UK Imposes Travel Restrictions To North Sea Oil Installations
Britain’s oil and gas sector association OGUK on Thursday banned people from travelling to offshore installations such as platforms if they have travelled to certain countries affected by the coronavirus in the previous 14 days.
The ban comes after Equinor reported the oil industry’s first coronavirus infection on an offshore installation on Wednesday, highlighting the challenge in preventing contamination for thousands of workers living in the close quarters on rigs and platforms.
“Industry policy is that personnel will not be permitted to travel offshore if they have travelled from or transited through affected countries … on the UK government’s list of affected areas,” OGUK said.
These countries, so-called Category 1 and 2 areas, currently include Italy, Iran, China’s worst hit areas and a number of other Asian countries.
OGUK’s health, safety and environment director, Trevor Stapleton said that rescue helicopters are ready to bring individuals back onshore if lives are at risk.
Helicopters could also bring coronavirus test kits to offshore installations and back onshore, he said.
As for possible production shutdowns in the British North Sea, which produced about 1.7 million barrels per day of oil equivalent last year, Stapleton said it was up to the individual installation managers.
When asked about possible interruptions to maintenance, he said there are some problems already, with a lot of equipment sourced from Italy, but “these are being looked at”.
Source:www.energynewsafrica.com
Emmanuel Montwedi Appointed Executive Secretary Of Int. Youth Nuclear Congress
A South African nuclear scientist Emmanuel Montwedi has been appointed as the new Executive Secretary for the International Youth Nuclear Congress (IYNC) during a board meeting at a congress in Sydney, Australia.
IYNC is a global network of the future generation of professionals in the nuclear field dedicated to developing new approaches to communicate benefits of nuclear power, as part of a balanced energy mix.
The network also aims to transfer knowledge from the current generation of leading scientists to the next generation and across international boundaries.
This year’s congress took place from the 9-13 March 2020.
Emmanuel Montwedi is a Senior Nuclear Engineer and is currently serving as the Deputy Chairperson of South African Young Nuclear Professionals Society (SAYNPS), which is a national network of more than 500 members.
Furthermore, Montwedi was in the Local Organising Committee for the African Youth Nuclear Summit (AYNS) 2019, an event that gathered more than 300 delegates from across Africa.
As the South African representative in the African Young Generation in Nuclear (AYGN) Executive Committee, Montwedi has also driven a number of important issues connected to youth empowerment, diversity and initiated collaborations with various organisations.
Speaking on the appointment, Gaopalelwe Santswere, President of the African Young Generation in Nuclear (AYGN), commented: “Montwedi has an interesting background and I have no doubt that his valuable knowledge and effective leadership skills will benefit our continued international collaborations as we continue to promote the peaceful uses of nuclear technology. It is commendable to see the IYNC taking the issue of diversity serious by ensuring global representation in the leadership structure.”
The newly elected IYNC board will serve for the period of two years until the next congress in 2022 which is set to take place in Russia.
“This appointment into executive leadership of IYNC has come at the right time where the country just approved its Integrated Resource Plan (IRP) which considers a diversified energy mix where nuclear is part of all forms of energy technologies”, says Israel Sekoko, Chairperson of SAYNPS.
“I am very happy and honoured to be part of the progressive and professional association like IYNC. It’s amazing how this unique network has created entirely new opportunities for thousands of young nuclear professionals across the globe. I look forward to expanding and developing that work, together with my experienced and dedicated colleagues”, said Emmanuel Montwedi.
Source:www.energynewsafrica.com
Dubai: DEWA Launches R&D Centre At Its Solar Park Under IPP Model
The Dubai Electricity and Water Authority (DEWA) has inaugurated the Research and Development (R&D) Centre at the Mohammed bin Rashid Al Maktoum Solar Park aimed at advancing Dubai’s Fourth Industrial Revolution (4IR) goals.
The sections and labs of the R&D Centre cover 4,400 square metres and is one of the key projects at the Mohammed bin Rashid Al Maktoum Solar Park, the largest single-site solar park in the world based on the Independent Power Producer (IPP) model.
The R&D Centre contributes to building and localising knowledge and expertise with around 70% of the Centre’s staff are Emiratis.
The Centre’s areas of work include solar power; the integration of smart grids; energy efficiency, and water, in addition to 4IR applications such as ‘3-D Printing and Additive Manufacturing’ as one of the innovative solutions to produce spare parts for electricity generation, transmission, and distribution divisions.
The Centre has various internal labs and outdoor labs to study the performance and reliability of PV panels.
Key internal labs include the Electrical Characterisation Lab, the Mechanical Characterisation Lab, the Materials Characterisation Lab, the Solar Simulator Lab, and the Accelerated Aging Lab.
The outdoor labs will be used to test different solar panel technologies and performance, as well as a safe zone for drone testing.
DEWA’s R&D Centre is the only centre in the UAE that focuses on renewable energy, smart grid technologies and energy efficiency and has the largest and most comprehensive solar testing and certification facility in the UAE.
Furthermore, it operates the longest continuous testing of photovoltaic panels in the UAE in desert climate conditions.
The Centre has 37 male and female researchers, 20 of whom are PhD and MSc holders. The team has published over 40 papers in international conferences and magazines.
“We are committed to anticipating and shaping the future of energy and water. We include innovation in all our strategies and initiatives, to support the UAE Strategy for the 4IR, which aims to strengthen the UAE’s position as a global hub for the 4IR,” Saeed Mohammed Al Tayer said.
