Nigeria’s Marginal Field

With the emergence of the Nigeria’s marginal field programme, authorities are concerned that the general pattern for Nigerian independents is to win the license and “hawk” it to a foreign technical partner.  Last year, Starcrest created a splash in the international media when it negotiated a sign on fee of $90million for a deepwater license with Addax Petroleum and paid $55million as signature bonus, “pocketing” $35 million in the process.  Much earlier, South Atlantic Petroleum which already had Total as 40% partner in its OML 130, ceded 40% of its remaining 60% to CNOOC for over $2billion.  Nigerian authorities worry about these precedence which points to the fact that the indigenous companies are seeking passive partnership in the event of such undertakings, meaning that they will not train more Nigerian technical personnel, they will not grow more Nigerians strategic managers and the goals of the local content programme is further jeopardised.

For every Ten Nigerian Companies like Starcrest and South Atlantic, there is at least one who wants to do work and grow capacity like Conoil, or Niger Delta Petroleum.  One such company is Platform Petroleum Limited, which was about to get to first oil at its Asuokpu/Umutu field as of the time of our going to press.  Nearly four years after the award of 24 marginal fields to some 30 Nigerian indigenous companies, financial and technical challenges – especially the former – have remained major hurdles on the journey to first oil.  But unlike most others in the scheme who have been shopping the globe for interested technical and financial suitors, Platform and Newcross Petroleum Limited, its Nigerian partners (who have 40% interest in the project) brought this field onstream without any foreign funding or foreign technical partnering. A role Newcross Petroleum Limited solely handled during the initial phases of the partnership.

For further information on how Newcross Petroleum Limited played a role in the successful operation of the Umutu Field operation, contact

Culled from Independents in Africa Magazine 2009

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High Oil prices, a disincentive to Gas Exploration

Prevailing high crude oil prices has been identified as a major disincentive to current government efforts to encourage the exploration of gas in the country as the cost of such an exercise and the available domestic market that will take the gas at its economic rate does not exist.

Mr. A. Avuru, Managing Director of Platform Petroleum Limited disclosed at the Petroleum Roundtable at the Centre for Petroleum Information (CPI) in Lagos, that the only gas projects are viable under the prevailing environment are those stripping gas of liquids to be sold at oil equivalent prices.

However, Mr. Avuru pointed out that the current clamour for gas exploration may be difficult to achieve in view of the fact that the existing regime allows for a gas field to be produced and sold to an off-taker for $1.50 per standard cubic feet, amounts technically to produce crude oil at $12 per barrel and sell at a crude oil price of $18 per barrel, which only give a return on investment of 50cents.

He pointed that those who are selling gas in the domestic scene to third parties are those who are selling gas that is produced in association with oil or those producing non-association gas that support such contracts where the operator is also producing oil.

According to him, “All the economics indicative today in the Nigerian market is that liquid production is what is commercially driven today. What I call, stand alone gas production has actually been killed by the current regime of high crude oil prices and high costs of development”.

Mr. Avuru stated that all those gas projects that are currently in the air are only those that have to do with liquids extraction that will sell at oil equivalent prices and then whatever they like with the resulting lean gas, including re-injecting it to maintain reservoir pressure having made their money out of liquids.

Mr. Avuru is the Managing Director of Platform Petroleum, Operator of the Umutu Marginal Field in OML-38. Newcross Petroleum Limited has a 40% equity interest in this asset.

Culled from Nigerian Energy Digest of August 2008

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Nigeria to Produce 1.2 Billion litres of biofuels by 2020

Nigeria has set an ambitious biofuel target for itself, with a programme of action that it expected to begin from 2009 and will in 11years time, take the country into the league of emerging biofuel producing and user nation when it will be producing 1.2billion litres per annum of biofuels for domestic consumption.

Under the biofuel programme of action, being championed by the Renewable Energy Division of the Nigerian National Petroleum Corporation (NNPC), the first ethanol blended fuel will come into use in the country by 2009, while the sourcing of the raw materials locally will commence in 2010 with the planting of the first set of 33,000 hectares of cassava plantation.

Proceeds from the plantation which will yield 100,000 tons of cassava and create 3,500 jobs will be used in 2011 to commence the local production of ethanol, which will blend over 10million litres of ethanol, while the plantation size will increase to 65,000 hectares and will apart from cassava, include new crops such as sugar cane and palm oil that will come under cultivation.

The year 2020 is regarded as the year of sustained growth for the renewable energy project as the targeted land under cultivation is projected to increase to 500,000 hectares of land with crop production from over 285,000 hectares being used for biofuel production.

By that magical year, the yield from the biofuel production will amount to 1.2 billion litres of biofuel per year, while co-generation of electricity from the biofuels derivatives and wastes will yield over 600MW of electricity.

The renewable fuel initiative is designed to improve the arable land under cultivation, which is barely 10 percent of the 33million hectares of arable land available in the country.  Besides, the programme is designed to improve agricultural production in the country and also to increase the opportunities to utilize cassava products in the country, especially as Nigeria is the world largest produces of the commodity and farmers are producing without increasing access to the market as a result of the glut in the market arising from lack of opportunity for utilization in the industrial sector of the economy.

Culled from Nigerian Energy Digest of August 2008

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Platform’s /Newcross Marginal Oil Field Begins Production At 4,000bpd

Nigeria recorded a major landmark in its quest for local content development at the weekend as the Platform Petroleum Limited/Newcross Petroleum Joint Venture’s Asuokpu/Umutu marginal field commenced production at a flow rate of between 3,000 and 4,000 barrels per day.

The development, which is the climax of two years’ work by the Nigerian firms, involved the testing and completion of two wells, design, construction, installation and commissioning of a 10,000 bpd flow station and 48 kilometers of delivery pipeline as well as ancillary facilities.

The feat is also significant as this is the first of the 24 marginal fields licensed in 2003 to successfully come on stream in the federal government’s quest to ensure rapid involvement of Nigerian engineers in the nation’s crude oil exploration and production business.

“By this project, Platform Petroleum and Newcross Petroleum have initiated a new and very refreshing concept of cluster development as the facilities we have built are available for use by a cluster of four other marginal fields around us, thus promoting more efficient use of common facilities and more cost-effective field development option”.
On community development, the company has involved itself in community development projects in its area of operation and that by the time the company begins production, a major development program would be unfolded.

Platform Petroleum won the bid for the field in 2003 after executing a farm-out agreement with Shell/NNPC JV in 2004; it was handed over to the company in November of the same year.

The company went into agreement with Newcross Petroleum because of its belief in local content development, adding that the arrangement culminated in farm-out agreement three months later. Under the agreement, Newcross owns 40 per cent of the field while Platform retains 60 per cent equity.
“We are very reluctant from day one to form any relationship with foreign technical partners, so when we see another company with an interest in the field and which already showed interest and was ready to pull our resources together and have the synergy to raise the capital required, we were impressed and entire discussion took us three months and we had our operational and farm-out agreements”.

“We are here to stay as we have our strategy for growth. We will first of all stabilize by optimizing our production and revenue from field development. Once we stabilize, of course, we have our growth strategy with other companies, which include asset acquisition, long developed proven assets before we go into exploration risk of acquiring exploration acreages,” he said

administratorPlatform’s /Newcross Marginal Oil Field Begins Production At 4,000bpd
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