The Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDiB), the umbrella body of IPPs in the West African nation, Ghana, has called on government to stop demonising the current ‘Take or Pay’ contracts signed with IPPs in the previous government.
According to the chamber, it is not right for government to demonise what a ‘take or pay’ contract is, or portray the other side to those contracts as bad people or bad companies.
In a statement copied to energynewsafrica.com, the chamber explained that the current ‘take or pay’ contracts were carefully negotiated and entered into in good faith over many years with international advisors on all sides of the transaction, including for the government (Ministry of Finance, Ministry of Energy, Attorney General and ECG).
“The nature of the obligations assumed by GoG (Ministry of Finance, Ministry of Energy, Attorney General and ECG) is consistent with best practice not only in Africa but also in many other jurisdictions around the world.“The same sort of ‘take or pay’ PPA is in place in many IPPs across Africa including in Nigeria, Cote d’Ivoire, South Africa, Kenya, Tanzania, Uganda, Zambia and across Asia / South America as well. The nature of a ‘take or pay’ arrangement is not, in itself, at all wrong.
“What always needs to be considered is which power projects are entered into by a state-owned off taker on such a take or pay basis, what the tariff is for the project and how risks in the project are all allocated.”
The Finance Minister, Ken Ofori-Atta, while presenting the mid-year budget review statement on the floor of Parliament on Monday, July 29, 2019, blamed the previous government for committing the country to ‘take or pay’ agreements in the energy sector.
He claimed the country was paying over GH¢2.5 billion annually for some 2,300MW in installed capacity, which the country does not consume.
“We shall, from August 1st 2019, with the support of parliament, make ‘take-or-pay’ contracts a beast of the past,” he stressed.
On August 26, 2019, the Finance Ministry, in a statement signed by the Chief Director, noted that government was going to commence collaborative consultation process with the IPPs and gas producers.
IPPs Welcomed The Process
The chamber, however, welcomed the approach by the government for a collaborative consultation process to address the challenges in the energy sector (which are not the offence of the IPPs and gas producers).
The chamber expressed its commitment to assisting all parties in creating a framework for the power sector, which allows the continuation of private sector involvement in the delivery of electricity to Ghana at least cost.
“It may be considered by some that the “right thing” is to blame a ‘take-or-pay’ contract or blame the private sector, which are the other side to those contracts–but that would be wrong and be a mistake.
“That will, at best, waste time and lead to an erosion of confidence in Ghana but at worst could lead to termination of the contracts with a vast termination sum being required to be paid by Ghana. What GoG should now do is to act reasonably and, yes, voice its concerns with certain issues and payment terms, but also listen to the other side, to advisors, to supporting agencies to ensure that the resulting path chosen is considered properly in a measured way.”
Caution
Whilst the chamber said it is sympathetic to government’s concerns about the energy sector and the macroeconomic stability of the country, it said a unilateral recalibration of the PPAs by GoG/ECG is not the way to address these concerns and would, in its opinion, be tantamount to a breach and/or repudiation of those agreements.
In addition, place IPPs in breach of their obligations to third parties and ultimately affect Ghana’s credibility internationally as an investment destination.
The Brazilian Senate has approved an agreement for the transfer of rights over a disputed group of oil fields that would see state energy giant Petrobras get US$9 billion in compensation.
Reuters reports the agreement also involves payouts to oil-producing states. These will come from the expected proceeds from auctions of the fields as well as from the surplus reserves of these fields. States will get 3 percent of the surplus reserves as well as portions of a 15-percent share of the auction proceeds, which the government has estimated at U$35 billion.
It was the surplus reserves at the offshore fields, all in the pre-salt zone, that sparked the dispute. The so-called transfer-of-rights area was assigned by the government to Petrobras back in 2010 to extract 5 billion barrels of oil and gas based on the oil prices at the time. The complex provisions of the contract, however, included a review of the costs in the area after it was declared commercially viable in 2014.
The state oil firm explored the area and found that a lot more oil lies in this low-risk offshore zone. There are estimates that the transfer-of-rights area could hold up to 15 billion barrels of oil in excess of the 5 billion barrels to which Petrobras was entitled to produce when the government transferred the area to the state firm in 2010.
Earlier this year, Petrobras said in a regulatory filing that it expected to get up to US$14 billion in compensation after the dispute was settled. The compensation it will actually get is significantly lower, but it would also be party to the development of the blocks.
