AfrOil - oil & gas news for Africa

22 January 2013

AfrOil
Week 03

Issue 473
News
Analysis
Intelligence
Published by
AFRICA OIL & GAS MONITOR
NewsBase
COMMENTARY 2 NEWS THIS WEEK…

Algeria crisis
The In Amenas attack 2

Nigeria takes Qua Iboe crunch 4

PIPELINES & TRANSPORT 5 Algiers demonstrated its willingness to engage
terrorism last week in its response to the In
Tender issued for Kenya’s new pipeline 5
Amenas assault, but can the country keep its
South Sudan remains keen on pipeline to
Kenya 5
facilities – and workers – safe?
Piracy threat increasing in West Africa 6 Algeria has committed to providing more security
for its facilities, as has Libya, which could well
INVESTMENT 6
face similar attacks. (Page 2)
Perenco signs Cameroon exploration
contract 6
East African links
PERFORMANCE 7
South Sudan is still casting around for export
Eni confirms Sankofa find with appraisal options, while Kenya is re-tendering a long-
well 7
planned products pipeline.
Somaliland aspires to oil future 8

Frost: South African shale gas years
Kenya has taken a first step in tendering a pipeline
away 8 from Mombasa to Nairobi, which was to have been
worked on by Libya’s Tamoil. (Page 5)
POLICY 9

Griffiths charged with Chadian
A South Sudanese official has reiterated interest
corruption 9 in an export pipeline through Kenya, but this will
be an expensive proposition. (Page 5)
PROJECTS & COMPANIES 9

Pura Vida signs up Gabonese block 9
South African shale
Liberian 3-D seismic under way 10
Frost & Sullivan believes the shale resource of the
NEWS IN BRIEF 11 Karoo Basin will not be commercially produced for
CONFERENCES 21 at least seven years. (Page 8)

For analysis and commentary on these and other stories, plus the latest oil and gas developments, see inside…
Copyright © 2013 NewsBase Ltd.
www.newsbase.com Edited by Ed Reed
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

AfrOil 22 January 2013, Week 03 page 2

COMMENTARY

The In Amenas attack
Algeria has weathered the last few years in relative calm, but the assault last week on the
In Amenas joint venture was a shocking reminder of both local and regional problems
By Chris Moghtader and Ed Reed
The terrorist strike, and its response, ran for four days and led to an estimated 70 deaths
French intervention in Mali and insecurity in the Sahel have been pointed to as motivating factors
Algeria and Libya have responded with assurances of additional security forces for energy facilities

The attack on Algeria’s In Amenas gas to reports, attackers told locals and Cameron went on to praise the
facility began with the ambush of a bus Muslims that they would not be harmed, Algerian response and said the
carrying workers and ended with a death and that they were targeting Westerners responsibility for the deaths “lies
toll said to be more than 70 – raising and Christians. squarely with the terrorists.”
fresh concerns about security in the Sahel The Jamestown Foundation reported As of January 20, BP said four of its
region. that responsibility for the attack was also workers were still missing and that it had
Details of the assault are still emerging claimed by a rival group, Katibat al- 18 employees at the facility when the
but it seems the January 16 dawn ambush Mulathamin – which it translated as attack began. The company said it had
on the bus led to the deaths of an Brigade of the Wearers of the Veil. evacuated non-essential staff from In
expatriate worker and an Algerian Salah, Hassi Messaoud and other
security guard. The attackers, who appear Grim tally locations and that the security situation
to have been members of Mokhtar At the time of the attack there are was under “close review.”
Belmokhtar’s al-Muaqioon Biddam – thought to have been around 800 workers Statoil released the name of five
which can be translated as Signed in at In Amenas, of whom 135 were employees still missing on January 20,
Blood – brigade, then stormed the expatriates. Figures provided by the UK noting that it had 17 workers at the plant
Tigantourine plant, taking a number of government suggest at least 12 workers at the time of the assault.
hostages. are dead and another 20 missing – and A statement from Sonatrach on
It appears the kidnappers attempted to the same source repeated Algeria’s January 20 “condemned and deplored”
move some of their hostages on January statement that 37 foreign hostages had the terrorist attack on Tigantourine and
17 but the Algerian army attacked with a been killed. Over 30 terrorists had died, offered condolences to its partners and
helicopter gunship, leading to the death UK Prime Minister David Cameron said, the Algerian army for the dead, but did
of between 20 and 40 people. Both but a “small number” are in Algerian not provide information on the status of
kidnappers and kidnapped died in the custody. its workers.
Algerian assault.
The Algerian army
carried out a final
assault on January 19.
Algerian Prime
Minister Abdelmalek
Sellal, on January 21,
said 37 foreign
workers were believed
to have died. Sellal
also said 29 militants
had been killed and
that three had been
captured. Around 680
Algerian workers and
more than 100
expatriate workers
were freed, according
to Algiers. According



