Oil and gas company Tullow Oil has made a second oil discovery offshore Guyana. The Joe-1 exploration well has opened a new Upper Tertiary oil play in the Guyana basin.
Tullow started drilling at the Joes prospects in the Orinduik block offshore Guyana, the company’s second well in the block after the Jethro-1 well, in late August.
The Joe-1 exploration well was drilled by the Stena Forth drillship to a Total Depth of 2,175 meters in water depth of 780 meters, Tullow said in a release posted on its website Monday.
According to the company, evaluation of logging and sampling data has confirmed that Joe-1 has encountered 14 meters of net oil pay in high-quality oil bearing sandstone reservoirs of Upper Tertiary age. Joe is the first oil discovery to be made in the Upper Tertiary and de-risks the petroleum system in the west of the Orinduik block, where a significant number of Tertiary and Cretaceous age prospects have been identified.
Tullow and its partners will now evaluate data from the Joe-1 discovery alongside data from the Jethro-1 discovery announced in August 2019 and await the outcome of the Carapa well to determine the optimal follow-on exploration and appraisal program.
Also in Guyana, the Repsol-operated Carapa-1 well on the Kanuku license (Tullow 37.5%) is scheduled to start drilling in late September with the Rowan EXL II jack-up rig and will test the Cretaceous oil play with a result due in the fourth quarter of 2019.
Joe-1 was drilled on the Orinduik license, offshore Guyana by Tullow’s wholly owned subsidiary Tullow Guyana B.V.
Tullow Guyana B.V. is the operator of the Orinduik block with a 60% stake. Total E&P Guyana B.V. holds 25% with the remaining 15% being held by Eco (Atlantic) Guyana Inc.
On completion of operations, the Stena Forth drillship will depart Guyana and return to Ghana.
Commenting the new discovery, Angus McCoss who is Exploration Director: “I am very pleased that we have made back-to-back discoveries in Guyana and successfully opened a new, shallower play in the Upper Tertiary age of the Guyana basin with our second well. The Joe-1 discovery and its surrounding prospects represent another area of significant potential in the Orinduik Block and we are greatly looking forward to the next phase of the program as we continue to unlock the multi-billion barrel potential of this acreage.”
“The Joe-1 discovery has now opened up an additional play on the Orinduik Block that further defines the full potential for Eco and our partners in Guyana. Our initial interpretation, prior to drilling, defined over a dozen potential resource targets throughout the entire hydrocarbon section. We set a strategy to first focus on these shallower Tertiary plays as they have a huge positive effect on overall economics and allow a speedy path to production. Fast, low risk drilling to thick, clean, high porosity oil-bearing sands has decreased the drilling costs and greatly de-risks the development.
“This new discovery in the Upper Tertiary has opened a new play, the first Upper Tertiary discovery in Guyana, throughout our block, just as the Jethro-1 discovery did in the Lower Tertiary section. It has greatly increased our chance of success on our upcoming drilling targets and significantly de-risks other resource not previously considered in our interpretation,” Colin Kinley, COO and Co-Founder of Eco Atlantic, also commented.
Oh his part, Gil Holzman, CEO and Co-Founder of Eco Atlantic, also said: “The Joe-1 discovery, only a month after the Jethro-1 discovery, is very material for us as it has proven that our theory of shallow low-cost plays exists in Guyana, as we are up-dip from the huge Exxon fields at Liza and Turbot areas, with good quality sands and oil that is clearly present on our block.”
The cost of power in the Republic of Ghana still remains among the highest in the sub-region and serves to increase the cost of production for industries in the country, the Ghana Employers Association has said.
According to the Business and Financial Times(B&FT), President of the Ghana Employers Association (GEA), who was addressing members at this year’s annual general meeting of the association in Accra, said the cost of power remains a hindering factor to the competitiveness of local business and must be driven down significantly.
He said such a move will no doubt retain existing investors and attract new local and foreign ones into productive sectors of the economy, thereby creating the much-needed jobs.
“Cost of electricity in the country remains comparatively high within West Africa; the reduction in electricity tariffs last year, particularly for industry, was a welcome development but we still have some work to do in the area of lowering tariffs even further for industrial and commercial users.”
Mr. Acheampong argued that in the drive toward an aggressively industrialised economy, government needs to, as a matter of policy, discriminate some more in favour of ‘process power’ as against ‘utility power’, given the value-addition impact of the former on the economy.
