Scarabeo-3 Ladies

Crudediggers is serving you with Scarabeo-3 Babe's. These are the two ladies who are swimming in the men's infested water of SC-3 and you need to give them kudos for this singular feat. Did you enquire about their names? Sorry, they are our very dear proprietary properties, we can't afford to devulge their identities more than this! Just thank Crudediggers for going this far.

Next is the lively Mafia, ever ready to work and entertain at the same time. I bet you love his wrist-clock, the very best for his drllship responsibilities. Also the gentle OIM and his good friend and yours' truely. Have a nice day!

End of 2006 at Scarabeo-3

For crudediggers on board Scarabeo-3 Rig drilling for Addax in offshore Nigeria, 2006 ended on a fun-filled note. The Xmas and New Year days were fully occupied with memorable activities such that everyone on board felt less home-sick. Below are shots of some golden moments.

I'm sure you'll agree with me that these 'crudediggers' hardly missed home. They had so much fun you can press out honey from their eyes.
Comments please!!!!!
Cheers.

Investing in Nigeria's Gas and Oil

I have had quite a number of enquiries recently on the investment opportunities in the Nigeria's oil and gas industry. Below is some vital info that might be benefitial. Please note that this is not wholly correct as most areas are subject to government and operational changes with time. Contact the relevant bodies for latest updates.
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Upstream
The Nigerian Oil and Gas reserves have grown tremendously since its first discovery in 1956, from a modest figure of 0.184 billion barrel of oil and 2.260 billion cubic feet of gas in 1958 to more than 30 billion barrels of oil, 3.80 billion barrels of condensate and about 170 trillion cubic feet of gas, as at December 2005.

Present civilian government has introduced various incentives for increasing oil reserves and gas utilization. These iclude, a Memorandum of Understanding (MOU) negotiated and agreed to guarantee a notional profit margin of US $2/bbl which was revised to include the Reserves Addition Bonus clause, which qualify the operator for a tax credit for additions to reserves that exceeds its production for a year.

Opening up of other basins, which are blocked into concessions and awarded to competent entrepreneurs for exploration and development. The basins are Benin, Anambra, Benue Trough, Chad and the Deep and Ultra-deep offshore area of Nigeria.

The first four of these basins are relatively un-explored while the Deep and Ultra-deep offshore are still partially explored. The opening-up significantly increased the number of companies exploring for hydrocarbon in Nigeria from just a few to over 60 with about 46 of them discovering oil, gas and/or condensate in significant qualities. This brought about the conversion of 91 of 177 Oil Prospecting Licenses (OPLs) to Oil Mining Leases (OMLs) (as at 2003). Seventeen of these companies have gone into actual production. In the deep and ultra-deep offshore terrain, 12 companies have discovered oil and gas in commercial quantities (source-nnpc). This encouraging result made the Government to open up more than 40 new blocks to interested entrepreneurs for competitive bidding process since the year 2000 to 2005.

Government also awarded 24 of the 200 fields classified as marginal by operators due to low ranking in their investment portfolio and/or remoteness to existing facilities to 32 local companies. These 24 Marginal fields have an estimated reserve of about 300 million barrels of crude.

Government also encourages drilling that will target deeper horizon by giving exploration, first and second appraisal incentive to wells that investigate depths in excess of 500 meters beyond that of the deepest well in the field.

Some of the major activities in which investment opportunities abound include but not limited to the following: Surveying; Civil Works Seismic Data Acquisition and Interpretation. Also are other geological activities, drilling operations, crude oil transportation and storage as well as production.

Upstream Opportunities
•Surveying - tropical and planimetric; and sea bottom survey, Civil Works- mud pit construction, concrete works at rig sites, Seismic data acquisition and interpretation, Drilling operations, Pipelining, Crude oil transportation and storage, Exploration and production of oil and gas products, Manufacturing of consumable materials in exploration such as explosives, Detonators, steel casting, magnetic tapes etc.
I encourage research for development of local substitutes for items such as medium pressure valves, pumps, shallow drilling equipment, drilling mud, bits fittings, drilling cement etc. This will definitely attract government assistance.