COMMENTARY
Insecurity Insecurity in neighbouring Mali, Niger “The country is therefore the latest
The attack has been widely linked to a and Libya, combined with weak to non- candidate to be added to the long list of
French decision to send a military existent border control throughout the countries at risk from political turmoil in
intervention force to help resolve the region, while a deluge of arms and the MENA region and could underpin the
ongoing crisis in northern Mali, which military equipment left over from the geopolitical risk premium further.”
began on January 11. The militants Libyan conflict, have left Algeria Algerian exports to Italy fell to 60-65
themselves reportedly called for a French increasingly exposed. million cubic metres on January 17, from
withdrawal as one of their demands for Attacks against the energy industry normal levels of 70-75 mcm per day,
the release of hostages. However, given have been only sporadic in recent years Reuters reported.
the scale of the attack, at more than 1,000 in Algeria. Where they have occurred, RBC Capital markets said BP and
km from Mali itself, it seems unlikely they have tended to target vehicles Statoil both had working interest stakes
that it could have been planned and belonging to oil and gas companies, of 46% in In Amenas, while Sonatrach
executed within such a short period. rather than the installations themselves. It held the remaining 8%. “Work is
There was no consensus from Algerian is not clear whether this latest attack is presently taking place on an expansion
officials as to where the attack had the beginning of a new trend, or whether project which was due to [be] completed
originated from, although Libya and it evolved from an attack on a convoy in [the second half of 2013]. We have no
Niger were also mentioned. into something more serious. incremental volumes in 2013, then 6,000
It seems likely the Algerians were Cameron, speaking to the UK’s bpd and 17,000 bpd each in 2014 and
spurred into action by concerns that the Parliament on January 21, said the 2015.”
terrorists would escape with hostages international terrorist threat was shifting
over the Libyan border, which is very away from Afghanistan and Pakistan More caution
close to In Amenas. Once the decision towards Yemen, Somalia and parts of Given that details are still emerging from
had been taken, Algerian Special Forces North Africa. the Tigantourine assault, it would be
would have prioritised killing the premature to leap to conclusions.
assailants, over saving hostages. The In Amenas However, it seems likely that in the near
stark line taken by Algiers can be seen in The four wet gas fields that make up the term, companies will be far more
a statement by Algerian Communications east Algerian development are operated cautious in making development plans in
Minister Mohamed Said Belaid, who said by a joint venture involving BP, remote areas of the Sahel – and require
there would be “no negotiation, no Sonatrach and Statoil. Contractors from more assurances from local forces,
blackmail, no respite” for terrorists. Japan’s JGC Corporation were also at the whether in Algeria or Libya.
The apparent mastermind of the attack, facility and it is thought that nine of the Algeria intends to hold a bid round
Belmokhtar, is well known throughout hostages killed were Japanese. later this year and is in the process of
the region. A former member of al-Qaeda Algerian Minister of Energy and Mines changing its hydrocarbon laws to make
in the Islamic Maghreb (AQIM), he is Youcef Yousfi told the state’s the country more attractive to bidders.
renowned as much for banditry and information agency, APS, on January 21 This terrorist assault may increase the
smuggling as he is for his terrorist that damage to the plant was minor and pressure on Algiers to strike a more
activities. He has been implicated in that production would restart in two days. conciliatory tone with foreign companies.
numerous kidnappings of foreigners However, there were reports that the There has been some suggestion that
throughout the region in recent years, terrorists had laid mines around the companies will use more local workers,
including a Canadian diplomat, Robert facility and BP declined to comment on reducing their expatriate exposure. This
Fowler, who was held for around four timing. is an appealing idea, and will go down
months. In Amenas produces around 9 billion well with local communities, but the
Regardless of whether or not the attack cubic metres per year of gas – around skills required are in short supply so may
can be credibly linked to the intervention 10% of the country’s total – and 60,000 not be practical.
in Mali, it is symptomatic of wider barrels per day of liquids, said JBC Libya too will face pressure to increase
insecurity throughout the Sahel. Algerian Energy. security at its energy installations as,
officials had warned of a growing The attack “may be a sign that the following the attack on the US consulate
terrorist threat in the south of the country political stability of the Islamic country in Benghazi in September 2012, concern
throughout 2012, particularly following a is on a downswing,” JBC continued, is running high.
suicide attack in the southern oasis city noting also that gas exports from Algeria
of Tamanrasset in March. to Europe had declined in 2012 by 4%.



COMMENTARY

Nigeria takes Qua Iboe crunch
The same old problems continue to curb Nigerian production hopes, while piracy figures
mount
By Helen Castell
Qua Iboe exports in February will come in below previous expectations
Shell has complained of mounting pipeline insecurity, which has restricted exports
Production is returning after the floods of November

