Algeria: El Merk 'mega project'

Following the announcement of the settlement of its tax dispute Anadarko issued a statement, ahead of its investor conference last week, saying that the El Merk mega project, in which Anadarko is the leading foreign shareholder, is approximately 90 per cent complete and expected production of significant volumes by the end of this year. The El Merk in the Berkine Basin is approximately 300 kms south-east of Hassi Messaoud. It was established to design and construct the surface facilities required for the exploitation of hydrocarbon liquid reserves of six reservoirs in Blocks 208, 405a and 212. It will also accommodate the processing of additional fluids from the Sonatrach/Anadarko and Sonatrach/Eni existing HBNS/HBN facilities (Block 403a/404a), approximately 80 Km north of the proposed El Merk development.

The US$4 billion El Merk Oil Field Development project is under the management of the Groupement Berkine whose shareholders are Sonatrach (37.70%), Anadarko (18.10 %), ConocoPhillips (16.90%), Maersk (9.10%), Eni (9.10%) and Talisman (9.10%) A considerable number of other foreign companies are involved in various aspects of the massive project. These include Petrofac for the central processing facilities; the ABB/SARPI/Petrojet consortium for the support networks; Kahrif for the transmission lines; and Siemens (for the armoured post package. The original design contract was awarded to KBR in 2006.

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

© 2012 Menas Associates

Kashagan to come onstream by end of 2012

According to project operator Eni, Kazakhstan's enormous Kashagan oilfield is due to begin producing by the end of 2012 - several months earlier than expected.

The Italian energy major announced the news on 4th September, with Chairman Giuseppe Recchi revealing that “phase one of the Kashagan project has been completed by over 90 per cent”. The first phase is expected to produce 300,000 barrels per day (b/d), with production reaching 1 million b/d in the second phase and 1.5 million b/d in the third phase.

The announcement is something of a last-minute victory for Eni and its partners in the North Caspian Operating Company (NCOC), a consortium which also includes Royal Dutch Shell Plc, ExxonMobil Corp, Total, KazMunaiGas, ConocoPhillips and Inpex Holdings Inc. As recently as July, the consortium was allegedly considering requesting the Kazakh government for an extension to the 2013 deadline for pumping the first oil. Last year senior Kazakh officials suggested that the second phase might not start until 2020. In March, a source told the energy analysts Platts that Kashagan “is in complete disarray.”

The government's Oil Ministry has threatened to slap the consortium with financial penalties if it fails to meet the deadline, having rejected an improvised plan to begin pumping 50,000 b/d by bypassing unfinished processing facilities.

The project has been delayed for both political and technical reasons. On the political side an uncertain tax environment and an increasing tendency towards resource nationalism by the Kazakh government have sown uncertainty among the consortium's international members. On the technical side, geological peculiarities and the area's environment – freezing cold in winter, beset by huge chunks of ice and high winds – have led to a steady increase in the cost and time of recovering oil.

There are reasons to be sceptical about Eni's latest statement, however. In May the company was adamant that Kashagan would begin producing by the end of 2012 or early 2013, before it began discussing the possible need for an extension. So although hopes have been raised by Eni's announcement, it remains to be seen whether the consortium can deliver on its latest promise.

Sources: Central Asia Newswire, Platts

For more news and expert analysis about the Caspian region, please see Caspian Focus.

NNPC negotiating Brass Liquefied Natural Gas project with international partners

There are reports that Nigerian National Petroleum Corporation (NNPC) is currently in negotiation with LNG Japan and Itochu Corporation and the US-based Sempra Energy, to jointly acquire 9 per cent of NNPC's stake in the Brass Liquefied Natural Gas (LNG) project. Negotiations are said to have reached an advanced stage and will soon be concluded. NNPC currently has a 49 per cent stake in the potentially hugely lucrative project, whilst ConocoPhillips, Eni and Total each hold 17 per cent stakes in the project which is located in Bayelsa State.

As part of the Federal Government's Niger Delta post amnesty policy the NNPC will cede 10 per cent of its stake in the Brass LNG project to Rivers and Bayelsa States, under the scheme to allow host States to own stakes in such projects. This means that if the current negotiations are indeed successful the NNPC will only hold a 30 percent stake in Brass LNG after ceding 9 per cent to the consortium and 10 percent to the Bayelsa and Rivers State Governments.

Long fuel queues have suddenly returned to most of Nigeria's major cities. On Friday 18th March residents in Abuja and Lagos State awoke to the reality of fuel scarcity and the resultant queues.

The NNPC has not yet made any statement on the reasons for this recent fuel scarcity. Some observers believe that, unless the fuel scarcities are quickly resolved, it could definitely have an adverse effect on President Goodluck Jonathan's popularity in the presidential polls which is now less than a month away.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2011 Menas Associates

Turkmenistan raises borrowing from China to $8.1 billion

Turkmenistan's government has increased borrowing from China to $8.1 billion, to fund major developments in the Turkmenistan gas industry.

According to a number of national sources, Turkmenistan's President Gurbanguly Berdymuhamedov instructed gas industry leaders to hold negotiations with the State Development Bank of China (SDBC) for a preferential loan in the amount of $4.1 billion, to be used to further develop a field in Southern Eloten. China has already allocated Turkmenia $4 billion for realisation of the first stage of development of the field.

Earlier in the year, Turkmenistan's government granted licenses to ConocoPhillips and Mubadala Development Co for development of Block 21 in the Turkmen sector of the Caspian Sea.

Source: ABC Azerbaijan

For more news and expert analysis about the Caspian region, please see Caspian Focus.