Declining crude production

Declining crude productionLook for continued exploration success in the West; massive gas development in the North. Elsewhere, much of the continent remains underexplored.


Declining crude production, rising gas output, increasing energy consumption, economic reform and privatization are changing the structure of the oil and gas industry in Egypt. Recent developments indicate that this year could witness the "real" start of the Egyptian offshore oil and gas industry. Egypt is trying to establish itself as one of the worlds' leading gas exporters.

Exploration. Apache announced a string of discoveries during the past year. Last February saw two discoveries: Akik 1X, which tested 23.4 MMcfd and 1,685 bpd of condensate (bcpd); and Karama 1X, which tested 1,520 bpd of 43[degress]API crude and 500 Mcfgd. Apache also announced a discovery in Neath South 1X in the Khalda Offset concession. The well tested at a combined rate of 2,778 bopd and 4.5 MMcfgd. Apache's discoveries continued in April with the Akik 1X well, where the Lower Cretaceous Adam el Bueib formation flowed at 26 MMcfgd and 2,366 bcpd. This doubled the well's previous output to 49.4 MMcfgd and 4,051 bcpd.

Last April, TransAtlantic Petroleum announced the discovery and successful appraisal of the Lagia oil and gas field in the Central Sinai concession, Gulf of Suez. The Lagia 6 discovery flowed oil and gas at rates up to 152 bopd and 300 MMcfgd.

Other successes include: Novus Petroleum's three oil discoveries in the Khalda concession of the western desert, with combined production of 6,000 bopd, and Tanganyika Oil Co.'s Hana 1 discovery in the Gulf of Suez.

Shell is in the process of evaluating results of 3-D and 2-D seismic surveys in its 16,000-sq-mi deepwater concession in the Mediterranean. Shell expects to spud the first well at the end of this year. If discovered, production of oil and gas from this concession is not expected until at least 2005.

Drilling/development. Wells drilled in 1999 totaled 169, about flat with 1998. However, the number of oil wells drilled increased by 45%. Producing oil wells increased by 79 and stood at 2,011 by December 1999. It is forecast that the number of wells drilled will stay the same in 2000, including the drilling of 59 offshore wells.

TransAtlantic reported the completion of its Hana 6 oil well in the Hana development. The well is expected to produce 1,500 bopd. Last May, Tanganyika Oil Co. Ltd. announced the completion of its development program in Hana field in the Suez basin, after drilling six successful wells. Oil production from these wells is expected to increase to 5,000 bpd from 2,000 bpd. Plans are underway to install permanent treating, handling and pipeline facilities capable of processing 15,000 bopd.

In an effort to increase Egyptian gas exports, Egyptian Petroleum Corp. signed a letter of intent with BP Amoco to develop gas facilities, including two trains for LNG and two trains for NGLs.

Production. Crude production declined in 1999 by 4.3%, to 760,000 bpd. Gas production increased by 20% and was expected to increase further in 2000. BP Amoco recently announced the beginning of Ha'py field production from the offshore Ras El Barr concession, Nile Delta basin. The field will produce 284 MMcfgd and 500 bcpd.

Crude and condensate reserves were estimated at 3.77 billion bbl in 1999, nearly flat with the previous year. However, gas reserves increased by an impressive 29% in 1999 to 42.5 Tcf.


Fires, riots, ethnic massacres, bombings, protests, declarations of force majeure, kidnappings, murders, production shut-ins, union strikes--just another year of turmoil in Nigeria. Yet, ironically, one could say that it has been a year of optimism and positive change as the country returns to democracy.

Nigeria's new president, Olusegun Obasanjo, is reforming the country's oil sector. He replaced the entire military command, canceled 47 E&P contracts handed out by his predecessors, intends to privatize the country's refineries and plans to sell some unprofitable stateowned businesses. Jackson GaiusObaseki, director of the Nigerian National Petroleum Corp. (NNPC), fired more than 70 senior and mid-level managers, stopped the theft of gasoline for the black market, revised oil-trading contracts and conducted several audits.