A recovery in Nigeria’s crude oil exports The company has been critical of the Resources, Diezani Alison-Madueke, but
was dealt another blow last week with Nigerian government’s failure to stem we always have challenges because of
news that shipments of the country’s Qua endemic oil theft in the country – which the rate at which pipelines are being
Iboe grade would suffer delays in has also been a factor behind production vandalised, practically on a daily basis,”
February. shortfalls and export delays. The Nation quoted him as saying.
The news comes just a month after
ExxonMobil lifted a force majeure – a Pipe problems Pirates
clause which means a company is not Although Shell itself has “made great It is not only onshore installations and
able to meet contractual obligations progress over the last two years in terms pipelines that are being targeted by
because of events beyond its control – on of actually dealing with operational thieves. Nigerian authorities last week
Qua Iboe, which is Nigeria’s main export issues, and in cleaning up previous years’ charged 23 people with oil theft after the
grade. Disruptions to Qua Iboe loadings sabotage and operational spill sites” in navy seized two ships carrying allegedly
mean that three out of 11 cargoes that Nigeria, at the same time the “stealing stolen crude oil late last year.
were initially scheduled to load in and sabotage of crude oil has Nine Nigerians and two Ghanaians
February will now be pushed back into intensified,” Shell’s CEO, Peter Voser, were arrested when the navy intercepted
March, trade sources told the Energy said in a December statement posted on the Mount Eve vessel, which was
Tribune. the company’s website. carrying 16,500 gallons (75,000 litres) of
Although it is not clear why the delay “The overall security situation in 2012 refined fuel. A week later, the navy
has occurred, one trader said that has worsened,” he said. “Shell alone arrested 10 Indians and four Nigerians
February’s production forecast was cannot solve these issues. It needs aboard the Ashkay vessel, which was
simply overoptimistic. “It’s just an concerted government action to reduce carrying 35,000 gallons (161,000 litres)
adjustment of production, [which] was [the] theft of crude.” of allegedly stolen fuel.
forecast too optimistic,” he said. Nigerian National Petroleum The number of attacks on oil tankers
Nigeria’s oil production had been Corporation (NNPC) has lost around 165 offshore Nigeria nearly doubled in 2012,
expected to rise around 10% in February billion nairas (US$1.06 billion) over the from 11 in 2011. In December 2012, 11
after recovering from the floods of late past four years to oil product theft and attacks were reported on ships in the Gulf
2012. pipeline vandalism, one of its of Guinea, most of them involved in the
Italy’s Eni also lifted its force majeure subsidiaries, the Pipelines and Products oil business, UPI reported.
on Nigerian oil exports last week, raising Marketing Company (PPMC), said on Piracy off West Africa “is reaching
hopes that an end was in sight for January 17. dangerous proportions,” the International
Nigeria’s supply problems. “We have “We are talking to legislators at the Maritime Bureau (IMB) said in October
removed the force majeure on Brass,” an National Assembly on proper sanction 2012. “It’s a serious problem,” said IMB
Eni spokesman said on January 16. and prosecution of people that engage in director Pottengal Mukundan. “The
Eni had first declared force majeure in oil theft and pipeline vandalism,” said pirates are getting quite audacious, with
early November and traders had reported PPMC’s managing director, Prince increasing levels of violence being used.”
delays of more than a month for the Haruna Momoh. “We believe that Corruption is also a perennial problem.
Brass River grade, which typically between now and the end of June, we In October last year, a leaked report
accounts for around 5% of Nigeria’s total should be able to come up with a commissioned by the government alleged
oil exports. solution.” mismanagement of gas deals had cost the
Royal Dutch Shell also declared three “We at the NNPC are still keeping the Nigerian state US$8.6 billion between
force majeures on its Nigerian oil and gas mandatory 30-day national stock reserve, 2009 and 2011.
output in the fourth quarter of last year. as directed by the Minister of Petroleum



COMMENTARY
That said, Nigeria’s oil exports have (US$3.7 billion). and ongoing maintenance” on pipelines
been recovering slowly since the flood The lift in oil exports occurred “even and other facilities, Nigeria’s accountant
waters receded. In December, a pick-up as crude-oil production and lifting general, Jonah Otunla, said last week,
in oil exports helped Nigeria’s state encountered several disruptions as a without releasing specific oil export
revenue rebound 2% to 581 billion nairas result of increased bunkering activities figures.

PIPELINES & TRANSPORT

Tender issued for
Kenya’s new pipeline
Plans for the construction of a second Tamoil was contracted to re-design the eastern Africa region up to the year
products pipeline linking Kenya’s port pipeline to move fuel in both directions 2044,” KPC said in a statement.
city of Mombasa to the capital, Nairobi, and also expand it from six inches (152 Much of the oil trucked from
moved forward last week when mm) to 10 inches (254 mm), a plan that Mombasa is destined for landlocked
invitations went out for procurement, drove up the cost of the project from the Uganda, Rwanda and Burundi. However,
construction, testing and commissioning initial US$80 million to US$300 million. the challenges of poor roads have led to
of the project. Last week, Kenya Pipeline Company delays in the delivery of fuel, creating
The new US$300 million pipeline, (KPC) called for expressions of interest supply gaps in the three economies.
which in future could be extended to (EOI) in the design of the 450-km KPC runs a pipeline from Mombasa to
Kampala in Uganda, will replace the pipeline, as the country seeks to ease the Nairobi, which extends to Nakuru, before
current one whose 30-year lifespan has transportation of fuel from Mombasa, branching to Eldoret, in Kisumu.
ended, according to a report by Reuters. providing an alternative to the present Those companies hoping to take part
The undertaking comes after an earlier system of unreliable trucking. need to meet a number of KPC’s
attempt to extend the current pipeline, Submissions must be delivered to KPC requirements, including 10 years of
terminating in Eldoret town in western by February 28. experience on similar work and audited
Kenya to Kampala, under a contract with “The new pipeline is designed to meet reports for the last five years.
Tamoil East Africa was put off. petroleum products demand for the

South Sudan remains keen
on pipeline to Kenya
A South Sudanese diplomat has said his of 2012, saying that they hoped to begin dependent on an existing export line that
country remains eager to build an oil construction as early as June, with work runs through Sudan. That pipe has not
export pipeline to Kenya. wrapping up about 18 months later. carried any South Sudanese crude during
South Sudan’s ambassador to Nairobi, However, the two sides have yet to reach the last 12 months, owing to a dispute
Ngurduong Majok, indicated in a recent agreement. between Khartoum and Juba over transit
interview with The EastAfrican that Juba The ambassador told The EastAfrican fees. In turn, the idling of the pipeline
still saw the proposed link as the best that Juba and Nairobi were still in talks has forced South Sudan to freeze oil
long-term option for moving crude to on the project but did not say when a deal production.
market. South Sudan intends to construct might be concluded. The US$5-6 billion The two sides signed a deal on transit
the 2,000-km pipeline regardless of the price tag for building the pipeline, which shipments in late September, saying they
outcome of negotiations with Khartoum, will run from Juba to Lamu, would be hoped to see crude flows resume within a
he said. covered by revenues earned from oil few months.
South Sudanese officials began talks exports, the newspaper noted.
with Kenya on the project in the first half In the meantime, South Sudan remains



