East Africa’s Oil Industry: A New Story In The Making (Article)
The recent acquisition by Total of Tullow Oil’s entire interests in the Lake Albert Development Project in Uganda, including the East African Crude Oil Pipeline, marks the beginning of a new chapter for East Africa’s energy industry. To dissect the deal and discuss its wider implications for the region, the African Energy Chamber organised a webinar with leading regional industry experts, held under the Chatham House Rule.
Featuring key officials and representatives from Stanbic Bank, Standard Bank, Shell, Baker Hughes and the Kenya National Oil Company, the webinar was hosted by Eng. Elizabeth Rogo, Founder & CEO of TSAVO Oilfield Services and President of East Africa at the African Energy Chamber.
Good or bad deal?
Under the agreement announced last week, the overall consideration paid by Total to Tullow will be $575m, with an initial cash payment of $500m at closing and $75m when the partners take the Final Investment Decision (FID) to launch the project. Under the terms of the deal, Total will acquire all of Tullow’s existing 33.3334% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. The Lake Albert project, also called the Tilenga Project, has a production capacity of up to 230,000 bopd, which would propel Uganda in the top 5 of sub-Saharan Africa’s oil producers. In addition, the proposed 60,000 bopd refinery and some of the overarching issues were mentioned.
The deal is a win-win for all stakeholders involved. First, for Total, who ends up acquiring Tullow Oil’s entire interests in the Lake Albert development project for less than $2/barrel. Then, for Tullow Oil, whose debt is rising and who is looking at raising $1bn by selling some of its key assets. The company’s shares rose on the announcement of the deal. Finally, it is a win for Uganda’s oil industry and local jobs. After years of deliberations and debate, the closing of the sale allows the country and oil companies to move the conversation towards FID and practical project’s development. It also sends strong signals to the rest of the region, and Kenya in particular, to do everything possible to unlock their own oil & gas potential.
While visibility on the FID’s timeline remains unclear, the project is very competitive even in a depressed low oil prices environment. The cost per barrel of the integrated Lake Albert Development Project is indeed estimated at around $50. This is explained in part because the country’s hydrocarbons are within shallow deposits which are less drilling intensive and do not need as much casing, tubing and completion work. While Total is following a global trend of drastically cutting expenses in light of the COVID-19 pandemic and the collapse of oil demand and oil prices, the project’s economics make it one of the most likely to get FID in the near future.
A key unanswered question for now is whether CNOOC will exercise its pre-emption rights under the joint operating agreements it has with Tullow Oil and Total as a joint venture partner, like it did in the failed 2019 sale. A scenario under which the Chinese major does exercise once again its pre-emption rights is very likely, and will in fine depend on China’s overall strategy for the wider East Africa region.
Pipeline matters
The moving forward of the Lake Albert Development Project, and its export pipeline, is a major step forward de-risking other potential oil & gas projects in East Africa and making them attractive for investments and financing. Given the current industry dynamics and potential liquidity constraints, participants agreed that a scenario under which two regional pipelines would be laid was becoming more challenging. The size of Uganda and Kenya’s discovered reserves along with the capital and financial muscles of their operators will be factors weighing in which pipeline gets executed.
The EACOP was, however, a matter which participants thought could become contentious for the execution of the overall Lake Albert project, and the development of the region’s oil sector. Key questions remain to be answered, chief amongst them being Tanzania’s business environment and the country’s ability to provide policy certainty on the execution of such a major infrastructure venture. Whether Tanzania decides to stick to an enabling business environment and demonstrate its willingness to comprise with international investors after years of natural resources nationalism remains another unanswered question.
The way the execution of the pipeline evolves will determine a lot of East Africa’s oil industry future. While the original northern route through Kenya was deemed less favourable, a scenario under which Total would consider buying out Tullow Oil’s assets in Kenya, where several significant oil discoveries were made, could potentially re-roll the dice in the region.
Regional content, now
Finally, and more importantly, the expected first oil from Uganda in the coming years should urgently lead to local content preparations not on a national, but a regional level.
