With the new R1234 PSC in place, Savannah is progressing our plans for delivering the R3 East development with the intention to continue to work on the Early Production System (“EPS”) 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.
Subsurface work in Niger progressed well during the year following the completion of our Pre-Stack Depth Migration (“PSDM”) processing of the R3 East seismic data in 2019, which allowed us to complete the seismic interpretation of the R3 East area in 2020. The PSDM dataset showed an overall improvement in the interpretation of faults and horizons, supported by attributes analysis which also improved our structural, stratigraphic and sedimentological interpretations. Based on the newly interpreted PSDM, 3D geocellular models have been built for the Amdigh and Eridal discoveries. The resulting oil in place volumes were in line with previously reported estimated figures from the earlier Niger CPR.
Consistent delivery of operations within budgeted time
Our plan to first oil
Savannah remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South East Niger.
As previously announced, the intention was to carry out a well test programme on our principal discoveries in Q4 2023. However, following recent political events, this timeline will be subject to further revision due to restrictions imposed by the Economic Community of West African States on Niger, which has resulted in the closure of the border between Benin and Niger. This has created logistical challenges for companies operating in Niger and, specifically for Savannah, in relation to the importation of the necessary equipment to complete our planned well test programme. A further update in relation to timing will be provided in Q4 2023.
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.
The construction of the Niger-Benin pipeline by CNPC, which is expected to be completed in 2023 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. Niger’s President H.E. Mohamed Bazoum confirmed in October 2022 that the pipeline is expected to be completed by the end of 2023. The West African Oil Pipeline Company (WAPCO) also confirmed in October 2022 that 51.5% of the work had been completed at that time. 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