Down-stream Opportunities
In view of the enormous potentials in this sector, some fiscal incentives have also been put in place by the government for investors are as follows:
Gas Production Phase
•Applicable tax rate under the Petroleum Profit Tax (PPT) Act to be at the same rate as company tax currently at 30%.
•Capital Allowance at the rate of 20% per annum in the first four years, 19% in the fifth year and the remaining 1% in the books.
•Investment Tax Credit of the current rate of 5%.•Royalty at the rate of 7% on shore and 5% offshore.
Gas Transmission and Distribution.
•Capital allowance as in production phase above.
•Tax rate as in production phase.
•Tax holiday under pioneering status.

LNG Projects.
•Applicable tax rate under PPT is 45%.
•Capital allowance is 33% per year on straight-line basis in the first three years with 1% remaining in the books.
•Investment tax credit of 10%.
•Royalty of 7% on-shore, 5% off-shore tax deductible

Gas Exploitation (Upstream Operations)
Fiscal Arrangements are reviewed as follows:
All investment necessary to separate oil from gas from the reserves into suitable products is considered part of the oil field development.
Capital investment facilities to deliver Associated Gas in usable form at utilization or transfer points will be treated for fiscal purposes as part of the capital investment for oil development.
Capital allowances, operating expenses and basis for assessment will be subjected to the provisions of the PPT Act and the revised Memorandum of Understanding (MOU).
Gas Utilisation (Downstream Operations).

Incentives given to investors for encouragement of exploitation and utilization of Associated Gas for commercial purposes include:
Companies engaged in gas utilization are to be subjected to the provisions of the Companies Income Tax Act (CITA).
An initial tax free period of three years renewable for an additional two years.
Accelerated Capital Allowance after the tax-free period in the form of 90% with 10% retention in the books for plant and machinery.15% investment capital allowance which shall not reduce the value of the asset.

Recently, the government approved additional incentives to support the gas industry in the following areas:
- All gas developmental projects, including those engaged in power generation, liquid plants, fertiliser plants, gas distribution and transmission pipelines are to be taxed under the provisions of the Companies Income Tax Act (CITA) and not the Petroleum Profit Tax.
- All fiscal incentives under the gas utilisation downstream operations in 1997 are to be extended to industrial projects that use gas i.e. power plants, gas to liquids plants, fertiliser plants and gas distribution/transmission plants.
- The initial tax holiday is to be extended from three to five years.
- Gas is transferred at 0% PPT and 0% Royalty.
- Investment capital Allowance is increased from 5% to 15%.
- Interest on loans for gas projects is to be tax deductible provided that prior approval was obtained from the Federal Ministry of Finance before taking the loan.
- All dividends distributed during the tax holiday shall not be taxed.

Investment Opportunities in Downstream
Investment Opportunities in the Downstream sector are:
- Gas treatment
- Crude Oil and Gas conversion into refined and petrochemical products and finer chemicals
- Transportation and Marketing of the products Related ancillary services
- Refining, Petrochemicals and Gas Utilization

Nigeria's production cost per barrels is known to be one of the lowest world wide. Huge reservoirs of hydrocarbon abound in Nigeria.
From all indications, government has provided generous fiscal terms both for oil production and gas utilization.The economic environ though a little hostile recently, still ensure easy repatriation of profit by investors. An even field is provided for all operations in the Petroleum Regulations and the monitoring agency -the Department of Petroleum Resources.

