane has worked with BPSA since 2011 when she joined the company as the Chief Financial Officer.

Prior to that, she has served in executive positions at several companies including Ernst & Young, Eskom Holdings Limited, Airports Company South Africa and Vodacom Group Limited spanning a period of 20 years.

She will assume the role on September 1.

Join us at the Africa Oil & Gas Summit next month in Cape Town to hear more about industry news!

Kosmos to Begin Drilling 3 Super-Giant Prospects in Africa

Oil and gas exploration company, Kosmos Energy Ltd. KOS recently announced that it has decided to start the drilling of three new wells offshore Senegal and Mauritania by the end of this month. This follows the gas discovery off the coast of Senegal at the beginning of 2017. The company will start spudding of its three super-giant prospects with the Hippocampe well near Senegal.

To date, Kosmos Energy has drilled six wells off the coast of West Africa, where it has found around 40 trillion cubic feet of gas equivalent (Tcfe). The company believes that along the Atlantic margin, the Mauritania-Senegal offshore belt is the largest petroleum system found in last 15 years. Backed by the new seismic data gathered by Kosmos, the company believes that the resource base it has discovered will keep growing with more drilling.

Kosmos Energy's Drilling Plan

The company is presently working on the Yakaar-1 well offshore Senegal, where the company made a discovery in May 2017. The well with a depth of about 4,700 meters is located in the Cayar Offshore Profond block, where Kosmos has engaged the Atwood Achiever drillship.

Upon the closure of operations at the Yakaar-1 well, the company will move the drillship to Tortue-1, another Kosmos discovery, to perform a drill stem test. The company will then mobilize the Atwood Achiever drillship to drill the Hippocampe well, the first of the trio, which has 12 Tcfe gross unrisked resource potential. It is located in Block C-8, northwest and outboard of the Marsouin discovery. It has a large basin floor fan with extensive, stacked reservoirs of Cenomanian and Albian age, making it easy for Kosmos to extract. Kosmos Energy expects to begin the drilling of Hippocampe well by the end of Aug 2017.

The drillship will next move to Lamantin by the fourth quarter, the company's youngest prospect. The seismic tests have led Kosmos Energy to believe that Lamantin has black oil in its reservoir as it is from the Albian geologic timescale. Lamantin has an estimated p-mean resource size of 2-3 billion barrels of oil equivalent.

The company will reach its third prospect, Requin Tigre, by the end of 2017. It is located in northern Senegal and has 60 Tcfe gross unrisked resource potential. The prospect is from the Cenomanian geologic timescale. 

A long time coming: Offshore project sanctioning

Now that half the year has passed, a review of offshore project sanctioning might be timely. Activity has picked up in 2017, especially for larger projects with CAPEX allocations of at least $500m. The uptick in FIDs has coincided with improved E&P budget guidance from many IOCs. So oil price volatility notwithstanding, could this be an sign of generally improving prospects for larger offshore projects?

Large Projects On The Rise

Offshore field project sanctioning reached a peak of 120 FIDs in 2012. Since then, sanctioning activity has been under pressure from a range of factors, most notably the weaker energy price environment that has prevailed since 2H 2014. Indeed, oil company E&P spending cuts induced by the falling oil price in 2015 precipitated a 33% decline in FIDs that year. Larger projects (with an estimated CAPEX of at least $500m) have been hit the worse, with the number of such developments in 2016 to receive an FID down by 60% on 2012. In comparison, the number of smaller projects sanctioned in 2016 was down by a less severe 32% on 2012.

However, 2017 is (so far) looking rather more promising: 31 offshore field projects received FIDs in 1H 2017, of which 48% were larger projects. Among these were Coral FLNG Ph.1 ($7bn), Leviathan Ph.1 ($3.75bn), Liza Ph.1 ($3.2bn) and Njord A Upgrade ($1.6bn). FIDs have been stimulated by the higher (albeit volatile) oil price, as well as by successes in reducing offshore project costs (by around 30-40% on start 2014, on average).

