Oil Review Africa 2 2016

Oil Review

Africa

- Issue Two 2016

www.oilreview

africa.com

AfricaAfricaCovering Oil, Gas and Hydrocarbon Processing Europe m10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

www.oilreviewafrica.com

Dr Amy Jadesimi onNigerian opportunities

Exciting developmentsin Mozambique

Cape VI PetroleumCongress special report

Investing in highquality training

The latest advances inoffshore technology

Well integrity foroptimum performance

Top industry events

Interview: Dr DuncanClarke, Global Pacific

Advances for moreeffective drilling

Volume 11 Issue Two 2016

HE Yemi Osinbajo, Vice President ofNigeria, at the Cape VI PetroleumCongress in Abuja. See page 21.

� Training - p24 � Offshore - p26 � Technology - p30 � Events - p39

REGULAR FEATURES: � News � Contracts � Events Calendar � IT Update � Company Profiles � Products & Innovations

Africa’sinvestment

hot spots

Africa’sinvestment

hot spots

ORA 2 2016 Cover Spine_cover.qxd 08/04/2016 11:25 Page 1

NIGERIA’S ONLY 100%PRIVATE INDUSTRIAL FREE ZONE

www.ladol.com • [email protected]+234 1 279 0684; 760 6748

LADOL: THE IDEAL LOCATION FROM WHICHYOU CAN PARTICIPATE IN

THE WORLD’S NEXT BIG GROWTH STORY

LADOL’s mission is to help make Nigeria West Africa’s hub for industrial maritime and oil & gas activities. A $500 million award-winning Free Zone, Ladol provides technologically advanced infrastructure and round-the-clock support for all companies in the Zone.

LADOL has already reduced the cost of offshore logistics support by 50% and its fully serviced facilities allow new entrants to set-up and access the high growth West African market at minimal

S01 ORA 2 2016 - News_Layout 1 07/04/2016 16:06 Page 2

http://www.ladol.com/

Oil Review Africa Issue Two 2016 3

Editor’s noteTHERE IS A strong investment theme running through this issue of Oil ReviewAfrica and, as a result, there is a wide range of views and analysis on offer.

For our cover story on page 15, industry-leading consultants havecompiled a detailed analysis of investment opportunities. It is essentialreading for anyone seeking value-for-money investments in new markets.

Upstream sector investment is the focus of the interview with Dr DuncanClarke, chairman of the board for Global Pacific & Partners. He offers a frankaccount of the challenges facing certain African markets in our new backpage interview feature. Turn to page 46 to read his views on upstreaminvestment in this challenging period for upstream players.

Meanwhile, on page 10, Dr Amy Jadesimi, managing director of LADOL,offers her upbeat perspective on the myriad opportunities for investment inNigeria that have actually been facilitated by the fall in oil prices. Accordingto Dr Jadesimi, now is a great time to acquire Nigerian assets.

We also have a special report on the Cape VI African PetroleumCongress, which was held in Abuja in March. Nigeria’s gas ambitionsdominated discussions. The full report is on page 21. A wide range of viewswere aired at the congress, demonstrating that there is always room forhealthy debate when it comes to the future of oil and gas in Africa.

Tanzania is an emerging hydrocarbons market. (Image credit: Flickr/Florian Kreitmair)

News and viewsIndustry news and executives’ calendar 4Updates from across the African region and upcoming events for industry professionals.

Dr Amy Jadesimi 10The LADOL managing director talks about customers getting value for money.

Country FocusMozambique 12Bringing growth to Mozambique’s hydrocarbons industry with the Pemba project.

FeaturesInvestment in African oil and gas 15Where are the investment opportunities in oil and gas across Africa? onferenceReportCape VI African Petroleum Congress 21A special report on this March conference from our correspondent in Abuja.

Sector SurveyTraining 24A leading industry consultant, explains why training is should never be left to chance.

Technical FocusOffshore technology 26How to maximise offshore technology in a low oil price environment.

Radars 30Two types of advanced radar technology for accurate measurement are explained.

Smart meters 32How smart meters can help with advanced oil recovery.

Drilling 34Continuous circulation techniques for best results.

Well integrity 36Dr Liane Smith outlines the latest advances in well integrity technology.

Subsea technology 38Innovations for underwater operations.

Events5th Mozambique Mining, Energy, Oil & Gas Conference 39This exciting event coincides with an exciting time for hydrocarbon development.

Nigeria Oil & Gas Conference and Exhibition 41President Buhari will be opening this event, to be held in Abuja in June.

Tank World Expo 2016 43Leaders in the storage sector will converge on Dubai this month.

InnovationsNew developments for oil and gas producers 44New products and educational opportunities for industry professionals.

InterviewDr Duncan Clarke 46Global Pacific & Partners’ chairman of the board talks about prospects across Africa.

Where are the best places for oiland gas investment in Africa? Moreon page 15.

Contents

AfricaAfricaCovering Oil, Gas and Hydrocarbon Processing


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Execut ives Calendar 2016APRIL

12-13 Tank World Expo DUBAI www.easyfairs.com

19-21 MOC Mediterranean Offshore Conference & Exhibition ALEXANDRIA www.moc-egypt.com

20-21 Ghana Summit ACCRA www.cwcghana.com

22-24 Ghana Summit - Oil & Gas Frontier Markets ACCRA www.thecwcgroup.com

27-28 MMEC (Mozambique Mining, Energy, Oil & Gas) MAPUTO www.mozmec.com

28-29 Global Asset Integrity Management O&G Forum BERLIN www.magvoyenergy.com

MAY2-5 OTC 2016 (Offshore Technology Conference) HOUSTON www.otcnet.org

2-3 Global Asset Integrity Management O&G Forum FRANKFURT www.magvoyenergy.com

4-6 Southern Africa Energy & Infrastructure Summit MAPUTU www.southern-africa-summit.com

9-10 SPE Oilfield Corrosion Conference ABERDEEN www.spe.org

11-12 International Oil & Gas Security Conference & Exhibition LONDON www.oilgassecurity.com

17-19 International Conference on Petroleum Data Integration HOUSTON www.pnecconferences.com

25-26 14th Africa Independents Forum LONDON www.africa-independentsforum.com

JUNE7-8 Petrochemical Engineering & Construction Conference & Exhibition NEW ORLEANS www.petchem-update.com

10-12 5th East Africa Oil & Gas Exhibition & Conference NAIROBI www.expogr.com

13-16 Nigeria Oil & Gas Exhibition & ConferencE (NOG 2016) ABUJA www.cwcnog.com

14 Adapting To A Challenging Oil Price Environment LONDON www.spe.org

15-16 IADC World Drilling 2016 Conference & Exhibition LISBON www.iadc.org

21-22 Cyber Security for Critical Assets RIO DE JANEIRO www.criticalcybersecurity.com

28-29 FLNG World Congress 2016 SINGAPORE www.iqpc.com.sg

30-2 June 78th EAGE Conference & Exhibition 2016 VIENNA www.eage.org

JULY7-9 2nd Oil & Gas Tanzania DAR-ES-SALAAM www.expogr.com/tanzania/oilgas

12-14 Tanzania International Forum for Investments DAR ES-SALAAM www.tziforum.com

21-23 World Congress on Petroleum & Refinery BRISBANE www.petroleum.omicsgroup.com

25-27 Artifical Lift Systems for Optimised Production Workshop BANGKOK www.spe.org

Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

A TOP-LEVEL SUMMIT will bringenergy industry players andinfrastructure leaders together inMozambique. The Southern AfricaEnergy and Infrastructure Summit(SAEIS) will be held in Maputo, thecapital of Mozambique, from 4-6 May.

This event, hosted by EnergyNet,follows the March announcement byGigawatt Mozambique of a US$200mn investment into the country’spower sector, along with other globalstakeholders, including Standard Bankand the World Bank. This major investment is aimed at leveragingMozambique’s natural gas resources, with the aim of benefiting many of itsneighbours in the region, as well as Mozabique itself.

Regional co-operation, and the promotion of energy and infrastructureprojects with a combination of public and private sector funding. Casestudies of African energy and infrastructure success stories will also beshared at the summit.

“Regional development is the key to unlocking Africa’s investmentpotential,” said Veronica Bolton-Smth, EnergyNet’s regional director for Eastand Southern Africa. “SAEIS will bring together countries from the SADC regionto discuss live infrastructure and energy projects which require investment.”

For more information: www.Southern-Africa-Summit.com

A NIGERIAN PIPELINE facility has benefited from the delivery of an Internetof Things (IoT) connectivity solution. The Shell Nigeria pipeline facility nowhas a digital oilfield solution (DOF) which was installed in a partnership withIngenu and KONÇAR, at a cost saving of more than US$1 mn ininfrastructure investment.

With the remote Niger Delta location of the pipeline, a streamlined andcost-effective solution for digitising the oilfield was an importantconsideration for the operator.

The DOF solution combines IT automation and instrumentationtechnologies to provide a support platform which serves the dual purposesof utilising remote field data and optimising operational efficiencies. Theaim is for the integrated technology to provide fast analysis and efficientdata management. This, in turn, offers Shell accurate insights into fieldprocesses, resulting in safe and efficient oilfield production.

The cost savings were achieved thanks to Ingenu’s Random PhaseMultiple Access (RPMA) network technology, which was mated withcommunications solutions including satellite and GPRS for a cost-effective,low-power, wide area RPMA network. This eliminated the need for expensiveinfrastructure investment, such as towers, radios, extensive datacommunications equipment and battery banks.

KONÇAR’s role in the project was to provide Shell Nigeria witha collection of detailed field data in relation to pipeline pressure,temperature and flow. The KONÇAR remote terminal units and wirelesspressure and temperature transmitters were installed in flow station,manifolds and wellheads. This provided connectivity from the field to theback office to ensure reliable information transmission.

Nigeria pipeline boosted by digital tech

Many exciting infrastructure projects aretaking place in Mozambique.

Regional players gather in Mozambique




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6 Oil Review Africa Issue Two 2016

THE 70 MW Tobene independent power plant has been inauguratedin Taiba Ndiaye, 90 km north-east of Dakar, the Senegalese capital.It is operating as a heavy fuel oil-fired plant and can be convertedto a gas-fired plant, and is expected to provide electricity for up to1.5 mn people, which comprises about 10 per cent of theSenegalese population.Senelec, Melec PowerGen and the World Bank Group jointlyannounced the plant’s inauguration.The International Finance Corporation, a member of the World BankGroup, and Melec PowerGen developed the plant on a build, ownand operate basis. IFC holds a 10 per cent stake and MelecPowerGen holds the remaining 90 per cent.Melec PowerGen also operates the Kounoune power plant inSenegal and the Thika power plant in Kenya, both of which run onheavy fuel oil.

NIGERIAN OIL MARKETING company, Forte Oil, has announced plans to raiseup to 100 bn naira (US$503 mn) in order to expand its business across thecountry. The proposal will go to a shareholder meeting on 26 April, when thecompany’s annual general meeting will be held.

According to a statement released in March, Forte Oil is considering a range of options for raising the money. These include a rights issue, bondor share offering or global depository receipts.

“This capital raising is part of our preparations to take advantage ofopportunities in the economy,” Akinleye Olagbende, Forte Oil’s chiefcompliance officer told Reuters.

In terms of where Forte Oil might seek to expand, Mr Olagbende said thecompany was interested in seeking out opportunities in the upsteam sector,and may look into other viable businesses for possible investment.

Forte Oil has reported a pre-tax profit of 7.02 bn naira for the 2015financial year. This is up from the 6.01 bn naira pre-tax profit for 2014.

In another boost for Forte Oil, the company’s group chief executiveofficer, Akin Akinfemiwa, has been elected as chairman of the Major OilMarketers Association of Nigeria (MOMAN), the umbrella body of oilmarketing companies for the country. Mr Akinfemiwa replaces foundingchairman, Wale Tinubu in the MOMAN leadership role.

“Our main focus at MOMAN is to continue to work closely with all theregulatory bodies to finding lasting solutions to the problems faced in thedownstream sector, and also to assist the federal government by ensuringuninterrupted supplies of petroleum products to Nigerians,” said MrAkinfemiwa. At the announcement of his new role, he described the oilmarketing industry as “a driver of the Nigerian economy”.

AFRICAN COMPANIES IN multiple countries may be implicated in a major oilindustry bribery scandal that was revealed jointly by Australian newspaperpublisher, Fairfax Media, and online news source, Huffington Post.

The story broke in early April with reports, sourced from files leaked tojournalists, that Unaoil, a Monaco-based company, bribed governmentofficials on behalf of its clients to help them secure lucrative contracts onoil industry projects. Unaoil’s clients include exploration companies,comstruction companies, engineering firms, and oilfield service contractors.

The media reports have cited operators in numerous African countries asbeing involved in alleged bribery in regard to winning contracts.

In West Africa, allegations include Unaoil’s involvement in relation to a gas project in Congo, as well as a contract in Equatorial Guinea in 2003,although this contract was withdrawn before it was due to be finalised.

Despite the size of its oil industry, Unaoil has not made any major dealsin Nigeria. In Angola, another major African market, there have beenallegations of bribery in relation to an equipment contract in 2011.

