Savannah’s plans for delivering the R3 East development continue to progress with the intention to commence installation of an Early Production System (“EPS”) by the end of FY 2021, market conditions and financing permitting. Significant further potential on the Savannah PSC areas remains, with 146 further potential exploration targets having been identified for future drilling consideration.
Achieving first oil from Savannah’s discoveries in Niger is a key strategic goal for the Company and has the potential to deliver meaningful cash flows for the business. In 2018, Savannah launched its maiden exploration drilling campaign on the R3 East portion of the R3/R4 PSC area, delivering 100% success rate on the five wells drilled – Bushiya, Amdigh, Kunama, Eridal and Zomo. The Company delivered this drilling campaign with no Lost Time Incidents and ahead of budget.
In April 2019, we formally submitted the field development plan for the R3 East area Early Production Scheme (“EPS”) to the Ministry of Petroleum for approval. The EPS is intended to develop resources discovered on the R3 East portion of the original R3/R4 PSC area.
In 2019, we completed the Pre-Stack Depth Migration re-processing of the R3 East 3D seismic dataset, which showed an overall improvement in seismic imaging (better event continuity and fault definition) at all levels versus the existing Pre-Stack Time Migration dataset. The interpretation phase, which commenced in June 2019, will assist in confirming appraisal and development drilling locations as well as identifying further prospectivity.
Consistent delivery of operations within budgeted time
Our plan to first oil
The EPS is composed of two phases, with a first phase expected to deliver an initial production of up to c. 1.5 Kbopd to the local Société de Raffinage de Zinder (“SORAZ”) refinery, which is connected to the ARB at the Goumeri Export Station (“GES”) via the 463km Agadem-Zinder pipeline. In this first phase, following testing of our Amdigh-1 and Eridal-1 wells, processed crude will be trucked from Amdigh 120km to the GES. Depending on field performance, Savannah anticipates in a second phase to build a Central Processing Facility (“CPF”) at Amdigh which will act as a gathering and processing station for crude from all current and future discoveries. Production is then expected to ramp up to 5 Kbopd with the processed crude being sent to the GES via a newly laid 90km pipeline.
Niger-Benin export pipeline
In September 2019, a Transportation Convention was signed between the China National Petroleum Corporation (“CNPC”) and the Republic of Niger in relation to a new crude oil export pipeline from the Agadem Rift Basin (“ARB”) to the Atlantic coast in Benin (the “Niger-Benin Export Pipeline”). This pipeline is expected to run for approximately 2,000km from the ARB in Niger to Port Seme on the Atlantic coast in Benin and is believed to be CNPC’s largest ever cross-border crude oil pipeline investment. Following the signature of the Transportation Convention, His Excellency President Issoufou Mahamadou of Niger officially launched the surface infrastructure works for the Niger-Benin Export Pipeline at a ceremony attended by Savannah representatives on 17 September 2019.
The construction of the Niger-Benin pipeline by CNPC, which is expected to be complete in 2022 is a material development for Savannah. Once initial production starts and following the planned ramp up to 5.0 Kbopd, the pipeline will provide an important export route and the ability to better monetise our existing and future oil discoveries in the ARB. In addition, the new pipeline will reduce the need to truck the produced oil, significantly lowering the potential environmental exposure.
Niger’s domestic oil consumption is relatively low (currently approximately 10 Kbopd), meaning a significant proportion of existing oil production in the country is exported, largely by truck and road to northern Nigeria. The majority of oil planned to be produced from future developments, including from CNPC next major phase of development on the Agadem Production Sharing Contract (“PSC”), is expected to be exported.
Proposed Niger-Benin pipeline route
The Transportation Convention follows the signature in August 2019 of the Niger-Benin Pipeline Construction and Operation Agreement between CNPC and the Republic of Benin, as well as the upstream approval granted by the Republic of Niger to CNPC in June 2018 in relation to the Agadem PSC Exclusive Exploitation Area 3, the production from which is expected to be exported from Niger using this pipeline. Under the terms of Savannah’s licences, the Petroleum Code of Niger and its Implementing Decree, Savannah is entitled to access the Niger-Benin Export Pipeline and expects there to be spare capacity to enable the monetisation of further discoveries within our licence areas. Commencement of construction of the Niger-Benin Pipeline is therefore a major positive for Savannah’s Niger business unit. CNPC has confirmed that construction, which is expected to transform Niger into a major oil producer in West Africa, is expected to be completed in 2022. The project has the potential to deliver significant economic growth for the country and the population of Niger.
Exchange of documents and greetings between Mr Wang Zhong Cai (President of China National Oil and Gas Exploration and Development Corporation (“CNODC”)) and Foumakoye Gado (Niger Minister of Energy and Petroleum) at the Transportation Convention signature ceremony in September 2019
His Excellency President Issoufou Mahamadou of Niger and Mr Wang Zhong Cai (President of CNODC) at the first stone ceremony for the Niger-Benin pipeline held in Koulélé, Agadem in September 2019
Savannah’s team of Mohamed Silimane (Director of PR and Stakeholder Relations), Idriss Naino Jika (Head of Site (Operations)) and Moussa Chetima (HSE Officer) greet His Excellency President Issoufou Mahamadou at the first stone ceremony for the Niger-Benin pipeline held in Koulélé, Agadem in September 2019
His Excellency President Issoufou Mahamadou signing the pipeline at the first stone ceremony for the Niger-Benin pipeline held in Koulélé, Agadem in September 2019