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Yinka Folawiyo brings in U.S. oil firm
to Develop oil Block near Benin Republic


Lagos based Yinka Folawiyo Petroleum Company Ltd (YFP) has teamed up with a U.S. firm Syntroleum Corporation to develop an oil and gas discovery offshore Nigeria. The oil block which is owned 100 per cent by YFP, is to cost approximately $10 million to develop. The oil block license covers approximately 454,000 acres located offshore in western Nigeria near the border with Benin Republic.

The oil block was originally granted to YFP in 1991 under the federal government's Indigenous Programme, which was put in place to encourage the development of a locally owned and operated Nigerian upstream oil industry. Any crude oil and condensate produced is subject to attractive fiscal terms under Nigeria's royalty and petroleum profits tax regulations. The new initiative could be additionally enhanced by Nigeria's fiscal incentives for gas, designed to encourage natural gas development projects. As a further economic plus, volumes produced from the oil field would be exempt from inclusion within Nigeria's OPEC quota under current rules. Syntroleum's GTL Barge is designed to produce a nominal 20,000 barrels per day of oil and natural gas.

Yinka Folawiyo Petroleum Co Ltd. (YFP), a leading, privately-owned Nigerian oil independent, is a member of the Yinka Folawiyo Group of Companies (Folawiyo Group) based in Lagos. In addition to its upstream oil and gas business, the Folawiyo Group is a leader in private-sector electrical power generation in Nigeria through its wholly owned subsidiary Yinka Folawiyo Power Ltd (Y.F. Power). Y.F. Power facilitated with its partners the first Independent Power Project (IPP) in Nigeria with nine natural-gas-fired power barges, which provide electric power to the Nigerian national grid. The Folawiyo Group is also a leader in the nation's retail banking and real estate sectors, and owns extensive transportation, agribusiness and fisheries operations, among others.

Tunde Folawiyo, Group Executive Director of the Yinka Folawiyo Group of Companies and chief executive of YFP said "Syntroleum's GTL technology offers a viable path to monetize the significant gas accumulation which has been discovered in the Aje Field." "YFP has been seeking partners with a comprehensive approach to the Aje Field development which would include generating value from our natural gas volumes, in addition to developing Aje's crude oil and condensate volumes. We believe Syntroleum's Aje Field development concept will generate significant additional value from our gas through the application of their GTL Barge technology. We also recognize additional gas-prone exploration targets on trend with Aje on OML 113 which can provide future opportunities for our group. We believe that having a viable gas development solution is key to both the efficient development of OML 113 and to unlocking the value of Nigeria's huge proven gas reserves."

Joseph Bruso, President of Sovereign Oil & Gas in Houston said ''Because this field is still in the appraisal stage, there is still risk. If the Aje-3 appraisal well is successful it could confirm that the Aje Field is capable of producing 20,000 to 40,000 barrels per day of crude oil and condensate, and another 20,000 barrels per day of GTL products and natural gas liquids. This project demonstrates Syntroleum's ability to use its GTL technology to obtain an equity position in natural gas projects with potentially large liquid hydrocarbon volumes. We are extremely pleased to join Mr. Folawiyo and YFP on the OML 113 project, and while there is additional appraisal work to be done to confirm commerciality, we look forward to implementing a successful oil and gas development of the Aje Field incorporating the GTL Barge."

Following the successful drilling, testing, and suspension of the wells in 1997, OPL 309 was converted to OML 113 in June 1998 with an initial term of 20 years. Under the hydrocarbon laws of Nigeria, this conversion to an Oil Mining License marks the recognition by the federal government that an exploitable hydrocarbon accumulation has been discovered. The term of OML 113 runs through July 2018 and may be extended upon application to the Nigerian petroleum authorities.

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