Making Strides in West Africa
Making Strides in West Africa
Pontem Analytics Forging Strategic Partnerships in Nigeria
Africa is an important region in Pontem Analytics’ strategic growth plan; however, this is not just a financial or business imperative, but a passion born out of the need to be a force and partner in eradicating energy poverty in Africa. By using our domain knowledge in production and data science, Pontem Analytics sees an opportunity to support indigenous and international oil and gas companies to increase their production and optimize their operations, amongst other possibilities.
Setting up in Africa: East vs. West
Given the infancy of the East African oil and gas sector, it was desirable to start Pontem Africa’s operations in East Africa (Kigali, Rwanda) to be part of the region’s oil and gas journey, while exploring strategic partnerships across other parts of Africa for growth. Supporting oil and gas activities in West, South, North, and Central Africa is of interest to Pontem, and fits in quite nicely with our desire to eradicate energy poverty across Africa.
With Nigeria being the second largest producer in Africa (and second in gross GDP), along with opportunities & challenging bothering topics such as pipeline integrity & security (pipeline rupture and leaks), operational efficiency, digital strategy & remote operations, metering & allocation and system operability, Pontem explored Nigeria as the first country to establish strategic partnerships outside of our home base in Rwanda.
For context, it's probably worth giving a quick explanation on the term “energy poverty”. There are about 600 million people in Africa with no access to energy or power. This statistic is a huge problem for a continent that is pursuing its industrial revolution. The current energy production, fossil fuels and renewable energy, still falls behind on providing energy access to the 600 million African residents.
Electricity — you can’t fight poverty without it.
JackRabbit
Energy poverty co-relates with other forms of poverty.
World Economic Forum
The idea that simply providing minimal electricity access constitutes success overlooks the glaring disparities in global energy distribution. While an average American consumes 50 kWh in less than two days, individuals in Kenya or Nigeria are expected to make do with this amount for an entire year. Remarkably, no high-income nation consumes less than an average of 4,000 kWh per person annually, with the US surpassing 12,000 kWh. In contrast, Ghana averages 350 kWh, and Nigeria barely reaches 150 kWh (statistics from World Economic Forum). Such discrepancies are stark, illustrated by the fact that the power consumption of office buildings along K Street in downtown Washington DC exceeds that of Liberia, and Senegal's total electricity usage is eclipsed by Californians playing video games.
Achieving Sustainable Development Goal 7's objective of universal access to modern energy necessitates rejecting the notion that impoverished communities should settle for meager energy provisions. Limiting energy access to minimal levels perpetuates energy poverty for hundreds of millions worldwide.
With the enormous oil and gas resources underneath Africa’s grounds, it is important for Africa to explore, develop and produce its resources to allow for energy access across all the corners of the continent. Pontem’s move into Africa is to support African oil, gas production, and ensure that production is assured through the utilization of physics-based modelling, simulations, and data science.
Geoplex | Pontem Analytics Partnership
Geoplex Drillteq Limited and Pontem Analytics forged a strategic partnership, signing a Memorandum of Understanding (MOU) on March 29, 2024, aiming to bolster oil and gas operations across West Africa and Sub-Saharan Africa. Geoplex, recognized as the fastest-growing indigenous oilfield service company in the region, boasts expertise in drilling and engineering services, electric wireline, well testing, pressure pumping, completions, and FPSO services. With aspirations to expand into onshore and offshore production systems, Geoplex sought Pontem Analytics' specialized production assurance solutions to enhance its service offerings, catering to clients from reservoir to processing facilities.
Pontem Analytics, renowned for its data-centric engineering solutions in production assurance, complements Geoplex's portfolio by addressing intricate challenges prevalent in the energy sector. By seamlessly integrating upstream, midstream, and downstream solutions, Pontem Analytics enhances Geoplex's capabilities, particularly downstream of subsurface operations. The partnership aims to engage major indigenous and marginal oil and gas operators in Nigeria and extend its presence to other Sub-Saharan African countries, capitalizing on Geoplex's extensive regional offices in Nigeria, Ghana, Cote D’Ivoire, and Congo.
Geoplex's Vice President of Sales & Marketing, Olakunle Dosunmu, expressed enthusiasm for the strategic collaboration, emphasizing its alignment with Geoplex's expansion strategy to offer comprehensive solutions across the entire oil and gas value chain.
This is a strategic partnership with Pontem Analytics, and it is in line with our strategy at Geoplex to expand our scope of offerings to support our clients and customers in solving their challenges and complex issues from subsurface through the production systems to the processing facilities. We are excited about the opportunities this partnership brings to our customers.
