Business: O&G. Region: Europe. Country: Ukraine. Ukraine Launching Major Gas Extraction Projects with Western Companies. By Vladimir Socor

I share this post with you as it would have an impact on your geopolitical perspective.

By Vladimir Socor. Jamestown Foundation . 

The Ukrainian government is launching major natural gas extraction projects in the country, as joint ventures with leading Western companies (Interfax-Ukraine, Ukrinform, November 5). At present, Ukraine depends on Russian gas imports for more than 60 percent of Ukraine’s total annual consumption (Bloomberg, November 7). The government’s goal is not simply to reduce Ukraine’s dependence on Russian gas, but—far more boldly—to eliminate that dependence entirely and achieve self-sufficiency by boosting gas extraction within the country.

The Ukrainian government is currently working with Chevron, ExxonMobil, and Royal Dutch Shell toward that goal. These projects are variously targeting shale gas, tight gas, and conventional gas, onshore and offshore on Ukrainian territory.

According to President Viktor Yanukovych’s statement, occasioned by the agreement just signed with Chevron (see below), the projects with Shell, ExxonMobil, and Chevron would enable Ukraine to become self-sufficient for gas supplies by 2020 (Presidential press release, November 5).

On November 5, Chevron and the Ukrainian government signed a production sharing agreement (PSA) to explore and develop the Olesska shale gas deposit, an acreage straddling the Ivano-Frankivsk and Lviv oblasts. Energy Minister Eduard Stavytsky and Chevron Exploration and Production Europe chief, Derek Magness, signed the agreement in Kyiv, witnessed by President Yanukovych and the United States’ ambassador to Ukraine, Geoffrey Pyatt.

Under the agreement, the Ukrainian state (represented by the Ministry of Energy and Nadra Ukrainy’s Nadra Olesska subsidiary) and Chevron shall each hold 50 percent of the project’s shares. Chevron shall make an initial $350 million investment in geological surveys and exploration drilling during the first three years of work on the project. If that phase is successful, the PSA’s lifetime can continue for up to 50 years, depending on the size of the shale gas deposit. The Ukrainian side anticipates investments of up to $10 billion for the project’s lifetime, and an extraction volume in the range of 5 billion cubic meters (bcm) to 10 bcm per year, once production reaches the plateau phase (Interfax-Ukraine, Ukrinform, November 5).

Ukraine’s agreement with Chevron is the latest in a series of project agreements of comparable significance. In September 2013, Shell and the Ukrainian government signed a PSA to explore and develop the Yuzivske gas deposit in the Donetsk oblast. That deposit is believed to contain shale gas as well as conventional gas. The PSA follows the pattern of 50 percent to 50 percent distribution of shares between the Ukrainian state (energy ministry with Nadra Ukrainy) and Shell in this case, for up to 50 years. Minister Stavytsky estimates the total investment value at $10 billion, and the plateau-phase production at 8 bcm per year. Shell has committed $500 million to the first stage of exploration, starting from 2014 with plans to drill some 15 exploration wells (Ukrinform, November 7).

In August 2013, a consortium of ExxonMobil and Shell signed an agreement of intentions with Ukraine’s Ministry of Energy to explore the Skyfska offshore gas deposits in the western Black Sea. The Ukrainian government chose this partnership instead of one with Russian Lukoil. Negotiations are intended to be completed by the end of 2013) (PRNewswires, November 5; Bloomberg, November 7).

Gas supplies sourced from liquefied natural gas (LNG) is also a scenario under consideration in Kyiv. The Ukrainian government proposes to draw up a Croatian-Hungarian-Ukrainian inter-governmental agreement to construct an LNG terminal on Croatia’s Adriatic coast and to inter-connect Croatia’s gas pipeline network with that of Ukraine via Hungary’s (Ukrinform, Interfax-Ukraine, November 6).

Some basic aspects of the gas extraction projects remain unclear or even unknowable at this preliminary stage. The size of reserves, extraction costs and the commerciality of the projects are yet to be determined. While Ukrainian officials seem confident enough to anticipate future production volumes, the three Western major companies involved are tight-lipped about reserves and potential production. After the early results of shale gas exploration in neighboring Poland turned disappointing, the general tone of debates on shale gas in Ukraine has become more circumspect. Local opposition to shale gas projects seems also possible in Ukraine, following local protests in Bulgaria and Romania that halted Chevron’s and other shale gas projects there. Whether hydraulic fracturing or “fracking” (method used to extract natural gas from shale rock formations) turns out to be more acceptable in Ukraine than elsewhere is also far from clear.