These, by the way, are scheduled to be auctioned next month. Participants will need to pay up a combined signing bonus of almost US$27 billion for the four offshore blocks,
Norwegian oil and gas firm Equinor’s oil storage terminal in the Bahamas has been damaged by the hurricane Dorian earlier this week
Tropical Cyclone Dorian passed over the Abaco islands (northern Bahamas) on September 1 as a Category 5 hurricane with maximum sustained winds of 295 km/h.
On 2 September at 3.00 UTC, its center was over Grand Bahama Island with maximum sustained winds of 285 km/h.
As per the UN reports, at least 20 fatalities have been reported in the Bahamas, 17 in the Abacos and 3 in Grand Bahama. According to the World Food Programme (WFP), more than 76,000 people were affected and are in need of immediate humanitarian relief.
In a statement on Thursday published by offshoreenergytoday.com, Equinor expressed concern by the reports of widespread devastation coming from the Bahamas in the aftermath of the hurricane.Equinor operates the South Riding Point oil storage at Grand Bahama and had 54 personnel there ahead of the arrival of the hurricane.
“All Equinor personnel in the Bahamas are now confirmed safe and accounted for. The safety and well-being of our personnel, their families, and the local environment is our first priority,” Equinor said.
“[The employees] had worked at the South Riding Point oil storage terminal up until the precautionary shutdown on 31 August. It has taken some time due to the difficult communications conditions, but we have now succeeded in establishing contact with all of them,” Equinor said.
Terminal damaged, oil spills
“Our personnel are all still facing a tough road ahead due to the devastation the hurricane has caused on the islands. Our initial aerial assessment of the South Riding Point facility has found that the terminal has sustained damage and oil has been observed on the ground outside of the onshore tanks. It is too early to indicate any volumes. At this point there are no observations of any oil spill at sea,” the Norwegian firm added.
According to Equinor, the company has mobilized oil spill response resources and they will arrive at South Riding Point “as soon as possible.”
“None of our personnel were at the terminal when the hurricane took place…While weather conditions on the island have improved, road conditions and flooding continue to impact our ability to assess the situation and the scope of damages to the terminal and its surroundings.
We will come back with more updates as soon as we are able to gain access to the terminal area and verify information,” the Norwegian firm said.
Without technological constraints, more people from across Africa are free to innovate and create on the global stage; democratisation of energy is necessary to enable Africans to move into the digital age.
The term ‘Democratisation of Technology’ has become synonymous with the digital age. In a nutshell, it means that access to advanced technology is no longer the domain of a privileged few, but that more and more people are benefitting from access to smart technologies which is rapidly levelling the playing field of global innovation.
One of the deciding factors in who has access to this technology, is the distribution of energy. In order to ensure the equality of technology we first need to solve the problem of unreliable energy.
The concept that energy must come from one central source is inefficient and outdated. By decentralising energy and allowing people to generate and use energy as needed, you’re allowing people to take charge of their own prosperity. In a continent like Africa, with the incredible opportunity for solar and wind generated energy, keeping energy centralised severely hampers the potential for economic growth.
Microgrids are an effective way to quickly and effectively diversify a centralised energy grid. By employing microgrids you not only take the strain off the central grid and lower your carbon footprint, you also create economic opportunities where people can sell off excess energy produced.
The Brooklyn Microgrid project is an excellent example of how clean energy can be turned into thriving micro-economies. In this case, LO3 Energy, a company based in New York, working alongside Siemens have installed a solar-powered microgrid. In addition to generating clean energy for its own use, the company also installed a blockchain enabled transactive energy platform. This means any unused energy can be sold, generating a new revenue stream.
Enabling democratisation of technology
The same system could be put in place in certain parts of Africa. A shop or building even in remote parts of the country, for example, could install a microgrid and sell off excess energy to surrounding businesses. You could take it one step further and create a transparent energy retail environment where a resident in another part of the country, could choose to top-up their electricity directly from a microgrid supplier based elsewhere.
By diversifying energy through microgrid technology, we can very quickly create new income streams in disadvantaged areas while at the same time growing and stabilising access to energy. This, in turn, will kickstart real democratisation of energy.