Between the two upstream projects of Tilenga (Total) and Kingfisher (CNOOC), the pipeline project and the Uganda oil refinery project, the scale of upcoming projects in Uganda and the neighbouring countries represents billions of dollars of opportunities for local companies. However, given the under-developed nature of the local hydrocarbons services industry in East Africa, only regional partnerships and joint-ventures can result in maximising such opportunities. As the conversation in Uganda moves towards employability within local communities and ensuring that Uganda’s oil benefits the development of a strong local sector, the region as a whole needs to come together to support regional ventures. Unless companies across East Africa come together and leverage on their respective expertise and experience to work together, there is a fear that upcoming oil and gas projects will ultimately go to foreign contractors and deprive local businesses from tremendous growth opportunities. In this regard, the development of an African regional content is one of the top 10 measures that form Africa’s Common-sense Energy Agenda, released by the African Energy Chamber earlier this week.
In this context, the need to invest in education, training and skills transfer is greater than ever. The success of the region’s oil sector will depend on all stakeholders coming together to bring the East African energy story to investors
Source: Africa Energy Chamber
Source: www.energynewsafrica.com
Ghana: COPEC Warns Of Fuel Shortages If GCNET/UNIPASS Issue Is Not Resolved Immediately
The Chamber of Petroleum Consumers-Ghana, a petroleum advocacy group in the Republic of Ghana, is urging the government to ensure speedy resolution of the ongoing challenges in respect of the migration of GCNet platform to UNIPASS to avoid fuel shortages in the country.
According to COPEC, Oil Marketing Companies (OMCs) and the Liquefied Petroleum Gas Marketing Companies (LPGMCs) that had orders for supply of fuel to various outlets could not load a single litre of fuel all day on Wednesday due to the discrepancies in the migration onto the new customs system (UNIPASS) at the depots.
“This situation, if left unresolved within the next 24 hours, could and will certainly lead to serious fuel shortages across the country,” a statement signed by Executive Secretary of COPEC, Duncan Amoah said.
The UNIPASS/ICUMS platform is a new port clearing system that processes documents and payments through one window: a departure from the previous system where valuation and classification and risk management and payment were handled by different entities.
Below is COPEC’s full statement
RESOLVE THE GCNET/UNIPASS ISSUE IMMEDIATELY TO CURTAIL ANY FUEL SHORTAGES ACROSS THE COUNTRY.
The ongoing challenges in respect of revenue settlement following from a decision to migrate onto a new platform ( UNIPASS ) from the existing GCNet platform is leading to a lot of challenges with petroleum liftings across depots in the country.
Oil Marketing Companies ( OMCs ) and the Liquified Petroleum Gas Marketing Companies ( LPGMCs ) that had orders for supply of fuel to various outlets could not load a single litre of fuel all day on Wednesday the 29th of April due to discrepancies in the migration onto the new customs system ( UNIPASS ) at the depots.
A communique issued earlier yesterday from the NPA indicating a swift response to resolve the issue to enable the liftings seemed not to have yielded as most Oil Marketing Companies and the LPGMCs had to make alternative arrangements to accommodate their drivers who had been dispatched to load products from the depots across the country.
This situation if left unresolved within the next 24 hours could and will certainly lead to serious fuel shortages across the country.
One would expect that the new system would have been rolled out gradually side by side with the old system in order to help in facilitating a gradual phasing out of the existing system ( GCNet ) but the seeming haste in abandoning the old system whiles the new system ( UNIPASS) is not fully ready and integrated is clearly leading to discrepancies being witnessed and we wish for a speedy resolution to forestall any possible shortages across the country.
Our attention has further been drawn to the cutting of staff numbers by some of our Oil Companies due to the adverse effects of Coronavirus on volumes and revenues through a lot of others have refused to lay off.
In light of the above, we call on the State to ensure the various Oil and Gas Companies are not left out in the announced SME support as a lot are reeling heavily under the harsh effects of our 3 weeks lockdown and subsequent low volumes and revenues which can increase job losses and redundancy within the country.
We further call on the Regulator of the downstream ( NPA ) to also work out a mechanism to ease down on the heavy license renewal fees charged to these companies to enable them to adjust to the vagaries of the Coronavirus outbreak on their businesses with the view to ensuring they keep fuel prices lower for Ghanaians without the tendency to increase or collect their full margins which can only lead to increases in pump prices.
Finally, we will like to reiterate an earlier call on the Ghana Revenue Authority to give a moratorium for the next 6 months to Oil Companies instead of the current one spanning up to end of July to file their returns later than the current 45 days since sales volumes across the board has reduced significantly and any attempts to enforce the earlier 21 or 45-day collections could only mean going to the banks to borrow which eventually places undue pressures on them to engage in all manner of games to survive.