In North Africa, it has been alleged that Unaoil has been involved inAlgerian and Tunisian refinery tenders.

Unaoil has denied the allegations and released a statement on 4 April.In the statement, the allegations are described as “grave”.

“Many appalling things have been said about our business, allegationsare being treated as fact, and speculation is rife,” the statement said,adding that the company is “engaging with authorities” and “consideringwhat actions we will take.”

The US Department of Justice, anti-corruption police in Britain andAustralia and authorities in Monaco are all investigating the allegations.

Unaoil leak may impact African operations

Oil-fired power plants are expanding in Senegal. (Image credit: Flickr/jbdodane)

THE CHEPTUKET-1 WELL, located in Block 12A, in northern Kenya,has encountered good oil shows, according to announcements fromAfrica Oil and Tullow Oil, two of the stakeholders at 20 per cent and40 per cent respectively. Delonex Energy, which launched an African E&P company in

2013, holds the remaining 40 per cent stake in the block. The Delonex stake in Block 12A is the result of a farm-down fromTullow Oil in 2015.The promising showings were seen in cuttings and rotary sidewall

cores across a large interval of 700 metres. Cheptuket-1 is the firstwell to be tested in the Keiro Valley Basin, and it was drilled by thePR Marriott Rig-46 to a final depth of 3,083 metres.“This is the most significant well result to date in Kenya outside

the South Lokichar basin,” said Angus McCoss, the project’sexploration director. “Encountering strong oil shows across such a large interval is very encouraging indeed. “I am delighted by this wildcat well result and the team is already

working on our follow-up exploration plans for the Kerio ValleyBasin,” McCoss added.According to statements from Africa Oil and Tullow Oil, the

objective of the well was to establish a working petroleum systemand test a structural closure in the south-western part of the basin. The promising results from the Cheptuket-1 project, as well as

the success of the Etom-2 exploration in Block 13T, also in northernKenya, indicate the presence of an active petroleum system withsignificant oil generation. Post-well analysis is now in progress ahead of the stakeholders

defining the future exploration programme in the basin. Now thatthe exploration process has been completed, the PR Marriott Rig-46will be demobilised.As well as the Cheptuket-1 and Etom-2 discoveries, the Kerio

Valley Basin is also the site of the successful Ngamia and Amosingdiscoveries. The Ngamia discoveries were also drilled by the PRMarriott Rig-46.

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Forte Oil to raise funds for expansion

Promising results from Cheptuket-1 wellOil-fired power plant opens in Senegal



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UNDER ARTICLE IV of the IMF's Articles ofAgreement, the IMF holds bilateral discussionswith members, usually every year. This year'sreport on Nigeria was recently discussed by theexecutive board of the IMF.The directors welcomed the authorities’

policy agenda of enhancing transparency,strengthening governance, improving security,and creating jobs. Directors noted that theNigerian economy has been hit hard by thedecline in oil prices, which has slowed growthsharply and led to macroeconomic imbalances.Given the uncertain global outlook, directorsstressed the need for significantmacroeconomic adjustment. They highlightedthe importance of implementing a coherentpackage of policies, in consultation with IMFstaff and development partners, to safeguardfiscal sustainability and reduce externalimbalances, and advancing structural reforms tosupport inclusive growth.Directors emphasised the critical need to

raise non-oil revenues to ensure fiscal

sustainability while maintaining infrastructureand social spending. They urged a gradualincrease in the VAT rate, further improvementsin revenue administration, and a broadening ofthe tax base. The stress was laid on theimportance of strengthened public financialmanagement and service delivery. They alsoencouraged the implementation of anindependent price setting mechanism toaddress petroleum subsidies, whilestrengthening the social safety net. Board members noted that the policy

approach of expansionary monetary policy,together with a relatively fixed exchange rateand exchange restrictions, had adverselyimpacted economic activity. They underscoredthe need for credible adjustment to the largeterms of trade shock, including through greaterexchange rate flexibility and speedy unwindingof exchange restrictions to facilitate anexchange rate consistent with fundamentals.The directors observed that further

strengthening of the regulatory and

supervisory frameworks would help improveresilience, even as financial sectorsoundness indicators remain favorable.Structural reforms would enhance

competitiveness and support investment.They encouraged the authorities to continuecore infrastructure investment, and furtherreduce the cost of doing business throughgreater transparency and accountability.IMF members welcomed renewed efforts

to adopt legislation to spur investment inthe oil and gas sector, and promote policiesto strengthen governance of the sector,including targeted AML/CFT measures.Directors welcomed the progress that has

been made in improving the quality andavailability of economic statistics. They acknowledged the authorities’

commitment to implement the eGDDS,including a National Summary Data Page,and encouraged efforts to improve balanceof payments data and compilation of subnational fiscal accounts.

IMF executive board discusses Nigerian economy

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DDR AMY JADESIMI, managing directorof LADOL, spoke with Oil ReviewAfrica about the services offered bythe company’s free zone facility in

Nigeria, exciting future plans, and how the low oilprice environment can offer excellentopportunities for investors around the world.

LADOL is a unique proposition in the Nigerianoffshore market in that it offers a 100 per centprivately owned free zone for clients with accessto a full range of drilling and support services.

“We are 100 per cent Nigerian-owned and theonly facility that is 100 per cent privatelyfinanced,” Dr Jadesimi told Oil Review Africa.“The investors know we are very dedicated to themarket, we are in it for the long term.

“We understand the local market.”

Major savings for drilling and production supportDr Jadesimi says that the LADOL free zone facilityis able to offer clients significant cost savings ofup to 50 per cent, compared to other offshoresupport services on offer in Nigeria.

She describes the facility, with its Lagoslocation as a “convenient hub” for local andinternational operators.

“It is the optimal location with access to aharbour 24 hours a day, seven days a week,” shesaid. “The location is key.”

A particularly attractive feature for LADOL’sclients is the fully integrated services on offer,with Dr Jadesimi explaining that because the freezone offers everything operators require, thiskeeps the costs competitive.

The services at the 30-hectare free zoneinclude a US$150 mn logistics facility, a hotel,serviced offices, the quay wall, access to allnecessary chemicals, fuel and water, andadvanced information technology solutions.

Dr Jadesimi explained that LADOL has workedclosely with the US Trade and DevelopmentAssociation to ensure the information technologysolutions enable free zone clients to take advantageof cashless and paperless office applications.

The importance of customer satisfactionUsing local staff has also helped LADOL offercompetitively priced support solutions.

“We have indigenous, fully trained staff andthey are available 24 hours a day,” said DrJadesimi. “Our main value proposition is that weare a low-cost provider and we offer a safe andefficient service.”

As a private sector provider of services tooffshore clients, Dr Jadesimi said that customerservice is essential to the survival of the business:“We only get paid if our customers are happy.”

A technical and local content success storyLADOL has been involved with a large Nigeriancompany in an offshore bloc installation projectthat Dr Jadesimi is particularly proud of.

“It is the first time an offshore oil bloc hasbeen owned by a Nigerian company,” she said,describing it as a “momentous project”.

“There was a lot of work with the installationprocess before production,” said Dr Jadesimi. “Itwas a huge win for local content and for meetingtechnical challengies.”

Future plans for LADOLWith phase one completed, the LADOL facilityhas the capacity to load and offload two vesselsor barges at a time, 24 hours a day, seven days aweek. The initial quay wall covers a length of 200metres with an 8.5-metre draft.

Phase two of the LADOL site is underway, andthis will includfe a shipyard, an integrated FPSOand the doubling of the size of the quay. It ispossible to expand the quay to a length of up to1,000 metres. Phase two also includes a powerplant which will have a capacity of up to 50 MW.The project becomes even more ambitious, withphase three incorporating railway and agriculturalprocessing capacities.

Opportunities in the low oil priceenvironmentWhile the drop in oil prices has been a source ofmuch consternation across global oil markets, DrJadesimi is upbeat about the opportunities theprice drop has created in the Nigerian market.

As well as LADOL’s commitment to localcontent resulting in lower costs for its clientswho are looking to economise in the currentmarket, Dr Jadesimi told Oil Review Africa thatnow is a great time for investment in Nigeria,particularly in the upstream sector.

“It is the perfect time to invest in the marketand pick up assets,” said Dr Jadesimi. She alsocited the new government’s commitment toopenness, transparency and maintaining the ruleof law as another reason to invest in upstreamprojects in Nigeria.

LADOL is keen to demonstrate its owncommitment to being transparent and part of arobust regulatory environment. It has received aclean bill of health from the Nigeria CustomsService. The facility was visited by the service’scomptroller-general, Colonel Hameed Ali, and heexpressed satisfaction at LADOL’s compliancewith regulations during the high profileinspection of LADOL’s vessels. He told reportersthat LADOL is an investment that has all thetrappings to stimulate growth in Nigeria.

Gbenga Kuye, managing director of theNigeria Export Processing Zones Authority, hasalso praised LADOL for its commitment to growthand local content.

“We want to partner with legitimateorganisations,” said Dr Jadesimi, adding thatthere are opportunities for international investorsin both private and public sector projects. �

Dr Amy Jadesimi, managing director of LADOL, iscommitted to providing great customer service to clientsand moving forward with the expansion of the free zone.

“It is the optimal location withaccess to a harbour 24 hours a

day, seven days a week.”

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Dr Amy Jadesimi is positive about the investment opportunities on offer in Nigeria andexplains how the LADOL free zone is able to offer competitive prices to its clients. Shespoke with Oil Review Africa editor, Georgia Lewis.

Cost savings and investment opportunities inNigerian offshore


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GGovernments and organisations must look to form more creativepartnerships if they’re to resolve the crisis currently impactingthe global oil and gas industry. In particular, there are solidopportunities for British companies to form mutually beneficial

partnerships in Africa’s emerging hydrocarbons market. More organisationsand governing bodies need to follow the example of Aberdeen, Scotland,which has signed a creative partnership with the town of Pemba inMozambique. Thanks to the agreement, Aberdeen-based firms can bid fornew work and contracts in Pemba, an area which is said to hold hugereserves of offshore natural gas. The Aberdeen/Pemba partnership is just oneexample of innovation within the global oil and gas arena and shouldcertainly be encouraged.

Opportunities for operators and employees in the North Sea andbeyondWe all know that the North Sea and a number of other markets are down atthe moment, but this won’t be the case forever. The industry is cyclical and there are still numerous pockets around the world where there is significant

demand for talent such as Kazakhstan, Azerbaijan and in a number of Africancountries, including Mozambique.

It is something that benefits the UK economy, as well as the globalmarkets where partnerships are made. The UK has rafts of talented specialistsand exporting their expertise is an option that governments and energy firmsacross Africa should be encouraging.

Good news for recruitment in MozambiqueOil and gas firms have a great depth of expertise at their disposal and are notcurrently utilising it to its full extent. It recommends forming creativepartnerships in the downtime regions like Pemba.

It is also important to consider the benefits that partnerships witheducation institutions can bring, particularly in light of the role that theyplay in nurturing the next generation of oil and gas operatives. The past fewmonths have clearly been a difficult time for the North Sea but as a company that’s been heavily involved in the sector for more than 45 years,it’s our strong view that the market is cyclical and that it will only be a shorttime before business picks up once again.

The market has obviously struggled to react to the fact that the value ofour product has essentially been cut in half but the UK government, as wellas a number of major firms, have invested huge amounts into the North Seaand they’re not going to allow these assets to go to waste.”

Reports suggest that there will be an estimated 22 per cent reduction inthe cost of operating existing assets by the end of 2016 and that, supportedby the first annual production increase in over a decade, will improve theoutlook for the region.

There are considerable opportunities out there. We’ve seen operators lookto form strategic partnerships that make the use of UK talent in new,international markets. The strategic partnership between Aberdeen andPemba in Mozambique is potentially a very fruitful collaboration thatindicates that there is light at the end of the tunnel.

In 2012, Mozambique emerged as a new giant in the African natural gassector, with more than 100 trillion cubic feet having been discovered, mainlyin the offshore Rovuma Basin.

Mozambique’s burgeoning oil and gas industry is beginning to open up a wealth of job opportunities for those engineers with the skills andexperience who are seeking a new challenge. �

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The Scotland-Mozambique Pemba initiative is an example of how to help lessen theimpact of challenges in the oil and gas industry and create jobs for locals and expatsalike, writes Johnathan Johnson, CEO of engineering recruitment company, Fircroft.

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AANY DISCUSSION OF why it makessense to invest in African companiesand, in particular in oil and gasprojects, must begin by confronting

all the negativity that historically has surroundedthe continent.

Companies and investors in Africa have hadwell-founded concerns about political instability;endemic corruption; and regulations that havebeen loose, difficult to follow or constantlychanging.

Potential investment or acquisition targetsoften have been notable for poor corporategovernance and a lack of financial andoperational transparency, as well as the regularrecurrence of natural disasters such as floods andfamines, as reasons for a persistent lack ofeconomic progress in the region.

Yet today, there are encouraging signs. Thepeaceful political transition of power in Nigeriaparticularly is significant, given that the countryhas a growing economy and is increasinglyperceived as the gateway to Africa, rivaling SouthAfrica.

On the other hand, Africa continues to sufferhard luck. The 2014 Ebola virus outbreaks gaveinvestors a new reason to shy away.