The Association of Ghana Institute (AGI), in its 2nd Quarter Business Barometer Report, cited cost of power as the key driver in many local manufacturing industries’ collapse.
Mr. Acheampong further urged government to urgently accelerate the pace of developing other cost-effective forms of renewable energy, in order to enhance the country’s pedigree as the best business destination for West Africa.
“These forms of energy are not only cheap in the medium- to long-term, but are also environmentally friendly,” he noted.
The GEA president commended stakeholders of the business landscape for the sustained industrial peace at both national and enterprise levels, which he argued will facilitate increased investments into the economy.
Mr. Acheampong indicated: “As we strive to position the economy to attract both local and foreign investments to undertake transformational projects that will create jobs and sustainable development to the people, industrial harmony among social partners is a requisite for higher productivity, sustainability of enterprises and business growth”.
He further opined that sustained macroeconomic stability for inclusive growth and development is absolutely necessary in the country’s quest for rapid transformation.
For him, having all stakeholders working in mutual trust and confidence with government, and having wider discussions on broader macro-economic and social policy decision-making, will help build a stable and predictable economy that enables businesses to plan effectively. He said it is therefore necessary for continual dialogues, negotiations and consultations among employers, labour and government so as to maintain peace on the industrial front.
Half of Saudi Arabia’s oil production has gone offline following a surprise drone strike, oilprice.com has reported on Saturday.
Drones attacked Abqaiq facility in Saudi Arabia and the Khurais oil field run by Saudi Aramco early Saturday morning, the kingdom’s interior ministry said, sparking a massive fire at a crude processing plant essential to global oil supplies.
The closure will impact nearly 5 million barrels of crude processing per day, affecting 5 percent of the world’s daily oil production. And while Aramco is confident that it can recover quickly, if it can’t, however, the world could face a production shortage of as much 150MM barrels per month. An outcome which could send oil prices into the triple digits.
Houthi rebels– who are backed by Iran in a yearlong Saudi-led battle in Yemen– have apparently asserted responsibility for the strikes and pledged that more assaults can be expected in the future.
“We promise the Saudi regime that our future operations will expand and be more painful as long as its aggression and siege continue,” a Houthi spokesperson explained, adding that the attack involved ten drones.
The Iran-backed Houthis have recently been behind a number of assaults on Saudi pipelines, vessels and other energy infrastructure as tensions grow in the region.
There have been no details on the severity of the damage but Agence France-Presse quoted interior ministry spokesperson Mansour al-Turki as saying that there were no human casualties as a result of the attack.
Africa Oil & Power (AOP) has announced Salesian Institute as the new community partner for AOP’s flagship conference and exhibition which will take place at the CTICC 1 on October 9-11, 2019 in Cape Town, South Africa.
“We are privileged to be working with the Salesian Institute, as their mission is so fully in line with our #MakeEnergyWork theme for this year’s Africa Oil & Power Conference,” Guillaume Doane, CEO of Africa Oil & Power in a press release copied to energynewsafrica.com.
“For us, #MakeEnergyWork means building an energy industry that positively impacts all segments of society, including vocational programs that target the underprivileged. We look forward to opening lines of communication between the Salesian Institute and energy industry stakeholders,” he added.
The Salesian Institute is dedicated to improving the lives of South Africa’s vulnerable children and youth at risk.
For over one hundred years, they have been providing education, shelter and emotional support for at-risk youth through a combination of basic education, vocational training, social skills and neighbourhood outreach.
The Salesian Institute has launched several successful initiatives over the years, most notably, the Learn to Live School of Skills which is a program designed specifically for vulnerable and at-risk children and youth. It provides basic education and skills training to youth at risk who cannot cope in mainstream schooling.
The Porsche Training and Recruitment Centre (PTRC-ZA) Mechatronics Technician program is jointly implemented by the Salesian Institute Youth Projects and the local Porsche importer, LSM Distributors (Pty) Ltd. The program equips trainees to diagnose, repair and service vehicles across the Volkswagen Group, which includes Porsche, Audi, Volkswagen, Bentley and Lamborghini.
Those attending the opening ceremony of the AOP conference will be entertained by the Salesian Institute Learn to live choir.
AOP will welcome 1,200 delegates over three days, with over 20 ministers and dignitaries set to speak on the main stage. The 2019 AOP #MakeEnergyWork conference will showcase how oil, gas and power can generate greater opportunities for the people of African nations and stimulate sustainable economic growth.