Signed
Duncan Amoah
Executive Secretary
COVID-19 Pandemic: Norway Cuts Oil Production By 250,000 BPD
The Norwegian Government has decided to make oil production cuts in an attempt to stabilise the oil market faster.
The Government said on Thursday that the coronavirus pandemic and the efforts to contain it in large parts of the world had a substantial impact on economic activity globally and oil demand as well.
The Norwegian authorities believe that oil production cuts will contribute to a faster stabilisation of the oil market compared to letting the rebalancing take place only through the market mechanism.
It is noteworthy that the International Energy Agency’s (IEA) latest estimate from mid-April suggests a fall in demand for oil of around 23 per cent or 23 mbpd in the second quarter.
This large and sudden fall in oil consumption represents an unprecedented event in the oil market. This, together with efforts to contain the pandemic has resulted in a large surplus of oil in the market and large quantities of oil in stock, with prices dropping about 70 per cent since the beginning of 2020.
In turn, many companies took measures to mitigate the effects of the oil price drop by slashing their capital expenditures for the year.
Norwegian Minister of Petroleum and Energy, Tina Bru, said: “Both producers and consumers benefit from a stable market. We have previously stated that we will consider a cut in Norwegian production if several big producing countries implement significant cuts. The decision by the Norwegian Government to reduce Norwegian oil production has been made on an independent basis and with Norwegian interests at heart”.
“We will cut Norwegian production by 250,000 barrels per day in June and by 134,000 barrels per day in the second half of 2020. In addition, the start-up of production of several fields will be delayed until 2021. Consequently, the total Norwegian production in December 2020 will be 300,000 barrels less per day than originally planned by the companies. The regulation will cease by the end of the year”, Bru added.
The basis for the regulation is a reference production of 1,859,000 barrels of oil per day. Thus, a cut of 250,000 barrels per day in June 2020 gives an upper limit for oil production on the Norwegian Continental Shelf of 1,609,000 barrels per day. A cut of 134,000 barrels per day in the second half of 2020 gives an upper limit for oil production on the Norwegian Continental Shelf in the same period of 1,725,000 barrels per day.
The cut will be distributed between individual fields and implemented by granting revised production permits to the relevant fields.
Companies that hold licenses in fields covered by the regulation will be affected through their ownership shares in the various fields. The effect for individual companies will thus depend on their ownership share in the various fields. The oil companies will be consulted before revised production permits are granted.
In turn, many companies took measures to mitigate the effects of the oil price drop by slashing their capital expenditures for the year.
Norwegian Minister of Petroleum and Energy, Tina Bru, said: “Both producers and consumers benefit from a stable market. We have previously stated that we will consider a cut in Norwegian production if several big producing countries implement significant cuts. The decision by the Norwegian Government to reduce Norwegian oil production has been made on an independent basis and with Norwegian interests at heart”.
“We will cut Norwegian production by 250,000 barrels per day in June and by 134,000 barrels per day in the second half of 2020. In addition, the start-up of production of several fields will be delayed until 2021. Consequently, the total Norwegian production in December 2020 will be 300,000 barrels less per day than originally planned by the companies. The regulation will cease by the end of the year”, Bru added.
The basis for the regulation is a reference production of 1,859,000 barrels of oil per day. Thus, a cut of 250,000 barrels per day in June 2020 gives an upper limit for oil production on the Norwegian Continental Shelf of 1,609,000 barrels per day. A cut of 134,000 barrels per day in the second half of 2020 gives an upper limit for oil production on the Norwegian Continental Shelf in the same period of 1,725,000 barrels per day.
The cut will be distributed between individual fields and implemented by granting revised production permits to the relevant fields.
Companies that hold licenses in fields covered by the regulation will be affected through their ownership shares in the various fields. The effect for individual companies will thus depend on their ownership share in the various fields. The oil companies will be consulted before revised production permits are granted. Chinese Oil Giant CNOOC Cuts US Shale, Canada Oil Sands Output
China National Offshore Oil Corporation (CNOOC), a major oil operator with assets around the world, is reducing its 2020 production and spending guidance in light of the unprecedented market downturn, with U.S. shale and Canada’s oil sands the main targets of its cuts.
