Glad to Be Back

Dear Readers,

From tomorrow, July 3, 2024, Energy Nuggets Daily will make a return and will thereafter be released every day at noon, West and Central African Time (WAT), Monday to Friday.

Next Monday (July 8), it will be the turn of the weekly paid content – Energy Nuggets Nigeria Insights to return.

It has been several months since the last time I posted on our website www.energynuggets.ng. Owing to numerous challenges, which we are still coping with, there was a long period of introspection and appraisal of the best way forward. However it is, we are glad to be back on the beat again!

While this blog was on break, many momentous events took place in the energy landscape in Nigeria:

• The echoes of that infamous quote: “the subsidy is gone...” are still reverberating in kitchen cupboards, farms, and food marts across the land;

 

• The national electricity grid collapsed so many times that most Nigerians did not even notice that striking workers shut down the grid during their recent 24-hour nationwide strike. Most Nigerians heard of the grid shutdown from the news, especially from an angry Secretary to the Government of the Federation, Senator George Akume, who described the workers' action as treason;

 

• During the period, the record-breaking US$20 billion Dangote refinery finally came on stream, many long months after former President Buhari “commissioned” the plant - a major milestone for Nigeria and indeed Africa, in the struggle to transition from exporting primary mineral resources to industrial processing;

 

• Meanwhile, Nigeria still rues her lost opportunities in securing a large chunk of the world’s LNG market over two decades ago when the IOCs that promoted Olokonla LNG, Brass LNG, and Doro Floating LNG among other stillborn LNG projects, all pulled up their kaya and went to build the largest LNG plant in the world in Australia. In the wake of European gas shortages on account of the Russian invasion of Ukraine, Nigeria, sitting on humongous gas reserves, watched helplessly as far away United States ramped up her LNG output from unconventional hydrocarbon production, using the hydraulic fracturing technique or “fracking” to fill in the European gas supply gaps;

 

• Of course, we like to celebrate ourselves as “the country with a lot of gas and some oil”. So, we made some noises recently about the huge progress being made with the “Decade of Gas” project by celebrating a whopping 52 percent completion of the Train 7 plant of the Nigeria LNG Limited facility on Bonny Island in Rivers State. We are also full of celebrations for the proposed extension of the West African Gas Pipeline to Morrocco, along the Atlantic coast of West Africa, through Senegal and Mauritania;

 

• We should salute NNPC Limited's doggedness in targeting the completion of the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project this year. This project was originally intended as the first leg of the Trans-Saharan Gas Pipeline project that was to supply gas to Europe through already existing undersea pipelines linking Algeria to Europe.

However, the Nigerian government appears to be focusing for now on encouraging investors to develop an industrial corridor along the pipeline route, especially between Abuja and Kano. It is not clear if laying a pipeline under the terrorism-infested dunes of the Sahara Desert is still on the cards;

 

• Most IOCs which have been producing oil in the swamps of the Niger Delta since 1958 have continued to bail out of the region and consolidate their activities in the more lucrative deepwater production sharing contract operations, where they have fewer logistics challenges and no community leaders to deal with. Not a bad development, contrary to the impression being created in some quarters. With such assets from which they are divesting now transferring to the independent producers, the latter are acquiring E&P muscles and will someday become our homegrown IOCs;

 

Unfortunately, the lack of investment in exploration to discover new reserves, which has plagued Nigeria in the last 25 years or more has persisted. Add to that the malignant “oil theft” that has left Nigeria vulnerable and incapable of cashing in on high oil prices. One wonders, are the oil thieves witches? Don't they move the stolen crude oil in barges and tankers to supply their forest refineries or international buyers? How can these movements occur without detection in this age of advanced surveillance technology?