By striving to reduce dependence on Russian gas, and pursuing self-sufficiency, Ukraine aspires to: a) security of supplies (optimal when the supplies are sourced internally); b) diversification of suppliers (putting an end Russia’s quasi-monopoly); c) a competitive internal gas market in Ukraine (with multiple suppliers), leading to lower prices; and d) obtaining some negotiating counter-leverage vis-à-vis Russia (when Russia’s supply monopoly comes to an end).

The United States consistently supports Ukraine’s energy security goals. This provides at least one item of counter-evidence to the widespread perception of US disengagement from Europe’s East. The recently appointed Ambassador Pyatt builds on the legacy of his predecessor, Ambassador John Tefft, promoting US-Ukrainian joint projects in Ukraine’s energy sector.

Business: O&G – Offshore. Region: Africa. Country: Ghana. Technip in $1.23bn offshore project in Ghana

(Source: http://www.pipelineme.com/news/international-news/2013/10/technip-in-$123bn-offshore-project-in-ghana/).

Technip, leader of a consortium with Subsea7, has been awarded by Tullow Ghana Limited two contracts for the TEN Project, located offshore Ghana with a combined worth of US$1.23 billion, with Technip’s share of the project amounting to $730 million.

The TEN Field is located in the Deepwater Tano Contract Area, 60 Km off the coast of Ghana and approximately 30 Km west of the Tullow Operated Jubilee Field. The TEN field has a water depth reaching up to 2,000m.

Frédéric Delormel, executive vice president and chief operating officer Subsea, commented: “While the oil and gas market is rapidly growing in Ghana, we are proud to continue to contribute to the development of this country. Today, this new award demonstrates our ability to mobilise worldwide resources to bring strong know-how and technological innovation meeting the challenges of projects in ultra-deepwater.”

Jean-Marc Aubry, senior vice president at Technip for Western Europe, Africa, India and Pakistan,said: “We have been operating in Ghana for over four years, when we were awarded the Jubilee project, the first deep water field ever developed in this country. These new awards correspond to a significant milestone for our presence in Ghana.”

Technip’s scope of work includes the engineering, fabrication and installation of nine flexible risers, 3 flexible flowlines and 12 flexible spools totaling 48 Km.

The French engineering giant will also provide engineering, fabrication and installation services for 33 Km of water injection and gas injection rigid flowlines and install about 63 Km of static and dynamic umbilicals. It will engineer, pre-fabricate and provide final assembly and installation of 10 well rigid jumpers and delivery of a further six prefabricated rigid jumpers.

Technip said that the major ultra-deepwater project would require its full global expertise. The company’s operating centre in Paris will execute this project with the support of the group’s offices in Accra, Ghana. The flexible pipes will be fabricated at Technip’s Flexi France facility in Le Trait, France and the rigid flowlines at the Group’s spoolbase in Evanton, UK.

The offshore installation is scheduled to be completed in the second half of 2016.

Tullow Ghana Limited (a subsidiary of Tullow Oil plc) is Operator of the Deepwater Tano Contract Area with an interest of 47.175 per cent. Other partner interests are Kosmos Energy (17 per cent), Anadarko Petroleum (17 per cent), Sabre Oil & Gas Holdings Ltd, a subsidiary of Petro SA (3.825 per cent), and the Ghana National Petroleum Corporation (15 per cent).

The TEN field (source: http://www.tullowoil.com/ghana/index.asp?pageid=12).

In March 2009, the Tweneboa-1 exploration well, in the Deep Water Tano licence, 25 km from Jubilee, discovered a highly pressured light hydrocarbon accumulation.

The well encountered 21 metres of net pay on the edge of a giant 200 sq km fan system related to the Jubilee play. Intriguingly, the well also encountered a four metre over-pressured oil-bearing sand and an over-pressured zone at total depth.

Tullow planned to carry out appraisal drilling to test core areas of the structure where thicker reservoir sections are mapped. The second well, Tweneboa-2 began drilling towards the end of 2009. In January 2010, Tullow announced that the well had encountered two separate hydrocarbon columns containing oil and gas-condensate legs. In total, 32 metres of net pay were encountered.