Another area of interest may be the Downstream- Gas Sector:
1. Domestic Production and Marketing of Liquefied Natural Gas (LPG).
2. Domestic Manufacturing of LPG cylinders, valves and regulators, installation of filling plants, retail distribution and development of simple, flexible and less expensive gas burners to encourage theuse of gas instead of wood.
3. Establishment of processing plants and industries for the production of:
- refined mineral oil, petroleum jelly and grease
- Bituminous based water / damp proof building materials e.g. roofing sheets, floor tiles, tarpaulin,
- Building of asphalt storage, packaging and blending that may export these products.
4. Establishment of chemical industries e.g. distillation units for the production of Naphtha and other special boiling point solvents used in food processing.
5. Linear Alkyl Benzene, Carbon Black and Polypropylene producing industries.
6. Development of Phase II (Phase III to commence later) in Nigeria’sPetrochemical Programme
8. Small-scale production of chemicals and solvents e.g. chlorinated ethane, Formaldehyde, Acetylene etc. from natural gas.
9. Crude oil refining with efficient export facilities. Companies with the technology can undertake turn around maintenance of refineries. There is a tremendous scope for small-scale joint venture manufacturing concerns with foreign technical partners. Such ventures can start warehousing arrangements that will ensure continuity of supply at competitive prices.
10. Products Transportation and Marketing of associated products e.g. Lubricating Oil processing, LPG bottles and accessories, oil cans reconditioning etc.


Opportunities in Ancillary Activities.
Other investment opportunities contingent upon refining and ancillary activities are the manufacture of special products that include the following:
•Industrial and Food grade solvents: Insecticides, Cosmetics, Mineral Oil, Petroleum Jelly and Grease, etc.

Source: NNPC, DPR, Nigeria govt.
PS: verify all info before venturing into any business and make sure you contact the right agency for assistance.

Nigerian Oil & Gas Update

This piece of information is in reaction to enquiries from visitors on the Nigeria's oil & gas potentials. More info is contained in the nigerian oil & gas website: www.cwcnog.com

OverView
Nigeria is the largest oil producer in Africa and the eleventh largest in the world with an average of 2.6 million barrels per day (bb/l) (2006E). Nigeria's economy is heavily dependent on the oil sector, which account for nearly 80% of government revenues and helps the development of Nigeria's infrastructures and other industries.
The government has also been working on a number of economic reforms including the privatization of state-owned entities to continue to encourage private investment and reinvest in the country and it its people.

Nigeria Oil & Gas
Oil
~ Proven Oil reserves of 35.2 billion barrels and plans to expand to 40 billion barrels by 2010
~ Joint ventures account for 95% of Nigeria's crude oil production
~ NNPC estimates that $7 billion per year will be necessary to fund exploration and development in hopes of reaching its production targets.
~ Crude oil producers will be required to refine at least 50 percent of their production in country at existing refineries by 2006
~ 3 new refineries to come onstream by 2008 with the government issuing 13 licences for the construction of additional private refineries.

Gas
~ Natural gas reserves of 185 trillion cubic feet (01/06)
~ Plans to raise earnings from natural gas exports to 50 percent of oil revenues by 2010
~ Nigerian gas flaring accounts for 20% of the world total which could be ended by 2008 by collecting associated natural gas and processing it into LNG.
~ NNPC estimates that $15 billion in private sector investments is necessary to meet its natural gas development goals by 2010
~ The $7 billion Nigeria-Algeria (NIGAL) project is planned to be finished by 2009. 4 000 km pipeline from Nigeria to Algeria's export terminals on the Mediterranean.

Addax Commences Production from Nda Field

First Nda Development Well Commences Production And Addax Petroleum’s Daily Oil Production Exceeds 100,000 Bbls/Day For The First Time

Calgary, Alberta, August 1st, 2006 – Addax Petroleum Corporation (TSX: AXC):
Addax Petroleum today announced that first production from the approved Nda Field development programme started on July 30. The addition of this Nda Field production has raised Addax Petroleum’s gross daily oil production to 102,200 bbls/day, the first time that Addax Petroleum’s production has exceeded the 100,000 bbls/day milestone.

Commenting on the development Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum said, “We are delighted and proud of these two concurrent achievements which underline our commitment to growth through the development of our resources. In the growth cycle of any E&P company, exceeding 100,000 bbls/day marks a coming of age.”

The Nda Field lies in OPL90, was discovered by Addax Petroleum in July 2004 and is adjacent to the Okwori field. The field is being developed as a subsea tie-back to the Okwori FPSO on OPL90 following an extended well test. The Corporation received approval for the Nda Field Development Plan in February of this year.