CNOOC announced on Wednesday that it would lower its planned capex and production guidance for 2020, as “proactive measures to face the challenges” of the turbulent oil market.
“The global oil and gas market was facing an unprecedented situation in the first quarter of 2020 as impacted by the COVID-19 pandemic and sharp drop of international oil prices. In response to an increasingly complex external environment, CNOOC Limited took proactive measures to face the challenges and strived to mitigate the impact. For the rest of the year, we will continue to implement more stringent cost controls, and further strengthen our cash flow management,” CEO Xu Keqiang said in a statement.
The Chinese company will mostly reduce spending in the U.S. shale patch and oil sands assets in Canada, where production is set to be kept at minimum levels, CNOOC’s chief financial officer Xie Weizhi said on a teleconference, as quoted by South China Morning Post.
Staff layoffs cannot be avoided, the manager said.
CNOOC is the latest giant oil firm opting to reduce spending in U.S. shale. The oil patch has already seen spending and production cuts from almost all companies, including supermajors Exxon and Chevron, as the industry has been rushing to cut budgets and exposure to the Permian.
According to CNOOC’s Xie, oil will trade in the $30-$40 per barrel range for most of this year.
In key operational statistics for Q1 2020, CNOOC said that its average realized oil price slumped by 19.3 percent on the year to US$49.03 per barrel, in line with the trend of international oil prices. Overall oil and gas sales fell by 5.5 percent annually, as the lower realized oil prices couldn’t offset higher production volumes.
CNOOC cut its annual net production target for 2020 from 520-530 million barrels of oil equivalent (boe) to 505-515 million boe. Total capital expenditure (capex) for 2020 was reduced from US$12 billion-US$13.4 billion (85-95 billion Chinese yuan) to US$10.6 billion-US$12 billion (75-85 billion yuan).
Shell Cuts Dividend For First Time Since World War II
Royal Dutch Shell has cut its dividend for the first time since World War Two following the collapse in global oil demand due to the coronavirus pandemic.
According to Reuters, the energy giant also suspended the next tranche of its share buyback programme.
The move came as it announced a 46% fall in first-quarter net income to $2.9bn (£2.3bn).
Chief Executive Officer for Shell, Ben van Beurden warned of “continued deterioration in the macroeconomic outlook”.
He said Shell was taking “further prudent steps to bolster our resilience” and “underpin the strength of our balance sheet”.
Shell is cutting its quarterly dividend by two-thirds, from 47 cents to 16 cents, starting in the first quarter of this year.
The company said it had also cut activity at its refining business by up to 40% in response to the sharp fall in demand for oil.
David Barclay, senior investment manager at Brewin Dolphin, said: “Royal Dutch Shell’s decision to cut its dividend for the first time since World War Two reflects the unprecedented economic impact of Covid-19.
“There was a great deal of speculation about what the energy company would do leading up to these results and the market was braced for bad news.
“On the face of it, the dividend cut and cancellation of share buybacks may be seen by some shareholders as a negative move in the short term.
However, looking further ahead it could well prove to be the right step, as Shell looks to strengthen its financial position and cut costs during a very difficult time.”
Ghana: Unemployed Man Before Court For Stealing 11 ECG Prepaid Meters
An unemployed man has been charged by a Circuit Court in Accra, capital of Ghana, West Africa, for allegedly stealing 11 prepaid meters valued at $2,600 belonging to power distribution company, ECG, at Nungua, a suburb of Accra.
The court presided over by Her Honour, Mrs. Afia Owusua Appiah charged the accused person with stealing contrary to section 124 of Act 29/60.
According to report filed by Kasapafmonline.com, the accused person, Edward Abeiku, who is a resident of Nungua, however pleaded not guilty to the charge of stealing pressed against him by the court.
The brief facts of the case as presented to the court by prosecutor Inspector Samuel Ahiabor were that, the complainant in the case is Mr Samuel Korley, the Nungua District Technical officer of ECG while the accused person, is unemployed and a resident of Nungua.
Inspector Ahiabor told the court that, the Kpeshie Divisional Police Command has been receiving rampant complaints of theft of ECG prepaid meters within Nungua and its environs.
The command, he said “has been informing the District Office of ECG about the occurrence and both offices have been on the lookout for the perpetrators of the crime.
He told the court that, “on April 22, 2020, the command received information from a witness Michael Afotey that the accused person and two others (yet to be arrested) have stolen some electricity meters and kept them in a room.