Small Runs Rule

That being said, while it is true that sanctioning of larger projects seems to be on the rise, it is important to note that many such projects (including all those named above bar Liza Ph.1) were conceived pre-downturn and were on the verge of obtaining an FID in 2014. This implies that the recent uptick in large-project activity may not be sustainable, especially as the backlog of such projects continues to fall. Indeed, the history of start-up delays and cost over-runs at mega-projects such as Kashagan Ph.1 ($48bn) and Greater Gorgon Ph.1 ($55bn) had already prompted operators to rethink the viability of larger offshore projects even before the oil price downturn. Onshore US basins are also potentially problematic for offshore projects, insofar as they compete (quite effectively) for scarce investment dollars.

Efficiency Matters

As a result of these considerations, operators have been downsizing many of the other large-scale projects planned prior to the fall in the oil price. Browse is set to use two FPSOs instead of three FLNGs, for example, while Bonga SW “Lite” now entails an FPSO with a processing capacity 33% smaller than before. Many operators are also placing more emphasis on subsea tiebacks to existing facilities, instead of major new offshore hubs (even if this means lower production volumes). Adapting to the potential “lower for longer” oil price outlook thus seems to be a priority for many upstream players.

So although FIDs at larger projects have picked up, looking beyond the backlog of projects from before the downturn, such developments seem to be less in favor. Scratching the surface, small projects are at least an offshore outlet for upstream investment and in the long run, perhaps cost savings cemented post-2014 might make large projects more competitive.

Come and join us at the 5th Africa Oil & Gas Summit in Cape Town to get the latest updates from across the continent and hear from representatives from 16 different African countries. Contact us here

2016: Angola maintains lead over Nigeria on oil output in Africa

ABUJA— Angola has been ranked leading oil producer in Africa for 2016, having surpassed Nigeria by reaching a daily average of 1.7 million barrels, reports, said. The figure exceeds the previous record of 1.5 million barrels a day. It will be recalled that pumping has increased by 8,800 barrels more per day against June report, when the country surpassed Nigeria for the first time, with its steady rise against declines recorded by Nigeria for most part of this year. Nigeria’s production has been critically affected by bombings and attacks of facilities by militants in the Niger Delta. Angola’s production represents 90 percent of exports, 50 percent of gross domestic product and 80 percent of its tax revenues, according to the Angola Press Agency. However, on average, Luanda obtained $45.93 for each barrel exported this year, compared to $100 earned in 2014. Meanwhile, the Angolan National Fuel Company (Sonangol) has begun a process of reforms that include bringing down the production cost of one barrel of crude oil to 12 dollars, almost half of the current price. Sonangol’s revenues are still lower than in 2013, the year before the economic crisis. In 2014, revenues reached $26,657 billion and in 2015 decreased to $16,212 billion. Estimation for the budget of 2017 is $46 a barrel and an annual production of 664.68 billion barrels of crude, or 1.84 million barrels daily. Early December, the Nigeria Bureau of Statistics, NBS, explained that Nigeria’s oil production averaged 1.63 million barrels per day (mbpd), lower than the level in second quarter of 2016. Oil production was also lower relative to the corresponding quarter in 2015 by 0.54 mbpd when output was recorded at 2.17 mbpd. Nigeria’s oil production had risen to 1.9 million b/d, in October according to the Ministry of Petroleum Resources.

Nigeria's Oil Production Helps Keep Oil Prices Low

Along with Libya and Venezuela, Nigeria is an OPEC wildcard. Exempt from the promised production cuts started in January, Nigeria (along with Libya) have been offsetting OPEC's reduction, adding nearly 100,000 b/d in output from May to June alone, a quarter of OPEC's total increase. A few days ago, Nigeria voluntarily agreed to limit its oil output to 1.8 million b/d. 

