Fresh worries for Vitol as Agbami and Akpo fields experience decline

 

 

By Gbenga Adedayo

The much celebrated buy out of Petrobras of its 50% stake in a Nigerian oil and gas exploration venture by a consortium led by top oil trader, Vitol for $1.407 billion, may have turned out to be a white elephant deal, as the targeted two oil fields are currently experiencing decline, making the deal unprofitable.

Petrobras’ holdings in the two targeted fields were its indirect 8 percent in Oil Mining Lease (OML) 127 containing Agbami field operated by Star Deep Water Limited, an affiliate of Chevron and, indirect 16 percent interest in OML 130 operated by Total Upstream Nigeria Limited, made up of Akpo and Egina fields.

Before the deal was consummated, the Agbami and Akpo fields had a combined production of 368,000 barrels per day, and this was further projected to increase to 568,000 barrels per day by the second half of 2019, a development that made the deal a rare investment opportunity for Vitol in the upstream oil sector.

Combined production of the two fields has currently declined to 228,000 bpd from the initial 368,000 bpd.  Of this, Agbami which started production in 2008 has declined to 108,000 bpd, while Akpo field which came on stream in 2009, is currently producing 120,000 bpd.

The consortium for the purchase was led by Vitol and comprising Africa Oil Corp, Delonex Energy Ltd. and Vitol Investment Partnership II Ltd.  This is made up of Africa Oil’s 25%, Delonex Energy Ltd’s 25% and Vitol Investment Partnership II Ltd’s 50%.

The sale was part of the Brazilian company’s plan to offload $21bn assets by the end of last year to help reduce its huge debt profile. Petrobras’s net debt stood at $73.66bn by the end of June 2018, down 13 per cent from $84.87bn at the end of 2017.