According to him, the “Police proceeded to the said location where the accused person was arrested with one of the stolen ECG prepaid meters in his hands.
“A search conducted in the room of his accomplice, Robert Annang Adu close to the scene of the arrest revealed four pieces of prepaid meters belonging to ECG.
“When the accused person’s room was subjected to a search, another three faced ECG prepaid meter was retrieved.”
The prosecutor told the court that, “the accused mentioned Robert Annang Adu and Abeiku as his accomplices.”
“Police investigation revealed that from January to early April the accused person and his accomplices have stolen several ECG prepaid meters officially assigned and installed for some applicants with Nungua township and re-assigned them to unsuspecting members of the community at the cost of GHc600 per meter.
According to him, the complainant, Mr Samuel Korley, identified the prepaid as properties of ECG which were among 60 pieces of meters reported stolen.
“During investigation, the accused further led police and officials of ECG through Nungua township and pointed out additional five pieces of ECG prepaid meters which were among numerous meters the group have stolen from victims and re-installed them for the unsuspecting customers.
“The meters were disconnected and removed. In all 11 pieces of stolen ECG prepaid meters were retrieved during investigation,” the prosecutor informed the court.
The accused person, he said, “was charged with the offence and put before the court while efforts are being made to arrest the two accomplices.
However, the court granted him bail in the sum of GHc60, 000.
In addition to the bail conditions, he is to provide three persons to stand as sureties, one of them the court said must be a public servant earning not less than GHc2, 500 per month.
The case has been adjourned to June 15, 2020.
Source: www.energynewsafrica.com
Maersk Drilling To Sack 300 Workers In North Sea
Denmark based-rig operator, Maersk Drilling says it is taking steps to reduce its offshore crew pool as it stacks North Sea rigs in light of the COVID-19 pandemic and crash in oil prices.
The company said that due the commercial outlook for offshore drilling it expects around 250 to 300 redundancies in the North Sea crew pool in Denmark, Norway and the UK.
It is currently in the process of initiating consultations with trade unions and employee representatives.
“Though it’s standard practice in our industry to adjust our workforce to activity levels, it never feels right to say goodbye to good colleagues, especially when so many have walked the extra mile to keep operations running in these very difficult circumstances.
However, it’s our responsibility to safeguard our business and we are now taking steps to maintain competitiveness in the challenging market environment,” CEO Jørn Madsen said.
Maersk Drilling said some tenders and projects are being delayed or cancelled.
On April 16, the company announced it received notice of early termination for two drilling contracts involving the semi-submersible Maersk Developer and jack-up rig Maersk Reacher.
However, due to early termination fees, the financial impact of the contract terminations on 2020 profitability is expected to be minimal, the company said.
Source:www.energynewsafrica.com
Tanzanian Healthcare Centres To Receive Free Electricity Services
JUMEME, a mini-grid operator, has launched a COVID-19 Relief Programme to support the Tanzanian healthcare centres in the fight against the COVID-19 pandemic.
With this programme, JUMEME will use its local solar-hybrid mini-grids to provide 10 healthcare facilities in the Lake Victoria Islands with free electricity services for the coming three months.
As free and reliable electricity supply will help keep operations run smoothly, it will also free up much needed financial resources to better prepare the local healthcare facilities to fight COVID-19.
In addition to its 12 solar-hybrid mini-grids already in operation in the Lake Victoria area, JUMEME is also finalizing the implementation of 11 mini-grids on the shores of Lake Tanganyika, in the Northwest of Tanzania, which will connect 10 more health centres once operating.
JUMEME intends to extend its relief program to this area to support their local health centres as soon as the new project is completed.
Dr. Kole, Chief Physician at the Bwisya Hospital said: ”We are grateful to JUMEME for the (electrification) services they offer to Bwisya Hospital for 24 hours a day without failure. We also appreciate the availability of electricity which enables us to conduct clinical procedures, surgery, and other essential health services to the people of Ukara island.’’
Health centres are common in Tanzania’s remote rural areas. Patients rely on these facilities to receive first aid and treatments for common infections, before being referred to larger, better equipped facilities if needed.
In JUMEME’s project areas, which were selected for their remote, off-grid location, only one healthcare facility can be deemed a hospital, which is located in Bwisya on the island Ukara.
