Multinationals may be disqualifiedThere are conflicting signals about the Nigerian Government's intention to throw open the bidding process for ultra deepwater offshore blocks in the country's prolific Niger Delta Basin. The blocks, which lie more than 100 km off the Nigerian coast in depths of more than 1,500 meters, are seen as the next frontier for exploration with potentially huge reserves of crude oil. There are seven of them.
In late last March, just a week before the press quoted the oil minister Dan Etete as saying that a new round of bidding for oil prospecting licenses (OPLs) for ultra-deep offshore blocks was imminent, the government awarded the highly prospective lease OPL 246 to an indigenous company - Star Atlantic Petroleum, after some backdoor negotiation. Petroleum ministry officials say that the award to SAP was in consonance with the pattern of awards since the last all-comers bidding was concluded in 1991.
Sources at the Ministry of Petroleum Resources in Abuja say that only indigenous companies will be favored by any future award of the ultra deepwater leases. The Nigerian Government is under so much pressure from indigenous companies for these leases, even though "no Nigerian-owned company can come up with the kind of money needed for exploiting the resources in this part of the basin," industry sources say.
Multinationals are expected to farm-in and serve as financiers as well as technical partners in the production sharing contracts between the government and the indigenous holders. The French company Total and the Brazilian state oil company Petrobras are believed to be bankrolling SAP's venture in OPL 246, both holding 20% equity each.
As if to underline that the awards of the ultra-deepwater leases are a political issue, the government recently awarded another lease, OPL 244, to a company owned by Daniel Kanu, who is spearheading the campaign for the military head of state, Sanni Abacha, to continue in office after elections go to democratic government later in the year. Now, only five of the ultra deepwater blocks remain.
In 1991, Nigeria assigned 15 deepwater blocks (between 250 and 1,500 meter water depths) to 10 companies, seven of them multinational. They include Statoil, Shell, Agip, Elf, Conoco, Mobil, and Exxon. The three indigenous companies are Allied Petroleum, Famfa Oil, and Noreast. Some 2 billion bbl of oil are suspected to be contained in three of the 15 structures tested so far by all the multinationals. But the development is still at a very early stage because of the huge costs involved, as well as uncertainty over the exact rules that will govern production.
Bakassi air space is crampedNigeria warns against flying over disputed Bakassi as the battle over the ownership of a vast acreage of shallow offshore oil terrain intensifies. The Nigerian Air Force warned airline operators in the country to stop flying over the disputed Bakassi Peninsula. The face-off is between Nigeria and Cameroon.
The force's station in Calabar, in Nigeria's southeastern state of Cross River near the Nigeria-Cameroon border, warned that any aircraft flying through Bakassi airspace "will be brought down." The warning was copied to two oil companies which fly their workers by helicopters to their respective offshore oil rigs close to that area.
Nigeria and Cameroon have been clashing since early 1994 on Bakassi, a territory of about 1,000 sq km. believed to be rich in fishery and oil resources. Tension has mounted since February, when there were a series of reported attacks on Nigerians resident in the peninsula by forces from Cameroon.
The dispute over the ownership of Bakassi was filed to the International Court of Justice by Cameroon in 1994 and is currently being heard at The Hague, the Netherlands.
Angola: Exxon part of deepwater successThe most remarkable success stories in deepwater offshore West Africa are Elf, Chevron, and Shell. Or are they? Exxon, the world's second largest private oil company, is celebrating its success in the frontier, claiming a share of the victories credited to the three other companies. "Exxon affiliates to date have participated in six announced major deepwater discoveries offshore West Africa," Exxon officials say.
Elf's discoveries of Rosa, Girassol, and Dalia in deep offshore Angola, each reportedly holding recoverable reserves of oil in excess of 500 million bbl, are well known. Chevron is racing to put the Cuito Field (2.5 billion bbl of oil in place) in deep offshore Angola, onstream by 1999. Shell wants to commence production of the Bonga Field, (1 billion bbl oil in place) in deep offshore Nigeria, by 2002.
Exxon says that many of these successes are shared: "The three major Angola deepwater discoveries in which Exxon affiliates have an interest include: Rosa (20%), Girassol (20%), and Dalia (20%) on Block 17."
In addition, Exxon's affiliate Esso Exploration and Production Nigeria (Deepwater) Ltd. holds a 20% interest in the Bonga discovery in Block 212 offshore Nigeria. Each of these fields hold no less than 750 million bbl of oil, according to reports.
But Exxon itself, as operator, has recently had cause to sing. Early in April, it announced that Esso Exploration Angola Ltd, has made a second deepwater oil discovery on Block 15 in Angola.
The discovery well, named Marimba, was drilled in 4,230 ft water depths on Angola Block 15. The well encountered an oil-bearing reservoir that flowed at an aggregate test rate of about 6,800 b/d.
A month before, the company announced the Kissanje discovery, also located on Angola Block 15, about 16 km east of Marimba. Kissanje was drilled in a water depth of 3,318 ft. Three oil-bearing reservoir intervals were encountered, two of which flowed at a combined test rate of about 10,000 b/d of oil. The Marimba and Kissanje wells are located about 360 km west of Luanda. Further appraisal work will be carried out to evaluate the commercial potential of the discoveries.
As operator of Marimba and Kissanje, the Exxon Angola affiliate's interest is 40%.
The Angolan national oil company, Sonangol, is the concessionaire of the block. The other Kissanje/Marimba interest owners include BP Exploration (Angola) Ltd. (26.67%), Agip Angola (20%), and Den Norske Stats Oljeselskap (13.33%). Exxon is the only U.S. company whose affiliates have interests in Angola Blocks 15 and 17.
Marimba and Kissanje are the first wells Esso has drilled on Block 15, and a third well is currently being evaluated. Esso plans to drill additional wells on the block this year.
Equatorial Guinea increases tax takeTwenty months after the take-off of its first producing oil field, the government of Equatorial Guinea has increased its take in the country's burgeoning oil industry. Until August 1996, Equatorial Guinea was a marginal gas producer. But the Zafiro field, located in 200-meter water depths in the offshore Niger Delta, was discovered in March 1995 and brought onstream in August 1996.
Today, it is producing 80,000 b/d of oil. A revised production sharing contract with the government has seen Mobil's share of the block drop to 71.5%, from 75%; United Meridian's share drop to 23.5% from 25%, while the government of Equatorial Guinea holds 5%.
Correction:In the March issue, Offshore incorrectly reported that Chevron lost a man to a fire incident which occurred as a result of an explosion on a rig offshore Nigeria. This actually happened on a Mobil rig, not Chevron.
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