According to an article in Platt 's Oil-gram News, the Clinton administration wants to lessen U.S. crude-supply dependency away from the Persian Gulf--apparently toward Africa--as evidenced by recent visits to Nigeria by Energy Secretary Bill Richardson. Richardson signed an MOU pledging short-term financial support for the oil-rich nation's energy sector in exchange for "substantial free-market reforms, beginning privatization of state energy companies, and removing trade and investment barriers." The U.S. buys about one-third of Nigeria's crude.

Agip, Chevron, Shell, Mobil, TotalFinaElf and Texaco, collectively, have 98% of the country's operating assets and oil reserves. Oil and gas account for 95% of Nigeria's export revenues.

Exploration. By the cut-off date of July 1, 2000, 51 bids were submitted for 22 new onshore and offshore licenses that were put up for auction in March. Ocean Energy and Nigerian partner Amni International submitted the highest bid: $201 million. Shell offered $200 million for the combined OPL 250 and OPL 332 blocks. Winners will be announced later this year.

Discovery Well AKPO 1 flowed 9,000 bopd last May. The well was drilled in 4,500-ft waters in OPL 246. TotalFinaElf is operator (24% interest) with partners South Atlantic Petroleum (60%) and Braspetro (16%).

Texaco's Agbami 2, the second well drilled in the deepwater Agbami structure, suggests a giant field of 1 billion boe or more. The structure covers 45,000 acres. Texaco plans to drill two more appraisals on the field this year. The company will also drill a wildcat on each of the five deepwater blocks it holds an interest in. Four major deepwater discoveries have now been made offshore Nigeria.

Drilling/development. Continuing unrest among communities in the Niger Delta and other groups--who are demanding a larger share of oil revenues--is impeding development, especially onshore.

Shell will spend $2.7 billion to develop its deepwater Bonga field. The giant field is in 3,300-ft waters and is expected onstream in 2003, producing 200,000 bopd and 150 MMcfgd via subsea completions to an FPSO. Reserves are estimated at 600 million bbl.

Nigeria flares about 75% of its gas production, but a six-company, Chevronled consortium will change that when it builds the $400-million West African Gas Pipeline. It should start delivering 120 MMcfgd to Ghana, Benin and Togo beginning in 2003.

The government signed a $1-billion agreement in November for development of EA/EJA field with Shell (77.14%), Agip and TotalFinaElf. With reserves of 350 million bbl, the shallow-water field should produce 100,000 bopd and 100 MMcfgd. It is expected to come online later this year.

Production. The country plans to expand production capacity from the current 2 million bopd. Capacity should expand to 3 million bopd by 2003 and 5 million by 2010. The government will invest $35 billion in the energy sector during the next five years.

Nigerian LNG Co. made its first shipment of LNG from the $3.8-billion LNG plant in Bonny, Rivers state, in October. Construction of a third LNG train is 30% complete and should be online by year-end 2002.

Ireland's Tuskar Resources sold its first oil from Obe field in February. While in an extended-test phase, Well Obe 4's flowrate was more than 5,500 bopd. An FPSO will soon be repositioned and anchored for further production. Reserves are estimated to be 500 million bbl.

Nigeria's crude and condensate production averaged 2.1 million bpd in 1999. Annual gas production was 200 Bcf.


Algeria depends on energy for 95% of its outside revenues. Recent years have seen a slowdown in exploration contracts; oil prices, bureaucracy, mediocre fiscal terms and war are among the chief causes. Eight years of violence have killed at least 100,000 people, but peace prospects have improved under President Abdelaziz Bouteflika.

Algeria's energy sector is being liberalized to compete with other nations trying to attract foreign investment. About 20 foreign oil companies currently operate here. New Energy and Mines Minister Chakib Khelil appointed Abdelhak Bouhafs as chairman of state oil company Sonatrach in January 2000. Together, they have been implementing the changes necessary to attract investment.

Exploration. First Calgary Petroleums Ltd. signed a PSC for exploration of Block 406a in the Berkshire basin. The block, which covers 375 [mi.sup.2], is 10 mi southeast of Anadarko's giant Hassi Berkine oil field. The five-year agreement requires acquisition of new seismic data and drilling two wells within the first three years.