Our Siemens office in Midrand is equipped with a microgrid and now uses 50% less power off the central grid. The office has gone more than a year with uninterrupted power and has saved about 2 460 tons of CO2 since the system was opened (174 000 kWh per month).
Through energy comes wider access to communication and the ability to participate in global conversations through online connectivity. This in turn nurtures creativity, innovation and economic growth.
Traditionally, the journey from ‘idea’ to ‘successful product or business’ is a complicated process involving business cases, pitches for funding to build a prototype, raising capital investment for production and testing, wading through patent approvals and trademark law. While many of these steps are still crucial once you have a working prototype, the democratisation of technology makes it easier for inventors and entrepreneurs to develop their ideas. SME’s are vital economic drivers and making it easier for them to compete will benefit the economy as a whole.
Digital twinning is one example that streamlines the production process. A digital twin is a virtual representation of a physical product or process, used to understand and predict the physical counterpart’s performance characteristics. Digital twins are used throughout the product lifecycle to simulate, predict, and optimise the product and production system before investing in physical prototypes and assets.
This means innovators can test their products in the virtual world and refine it before ever needing to raise money for testing. Real-life testing is still vital with most products, but with digital twinning you can get your product as close to perfect in the virtual world in order to save time and costs when it comes to the final real-life test phase. In many ways this agility levels the playing field giving small, developing companies (and countries) the same opportunities as their bigger and more established counterparts.
Siemens also offers this technology free to universities. Students have access to a free version of the same easy-to-use software suite used by professionals. In addition to free software, we provide tutorials, webinars, online courses and certification to help them develop their skills.
Breaking down barriers
Through access to technology anyone, anywhere, has the opportunity to create a thriving business or economy. Across Africa it can play a large role in the empowerment of women and youth development.
One example is our Siemens Fabric campaign, which was set on the global stage, but all the fabric produced for the initiative was made by a small female-owned business situated in Alexandra, Gauteng. Legae Larona Sewing Cooperative in Alex now forms part of the Siemens Enterprise Development programme.
This is where you start seeing the results of the democratisation of technology – when an innovator from a small community in a developing nation has the same access to opportunity as those operating from high-tech offices in the first world. It’s not yet a perfect system, but through the clever use of technology we can exponentially increase access to opportunity.
Source: Sabine Dall’Omo, CEO of Siemens Southern and Eastern Africa
While electricity demand in summer is generally lower than in winter, the summer period comes with its own challenges noted Eskom, South Africa’s national power utility.
The change in customer electricity consumption in summer means sustained demand throughout the day and not just over the evening peak as people use air conditioning for cooling.
Eskom also ramps up planned maintenance over the summer period, taking advantage of the overall reduced demand in electricity.
“Our objectives over the next seven months is to avoid load shedding while we conduct an average of 5,500MW planned maintenance and work hard at keeping unplanned breakdowns below 9,500MW,” Eskom said in a statement published by esi-africa.
“Diesel, pumped-storage and demand response options, which includes Eskom requesting big industry to switch off when demand peaks, will be used to supplement any shortfall in capacity.”
The power utility warned that there will also be heightened focus on sustained transmission and distribution network performance particularly in light of the recent increase in the theft and vandalising of electricity infrastructure.
“Our objective over summer is to avoid load shedding, to sustain our plant performance, and to continue to maintain our plant in order to avoid unplanned breakdowns. While the risk of load shedding always exists, we remain confident that we are on course to keeping the lights on for South Africa this summer,” Jan Oberholzer, Eskom’s chief operating officer.
Eskom’s acting group chief executive, Jabu Mabuza, also commented: “Our briefing comes against the backdrop of commendable performance in winter, and we are grateful for the support from the Minister of Public Enterprises and the Ministerial Task Team whose report provided valuable input into the 9-point generation recovery plan.
“We are encouraged by the steady system recovery and new plant units coming on line to give new power into the South African grid as we saw last week with the commissioning of Medupi’s sixth and last unit.”
Addressing coal stock challenges
Eskom also noted that it has made notable strides in addressing coal stock challenges. Prior to the announcement of the winter plan, 10 of 15 coal-fired power stations were below the prescribed 20 coal stock days as per the Grid Code requirement.
Today, coal stock levels have improved to 495 days, excluding Medupi and Kusile, the company stated.
