Rarely in life do you get a second chance. But since we are almost Back to December, it is time to revisit that vintage Taylor Swift classic, where the singer describes how she messed up a relationship and begs for another chance.
With that attitude, she could stand for president of Argentina and Nigeria, countries that are both trying to put past troubles and failures behind them, begging international oil and gas investors for forgiveness… and new investment.
Surely, things will be different this time, right?
When we last looked at Argentina in September, the insolvent South American country had just been hit with a US$16 billion (with a "b") defeat in a lawsuit by angry investors in the American courts over the country's decision to nationalise YPF, the country's largest oil and gas company, more than a decade ago. Many foreign YPF shareholders were not compensated when their shares were seized by then president Cristina Fernández de Kirchner in 2012, and they took their grievances over the nationalisation to court.
Now Ms Fernández de Kirchner's Peronist party has been soundly defeated in the polls, and a shaggy-haired libertarian radical named Javier Milei will be sworn in as president on December 10. He has promised to privatise YPF and shut down the central bank, and he is even hoping to double the country's oil production.
In an interview in October, Mr Milei (not especially controversially) declared that the Argentinean peso was worth "less than excrement" and made "blowing up" the central bank a key campaign promise as part of his plan to dollarise the economy, tame the country's triple-digit annual inflation, and rebuild its disastrous public finances.
Argentina produces about 550,000 barrels of oil a day, about the same as Azerbaijan. This would have been great, except for the fact that Argentina is a country of 45 million people and runs a US$12 billion a year trade deficit in oil and gas, whereas Azerbaijan is a country of just ten million people that exports around 440,000 barrels of oil per day as well as copious quantities of gas.
Boosting Argentina's oil and gas production would be a major step to helping Mr Milei's plans after decades of economic failure, and there is good news on all fronts for him.
Equinor is planning to drill Argentina's first deepwater well in the first half of next year with its so-called Argerich-1 wildcat exploration well, 300 kilometres off the coast of Mar del Plata in water depths of over 1,500 metres. This well, which is expected to be drilled by the drillship Valaris DS-17, marks the commencement of deepwater exploration in the Argentinean sector of the Atlantic Ocean. Recent discoveries in Namibia have spurred interest in blocks on the opposite side of the Atlantic, as these are believed to have similar geology and prospectivity as the phenomenally successful "billion barrel" blocks operated by TotalEnergies and Shell in southern Africa.
It is estimated that the single well will cost Equinor and its partners YPF and Shell up to US$100 million and the drilling is scheduled to last 60 days. Besides drilling Argerich-1, Equinor and its partners will also also shoot a 3D seismic survey on Block CAN-100, as well as in Blocks CAN-108 and CAN-114, also in the Argentina Norte basin.
Fénix is a Spanish word that translates into "phoenix" in English. Saipem has begun work on TotalEnergies' Fénix project off Tierra del Fuego, which will be producing around 10 million cubic metres per day of natural gas at production start-up expected in early 2025. Total says this is 70,000 barrels per day (bpd) of oil equivalent.
Saipem used the construction vessel Normand Commander to install the project's first pipeline sleeper in June, officially launching the campaign. Now Bourbon Subsea has mobilised Bourbon Evolution 808 out of lay-up in Africa to join the construction campaign.
Total says it is investing approximately US$700 million to develop the Fénix field. The gas will be exploited through three horizontal wells to be drilled by the jackup Noble Regina Allen next year from a new unmanned platform, which Saipem will install in 70 metres of water. The platform is being constructed in Ravenna by Italian fabricator Rosetti Marino.
The gas will be transported through the Saipem-laid 35-kilometre-long subsea pipeline to TotalEnergies' Véga Pleyade platform, then treated onshore at the Rio Cullen and Cañadon Alfa plants. Last year, the Argentinean government granted Total a ten-year extension over the CMA-1 concession, where Fénix is located, until the end of April 2041.
There is also excitement for Milei onshore, where Reuters reported that the Vaca Muerta ("Dead Cow" in English) shale formation could produce more than one million barrels per day of crude oil by 2030, if Argentina could resolve pipeline and transport capacity bottlenecks. That is the big "if".
Vaca Meurta is a shale oil formation the size of Belgium located onshore in Argentina's southern Patagonia region. Current production there is just under 300,000 bpd now, but consultancy Rystad Energy is optimistic that additional rigs being deployed could see production soar, which would fulfil Argentina's ambition of becoming a liquefied natural gas (LNG) exporter. Vaca Muerta holds the world's second largest shale gas reserves and the fourth largest shale oil reserves. YPF is the largest player in Vaca Muerta, amid local controversy over the impact of its drilling.