Olakunle Dosunmu, Vice President Sales & Marketing, Geoplex
Pontem Africa's Temitope Solanke echoed the sentiment, highlighting the partnership's significance in extending Pontem's reach to West Africa and leveraging Geoplex's established client base and market reputation. Solanke emphasized Pontem's data-centric engineering approach as a valuable asset to the Nigerian oil and gas industry, leveraging existing operational data for enhanced performance and efficiency.
This partnership extends Pontem’s reach to West Africa by leveraging Geoplex’s expansive client base and reputation in the West African energy market. The partnership is beneficial to the local oil and gas industry in Nigeria due to the data-centric approach to Pontem’s engineering activities, which can leverage on the immense amount of existing data in oil and gas operations.
Temitope Solanke, Pontem Africa
About Geoplex Drillteq Limited
Established in June 2002, Geoplex has emerged as a leading indigenous service provider in Sub-Saharan Africa, driven by government policies promoting local participation in the upstream oil and gas sector. Through strategic collaborations with technical partners like Pontem Analytics, Geoplex delivers full-stream integrated oilfield solutions tailored to enhance field productivity, safety, and environmental stewardship. Led by CEO Engr. Wole Ogunsanya, Geoplex's board comprises seasoned individuals with extensive executive experience, reinforcing its position as the preferred service provider in the industry. Ogunsanya also serves as Chairman of the Petroleum Technology Association of Nigeria (PETAN), further showcasing Geoplex's commitment to industry collaboration and innovation.
Pontem Analytics is proud of what Engr. Ogunsanya has achieved in the Nigerian oil and gas sector and takes this opportunity to celebrate him for his accomplishments. According to PETAN’s new Publicity Secretary Engr Innocent Akuvu, Ogunsanya will lead the association for the next two years till March 2026.
Engr. Ogunsanya, who graduated with honors in mechanical engineering from University of Lagos in 1987, boasts over three decades of oil industry experience, starting with roles at Schlumberger as a field engineer and progressing to management, including the position of Country Operations Manager. He later went on to start his own oilfield services company, Geoplex Drillteq, which is now the fastest growing oilfield services company in Sub-Saharan Africa,
A special congratulations to a titan of the Nigerian oil and gas industry and to PETAN. PETAN, an association of Nigerian indigenous technical oilfield service companies in the petroleum industry, is reputed as the initiator of local content and has been championing the quest for increased local participation in the Nigerian oil and Gas industry, which culminated in the Nigerian Oil and Gas Industry Content Act, 2010.
Vauxoil | Pontem Analytics Partnership
Pontem Analytics solidified its presence in the Nigerian oil and gas market by partnering with Vauxoil Limited, leveraging their extensive experience and relationships with the National Oil Company (NOC) in Nigeria. The Memorandum of Understanding (MOU) signed between Vauxoil and Pontem aims to collaborate on opportunities with Nigerian Exploration and Production Limited (NEPL), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).
CEO of Vauxoil Limited, Mr. Debola Omooba, emphasized the partnership's importance in supporting the NOC's efforts to optimize production, cost, operations, and safety. With significant CAPEX projects on the horizon for NEPL, Mr. Omooba views the partnership as instrumental in supporting organizational objectives and promoting local content in Nigeria.
The collaboration with Pontem Analytics will enhance NEPL's endeavors to optimize production, cost, operations, and safety, as stated by Mr. Omooba.
Vauxoil Limited's collaboration with Pontem Analytics will assist Nigerian Exploration and Production Limited in optimizing production, reducing costs, streamlining operations, and enhancing safety measures.
Debola Omooba, CEO, Vauxoil Limited
Temitope Solanke, Pontem Africa, highlighted the significance of operating in Nigeria through partnerships, enabling Pontem to localize global content and add value to local operations.
Operating in Nigeria through strategic partnerships and supporting the national oil company allows Pontem to enhance local operations by adapting global expertise to local contexts.
Temitope Solanke, Pontem Africa
About Vauxoil Limited
Vauxoil Limited, known for its dynamism and innovation in the energy sector, has emerged as a key player in Nigeria's energy landscape. Committed to sustainability, efficiency, and technological advancement, Vauxoil delivers top-notch services across exploration, production, refining, and distribution of petroleum products while upholding environmental responsibility and safety standards. The company's dedication to innovation and corporate social responsibility aligns with Pontem's values, fostering a partnership poised for growth and success in shaping the future of Nigeria's energy industry.