These smaller facilities are especially vulnerable, as they receive less funding than larger hospitals.
NYSE To Delist Diamond Shares After Bankruptcy Filing
Offshore drilling contractor, Diamond Offshore Drilling has received a delisting notice from the New York Stock Exchange (NYSE) after filing for Chapter 11 bankruptcy protection.
According to Diamond Drilling, it received notification from NYSE Regulation that it has determined to start proceedings to delist the company’s shares of common stock.
NYSE Regulation determined that the company was no longer suitable for listing after the company’s disclosure that it and select subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
Diamond said it does not presently anticipate exercising its right to appeal NYSE Regulation’s delisting determination.
The company added that it expects that its common stock will be quoted on the OTC Pink markets.
NYSE listing for several other offshore drilling contractors is at risk due to the difficult market situation.
Source:www.energynewsafrica.com
Venezuela: Maduro Appoints One Of America’s Most Wanted As New Oil Minister
Venezuelan government is looking to reverse the radical decline in its oil industry with two new appointments–one which involves putting a fugitive drug trafficker at the helm of its troubled oil industry.
Tareck El Aissami, previously Minister of Industries and National Production–and a current member of America’s 10 Most Wanted—will replace Manuel Quevedo as Oil Minister. The second appointment places the cousin of late president Hugo Chavez at the helm of state oil company PDVSA.
El Aissami was recently added to the United States’ list of 10 most wanted fugitives on charges of drug-trafficking after three years ago he was sanctioned for drug trafficking. He was later accused of violating the sanctions by receiving payments for facilitating the transportation of drugs, Reuters reports.
Venezuela has been fighting hyperinflation and persistent basic goods shortages as well as inexorably declining oil production brought about by a combination of under investment, mismanagement, and U.S. sanctions.
From more than 2 million bpd, its output has fallen to just 700,000 bpd.
It may fall further now that the United States is pressuring Chevron and Halliburton into leaving the country. The U.S. Office of Foreign Asset Control tightened Venezuelan oil sanctions earlier this month that pretty much prohibit both U.S. companies from doing business in the country. Chevron’s joint venture with PDVSA produces about 200,000 bpd of heavy crude.
In February, Nicholas Maduro declared an energy emergency that also aimed to overhaul the country’s struggling oil industry. It seems it hasn’t worked so far, with gasoline shortages worsening so much that the government began to shut down fuel stations across the country.
Venezuela produces little gasoline because its refinery network is in the same state of disrepair as its oil industry as a whole. It also imports little after imports from the United States stopped. Venezuela was the one that suspended imports from the U.S. amid the escalating row between the two.
Meanwhile, Venezuelan oil has fallen to below $10 per barrel. This is the lowest in more than twenty years.
Source: Oilprice.com
Ghana: Covid-19: Senyo Hosi Urges Businesses To Reposition Themselves For Future Eventualities
The Chief Executive Officer of the Bulk Oil Distributors (CBOD) in the Republic of Ghana, Senyo Hosi is urging businesses in the West African nation to learn from the impact of coronavirus pandemic and position themselves and take advantage of future eventualities.
According to him, if businesses in the West African nation had been well prepared, they could have taken advantage of the demand for hand sanitisers in the United States and become exporter of the product and raked in foreign exchange.
The outbreak of the coronavirus, which has killed over 200,000,000 globally with the U.S, alone, recording 58,900 deaths, has resulted in the high demand for hand sanitisers.
The situation has compelled the U.S oil and gas firm, ExxonMobil to configure its refinery at Louisiana to start producing sanitisers for donation to fight the Covid-19.
Contributing to a discussion on the impact of the coronavirus on businesses and opportunities coronavirus presents, on ‘AM Show’ on Joy News Channel, in Ghana, Senyo Hosi noted that countries like Vietnam and Thailand have established themselves as rice exporters while India is noted for medicine export globally.
He, however, said the same cannot be said for Ghana and many other African countries.
He noted that Ghana is heavily dependent on imports and called for a paradigm shift by revolutionising the agricultural sector so that some of the imported products can be home grown.
Senyo Hosi was of the firm believe that Ghana, and for that matter, Africa needs to start producing more things themselves instead of depending on imports.
“Take sanitisers for example: A lot of demand is coming from the U.S. If we had positioned ourselves and possibly shut our borders earlier, we would have become global exporter of sanitisers and other PPE,” he said.