PIPELINES & TRANSPORT
Several weeks ago, the leaders of during a visit to Juba last week, said they last May that Juba wanted to use tanker
Sudan and South Sudan reiterated their did not expect Khartoum to uphold its trucks to export at least 35,000 barrels
commitment to upholding the deal. share of commitments under the per day – equivalent to 10% of the
However, South Sudan has yet to bring agreement signed in September 2012. As country’s production – via Ethiopia.
its fields back on line, partly as a result such, South Sudan should proceed with The Sudan Tribune noted, though, that
of continued clashes with Sudan over plans for moving oil to market by truck, existing roads in South Sudan and
security issues and jurisdiction over the the senators suggested. Ethiopia could not withstand heavy
Abyei region. They said the US government would traffic from tanker trucks. New roads will
support this scheme, which was mooted have to be built to facilitate large-scale
Trucking option last year by South Sudanese Oil Minister oil exports, it said.
Meanwhile, a group of US senators, Stephen Dhieu Dau. The minister said

Piracy threat increasing
in West Africa
Pirate attacks have fallen to a five-year armed security teams, plus the members taken hostage, with the use of
low around the world, mainly as a result application of “best management guns during an attack having been
of successful action against Somali practices” by ships’ crews. reported on at least 37 occasions.
pirates, but the waters off the coast of However, it warned that the threat and Attacks in Nigerian waters reached 27
East Africa remain the world’s most capability of heavily armed Somali last year, compared with 10 in 2011.
dangerous, while risk is increasing pirates remained strong and that a Togo experienced 15 attacks, up from
offshore West Africa. continued naval presence was essential to five in 2011, while Cote d'Ivoire
Assaults in Somalia and the Gulf of combating buccaneers. “This progress recorded an increase from one pirate
Aden – reported by 75 ships in 2012, could easily be reversed if naval vessels assault in 2011 to five last year.
compared with 237 in 2011 – accounted were withdrawn from the area,” said the “Now, we're seeing more abductions of
for 25% of incidents worldwide last year, IMB’s director, Captain Pottengal sailors from oilfield supply vessels off
according to a global piracy report Mukundan. IMB also said piracy was on Nigeria, and tankers being hijacked as far
published by the International Maritime the increase in West Africa’s Gulf of west as Abidjan. This type of violent
Bureau (IMB) on January 16. Guinea, where there is currently no maritime criminality shows no sign of
The international watchdog said the engagement of international navies for decreasing any time soon,” according to
number of Somali hijackings had halved counter-piracy activity. It reported 58 an intelligence analyst from security firm
from 28 in 2011 to 14 last year, largely incidents in the region during 2012, AKE, quoted by Reuters.
because of “pre-emptive strikes and compared with a total of 46 incidents in Only Benin reported a reduction in
robust action against mother ships” by the area during 2011. Last year there piracy, with its figures down from 20 in
several navies and the work of private were 10 hijackings and 207 crew 2011 to two events last year, IMB said.

INVESTMENT

Perenco signs Cameroon
exploration contract
Anglo-French independent Perenco has According to the agreement, said collection on the area for three years and
signed a contract with Cameroon’s state- Perenco on January 15, it will explore the drill two wells to a minimum depth of
run Societe Nationale des Hydrocarbures offshore block, which covers 137.13 1,100 metres. Depending on the results
(SNH) to drill two wells in the Atlantic square km. obtained, the contract could be extended
coastal Rio del Rey Basin’s Moabi block. Perenco will undertake seismic data for another two years.



INVESTMENT
Perenco is investing 17.5 billion CFA 2012, up 9.3% on the same period in block in the country’s southwest region.
francs (US$35.5 million) in this first 2011, according to an official statement SNH is working with Addax Petroleum
phase of the project. handed to reporters in the capital in several blocks in the oil-rich Rio del
There are options for two further Yaounde. Rey Basin, where the Bakassi peninsula
exploration phases, both running for two One of the most recent discoveries in is situated.
years each, with a well required to be Cameroon was made by Chinese-owned In the gas sector, Scotland’s Bowleven
drilled in each additional period. Addax Petroleum, which said in October has announced its intention to begin
Cameroon raised about 477 billion that it had discovered new offshore oil production at its offshore Sapele wells by
CFA Francs (US$950 million) from oil and gas reserves in Bakassi, at its the end of 2015 or 2016.
production over the first nine months of Padoux-IX exploration well in its Iroko

PERFORMANCE

Eni confirms Sankofa
find with appraisal well
Eni’s first appraisal well in Ghana’s Engineering studies to develop and joint venture partners playing a
Offshore Cape Three Points (OCTP) ensure commercialisation of the block prominent role.
block has confirmed the commerciality are also ongoing under the terms of a Eni’s subsidiary Eni Ghana
of the Sankofa discovery. This is Memorandum of Understanding (MoU) Exploration and Production is the
estimated to contain around 450 million recently signed by Eni, Vitol and Ghana operator of the block with a stake of
barrels of oil in place, with recoverable National Petroleum Corporation (GNPC) 47.2%. Vitol Upstream Ghana holds a
resources of up to 150 million barrels with the Ghanaian Ministry of Energy. 37.8% interest, while the remaining 15%
including gas, associated liquids and oil. The MoU has a particular focus on the belongs to GNPC, with an option for an
Sankofa East 2A encountered 23 domestic gas market, with Eni and its additional 5% share in the block.
metres of gas and condensate
gross pay – of which there were
17 net metres – and 76 metres of
gross oil pay – with 32 net metres
– in good Cretaceous sands, Eni
said in a statement on January 17.
Data acquisition has confirmed
hydraulic communication in the
oil-prone reservoir between the
discovery and the appraisal wells,
the Italian company said. More
work is under way on planning the
development of the reserves.
The Sankofa East 2A appraisal
well reached a total depth of 4,050
metres, in 990 metres of water in
the OCTP block, in the Tano
Basin, approximately 50 km from
the Ghanaian coastline. It was
drilled 8 km southwest of the
Sankofa East X1 discovery well,
which contains the same reservoir
sands and lies around 38 km east
of Ghana’s Jubilee field.