Al Tayer noted that in order to increase the contribution of 4IR to the national economy by means of advancing innovation and future technologies, the National Artificial Intelligence Strategy 2031 is central to developing an integrated system that employs AI in vital areas of the UAE.
The R&D Centre received a Platinum Rating for green buildings from Leadership in Energy and Environmental Design (LEED) by the US Green Building Council.
The Centre has PV panels installed on its roof and car park, as well as Building Integrated Photovoltaic (BIPV) in its walls.
The building reduces energy consumption by over 25% and saves more than 50% water. The percentage of recycled materials is more than 30%.
Source: www.energynewsafrica.com
Ghana: Oil Marketing Companies Lost GHc50m In Dec 2019-Agyemang Duah
The Chief Executive Officer of the Association of Oil Marketing Companies (AOMC’s) in the Republic of Ghana, Kwaku Agyemang-Duah says the OMCs lost a whopping GHS 51m between 16th and 31st December, 2019.
The losses, he explained was as a result of the OMCs staying the price of fuel at the pump when crude oil prices soared on the international market amidst the depreciation of the cedis.
He said the OMCs decided to keep the price at that time because increasing it would have become unbearable to consumers.
“In the second window of December 2019, which covered 16th to 31st, per the prevailing international market prices, petrol, diesel, and LPG were to be sold nominal at GHc5.57, GHc5.85, and GHc5.68 per litre/kg respectively. Yet, the highest ex-pump price of petrol and diesel was sold at GHc5.41 whereas LPG was sold at GHc5.58. This means, OMCs subsidised fuel prices and in effect, made losses of 16. 62 pesewas on petrol, 44.615 pesewas on diesel and 10.27 pesewas on LPG translating to GHc50 million.
“These losses were considered subsidies which OMCs were technically gifting our cherished consumers on a daily basis at retail outlets on the price.”
Mr Agyemang-Duah said these losses led to a good number of their members’ inability to pay their employees in a regular fashion, inability to settle financial obligations such as loan etc. when they fell due, delayed SSNIT contribution payments, inability of some OMCs to load petroleum products as well as honour some statutory fees and charges,” he said.
Mr Agyemang-Duah was addressing a press conference in response to recent calls by the opposition NDC and Chamber of Petroleum Consumers for OMCs to slash the prices of fuel at the pump, following the fall in crude oil price on the international market.
Readers would recall that the opposition NDC asked the government to ensure that fuel prices were reduced by at least 20 percent to reflect the decline of crude oil prices on the international market.
That, according to Mr Agyemang-Duah, is not possible because of the price build up indicators.
“A preview of the price build-up comprising ex-refinery price, taxes and levies and marketers and dealers margins indicate that for the expected public expectation of between 10 percent-20 percent reduction to occur. One of these parameters would have to suffer. However, our margins have suffered enough,” he stated.
At about 5pm, WTI was trading at about US$31.12 per barrel while Brent was hovering around US$33.48
“As the international prices decline at a steady state in the midst of the appreciation of the cedi, we believe that the competition engendered by the deregulation, will culminate in the eventual reduction of the ex-pump prices that fairly reflect the market dynamics as well as the need to ensure the survival of the operators.”
Source: www.energynewsafrica.com
Ghana: Gov’t To Distribute Free LED Bulbs To Households Nationwide
The government of Ghana has announced plans to supply 12 million free energy saving LED bulbs to electricity consumers across the West African nation.
Per the distribution, Metropolitan Assemblies would receive 50,000 each covering 6W, 9W, and 13W, while Municipal and District Assemblies would receive 40,000 and 30,000 each respectively.
The initiative forms part of the Ghana government’s nationwide energy conservation and demand side management exercise which targets homes and strategic institutions, since their collective energy consumption accounts for over half of the national electricity demand.
Addressing the media in Accra, capital of Ghana, on Thursday, Ghana’s Energy Minister, John-Peter Amewu said the venture is to ensure energy wastage in the system is reduced.
According to him, the project would start in three months’ time through Metropolitan, Municipal, District and other local media to ensure a successful process.
Mr Amewu said the government used GHc200 million to procure the LED bulb to ensure that all households, universities, hospitals and other heavy energy consumers adopt the use of energy efficient appliances to reduce burden on the national grid.
“To ensure that the government achieves its intended purpose for this exercise, energy conservation and demand side management, a comprehensive audit would be conducted by relevant government institutions a month after distribution of the LED bulbs,” the Energy Minister said.
He urged Ghanaians to remain vigilant and ensure nobody sells the free six watts bulbs to them when the exercise starts in three months’ time across the nation.
Source:www.energynewsafrica.com
OPEC+ Panel Cancels Next Week’s Meeting
The March 18 meeting of the OPEC+ panel monitoring the oil market and producers’ compliance with quotas has been canceled, a source in one delegation told Russia’s news agency TASS on Thursday, as Saudi Arabia and its OPEC allies face off with Russia in an escalating oil price war after the OPEC+ group failed to agree on joint actions last Friday.
The meeting of the Joint Technical Committee (JTC) of OPEC and non-OPEC countries, scheduled for next week, is unlikely to take place, three sources familiar with the plans told Reuters, with one source saying that the meeting would be postponed.
OPEC’s top producer and de facto leader, Saudi Arabia, has signaled it would not attend the panel meeting, regardless of its format, one of the sources told Reuters.
Earlier today, reports suggested that the meeting would go ahead, but in a teleconference format because of the coronavirus outbreak which is spreading in Europe.