 

• Finally, I have been itching to comment on the Malabu Oil saga, but I feared getting into trouble with the courts. I believe the matter is now essentially rested and time to wonder about the whole rigmarole of EFCC and Attorney-General Malami dragging his predecessor Adoke all over the place because they smelt a rat in the out-of-court settlement reached by the Jonathan government to bring on stream OPL 245 – one of Nigeria’s largest oilfields, encumbered by the dispute between Dan Etete, the Shell Group and Italy’s ENI. The latter two companies were beneficiaries of the revocation of the allocation of the Malabu oilfield allocation to Dan Etete, by the Obasanjo government on the suspicion that the allocation was an underhand deal between General Abacha and his petroleum minister. So, what finally happened? Is it not the same or similar deal that has been consummated after losing another ten years?

Apart from Energy Nuggets Daily, (our free daily briefing and analyses of trends in the industry), the premium weekly paid content – Energy Nuggets Nigeria Insights provides deeper guidance for serious industry operators and decision-makers.

We are also pleased to announce the return of African Petrobusiness with the August 2024 edition. The magazine was first test run in 2006 when it was printed in Austin, Texas, USA, and distributed at that year’s Offshore Technology Conference in Houston.

In addition, content like eBooks, podcasts, webinars, and white papers add to the rich offering of actionable energy intelligence available on www.energynuggets.ng.

You can count on us to be your guide on energy business intelligence from the Gulf of Guinea region because our experience counts. We have deep knowledge of the industry, drawn from strong connections with academia, industry, and policy aficionados.

We speak with authority, linking trends to their historical roots. For instance, we know that the present relatively strong presence of Indigenous E&P operators in Nigeria has its roots in three waves of discretionary acreage awards to wealthy Nigerians in the 1990s, especially during the military presidency of Ibrahim Babangida.

The 1990s class included moneybags like MKO Abiola, Mike Adenuga, Mohammed Indimi, Aminu Dantata, and Jerome Udoji among others. Later awards under General Abacha saw the rise of General Danjuma and his South Atlantic Petroleum and O.B. Lulu Briggs’ Moni Pulo.

This period also saw the entrepreneurial efforts of many other illustrious Nigerians like Tunde Afolabi, Tunde Folawiyo (who took over his father’s Folawiyo Petroleum), Kase Lawal, George Osahon, and Austin Avuru among many others. This was the era of “technical partners” who were expected to provide the funds and expertise to produce the fields.

Abacan Resource Corporation of Canada was a dominant player in this area in the early 1990s, having played leading roles in the discovery wells drilled by Amni, Allied Energy, and Folawiyo Petroleum. Unfortunately, Abacan fell out with all three indigenous operators due to its funding challenges and other allegations made by the US Security and Exchange Commission, which led to its liquidation.

Wade Cherwayko, the Ukrainian-Canadian who took over the running of Abacan from his father before its problems, did not give up. He later made a strong comeback, making inroads into Nigeria and Sao Tome e Principe, using another company he formed - Equator Exploration, which raised £60million in the London Stock Exchange to support speculative seismic surveys in Sao Tome; and partner indigenous marginal field operators, who had at this time burst on the scene in Nigeria. Wade was to have further disputes and problems with the Nigerian partners of Equator Exploration, including Peak Petroleum, whose dream of building a floating LNG plant never materialized due to no funds.

Then entered Marte Resources, another Alberta, Canada company through which Wade forged new technical partnerships in Nigeria. The successful Umusadege field, where it partnered with Midwestern Oil & Gas and Suntrust Oil, has produced substantial volumes of light sweet crude since 2008.

However, not all the efforts yielded rosy results. For instance, its partnership with Del Sigma Petroleum entered into in January 2006, faltered, as the latter had to scramble for other sources of funding in its quest to bring the Ke marginal field on OML 54 on stream.

By far the most consequential award for indigenous E&P companies in Nigeria was the 2001 discretionary award of marginal fields to 30 indigenous operators, under the supervision of the late Dr. Rilwanu Lukman. Some of those companies are now producing crude oil from fields such as Walter Smith’s Ibigwe; Frontier Oil’s Uquo gas field; and Energia’s Ebendo field among others. They have chucked up decent reserves, far beyond expectations, placing them in good stead to become competitive in the emerging African oil-producing countries. The most recent allocation of 57 marginal fields has been described as the most transparent, bringing in a hefty US$ 200 billion for the Federal Government.

 

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