PERFORMANCE

Somaliland aspires to oil future
Somaliland, which lies along the Somaliland is strategically positioned to the drilling of one exploration well.
northern side of the Horn of Africa, and be one of East Africa's major energy According to the Genel website, the
which declared its independence from supply bases and play a key role in the area of Somaliland that it is exploring
Somalia in 1991, hopes to have a future region’s energy future,” he said, could hold 1 billion barrels of oil.
based partially on hydrocarbon according to the Somaliland Sun Meanwhile, in neighbouring Puntland,
development. newspaper. a semi-autonomous region of Somalia,
Anglo-Turkish Genel Energy acquired In August 2012, Genel acquired a 75% Horn Petroleum drilled two wells last
two production-sharing agreements interest in two blocks in partnership with year that proved to be dry.
(PSAs) in 2012 for five onshore blocks in the East Africa Resource Group, which Horn said last year it would continue
the country and is expected to drill in holds the remaining 25%. In November, with its exploration programme in
2014. Genel farmed in to a 50% stake in three Puntland. The company and its partners,
The breakaway state’s Minister for more blocks that form the Odewayne Range Resources and Red Emperor, said
Mining, Energy and Water Hussein Abdi PSA with partners Jacka Resources and they would enter the next exploration
Dualeh recently attended an energy Petrosoma, which hold 30% and 20% phase in the Nugaal and Dharoor Valley
conference in Abu Dhabi to acquaint the stakes respectively. The deal called for PSAs. Those agreements call for one
energy industry with his country’s plans. Genel to carry its partners through exploration well to be drilled within a
“In light of its geographical position, Phases 3 and 4 of the PSA, which include three-year period.
long coastline and deep-sea ports, gathering 1,500 km of 2-D seismic and

Frost: South African
shale gas years away
South Africa’s hopes to replicate the resource. million British thermal units (US$249-
North American shale gas boom are A number of companies are working 440 per 1,000 cubic metres) might be
unlikely to cut prices by the same extent on shale in the country, although South reasonable, while allowing it could be as
and will take seven to 10 years to reach Africa’s Sasol pulled out during the low as US$6 per million Btu (US$166
commercial levels, according to a recent moratorium. per 1,000 cubic metres).
conference call by Frost & Sullivan US figures have put South Africa’s Fracking in the Karoo poses particular
experts. shale gas resource at 13.7 trillion cubic difficulties owing to the region’s limited
A South African industry analyst at the metres but this is likely to fall once more water resources, with extremely low
consultants, Dominic Goncalves, said the information is established, with the rainfall. “A huge amount of water would
main difficulty in exploiting the analyst citing the example of Poland, need to be transported,” Goncalves said,
country’s shale gas reserves in the Karoo where figures were reduced by around in order to provide the 2-30 million litres
Basin would be environmental concerns. 85% after initial drilling results. of water per well needed.
The area is highly prized and opposition Goncalves said the likely figure for Unlike Europe or the US, South Africa
to hydraulic fracturing in particular is South Africa would probably be 283 has only a limited amount of
notable. billion cubic metres to 1.42 tcm, which is infrastructure so substantial investments
The moratorium on the industry was “still significant.” would be needed in pipelines and a
lifted in September 2012, Goncalves The country needs to press ahead with market would have to be created.
said, but “fracking is still not currently finding new sources of power feedstock, Statistics from the US suggest the
permitted.” As such, industry is caught in as it is experiencing fuel shortages. possibility of water contamination is very
a “Catch-22” situation, the analyst said, “There is no way to know the price” of low, but the Frost analyst said there was
where it cannot prove South African shale gas production, he continued, “no element of certainty in fracking.
shale gas is a valuable, exploitable although suggesting that US$9-16 per Accidents can happen.”



POLICY

Griffiths charged with
Chadian corruption
Griffiths Energy International has been 2011. problematic. Fees paid to consultants are
charged with foreign corruption by the The company began an internal often flagged by transparency
Canadian authorities, but the company investigation in November 2011 and campaigners as open to abuse.
said it was confident there would be a shared the results with authorities in May Griffiths filed for an IPO in November
“near-term negotiated resolution.” The 2012. 2011 but dropped these plans in February
company was charged with one count “We've worked extensively with the the following year, saying it had raised
under Section 3(1)(b) of Canada’s Crown and the RCMP throughout and we cash privately. The company said it had
Corruption of Foreign Public Officials anticipate a negotiated resolution in the spudded its first development well on the
Act by the Public Prosecution Service of very near future,” said Griffiths’ Badila field at the end of November last
Canada (PPSC). president and CEO, Gary Guidry. “We year.
Griffiths’ notified US and Canadian can't say any more at this time, but will The company signed up the Mangara-
authorities in November 2011, after commit to providing more details as soon Badila production-sharing contract (PSC)
discovering contracts signed by its as a resolution is approved by the Court in March 2011 and the Doseo-Borogop
previous management with two and made public.” PSC in January 2011. Griffiths signed a
companies owned and controlled by a According to previous statements, preliminary deal with Glencore
“foreign public official and his spouse” Griffiths paid around US$8.5 million on International last year under which the
between August 2009 and February consulting agreements on entering Chad trader would take a 25% stake in the
2011. The new team at Griffiths was and around US$2 million of this amount Mangara and Badila developments.
appointed between July and September was considered to be potentially

PROJECTS & COMPANIES

Pura Vida signs up Gabonese block
Australia-based Pura Vida Energy has
taken an 80% stake in the Nkembe
block, offshore Gabon. The company
will be the operator and will carry the
remainder of the equity on behalf of
Gabon. Pura Vida announced the deal
on January 15, after signing the
production-sharing contract (PSC) in
Libreville on January 11.
The block covers 1,210 square km,
with water depths of 50 to 500 metres,
in the Gabon Basin. Nkembe is close to
a number of producing oilfields, Pura
Vida said.
The company’s technical director,
David Ormerod, said the award was an
important step in building a
“diversified portfolio of high-quality
exploration assets.