In July 2010, the Owo-1 exploration well encountered 53m of light oil pay. This was followed by a sidetrack well which encountered an additional 16 metres of net oil pay in the lower part of the same channel system. Pressure data indicates that this oil pay is in communication with the reservoirs penetrated in the Owo-1 well and confirms at least 69 metres of total net oil pay in a substantial gross oil column of 200 metres. Drilling further ahead, two gas/gas-condensate legs were also encountered totalling a further 19 metres of net pay.

During 2011, significant progress was made in the programme of appraisal drilling and flow testing of the Tweneboa, Enyenra and Ntomme fields, collectively known as TEN. Tullow anticipates developing the three accumulations in an integrated subsea cluster development scheme using a single FPSO.

2011 accelerated appraisal

The appraisal programme commenced in January 2011 with the drilling of the Tweneboa-3 well comprising two deviated exploratory boreholes drilled into the Ntomme prospect which was proven to be a material and separate gas-condensate accumulation.  

Further appraisal drilling on the Enyenra field has continued during 2011 including the re-drill of the Owo-1 discovery well in December 2011, to allow testing and coring. To determine the level of reservoir connectivity and well deliverability, the well was flow tested.  The lower channel was tested at a rate of approximately 10,000 bopd, and a commingled rate for the two upper channels was approximately 12,000 bopd. The pressure response will be monitored by pressure gauges deployed in the Enyenra-2A and Enyenra-3A wells, located to the south and north respectively.

Continued appraisal success in 2012

In the first half of 2012, the appraisal drilling and well testing for the TEN project made good progress with three wells drilled in support of the Plan of Development (PoD).  The Owo-1RA well was drilled and successfully tested in February 2012 at combined rates of 20,000 bopd. Enyenra-4A was drilled in March 2012, intersecting 32 metres of oil pay. Water injection tests on this down-dip well were carried out in April 2012 with results proving that the Enyenra channel sands are suitable for water injection to support oil production.
 
The Ntomme-2A well was drilled in May 2012 and found oil down dip of the Tweneboa-3ST gas discovery (the Ntomme discovery well). The well was production tested at combined flow rates of around 20,000 bopd confirming excellent quality reservoir.  As part of the overall appraisal programme pressure gauges were installed in a number of the wells and gauge readings have confirmed reservoir continuity across each of the individual Tweneboa, Enyenra and Ntomme fields.
 
The data from the appraisal activity in the first half of 2012 has enabled the subsurface models for the TEN fields to be updated and the combined resources range is 200 to 600 mmboe with most likely resources of 360 mmboe of which 70% is oil.

Plan of Development

In the second half of 2012, the TEN project made good progress and Tullow and partners submitted the Plan of Development (PoD) to the Minister of Energy in early November 2012. On 29 May 2013, the Government of Ghana formally approved the TEN PoD. The approval paves the way for Tullow and its partners to proceed with the development of these discoveries and to define the final schedule and capital programme to deliver first oil in 2016 and a steady ramp up to a capacity production rate of 80,000 bopd. Development of the TEN Project will require the drilling and completion of up to 24 development wells which will be connected through subsea infrastructure to a Floating, Production, Storage and Offloading vessel (FPSO), moored in approximately 1,500 metres of water. Contracts for the FPSO and subsea tenders will be awarded over the coming weeks and rig capacity for the drilling and completion of the development wells has already been secured.

Strategic White Paper. Company: Statoil. Presence: CIS, Africa, Europe. Focus: Trans-Adriatic Pipeline (TAP) consortium.

Statoil is a Norway’s company that offering customers “spot” prices instead of one’s indexed to the oil price. This is mainly their competitive advantage. it operates 16 offshore blocks and invests in 504 offshore wells. Statoil produces 2 million barrels of oil equivalent per day, 1.5 million of which are produced in Norway.

In the CIS, Statoil is aggressive in Azerbaijan and holding licenses in Kazakhstan market. Statoil is part of the Trans-Adriatic Pipeline (TAP) consortium to pipe Azeri gas to the European Union. This consortium is developing the giant Shah Deniz II field in the Azeri waters of the Caspian Sea. Its leading members are Azerbaijan's state-owned SOCAR, Norway's Statoil and BP.The going on revolution in unconventional gas production from shale beds is impacting the balance of power between Russia and its European customers. In the mean time, America, as a new world’s biggest gas producer, and a potential big exporter, is pushing down the price of gas on the world market.Based on the Economist, the "Shah Deniz II field is not only further reducing European dependence on Russian supplies. Also, Europeans are finding they have bargaining power: Bulgaria recently negotiated a 20% price cut in its new ten-year contract with Russia. Poland and Ukraine are intent on developing their own supplies of shale for strategic as well as economic reasons. TAP will carry Azeri gas from Turkey's border to Greece to the southern tip of Italy, passing through Albania and through the Adriatic Sea."If you need insight in who is who within Statoil, or insight on the Shah Deniz II filed or the TAP project, let me know.

http://www.statoil.com/en/Pages/default.aspx

Strategic White Paper. Company: Tethys Petroleum. Presence: CIS, Africa, Europe. Focus: current activities, O&G in CIS. Opportunity.