South Africa stands apart as a nation with a more developed economy, featuring bankersand corporations that weigh investmentsopportunities in the rest of the region in muchthe same way as their counterparts in other areasof the world.

Because of slow growth in South Africa’s owneconomy, investors and businesses there seekingexpansion opportunities are looking elsewhere inAfrica.

Those who see opportunity in sub-SaharanAfrica point to its underserved population, anemerging middle (or, at least, consumer) class, and its rich pool of human and natural resources.

The region’s economy is one of the world’sfastest growing, with gross domestic productprojected to rise an average 4 per cent to 6 percent annually for the next several years.

The opportunity to profit from Africa’s growthis real. On average, the continent’s economieswill grow 4.5 per cent in 2015 and 5 per cent in2016, according to the 2015 African EconomicOutlook report by the Organization for EconomicCo-operation and Development (OECD), theAfrican Development Bank (ADB) and the UnitedNations Development Programme (UNDP).

Given that, there should be opportunities inAfrica and the oil and gas industry needs tocapitalise on this.

But finding the right strategy will be tricky.

What is required is not simply money — butexecutive leadership that sets an example forimproved corporate governance that will lead tosustained success.

What does this mean for investment inAfrican oil and gas?Across the African continent, only a fraction ofthe large volumes of natural resources is beingexploited. Access to energy is an essential part ofAfrica’s push towards economic growth anddevelopment. Strong, fair extractive policies areessential.

As well as opportunities with existing oil andgas developments, more projects are comingonline in countries such as Ghana, Tanzania andUganda.

The good news is that multiple governmentsacross Africa are implementing regulatoryframeworks that favour investment in exploration,production and the necessary infrastructuredevelopment. Looking ahead, the African oil andgas sector is becoming more competitive.

New opportunities in Ghana, Tanzania andUgandaAngola, Nigeria and South Africa have long beenthree of the major players in African hydrocarbondevelopment but more players are emerging asforces to be reckoned with as the drive towardsaccess to energy for all means responsibleexploration and production of oil and gas is moreimportant than ever.


Oil tankers at Takoradi on the coast of Ghana.(Image credit: Ben Sutherland/Flickr)

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Overcoming negativity and improved governance are among the factors needed to makeinvestment in African oil and gas a solid proposition. Max Gebhardt, Frank Ford and DanHealy from FTI Consulting offer this analysis.

A bright future forAfrican investment?


Today, there are encouragingsigns, such as the peaceful

transition of power in Nigeria.


Ghana remains a strong and growing oil andgas producer. By 2021, Ghana National PetroleumCompany is expected hit its production target of250,000 barrels per day. The Jubilee fieldsdiscovery has proven to be a success story forGhana and further investment of US$20bn isbeing sought.

Additionally, the Tweneboa-Enyenra-Ntomme(TEN) field, a Tullow project, is looking verypromising with estimated reserves of 245mnbarrels.

The Rovuma field in Tanzania has been animportant part of the country’s gas sectordevelopment. This has contributed to tremendousinterest in hydrocarbons with FDI increasing by 6 per cent to US$1.8bn in 2013.

Tanzania is now at a juncture where decisionswill have to be made about how the country willuse its gas for domestic customers and how LNGinfrastructure can be put in place to create a strong export market, particularly to big-spending, energy-hungry Asian markets.

The country will need to raise the capital tomeet the enormous potential of its gas resourcesand this will require broad investment intechnology, development, export operations andinfrastructure for gas-to-power transmission.

In the past decade, Ugandan oil and gasexploration has continued apace. Discoveries inthe Albertine Graben basin and Lake Albert havemade Uganda a global player and boosted itsstatus as a country worthy of investment inhydrocarbon development. The Albertine Grabenbasin is 40 per cent explored and has a successrate of 90 per cent.

Liberal fiscal policy has put Uganda in a strong position to attract foreign investment.The Ugandan government has implementedpolicy which states that oil and gas operatorsmust support the development of the petrochemical sector based around an oil refinery.

This refinery’s government-estimated cost willbe US$2.5bn based on a capacity of 60,000

barrels per day. Potentially, this could be a greatopportunity for direct foreign investment as longas the relevant technology and a robust financingstructure are put in place.

Mixed news for oil and gas investmentOther factors will have an impact on Africa’sattractiveness for oil and gas investment. TheAfrican Economic Outlook report predicted that


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Muhammadu Buhairi, President of Nigeria, has promised reforms to improve governance and cut down on corruption,which impacts on the oil industry. (Image credit: European Parliament/Flickr)


The Ugandan oil industry has been working for along time to develop the entire value chain. This isa truck transporting petroleum for export in 2004.(Image credit: Stefan Gara/Flickr)


private foreign investment will grow toUS$55.2bn in 2015, more than 10 per cent higherthan 2014.

But the figure continues to be significantlylower than the US$66.4bn invested in 2008, asign that foreign interest in investment in Africa,while rising, still has not fully recovered from theblow of the global financial crisis.

One of the greatest traditional concerns aboutAfrica — its burgeoning population — alsorepresents an opportunity. Sub-Saharan Africa’spopulation is expected to double by 2050, and,unfortunately, many of those people will be borninto poverty, according to the PopulationReference Bureau.

On the other hand, the ADB reported in 2014that a stable African middle class, defined by theADB as people spending from US$4 to US$10 aday, already has grown to 313mn, or 34 per centof the total population. A larger middle classmeans greater demand for improvedinfrastructure and this can be facilitated byaccess to energy.

The recent peaceful transfer of power inNigeria for the first time in its history has givenrise to optimism about the potential for politicalstability in the region.

In March 2015, former President GoodluckJonathan conceded the national election toMuhammadu Buhari, who was inaugurated inMay. If the leaders of other African countries seethat a more democratic political climate leads toa better economy, they may be motivated tofollow Nigeria’s example.

Nigeria’s robust oil and gas industry plays a major role in this climate of growth. TheNigerian government received US$293bn inroyalties from 42 oil and gas companiesoperating in the country between 2006 and 2012,it was disclosed in December 2015 by the Nigeria Extractive Industries TransparencyInitiative.

Robert Diamond, Jr., the former Barclays CEO,now focusing on African investment as CEO ofAtlas Merchant Capital, cited Nigeria’s peacefulpolitical transition as one of the major reasons forhis own optimism.

Speaking as part of an FTI Consulting paneldiscussion at the World Economic Forum onAfrica 2015 this past June, Diamond said,"Nigeria is a very big part of the [sub-SaharanAfrica] growth story, [as] one in three of GNP[gross national products] comes from Nigeria andone in five Africans is Nigerian."

Throughout the region, urbanisation andpopulation growth "will demand services [thatdon’t exist today] and infrastructure that is still to

be built," said Rick Menell, a senior advisor toCredit Suisse and a mining industry veteran,speaking at the same event.

"Public-private partnerships are necessary, butthey need a regulatory framework that satisfiesboth the profit motive of investors and thebroader mandate of governments."

Businesses are looking for governments withwhom they can work and sensible regulatorystructures surrounding oil and gas developmentwill certainly play an important role.

Dealing with African governments can bedifficult, but the challenge is starting to lookmore manageable. Given a sufficient appetite for


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Democratic Republicof the Congo

Figure 3: Future Gateway for Business to Invest in AfricaQ. Which countries do you consider will become the gateways for business to invest in Africa in !ve years?

3% Base: (2015) n=78 opinion leaderson Africa

4%

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4%

6%

6%

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8%

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11%

13%

15%

19%

22%

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Ivory Coats

The burgeoning populationof Africa is a traditional

concern, but it also representsan opportunity.


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risk and a properly diligent approach to riskmitigation, investors and companies interested ininvestments.

FTI surveyed a panel of business leaders and89 per cent expect an overall rise in investment.The good news for the oil and gas industry is thatthe areas where investment is expected to rise allrequire reliable access to energy, with 96 per centexpecting the greatest increase to occur incommunications infrastructure and 90 per centexpecting an increase in traditional infrastructuresuch as transport, schools and hospitals.

Additionally, investment is predicted to besolid for energy infrastructure itself. Additionally,74 per cent said they would most like to seeinvestment increased in agriculture, anotherenergy-hungry sector.

An African investment strategyAfrica is poised to more fully realise its economicpotential. Investing in African companies still callsfor a great deal of caution. The opportunities inAfrica are real, but the investors that profit mostwill be those that take the time to completelyunderstand what they are buying or investing in.

By definition, capitalism is good for business.It’s particularly good for business in Africa. Smartforeign investment improves the governance of

African businesses, which, in turn, increasesopportunities for other businesses, both withinand outside the continent.

The message from investors is (and ought tobe), "We’re not going to give you money unlessyou behave like a real business."

Investors have the right to insist that the

African businesses they put money into meet thesame standards of management and governancethey would expect from companies anywhere elsein the world.

By setting high standards, investors cannotonly capitalise on an improving economic climatein Africa — but they also can accelerate it. �


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South Africa has one of the more developed economies in Africa. (Image credit: mallix/Flickr)



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S04 ORA 2 2016 - Congress Report_Layout 1 07/04/2016 16:23 Page 19

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WWITH THE NIGERIAN government’splan to reduce gas flaringthrough joint venture contractsthat would expand infrastructure

and deploy liquefied natural gas for domestic andindustrial uses by 2020, what viable localinfrastructure was in place to aid reduction ofproduction cost for investors?

The second question was how the governmentintended to handle issues, with pastcollaborations, that cropped up as a result ofpoorly executed legislation and unreliablegovernment policies, and encourage a stableenvironment for future investments.

Nigeria is a member of the World Bank GlobalGas Flaring Reduction (GCFR) Partnership, andaccording to the Vice President, Professor YemiOsibanjo, who opened the exhibition on behalf ofPresident Muhammadu Buhari, it will, with thesupport of its Parliament, sign the United Nationsagreement of “Zero Routine Flaring by 2030”. Ithas, however, targeted 2020, ten years ahead ofthe UN’s target. Its call for collaboration is aimedat achieving this ambitious goal.

However, the problem some see withinvesting in Nigeria is the penchant of each

succeeding administration to make grand plansbut put forward little by way of strategy to ensurethat these plans and visions are executed evenwhen the administration is no longer in power.

Olivier Mussat, chief investment officer Oil & Gas of the World Bank Group’s InternationalFinance Corporation (IFC) addressed this point,during a question and answer session on Day Twoafter his presentation titled Africa Oil & Gas:Challenging Road Still Ahead.

He spoke about how a change ofadministration often affected government-investor relationship. Most governments, he said,were usually wary of being taken advantage of byprivate investors and in a situation where a private investor takes advantage of a weakgovernment, the tendency is for the newadministration to rescind the investor’s licence.

“You are doing it for the right reason but thesignal you are sending to the world is that you are not a stable country to operate in,” hesaid, however.

What was more important, he noted, more soeven than infrastructure, was to have a “countryview” – where an administration looks beyondthe four years it gets to stay in power and rather

creates strategic structures including legislationand infrastructure that would ensure developmentfor years to come.

He gave an example of his country, France,where the government in the seventies decidedthat rather than being held hostage to oil and gasdrops, natural resources it did not produce, itwould develop instead a nuclear programme.

“This came from the strategic vision of a president who knew that this nuclearprogramme would happen after he was gone; soyou need vision,” Mussat advised.

Chidi Momah of the Nigerian NationalPetroleum Corporation (NNPC), the agency thatregulates Nigeria’s petroleum industry, in his talk– Revisiting the Regulatory Space for theNigerian Petroleum Sector – on Day 1 of theexhibition, had discussed the government’s planto create a transparent regulatory environmentthrough new legislation.

This news is supposed to sound encouragingto old and new investors – finally, an end to thebureaucratic bottlenecks and inefficiency thathave characterised government-private investorcollaboration in Nigeria’s petroleum industry, a situation which has often led to a call forcomplete privatisation of that sector – exceptthat we have been here before.

In the same presentation, Momah denouncedthe Petroleum Industry Bill – a legislation thatwas touted back in 2007 when it was introduced,as the herald for the much-needed reforms in theoil and gas sector, and was designed tostrengthen the capacity of indigenous Nigeriancompanies in the oil and gas sector to competewith international oil companies in the searchand acquisition of hydrocarbons in Nigeria.


The Lagos Deep Off-Shore Logistics facility. (Imagecredit: LADOL)

Nigeria is a member of the World Bank Global Gas FlaringReduction (GCFR) Partnership, and according to the VicePresident, Professor Yemi Osibanjo, who opened the

exhibition on behalf of President Muhammadu Buhari, it will,with the support of its Parliament, sign the United Nations

agreement of “Zero Routine Flaring by 2030”

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Two questions appeared to hang over and direct the conversation atthe Sixth African Petroleum Congress and Exhibition (CAPE VI), whichwas held in Abuja from 15-18 March.

Nigeria seeks collaborations to fund its gas vision



Momah said, however, that the bill’sexpectations did not match the realities onground. Hence, the need of new legislationderived from the old one. This time it would coverthree or four bills that would clarify roles, createviable institutions with clear functions andboundaries, and “avoid making investors dancearound” – a much needed situation for long-termstable, productive collaborations that will surviveadministration after administration.