PROJECTS & COMPANIES
Pura Vida has taken a high equity A note from Hartleys, which has also and contract terms.
position, demonstrating our confidence in acted as Pura Vida’s corporate advisor, Pura Vida is to buy 845 square km of
this project and the belief that sound predicted the company would adopt a 3-D seismic data from WesternGeco.
technical work will generate value by similar strategy to its new Gabon block, Under the first phase, which will run for
proving the potential of these plays.” with a “farmed-out carry on at least one four years, the company will acquire 550
Pura Vida recently struck a deal to well.” square km of Multi Azimuth 3-D seismic
farm out a stake in its Moroccan block, The Australian company noted recent and drill an exploration well. Seismic
Mazagan, to the US’ Plains Exploration interest in subsalt plays in Gabon and work is expected to begin early in the
and Production (PXP). Under the said it would be investigating these on second half of this year.
Mazagan deal, PXP agreed to make a Nkembe. Tudor Pickering Holt has The second phase will involve another
US$15 million upfront cash payment and described the country as being the most 550 km of 3-D seismic and the drilling of
provide US$215 million of funding for appealing in West Africa for pre-salt two exploration wells.
work on the block. work, based on its potential resources

Liberian 3-D seismic under way
TGS-NOPEC Geophysical has started African Petroleum Corporation, which there were plans for a “very active
acquiring a 3-D multi-client survey over announced recently that it had started exploration programme” in Liberia for
up to 7,800 square km of acreage in the drilling at its Bee Eater-1 well offshore 2013.
Harper Basin, offshore Liberia. The Liberia, about 10 km from what the A second well is planned in the
survey, known as Sunfish, “provides company said was a proven high-quality offshore region once the Bee Eater-1
excellent data coverage for the source- reservoir. The Australian company said well has been completed. The
prone, syn-rift and early post-rift the well was meant to test the westward recoverable resources for the Bee Eater
sequences in this highly prospective area extension of the reservoir. African area are estimated by the company at
offshore Liberia,” said TGS on January Petroleum’s CEO, Karl Thompson, said more than 840 million barrels of oil.
16.
“TGS has been active in acquiring data
over the West Africa Transform margin
for the past decade and this survey
demonstrates TGS’ ongoing commitment
to grow the seismic data library in
Africa,” said TGS’ senior vice president
for the eastern hemisphere, Stein Ove
Isaksen.
TGS is chartering the 12-streamer
Polarcus Asima for the survey, which is
supported by industry funding. The
charter will last for approximately six
months. Data processing will be
performed by TGS and will be available
to clients in the third quarter of 2013,
prior to Liberia’s 2013 bid round.
Liberian President Ellen Johnson
Sirleaf has been active in courting
investments in the country’s oil and
natural gas sector, as it recovers
politically and economically from years
of civil war. The Liberian government
has said that more than US$16 billion has
been invested in natural resources, such
as oil, during the past six years.
Inroads have been made by Australia’s



NEWS IN BRIEF
The following news items are sourced completed with thermal casing, however,
from local and international news Egypt discovers oil their flow rates are expected to increase
sources. NewsBase is not responsible for and gas in Western from their current 22 barrels per day with
the contents of the stories and gives no
Desert steam injection into the other nearby
warranty for their factual accuracy. wells.
Egypt General Petroleum Co. (EGPC) MENA HYDROCARBONS,
North Africa made an oil and natural gas discovery in January 15, 2013
the Western Desert and plans to drill nine
Algeria crisis wells to develop the concession, the Oil Tension increases in
triggers Libya, Egypt
Ministry said January 14. The find has Libya
reserves estimated at about 16.5 billion
oil security review cubic feet of gas and 48 million barrels Unconfirmed reports indicated that
of crude, the Cairo-based ministry said in hostile groups have threatened attacks on
Libya rushed to beef up security at its
an email. The company and Kuwait foreign targets in Libya in response to
oilfields and energy firms were
Energy Co. made two joint discoveries in ongoing violence in Mali. In Benghazi,
considering similar measures in Egypt as
the same area, the ministry said. unconfirmed reports indicate that
Islamist militants threatened to attack
BLOOMBERG, January 14, 2013 security forces in the city intercepted a
new installations in North Africa.
number of vehicle-borne improvised
Hundreds of workers were evacuated
from a number of Algerian production
MENA Hydrocarbons explosive devices (VBIEDs) at the