Nigerian Oil and Gas Industry
When oil and gas is mentioned in West Africa, the first name that comes to mind is Nigeria, and as of 2023, Nigeria was named the second largest producer in Africa. It’s important to give a bit of background to the oil and gas industry in Nigeria. Since the beginning of the 20th century, Nigeria's oil and gas sector has embarked on an extraordinary journey. It all commenced in 1908 when the Nigerian Bitumen Corporation, a German firm, began exploration in Araromi and Okitipupa (in present-day Ondo State) in pursuit of oil. However, it wasn't until 1956 that Shell-BP made a breakthrough, discovering commercial oil at Oloibiri, heralding a new era for the country.
The 1970s represented a significant milestone as Nigeria joined the prestigious ranks of the Organization of the Petroleum Exporting Countries (OPEC), solidifying its status as a major player in the global energy arena. Nevertheless, in the subsequent decades, the oil industry encountered various challenges, including political instability, sabotage, and oil theft, resulting in a decline in production. Despite these obstacles, Nigeria's oil and gas sector remains a fundamental pillar of the nation's economy, shaping its socio-economic trajectory.
Daily oil production has dwindled in Nigeria over the past decade due to various reasons such as insecurity, oil theft & pipeline rupture, OPEC allocation, production challenges and metering and allocation challenges, amongst others. However, the oil production is increasing steadily, as the chart below depicts. In February 2024, Nigeria's crude oil production reached 1,476,000 barrels per day, marking an increase from the previous month's figure of 1,429,000 barrels per day in January 2024. This data, updated monthly, reflects an average production of 1,904,000 barrels per day from January 2002 to February 2024, spanning 266 observations. Notably, Nigeria's crude oil production peaked at 2,496,000 barrels per day in November 2005, while its lowest recorded output was 1,015,000 barrels per day in September 2022. This production data remains actively monitored by the Organization of the Petroleum Exporting Countries and is reported in CEIC.
As major oil companies divest and depart from Nigeria, indigenous oil companies are tasked with efficiently operating the acquired assets to maximize production while ensuring safety. This trend has heightened Pontem's interest in participating in Nigeria's oil and gas sector.
What’s Gas Got to Do with It
It’s difficult to separate my writing from my love for music. From the title above, I guess the song, “What’s Love Got to Do with It” recorded by Tina Turner and written by Graham Lyle and Terry Britten comes to mind. Who doesn’t love this song. This song eventually became Tina Turner’s biggest single. I digress, again.
In the Nigerian energy context, what’s gas got to do with it? Despite the lack of energy access across the nation and Africa, Nigeria burns off gas that can power 4 million homes amid blackouts. Amid a nationwide energy crisis, Nigeria finds itself grappling with a peculiar irony as gas meant to alleviate power shortages is instead being wasted through flaring, leaving hundreds of thousands of homes without electricity.
According to Abubakar Ibrahim in the Business Day news release on 31st March 2024, natural gas estimated at $205.7 million and capable of powering four million households was flared in the country in the first two months of 2024. Data obtained from the Nigerian gas flare tracker of the National Oil Spill Detection and Response Agency (NOSDRA) showed the country flared about 58.8 million standard cubic feet in the first two months of 2024 with a power generation potential of 4,040 megawatts (MW). “The rule of thumb for an industrial nation is about 1MW for every thousand population,” PricewaterhouseCoopers said in a report titled ‘Privatization in the Power Sector: Navigating the transition’. With an installed generating capacity of about 13,014.14MW and an operating capacity of circa 4,000MW, according to data gleaned from the Nigeria Electricity System Operator, electric power is still a major hindrance in the country. This stark reality underscores the urgent need for collaborative efforts to address Nigeria's energy sector challenges.
Not everything in this sphere is glooming. At the 2024 Oloibiri Lecture Series and Energy Forum, industry leaders emphasized the importance of integrated strategies for infrastructure, transportation, and security to achieve stability in the energy sector. Mele Kyari, the group chief executive officer of NNPC Limited, emphasized the critical importance of bridging the energy access gap to the creation of economic prosperity of the country. To bridge the energy access gap in Nigeria, Kyari said NNPC Ltd was working on developing the right infrastructure to deliver oil and gas to drive prosperity for Nigerians.
The lack of critical pipeline and gas processing infrastructure has been a hinderance to the improvement of energy access in Nigeria. Isn’t it a paradox that a country that needs energy access is flaring gas that can power millions of homes and help in eradicating the plague of energy poverty covering the spheres of Africa? The major infrastructure projects require highly skilled and specialist capabilities which Pontem Analytics can provide through its strategic partnerships in Nigeria. The design of the requisite gas pipelines and the optimized operations of the same, including leak detection and system operability, are areas where Pontem Analytics can support the local industry in Nigeria. The partnerships forged signify a concerted effort to bolster Nigeria's oil & gas industry and alleviate energy poverty across the region.