YPF is definitely hoping for a second chance as an LNG exporter.
In June 2019, YPF shipped its first LNG cargo from the Tango Floating LNG unit, which it had leased from Belgium's Exmar. The Tango FLNG has production capacity of about 70 million cubic feet (1.98 million cubic metres) of gas per day, and initial expectations were that the unit would export around 500,000 tonnes, eight LNG cargoes annually for ten years, with feedstock coming from YPF's Vaca Muerta fields.
Unfortunately, YPF faced operational and pipeline constraints to pump the shale gas to the Exmar unit, so in 2020, it declared force majeure on the charter of the FLNG vessel. Exmar then took YPF to arbitration, and YPF agreed to pay the Belgian contractor US$150 million as compensation for the early termination of the charter. Exmar then sold the ship to ENI Congo for around US$700 million last year, as we reported.
Let's hope Mr Milei is not flogging a dead horse…er, cow with his hopes for a revival in Vaca Meurte.
Usually, we don't do downstream, but we will make an exception for Nigeria, where the country's richest man, cement tycoon Aliko Dangote, will shortly commence domestic production at a newly completed US$20 billion oil refinery, which he built from scratch in a swamp outside Lagos. This is sorely needed.
Like Argentina, Nigeria runs a chronic trade deficit in refined products, even though it produces over a million barrels of crude oil per day. Being Nigeria Like many large infrastructure projects, the scheme is several years late and US$8 billion over budget. It is 20 per cent owned by the Nigerian National Petroleum Corporation (NNPC), after the state oil company made a US$2.76 billion equity purchase in 2021.
When running at full capacity of 650,000 barrels per day, the Dangote refinery should eliminate Nigeria's US$23 billion foreign-exchange bill for the import of refined petroleum products and its US$3 billion import bill for fertiliser, helping to stabilise a country, which has seen its currency collapse this year, with the Naira halving in value.
Shipping crude direct to Dangote's huge facility might (That's a big might.) reduce some of the endemic oil theft from Nigeria's production facilities.
One of the standard complaints by Nigerians is that the country was pillaged by years of British colonial rule, and so traumatic was the experience that it is no wonder the country remains economically disadvantaged even today. Indeed, it is true that Nigeria became a British protectorate in 1901 and remained under British rule until 1960, when it gained its independence, so it has now been independent for longer than it was under British control.
But just as Argentina botched its previous LNG project, so Nigerian efforts to maintain a domestic refining industry have been an abject failure. This history of the four refineries that were built in Nigeria shows that nationalisation by NNPC led to declining productivity, then a complete shut-down of operations due to corruption and state plunder.
The 38,000bpd Old Port Harcourt Refinery was completed and commissioned in 1965 by Shell and BP. The Federal Government of Nigeria acquired a 50 per cent shareholding and, in 1972, increased its shareholding to 60 per cent. It then took total ownership of the facility, which Shell has then increased to 60,000 bpd capacity, and renamed it NNPC Refinery, Port Harcourt.
Additional refineries were later built by NNPC, being Warri Refining and Petrochemical Company with capacity of 125,000 bpd, which was commissioned in 1978; Kaduna Refining and Petrochemical Company; with capacity of 110,000 bpd, which was commissioned in 1980; and New Port Harcourt Refinery with capacity of 150,000 bpd, which was commissioned in 1989.
Despite the fact that the Nigerian state had allocated US$25 billion (with a "b") to the maintenance of the refineries (according to national media), pipeline vandalism, the theft of equipment and funds, and downright incompetence meant that today, not one of these refineries is producing a single barrel of petrol or diesel.
"The problem of poor governance has been recognised as a key factor that has affected the performance of the refineries," as the study concluded. "The refineries are 100 per cent owned by the government and have no independent control of or access to their funds."
NS Energy reported that in 2021, the Nigerian Federal Executive Council, presided over by then-President Muhammadu Buhari, approved the sum of US$1.5 billion (about NGN575 billion) for rehabilitation works on the New Port Harcourt Refinery. To date, the facility remains out of service. It is not clear how the US$1.5 billion is being spent.
Let's hope Mr Dangote is able to protect his facility from the depredations of NNPC and the Nigerian government and finally produce meaningful quantities of refined products for his desperately poor nation.
In June, we covered the dramatic fall from grace of Godwin Emefiele, Nigeria's former central bank governor, who was first suspended and arrested for malfeasance.