Still, despite the inefficiency andinconsistency, Nigeria has in the last few yearsmanaged some collaborations that have enduredchanges in administration; such as GeneralElectric service centre for manufacturing rotatingequipment in Calabar, the LADOL industrial freezone in Lagos, Dangote indigenous refinery inLagos and the Samsung FPSO Integration Yard inLagos. These were highlighted by the vicepresident, Osibanjo, while he called forpartnership from member countries in the AfricanPetroleum Producers Association (APPA), theorganisers of CAPE VI.

However, there is still the clamour for on-ground viable infrastructure that would reduceproduction costs and create opportunities in othersectors of the economy apart from oil and gas.

Uzo Nwagwu, GE’s COO of Oil and Gas (SubSaharan Africa), who made this call, noted thatthere were some infrastructure currently in placesuch as the East-West Road and the West AfricanGas Pipeline; but they were largely still underconstruction (East-West Road) or underutilised(West African Gas Pipeline, a project which began

in 1982, was completed in 2006 but since thenhas faced numerous delays in operations due toone problem or the other.

“Until we actually take a very close look atthe various (infrastructure) that currently exist andaddress (viability) from a tactical standpoint, itbecomes extremely difficult to create a logisticalhub that will not just serve the country but the(West African) region,” Nwagwu said.

And this is where we get some real breath offresh air. Amy Jadesimi, the managing director ofLadol, a company the vice-president identifiedas “wholly indigenous, privately developed andhosting the largest shipyard in West Africa”,stepped up to the stage and delightfullydeclared that her company could solve all ofGE’s problems.

However, in her presentation titled ‘PrivateDevelopment Imperative: Driving Economic Growththrough Local Private Sector in Nigeria’, Jadesimistressed the need for local content, calling forinvestments from “the indigenous people ofNigeria”, which, she said, would result in strategicinfrastructure that would cause a multiplier effectin the development of growth markets

Emphasising the importance of local content,she noted that the contributions foreign currencyrevenue, which comes from oil and gas, toNigeria’s GDP on a rising scale was negligible.On the other hand, there were huge benefits tobe derived from “real local content”.

“Real local content lowers cost,” she said,noting her frustration when she hears statementsto the contrary.

Giving Ladol as an example, she said it was“Nigeria’s first 100 per cent privately financedhigh value free trade zone equipped withtechnologically advanced infrastructure that cansupport high value industrial projects and reducecost of operating in Nigeria by 50 per cent.” Ithas been in operation for close to 10 years.

She also spoke of a vision to create morewholly indigenous companies like Ladol, allaround Nigeria so that much of the profits fromthe oil investments remained in the country.

Which brings us back to the PetroleumIndustry Bill, which was decried by the NNPC asuntenable, and a third question, is there a (sizable) piece for the Nigerian investor in the pie is government is currently offering to theworld? �


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CAPE VI welcomed petroleum specialists from across the globe and government officials in Africa's petroleum sector.

“Nigeria’s first 100 per centprivately financed high valuefree trade zone equipped

with technologicallyadvanced infrastructure that

can support high valueindustrial projects and reducecost of operating in Nigeria

by 50 per cent.”



Oil Review Africa Issue Two 2016 23www.oilreviewafrica.com

NIGERIA’S VICE PRESIDENT Yemi Osinbajohas urged African countries to work togetherto address the development of a robust gasinfrastructure in order to meet its futureenergy needs. He made the remarks at the 6th edition ofAfrican Petroleum and welcomed leadinggovernment, institutional and private sectorpetroleum stakeholders taking both long-term and short-term positions on thecontinents oil and gas sector.The event takes place every three years andis Africa’s most strategic oil and gas meeting,attracting petroleum experts from across theglobe and Africa’s top government officials inthe petroleum sector, reported state housecorrespondent Mariah Oasehinde. CAPE VI will allow visitors to find out aboutthe latest prospects for mergers andacquisitions, exploring ways they can expandtheir network throughout the continent, plantheir pan-African petroleum strategy anddemonstrate new technology innovationsand services at the CAPE VI exhibition to apre-qualified audience of potential buyers.

In December 2015 at the CAPE VI launchpress conference, the minister of state forpetroleum, Dr Ibe Kachikwu, noted theimportance of African petroleum producersworking together to develop resources andshare their knowledge on the oil and gassector to lower production costs. He alsoadded that CAPE VI was a good meeting place for specialists in thesector to come and discuss this. “Nigeria was a key founding member of APPAand a promoter of the African Petroleum

Congress. We hope that the event willhighlight the nation’s oil and gas potential toa global audience and help showcaseNigeria’s small and medium scale oil and gascompanies to other African countries andworld at large,” said Dr Kachikwu.CAPE VI was inaugurated by his Excellencythe President of the Federal Republic ofNigeria and welcomed the eighteen memberstates of APPA (Algeria, Angola, Benin,Cameroon, Chad, Congo, Côte d'Ivoire, DRCongo, Egypt, Equatorial Guinea, Gabon,Ghana, Libya, Mauritania, Niger, Nigeria,South Africa, and Sudan), including theirMinisters and National Oil Companies. Exploration and service companies active inAfrica were also welcomed to the event,alongside Africa’s indigenous companies. HE Muhammadu Buhari GCFR, President andCommander in Chief of the Armed Forces, HEMahaman Laouan Gaya, Executive Secretary,African Petroleum Producers Association(APPA) and Dr Amy Jadesimi, managingdirector, LADOL Integrated Logistics were alsopresent at the show.

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Nigeria’s Vice President Yemi Osinbajo

Nigeria advises African countries to unite to push gas development


http://www.exhibitionsafrica.com/


TTHE OIL, GAS and petrochemicalsindustry finds itself in highly turbulenttimes in the early months of 2016. Thecollapse in the crude oil price, global

stock market uncertainty and the slowdown inChinese growth have combined to give us someof the toughest times that we’ve faced, certainlyin recent years.

These factors have hugely impactedprofitability for companies in the sector andinevitably, budgets have been cut, particularly inthose areas of discretionary expenditure such astravel, conferences and skills development.

The challenges aheadFurthermore, the volatility and uncertainty in oiland gas markets have resulted in some youngpeople losing interest in the oil and gas sector asa career option and instead choosing more‘fashionable’ industries instead. For example, thenumber of university students taking petroleumengineering courses has declined in recent years.

The challenge facing the industry right now isto avoid a repeat of the 1980s and 90s, when,like now, plummeting oil prices led to thousandsof job losses and fewer young people obtainingindustry-relevant qualifications.

As demand returned, the industry nevercaught up and the impact is still being felt. Thereis a lack of suitably qualified candidates in the30- to 45-year-old age range, from which mostsenior management and executive leaders aredrawn. The experienced employees, in their 50sand 60s, are starting to retire, but there are notenough skilled and seasoned individuals movingin to replace them.

This demographic time bomb is a majorconcern, but at the same time, we are cuttingexpenditure when arguably, it needs to increase.

Developing local contentArguably, skills development in Africa is nowperhaps more important than ever. There areambitious localisation programmes across thecontinent, and all with challenging quotas to

meet in terms of staff percentages coming fromthe home country. This is absolutely the rightthing to do. As the industry matures, it needs tomove away from such a strong reliance onexpatriate labour and achieve a sustainable andcost-effective approach, with a steady supply ofhighly skilled local talent. Of course, this isn’teasy, especially at the outset, with all industriesactively chasing the best graduates and skilled,motivated people.

The issue isn’t just one of sustainability.Repeated surveys have shown that the averagelocal salary in Africa is two to three times lessthan the average expatriate salary. This is, in part,due to local employees occupying fewertechnical and senior positions, but is also due tothe fact that expatriates expect higher salaries towork away from home, particularly in thoseregions where the level of security risk is higher.

With this move away from reliance onexpatriate labour to a much greater emphasis onlocal labour, real skills development is essential.

It is no longer enough to just buy training coursesfrom a catalogue, based on title.

Instead, it is essential to have competency-driven programmes, with measurable outcomesand using carefully selected and high qualitytraining providers. The focus on outcomes andquality will be the secrets to success.

Striving for excellence in trainingThere also has to be more involvement offunctional leaders in the training anddevelopment process. It isn’t enough to simplysend someone on a training course and expectthem to be immediately different and moreeffective in the workplace. Instead there has tobe a focus on the newly acquired skills and howto use these in the workplace. This needs pre-and post-course discussions with the line-manager, together with the setting of some clearand measurable objectives related to the training,which will allow the new skills to be put to activeuse and the impacts actively measured.

Gas development in places such as Cameroon requires investment in the very best quality training, and it may notnecessarily be the cheapest available. (Image credit: Carsten ten Brink/Flickr)

Train

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Investing in high quality training, rather than simply opting for the cheapest provider, isa worthwhile activity for any oil and gas operator in Africa. Andy Gibbins, director of GLASConsulting, outlines how effective training will help build the talent pool for the future.

Effective skills development:More important than ever


There is a demographic timebomb in the oil and gas

workforce and skillsdevelopment is moreimportant than ever.

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The impact of the training course should bereviewed with the employee several months afterthe event (typically six) to ensure that theoutcomes have been achieved.

As the oil and gas industry has grown inAfrica, so has the training industry, with aproliferation of training providers, some of whichare very good indeed and some of which are,frankly, poor. Buyers of traning services need tohave much more focus on exactly what it is theyare buying and hone in on the credentials andexperience of those actually providing thetraining. Good training means having goodcontent, but this alone is not enough. If it cannotbe delivered in an engaging and interesting way,the impact will be lost.

Positive change in the pipelineI’m pleased to say that I see clear signs that theabove messages are being taken on board in theregion. I recently worked with a petrochemicalsmajor delivering a bespoke programme for shiftteam leaders. We had considerable discussion onthe specific requirements prior to the events,including meetings at site with functionalleadership and other major stakeholders, such asthe human resources department. Of course suchan approach takes more time and effort (and in

truth costs a little bit more too), but the impact isfar better than it otherwise might have been. Thecompany sent senior managers to open thetraining sessions and explain exactly why theywere being conducted. They also attended at theend of the event to listen to the presentationsand action plans of the training delegates and tooutline the related next steps.

In summary, there are a number of importantpoints. Firstly, training and developmentabsolutely must not stop, despite the currentfinancial challenges.

Secondly there has to be a greater focus onincorporating the training process much moreinto the overall development plans of staff, withmuch more involvement of the line managers andvery close collaboration between line managersand the training department.

Thirdly, we must look very closely atworkforce demographics before it is too late.

Finally, localisation programmes must remaina priority. These are the key to the futuresustainable success of companies in the region.

Care should be taken to make sure that thesetraining programmes are excellent – this is farmore important than focusing on the cost of suchprogrammes. �

www.glasconsulting.org


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The next generation of employees in the African oil andgas industry. (Image credit: Union to Union/Flickr)

The training approaches thatcost a little bit more oftenhave far greater impact,despite current financial

challenges.



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TTHE GLOBAL OIL and gas industry hasentered a turbulent era of oversupply,with unstable pricing and restrictedbudgets posing a long term challenge,

not just a short term hurdle. Operators need to ‘ride the storm’ by boosting

operational efficiency. It is an objective promptingmany to innovate by adopting technologies thataid production while minimising demand onresources.

Investment in digitisation and analytics froman E&P perspective may grab most of theheadlines in this respect. Offshore operatorsshould not underestimate the potentialoperational efficiencies – and therefore costefficiencies – attainable by using the rightsurveillance solutions, in the right way.

Integrated systemsThe emergence of IP-based surveillance presentsthe most significant opportunity for the sector inthis regard, as it enables seamless integrationbetween video and a wide range of critical thirdparty systems such as access control, processcontrol, chemical detection, emergency responseand even radar.

The immediate benefit of this is that it takesfewer people less time to monitor systems whenthey are unified – and therefore manageable – ina single command and control environment. Butthe more significant benefit for a cost-consciousmarket is the depth of data analysis this level ofintegration facilitates.

Details such as fluctuations in temperature,noise or equipment performance, accessanomalies and unusual personnel movements,

can be easily monitored and continually cross-referenced via a single security managementsystem to identify issues before they have achance to escalate. The same system can also beconfigured to prompt high definition visual feed(from the nearest camera stations) and generateautomatic on-screen incident investigation /response workflows for even greater efficiency.

Consolidating site monitoring in this wayenables swifter threat response and ultimatelycan prevent incident escalations that would bedangerous to people, places and profits.

Maximising existing assetsOf course, while the dominant surveillance trendfor new developments is for HD IP-based systems,there are still a huge number of analoguecameras in operation.

The scale of some sites, combined withbudget restrictions, means wide scalereplacement of analogue cameras is simply notfeasible, and given that many operators will belooking to develop their existing assets ahead ofnew project investment, ensuring that all ‘old andnew’ can work together is essential.

This is particularly relevant in areas whereproject expansion, due to a long history of

development, is more common. One of the major benefits of the latest

interoperable surveillance systems, in terms ofpure cost effectiveness and ease of use, is thatthey can utilise legacy products i.e. existinganalogue cameras and their infrastructure,connect them with new technology, and unitethem in a system that delivers all the advantagesof digital control functionality – a hybrid system.