About Addax Petroleum:
Addax Petroleum is an international oil and gas exploration and production company focused on Africa and the Middle East. Addax Petroleum is the largest independent oil producer in Nigeria and has increased its crude oil production from an average of 8,800 barrels per day for 1998 to an average to date of approximately 80,000 barrels per day in the first quarter of 2006. Further information about Addax Petroleum is available at www.addaxpetroleum.com or at www.sedar.com.

NB: Nda field development wells are drilled by Saipem's Scarabeo-3 Rig.

Questions on Obo-1

I had the following comments for the Obo-1 post.

1. Tommy R. said...
Hi,Have you heard anything about this discovery being larger than a 1B find to surpass that of the Akpo find?Thanks for any info you might have heard.
Tommy R.
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2. Mike M'Centir said...
Nigeria seems to be booming with discoveries, but how is your government planning the management. Learnt there's still so much corruption in high places and the violent crisis in Niger Delta area!!
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REPLY:
I don't have much info with me for now to compare the two finds (Obo & Akpo) but I'll see what I can scoop for you.

On the second response from Mike, my guess is as good as yours !! The Nigeria's government of the day is trying its best to manage the country right, both financially and politically. We're looking forward to better days ahead.

Thanks for the response.

Chevron JDZ Obo-1 Well

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LOCAL CHEVRON NEWS RELEASE: Issued in Lagos, Nigeria, May 26, 2006
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The Nigeria – Sao Tome & Principe Joint Development Authority, Chevron and its co-venturers Esso Exploration and Production Nigeria-Sao Tome (One) Limited, and Dangote Energy Equity Resources, have encountered hydrocarbons in the Obo-1 exploration well in Block 1 of the Nigeria – Sao Tome and Principe Joint Development Zone.

The Obo-1 well logged a cumulative total of at least 150 feet (45 meters) of net hydrocarbon pay in multiple reservoirs and provided important reservoir rock and liquid samples, which need to be evaluated and integrated into the interpretation of the Obo Area to determine the next step of the appraisal process. At this stage, it is premature to determine whether or not Chevron and its co-venturers have made a commercial discovery.

The Obo-1 well is located in 1,720 meters of water (5, 640 feet) and the drilling operation was completed in 63 days on March 15th 2006. The JDZ Block-1 is located approximately 190 miles (300 kilometers) north of the city of Sao Tome and approximately 125 miles (200 kilometers) south of the city of Port Harcourt in Nigeria. Chevron JDZ Limited has a 51 percent equity share in the block while Esso Exploration and Production Nigeria-Sao Tome (One) Limited, and Dangote Energy Equity Resources have the remaining 40 and 9 percent equity, respectively.

Source: Chevron

Chevron Nigeria: 2005 Report Card

The year 2005 was a year of great achievement for the Nigeria Mid-Africa SBU of Chevron. The company was particularly proud of its continued improvement in safety.
It reduced injury rate by 40 percent over the 2004 performance which was also 30 percent improvement over the previous year. That means that for a period of five years, it had improved its safety by nearly 100 percent. This is not all about statistics, but about behaviour which reflects the business unit’s safety programme.

The production target in 2005 was 220, 000 barrels a day net. The JV had excellent production performance at 164.6 BOEPD versus target of 161.8. Unfortunately, the ExxonMobil operated Chad Development (Chevron is 25% non-operating partner) achieved only 43.7BOEPD versus target of 57.8. It was the first time the company would accomplish its production target.
The company was very successful last year in its capital stewardship in projects the company was executing. When the drilling results are looked at, it will be discovered that the company spent $150 million to get 35, 000 barrels a day. That is pretty good result.

Other 2005 ccomplishments
The Nigeria mid-Africa (NMASBU) also has an impressive list of additional accomplishments in 2005, reflecting the diverse level of work and services required to manage the NMA business plan. The Nigeria JV achieved "Stretch" Production Target; Successful Swamp Re-entry, ramping up to 43 MBPD as well as an active exploration program.
In the Deepwater, the company had a couple of great discoveries in OPL 214 Uge operated by ExxonMobil and OPL 222 Efere operated by Total while it is also drilling an important well, Obo-1 in JDZ Block 1.
An important CARRY agreement was put in place last year to ensure that it was able to fund many of the JV projects. The achievements of the company are:
CNL JV Obokun Exploration Well - 9,000 BPD DST OML Conversion for OPL 216, 217 & 218 Farm-out of EG Block L and OPL 318 Approval of Carry Agreements for Mcji, Meren and Delta South.