1. Kazakhstan
They have 3 fields currently under development:
• One oil field producing 4000 b/d at 2500 m depth, close to the Aral Sea & they are trucking the Oil 250 km to the city of SHALKAR.
Note: they have storage facilities at both ends.
• 2 gas fields at 500 m depth mostly methane(at 99.9%).
• They plan to drill 2 more Oil wells & 2 more gas wells in 2013.
• They have another prospect in Kulbas in the North West of the Country & it is likely Gas condensate. Seismic is in 2014 & drilling early 2015.

2. Tajikistan
• Tethys has 1 exploration license covering an area of 34000 Sq km under PSC for 5 years.
• Tethys made a deal to be signed in August 2013 with Total & CNPC with 33% each involving a cash investment fund of 60 M USD.
• It is more gas condensate(similar to the one in Yoloten-Turkmenistan) for about 100 TCF about 27 B barrels of reserves estimated.

3. Uzbekistan 

• They have taken an existing field (north in Urtabulak) & they have started slowly with 100 b/d.
• They have been offered a field close to the border with Turkmenistan at Chegana under an PEC (Production enhancing Contract). They would spend the CAPEX & get 50 % of production with NO taxation.

• TETHYS have their Operations HQ in Dubai & the office for Exploration / Geology is in London
• Development in the CIS countries is done out of Dubai

Prospects you may be interest of: They do have coming a small tender (about 10 M USD) for a Glycol Dehydration Unit + Compressors + 13 km (16 inch) export pipeline

http://www.tethyspetroleum.com/tethys/index.action

New Twitter account @BD4Executives

We have now a new Twitter account. You can follow all the new posts and advise @BD4Executives 

Taif Airport (KSA) and PPP airports Arusha, Mwanza, Mtwara and Kiliminjaro (Tanzania)

If you need any advise, let me know

Region: MENA. Country: KSA. Project. Upgrading the Taif airport.

Is expected soon. As the big 3 are enough busy, this prospect may be a fair opportunity to integrate the market. It is a mid-small size project and the risk would be manageable. 


The scope is mainly a heavy rehabilitation on terminal and airside. 
The idea is to rehabilitate the infrastructure to be fitted as an international airport to support Jeddah and Medina. 
Almost 200k maximum for the design and the supervision packages. 

My advice to all: You should have connection with GACA and have a local sponsor. 

If you need more details, or you need advise on GACA and local Sponsor, let me know.

Region: Africa. Country: Tanzania. Projects: PPP opportunities; Arusha, Mwanza, Mtwara, Kilimanjaro.

Based on the TAA website, "Tanzania Airports Authority is undergoing the biggest transformation in its history. Over the next 10 years we want to become a HUB for Eastern and Central Africa." 
TAA needs funds to achieve a basic infrastructure upgrading. 
The less riskier one is Kilimanjaro International Airport. However, the CAPEX of the other three is low and will not attract the major International players (unless if they would be interested to have the three airports at the same time). 

I have photos of these airport, and contacts and who-is-who.

Following some direct questions: 
There are three main stockholders here and ALL are equal (in Africa this is VERY important): 
1. TAA. you have to know who-is-who in TAA. Why: to have access to technical documentations and history. Don't underestimate the engineers working for TAA: they are rally good and competent. 
2. The PPP agency. It is a new agency and reports to the Ministry of Finance. They are working based on a new PPP and BOT rules. Don't expect that much. Why you need this agency: to have advise and to know how to work with the Ministry of finance bureaucrats. 
3. The Ministry of Transport and The Ministry of Finance. You may have access to these two main stockholders through TAA and the PPP agency. But it is needed as well to know all the main influential bureaucrats there. 

This is Tanzania. Based on some question I received, you may know that you have to expect a fuzzy-fuzzy structure out of there. 
All you need is Patience and Perseverance. 

Advise: (1) work with your embassy or government representative. If they are business oriented, they may open doors. (2) Networking is key in East side of Africa. You can't do anything while you are abroad.