This can make a big difference to the overallinvestment figure for upgrading a project (forexample introducing new drilling platforms orimproved logistics infrastructure) as it negatesthe need to strip out and start from scratch. Witha fully interoperable system, these new camerastations can be quickly and easily introduced, andwork side-by-side with existing cameras, feedinginto one digital monitoring and control system.

Safer assets are more cost-effectiveUsing surveillance to detect corrosion anddegradation may not be the first thing thatsprings to mind when discussing technology as acost-reduction measure, but the reality is thatsafer assets are more efficient and therefore morecost-effective.

Offshore assets are susceptible to extremeweather conditions and factors such as saltcorrosion. This can leave equipment open tolevels of wear and tear that can quickly escalatefrom minor degradation to complete malfunction.Constant manual inspection is expensive, and inmany instances dangerous, for the personnelconcerned. Today’s surveillance solutions offer aviable alternative.

Real-time, high resolution, high efficiency

Using integrated surveillance systems can result inoperational and cost efficiencies for offshore operators.

(Image credit: iurii/Shutterstock)

It takes fewer people lesstime to monitor systems

when they are unified in asingle command and control

environment.

Tech

no

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John MacKay, from global surveillance solutions business Synectics, provides an overviewof current offshore surveillance technology trends.

Harnessing technology in a cost-critical climate



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transmission of visual data, using low bandwidthsto avoid resource drain and unnecessary spend, ispossible using cameras that can operate inconfined space, low light and at extreme low andhigh temperatures. They are ideally suited formonitoring non-hazardous rig areas and areperfectly tailored for continuous monitoring ofhazardous areas, often difficult or dangerous toinspect manually on such a regular basis.

By integrating video feed with analytics via acommand and control platform, any deviationfrom set parameters (or combination of possibledegradation indicators) can be programmed totrigger an incident alert on monitors in thecontrol room for personnel to investigate further.And, thanks to improving IP networking andconnectivity, monitoring of this nature can beconducted from an onshore base, supportingleaner operations for offshore assets.

Equipment degradation monitoring, however,is not the only way that surveillance can be usedto improve safety and cost-efficiency. Forexample, through combining data sets frommultiple systems, the time required to detect andrespond to suspected leakage can be greatlyreduced.

Thermal camera stations are able to detectspillage by demonstrating variations intemperature and thermal emissivity between theoil and the water. Generally, due to the thermalconductivity of oil, it will become warmer thanthe surrounding water in the day by absorbingheat more quickly. Integrating thermal video withother process monitoring systems ensures thatany signs of spillage trigger alerts and guidancefor operators to check process equipment nearestthe potential leak.

This enables rapid incident reaction in order tolimit any negative fall-out from a safety and anenvironmental perspective, but also ensuresfinancial losses are minimised in terms of productloss and regulatory fines.

The same principle applies to areas such asflare, tank and pipeline monitoring. Earlydetection of poor flame colour or equipment ‘hotspots’ enables the deployment of maintenancepersonnel before process inefficiencies becomefull scale issues. This is a valuable capability for asector focussed on keeping a lean bottom line.

Surveillance and piracy Piracy continues to be a global problem for theoffshore oil industry.

While operators of offshore assets – fixed orfloating – may not be able to prevent physicalincursions, they can use integrated securitymanagement solutions to detect and deal withthreats earlier.

Radar, cameras (fixed, PTZ, thermal and multi-spectral), Automatic Identification Systems (AIS)and Electronic Chart Display and InformationSystems (ECDIS) are increasingly being integrated

using open platform command and controlsolutions. This facilitates the creation of virtualperimeters that trigger immediate vessel-typeidentification and positioning if breached, and theproduction of automatically generated incidentresponse workflows, including instruction for SOSnotifications or evacuation procedures.

In the event of intruders boarding the asset, itis also now possible for crew taking refuge in acitadel (designated safe zone) to transmitsurveillance footage or communicate via VSAT to‘friendly forces’ e.g. police, coastguard etc.,providing real-time updates of the situation as itunfolds.

Surveillance technology is already being usedby the offshore industry in this way to protectassets vital to the global oil and gasinfrastructure. It’s a trend which is undoubtedlyset to continue.

Summary The impact of global pricing instability is stillkeenly felt. Investing in solutions that supportefficient, effective operations is an increasinglyattractive proposition.

Integrated surveillance solutions appeal forthis very reason. They enable operators to ‘domore with less’ by unifying sophisticated safety,security and process management systems tofacilitate unprecedented levels of situationalawareness – awareness capable of bridging theoffshore/onshore divide.

Boosting detection, prevention and protectioncapabilities in this way, while also reducingdemand on resources, ultimately means thatoperators can confidently protect theirinvestment and prepare for the future. �


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Surveillance can be used to detectand monitor threats to asset integrity.(Image credit: canaryluc/Fotolia)

While operators of offshoreassets may not be able to

prevent physical incursions,they can use integratedsecurity management

solutions to detect and dealwith threats earlier.



GEOLOGICAL & GEOPHYSICAL (G&G) SERVICES

- Well log correlations and petrophysical analyses of reservoirs;- Geophysical (2D & 3D) acquisition design and interpretation of processed

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UPSTREAM ENGINEERING SERVICESAnalysis and interpretation of fi eld/laboratory measurements of petroleum and reservoir engineering data to generate:

- The subsurface pressure-temperature regimes of basins, regions, fi elds and reservoirs;

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recovery factors (FVFs & RFs) of reservoirs with correlations for bubble point pressure and coeffi cients of reservoir fl uid viscosity and compressibility;

- Computation of fl uid reserves volumes;- Outlines of the parameters for well design, drilling and completion;- Reservoir production profi ling and fi eld production engineering;- Enhanced production studies and solutions;- Basis of Design (BoD) for fi eld facilities and surface infrastructure based on

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RRADAR TECHNOLOGY HAS revolutionised level measurement in avariety of process industries since the introduction of 4-20mAloop powered, radar-based transmitters in the 1990s.

Both guided wave radar (GWR) and non-contact radar have numerousadvantages over older, more established level measurement technologies.

The benefits of radar technologyThe benefits of using these radar technologies versus traditional levelinstrumentation are myriad. It is important to understand how guided waveradar and non-contact radar can work together to provide reliable levelmeasurement.

Both GWR and non-contact radar have the same general principle ofoperation – that is, microwave time of flight and no moving parts. Becauseof these two important features, users can retrofit these ra dar transmittersinto various process applications.

Once installed, improvementsin efficiency and accuracy can bequickly appreciated.

The various applications thatuse these technologies include:DPs, due to SG shifts, installationcosts, and leak points; buoyancy,due to SG shifts, moving parts,calibration issues, and costs; RFcapacitance, due to cumbersomecalibration, dielectric shifts, and coatingissues; and ultrasonics, due to vapour effects,turbulence and foam.

How GWR and non-contact radartechnology worksWith GWR technology, the waveguidebecomes a probe which is immersed in eitherliquid or a dry, bulk media. The impedance ofthe probe is reduced when the higherdielectric priocess medium beingmeasured displacesthe air. Theelectromagneticpulses which aretransmitted down thewaveguide arereflected at this pointof discontinuity and thereflections are measured by high-speed circuitry in the transmitter and thusthe level is established.

In regard to non-contact radar,instead of the electromagneticpulses bieng transmitteddown a waveguide, as is the case withGWR technology, the energy istransmitted directly into the vesselthrough the air using an antenna. However, it does share a similarity withGWR in that reflections from the surface are measured by high-speedcircuitry in the transmitter in order to establish the level.

A powerful combination for modern operatorsGuided wave radar and non-contact radar are related technologies, andtogether they are a powerful combina tion that can cover the majority of yourcontinuous level control needs.

A very similar user interface and quick disconnect electronics means that, ifan operator knows how to use one, they will then know how to use the other.

Magnetrol delivers a powerful one-two punch in leading-edge radartechnology with its formidable duo made up of the Eclipse Model 706 GWRand Pulsar Model R96 non-contact radar transmitters.

These best-in-class level control solutions provide advancedmeasurement performance compared to traditional technologies – andcompetitive radar products. �

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Radars have revolutionised measurement for the hydrocarbons industry. Magnetrol’sguide wave and non-contact radars are excellent examples of this new generation ofleading-edge technology.


The Pulsar Model R96 non-contactradar transmitter.

The Eclipse Model 706 guided wave radar.

Guided wave radar and non-contact radar:A formidable team



http://www.whassan.com/


OOIL AND GAS operators strive tooptimise production of each welland reduce waste and inefficiency tomaximise economic recovery. One

difficulty with hydrocarbon production is that it israrely possible to produce just oil or gas alonefrom a well. The production stream is frequently amixture of hydrocarbons and a range of undesiredcontaminants like produced water and sand.Hydrocarbon-based solids provide challenges forflow assurance. Furthermore, process conditionscan vary enormously from well to well, even in anindividual well.

This poses an engineering challenge as theproduction system must be able to adapt to shiftsin operating conditions. This affects theprofitability and viability of the well. The ability tocharacterise and monitor the flow rates ofconstituent components with a production streamis vital to maximising economic recovery (MER).

Well testingA typical well test consists of two pieces ofequipment. The first is a series of gauges, checkvalves, flow switching valves, isolation valves andpacker assemblies located subsea, often as part ofa dedicated string that can extract a range of dataabout the health of the well and operatingconditions. The second component is the testseparators and metering skids.

Owing to the advantages of single-phasemetering over multiphase metering technology,current well test procedures are designed aroundtest separators which allow the production fluidto be periodically sampled. By separating asample into its constituent components andmeasuring them using single phase flow meters itis possible to gain insight into the behaviour ofthe production stream.

Well testing is conducted during theexploration phase to predict the life andproduction rates from a well. However, well testsare also used throughout the life of the well tomonitor and track production rates. The data isused to profile the well using characteristics suchas its flow capacity, skin factor, and the structuraland/or hydrodynamic boundaries, which dictatethe commercial viability of the well and thedesign/configuration of the production system.

Well testing to characterise the productionprofile allows the production process to beoptimised, and maximise economic recovery. Thischaracterisation relies on accurate measurement.However, even when using test separators and

single phase flow meters there are a number ofsources of error which can reduce the accuracy ofa test. These include: large or sudden changes inthe composition of the production fluid; presenceof second phases; poor maintenance; poorcalibration; fouling; installation effects; and welltest frequency or duration

Measurement accuracyA team from Coventry University set out toanswer what effect accurate measurement has onMER. The team created an example reservoir casewhere typical values for reservoir parameterswere chosen. Tests examined how differentmeasurement data influenced the reservoircharacterisation when compared with flow rates.The output was then used to select a reservoirfracture model which would be used to predictreservoir recovery factor. They found that the flowmeasurement error was only weakly linked torecovery factor. But the secondary effect of usingdata to select which model to use was significant.A flow measurement error of ±10 per cent wasenough to mis-select the predicted reservoirmodel, resulting in a shift in recovery factor byaround 12 per cent over 20 years. Incorrect flowrate measurement data was extremely important.

In the case study reservoir, the in-placehydrocarbon volume contained almost 40mnbarrels of oil. At US$60 per barrel this wouldresult in an error of around US$105mn. To putthis in context, Nigeria alone has a reserve ofmore than 37bn barrels of oil. This results in adecrease of around US$103bn in total production.

The sample reservoir also highlighted theneed for continuous measurement. When a test

separator is used, it is typically only for a fewdays a month before another well is tested in thecampaign. The recorded data is assumed to becorrect for the month before the next test, wherea new set of data is produced. During theassumed constant period, changes in thecomponent flows go unmonitored and issues suchas water breakthrough are undentified.

The major advantage of using multiphase flowmeters for well testing is that it is possible tomonitor the production stream in real-time,providing continuous data to operators whichwould be impractical with conventional testingtechniques. They can greatly reduce the cost,complexity and size of the infrastructure requiredto conduct well tests. Multiphase flow meters donot generally constitute a well test system ontheir own, but more commonly operate as part ofa wider well-testing strategy.

Accurate characterisation of reservoirs andproduction streams is vital to optimise productionprocesses and maximise economic recovery.Through research and operational experience ithas been found that the financial exposurecaused by inaccurate flow measurement can besignificant. Effective well testing procedures arevital in optimising production and maximisingeconomic recovery.

Flow measurement technologies such asmultiphase flow meters are developing rapidlywith the capacity to provide increased accuracy,new insight and diagnostic capabilities. Mostimportantly however, they provide a continuousmethod of measurement allowing for a fastresponse for production optimisation andreducing inefficiencies. �

An offshore oil platform off thecoast of Santa Barbara in California.

(Image source: Ken Lund/Flickr)

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Operators need to ensure well testing is regular and measurements are accurate as thiswill impact on profitability and viability. Neil Bowman, team leader for CFD and flowmodelling at NEL, outlines the latest techniquies and research findings.

Best practice techniques foroptimising every well




http://www.wika.co.za/


DDESPITE THE LOW oil priceenvironment, the world will continueto demand more and more energy inthe coming years, and hydrocarbons,

mainly gas, will continue to play an important rolein the energy supply for a long time.