Global MOU initiative
This is one of the company’s long term programs. The GMoU is a way to get communities more involved in the decision making of the development of their communities and to remove business and government from the middle of the process. The essence is that it should have better working relationship with the communities, have opportunity to dialogue with community people directly in a more meaningful way while the communities will have the opportunity to ensure sustainable development in their communities hopefully in a safe environment.

2006 path forward
While recognizing the solid performance achieved in 2005, it also planned to leverage those results and deliver an even better 2006. With all of the growth and changes, it is an exciting time to be in the Nigeria / Mid-Africa SBU. Expectations are high, and the company has the responsibility to deliver on our performance commitments. In 2006, the company wants to announce that it is already ahead of our production target per day. The company is better than what it had anticipated.

2006 Focus Areas
The top priorities are safety, improve reliability and base business performance, world-class execution of its major and capital projects
According to Jay Pryor, focus on the base business will be key to delivering 2006 NMA production performance. Efforts in the last couple of years to try and change production profile need to be coordinated. The production growth opportunity is good in the JV, Chad and Deepwater. Much incremental production is expected from the Swamp Re-Entry.

Significant Chevron investment in NMA
In 2005, the company’s budget in the CIEP was $1.6 billion dollars. In 2006, it is $2.5 billion. This means the business unit is getting the highest capital allocation within CIEP this year. This means more work and a big responsibility to deliver projects on-time and on-budget. The company has a lot of works to accomplish ... substantially more than in any other period in the history of Chevron’s Nigeria operations.
The NMA has a sustained investment of approximately $2.5 billion each year in the 2006-08 Business Plan. These projects are spread across the JV, Gas, Chad and Deepwater. This is likely to increase as Olokola LNG activities ramp up. Agbami is sucking much of the capital because it is nearing production.
Construction in Escravos Gas Project EGP3A and EGP3B has begun. These investments position NMA for reduced flares and commercialization of existing gas reserves.
The corporation is focused on growth, and it has challenged its subsidiaries to generate the next set of major capital projects that will deliver the future for Chevron. The Front End Engineering Design (FEED) for Olokola LNG Project is scheduled for the first quarter; Bonga SW/Aparo FEED involving four partners — the same period too while the drilling of Obo Well in JDA Block is scheduled for the first and second quarters. Nsiko FEED is for the fourth quarter.
Agbami is well into execution, and the company expects to see the hull floated out of the shipyard in 2006. Chevron has a 30per cent share of the Total operated Usan field in deepwater block OPL 222. Eight wells have already been drilled and the company is looking to complete the FEED work in 2006 to prepare for Final Investment Decision. First oil is targeted for 2010.
Flares-Out and Commercialization of Gas NMA is building a diverse Gas Business including a mix of national interest projects as well as regional gas distribution and LNG/GTL export. Chevron is dealing with trillions of cubic feet of gas in the JV Trillions more in the Deepwater. It must monetize those huge reserves.

IPP (independent Power Project)
One of the urgent needs in this area as well as in the country is additional power. The company elected to site a station to generate power close to Egbin Thermal Station. It wants to be part of the overall solution to power problem in Nigeria. Very little gas is used for domestic purposes in Nigeria. The company is working with CIEP to come out with a master plan for domestic gas in Nigeria. This will help the power business in Nigeria and also make it to explore for gas.
Nigerian Local Content
Chevron continues to take the lead in the support of Nigerian Local Content. The local content scope for the Agbami development is the most work done to date for an FPSO development. Chevron also supported a local company (VRMT) to establish laboratory facilities in Lagos for the advanced analysis of crude samples.
Remember... By maintaining focus on these three goals - safety, reliability and world-class execution - it will help ensure sustained competitive performance going forward.

Curled from (full Text): http://www.businessdayonline.com/?c=52&a=6889