He underscored the need for the government to make sure that companies which have been supported to produce sanitisers and other PPE due to the outbreak of coronavirus become sustainable and not allowed to fade away after containment of the situation.
“Are we going to be able to produce personal protective equipment (PPE) like we currently have some companies doing? What sustainable interventions are we going to have from government to make sure that these people will not just go beyond this immediate coronavirus problem and probably have these business thrive over 30 years or more?
Source: www.energynewsafrica.com
Ghana: Energy Minister Suggests Ways To Deal With Fall In Future Oil Prices
Ghana’s Minister for Energy, John- Peter Amewu has suggested that the country should build what he calls a sliding skill behaviour into its fiscal regime to ward-off shocks of low oil prices in future.
According to him, without that, the International Oil Companies (IOCs) and governments would continue to suffer anytime oil prices fall.
Amewu made this suggestion in an exclusive interview with energynewsafrica.com.
Oil prices on the international market have plummeted due to the outbreak of Coronavirus, which has slowed demand for the commodity.
Crude oil prices went as low as $11.78 (WTI) and $17.73 (Brent) on April 22, 2020.
“So, maybe, this is a lesson for us to begin to look into a sliding skill into our fiscal regime to address this fluctuating oil price,” Mr Amewu indicated.
The Energy Minister noted that Covid-19 has had a negative effect on all global economies and Ghana is not an exception.
Touching on Ghana’s upstream sector, he said companies like Aker Energy has postponed the development of PECAN project because most of the expatriates they need to bring cannot come because the country’s land and air borders have been shut because of the outbreak of coronavirus.
“Covid-19, as you rightly put, has had a lot of impact on some of these companies so yes, it is true they postponed their development activities but that doesn’t mean they will not come back when the situation calms. Most of these companies will come back,” he explained.
Commenting on how the government intends to sail through this Covid-19 period, Mr Amewu noted that it has thrown the country’s budget out of gear, but he trusted the Finance Minister to undertake financial re-engineering to cushion the Ghanaian economy in this trying times.
Addressing whether Ghana would engage oil exploration companies in this Covid period, he said low price could be the bargaining power of these companies so, the government would wait for a stable price period to engage them in future.
“Government’s budget has been hit extensively in terms of the revenue… billions of dollars have been lost as a result of the fall in oil price but the Finance Minister is on top of the game, he is trying to restrategise and relook at some of our expenses to expand and see where he can get some extra sources of funding to address some of these problems. So I think we are on course as a country,” he assured.
Source: www.energynewsafrica.com
African Energy Chamber Calls On Bank Of Central African States To Relax Forex Rules
The African Energy Chamber has joined oil industry stakeholders in calling on the Bank of Central African States (BEAC) to relax its currency controls rules adopted in June 2019.
Last year, the BEAC introduced new rules controlling the flows of currency in Central Africa in a bid to promote financial transparency and ensure that oil revenues stay within local economies and local banks. While the Chamber continues to support sound and transparent revenue management and distribution across the oil & gas industry, these specific rules have created a very unattractive environment for foreign investors seeking to invest in CFA union states.
The new rules notably state that all foreign exchange transfers over $1,680 be vetted for approval by the bank, and that all export proceeds above $8,400 be repatriated in 150 days to a local bank account. Unfortunately, such controls are causing transaction delays and preventing foreign investors to repatriate proceeds from their investment, which is a key condition of any attractive investment jurisdiction. With such controls and rules in place, CEMAC will suffer and becomes less attractive to credible investors.
H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, had quickly reacted and called the measures deadly for the local oil & gas industry, stating that they could destroy economies and make it impossible to attract investments. Local and regional entrepreneurs will suffer and the oil sector will see a decline in investment.
Given the current scenario of historic low oil prices and COVID-19 pandemic, the Chamber is urgently calling on the BEAC to listen to industry voices and concerns and relax such currency controls to maintain the region’s attractiveness as an investment destination.
“The FX Regulations adopted in June 2019 make it very difficult for our companies to compete and create employment, and render our business environment very unattractive for foreign investors. Given the worsening of the region’s economic outlook in light of the COVID-19, the industry needs urgent action on the relaxing of these FX Regulations,” declared H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons.