The oil price drop has pushed operators to cutcosts and activities planned in the coming years.New challenging E&P projects, such as deep andultra-deep water and HP/HT wells, have beenpostponed because of the low oil price trend.However, in this challenging environment theindustry will still have to drill new wells to supplythe energy needed for the future.

In situations with a narrow drilling marginbetween pore-pressure fracture gradient, it is notunusual that a well is abandoned before reachingthe target. This means it ends up failing technicaland commercial objectives.

In fact, operators can spend an enormousamount of time and money trying to solveproblems due to bottom hole pressuremanagement, such as kicks and circulationlosses, stuck pipes and low ROPs. Quite often,operators come to the erroneous conclusion thatthe well’s technical limit has been reached, andbelieve that abandoning the well is the bestdecision. But better techniques could change this.

Technnical advancesIn the last decade, technologies such as MPDsystems and continuous circulation systems havebeen developed to manage the bottom holepressure and its related problems. I have usedboth systems, but my view is that interruption ofmud circulation for a connection is one of themain causes of typical drilling problems.

The mud acts as the first safety barrier in thewell. When the mud pumps are not runningbecause of the addition of components to thedrilling string, most frequent drilling accidentshappen due to bottom fluctuations in equivalentcirculating density (ECD) and downhole pressurespikes, such as connection kicks and stuck pipescan happen. In conventional drilling this stop-start cycle of mud circulation occurs every 30, 60,90 or 120 ft of hole being drilled. This means thatthe likelihood of originating downhole problemsis very high indeed.

With a continuous circulation system,however, a downhole steady-state condition isnaturally maintained. This means that theformations do not suffer from pressureoscillations, hole-cleaning improves, and the

ability to pump out of the hole for extendedintervals usually means the string can be moveduntil it is inside the previous casing, thusreducing the chance of problems in open hole.

Over the course of my career, I have drilledmore than 150 wells onshore and offshore withcontinuous circulation, always reaching thetarget. Sometimes, continuous circulation madethe difference, ensuring the achievement of thetarget, whereas this would not have been possibleif the conventional stop-start drilling operationwas utilised.

For all these advantages, continuous circulationis the first stage that all operators shouldconsiderer to drill all wells. Without interruptingthe circulation safety and performance increase inany well condition, this technique will result in adrastic reduction of drilling time and costs with anearly first oil production.

Moving towards full automation One of the main targets of the oil and gasindustry should be to move to fully automatedremotely controlled drilling rigs. This results inimproved safety standards and economic marginsfor drilling projects. This process will require thecontinuity of drilling operations, where the first

target is the continuity of the first safety barrieron the well, the hydraulic barrier represented bythe drilling mud.

A lot of data can be collected from circulatingmud but every time we stop the mud circulationwe lose the link with the bottom.

Continuous circulation will play a major rolein the process of drilling automation because itensures a continuous dialogue with the bottomhole, necessary to perform an accurate andeffective remote control of drilling operations.

A new systemThe HoD® – Heart of Drilling – is a cutting-edgepackage designed by Drillmec to prevent drillingaccidents and improve drilling efficiency. The HoDcombines continuous circulation system with ananti-friction device.

The HoD’s Continuous Circulation system isdesigned to guarantee high safety standards onthe drill floor, system components’ reliability andeasy and fast rig up-down in all rigs in operations,onshore and offshore.

The continuous circulation, hub of the HoDpackage, is composed of a set of HoD valves(Drillmec patent pending), integrated in special subs mounted on top of each drillingstand used to drill the well phases withcontinuous circulation.

Subs are compatible with all sizes of drillpipes, from 41⁄2” to 65⁄8”, and their insidediameter allows wireline intervention if needed.Their design is also flexible and can be scaled tocustomer specification. �

Operators globally can benefit from modernised techniques. (Image source: Jerry and Pat Donaho/Flickr)

If a well is abandoned beforereaching the target, it failstechnical and commercial

objectives

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Drilling time and costs can be reduced with the latest techniques, according to AngeloCalderoni, vice president, R&D, for Drillmec.

Continuous circulation techniques forbest drilling results



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TTHE SEEDS OF modern well integritymanagement were sewn in the early1990s, in the fields of corrosionassessment and materials selection.

Even as recently as 12 years ago, it was still a function struggling for definition. With only abare understanding of the terminology, it was seenby many in the industry as a reactive process foranalysing well failure, rather than a proactivefunction that could extend the life of the well.

Today, well integrity management is a hottopic in the industry, the development of whichhas coincided with and been driven by a numberof factors. There is the tightening of regulationaround health, safety and the environment. Therehas been growing awareness that workingtowards the long-term sustainability of wells andplatforms can deliver much more than short-termsafety measures. And there have been significantdevelopments in information technology toenable far greater levels of automation and data management, making advanced analysis and real-time assessment possible.

Nonetheless, the industry’s current experienceof well integrity management remains fairlybroad. Some companies have yet to embrace wellintegrity management as a dynamic, automatedand real-time risk and asset managementprocess. They have turned paper records intoelectronic ones, and have a dedicated folder intheir office-based system, but that is about as far as they go.

These businesses still find it hard to addcontext to new information as it comes in. Theydon’t have ready access to the inventory ofequipment installed on wells – instead they haveto search through different documents to seewhat a given well looks like, and piece detailstogether to find out what is installed on it. Thesecompanies still face operational inefficiencies andcan end up prioritising work that is not critical.

More forward-thinking operators haveattempted to instil more of a managementapproach by using generic spreadsheets to recordwell information. Depending on the parametersthey choose, this enables them to identify which

wells look worse than others and develop someform of risk ranking capability. It is, however, stillvery manual and prone to human error.

More problematic is the fact that a spreadsheet can only provide a snapshot ofwhat’s happening. Whether data is updated oncea week or once a month, it still doesn’t providetrending information or give users the ability tolook at historical data and identify recurringanomalies or issues.

Real-time capabilityA growing number of proactive operators areintegrating more data-driven and specialist wellintegrity software into their operations. Greaterwell instrumentation along with a drive for moreautomated data collection, has created a situation that lends itself to using databasesoftware systems that can process and analysedata in real time.

This is the immediate future for well integritymanagement: a move away from tolerating dailyor weekly snapshots of well activity to insistenceon a real-time capability that enables operators torespond quickly to any change in circumstance orpotential problem. This kind of software canidentify immediately when a well goes out of itssafe operating envelope and alerts relevantpersonnel that there is something that needsattending to. These kinds of database system giveoperators all the information they need about thewell in a single view, plus access to backgrounddocumentation. An efficient, single source oftruth, the system is easy to interrogate so thatpertinent information can be readily extracted.

Crucially, it also ensures that everyone involvedin a well’s management has access to exactly thesame information at exactly the same time. Whendecisions have to be made regarding clashingpriorities, everyone involved understands theprecise status of the well.

Greater automation also allows for globalpooling of non-proprietary data for betterunderstanding of operational effectiveness. Forexample, by comparing performance of a piece ofequipment in use on the North Sea with otherdeployments of the same kit worldwide, operatorscan see whether their installation has a below orabove-average lifespan. From there, they can establishwhether it is the environment that is affectingperformance, or whether training, maintenance orother controllable factors are at play.

As the idea of the digital oilfield becomesmore firmly established in the industry, this typeof system will be seen as the standard to aspireto. We are already seeing more and moreoperators opting for dynamic, real-time data overstatic snapshots to give decision-making animmediacy it did not have previously.

This serves two purposes: on the one hand ithelps operators identify whether they have aproblem that needs immediate mitigation. On theother, it enables a degree of productionoptimisation where operators can set and monitoran individualised safe operating envelope foreach well. In other words, well integrity becomesan enabler of smarter well management.

Balancing actFor operators currently wrestling with rapidlydiminishing margins caused by the precipitousdrop in the oil price, this is welcome news. Theoil business has always been a series of carefulbalancing acts between safety, profitability,efficiency and regulation. The current marketconditions have thrown that into stark relief, andhighlighted where the industry has been runningitself too expensively.

Those that have implemented modern wellintegrity management software are in a betterposition to address some of the resultingchallenges and ensure that every dollar spent onthe well brings in a return.

Companies that have real-time insight into thestatus of their wells can optimise operations toextract maximum value out of their assets – atminimum cost. By providing operators with arealistic view of a well’s risk status, essentialinterventions like chemical treatment or well

Dr Liane Smith, managing director and founder, WoodGroup Intetech

More forward-thinkingoperators have attempted toinstil more of a management

approach

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Well integrity management has come a long way in the 25 years that Wood Group Intetech has been in business, says Dr Liane Smith, the company’s managing director and founder.

Well integrity managementpast, present and future



workovers can move to an appropriately timedschedule rather than sticking to an automated, butpossibly over-cautious, timetable. Unnecessaryshut-downs are minimised, maintenance time isoptimised, and even the use of a descaling or anti-corrosion agent becomes more efficient – withoutcompromising safety or production.

We are also seeing an increasing drive fromoperators interested in extending the life ofexisting wells that had previously beenconsidered at the end of their life, or evenbringing older well sites back into productionafter being suspended for long periods. The samesystem that can assess real-time operations oflive wells can determine whether there is valueto be gained from rehabilitating old wells withrelatively straightforward casing patches ortubing replacements. It could deliver another tenyears of active service at a fraction of the cost ofdrilling a new well.

Further into the future, well integrity willplay an important role in shale gas operations.There is plenty of scope for optimisingequipment to prevent well leakage, and ensuringmuch faster detection of and response topotential leaks. In particular, it can support thesmart control of chemicals injected to achieveoptimal fracking characteristics. Equallyimportant, well integrity can provide thereassurance and confidence that will be neededto bolster public support for the shale gas sector.

Well integrity management has become aproactive, highly automated, data-driven process.It is just one example of the big dataphenomenon that has swept through everyindustry, and an illustration of how that ‘datalake’ can be turned to advantage.

With high-performance software offering real-time insights, it will be a vital component forrealising the digital oilfield. And whateverdevelopments are to come, its foundations incomprehensive corrosion and structural analysis,and consistent focus on long-term sustainability,will ensure well integrity management remains a major success factor for operators for a significant time to come. �

Oil Review Africa Issue Two 2016 37

Wells


We are already seeing moreand more operators optingfor dynamic, real-time data

over static snapshots

Well integriy will play an important role in shale gasoperations in the future (Photo: NeonLight/Shutterstock)


http://www.slicshoes.com/

Oil Review Africa Issue Two 201638 www.oilreviewafrica.com

IINFIELD SYSTEMS LTD, the UK provider ofdata and analysis for the offshore oil andgas industries, is confident that thedevelopment of West Africa’s offshore will

remain strong. This is despite the effect of lower oilprices, which Douglas-Westwood, a marketresearch provider, warns will continue to suppressmobile offshore drilling unit day rates, until at least2017. Catarina Podevyn, an associate at Infield,anticipates robust demand growth through to 2018in the sub-region, driven by Angola.

To support this enhanced subsea activity, a swathe of new subsea technologies is beingdeployed. These can roughly be categorised underthree headings: field development, sub-seaprocessing and production enhancement.Clustered satellite solutions tied back to floatingproduction storage and offloading (FPSO) vesselsare gaining ground and there is an increasinginterest in subsea processing.

Major offshore projectsTotal’s $9 billion Pazflor subsea gas-liquid projectin Angola is being touted as the “first in the worldto use a plan, based on separation on the oceanfloor spanning several sub-sea reservoirs.”

Total’s offshore Moho project provides anothersubsea technology first for Africa. The MohoPhase 1b project, located 75 km offshore Pointe-Noire in Congo-Brazzaville, involves drilling 11wells in water depths ranging from 750 metres to1,200 metres.

The company claims that the two subseamulti-phase pumps are “the most powerfulinstalled anywhere to date”. The field is tied backto the floating production unit on the MohoBilondo field. Work is continuing on the nearbyMoho Nord development. When complete it willadd a further 100,000 boe/d of capacity.

In February, Seadrill, the Bermuda-baseddeepwater drilling contractor, secured a two-yearcontract offshore Angola for the semi-submersibleWest Eclipse. Work is due to start this year. Alsoin February, Fugro Subsea Services Limited – theprovider of integrated geotechnical services to theoffshore oil and gas industries – was awarded acontract by Technip SA, the engineering andconstruction project management company.

Fugro will provide advanced deepwater surveyand positioning services for seven installationvessels and construction support vessels offshoreAngola for the Kaombo project. The contractbegins in second-half 2016 and will continue intoearly 2018.

Other activities in the westSubsea 7's autonomous remote interventiontechnology division, i-Tech, has secured contractextensions from two separate offshore EquatorialGuinea operators for a period of three and fiveyear's respectively. i-Tech will provide a suite ofbespoke services, including the supply of ROV's,intervention tooling, surveys and inspections. Thesewill be managed from i-Tech's operational base inEquatorial Guinea’s capital Malabo.

Ocean Installer has been contracted by theindigenous Nigerian company Folawiyo Aje Servicesto provide offshore construction services for the AjePhase 1 project. The Aje field is in the Benin basinand located 24 km offshore western Nigeria, in awater depth of roughly 900 metres. The scope ofthe work includes mooring buoy installation andhook up, as well as flowline and umbilicalinstallation. The company’s construction supportvessel Normand Vision is understood to havecommenced operations.