Only one power station (Kriel) remains below the Grid Code requirement. The utility said it does not expect any coal-related risks throughout the summer months.
“I would like to assure our stakeholders that Eskom remains committed to stabilising our business and to moving towards a sustainable future. Eskom is committed to recovering its operational performance and the generation 9-point recovery plan is on track and will continue to yield positive results,” Mabuza said.
Eskom appeals to customers to continue to use electricity sparingly throughout the day by doing the following:
Set air-conditioners’ average temperature in summer at 23ºC.
Be energy efficient and change your light bulbs to energy-efficient lights/LEDs.
Use the cold water tap rather than using the geyser every time.
Set your swimming pool pump cycle to run twice a day, three hours at a time for optimal energy use.
At the end of the day, turn off computers, copiers, printers and fax machines at the switch. Avoid standby or sleep mode.
Norwegian oil and gas firm Aker BP has failed to find hydrocarbons at an exploration well in the Norwegian part of the North Sea.
The Norwegian Petroleum Directorate, according to offshoreenergytoday.com on Wednesday said that Aker BP had completed the drilling of the exploration well 30/12-2, and that the well was dry
The well was drilled about 70 kilometers south of the Oseberg field center and 160 kilometers west of Bergen in the northern part of the North Sea.
The objective of the well was to prove petroleum in Middle Jurassic reservoir rocks (the Tarbert and Ness formation). This was the first exploration well in production license 986, which was awarded in APA 2018.
NPD indicated that the well was drilled to a vertical depth below the sea surface of 3173 meters and was terminated in the Ness formation in the Middle Jurassic.
Water depth at the site is 105 meters. The well has been permanently plugged and abandoned.
The exploration well was drilled by the Deepsea Stavanger semi-submersible drilling rig, which is now drilling the appraisal well 25/4-14 S on the Alvheim field where Aker BP is the operator.
ENGIE, a France- based energy firm has announced the acquisition of Mobisol, a pioneer of off-grid solar solutions.
The closing of the acquisition of Mobisol will happen once all approvals of the relevant regulatory bodies are received.
“With the acquisition of Mobisol, ENGIE expands its access to a market of millions who are not connected to the grid and establishes itself as the market leader on the continent,” Isabelle Kocher of the company said in a press statement copied to energynewsafrica.com by APO Group.
“Not only do we change people’s lives with clean energy but we trigger economic activities for households and entrepreneurs who generate additional income once they are connected,” she added.
Founded in 2011, Mobisol employs over 500 people as well as approximately 1,200 contractors.
The company has operations in Tanzania, Rwanda, and Kenya and has installed more than 150,000 solar home systems, providing clean and reliable energy to over 750,000 people in sub-Saharan Africa.
With the acquisition of Mobisol, ENGIE will be offering solar home systems in three additional countries, complementing the six countries where it is already present with its solar home system company Fenix International.
Mobisol’s focus on productive use products, combined with Fenix’s inclusive home solar power systems, will enable ENGIE to offer an unparalleled range of affordable energy products as well as extending its customer base from rural to urban areas.
Off-grid electrification in Africa
ENGIE already has significant activities in off-grid electrification in Africa. With its subsidiary Fenix International, it provides access to energy and financial services via its solar home systems to over 500,000 customers, improving the quality of life for over 2.5 million people in Uganda, Zambia, Nigeria, Benin, Cote d’Ivoire and Mozambique.
Additionally, with ENGIE PowerCorner, it supplies affordable electricity to rural populations through smart mini-grids powered by solar energy and battery storage.
PowerCorner offers 24/7 energy services to households, local businesses and public services in villages across Tanzania and Zambia.
All of these services are enabled by digital financial solutions such as mobile money and Pay As You Go technologies.
“With ENGIE PowerCorner, Fenix, and now Mobisol, we will pave the way for a new generation of affordable energy services, in line with our strategy focused on the acceleration of the zero-carbon transition,” Kocher said.
The 8th edition of Petroleum Fun(PETFUN) games, which was organised by the Association of Oil Marketing Companies(AOMC) in the Republic of Ghana, at the Burma Camp Recreational Centre on Saturday, August 31, 2019, saw Ghana’s leading OMC GOIL’s team emerging as the overall winner.
Team GOIL placed 2nd in soccer, 1st in volleyball, 1st in table tennis and 2nd in swimming race.
