Week in review

Shell and Eni were the talk of the town last week in oil and gas, albeit for the wrong reasons. Their dealings surrounding the acquisition of the OPL 245 Block offshore Nigeria continue to face scrutiny.

Shell was forced to put out a statement on Monday in response to fresh accusations of wrongdoing in relation to the acquisition of the OPL 245.

On Sunday, BuzzFeed and Italian daily Il Sole 24 Ore alleged that Shell, in the run up to acquiring the block in 2011, was aware that the USD 1.1-billion payment would end up with former Minister of Petroleum Resources and convicted money launderer Dan Etete, and that he would likely use it for bribes.

On Monday, Global Witness and Finance Uncovered published a similar report containing, among other information, e-mail exchanges between top Shell executives that lend credit to the accusation that Shell en Eni entered into a deal for OPL 245, knowing it would result in a bribery scheme.

On a more positive note, Nigeria will begin debt payments to international oil companies operating in the country this month, Minister of State for Petroleum Resources Emmanuel Kachikwu said late on Wednesday.

The country reached a settlement with the Chevron, Eni, ExxonMobil, Shell and Total on exploration and production costs in November 2016, with the first instalment of its USD 5.1-billion to be paid within three weeks.

The dispute centred on exploration and production costs incurred by the IOCs between 2010 and 2015 that should have been split between the mentioned operators and Nigeria National Petroleum Corporation (NNPC) in the respective partnerships. The IOCs have frequently accused NNPC of not carrying its share of the costs.

“The initial payments would be made by the end of April 2017,” Kachikwu said in a statement, adding that the IOCs are expected to “ramp up investments in the country’s oil and gas sector” in return. The minister, who reportedly courted ExxonMobil for investment in domestic refinery projects on Wednesday, said the five-year repayment scheme could unlock USD 15 billion in international investment.

Lower oil prices and continued attacks on oil infrastructure have put a strain on Nigeria’s finances. According to an NNPC report on Wednesday, crude volumes sold dropped from 772.2 million barrels in 2015 to 668.59 last year, resulting in a USD 6.7-billion hit.

Finally, Kachikwu late on Thursday contradicted reports that the turnaround maintenance work at Shell’s offshore Bonga field would be completed this month. Discussing the ramp up of Nigerian oil production in an interview with Bloomberg Television from Washington, Kachikwu said the work at Bonga would be completed in July and would be preceded by the finalisation of repairs on the Forcados pipeline.

While no specific date for the conclusion of maintenance work was given upon the announcement of the production halt in March, a Shell spokesperson at the time said the company was aiming to resume operations in April.

Transmission jackpot
Qatar General Electricity and Water Corporation (Kahramaa) on Sunday signed nine agreements as part of phase 13 of the country’s power transmission system expansion plan. The contracts, which represent a combined value of USD 2.28 billion, will see international contractors build transmission infrastructure, including 77 substations and 453.3 kilometres of extra high voltage cables.

The latter job will be carried out by South Korean party LS Cable and System, Larsen & Toubro, Japan’s Furukawa and Elsewedy Electric of Egypt. The substations will be built by Siemens, Larsen & Toubro, Turkey’s Betas, regional entity Galfar and National Contracting Company, operating out of Saudi Arabia.

Support
Engineering services provider Lloyd’s Register on Monday announced it had won an inspection contract for Bumi Armada’s Armada Olombendo FPSO, working offshore Angola. The deal includes inspection services, including risk-based inspection for the hull, topside structures, pipelines, turret, mooring system, pipework and pressure safety valves as well as corrosion risk assessment. Malaysia’s Bumi Armada will also be given access to risk profile software. Output began through the Armada Olombendo FPSO in February 2017, marking the start of production from Eni’s East Hub project ahead of schedule.

China National Petroleum Corporation (CNPC) will set up a new Middle Eastern headquarters in Dubai, state media reported on Tuesday. The new premises will be located in the Jebel Ali Free Zone (Jafza), where it will eventually be joined by all of CNPC’s 16 entities active in the region, according to the company’s chief executive for the Middle East, Zhu Jungfeng. The 55,000-square-metre site from where CNPC will co-ordinate its regional activities will feature a 10,000-square-metre warehousing space.