Russia’s energy ministry believes that under the circumstances a teleconference is the most adequate format for holding the meeting, Russian Energy Minister Alexander Novak said on Thursday, but didn’t confirm the date of March 18, saying that “we need to ascertain if we have received an official invitation.”
On Wednesday, Novak said that Russia would send representatives to the meeting of the OPEC+ panel, reiterating Moscow’s readiness to continue cooperation with OPEC in some form after the collapse of the OPEC+ production cut deal and oil prices.
Novak’s comments came a day after he said that the “doors aren’t closed”, to future cooperation between Russia and OPEC, despite the breakup of the OPEC+ production cut agreement.
OPEC+ has meetings scheduled for May or June to assess the situation on the market, the Russian minister said, but his Saudi counterpart seemed to dismiss Russia’s comments that cooperation should continue.
Source:www.energynewsafrica.com
Oil Price Slump May Jeopardise Our Planned $1 Billion Asset Sales-Tullow
Tullow Oil Plc has said that the oil price slump may jeopardise planned $1 billion asset sales designed to refill its coffers as the Africa-focused group’s lenders may balk at approving loans, threatening its future.
According to the company, the oil price slide might thwart the asset sales which may stop its lenders from approving semi-annual reserve-based loans or amendments to its debt covenants if required.
As at about 5pm Thursday WTI was trading at US$31.65 per barrel while Brent was trading at US$33.72 per barrel.
“If oil prices remain at or below their current levels for an extended period of time, this would adversely impact our future financial results,” Tullow said in a statement posted on the company’s website.
The company said it expects its free cash flow to slide to $50 million-75 million this year at an oil price of $50 a barrel, but hopes to raise cash from the asset sales.
Free cash flow at the group had already fallen last year to $355 million from $411 million in 2018. Highly-indebted Tullow expects to break even at prices of $45 a barrel.
Tullow said it expected its debt facility to be confirmed this month at $1.9 billion, of which it can still tap $700 million.
It said it would slash its investment budget by about a third to $350 million this year and cut its exploration spending, historically the focus of the group, by almost half to $75 million. That will be weighted towards its fields in Ghana.
The company, which is also shrinking its workforce by about a third, said it has drawn up a final shortlist of chief executive candidates to replace Paul McDade, who resigned in December.
Tullow has hedged around 45,000 barrels a day of its 2020 production at a floor price of $57.28 a barrel, and around 22,000 bpd of its 2021 output at a floor of $52.78 a barrel.
Below is Tullow’s 2020 Outlook
- Group production year-to-date in line with expectations; full year guidance of 70,000 – 80,000 bopd
- Jubilee performing well after gas processing facility upgraded, increased gas offtake agreed, and sea-water injection capacity optimised; Nt-09 production well at TEN on-stream in Q2; non-operated West African production in line with expectations
- Capex of c.$350 million, down c.30% from 2019; exploring options to reduce further if required
- 2020 free cash flow forecast of $50-$75 million at $50/bbl; free cash flow breakeven of c.$45/bbl
- 60% of 2020 sales revenue hedged with a floor of $57/bbl; 40% of 2021 sales revenue hedged with a floor of $53/bbl
- RBL redetermination ongoing; expected c.$1.9 billion debt capacity at the end of March; liquidity of c.$700 million
The U.S. Is Wronging Nigeria And The Energy Industry With Travel Ban (Article)
By: NJ Ayuk
It is difficult to come to terms with the United States’ decision to include Nigeria in the extension she made a few weeks ago to the infamous “Muslim Travel Ban”, which already restricted movements of people from Iran, Libya, North Korea, Syria and Yemen. Alongside Nigeria, Tanzania, Myanmar, Eritrea, Sudan and Kyrgyzstan were also added to the list of countries with entry restrictions. Effectively, with the struck of a pen, or a whim, President Trump barred a quarter of the 1.2 billion people living in Africa from applying for residence in the United States.
Officially, the extension made to these nations is based on security concerns. Tanzania and Nigeria, particularly, are named by Washington as having failed to meet U.S. security and information sharing standards. Further, Nigeria is singled out for fears that the country harbors terrorists that could pose risks if they entered the U.S.
Much and more of this is difficult to reconcile with the U.S.-Nigeria long-standing allied relations and particularly with recent programs designed to bring the two nations closer together, but before we go there, let’s look at what the reality shows.
Since 1975, not a single incidence of a Nigerian, or for that case Tanzanian or Eritrean, being involved in a terrorist attack on American soil has been recorded. Boko Haram, the extremist group that has terrorized parts of the North of Nigeria (a region from which few migrants come from) in recent years, has never shown any signs of wanting to expand its territory, much less to open remote branches in North America. In fact, the American and Nigerian forces have worked closely together to address that and other challenges, and the Trump administration itself has recognized Nigeria as an “important strategic partner in the global fight against terrorism.”
Further, while Tanzanians and Eritreans have been excluded from what is known as the green card lottery system, Nigerians have been barred from applying for permanent residence visas in the United States. In 2018, 14 thousand such visas were issued to Nigerians, making it by far the most affected by the ban from all the new entrants to the list.
Beyond the sheer pain that fact must cause to the thousands of Nigerian families that have been waiting for years to be reunited in the U.S., from a security point of view, the decision makes no sense. Only permanent visas have been suspended. Tourist and work visas remain as usual. How does barring access to the most strict and difficult to obtain visas but maintaining the less restrictive short-term ones prevent terrorists from entering the U.S.? It is nonsensical. Even the fact that the announcement of the extension was made by the media before these countries’ authorities were even notified is telling of how lacking in protocol the process seems.