It is hosted in partnership with the Department of Mineral Resources and Energy of South Africa and will take place on October 9-11, 2019 at the CTICC 1 in Cape Town.
Source: energynewsafrica.com
Chad’s rigs count has been surprisingly high for a year now, in a country that produces only about 100,000 bopd. With seven rigs deployed on its territory since September 2018 according to Baker Hughes GE, Chad counts more rigs than most African petroleum provinces. It is more than Angola, sub-Saharan Africa’s second largest producer of oil. It is almost more than Congo, sub-Saharan Africa’s third largest producer. The list continues: it is more than Gabon, Cameroon, or even Equatorial Guinea.
The reason: Chad is drilling. In efforts to expand exploration and boost domestic production, the land-locked Central African nation is proving that focusing on basics is a recipe for success. Drilling efforts have translated in increased production and oil revenues, despite several industry setbacks.
The recovery of Chad’s economy and petroleum sector after the recent plunge in oil prices has indeed not been a smooth journey to say the least. Chad has Africa’s 10th largest proven oil reserves but its output has been slipping in recent years due to maturing fields and disruptions caused by the conflict with Boko Haram in the southwest. Lower commodity prices added another layer of complexity to an already very intricate situation, and put the economy in jeopardy. Hopes brought by the renegotiation of the country’s debt with Glencore and the rebound in oil prices were short lived. In 2019, both ExxonMobil, which produces a fourth of the country’s oil and Glencore, which represents about 9% of Chad’s production, announced their intention to sell their assets in the country.
But as two of its biggest operators prepared their exit, Chad welcomed new ones and did not lose focus on bringing out what former minister Me Béchir Madit had then called a “second golden age of oil between the end of 2019 and 2025.” To ensure the growth of its industry, Chad launched the construction of the mini Rig-Rig refinery in 2017 to address crying domestic shortage of petroleum products, granted several new fields to the CNPCIC in the Bongor Basin, welcomed new operator United Hydrocarbons, and renegotiated its debt with commodity trading giant Glencore in 2018.
As oil prices started rebounding, good news came along. Taiwan’s Overseas Petroleum and Investment Corporation completed its exploitation platform and connection pipeline to the Komé centre, while Petrochad developed its Krim-Krim wells. The Société des Hydrocarbures du Tchad (SHT), the country’s national oil company, also made progress on the development of its Sedigui field by signing a contract with a Sino-British consortium for the construction of a gas pipeline, gas treatment facility and gas terminal in Djarmaya.
In two months alone, between July 2018 and September 2018, rigs deployed in Chad went up from only one to seven, according to Baker Hughes GE. That’s a considerable jump in such a short time, while most of its neighbours were still dealing with a drilling syndrome. For a year now, Chad has had more rigs deployed on its territory than most other African markets, revealing sustained drilling activity which has now translated in numbers. As drilling activity picked up, production increased, and so did revenues.
According to the latest reports of the Ministry of Finance and Budget, Chad’s oil production and oil revenues have witnessed considerable increase in 2019 so far. In the first quarter, oil revenues increased by over 64% compared to the same period last year, led by an increase in production by over 18%, most of it due to the CNPCIC, and thanks to a better foreign exchange rate. The second quarter confirmed the trend. During this period, oil revenues increased by another 38.6% while oil production increased by 23%, again led by the CNPCIC which has witnessed a growth of production by over 45% this year so far. Between January 2019 and June 2019, Chad produced 22,791,749 barrels. On a daily basis, that’s an average of 126,000 bopd, a very healthy figure for a state whose revenues come at 70% from oil exports.
Improved situation in Chad explains why the acquisition of ExxonMobil’s 40% stake in the Doba Basin has become a source of intense bidding and negotiations. It also explains why the country’s economic forecast are bright. In 2019, the IMG predicts Chad’s economy to grow by 4.5%, well above the world’s average of 3.3%. When many African oil nations struggle with a slow recovery, Chad reminds us that a successful energy strategy is a no brainer, and drilling must be a part of it.
Source: Mickael Vogel, Director of Strategy, African Energy Chamber
Contractors working on the 330kV Bulk Supply Point at Pokuase in the Greater Accra Region of the Republic of Ghana are working speedily to beat the project schedule.
Work on the US$33 million project, which is expected to boost power supply upon completion, will benefit areas including Pokuase, Nsawam, Kwabenya, Legon, Oyibi and Adenta.