A key gas pipeline infrastructure project is in sight, and that is the Nigeria to Morocco Gas Pipeline project. Nigeria and Morocco at a meeting in Abuja in 2016 announced the pipeline will span over 7,000 kilometers along the West African coast, transporting about 3 billion cubic feet of gas daily to Morocco, and Europe by extension. While the project has stalled for a few years due to global recession and COVID pandemic, it has regained traction and set to be developed.
How about the Nigeria to Morocco Gas Pipeline?
The Nigeria to Morocco gas pipeline project represents a monumental endeavor aimed at connecting two major regions in Africa through an extensive network of pipelines. This ambitious project seeks to transport natural gas from Nigeria, one of the continent's largest producers, to Morocco, situated in North Africa. The pipeline is anticipated to span thousands of kilometers, traversing multiple countries and terrains along its route.
The Nigeria-Morocco Gas Pipeline (“NMGP”) is a new regional onshore and offshore gas pipeline that is intended to deliver natural gas resources of Nigeria to 13 countries in West and North Africa as a continuation of the existing West Africa Gas Pipeline (“WAGP”) between Nigeria, Benin, Togo, and Ghana. The project falls in line with the “Decade of Gas Master Plan” that Nigeria’s former president, President Muhammadu Buhari, launched in 2020. The master plan seeks to bolster Nigeria’s gas production and gas exports.
The strategic importance of the Nigeria to Morocco gas pipeline project cannot be overstated. Firstly, it promises to significantly enhance energy security and stability in both Nigeria and Morocco. By diversifying energy sources and reducing reliance on traditional fossil fuels, such as oil and coal, the pipeline contributes to a more resilient energy infrastructure in both countries. This is particularly crucial in light of fluctuating global oil prices and the need to mitigate the environmental impact of traditional energy sources.
Moreover, the pipeline serves as a catalyst for regional economic development and integration. As it traverses various countries enroute to Morocco, the pipeline facilitates cross-border cooperation and collaboration, fostering economic growth and cooperation among participating nations. It also presents opportunities for job creation, infrastructure development, and technology transfer along its route.
In addition, the Nigeria to Morocco gas pipeline project holds the potential to strengthen diplomatic ties and foster closer relations between participating countries. By facilitating the exchange of energy resources, the pipeline promotes mutual interdependence and cooperation, paving the way for enhanced diplomatic relations and regional stability.
Furthermore, the project aligns with broader continental objectives, such as the African Union's Agenda 2063 and the African Continental Free Trade Area (AfCFTA). By promoting intra-African trade and cooperation, the pipeline contributes to the realization of these overarching goals, positioning Africa as a dynamic and integrated economic bloc on the global stage.
Overall, the Nigeria to Morocco gas pipeline project represents a transformative initiative with far-reaching implications for energy security, economic development, and regional cooperation across Africa. As construction progresses and the pipeline becomes operational, it is poised to reshape the energy landscape of the continent and unlock new opportunities for sustainable development and prosperity. Pontem Analytics is well positioned to be a part of this massive endeavor through its partnerships.
What’s Cooking in the Nigerian Oil and Gas Market?
There are numerous projects in the Nigerian oil and gas industry that are of importance to improving energy access in the country. Below are a few highlighted in Energy Capital & Power publication titled, Top Upstream O&G Developments in Nigeria 2023-27, in April 2023.
OML 13 Field, managed by the Nigerian Petroleum Development Company Ltd (now Nigerian Exploration and Production Company), is undergoing a $3.15 billion development aimed at expanding Nigeria's crude oil reserves and daily production. At its construction stage, the project boasts a capacity of 184,333 barrels per day (bpd), with operations slated to commence in 2023/2024 and is forecast to peak in 2028, Based on economic assumptions, the production will continue until the field reaches its economic limit in 2062. This initiative is expected to significantly boost the government's revenue from energy monetization, projecting earnings of $10.2 billion over 15 years.
The Bonga North deep-water project, operated by Shell Nigeria Exploration and Production Company Ltd (SNEPCo), is set to augment Nigeria's oil production with a capacity of 110,000 bpd. Valued at $5 billion, the project, anticipated to go live by 2025, will tap into an additional 525 million barrels of crude oil reserves in the Bonga field.
Another noteworthy venture, the Okpokunou/Tuomo West Cluster Development, aims to bolster Nigeria's industrialization efforts by harnessing natural gas resources. This conventional gas project, currently in the feasibility phase, targets a production equivalent of 85,000 bpd of gas for local consumption, with operations expected to commence in 2024.