The whole thing is perplexing, but beyond the issues of principle, this decision has the potential to hurt the relations between these countries and the U.S., and when it comes to Nigeria, that risks hurting the U.S. too. After all, Nigeria, Africa’s biggest economy, is the U.S.’s second biggest trade partner in sub-Saharan Africa, is Nigeria’s second biggest export destination and it’s the biggest source of foreign direct investment. American companies have extensive investments particularly in the energy and mining sectors in Nigeria, which risk being affected by a breakdown in bilateral relations. Some companies, like ExxonMobil, have been operating in the country for nearly 70 years, since even before the country became independent from colonial rule, and Chevron has also been an active and central participant in the country’s oil industry for over forty years. Both these companies are partners in Nigeria’s mid and long-term strategies to curb gas flaring, develop a gas economy, expand oil production, improve its infrastructure network, raise its people out of poverty, etc.
Nigeria and the U.S., under a bilateral trade and investment framework agreement, sustain an annual two-way trade of nearly USD$9 billion. When the president of the U.S. makes a decision like this, it can affect the relations the country and these companies uphold with Nigeria. Further, it directly clashes with the U.S.’s strategy to counter Russia’s and China’s growing influence in Africa by expanding its relations with the continent.
How does closing the door to Africa’s biggest powerhouse accomplish that? The policy established under the 2019 Prosper Africa initiative, that was designed to double two-way trade between the U.S. and Africa, seems difficult to reconcile with this latest decision. Over the last couple of years, president Trump has made several statements, at varying levels of political correctness, about how he would like to restrict immigration to the U.S. to highly-skilled highly educated-workers. If that is one of the reasons behind the inclusion of Nigeria, again, it fails completely.
Nigerians represent the biggest African community in the U.S., numbering around 350 thousand, and one of the communities with the highest level of education in the US globally. According to the American Migration Policy Institute, 59% of Nigerian immigrants have at least a bachelor’s degree. That is higher than the South Korean community (56%), the Chinese community (51%), the British community (50%) or the German community (38%), and it is tremendously higher than the average for American born citizens (33%).
More than 50% of Nigerians working in the U.S. hold white color management positions, meaning they have access to considerable amounts of disposable income and contribute greatly to the American economy. Those are the immigrants the U.S. wants, the ones that built the American dream! Which only makes this decision ever harder to grasp, unless of course, if we consider that this might have nothing to do with security concerns, and all to do with a populist decision designed to please the president’s most conservative support base as we approach the presidential campaign. If that is the case, then American foreign policy has truly reached a dark age.
From his side, President Buhari’s government has done what is possible to appease the situation, setting up a committee to address the security concerns with U.S. officials and INTERPOL, and restating its commitment to “maintaining productive relations with the United States and its international allies especially on matters of global security”, Femi Adesina the Spokesman for the Nigerian Presidency said.
Last week, the Nigerian government requested the U.S. administration to remove the country from the travel ban, and also announced a reduction in visa application fees for visiting Americans from $180 to $160, in a symbolic gesture meant to reinforce relations between the two nations.
In the meantime, Nigeria’s and other economies risk suffering from this unexplainable decision, and immigrant Nigerians in the U.S. that had been waiting so patiently for the dream of being reunited with their families in the “land of the free” await a resolution for a problem they did not know existed until a month ago.
NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of pan-African corporate law conglomerate Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.
Liberia: President Weah Sacks Bobby Brown Over Fuel Shortages Brouhaha
President of Liberia, H.E. George Manneh Oppong Weah has dismissed the Deputy Managing Director for Operations of the Liberia Petroleum Refining Company, Bobby Brown over gross negligence and fraudulent activities.
According to the President, Mr Brown will be investigated by the appropriate authorities and, if found guilty, will be prosecuted under the full weight of the law.
The dismissal of Bobby Brown followed findings of a Special Task Force commissioned by the president to investigate the recent shortages of petroleum product on the market.
The West African nation was hit by fuel shortages, leading to long queues at filling stations.
The development brought the transport sector of the economy almost to a halt.
In a statement, President Weah said during this process, any other personnel found to be directly linked to illegality with regards to petroleum movements would face prompt administrative actions, and would also face prosecution under the law.
Among actions the President has taken to avoid recurrence of the shortages are that “All petroleum importers who currently have payments for provisional lifting products still outstanding are hereby given 90 days to restitute the products, either in cash or in-kind; and petroleum importers that willfully transferred products stored at their facilities are also given 90 days to restitute the products, either in cash or in kind.
“The Ministry of Justice is hereby ordered to place such importers in receivership until the products are recovered. Failure to replenish the products within the specified time will result in the revocation of importers’ licences and forfeiture of allocated storage facilities.
“All petroleum importers’ licences are hereby suspended and are to be individually subjected to a performance-based review covering the period January 2017 to January 2020. Re-activation of licences will be done on a case-by-case basis, and those that do not meet performance and capacity requirements satisfactory to the Liberia Petroleum Refining Company will be subject to revocation.”
The President assured petroleum importers that all products accepted into the storage facilities of the Liberia Petroleum Refining Company would be protected from fraudulent and illegal manipulation, going forward.
Source: www.energynewsafrica.com
Saudi Arabia Unveils Plans To Maximize Oil Output
OPEC kingpin Saudi Arabia has unveiled plans to dramatically ramp up oil production, raising the stakes of an all –out price war with non-OPEC leader Russia.