The project is being executed by Elecnor of Spain, with earth moving works sub-contracted to Cymain while Mikadu and Oakley have also been sub-contracted for the construction of GRIDCo and ECG/PDS offices.
The BSP, which is the first project under the Ghana Power II, spearheaded by the Millennium Challenge Corporation (MCC) through the Millennium Development Authority, is expected to be completed in the first quarter of 2021.
When energynewsafrica.com visited the project site, contractors were seen busily working with earth moving machines and tipper trucks to prepare the base for actual civil works to start.
The Project Manager for Pokuase Bulk Supply Point (BSP), Patrick Oppong who took energynewsafrica.com’s reporter around the site explained that per their planned schedule, the project should be about 16%.
However, he said the progress of work is about 25% complete due to the speed with which the contractors are working.
“We want to say that by two or three weeks’ time, earth works should be completed and civil works for foundation will also start straight away. As you can see, they are marking the foundation for GRIDCo’s office building. ECG/PDS building will also start in three weeks’ time,’ he explained.
Arrival of Equipment
Contractors working on the project, Mr Oppong said have already submitted designs and placed orders for the manufacturing of all the equipment including transformers to be used.
According to him, officials of MiDA, PDS, ECG and the contractors will visit Turkey, Germany, Italy, USA, India, as well as Switzerland where the order for the equipment has been placed to inspect them in December this year to ensure that they are of standard before they are shipped to Ghana between February and May 2020.
Job Creation
The project has employed about 90 workers so far, with more people to be employed when the actual construction begins.
Mr Oppong told energynewsafrica.com that 200 additional workers would be employed, explaining that priority would be given to residents of the area.
“On records, close to 90 workers have been employed for the earth works. When the actual construction work starts we will add about 200 more people,” he said.
As part of effort to ensure that women also benefit from the job opportunities being created as a result of the project, a policy has been developed to ensure that 5% of the technical workforce are women, Mr Oppong, explained.
Community Engagement
According to Mr Oppong, there is a monthly engagement with residents of the area, especially those who are close to the project site to know their concerns in order to get them addressed.
He said based on the engagement, “we have decided to improve on the road network in the area and also making assure that we water the road every morning and evening to minimise dust pollution.”
Safety Measures
As part of effort to ensure material quality, the Centre for Scientific and Industrial Research of the Ministry of Environment, Science, Technology and Innovation has also set up a centre at the site to test the soil and other materials that will be used to ensure that they are of quality.
Assurance
Mr Patrick Oppong assured the public that MiDA would ensure that the project is executed up to standard so that the country would get value.
This is where GRIDCo’s office building will be sited
The chairman of the Nigerian Electricity Regulatory Commission (NERC), Prof James Momoh, has assured the West African nation that “stable power supply in
Momoh is confident that this would be achieved when the metering situation in the country improves through the intervention of current Meter Asset Providers’ scheme coupled with the rollout of renewable energy.
“We are committed to improving the quality of lives of Nigerians every day and every minute. The target is that by the time we have improved meter within two years that will improve the quality of service all over the country,” Prof. Momoh reportedly told THISDAY.
He added: “By the time we allow renewable energy before 2030, a lot will be done. Formerly, I am saying do we have a target when all Nigerians will be powered? Hopefully, in our lifetime it will happen.”
Clarification of electricity tariff
The NERC official also provided clarity on the current electricity tariff situation in the country, saying the Commission has not increased tariff contrary to what had been making the rounds since it published what he called, “a minor review” last month.
According to Momoh, “we [NERC] have not increased tariff at the moment. What we have done is, ask the big question: When do we get this thing right given that the Discos say we need cost-reflective tariff to be able to provide services that we actually should do?
“So we did a minor review which is a review that takes into account the exchange rate, gas availability, availability of capacity generation, network availability, to make sure there is meter available to customers.”
Momoh explained: “NERC would have to take advantage of this opportunity given to us as a regulator to make sure we have a third party investor to provide meters, which is called Meter Asset Providers. That allows customers now to have access to meters.”
Reasons behind the tariff review
According to Momoh, the Discos must recognise that they have to provide quality power, “they have to make sure customers are metered, we also have to make sure all the indicators are right, then we can say we have done the review that was lacking before. Mind you, the review was not done since 2015.”
Momoh underscored that the review was done to alert the Discos of their key responsibilities and the responsibility of customers and the expectation of customers.
“Then, the reaction that will follow is that with engaging the customers at the end of the day, maybe by next year, we will be able to now agree on what should be the appropriate cost,” he said.