For over 20 years, there's been a Niger Delta insurgency over who controls the oil revenues in Nigeria - exacerbated by elements of struggle between ethnic groups. The main militant group is the Delta Avengers, following the MEND faction in the 1990s and 2000s. The most common strategy has been the same:  attack oil pipelines and production platforms to strike at the heart of the Nigerian economy and central government's budget. Thieves can take 33% of the oil that flows along pipelines in the Delta. Last Monday alone, Nigeria’s crude output dropped 150,000 b/d after militants vandalized the Trans-Niger pipeline in Ogoniland. Combined with maturing basins, attacks have lowered oil output from 1.9 million b/d in 4Q15 to 1.4 million b/d in 1Q17.

Yet, Nigeria's production is recovering, keeping oil prices lower than when OPEC first announced its cuts. oilfields in Nigeria have been brought back as militant activity has subsided, and there is still some space left to rise. Nigeria though will still have short-term changes in security conditions, and the 2020 production target of 2.5 million b/d is unlikely: it hasn't been met since 2005. Now, Oil Minister Emmanuel Ibe Kachikwu says that the focus is on “stability and consistency” in the Delta. 

New investment by foreign operators isn't an easy sell, but emerging Nigeria is Africa's largest economy and a fast growing, highly-resourced nation. Nigeria has nearly 40 billion barrels of proven oil reserves, with a petroleum resource that could be 10-15 times higher, given a lack of exploration that makes Africa such an exciting place for future oil and gas development.

And Nigeria has nearly 85 million kids under the age of 14. Unacceptably, nearly 80% of Nigeria's 190 million people live on less than $2 a day: "Nigeria needs to invest $267bn on electricity by 2040 – Report." Indeed, it's tragic that the majority of Nigeria's developed oil is exported. Again, "Oil And Natural Gas Companies Could Be Heroes In Africa" by working to develop modern fuels for domestic growth, not just for export to rich, distant lands. Simply put, horrifically exacerbated by corruption, Africa's massive resources are being used to help others, not to help Africans themselves. Does Al Gore know that 650 million Africans have no electricity whatsoever?

The case of Nigeria is important to why global oil supply could rise by 1.9 million b/d next year if no OPEC deal is struck to lower production beyond March 2018. And with oil demand potentially growing just 1.2 million b/d, ongoing oversupply means sustained downward price pressure, keeping oil oscillating around the $50 per barrel market for three or four years.

Don't miss out on the best networking opportunity in the industry this year, join us in beautiful Cape Town for the 5th Annual Africa Oil & Gas Summit!

Africa's Oil & Gas sector continues to show substantial growth, with significant new hydrocarbon and gas findings across the continent over the past 12 months. The industry is not without its challenges however, and low oil prices, lack of funding and poor infrastructure are just some factors casting a shadow over prospective projects and investments.

The 5th Africa Oil & Gas Summit 2017 will take place at the 5* NH Cape Town in just 12 weeks time (28th & 29th September). This industry-leading event will examine the latest opportunities, licensing rounds, innovative technologies and funding strategies in place across the entire continent. The conference will focus on the latest opportunities, licensing rounds, technologies and challenges in African oil & gas, as well as offer a number of senior-level networking sessions.

The two-day event in Cape Town will offer extensive networking opportunities, in-depth panel discussions and industry presentations, pre-arranged one-on-one meetings, a Business Brunch and a networking evening on Day One.

Join us at the 5th Africa Oil & Gas Summit to meet with Ministries of Energy, IOCs, NOCs and key industry stakeholders from over 25 African countries, and take advantage of high-level discussion, networking and meetings.

International Operators and National Oil Companies Confirmed to Attend Include:

Shell East Africa, Sasol E&P, Total E&P Mozambique, ENI, Anadarko, Sonangol, PetroSA, NAMCOR, TPDC, NOC Kenya, INP, ENH and many more.

