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Lagos Oilfield Dispute Worsens, Another Investor Heads for Court

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  • Lagos Oilfield Dispute Worsens, Another Investor Heads for Court

The dispute among joint venture partners in Aje oil field, offshore Lagos, appears to have escalated as another partner, EER (Colobus) Nigeria Limited, has gone to court.

One of the partners, Panoro Energy, announced in December that it was in disagreement with its JV partners over cash call and intended to initiate arbitration and legal proceedings to protect its interests.

The company holds 6.502 per cent participation interest in Oil Mining Lease 113, where the Aje field is located, through its subsidiary, Pan Petroleum Aje Limited.

The commercial court division of the High Court in London granted the PPAL an interim injunction, restricting the JV partners from taking any action under the default provisions of the Joint Operating Agreement that would prevent the PPAL’s continued participation in the JOA and OML 113.

Panoro Energy said in a new update that the EER (Colobus) Nigeria applied for and, on July 13, 2017, was granted an order by the Federal High Court of Nigeria, adding that the court set the time to hear the motion on notice as July 24, 2017.

It said, “It is Panoro’s understanding that the EER, like Pan Petroleum, is in default of certain of its cash calls under the JOA and, therefore, the court’s order restrains any of the non-defaulting joint venture partners from issuing a notice under the JOA requiring the EER and, perhaps Pan Petroleum, to withdraw from and transfer all its interests and rights in the OML 113 and the JOA to all the non-defaulting parties.”

According to the company, under the JOA, the potential consequence of a JV partner not making payment of its share of a cash call on or before the expiry of the 45-day grace period is that two or more of the other JV partners, who are not themselves in default and represent a majority of the interests not in default, have the option to require the defaulting party to withdraw from the OML 113 and the JOA by issuing a notice of withdrawal.

“However, any such action may currently be prevented by the Nigerian injunction referred to above,” Panoro said.

It said, “Should Pan Petroleum in future be issued with a withdrawal notice, it will vigorously dispute its forced withdrawal from the OML 113 and the JOA, and will explore all legal and diplomatic avenues to ensure the notice is withdrawn or the withdrawal is held to be unenforceable.

“Although Panoro has sufficient funds available, Pan Petroleum has at this time not paid its share of certain cash calls under the JOA. The 45-day grace period permitted under the JOA has now expired and Pan Petroleum continues to be in payment default. Pan Petroleum’s share of these unpaid cash calls currently stands at approximately $6.8m net of crude entitlements.”

Pan Petroleum said many of the cash calls that had been made were made in a manner inconsistent and prohibited by the JOA procedures, adding that an external audit of the JV’s procedures and accounting had been commissioned.

The company said its arbitration proceeding was ongoing, and the arbitral tribunal had recently pushed the timetable for the hearing out, now likely to be heard during the first quarter of 2018.

Yinka Folawiyo Petroleum Company Limited, a wholly owned indigenous firm, is the operator of the OML 113. Other partners are New Age Exploration Nigeria Limited and PR Oil & Gas Nigeria Limited (the holder of MX Oil’s investment in the field).

First oil was achieved on the Aje field in May last year, 20 years after it was discovered.

A London-based energy firm, MX Oil, which has an indirect investment in the OML 113, said on May 24 that production from the Aje-4 well field had stabilised after an initial period of decline associated with rising water cut.

It said the production from the Aje-5 well had been limited and required subsurface intervention, adding that the intervention was in the process of being completed and would include re-connection to the subsea tree.

“To date, the company has completed its share of the payments required to get to this stage of the project’s development,” MX Oil said.

The company said it was previously anticipated that a further well, Aje 6, would be drilled in the short term to increase oil production from the field, but the drilling of the well would be deferred until the partners had concluded on the most appropriate next steps.

It said, “As has previously been announced, the Aje field is believed to hold significant resources of gas. The partnership has been progressing the field development plan for the development of the gas and has also held discussions with various potential gas off-takers.

“The partners in the Aje Field are therefore currently considering whether it would be more appropriate for the next stage of the field development to focus on gas production rather than drilling additional oil wells.

The Chief Executive Officer, MX Oil, Stefan Oliver, said given the potential scale of the gas opportunity versus the risk and reward of drilling additional oil wells, it made sense for the partners to consider and reflect on what the next stage of the development should be.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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