Similarly, the Hi Field, situated in Block OML 144's shallow waters, is undergoing front-end engineering design, with a projected production capacity of 75,000 bpd upon its scheduled operational debut in 2025, spearheaded by SNEPCo.
Preowei Field, managed by TotalEnergies E&P Nigeria Limited, is slated to commence operations in 2024, boasting a production capacity of 70,000 bpd, with a production timeline extending through 2047.
HA Field, a $1.6 billion development in Block OML 77, is under construction and expected to come online in 2024, producing 60,000 bpd of oil and 250 million standard cubic feet per day of gas, managed by SNEPCo.
Furthermore, the Gbaran Nodal Compression initiative, an extension of Gbaran Phase 1 and 2A fields, aims to enhance gas recovery in block OML 28 through the installation of gas compression trains. This project, currently under construction, is set to add 60,000 bpd to SNEPCo's production portfolio in Nigeria, with operations slated to commence this year.
The JK Field, still in its feasibility stage, is projected to achieve first production of 55,000 bpd by 2026, operated by SNEPCo.
Lastly, the HD Field, currently in its feasibility stage, is expected to commence operations in 2026, producing 50,000 bpd of oil, under the management of SNEPCo.
Pontem Analytics Visits Nigeria
The article would not be complete without a recap of Pontem's recent visit to Nigeria in February 2024. A three-member delegation from Pontem embarked on the trip to further explore and solidify partnership discussions with our now strategic partners. It proved to be an enriching experience, providing valuable insights into various aspects of Nigeria for all attendees.
Political and economic context: The trip took place against the backdrop of a relatively stable political climate but challenging economic conditions, characterized by a declining Nigerian naira. However, while the Pontem team was in Nigeria, they witnessed the government's proactive measures to address the economic challenges, leading to a gradual appreciation of the naira during their stay. This positive trend has persisted since then, supported by the "GrowNairaBuyNaija" slogan.
The vibes: The entertainment scene in Nigeria proved to be exceptional. During their visit, the Pontem delegation had the unique opportunity to attend the "Night with The Generals" concert featuring renowned Afrobeats artists like Davido, Flavour, Asake, Kcee, and Zlatan. The concert coincided with the African Cup of Nations Finals, where Nigeria competed against the host nation Ivory Coast. Emotions ran high as the match was streamed live at the concert. Two members of the Pontem delegation, Tommy Golczynski from Pontem USA and Keza from Pontem Africa, proudly sported the Nigerian national football team jersey while enjoying the event in style.
Visit to the coastline: The coastline of Lagos, Nigeria, is truly stunning. During the visit, the Pontem delegation had the opportunity to explore "Good Beach" and admire both its beauty and its importance to Nigeria's tourism and economy.
Beauty lies in the eyes of the honest
Temitope Solanke
Courtesy visits to prominent Nigerians and organizations: Paying homage to those deserving of it is quite important in African culture. It shows respect and regard. While constrained by word limit, only two visits will be shared. The delegation visited the home of Otunba Tunji Lawal Solarin (TLS), the founder and former chairman of Eterna Oil and Gas, who has had advisory roles to several presidents of Nigeria in the area of energy and power. Also in attendance at the home of Otunba TLS was Engr. Wole Ogunsanya, the CEO of Geoplex and chairman of PETAN. Otunba TLS expressed his optimism of the Nigerian oil and gas industry and encouraged Pontem to stay engaged in the thriving activities in the sector. Pontem’s co-founder, Tommy Golczynski expressed his appreciation to Otunba TLS for hosting the delegation, his advice and encouragement. The following day after, Pontem was invited to a dinner at the highly esteemed Metropolitan Club in Victoria Island Lagos, where industry leaders and champions gather for recreation, business dinners and camaraderie. It is a member only club, chaired by Mr. Fola Adeola, who is a household leader in the banking industry and a former vice-presidential candidate of a major party in Nigeria. The dinner was attended by prominent chairmen, owners and CEOs of oil and gas companies, banks, titans of industries and elder statesmen.
Summary
Nigeria, often hailed as the giant of Africa, represents not just its own success but a beacon of hope for the entire continent. Despite boasting a mature oil and gas industry, Nigeria still holds vast untapped potential in the energy sector. Addressing energy poverty, a significant challenge for both the country and the continent, requires efficient, safe, and sustainable exploration and development of Nigeria's resources. Pontem has strategically partnered with Nigeria to support these efforts. With several ongoing projects and more on the horizon, coupled with the completion of the Dangote refinery, Pontem remains optimistic about the Nigerian oil and gas industry's ability to exceed expectations and make significant strides towards ending energy poverty.