State-owned oil behemoth Saudi Aramco said Wednesday that it had been asked by the Saudi energy ministry to raise its production capacity to 13 million barrels per day (bpd), up from 12 million bpd at present.
The oil-rich kingdom has been pumping around 9.7 million bpd in recent months, but it has plenty of spare capacity to pump more crude, with hundreds of millions of barrels also in storage.
“This bold move to attempt to order production to 13 (million) barrels confirms that Saudi is trying to apply maximum pressure on both Russia and the U.S.,” Cailin Birch, a global economist at the Economist Intelligence Unit (EIU), told CNBC on Wednesday.
“By sending signals that they will flood the market as soon as possible, they may be hoping to either force Russia back to the negotiating table or to prompt a wave of bankruptcies and investment cuts in the U.S. that would have a noticeable impact on shale production,” Birch said.
International benchmark Brent crude is trading at $35.80 Wednesday evening, down over 3.5%, while U.S. West Texas Intermediate (WTI) stood at $32.72 around 3% lower.
Oil prices have almost halved since the start of 2020.
The latest sell-off was preceded by a breakdown in talks between an alliance of some of the world’s largest oil producers late last week.
Markets had been hoping for an agreement between Saudi Arabia and Russia, as well as other OPEC and non-OPEC producers, in order to curb oil output and prop up prices; their failure to agree led oil prices to crash on Monday.
Analysts believe the producer group’s misstep has created an “unprecedented” situation in energy markets, with U.S. shale expected to take the brunt of the pain.
“The Saudi-Russian relationship — political as well as economic — is much more important in the light of U.S. energy independence than it was before the rise of the U.S. shale industry,” Tamas Varga, senior analyst at PVM Oil Associates, also said.
“Therefore, the current stand-off between the second and third oil producers in the world should turn out to be temporary. Painful as far as the global oil balance is concerned but temporary,” he added
Ghana: Calls By Opposition NDC, Others For Reduction In Fuel Prices Misplaced-NPA Boss
The Chief Executive Officer of Ghana’s downstream petroleum regulator, National Petroleum Authority (NPA), Hassan Tampuli says calls by some interest groups including the opposition NDC for the government to reduce prices of petroleum products is a clear indication of their ignorance of the current deregulation policy in the sector.
According to him, those calls are misplaced, premature and smack of cheap politics.
The reaction by Hassan Tampuli follows calls by consumer advocacy group, COPEC, opposition National Democratic Congress (NDC) and some section of Ghanaians asking the government to reduce the prices of fuel at the pumps due to the outbreak of coronavirus which has triggered the sharp fall in crude oil price to below US$40 per barrel.
“So we’ve heard calls from various interest groups; we’ve heard calls from COPEC, the Communications Director of the NDC, my good friend Sammy Gyamfi, and another group associated to the opposition, asking the government to immediately reduce prices of petroleum products. I think that, that call clearly sends the signal that our good friends in the other side have not learnt anything after they lost power, because since 1st July, 2015, when President John Mahama was President of the republic, we have moved from a time when the government would intervene in the pricing of petroleum products to a time where determination of price products is made by oil marketing companies,” he said.
He said the right to either increase or reduce petroleum products are determined by oil companies, yet the NDC is employing mischief to try to confuse ordinary Ghanaians in the price matrix.
“Have they asked Mr Alex Mould how things are done? And if people like Honourable Moses Asaga and Alex Mould speak, I would have been very sad but coming from Sammy Gyamfi, I think about 98 percent of the things he said were all false,” he stated.
“The key indicators are the forex rates, FOB prices, the international price, the taxes, levies and margins are the things that one has to take into accounts,” he explained.
Adding that the way of determining prices are also published in the daily newspapers to show how transparent the system has become.
Touching on when to decrease the price, Mr Tampuli observed that the second pricing window, which is March 15, could witness at least 15 percent reduction per the NPA’s calculation after the OMCs have taken their margins off.
He said for the intervention of the President of Ghana, ordinary Ghanaians would have been paying 40 percent tax levies and margins, adding that today, people pay 26 percent of those taxes, thus 14 percent reduction, denying the Ghana government of Ghc 1.2 billion for the period.
The NPA boss noted that even the NDC have acknowledged how the cedi has taken a very strong position against all the international currencies.
“So when the prices go up on the international market, Ghanaians will pay accordingly, now that the prices are coming down, nobody is going to tell the OMC’s or the NPA or the government that the prices should come down. It will come down naturally,” he stressed.
Source: www.energynewsafrica.com
Coronavirus Confirmed On Equinor’s North Sea Field
Following suspension of helicopter flights to several Equinor’s offshore installations due to suspected coronavirus case, one person at the Martin Linge field in the North Sea has tested positive on the coronavirus.
Earlier this week Equinor confirmed to Offshoreenergytoday, that it had suspended flights to several offshore installation, including the Martin Linge, while waiting for test results.
In an update on Wednesday, Equinor confirmed that one person had tested positive for coronavirus. The person is not seriously ill, the company added.
Equinor said it is in dialogue with the Norwegian health authorities about further measures. The infected person has been in isolation in his cabin since Monday, March 9.
Measures to prevent further contamination for offshore installations has been introduced.
It has not been decided when the person will be brought ashore.
The person arrived at the field just before noon on March 4. The person had recently been to Austria. When Austria was listed as a high-risk destination, the person was quarantined on board and a test was conducted.
Tests have been conducted on two further persons at the field, who have also visited high-risk destinations. The results of these tests are not yet available.