Technology transfer continues to be thebuzzwords to define the new relationship betweenthe largely western subsea technology suppliersand their African clients. Over the past year,Harkand, the UK provider of subsea capabilities andservices, has established joint ventures for subseaprojects in Nigeria and Ghana. In February, thecompany together with ESOPEG, the Angolansupplier of offshore vessels, signed a joint ventureto create a new company.

The new company, Harkand Angola, will focuson developing local information rights managementcapabilities. These will provide technical supportand local content to a range of subsea projects.

These and other developments should serve toput offshore West Africa in the driving seat in theuse of subsea technology over the coming years.

Catarina Podevyn says that the region isfortunate in that several capital intensive fielddevelopments were sanctioned prior to the oilprice decline.

Over the five-year period to 2020, InfieldSystems anticipates expenditure in Angola to focuson three pre-salt developments: Cameia Mound,Cameia (Phase 2), and Bicuar.

From now until 2020, Infield Systems expects54 fields offshore Nigeria to require capex, withTotal-led developments anticipated to form 38 percent of demand.

Ghana is forecast to remain the third-largestdestination for operator capex offshore West Africa,driven by the TEN (Deepwater Tano) developments.Tullow’s Mahogany East and the Eni-operatedSankofa OTCP are also anticipated to requiresubstantial investment in the next five years.

Equatorial Guinea is expected to undergo a capex demand compound annual growth rate(CAGR) of 13 per cent, to 2020. The catalyst forEquatorial Guinea’s demand growth is expected tobe Ophir’s Fortuna FLNG project, which is forecastto comprise 28 per cent of the country’s offshorecapex demand up to 2020. It is anticipated to seeits final investment decision by mid-2016, withInfield Systems currently forecasting installation tobe completed by 2019.

West Africa is demonstrably better positionedthan most other offshore oil and gas producingregions in the world to take advantage when theinevitable upturn happens. �

Offshore workers off the coast of Congo-Brazzaville change shift at dawn. (Image credit: Papagaio-pirata/Flickr)

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West Africa’s subsea growthdriven by technology


DDESPITE TUMULTUOUS TIMES in the oil and gas industry acrossthe world, up and coming projects in East Africa are offeringsome optimism to operators and investors. In particular,Mozambique’s burgeoning gas industry is offering hope.

Substantial natural gas reserves have been established in Mozambique andthe country is expected to become an important producer of natural gas inthe medium term.

In 2000, Mozambique’s first offshore licensing round was launched, andthe ongoing hydrocarbons activity since then has been a catalyst for the bi-annual Mozambique Mining, Energy, Oil & Gas (MMEC)event. This year, the fifth edition of MMEC will be held in Maputo from 27-28 April at the Joaquim Chissano conference centre.

The last MMEC conferenceMMEC was last held in 2014 with leaders from the oil and gas industry, aswell as mining and energy, coming together to network and share ideas. Itattacted 60 exhibitors and 600 delegates from 32 countries.

There were three major oil and gas sessions at the fourth edition ofMMEC. At the first session, ‘Insights into the evolution of the legal and fiscalframeworks regulating Mozambique’s oil and has industry’, delegates heardfrom representatives from Sal & Caldeira, Ernst & Young, and the InstitutoNacional de Petroleo.

The second session discussed gas development and monetisation planswith presentations from ENH, JGC Corporation, Fluor and Sasol PetroleumInternational.

Downstream incentives and opportunities were outlined in the final sessionfeaturing insights from the Matola Gas Company, Anadarko and Petromac.

Gigawatt Moçambique is one of many companies returning to participateat MMEC 2016 after a successful conference in 2014. Johan de Vos, thecompany’s managing director, will be speaking at this year’s event.

MMEC 2016This year, MMEC has been organised under the theme of ‘Commectinginvestors, policy makers and nsutry leaders to drive economic and socialdevelopment in Mozambique’. It is an ambitious theme that gives leadersacross all sectors represented at the event the chance to demonstrate howthey can contribute to growth in Mozambique.

Before the oil price drop at the end of 2015, Mozambique reported solidGDP growth, at 5.9 per cent in the first quarter, with the extractive industriesone of the main drivers of this positive performance. There was a slump inGDP growth in the second quarter, when it dropped to just 1.1 per cent butby the third quarter, GDP growth was picking up again at 1.8 per cent.

According to The Economist Intelligence Unit, Mozambique’s real GDP isprojected to grow by seven per cent annually between 2016 and 2020.

With these projections in mind, MMEC will aim to be a showcase forinvestment opportunities in the exhibition, as well as a chance to learn moreabout these opportunities, improvements in regulation and governance, andbig picture development issues during the conference sessions.

A wide range of companies and organisations are represented in theconfirmed speakers for the event, including Fluor Mozambique, Aggreko,Standard Bank, Matola Gas, Funae, Gesto Italia, Hidroeléctrica CahoraBassa, the National Council for Electricity, Gigawatt Moçambique, and theMaputo Corridor Logistics Initiative. �


MMEC 2016 has the ambitious theme of‘connecting investors, policy makers andindustry leaders to drive economic and social development in Mozambique

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The fifth Mozambique Mining, Oil and Gas and Energy event will be conducted with aspirit of optimism in regard to the East African country’s prospects.

Oil and gas industry leaders to converge onMozambique


Maputo, the capital of Mozambique, is setto become a hub for East African gasdevelopment. (Nuno Rosrio/Flickr)



http://www.wellfluidservices.com/new/

TTHE PRESIDENT MUHAMMADU Buharihas been confirmed to deliver thePresidential Address at this year’sedition of the Nigeria Oil and Gas

Conference and Exhibitions (NOG16) in Abuja, theorganizers of the event, CWC Group has revealed.

A critical time for the oil and gas industryAccording to some oil and gas industry players, thePresident’s participation in this year’s event is highlyanticipated as they seek Federal Government’sintervention in the face of global challenges.

The price of crude has dropped to recordlevels forcing many in the industry to cancel orsuspend key projects and investments as well asrecord significant numbers in job losses.

NOG16 will serve as the platform for thegovernment to showcase the direction in whichthey are taking the oil and gas industry in theyears to come.

Commenting on this year’s event, Dr. AlirioParra, former Minister of Mines and Energy,Venezuela and Member of Board, CWC Groupsaid: “NOG now in its 16th year has become anextraordinary event in the Nigerian andinternational energy calendars. It brings together

policy makers, operating oil companies,technology innovators and local manufacturers inan open and free discussion and debate that hasthe potential for developing new strategies forgrowth and investment".

Top-level speakersAlongside President Buhari, other high levelgovernment officials who will be participating inthe four-day event include the Minister of Statefor Petroleum Resources, H.E Dr. Emmanuel IbeKachikwu, other Ministers of the Federal Republic,senators, senior government representatives fromthe Ministry of Petroleum Resources, NNPC andits subsidiaries.

Also participating will be leaders and topmanagement of international oil companies,

independent producers, international andindigenous service providers and industryassociations.

Networking opportunitiesIn addition to the participation of who-is-who inthe oil and gas industry, CWC said this year’s eventwill provide unrivalled networking opportunities,bringing the entire value chain under one roof andconnecting participants to the right people in orderto add value to their businesses.

A diverse programmeAccording to the programme of events seen byour reporters, the first session tagged How WillNew Legislation & Policy Develop to Transformthe Oil & Gas Industry? will focus on issues suchas the policies needed to enhance the Nigerianoil and gas industry’s competitive edge, thechanges in legislation and policy that industryplayers want to see as well as how thegovernment is interacting with the industry todevelop policies among others.

Taking place from 13-16 June 2016 at theICC, Abuja, NOG brings together the best of oiland gas industry professionals, investors,governments, financiers and others from acrossthe globe. For more than one and a half decades,NOG has been developed in partnership with theMinistry of Petroleum Resources and NNPC. Thelast edition of NOG attracted over 250 companiesshowcasing the latest technology and services inoil and gas industry with about 6000 visiting fromvarious parts of the world. �

www.cwcnog.com


President Muhammdu Buhari will beopeing NOG16 in Abuja on 13 June.

Leaders of international oilcompanies, independent

producers, international andindigenous service providers,and industry associations will

all be present at NOG16.

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Industry leaders from government and the private sector will be on hand to outline theirvision for the future of Nigeria’s oil and gas industry at the 16th edition of this prestigiousconference, scheduled to be held in June 2016.

President Buhari to open Nigeria’s 16th annualOil and Gas conference


As ever, there will be plenty of networkingopportunities at this year’s NOG event in Abuja.

S08 ORA 2 2016 - Innovations_Layout 1 07/04/2016 16:52 Page 41


https://www.adipec.com/conference/

TTANK WORLD EXPO 2016, the onlyevent for the Middle East and Africantank storage markets, has finalised itsspeaker line-up. The conference

programme will host at least 18 leading industryspeakers, from organisations such as The UAEMinistry of Energy, OTTCO, Oiltanking OdfjellTerminals Oman, Dubai Mercantile Exchange,Burgan Cape Terminals and CITAC Africa.

The event, which takes place at the DubaiWorld Trade Centre on 12 and 13 April 2016,provides industry professionals from all over theworld with the opportunity to listen and learnfrom a series of educational seminars, deliveredby leading lights from the tank storage sector.The programme will cover everything fromdevelopments in Oman and future developmentsin Fujairah to oil prices and the African bulk liquidstorage sector.

There will be a strong focus on Omanthroughout the 2016 conference programme,reflecting the transitioning marketplace. AndrésSuárez, general manager at Orpic Logistics,Oman, will present an overview of the Muscat-Sohar Pipeline Project (MSPP) and discussOman’s potential to become a logistics hubfollowed by Said Al Mawaali, project director atOTTCO, who will be presenting the latestdevelopments at the region’s largest storagefacility in Oman. Roderick de Rooij, commercialmanger at Oiltanking Odfjell Terminals Oman,will discuss the future outlook for the storagemarket in the region. He will outline how tocapitalise on the trade routes between Asia andEurope, while analysing the region’s demand forstorage capacity.

Africa is another major focus for 2016, withAmrita Sen, chief oil analyst at Energy Aspects,examining regional supply, demand, trade flowand downstream capacity across MENA, followedby Gary Still, executive director at CITAC Africa,who will outline how to assess storage capacityand infrastructure across Africa in relation toproduct flow. Muziwandile Mseleku, CEO of

Burgan Cape Terminals will also discuss theregion, looking at the opportunities within theAfrican bulk liquid storage sector. The Tank WorldExpo conference will also feature specialisttechnical sessions. Per Cato Roed, managingdirector at BMT Asia Pacific, will cover the use ofsimulation and modelling in the design anddevelopment of bulk liquid storage facilities,while Riyad Sulaiman, capital investmentplanning engineer at Saudi Aramco, will take alook at advanced analytics for terminalinvestments. He will also discuss scenarioplanning, rational valuation under uncertainty,and real options analysis.

Companies are also using Tank World Expo tolaunch new innovations and technologies to theMiddle East and African markets. Terminalmanagers, technicians, engineers and other tankstorage professionals who attend the show willsee innovations from right across the supplyspectrum, from major names, including EmersonProcess Management, Kanon Loading Equipmentand Endress+Hauser through to the sector’s mostinnovative niche suppliers.

Knowsley SK will be displaying its latestfoam mixing technology – the Turbinator.Designed to accurately mix foam concentrateliquid with either freshwater or seawater, theTurbinator is suitable for use in fixed systems or

mobile units. Arflu Industry Valves will bepresenting its dual expanding plug valve requiringlittle maintenance and offering a verifiabledouble block and bleed service, plus a longlifetime. Climbex S.A. will be showcasing the fullyautomated mobile ORECO units for cleaningpetroleum tanks, including decanter and discseparators. This system works in an inertatmosphere, constantly monitoring the levels ofoxygen in a tank, stopping if the maximumpermissible concentration level is exceeded.Tranter Heat Exchangers will be exhibiting itsinnovative range of storage tank heating coils,which are highly efficient, reducing sitefabrication work significantly. The convectioninduced in the tank helps maintain a uniformtank temperature, reduces sludge settling andalso lessens the need for maintenance. Loyal tankstorage exhibitor, Loadtec Engineered Systems,will be highlighting its wide range of tankerloading arms. It will also present its portfolio offall prevention systems, designed for safe accessto road, rail and marine tankers. Mascoat will bedemonstrating its latest coating – the MascoatIndustrial-DTI. This multi-purpose coating solvesinsulating and corrosion under insulation issues.Fort Vale will demonstrate its MK3 Safeloadsemi-automatic bottom loading coupler, withextended ‘wrap around’ trigger design. �


The event will feature the leaders of tank storage industry coming together. (Photo: jcg_oida/Fotolia)

There will be strong focus onOman and Africa throughout

the 2016 conferenceprogramme, reflecting thetransitioning marketplace.

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Tank World Expo 2016 has finalised its speaker list for this year’s event, which will alsofeature exhibiting companies lining up to launch and showcase new innovations andtechnologies in the Middle East and African markets.

Tank World Expo’s line-up reveals future plansfor tank storage industry



44 Oil Review Africa Issue Two 2016

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DETECTING GAS LEAKS, particularly in confined spaces, is a safety challenge for many operators.

