A Review of the Nigerian Energy Industry

Contract Dispute: Firm seeks $50m claim against CAMAC Energy

20 January 2015, Lagos – Houston-based Northern Offshore Limited has announced a contract dispute with the Nigerian affiliate of CAMAC Energy, another Houston-based company and seeks to pursue $50 million claim against it (CAMAC) for alleged breach of contract.

CAMAC_Energy-e13208780737101The company said in a statement at the weekend that it had issued a Notice of Contract Termination to Oceanic Consultants Nigeria Limited (Oceanic), an affiliate of CAMAC Energy Incorporated for the Energy Searcher drilling contract.

According to the statement, CAMAC guaranteed Oceanic’s obligations under the drilling contract in Nigeria.

Northern Offshore further stated that it believes that Oceanic breached various terms of the drilling contract and will be filing a claim for in excess of $50 million associated with this matter pursuant to the arbitration provisions of the contract.

“The company hopes to have the rig demobilised out of Nigeria by late January 2015,” the statement added.

Northern Offshore did not provide details of the contract breach by Oceanic Consultants Nigeria Limited.

As part of its development and exploration programme in 2014, CAMAC Energy had announced  the signing of a long-term drilling contract with Northern Offshore for the drillship, Energy Searcher.

The rig was delivered to the Oyo field in Oil Mining Lease (OML) 120 offshore Nigeria, where it commenced drilling activities in the first half of 2014.

The agreement covered an initial period of one year, with an option to extend the contract for an additional one-year.

The Energy Searcher’s capabilities include drilling to total depths of up to 25,000 feet, and in water depths of up to 2,500 feet.

The Oyo Oilfield is located about 75 miles off the Southern Nigerian coast in deep-water.

CAMAC Energy has an interest in a production sharing contract (PSC) covering petroleum operations in the Oyo Oilfield under the OML 120.

Under the PSC, CAMAC Energy has partnered with Nigerian Agip Exploration Ltd (a subsidiary of Italy’s ENI SpA); the Oyo Oilfield’s other interest holder and operating contractor.

The Oyo Oilfield commenced production in December 2009. The initial two subsea production wells are connected to Armada Perdana, a Floating Production Storage and Offloading (FPSO) vessel.

The FPSO has a treatment capacity of 40,000 barrels of liquids per day, with gas treatment and re-injection facilities, and is capable of storing up to 1 million barrels of crude oil.

Northern Offshore Limited had in an early operational update in late 2014 announced that the drillship Energy Searcher, which is under contract in Oyo field, resumed normal operations on the September 23, following repairs to the control hoses to the unit’s blowout preventer.

“The repairs were completed somewhat earlier than previously anticipated and therefore, the Company now expects its consolidated financial results for the third quarter 2014 to be negatively impacted by a reduction of approximately thirty nine days of zero revenue rather than the forty five days previously estimated,” said the company.

Northern Offshore is a Bermuda holding company which operates offshore oil and gas drilling units and one production vessel in various markets around the world, including the North Sea, the Indian Ocean, Southeast Asia and West Africa.

The company’s fleet consists of four drilling units – a drillship, a semisubmersible and two jackup drilling rigs and one floating production facility.

Additionally, the company has under construction two 350′ high specification jackup drilling rigs, with delivery expected in the first and third quarters of 2016.

Oceanic Consultants is an international engineering consulting company that primarily serves the Nigerian offshore and onshore energy industry.



– This Day

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