Medical staff on board follows up all personnel and there are no additional persons with symptoms on board.
Equinor said that the activity on the field would be reduced today. Personnel remains at the installations they are already located on. Equinor is continuously evaluating further measures.
Measures to prevent further contamination are under implementation, including reduction of social gatherings, reduction of meetings, introduction of larger distances between personnel in the canteen, and cleaning of selected common areas.
The Martin Linge field is currently under construction and is planned to start production at the end of 2020.
There are currently 776 persons offshore, working on the project and spread across three installations.
Source:www.energynewsafrica.com
Absolutely Nothing Wrong With “Take-Or-Pay” (Article)
By: Paa Kwasi Anamua Sakyi
In recent times, there has been a strong debate on factors necessitating Ghana’s rising energy sector debt. One of such factors as mentioned, is the “take-or-Pay” (ToP) clause in the Power Purchase Agreements (PPAs) between the Government of Ghana (GoG) and Independent Power Producers (IPPs). GoG as the buyer of the power produced by the IPPs (sellers) have consistently blamed the challenges within the power sector on “take-or-pay” clause, otherwise referred to as “take-or-pay contracts”.
During the presentation of the 2019 mid-year budget review speech, and the 2020 Budget statement to the Parliament of Ghana in 2019, Ghana’s Finance Minister Mr. Ken Ofori Atta explained that Ghana pays the independent power producers (IPPs) for power they generate for the country including those not consumed under a “take-or-pay” agreement. He has on numerous occasions indicated that government will from August 1, 2019 only pay IPPs for power the country actually consumes, and suggesting that all “take-or-pay” contracts will be re-negotiated to convert to “take-and-pay” (TaP) for both Power Purchase Agreements (PPAs) and Gas Supply Agreements (GSAs).
In his estimation, on average less than 40 percent of the contracted “take-or-pay” capacity is actually used, with the country paying over half a billion U.S. dollars annually for excess power generation capacity. His concern was that “paying close to US$500 million per annum for excess power not utilize may contribute to the challenges in the energy sector that pose financial risks to the economy as a whole. More so, Government holds the view that it is as a result of obnoxious take-or-pay contracts signed by the past government, which obligate the country to pay for capacity it does not need.
These assertions are contestable, in that, it is rather the country that failed to plan to absorb or consume the power produced by the IPPs; thus creating the excess capacity we hear today. Government’s computation to arrive at the excess power is flawed as it figure suggest that it based calculation on installed capacity and peak demand. This is quite simplistic and very misleading, if not based on Dependable capacity (4613MW at end 2019), less the 20 percent Reserve margin (922MW at end 2019), and less end 2019 Peak demand (2881MW); to produce excess power figure of less than 850MW at end 2019.
Whatever the excess power is, there are many sectors of the Ghanaian economy that require power for production and service purposes; such as in agriculture, manufacturing, mining, and commerce. Another of such areas to deploy the so-called “excess power” is in rural electrification, a program which government has failed to grow over the past few years, with the country unable to inch close to the 100 percent Electricity Access rate target it set for itself to achieve by 2020.
Again, one cannot conclude that the energy sector challenges are related to obnoxious “take-or-pay” contracts signed in the past, because other very factors such as non-reflective tariff, distribution inefficiencies, and government interference, have also contributed greatly to the rising energy sector debt, which stood at a little over US$2 billion in January 2017 to over US$4 billion by mid-2019. And though Bulk Distribution Companies have recently been paid close to $1 billion, Ghana’s energy sector debt is still over US$3 billion, and the figure keeps rising.
Even the measures proposed in the 2019 Supplementary Budget to confront the issues in the energy sector, clearly shows that the challenges in the sector goes beyond “take-or-pay” issues.
One reality the Government of Ghana must admit is that a “take-or-pay” clause in power purchase agreements as a guarantee instrument is legally accepted by parties to power contract, and as a result, there is absolutely nothing wrong with the arrangement as it exist in Ghana and other parts of the world. Government must accept that this type of clause/agreement amongst others are necessary to achieve final investment decision (FID) for many power supply agreements.
However, it is not out of place for government to consider negotiating or re-calibrating the existing PPAs, as it explores all relevant avenues to deal with the rising energy sector debt. What is most important is how well government explores the PPAs option without an undesirable costs to the country, and not be overly fixated on “take-or-pay” issues.
Take-or-Pay Contract/Clause
Diverse guarantee instruments have been cultivated to deal with various types of risk embedded in projects. Among the contractual arrangements that is able to allocate risks during the operating period; take-or-pay, throughput, and take-and-pay contracts are perhaps the most commonly applied (Razavi, 1996).
In a large scale energy project, the most familiar type of off-take contract is the “take-or-pay” contract. Kaiser and Tumma (2004) explains take-or-pay contract as an agreement between a purchaser and a seller that require the purchaser to either pay for or take delivery of a pre-specified quantity of a commodity or service at a price at specific time intervals (“take”) or pay for the same quantity without taking delivery (“pay”).
In contrast with “take-or-pay”, a “take-and-pay” contract obligates the buyer to both take and pay the contract price for a minimum quantity of commodity each year. This type of contract is often generally described as a “firm off-take” contract. That is, if the buyer fails to take the minimum contract quantity in any period it will be in breach or default of the contract each time such failure occur, and it will become liable to the seller for damages upon the occurrence of each such breach or default (King and Spalding, 2013).
