Chevron to Sell Stake in Yinka Folawiyo Oil Block

As indigenous oil firm Yinka Folawiyo Petroleum Company (YFP) continues in its quest to commence oil production from its Aje field, in Oil Mining Lease 113, one of its joint venture partners Chevron Nigeria Deepwater H Limited, a subsidiary of US oil giant Chevron Corporation, has moved to sell its stake in the oil block, THISDAY (Lagos) reported Sunday.

The Aje field was discovered in 1996, in water depths ranging from 328 - 4,921 feet (100 - 1,500 meters) off the coast of Nigeria, about 40 miles southwest of Lagos.

When it is brought on stream, Lagos State will join the league of oil producing states in Nigeria, and could entitle the state to 13 percent derivation based on the?Onshore/Offshore Dichotomy Abolition Act of 2004, which entitles littoral states to derivation from crude oil produced on offshore locations within water depths of less than 200 meters isobaths.

YFP holds 60 percent interest in the block, while Chevron Nigeria Deepwater Ltd, Vitol Exploration Nigeria Ltd, Panoro Energy ASA, and Providence Resources Oil and Gas, an Irish firm hold the remaining 40 percent.

It was learnt that Chevron as technical advisor and operator of the block, owns 45 of the 40 percent interest in the oil field, but now plans to sell the 45 percent to Energy Equity Resources Limited (EER) which was once a joint venture partner to Panoro Energy.

Panoro is an international independent oil and gas company with offices in Oslo, London and Rio de Janeiro, and has a 6.502 percent stake in the OML 113.

Industry sources told THISDAY at the weekend that part of the deal could see EER take over operatorship of the block in place of Chevron.

EER is a London-based oil and gas company with Nigerian ownership. It currently has operations in the Joint Development Zone between Nigeria and Sao Tome and Principe, in Block 1, as well as in OML 115, an offshore block near the giant Zafiro and Alba field bordering Equatorial Guinea, and OPLs 281 and 233 in the Niger Delta.

However, YFP sources said that the transfer of operatorship is not possible, stating that while Chevron is at liberty to sell its stake in OML 113 to a third party, the operatorship will revert to YFP because the JV agreement stipulates that in the event the technical partner (Chevron) withdraws or sells its interest to a third party, operatorship shall be retained by Yinka Folawiyo Petroleum.

The Aje field was discovered in 1996, in water depths ranging from 100 -1,500 metres off the coast of Lagos. Unlike most concessions which are tertiary sandstones, Aje has multiple oil, gas and gas condensate reservoirs in the Turonian, Cenomanian and Albian sandstones, and as such has more affinity with the recent Jubilee and Tweneboa discoveries offshore Ghana.

Four wells have been drilled to date in the Aje field. Aje-1 and 2 tested oil and gas condensates at high rates. Aje-4, drilled in early 2008, logged significant pay and confirmed the presence of four productive reservoirs. The Aje field has full 3D seismic coverage.

There is a unique gas sales opportunity available to the partnership, which also includes Vitol and Providence Resources, via access to the West Africa Gas Pipeline project ("WAGP").

The WAGP was commissioned in May 2009 to provide Nigerian gas to end-users in Benin, Togo and Ghana, and is routed directly through OML113, only 5 kilometres from the Aje field.

The location of the Aje field, lying 26 miles (43 kilometers) south west of Lagos, may also provide a ready market for gas and associated LPG.

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