sites on the border with Libya to safer notes Lagia progress airport before they were detonated.
Unidentified militants opened fire on the
places in the country's centre and MENA Hydrocarbons is pleased to vehicle of Italy's consul, although he was
industry experts said that could announce the following operational not injured in the attack. Meanwhile, two
ultimately lead to lower oil and gas update. Activities on the Company's police officers were killed in separate
production from the OPEC member state. 100% owned Lagia oil field in Egypt attacks in the city on January 15 and 16.
Libya and Algeria are Africa's third and have re-commenced. A new progressive Saif al-Islam Gaddafi appeared in court
fourth largest oil producers with Libya cavity pump (PCP) has been installed in in Zintan on January 17 to face charges
also the largest oil reserves holder on the the Lagia well 9 which has produced related to a visit by an International
continent. Together with Egypt they are over the last 12 days at an average Criminal Court (ICC) lawyer in 2012.
important gas suppliers to Europe and the stabilised rate of 90 barrels per day of AKE, January 18, 2013
budgets of all three countries are heavily approximately 16 degree API oil gravity.
dependent on energy revenues. Libya's This PCP replaces the original sucker rod Major Libyan oil
terminal remains
oil protection force, affiliated with the pump that was previously installed in
defense ministry, said there had been no
closed, exports
Lagia 9. MENA has also completed
reports of incursions into its oilfields, installation of required production
where more guards and military personal facilities in the field with three oil delayed
had been deployed and security patrols storage tanks, a water tank, and a 500 The Zueitina oil terminal in Libya
intensified inside and around the sites barrel fuel tank and has connected all remains shut, almost a month after
around the clock. “Due to events in the producing wells with flow lines. Lagia demonstrators forced the closure of the
region, the Petroleum Faculty Guard has wells 8 and 10, which were also drilled in major oil exporting hub, a shipping agent
taken a series of actions to enhance and 2012 and designed for steam injection, told Dow Jones Newswires Thursday.
reinforce the protection of oilfields, will be placed on production following The closure has caused severe
facilities and employees in the western an initial steam injection cycle to begin disruptions to exports of oil from the
and southern regions of Libya,” it said. A next month. The Company has signed an North African country, traders have said.
Western security adviser working in agreement with an experienced Middle One trader said last week that five
Libya said by telephone he was not sure East steam operator, Steamtech and Co., cargoes for January loading had been
that would immediately boost security, to provide steam injection equipment and dropped, three cargoes of Bu Attifel oil
since the oil protection force, set up after personnel to start the steam injection and two cargoes of Zueitina oil. “It's
the overthrow of Muammar Gaddafi in operation in the field. Given the quality affecting the market really badly,” he
2011, was at an “embryonic stage.” of sandstone reservoir and oil gravity, it said. “Basically January liftings were
Libya's National Oil Corporation is expected that production volumes from cancelled.” Oil installations have been
chairman Nuri Berruien confirmed the wells will be significantly improved. focal points for demonstrations following
increased security measures at fields on The two remaining production wells in elections in July.
the Algerian border. the field, Lagia 6 and 7, were drilled by a
REUTERS, January 18, 2013 previous operator and were not



NEWS IN BRIEF
What is happening in “Zueitina is in line Maroc from its previous owner Caithness to the international market through
with what's been going on elsewhere; Petroleum. Cabre Maroc is the operator Ethiopia instead of waiting for Khartoum
there's been quite a lot of protests at oil of an extensive portfolio of highly to honour its agreements on oil transport.
terminals throughout the country over the prospective oil and gas exploration In May last year South Sudanese oil
last three months,” said Alan Fraser, risk licences and gas exploitation concessions minister Stephen Dhieu Dau told the
consultant at Ake security in an interview covering an area of approximately 5,100 Wall Street Journal that his country plans
last week. “Locals are trying to pressure square miles in northern Morocco. As to use trucks to export at least 10% of its
the government and oil ministry into well as the US$19 million paid to secure oil production, 35,000 barrels per day,
giving more people in the local the acquisition, a financial guarantee of through Djibouti after crossing Ethiopia
community jobs,” he said. In 2011, a US$5 million for the performance of and the Kenyan maritime port of
civil war that completely halted oil future exploration commitments on the Mombasa. The Senators who visited Juba
exports from the OPEC member rocked Rharb permits has also been provided to this week include Senator Steve Pearce
the markets and contributed to soaring ONHYM, the regulator of Morocco's oil of New Mexico carrying the message
prices. and gas sector. This guarantee will be which urged Kiir to immediately
DOW JONES NEWSWIRES, refunded immediately upon the transport its oil by trucks, saying
January 17, 2013 fulfillment of those commitments which Khartoum's act of stopping the flow of
is expected to occur during the second oil “doesn't make sense.” The Senators,
Chad's SHT seeks half of this year. Gulfsands said its who later gave statements to the state-
Sudan oil co- purchase of Cabre Maroc delivers to the owned South Sudan Television (SSTV)
operation company a large, contiguous and highly on Sunday, said their government would
prospective acreage position in an area support the new alternative initiative to
The head of the projects unit in Chad's with proven petroleum systems, revenues truck the oil to the international market in
Societe Des Hydrocarbures du Tchad from near term production, and multiple order to generate significant amount of
(SHT) Eng. Al-Mahdi Mohamed Gamar drilling targets. It believes that there is revenues for the country's economy.
said his country is participating in the meaningful near term value potential Senator Steve Pearce questioned the
international trade fair of Khartoum and contained within the proven conventional logic why South Sudan with such huge
the objective of their participation is to and shallow depth gas play in the Rharb resources should suffer economically.
benefit from Sudan's experience in Centre permit, together with significant However, the country has the plan in
indigenising the oil industry and striking exploration upside related to the fold and place already to alternatively truck the oil
agreements with Sudanese oil companies. thrust belt structures identified in the through Ethiopia from Upper Nile state
Sudan and Chad signed a protocol to adjacent Rharb Sud, Fes and Taounate but there was need to construct a
promote co-operation in oil, the deal won permits. Following completion of the tarmacked road to connect Upper Nile
strong support from Chadian President acquisition, Gulfsands and ONHYM and Ethiopia which will be able to
Idriss Deby who is seeking strong have become co-venturers in the Rharb withstand the frequent heavy traffic of
partnerships with African countries. He Centre and Rharb Sud permits, with big oil trucks. The road to connect Upper
said Chad entered the oil industry in Gulfsands the operator of the joint Nile state and Gambella region of
1972 through international companies venture and following completion of Ethiopia was one of the priority roads
and is now making efforts to establish various post completion matters, such as that of Juba-Nimule road which
local oil companies, stating that the Gulfsands and Caithness Petroleum connects South Sudan and Uganda
current oil output in Chad is 125,000 through their respective wholly owned because of their economic importance.
barrels from Kume oilfield, 60,000 subsidiaries will become co-venturers SUDAN TRIBUNE, January 14,
additional barrels are expected to be with ONHYM in respect of the Fes and 2013
produced this year. Chad has an oil Taounate Permits, with Gulfsands the
export pipeline running across operator of both exploration joint South Sudan signs
Cameroon, which brought major benefits ventures. deals with Israeli
companies
for the economy and the population. RIGZONE, January 17, 2013
SUDAN VISION, January 19, 2013
US calls on Kiir to South Sudan says it has signed an
Gulfsands completes transport oil by agreement with several Israeli oil
Moroccan trucks
companies, a potentially significant
acquisition strategic move that will consolidate
A delegation of US Senators have urged Israel's relations with the fledgling, oil-
Gulfsands Petroleum has completed a President Salva Kiir Mayardit of South rich East African state.
US$19 million acquisition of Cabre Sudan to begin to truck his country's oil