For their prize, team GOIL was presented with a brand new fuel dispenser/discharger and received awards for various category of games it competed.
Other OMCs that competed in the pet fun games and won awards were Galaxy Oil, Star, Tel Energy, Pacific, Frimps Oil, Kabore, Xpress Gas, Sel and BF Petroleum.
The theme for this year’s games was: ‘Together Everyone Achieves More’
The Industry Coordinator Mr Kwaku Agyemang- Duah and Vice Chairman of AOMC Mr. Michael Bozumbil congratulated all the awardees.
Mr Agyeman-Duah explained that the pet fun games gave the members of the association the opportunity to exercise their bodies and also fraternise with one another.
Mr Duah, who described their jobs as sedentary, said, “We are always in the office and so we decided to put this together so we can exercise to improve on our health.”
He emphasised that, apart from the fun they had, such events also help them to be together.
Mr Agyeman-Duah called on all their members to be united for a common goal.
Below are winners for the fun gamesSoccer
1st —-Galaxy Oil
2nd –GOIL
Sack race
1st—-Star Oil
2nd—Tel Energy
Volleyball
1st—GOIL
2nd—Pacific
Tag of war
1st—–Kabore
2nd—Pacific
Lime and spoon
1st —–Kabore
2nd—–Xpress Gas
Cards
1st—–Pacific
2nd—-Frimps
Table Tennis
1st—-GOIL
2nd—-Galaxy
Ludo
1st —-Sel
2nd—–Star
Swimming
1st—-BF Petroleum
2nd—GOIL
Draught
1st——Kabore
2nd—–Xpress Gas
Apple eating
1st —–BF Petroleum
2nd—-Tel Energy
Over 370 companies operating around the world, as well as Energy Ministries, have registered to attend this year’s Africa Oil Week (AOW) scheduled for November 4-8, in Cape Town, South Africa.
Among the multinational oil and gas giants that will be attending the conference are British Petroleum (BP), ExxonMobil, Tullow Oil, Anadarko, Equinor, ENI, Kosmos, CNOOC, CNPC and Chevron.
Also to feature at this year’s AOW will be the world’s leading seismic company, TGS, and oil and gas drilling giants, Maersk Drilling and Vantage Drilling.
The 2019 AOW, which promises to be exciting, will also be attended by 20 Ministers of Energy from Africa and US Fossil Energy Assistant Secretary Steven Winberg.
Below is the document containing the list of attendeesAOW Companies Attending List Final 2208 V1
State Saudi Aramco, the world’s biggest oil producer has announced that Yasir Othman Al-Rumayyan has been appointed as its new chairman effective September 3.
Al-Rumayyan was appointed a member of the company’s board in 2016 and is the governor of the public investment fund. He replaces Khalid Al-Falih, also the Saudi energy minister.
Saudi officials have stated that Al-Rumayyan’s appointment is to make a clear break between the government and the oil giant.
Saudi Aramco is expected to launch its initial public offering soon, with 5% of it for sale and the state hoping for a valuation of $2 trillion for the whole company.
The sale was due to take place last year but was delayed. So far Saudi Aramco has not picked a foreign exchange for the IPO, with both New York and the UK exchanges posing risks of one sort or another to the issuer.
Chevron appears to be laying the groundwork to leave Venezuela in the event that the U.S. declines to extend a waiver allowing it to continue operating in the country, Bloomberg has reported.
Over the past year, the San Ramon, California-based company updated some of its contracts with partners in the South American country to allow for the possibility of early termination, according to people with knowledge of the matter. Under the new terms, Chevron would incur no penalties for early termination and all payments due would be prorated up to the date of notification.
The new provisions come as the U.S. continues tightening sanctions against Venezuela in a bid to oust President Nicolas Maduro. Chevron, the last American company producing oil in the country, faces the October 25 expiration of a special waiver allowing it do business there. Some of Chevron’s long-term contracts were updated at the end of 2018, while other agreements were modified after the company obtained the sanctions waiver in July.
Chevron spokesman Ray Fohr said the company is hopeful that its license to operate will be renewed in October. “We are a positive presence in the country,” he said by email to Bloomberg. “Our focus is maintaining the safety of the operations and supporting the more than 8,000 people who work with us as well as their families.”