Following the release of Africa’s Energy Commonsense Agenda this week, the Chamber believes that reforming business environments across Africa should be a priority for every regulator and all central banks, in order to ensure swift economic recovery and make the continent more competitive on the global stage.
The African Energy Chamber’s Call to Action was released this week and is available to download for free on www.EnergyChamber.org. It details 10 measures that form part of a Commonsense Energy Agenda for Africa to recover from the current crisis.
Source: www.energynewsafrica.com
How Africa’s Oil & Gas Industry Can Bounce Back From COVID-19 Pandemic And Oil Price War (Article)
The double crisis of the COVID-19 pandemic and the collapse in oil prices is taking a toll on African economies and the African energy industry. An unstable and precarious oil prices environment has resulted in substantial cuts in state budgets and public spending, in losses of contracts and hundreds of thousands of jobs put at risk. Because bouncing back from this historic crisis will require strict and bold government action, the African Energy Chamber has released today its Call to Action, detailing 10 measures that form a commonsense energy agenda for Africa, which is now accessible to download for free at www.EnergyChamber.org.
The impacts of the current crisis are wide and affecting both Africa’s most promising exploration prospects, but also its multi-billion-dollar landmark projects such as BP and Kosmos Energy’s Greater Tortue Ahmeyim (GTA) LNG project in Mauritania and Senegal or ExxonMobil and Eni’s $30bn Rovuma LNG project in Mozambique.
Oil projects are suffering even more. In Ghana, the development of the Pecan Field has been thrown into very uncertain waters. Aker Energy cancelled its letter of intent sent to Yinson Holding this year to charter, operate and maintain the Pecan FPSO, set to be Ghana’s next big oil offshore development. Woodside Energy’s Sangomar Offshore Oil Project, Senegal’s very first oil venture that was sanctioned early this year, will be facing financing delays.
FID on Shell’s Bonga South West Aparo project in Nigeria, for which the invitation to tender was released to contractors early last year, could also not see FID this year. Delays in the execution or sanctioning of these projects will severely impact African economies whose local goods and services were set to benefit from billions of dollars of subcontracting opportunities.
“Our commonsense approach advocates for measures that will support the continuity of business operations and future sector growth. The oil and gas industry will only work for Africans when we set fair policies and treat oil and gas companies as partners who drive our progress,”NJ Ayuk, Executive Chairman at the African Energy Chamber noted.
“As the voice of the energy industry, we will continue to work with the public and the private sector and other stakeholders to revitalize the African oil and sector by putting Africans back to work,” Ayuk added.
While the immediate impact on the continent’s biggest oil & gas project is already being felt, a much bigger one will result from the deferral or cancelling of drilling plans. Across oil & gas basins, drilling projects are being put back on the shelves or terminated. It is the case of Valaris’ drilling activities for Chevron in Angola, of BW Energy’s drilling operations on the Marin Dussafu Permit in Gabon, of the much-awaited exploratory drilling by FAR in The Gambia, of early termination of drilling works of Maersk in Ghana’s Jubilee and TEN Fields, or of Tower Resources’ force majeure on the Thali PSC in Cameroon. No country is sparred, and such delays will further defer discoveries of new fields, and development drilling to ramp up Africa’s daily output.
Since the beginning of the COVID-19 pandemic and its subsequent effect on oil demand and prices, the African Energy Chamber has been leading the dialogue between the public and the private sector on advocating for measures to support our industry and its jobs. While the Chamber believes that market forces need to determine the industry’s future and advocates for limited government across the industry, the time calls for urgent actions. We cannot let our companies and industry collapse for the fear of loosing jobs and investments that would sustain our economies for decades to come. It is worth bearing in mind, that activity in and income from Africa’s energy sector generates significant amount of demand and services from other non-oil and gas sectors of the economy.
Key measures amongst the Africa’s Commonsense Energy Agenda released today are the extension of PSCs and work program adjustments to boost exploration and ensure the resumption of drilling activities. While exploration is a major part of our Call to Action, the Chamber also strongly advocates for tax relief on services companies, reforms of upstream fiscal regimes, banking and financial support, regional content development, incentives to infrastructure projects, and bold actions on removing fuel subsidies.
The African Energy Chamber will continue to call on governments, regulators and private companies to work together on finding the right solutions that work for their country and operations. We have the tools in our hands to quickly open new markets for our oil and gas businesses and create new jobs for our continent.
Source: www.energynewsafrica.com