Key Speakers:

Shell East Africa - Marc den Hartog, Vice President

Sasol E&P - Dr. Vincent Mashaba, Exploration Manager – Near Field

Ministry of Energy & Petroleum, Ghana - H.E. Dr. Mohammed Amin Adam, Deputy Minister

Ministry of Mines, Petroleum & Natural Gas, Ethiopia - Dr. Ketsela Tadesse, Head of Petroleum Licensing

Africa Finance Corporation - Osam Iyahen, Senior Vice President – Oil & Gas

Department of Petroleum Resources, Nigeria - Engr. Stanley Ngene, Chief Chemical Engineer

NOC Kenya - Ken Mugambi, Head of Corporate Planning & Strategy

TPDC - Charles Sangweni, Acting Director General

Interested in speaking, sponsoring or attending the event? Contact Lucy Jacobson-Durham at lucy@oliverkinross.com or +44 203 058 2350 for more information on how to get involved in the networking event of the year.

Nigeria approves national gas plan

Nigeria’s cabinet has approved the national gas policy which should help the country broaden its economy beyond oil.

The petroleum ministry said on Wednesday that the gas policy would form appropriate institutional, legal, regulatory and commercial framework for the gas sector, and remove the barriers affecting investment and development of the sector.

Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Nigeria needed major changes in policy to make gas a hub of the Nation’s economy.

He said there was a need to have a stream of revenues between petroleum and gas in order to see an improvement in the Nation’s economy and leverage on opportunities for gains from the oil and gas sector.

The gas policy will look to establish a single independent petroleum regulatory authority, separate upstream from the midstream, and separate the respective roles and responsibilities of government and the private sector.

The approved document – of some 100 pages – states Nigeria will strive to make an environment that encourages exploration specifically targeting gas.

It will also encourage exploration and development of new gas supply sources from the inland and offshore basins; develop portfolio management methodologies to prioritize low-cost gas development; clarify gas terms for PSCs; achieve gas flare-out through gas utilization projects utilizing mature flare reduction technologies; and produce a gas Resource Management Plan.

Asia Pacific was the major market for Nigeria LNG in 2015. However, the country expects its LNG to struggle for for market penetration there in the future, with two major exporters Qatar and Australia and their huge new volumes about to supply the same region. To remind, Qatar has this week said it will boost its LNG production from 77 million to 100 million tons per year with the new volumes from its giant North Field, located in the Persian Gulf.

Australia, for its part, has been home to several giant offshore gas projects, developed or under development, such as Gorgon, WheatstonePrelude and Ichthys.

Nigeria sees itself as “naturally an Atlantic basin supplier,” however the country expects its LNG exports to face challenges due to an over supply in some regions, and the lack of demand in others.

The document suggests that “perhaps Nigeria could help develop and then supply African gas markets with LNG and pipeline gas. The West African Gas Pipeline (WAGP) could be extended further west to neighbouring countries; gas pipeline connections could perhaps be made to Cameroon (although Cameroon has its own domestic gas reserves which are right next to the main industrial markets); or Nigerian LNG could be taken to other markets along the west African coast.”

South Africa: Prospects for Oil, Gas Exploration and Development

Rigzone contributor Nicholas Newman takes a look at the prospects for oil and gas development in South Africa

South Africa has very little in the way of proven oil and gas reserves. Exploration for oil and gas started as far back as 1913 and, so far, has proved disappointing. During the 1990s, prospectors and exploration companies, using modern survey techniques, discovered locally-useful but globally-insignificant amounts of oil and gas. Today, while the petro-geology for oil looks modest, the prospects for natural gas, whether conventional gas, shale gas or coal-bed methane (CBM) gas, appear to be more promising.

Oil Discoveries have been Very Small So Far

South Africa has proven crude oil reserves of some 15 million barrels, located in the Orange Basin off the west coast and the Bredasdorp Basin in south coast of Cape Province (source: Council for Geoscience).

To date, even in terms of its proven crude oil reserves, finds by exploration companies have been very small. Today's crude oil production by state-owned energy company PetroSA amounts to less than 5,000 barrels per day and comes from the Oribi and Oryz fields, which are located in Block 9 off South Africa's southern coast. In 2014, PetroSA reported a total oil production output of some 160,000 barrels per day, made up largely from imports of 425,000 barrels per day of crude oil in 2014, according to South African Revenue Service data.