Nosedive
If the U.S. government declines to extend Chevron’s waiver, the decision would put an end to the oil major’s 100-year history in the country, a story that started in the 1920s and survived a number of military coups and civil unrest. While ExxonMobil Corp., Royal Dutch Shell Plc and ConocoPhillips pulled out of Venezuela, Chevron reaffirmed its commitment to the country.
The company has applied its expertise in extracting heavy oil from California oil fields to its projects in South America and over the years has expanded its footprint by building a facility to pre-process sludgy Venezuelan oil into refinery-ready grades.
Chevron warned in August that developments in the crisis-torn South American nation could hurt its earnings.
“Future events related to the company’s activities in Venezuela may result in significant impacts on the company’s results of operation in future periods,” Chevron said in a filing with the U.S. Securities and Exchange Commission. The language had evolved from the company’s previous quarterly filing, when it said developments in the country could lead to “increased business disruption and volatility in the associated financial results.”
Chevron has about 330 direct employees in Venezuela, according to a person familiar with the company affairs. Venezuela accounted for only 1% of the company’s global crude oil output in 2018, or 42,000 bpd. The Petroboscan and Petropiar ventures are currently active, while the Petroindependencia and Petroindependiente projects are shut amid lack of parts and a humanitarian crisis in Venezuela.
Norwegian engineering company, Aker Solutions has launched its Intelligent Subsea offering designed to accelerate field development and maximize performance.
The industry has standardized, simplified, and reduced the size of equipment in recent years, but a further step-change is needed to drive a sustainable future for the subsea industry and the world it serves, Aker Solutions said in a report filed by offshoreenergytoday.com on Tuesday.
With Aker Solutions’ intelligent subsea approach, the time it takes to generate optimal subsea field layouts can be cut by 75 percent and the cost of field development capex can be halved, the company said.
Accelerated field development is achieved by combining Aker Solutions’ modular, optimized and configurable subsea equipment with automated design which can reduce engineering hours by up to 70 percent, Aker Solutions added.
Intelligent Subsea addresses the current and future needs of subsea production by combining three core value propositions: Adopting an integrated approach to field design where both the subsea and topside systems are optimized and concepts can be rapidly developed with the aid of advanced digital tools; Standardized and digitally-enabled products that can be rapidly configured to customers’ needs and are delivered with accelerated timelines – reducing the time to first production; Maximized life of field performance with enhanced recovery and extend field life enabled by condition monitoring, predictive maintenance and simplified system enhancement as the field matures.
“Digitalization of our work process and new applications are transforming field design, radically accelerating development and delivering actionable insight to maximize performance through the life of a field,” Aker Solutions Chief Executive Officer Luis Araujo reportedly said.
Source: www.energynewsafrica.com
Houston-based W&T Offshore has closed the purchase of ExxonMobil’s interests in and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico, offshore Alabama, and related onshore and offshore facilities and pipelines.
According to Offshoreenergytoday.com, W&T Offshore entered into a purchase and sale agreement with ExxonMobil to acquire its interests in the Gulf of Mexico assets for $200 million in June 2019.
After taking into account customary closing adjustments and an effective date of January 1, 2019, cash consideration paid by W&T was $167.6 million which includes a previously-funded $10 million deposit, W&T said on Tuesday.
The company added that the acquisition was funded by cash on hand and borrowings on its previously-undrawn revolving bank credit facility. W&T will also assume asset retirement obligations associated with these assets.
The deal includes working interests in nine GOM offshore producing fields and an onshore treatment facility that are adjacent to existing properties owned and operated by W&T.
The transaction adds net proved reserves of approximately 74 million barrels of oil equivalent (Boe) of which 99% are proved developed producing and 22% are liquids estimated as of the effective date.
The acquired properties produced approximately 19,800 net Boe per day (25% liquids) in the first quarter of 2019.
In addition, the company announced it is the apparent high bidder on two shallow water blocks in the GOM Outer Continental Shelf (OCS) Region-wide Oil and Gas Lease Sales 253 held by the Bureau of Ocean Energy Management (BOEM) on August 21, 2019.
The two shallow water blocks, Ship Shoal 332 and 367, cover approximately 10,300 acres and, if awarded, the company will pay approximately $0.3 million for the awarded leases, which reflects a 100% working interest in the acreage and a royalty rate of 12.5%. The blocks have a five-year lease term and are in close proximity to current W&T acreage.