According to Rogers and White (2013), “take-or-pay” contract is widely recognized by lenders, and it is often the most important method by which a seller secures the large external debt financing on limited recourse terms that energy projects typically require. A well-structured “take-or-pay” contract offers the seller with an assured revenue flow that provides sufficient return on the significant project capital investment and risks to which it is exposed. Vinter (1994) asserts that the predictability of revenue flows from the project minimizes the lender’s worry over potential risk of non-payment of the project debt.
Typically, a seller is concerned with two fundamental risks: market demand risk and price risk. A “take-or-pay” contract places the risk of deteriorating market conditions on the buyer by requiring it to always be responsible for the payment for a minimum purchase commitment (sometimes referred to as volume risk shifting), leaving the seller with only the market price risks to manage, which in some cases may be hedged (Rogers and White, 2013). It literally mean that, in the absence of the “take-or-pay” obligation a supplier bears all the risk that the off-taker’s ongoing need for the energy might dry up, or that a price swing might induce the buyer to break the contract.
“Take-or-Pay” contracts have been used by petroleum coke producers, aluminum company calination facilities, municipalities and waste incineration facilities (Kaiser and Tumma, 2004). The arrangement is also common in the energy sector, because of the substantial costs for suppliers to provide energy units such as electric utility, crude oil or natural gas; and the volatility of energy commodities prices.
“Take-or-pay” clauses are accepted the world over, as the arrangement exist in lots of places including Africa; in South Africa, Zambia, Nigeria, Tanzania, and Cote d’Ivoire. In Japan for instance, almost all liquefied natural gas (LNG) is imported under long-term contracts with a take-or-pay clause, although buyers assume considerable risk under such a clause. On the one hand, the government has accepted take-or-pay because it secures a stable supply of LNG (Namikawa, 2003).
Proceeding Cautiously
Reviewing and re-negotiating contracts could assist in achieving significant financial savings both in the short and long-term especially when market forces changes. However, one must to be careful not attract unnecessary costs because the service supplier is under no obligation to concede to you the buyer. In an attempt to re-negotiate, the buyer is essentially asking the seller for a favor. As a result, the buyer’s approach must be more calculated, as he seeks to restructure the contract to bring rates more in-line with current market conditions.
There could be financial or reputational damages if the process is poorly handled. In the instance where government would attempt to unilaterally re-calibrate the PPAs, it would be tantamount to a breach and/or repudiation of those agreements; and cost awaits the state in the form of judgement debt, reputational damage, and sabotages et cetera.
An approach for a collaborative consultation process to address the challenges in the energy sector will be less costly, compared to a unilateral re-calibration of the PPAs. Also an attempt to also blame the “take-or-pay” arrangement or blame the private sector who are the other side to those contracts, will result in government losing the goodwill to re-negotiate.
To this point, it is clear that “take-or-pay” clause as mostly capture in power purchase agreements is not wrong in all respect, and that it is an undeniable fact that risk associated with such capital-intensive projects must be well allocated to protect both the seller and the buyer. Government must therefore focus on areas to deploy effectively whatever “excess power” that may exist, and to correct the inefficiencies in especially the country’s power distribution segment.
Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security (IES) ©2019
Email: [email protected]
The writer has over 23 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media and CNBC Africa
Whatever the excess power is, there are many sectors of the Ghanaian economy that require power for production and service purposes; such as in agriculture, manufacturing, mining, and commerce. Another of such areas to deploy the so-called “excess power” is in rural electrification, a program which government has failed to grow over the past few years, with the country unable to inch close to the 100 percent Electricity Access rate target it set for itself to achieve by 2020.
Again, one cannot conclude that the energy sector challenges are related to obnoxious “take-or-pay” contracts signed in the past, because other very factors such as non-reflective tariff, distribution inefficiencies, and government interference, have also contributed greatly to the rising energy sector debt, which stood at a little over US$2 billion in January 2017 to over US$4 billion by mid-2019. And though Bulk Distribution Companies have recently been paid close to $1 billion, Ghana’s energy sector debt is still over US$3 billion, and the figure keeps rising.
Even the measures proposed in the 2019 Supplementary Budget to confront the issues in the energy sector, clearly shows that the challenges in the sector goes beyond “take-or-pay” issues.
One reality the Government of Ghana must admit is that a “take-or-pay” clause in power purchase agreements as a guarantee instrument is legally accepted by parties to power contract, and as a result, there is absolutely nothing wrong with the arrangement as it exist in Ghana and other parts of the world. Government must accept that this type of clause/agreement amongst others are necessary to achieve final investment decision (FID) for many power supply agreements.
However, it is not out of place for government to consider negotiating or re-calibrating the existing PPAs, as it explores all relevant avenues to deal with the rising energy sector debt. What is most important is how well government explores the PPAs option without an undesirable costs to the country, and not be overly fixated on “take-or-pay” issues.
Take-or-Pay Contract/Clause
Diverse guarantee instruments have been cultivated to deal with various types of risk embedded in projects. Among the contractual arrangements that is able to allocate risks during the operating period; take-or-pay, throughput, and take-and-pay contracts are perhaps the most commonly applied (Razavi, 1996).
In a large scale energy project, the most familiar type of off-take contract is the “take-or-pay” contract. Kaiser and Tumma (2004) explains take-or-pay contract as an agreement between a purchaser and a seller that require the purchaser to either pay for or take delivery of a pre-specified quantity of a commodity or service at a price at specific time intervals (“take”) or pay for the same quantity without taking delivery (“pay”).