Eighth-Largest Shale Gas Reserves in the World

Recent estimates by the U.S. Energy Information Administration (EIA) put South Africa's recoverable offshore gas at 9 trillion cubic feet (Tcf), while there is another 9 Tcf of unconventional gas located in the arid Karoo desert and some 1.5 Tcf of CBM gas. South Africa is estimated to have the eighth largest shale gas resources in the world.

Most of South Africa's natural gas produced by PetroSA comes from the maturing offshore 65,000-boepd (barrels of oil equivalent per day) Moss Gas F-A and South Coast Complex fields, and is sent onwards via an onshore pipeline to the gas-to-liquids) facility in Mossel Bay in Eastern Cape. However, all is about to change, according to Paul Eardley-Taylor who is responsible for Standard Bank's Oil & Gas sector coverage activities for Southern Africa, across upstream, midstream, downstream, "off South Africa's west coast is the 540-billion cubic feet Ibhubesi gas field, which is now licensed for development".

Ibhubesi gas production is expected in late 2017, at an initial flow rate of 100 million standard cubic feet per day. This gas will be delivered first to Eskom's 1,300-MW Ankerlig power station in Atlantis, Cape Province, and eventually to a planned 800-MW independent power plant.

Rising Domestic Demand for Gas

South Africa currently consumes some 180 billion cubic feet of gas per year, of which imports of 120 billion cubic feet (Bcf) arrive by pipeline from central Mozambique for customers in Johannesburg (source: EIA, January 2016). With the prospect of rising demand for gas in South Africa, ROMPCO, the pipeline operator, plans to increase capacity from 88 million gigajoules per year to 212 million gigajoules per year by the end of 2017 (source: Engineering News).

The main customer segments for gas are power generation, GTL production, heating and manufacturing activities. Gas provides about 3 percent of South Africa's total installed power output of 45,645 MW (source: Statistics South Africa). Today's gas-to-power program envisages increasing gas power generation to 3.1 GW by 2025. To support the gas-to-power program, and avert a looming power crisis, South Africa needs an interim solution as the development of prospective gas fields is at least a decade away.

Two main options are under consideration: increasing gas imports from neighboring Mozambique's northern gas fields and LNG imports. The former would entail the construction of a $6-billion, 1,615-mile long pipeline to link Johannesburg with the new fields. However, in the short-to-medium term South Africa could rely on imports of gas by LNG tanker to perhaps Saldanha port, either with a floating storage and regasification unit (FSRU) or a floating LNG (FLNG) import terminal.

Oil Firms have a Renewed Interest in SA's Hydrocarbon Resources

The discoveries made to date bear no comparison with the significant finds off Argentina or the North Sea gas fields. However, ongoing advances in technology and seismographic equipment have kindled renewed interest in South Africa's hydrocarbon resources by some of the world's largest oil companies.

According to Eardley Taylor, since 2012 "in respect of each of offshore and onshore (primarily shale) blocks, leading industry participants such as Exxon Mobil, Eni, Anadarko, Shell, Statoil, Total, Chevron (among others) are now involved in pre-drilling exploration". In October 2015, Shell was given the go-ahead to start drilling in South Africa's Orange basin (source: Fin24). In general, current exploration activities are focused on the Karoo Desert for shale gas, on the North Coal fields for coal seam gas and for gas off the West and Southern coasts of the Cape and Natal coasts.

However, the size of all of these resources is yet to be determined, a process which will take time. Though Eardley Taylor comments that "current estimates of yet-to-find resources are for … trillions of cubic feet of gas and billions of barrels of oil", he also stresses that "this potential is entirely untested at this point and is speculative". Even with such an eye- watering prospect at hand, the exploration and development of South Africa's oil and gas sector is likely to be slow and at least a decade away. Of more immediate impact will be imports of liquid natural gas, which will facilitate a quick and substantial ramp-up in power output by both state and independent gas power producers in coming years. As for domestic oil and gas discoveries, turning a prospect into reality will require many years and lots of money.