Total’s 50:50 joint venture with South Korea’s Hanwha will work to increase ethylene production capacity of the Daesan refining & petrochemicals integrated platform, the French major said on Wednesday. In a press release, Total said that its Hanwha Total Petrochemical entity has earmarked USD 450 million for investment. This should raise ethylene production capacity to 1.4 million tonnes per year, an increase of 30%.

Car Wash
Supreme Court Judge Edson Fachin late on Tuesday ordered an investigation into dozens of Brazilian politicians on allegations of corruption. The Supreme Court’s list includes eight of President Michel Temer’s cabinet ministers, more than 60 sitting congressmen, three state governors and four ex-presidents.

The allegations are a result of testimonies from 77 Odebrecht executives, who are said to have bribed politicians in return for legislative changes. The construction company, including former chief executive Marcelo Odebrecht, saw its plea bargain approved by the Supreme Court in January.

Investigators will now go after Temer’s chief of staff, Eliseu Padilha, and the secretary-general of the presidency, Moreira Franco. Foreign Minister Aloysio Nunes and Agriculture Minister Blairo Maggi will also be investigated, as will leader of the lower house of Congress Rodrgio Maia.

Lower courts will investigate four of Brazil’s six presidents of the past 25 years, Fernando Henrique Cardoso, Fernando Collor de Mello, Luiz Inacio Lula da Silva and Dilma Rousseff. Presidential hopefuls for 2018, senator Aécio Neves and former Foreign Minister Jose Serra, were also mentioned on the list.

Iraqi power lift
The Baghdad Power Plant, also referred to as the Besmaya facility, has commenced simple-cycle operations, gas turbine provider GE and developer Mass Group Holding (MGH) announced this week.

The first independent power producer project to be carried out on a build-own-operate basis outside the Kurdistan Region of Iraq, the Baghdad Power Plant, once fully operational in 2018, will deliver 3 GW to the Iraqi grid.

“The Baghdad Power Plant in Besmaya is truly path-breaking as it is the first of its kind by the private sector in central and south Iraq. By adding power to the national grid, we are contributing to the growth of the economy, and meeting the aspirations of the people,” MGH chairman Ahmad Ismail said on Tuesday.

Combined with the installed capacity of plants in Dohuk, Erbil and Sulaymaniyah, MGH’s total power production in Iraq will reach 7 GW.

The facility in Besmaya currently runs on four GE 9F.03 heavy-duty gas turbines. The scope of GE’s contract also includes the supply of four D200 steam turbines. It additionally has a multi-year operations and maintenance contract for the site.

Elsewhere in Iraq, Ale Heavy Lift on Thursday said it had installed gas components for a new degassing station in Iraq, weighing between 30 and 130 tonnes each. Using a CC2200 crawler crane, the company installed eight dehydrators, five flare KO drums and four separators. It also fitted three radiant sections, two receiver columns, a so-called nitrogen snuffing column and, finally, a hot oil expansion drum. The work was carried out at Zubair’s Rafidiyah, where the new degassing station is being built.

In the Americas
Schlumberger announced on Wednesday that it had signed an agreement with Argentina’s state-owned YPF to kick off a shale oil pilot project in Vaca Muerta’s Bandurria Sur Block.

The oilfield services giant will invest USD 390 million in the project, including the value of its own services. The development plan for the block calls for the drilling of 26 pilot wells and the construction of supporting infrastructure there. YPF will retain a controlling 51% stake in the project and operatorship; Schlumberger will acquire the remaining 49%.

On Thursday, BP Trinidad and Tobago brought the Trinidad Onshore Compression (TROC) project on stream. The initial start-up is only partial, as the development is not expected to reach full capacity for another few months.

Once fully ramped up, the project will increase gas flows at wells by reducing pipeline and well back-pressure. Projected output will be in the range of 5.66 mcm (200 mcf) of natural gas per day. Initially approved on July 26, 2016, by BPTT and Atlantic LNG, TROC will be wholly financed and owned by the former, while Atlantic LNG will serve as operator