In contrast with “take-or-pay”, a “take-and-pay” contract obligates the buyer to both take and pay the contract price for a minimum quantity of commodity each year. This type of contract is often generally described as a “firm off-take” contract. That is, if the buyer fails to take the minimum contract quantity in any period it will be in breach or default of the contract each time such failure occur, and it will become liable to the seller for damages upon the occurrence of each such breach or default (King and Spalding, 2013).
According to Rogers and White (2013), “take-or-pay” contract is widely recognized by lenders, and it is often the most important method by which a seller secures the large external debt financing on limited recourse terms that energy projects typically require. A well-structured “take-or-pay” contract offers the seller with an assured revenue flow that provides sufficient return on the significant project capital investment and risks to which it is exposed. Vinter (1994) asserts that the predictability of revenue flows from the project minimizes the lender’s worry over potential risk of non-payment of the project debt.
Typically, a seller is concerned with two fundamental risks: market demand risk and price risk. A “take-or-pay” contract places the risk of deteriorating market conditions on the buyer by requiring it to always be responsible for the payment for a minimum purchase commitment (sometimes referred to as volume risk shifting), leaving the seller with only the market price risks to manage, which in some cases may be hedged (Rogers and White, 2013). It literally mean that, in the absence of the “take-or-pay” obligation a supplier bears all the risk that the off-taker’s ongoing need for the energy might dry up, or that a price swing might induce the buyer to break the contract.
“Take-or-Pay” contracts have been used by petroleum coke producers, aluminum company calination facilities, municipalities and waste incineration facilities (Kaiser and Tumma, 2004). The arrangement is also common in the energy sector, because of the substantial costs for suppliers to provide energy units such as electric utility, crude oil or natural gas; and the volatility of energy commodities prices.
“Take-or-pay” clauses are accepted the world over, as the arrangement exist in lots of places including Africa; in South Africa, Zambia, Nigeria, Tanzania, and Cote d’Ivoire. In Japan for instance, almost all liquefied natural gas (LNG) is imported under long-term contracts with a take-or-pay clause, although buyers assume considerable risk under such a clause. On the one hand, the government has accepted take-or-pay because it secures a stable supply of LNG (Namikawa, 2003).
Proceeding Cautiously
Reviewing and re-negotiating contracts could assist in achieving significant financial savings both in the short and long-term especially when market forces changes. However, one must to be careful not attract unnecessary costs because the service supplier is under no obligation to concede to you the buyer. In an attempt to re-negotiate, the buyer is essentially asking the seller for a favor. As a result, the buyer’s approach must be more calculated, as he seeks to restructure the contract to bring rates more in-line with current market conditions.
There could be financial or reputational damages if the process is poorly handled. In the instance where government would attempt to unilaterally re-calibrate the PPAs, it would be tantamount to a breach and/or repudiation of those agreements; and cost awaits the state in the form of judgement debt, reputational damage, and sabotages et cetera.
An approach for a collaborative consultation process to address the challenges in the energy sector will be less costly, compared to a unilateral re-calibration of the PPAs. Also an attempt to also blame the “take-or-pay” arrangement or blame the private sector who are the other side to those contracts, will result in government losing the goodwill to re-negotiate.
To this point, it is clear that “take-or-pay” clause as mostly capture in power purchase agreements is not wrong in all respect, and that it is an undeniable fact that risk associated with such capital-intensive projects must be well allocated to protect both the seller and the buyer. Government must therefore focus on areas to deploy effectively whatever “excess power” that may exist, and to correct the inefficiencies in especially the country’s power distribution segment.
Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security (IES) ©2019
Email: [email protected]
The writer has over 23 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media and CNBC Africa
Ghana: Vivo Energy’s CSR Project Wins Best Community Relations Programme
Vivo Energy Ghana’s flagship sustainability project, ‘Energy for Water and Education’ has been adjudged the Best Community Relations Programme of the Year at the 8th National PR and Communications Excellence Awards.
Under this project, Vivo Energy Ghana (Shell Licensee), its employees and business partners handed over two newly constructed hand-pump boreholes to Hiamankyene community and rehabilitated the Brengo Presbyterian Basic School in the Ashanti Mampong Municipality to support the government efforts in achieving the SDGs 4 and 6, which centre on Quality Education and Clean Water and Sanitation respectively.
In addition, the company also donated educational materials to the people and school children in the community.
The Energy for Water and Education programme involved the regular consultation and engagements of various stakeholders including the project community and the municipal assembly in the planning and the implementation to ensure the successful execution of the project.
Commenting on the awards, the Managing Director of Vivo Energy Ghana, Mr Ben Hassan Ouattara expressed his appreciation to staff, business partners and all stakeholders for making the project a success.
“Your commitment level to impacting Hiamankyene community is unmatched. I want to express my profound gratitude to everyone for the personal contributions towards the project and I am very happy about the lives that we have changed and the communities we have impacted. This award is an affirmation of the hard work and commitment we invested into this project”, he said.
Receiving the award, the Corporate Communications Manager of Vivo Energy Ghana, Mrs Shirley Tony Kum, dedicated the award to the chief and people of Hiamankyene and project implementing partners. She further reaffirmed the company’s commitment to helping the government achieve the Sustainable Development Goals through its various strategic sustainability projects.
The National PR and Communications Excellence Awards is an annual event organised by the Institute of Public Relations, Ghana to recognise the achievements of public relations professionals, corporate institutions, public relations agencies and celebrate the best of Ghana’s PR and Communications industry.
Source: www.energynewsafrica.com