Gas Clip Technologies has developed the Multi Gas ClipPump (MGC Pump) portable detector, which offers manybenefits, particularly for small space applications.

The detector has an internal pump and its low-powerphotometric technology means it can run non-stop for fivefull days without having to recharge the battery.Additionally, it only requires calibration every six monthsand is operated with a single button.

It uses infrared sensor technology to detectcombustible gases, and electrochemical sensingtechnology to detect hydrogen sulphide, carbon monoxideand oxygen. The detector is OSHA-compliant, with visual,vibrating and audible alarms.

A COMPREHENSIVE, INTUITIVE digital platformfor reservoir data has been launched in a partnership between software company,WellDatabase and NUTECH, a Houston-based oilservices company.

The platform, known as NuQuest, which isavailable as a subscription, provides standardwell data coupled with corresponding reservoircharacterisation and engineering informationfrom industry leaders.

The engineering expertise is used to identifyimportant reservoir parameters which impact onproduction, and can help unlock furtherproduction opportunities in similar areas.

NuQuest has aimed to create an affordabledigital information source that allows for easyaccess to thousands of pieces of well analysis,including conventional and unconventionalplays, from around the world. Subscribers will beable to access a wide range of informationessential to fast, effective and informed decision-making, and reducing the risks associated with hydrocarbons development.

As well as providing a comprehensiveanalysis of the region’s historical well data, thedata is linked to proprietary reservoirengineering information and geological data.

“Our alliance with WellDatabase hasextended NUTECH’s bandwidth to another level,” said Allen Howard, president and CEO of NUTECH.

“By joining forces with WellDatabase andlaunching NuQuest, we are providing ourcustomers with the most inclusive service on themarket, generating insights that create valueotherwise previously unavailable.”

“There are multiple offerings of well dataservices within the industry, but none thatprovide the opportunities for forecasting andcomparatives as well as forward-thinking,efficient planning,” said John Ferrell, founder andCEO of WellDatabase.

NUTECH has analysed nearly 100,000 wellsglobally, from small independents to supermajors, in 80 countries, and specialises inreservoir evaluation and optimisation.

AN EXPANDED RANGE of ROVshackles will be particularlybeneficial for underwater andextreme weather conditionoperations. Van Beest has expanded the range ofGreen Pin ROV Release andRetrieve shackles with twonew products.

The new ROV shackles areavailable with either a fishtailhandle or a D-handle. They havebeen designed to be easily manipulatedby a hydraulically operated ROV arm and the tapered pin ending means it is easy to assemble underwater.

Other benefits for underwater operators include the white-paintedshackle body, green pin and orange handles for excellent visibility.

The handles are interchangeable and attach to the pin head with bolts and Nord-Lock rings,for added safety.

There is also a groove for wire rope in thepin head to attach the pin to the shacklebody, and the thread is completely chamberedto protect your sling. These shackles aresuitable for both inline and side loading.

Extreme temperature conditions are alsocatered for with these shackles as they have

been tested to work in temperatures as low as -60°C and above 200°C.Van Beest can supply the quenched and tempered

alloy steel shackles with a works certificate, materialcertificate, manufacturer test certificate, and ECDeclaration of Conformity.

They can also be supplied without wires so thatoperators can apply the best wiring for their specifications.

Gas Clip Technologies has developeda user-friendly gas detector that isideal for confined spaces.

Gas detection made easy and portable

Digital platform developed for reservoir data

An example of the ROV shackle with thefishtail handle in easy-to-see bright orange.

GRENOBLE ECOLE DE Management, inconjunction with a wide range of major playersin the field of energy technology, will belaunching a free MOOC (Massive Open OnlineCourse). The first one commenced on March 14.The course explores upcoming technologies forsolving the world’s major energy challenges. Itis aimed not only at students, but alsoprofessionals working within or with an interestin the energy sector.

The MOOC will provide participants withtechnical and business-oriented perspectives inregard to the issues at play in the developmentof new energy technologies, particularly aseconomies across the world are attempting toincrease the use of renewables alongside fossilfuels in the energy mix. Six main areas will becovered in the course, including energyefficiency, biogas, hydropower, solar power,hydrogen energy, and smart grids and storage.

Participants will learn how to analyse andevaluate new technologies and explore theirimpact on the energy sector, and discover moreabout the how the energy technologymarketplace is organised, as well as how themajor players are addressing challenges, suchas access to energy.

Over the six week course, it is expected thatparticipants will spend approximately two hoursper week using the MOOC website, as well asundertaking assigned readings.

The website will also feature a forumsection where participants can take part indiscussions and debates with other students aswell as energy industry experts.

Industry leaders that have partned withGrenoble for this course are: Tenerrdis, Air Liquide,CNR, General Electric and Think Smart Grids. It isalso supported by the French government.The course can be accessed viawww.en.grenoble-em.com.

Online course for exploringnew technology

Shackles for safe subsea applications


EDINBURGH BUSINESS SCHOOL, the Graduate School of Heriot-Watt University, has launched a specialist MBA in oil and gasmanagement. It has been designed exclusively for those working in, or aspiring to enter the hydrocarbons sector.

Students of the course will complete seven core courses as well as four specialist courses which include finance, projectmanagement, strategic planning and strategic negotiation.

The course offers flexibility with students able to either studyfrom home or on campus in either Edinburgh, Dubai or Malaysia, or with the school’s learning partners in Nigeria and Trinidad.From late 2016, the course will also be fully available online.

Miriam Nanyonga, a senior accountant with CNOOC Uganda,remarked that the specialist course covers “most of the areas a top decision-maker should be knowledgeable about, especiallystrategic negotiation”.www.ebsglobal.net

CYBER ATTACKS ARE costly to the global energy industry but the risk canbe minimised with effective security software. SafePass Pro has beendeveloped as an advanced cyber-security solution for IT systems withinthe oil and gas industry.

It works in multiple ways, improving network resources, minimisingmalware and spyware, enabling centralised control across all sites, andenforcing policies for acceptable use and security. Additionally, it offerscustomers the opportunity to assess and eliminate network vulnerabilities.

The Alert Logic threat monitoring service features a threat managerthat provides network intrusion monitoring and detection and avulnerability scanner, and the firewall protection supports URL filtering,application filtering and security.

As well as the advanced software, Harris CapRock, the developers,offer monitoring and support 24 hours a day. This means customers willhave access to the company’s industry-leading cyber-security experts whoare on hand to detect system vulnerabilities, monitor insider threats,proactively defend networks and respond to incidents.

“Security breaches and emerging threats to corporate networks areimpacting on the oil and gas market with greater cost and frequency asoffshore operations rely more heavily on always-on communicationsnetworks,” said Tracey Haslam, president of Harris CapRock. “SafePass Prooffers an unparalleled approach to cyber protection with the added abilityof working with Harris cyber security experts committed to securingcritical government networks.”

Harris CapRock operates in 24 countries, with its African presence inAlgeria, Angola and Nigeria. www.harriscaprock.com

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The Heriot-Watt Edinburgh campus. (Image credit: Iris/Flickr)

Specialist oil and gas MBA launched Cyber security solution for oil and gas

COMPANY ............................................................................Page No

ABS..................................................................................................................8AME Trade Limited..................................................................................35DMG World Media Abu Dhabi Ltd ....................................................42ECA Robotics ............................................................................................18Exhibition Management Services ....................................................23FUGRO GEOS Ltd ....................................................................................11GCA Energy Ltd........................................................................................47Global Pacific and Partners ....................................................................9Hyprops Nigeria Ltd..................................................................................7Hytera Communications Co. Ltd ..........................................................5Ladol Integrated Logistics Free Zone Enterprise............................2M.A. Qaiser Industrietechnik GmbH ................................................12Magnetrol International N.V. ..............................................................13Petroleum Agency SA............................................................................27PFL Engineering Services Limited ....................................................14Protea Oil & Gas ......................................................................................27Saudi Leather Industries Company Ltd ..........................................37SGS Inspection Services Nigeria Ltd ................................................20Tilone Subsea Limited ..........................................................................19Tolmann Allied Services Company Ltd............................................48Van Beest BV ............................................................................................25Well Fluid Services ..................................................................................40Whassan Nigeria Ltd ..............................................................................31WIKA Instruments (Pty) Ltd ................................................................33Zobeten Petroleum (Nigeria) ..............................................................29

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46 www.oilreviewafrica.com

What is the impact of the ongoing low oil priceenvironment on the African upstream sector? Africa's producer and exploration economies aretaking a bigger hit in 2016, with much lowercrude prices, and generic cutbacks in corporatespend on global and African E&P. Already, mostcountries in the upstream are in difficulty.

What about Nigeria and Angola in particular?Nigeria’s GDP growth rate has fallen, so tooAngola’s. State revenues are under huge pressurein both. Budget cutbacks have been mandatory.Currencies have depreciated. Debt issues havecome to the fore. State oil firms are in trouble.Sonangol is in the midst of a major restructuring.

NNPC’s future is still unsettled after the longsaga of the Petroleum Industry Bill’s emergence– still yet to finalise – and that some might seeas the longest and slowest “train crash” inAfrica’s upstream evolution, notwithstandingasset gains made by local players. Yet even theyare currently in difficulty, with capex constraints,financing problems, and in meeting all pastcommitments. A tough year is expected.

Are there differences in the upstream sectorbetween West Africa and East Africa?The fundamentals differ from West to East, withdiversity in corporate players and depth, andshort-term prospects, as well as in governmentstrategies and for both foreign and local firms.Neither is in the fortuitous situation thatprevailed one year ago, or even at the end of lastyear, given the oil price slide, global economicslowdown, and macro-conditions in East Asia andChina. In both zones, corporate players face thesame market milieu and industry dilemmas,encountering slowdowns in E&P, venture uptake,acreage leasing and upstream investment.

What role will foreign investment play in the growth of African upstream this year?The super-majors are in the strongest relativecorporate position yet, with independents andexplorers suffering from capex cutbacks, difficultymeeting commitments, and tough financing

conditions. For almost all independents, capitalmarkets remain tough to access. Producers faceweak global market conditions, and whileprojects in the recent pipeline can or will mostlikely continue forward, some have been set back.

Which companies are performing strongly inAfrica at the moment? And where are operatorscurrently struggling?ENI and Total have prominent positions on thecontinent, with the "Italian Stallion" holding alarger growth portfolio built from recent acreageentries, developing ventures in Congo-Brazzaville,oil output growth in Angola, and gas discoverysuccess. ENI’s Egyptian Zohr gas field is slated forfast-track LNG, and in East Africa theMozambique FLNG/LNG ventures remain stand-out projects, but with delayed FID, as is the casein Tanzania. Shell has taken over BG and itsacreage and assets, enhancing its East Africa

portfolio. And Total's oil production ambitions arestalled in Uganda due to oil pipeline politics, theheavy oil venture in Madagascar fell foul of lowcrude prices and unviable margins, while largeSouth African deepwater acreages remain on thebooks, but elusive for near-term development.South Sudan is "no-man's land" for the near-term.Key players have exited Seychelles. Central Africais dormant. Much of North Africa is struggling,perhaps bar Egypt.

Do you foresee E&P growth for South Africa?The core economy is structurally weak andeconomic growth is waning, along with softnessin the Rand, while the saga of finalisation ofpetroleum industry legislation remains to becompleted. This fundamentally political dramahas dragged on for a long while and generatedmuch industry disquiet, although some signalsappear to suggest it will be less onerous thanoriginally planned. Even so, no major upstreaminvestments should be expected, as allcompanies will be reviewing offshore portfolioand plans, and awaiting better times, and thestalled onshore shale gas game is yet to kick off.

What are the countries to watch this year interms of growth and investment?Rising oil output growth is slated for Ghana, largegas discoveries have reshaped the energy futureoutlook in Senegal, and Mauritania andMozambique’s LNG projects inch forward, alongwith FLNG in Equatorial Guinea and Cameroon,but all LNG is long-term. In this arena, Egyptseems likely to move fastest.

Do not expect much advance in exploration inMalawi. Zambia remains an upstream backwater,with Zimbabwe in a congenital mess save forminor CBM projects, and upstream hope in Kenyalies in acceleration of oil pipeline export routesfrom the north to the coast. Uganda is ditheringon exploitation and oil evacuation routes.

Are there any differences between North Africaand the sub-Saharan countries?Much of North Africa fell victim to the ArabSpring’s consequences, while sub-Saharan Africahad enormous opportunity to move forwardrapidly in 2010-15, yet many countries seem tohave lost some momentum.

Last year’s sharp unexpected downside incrude markets has mortgaged much immediateopportunity as the global paradigm has changedin unforeseen ways. �

Dr Duncan Clarke, chairman of the board for GlobalPacific & Partners, foresees mixed fortunes across Africafor oil and gas operators.

“The fundamentals differfrom West to East but neitheris in the fortuitous situationthat prevailed a year ago.”

Dr Duncan Clarke, chairman of the board for Global Pacific & Partners, discusses theprospects for the African oil and gas industry across the different regions, and outlineswhere the investment opportunities lie.

What does the future hold for theAfrican upstream sector?



http://gcaenergy.com/

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Oil Review Africa 2 2016