PART 5. UPSTREAM
And now finally, the cream of the oreo, the nutella between the bread, the ugali/matoke on the table; the upstream segment. This is commonly referred to as the exploration and production sector (E&P), it includes searching for potential underground or underwater crude oil and natural gas fields, drilling exploratory wells, and subsequently drilling and operating the wells to recover and bring the crude oil and/or raw natural gas to the surface. Arguably the most adventurous part of the petroleum industry, particularly due to the locations of the finds and what is at stake. I mean from the Arabian deserts to the fierce North sea waters, to the Siberian basin, working in the E&P segment is like living in the early 2000s version of the hit Survivor series. Only with a much larger reward than $1 million for the "winner", the tribe does get to speak, however, there is no immunity so everyone has to go the proverbial extra mile.
i. HISTORY(Yes, don't you just love history)
In respect to the rest of the world, East Africa's oil and gas industry has been on the back foot for the longest time with the region just now emerging as a frontier region. However this is not entirely true, as early as the 1920s, government geologist EJ Wayland documented hydrocarbon occurrence in the Albertine Graben, Uganda. In Kenya, Tanzania and the former Sudan, oil exploration dates back to the 1950s with the likes of British Petroleum (BP), Shell, Agip being the first companies to acquire concessions to search for the elusive black gold. Most of these companies focused their exploration around the coasts with the Lamu basin, Red sea area and Tanzanian islands of Mafia, Pemba and Ugunja being the focus areas. None of these discovered commercially viable hydrocarbons though.
Tanzania
In Tanzania, the Tanzania Petroleum Development Corporation(TPDC) was formed in 1969, this was followed by the significant gas discovery at Songo Songo in 1974. The petroleum Exploration and production Act of 1980 was soon enacted and was subsequently followed by more gas discovery at Mnazi bay. Several companies were licenced to operate in the country, and these include; Tanganyika Oil Company, Exxon Mobil, Shell, KUFPEC (Kuwait Foreign Petroleum Exploration Company)and Amoco.
In March 2012, Statoil and Exxon Mobil made the biggest offshore gas reserve discovery (Zafarani field) off the coast of Indian Ocean. Songo Songo and Mnazi Bay went into full commercial operation in 2004 and 2006 respectively. The country in 2013 adopted the National Natural Gas Policy. TPDC has grouped Tanzania's petroleum history into five phases i.e. phase 1; 1952-1964, phase 2; 1969-1979, phase 3; 1980-1991, phase 4; 1992-1999, phase 5; 2000 to date. Tanzania is currently estimated to have 57trillion cubic feet of gas deposits.
Kenya
In 1975, several consortia acquired land in the upper part of the Lamu
Basin. Texas Pacific et al. drilled the Hargaso-1 well in 1975 and
encountered oil and gas shows in Cretaceous rocks.In 1976 Chevron and Esso drilled the Anza-1 and Bahati-1 wells in the southern part of the Anza Basin.Seismic data revealed that salt diapiric structures were present along the Kenyan margin.
1981 saw the formation of the National Oil Corporation of Kenya(NOCK) which was mandated to participate in all aspects of the petroleum industry. In 1986 the petroleum exploration and production legislation in Kenya was revised with the aim of attracting international exploration interest. In late 2010, Tullow Oil farmed into six blocks in the Turkana Rift Basin (five in Kenya and one in Ethiopia). In 2012, Tullow Oil in partnership with Africa Oil and Marathon, drilled at Ngamia-1 in Block 10BB and Twiga South-1 in Block 13T in the onshore Tertiary Rift Basin. On 26 March, 2012, Tullow Oil announced an oil discovery in Block 10BB and a further discovery of oil in Block 13T in November 2012. Currently the estimated recoverable crude in the country is about 750 million barrels. Companies in operation in the country currently include; Tullow, Africa Oil, Marathon, Simba Energy, Anadarko, ERHC, NOCK, e.t.c.
Uganda
The government signed its first production sharing agreement (PSA) with
Fina Exploration Uganda in 1991 for a contract area which covered the
entire Albertine Graben.In 2001 Hardman Resources and Energy Africa acquired a license for Exploration Area 2 (Northern Lake Albert Basin). Heritage and Energy Africa, which was bought by Tullow Oil in May 2004, acquired licenses to Exploration Area 1 in July of that year and in
September, Exploration Area 3A (Semliki basin) was relicensed to
Heritage and Energy Africa. The Mputa-1 well in the Kaiso-Tonya area, drilled by Hardman and Energy Africa, became Uganda's first discovery well in 2005. Companies in the country currently include; Tullow, Total, CNOOC.
South Sudan
Being a young nation(gained its independence from Sudan in 2011) we will look at the history of the FORMER SUDAN. Onshore petroleum activities began in Sudan in 1975 when US oil giant
Chevron was granted a large concession in several provinces of
south-central Sudan, including in Western Kordofan and Western Upper
Nile. In 1979, Chevron struck oil near abu Jabra and then al Sharaf, on
the border between Darfur and Kordofan. They soon went on to make major
discoveries in Western Upper Nile in what is now Block 1, near Bentiu,
and developed the Muglad Basin where they found two huge oil fields, Unity and Heglig, both in the South.In February 1984, Chevron suspended its operations after three of its
expatriate field workers were killed by the Southern rebels of the
Anyanya II movement, and following this, suspended oprations in the
Bentiu region in December 1985 and by 1988 had dismantled its operations
at UnityWhile there was no oil extraction during this period, during
the civil war the then President Jafar Nimeiri attempted to redraw the
boundary of Upper Nile province so that the oil fields discovered would
be within the province of North Kordofan, north of the administrative
boundary between northern and southern Sudan which would later turn into
the international border with South Sudan. In June 1992, Sudan's president Bashir announced that Concorp
International, a small company which was owned by Sudanese businesmann
and senior National Islamic Front party members Mohamed Abdullah Jar
el-Nabi, had bought the Chevron concession. Although Chevron had
invested nearly a billion dollars, it was sold to Concorp for merely $25
million.In March 1997, GNPOC began to build a 1540 km oil pipeline from the oilfields to a marine export terminal on the Red Sea. At the beginning of 1998, contracts were signed worth $1 billion with
Chinese, Malaysian and European suppliers. In 1999, the pipeline began
delivery, and the first 600,000 barrels were loaded onto a Shell tanker. Until 2006 Sudan had only one major upstream project (Blocks 1, 2 and 4,
operated by the Greater Nile Petroleum Operating Company in the Muglad
Basin), one export pipeline (Greater Nile Oil Pipeline - GNOP), and one
crude oil blend (high quality Nile Blend). Late 2006, a second pipeline
came on stream, a major refinery expansion was realized, a second major
upstream project began, producing a second crude oil blend (the low quality Dar blend),
in addition to important field developments elsewhere. The country’s
crude oil production almost doubled, making it Africa’s fifth producer
with more than 434.000 barrels per day (bpd) by late 2006. Political instability on a local level has also disrupted oil
production, for example at Abyei which was the scene of serious fighting
in mid-2008. Across the country there has been evidence that some local
communities have begun to take action against the operators of fields,
for example in 2008 when nine Chinese oil workers were kidnapped in
South Kordofan, and some were killed. South Sudan shut down its oil production in January 2012 largely as a result of oil pipeline fee disputes
with Sudan. Prior to the shutdown oil had been the source of 98 percent
of South Sudan's annual revenue. In 2014, South Sudan exported crude petroleum worth $4.02 Billion.
Thank you for reading, hopefully it wasn't that much of a bore, Segment (ii) will be out soon.