Earlier this month, a court in Abuja released him on bail after he spent a surprising five months in prison following his dismissal by incumbent President Bola Tinubu. He was initially charged with the illegal possession of a shotgun and over one hundred cartridges, and last week, six charges relating to procurement fraud were added, relating to the awarding of contracts by the central bank for the supply of 37 Toyota Hi-luxes and various other vehicles.
It is good to see some consequences and repercussions, although one suspects that the Toyotas are simply the visible tip of a proverbial corruption iceberg.
Endemic bad management has plagued Nigeria's upstream sector as well as its downstream sector. The Asset Management Corporation of Nigeria (AMCON) seized two jackup drilling rigs, Rig Onome and Rig Oritsetimeyin, which were built by Seawolf Oil Services, ostensibly at a cost of US$508 million. First Bank of Nigeria took possession of the rigs following Seawolf's failure to pay back a loan of over NGN100 billion, which the bank then sold to AMCON in 2011.
AMCON struggled to find buyers for the jackups, which were laid up in Lagos Marina, before it recently found a buyer for Rig Oritsetimeyin. The rig was reflagged to the Czech Republic, most implausibly, and put to work in the Niger Delta.
This month, Rig Onome also returned to work… as a destination for Estonian slackliner and Guinness World Records holder Jaan Roose, who walked on a rope slung from Sterling Towers to Rig Onome in Lagos. The footage of him waving the Nigerian flag whilst barefoot on a wire and filming himself with a selfie stick whilst heading towards the rig is truly spectacular.
Perhaps Transocean can rise to the challenge and offer up its six laid-up drillships in Eleusis anchorage in Greece to Red Bull and Mr Roose? Those drilling towers would make a perfect slackline challenge, as per the poignant shots of the cold-stacked sextet on the shipfriend.gr website.
I was certainly impressed by the Youtube footage of Red Bull's high-flying Estonian slackliner walking on the tight rope to the jackup in Lagos. But if you only watch one marine video this week, it has to be… the celebration of the Thập kỷ chuyển đổi- Decade of transformation at Haduco, Vietnam's number one offshore vessel operator.
The video has everything – enhanced flash-effect glints, a Mercedes S-class on the quayside, even golden sparkles cascading around the company's visionary chairman, Pham Xuan Thang, who states that his staff must put "200 per cent effort into entering international markets," as well as spectacular drone footage of Haduco's vessels towing. Best of all, the whole office staff, dressed in neat naval uniforms, chant the company's name.
Indeed, Mr Pham has achieved remarkable success to propel the Vietnamese vessel owner into the top five in Asia-Pacific, with a fleet of 35 offshore support vessels of over 5,150hp (3,840kW) all bought second hand at cheap prices in the nadir of the market.
I don't think anyone would have guessed a decade ago that today, the company's fleet would be larger than those of POSH and MMA Offshore, let alone Pacific Richfield and Emas Offshore (both in liquidation) or Pacific Radiance or Swire Pacific Offshore (both sold). Today, Haduco vessels work as far afield as Myanmar and India. The Hai Duong prefix in the firm's ships' names literally means "Ocean Sun."
A close look at the company's fleet shows its acquisitions include vessels from DOF Tidewater, Maersk Supply Service, Farstad, Deep Sea Supply, and Nam Cheong, with anchor handlers up to 200 tonnes bollard pull, and the former Skandi Giant, an ex-DOF anchor handling tug supply vessel (AHTS).
In terms of production values, scripting, and mobilisation of the company's staff, Haduco has really thrown down the gauntlet. Let's hope the festive season brings Tidewater, "New Solstad", Bourbon, and Edison Chouest into the promotional video-making game.
Lights, camera, action, Quintin!
Background reading
The BBC coverage of Godwin Emefiele's July court appearance is a must read, featuring a large red Bible, the Nigerian secret police beating up his lawyers outside the court, and allegations of the possession of a shotgun.
Past coverage of other Nigerian corruption is here. The Serious Fraud Office in the UK should begin its prosecution of former Nigerian oil minister and OPEC president Diezani Alison-Madueke shortly. This poem captures the popular joy at the fall of the corrupt central bank governor.
Back to December doesn't just mean Taylor Swift. It also means we will be running our seasonal "Twelve Days of Christmas." We've just realised that for a full year, our 2022 article spelling the name of Norway's Odfjell Drilling incorrectly has stood. So, our belated New Year's resolution will be to spell Odfjell correctly. If you have any ideas of Christmas stories to include in this year's feature, please email us at editor@bairdmaritime.com.