NEWS IN BRIEF
South Sudan's petroleum and mining until the end of its contract in May 2018.
minister, Stephen Dhieu Dau, announced Sudan to boost oil The potential contract revenue for the
the oil deal last week after he returned output to 150,000 extension is estimated to approximately
from a visit to Israel. The country will
bpd US$450 million based on 97% utilisation
also bolster Israeli moves to counter and includes a performance bonus
Iranian inroads into the Red Sea and a Sudan plans to increase oil production to arrangement. This brings the total
major gunrunning route from the at least 150,000 bpd this year thanks to estimated contract value to US$1.13
Revolutionary Guards' base at Bandar two new oilfields and a higher recovery billion. In line with the omnibus
Abbas in the Persian Gulf to the Gaza rate from existing fields, its oil minister agreement terms and conditions between
Strip via Sudan. Dhieu Dau said told a newspaper on Wednesday. The Seadrill and Seadrill Partners, Seadrill is
negotiations were ongoing with Israeli African country, which currently pumps obligated to offer the West Leo to
companies - whom he did not identify - 136,000 bpd to 140,000 bpd, lost three- Seadrill Partners at a fair market price.
seeking to invest in South Sudan. He quarters of its output when South Sudan SEADRILL, January 16, 2013
indicated that the government in Juba, became independent in July 2011. The
the ramshackle capital of the infant state, drop in oil, its main source of budget and Angola production
hoped to export oil to Israel, but trade revenues, has thrown its economy reaches 1.78 million
bpd
observed that this could not happen into turmoil. Sudan had originally
before March. He gave no indication how planned to reach 180,000 bpd by the end
the landlocked south would achieve this, of the year, but its major Heglig oilfield In December 2012 Angola’s oil
or what volume of crude would be was damaged during a brief occupation production totalled a daily average of
involved. by South Sudan's army and border 1.78 million barrels, which is slightly
HAARETZ, January 20, 2013 fighting between the two countries in lower than the target set by the
April. The planned increase will be government of 1.8 million barrels per
Oil shutdown is driven partly by the al-Barsaya oilfield in day, according to Angolan weekly
correcting tax Block 17 in South Kordofan state, which newspaper Expansao. Although Angolan

revenue shortfall in
has started with an initial output of 6,000 production last year ranged between 1.65
bpd, State Oil Minister Faisal Hamad and 1.75 million barrels per day, the
Unity State told the al-Intibaha newspaper. Its output State Budget for 2013 outlines daily
The financial crisis caused by the year- will rise to between 10,000 bpd and production of 2 million barrels per day.
long oil shutdown in South Sudan is 15,000 bpd this year, he estimated. He Expansao said it would be difficult to
forcing Unity state to address the did not name the companies involved in meet that target and cited Oil Minister
government's relaxed attitude to tax the field, but Block 17 is operated by Botelho de Vasconcelos, as saying that,
collection, the state's minister of state oil firm Sudapet and Ansan, a “to achieve 2 million barrels we will
agriculture and forestry told Sudan company owned by Yemeni investors. A have to work more and more.”
Tribune. Samuel Lony Geng said Friday second new oilfield in Hadida in Block 6 MACAUHUB, January 16, 2013
in the western Darfur region will increase
GE, GLS, strike
that since South Sudan split from Sudan
in 2011 the process for collecting tax output to 20,000 bpd this year from
revenues has remained “very weak.” 10,000 bpd currently, he said. Chinese- partnership
Following the oil shutdown a year ago owned Petro Energy E&O is operating
US group General Electric (GE) has set
South Sudan's government has begun to the field.
up a partnership with Angolan company
look into diversifying its economy and REUTERS, January 17, 2013
GLS Oil & Gas, of the GLS Holding
West Africa
how to increase revenues from other group to expand the services it offers to
avenues. In January last year South the oil sector, in which it has operated for
Sudan accused Sudan of confiscating oil
Seadrill receives
over 50 years, Angolan state newspaper
entitlements worth about US$815 Jornal de Angola reported. The
million. This was denied by Khartoum, term extension for partnership, called GE-GLS Oil & Gas
which said it had only taken some oil as
payment in kind for alleged unpaid
semi-submersible Limitada, was made official on 31
December 2012 following a long
transit fees. Tullow has exercised its contractual
negotiation process. The US
SUDAN TRIBUNE, January 20, option to extend the contract for the
multinational is represented in this
2013 ultra-deepwater semi-submersible rig
partnership by its subsidiary Nuovo
West Leo by two years from May 2016
Pignone Angola, which is based in
to May 2018. The West Leo is expected
Italy.
to carry out operations in West Africa



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