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, “We are pleased to have closed our purchase of free cash flow positive, producing properties in the GOM from ExxonMobil exactly as scheduled. These low-decline assets add significant reserves and production to our portfolio and are adjacent to our current operations. This provides us the opportunity to recognize increased scale, rationalize operations and capture cost efficiencies to further grow cash flow.
“In addition, we remain active in seeking other new GOM opportunities through our participation in the BOEM lease sale earlier this month where we were named apparent high bidders on two shallow water blocks. We will continue to focus on maximizing value through accretive acquisitions, organic growth and operational excellence.”
“The same sort of ‘take or pay’ PPA is in place in many IPPs across Africa including in Nigeria, Cote d’Ivoire, South Africa, Kenya, Tanzania, Uganda, Zambia and across Asia / South America as well. The nature of a ‘take or pay’ arrangement is not, in itself, at all wrong.
“What always needs to be considered is which power projects are entered into by a state-owned off taker on such a take or pay basis, what the tariff is for the project and how risks in the project are all allocated.”
The Finance Minister, Ken Ofori-Atta, while presenting the mid-year budget review statement on the floor of Parliament on Monday, July 29, 2019, blamed the previous government for committing the country to ‘take or pay’ agreements in the energy sector.
He claimed the country was paying over GH¢2.5 billion annually for some 2,300MW in installed capacity, which the country does not consume.
“We shall, from August 1st 2019, with the support of parliament, make ‘take-or-pay’ contracts a beast of the past,” he stressed.
On August 26, 2019, the Finance Ministry, in a statement signed by the Chief Director, noted that government was going to commence collaborative consultation process with the IPPs and gas producers.
IPPs Welcomed The Process
The chamber, however, welcomed the approach by the government for a collaborative consultation process to address the challenges in the energy sector (which are not the offence of the IPPs and gas producers).
The chamber expressed its commitment to assisting all parties in creating a framework for the power sector, which allows the continuation of private sector involvement in the delivery of electricity to Ghana at least cost.
“It may be considered by some that the “right thing” is to blame a ‘take-or-pay’ contract or blame the private sector, which are the other side to those contracts–but that would be wrong and be a mistake.
“That will, at best, waste time and lead to an erosion of confidence in Ghana but at worst could lead to termination of the contracts with a vast termination sum being required to be paid by Ghana. What GoG should now do is to act reasonably and, yes, voice its concerns with certain issues and payment terms, but also listen to the other side, to advisors, to supporting agencies to ensure that the resulting path chosen is considered properly in a measured way.”
Caution
Whilst the chamber said it is sympathetic to government’s concerns about the energy sector and the macroeconomic stability of the country, it said a unilateral recalibration of the PPAs by GoG/ECG is not the way to address these concerns and would, in its opinion, be tantamount to a breach and/or repudiation of those agreements.
In addition, place IPPs in breach of their obligations to third parties and ultimately affect Ghana’s credibility internationally as an investment destination.
Equinor operates the South Riding Point oil storage at Grand Bahama and had 54 personnel there ahead of the arrival of the hurricane.
“All Equinor personnel in the Bahamas are now confirmed safe and accounted for. The safety and well-being of our personnel, their families, and the local environment is our first priority,” Equinor said.
“[The employees] had worked at the South Riding Point oil storage terminal up until the precautionary shutdown on 31 August. It has taken some time due to the difficult communications conditions, but we have now succeeded in establishing contact with all of them,” Equinor said.
Terminal damaged, oil spills
“Our personnel are all still facing a tough road ahead due to the devastation the hurricane has caused on the islands. Our initial aerial assessment of the South Riding Point facility has found that the terminal has sustained damage and oil has been observed on the ground outside of the onshore tanks. It is too early to indicate any volumes. At this point there are no observations of any oil spill at sea,” the Norwegian firm added.
According to Equinor, the company has mobilized oil spill response resources and they will arrive at South Riding Point “as soon as possible.”
“None of our personnel were at the terminal when the hurricane took place…While weather conditions on the island have improved, road conditions and flooding continue to impact our ability to assess the situation and the scope of damages to the terminal and its surroundings.
We will come back with more updates as soon as we are able to gain access to the terminal area and verify information,” the Norwegian firm said. 