Momoh said NERC supports every effort made to ensure that renewable energy forms a big part of the energy mix by 2030, contributing approximately 30% of the country’s power supply.
President João Lourenço has made it a priority to revive Angola’s oil and gas sector through regulatory reform and changes to the tax framework, which have encouraged international oil companies to take a fresh look at the country.
Angola, an Organisation of the Petroleum Exporting Countries (OPEC) member, produces approximately 1.37 million barrels of oil per day and an estimated 17,904.5 million cubic feet of natural gas.
This places Angola as sub-Saharan Africa’s second-largest oil producer after Nigeria. Around 95% of export and 70% of tax revenues come from petroleum.
The industry is dominated by the upstream sector – exploration and production of offshore crude oil and natural gas.
Unpacking Angola’s oil market
9 billion barrels of proven oil resources
37 million bopd oil production
Almost 75% of Angola’s oil production comes from offshore fields. It produces a light sweet crude oil containing low volumes of sulphur, suitable for processing light refined petroleum products.
The oil-rich continental shelf off the Angolan coast is currently divided into 50 blocks. This is expected to more than double with the auctioning of new blocks from 2019 to 2025.
Despite being a leading oil producer in sub-Saharan Africa, Angola imports up to 80% of its demand for refined petroleum products from commodity traders such as Vitol and Trafigura. The Government of Angola has plans for the construction of national refineries to increase its refinery capacity.
In 2018, in response to declining investment, the Government introduced legislative reforms, began to restructure the state oil company, Sonangol, and created the National Concessionaire – Angola’s Oil, Gas and Biofuels Agency (ANPG) – to oversee licensing.
The process for approval of contracts with third parties to carry out petroleum operations is now simplified, and taxes reduced.
Unpacking the country’s gas market
11 trillion cubic feet of proven natural gas reserves
For the first time, Angola is thinking strategically about how to exploit large reserves of gas considered until now little more than a by-product of lucrative oil production.
2018 saw the first gas legislation to regulate natural gas exploration, production, monetisation and commercialisation. The gas industry requires significant investment to exploit its full economic potential.
Exploration and production market players:
Total: 41% market share
Chevron: 26% market share
ExxonMobil: 19% market share
BP: 13% market share
ENI
Equinor
Upstream market players:
Halliburton
Baker Hughes
FMC Technologies
Oceaneering
Weatherford
Schlumberger
Oil and gas prospects
Untapped oil reserves in the Congo and Kwanza basins, mostly in deep and ultra-deep waters, hold huge potential. However, over the past six years, there has been limited investment in new or existing production fields due to a lower oil price and Angola’s relatively high production costs ($40 per barrel).
Now, following discoveries and investments over the last year, production is expected to increase in 2020 and 2021. ANPG will be auctioning off 55 new blocks over the next seven years, starting with the first round of bids on 10 offshore blocks in October 2019. The auction of nine onshore blocks will follow in 2020.
Source: Africa Oil Week taking place in Cape Town, South Africa from 4 to 8 November 2019.
Vaalco Energy has started its 2019/2020 drilling campaign and spud the Etame 9P appraisal wellbore at the Etame field offshore Gabon.
Vaalco last month said it would start its Gabon drilling campaign during September, using the Topaz Driller jack-up rig.
Vaalco said in an update on Friday, September 13 that drilling of the Etame 9P appraisal wellbore is expected to take approximately four weeks, after which the company will start drilling the Etame 9H development well targeting the Gamba reservoir.
According to the company, the objective of the Etame 9P appraisal wellbore is to test the Dentale reservoirs beneath the Etame field. The company estimates that there could be up to 4.6 million gross barrels of recoverable oil present in the Dentale reservoirs beneath the Etame field.
If these resources are present in the Dentale, the company will need to drill additional wells to exploit these reservoirs.
As previously reported, Vaalco contracted the Vantage Drilling-owned Topaz jack-up drilling rig to execute the 2019/2020 drilling campaign, which will include two appraisal wellbores and up to three development wells.
“We have entered into the first phase of our growth strategy starting with the Etame 9P appraisal wellbore where we are seeking to de-risk significant resources in the Dentale formation with a view to future exploitation opportunities. The resources we are targeting were identified in oil-bearing Dentale reservoirs encountered in wells drilled beneath the Gamba reservoir at the Etame field. The Etame 9P appraisal wellbore represents the first of many opportunities where we are attempting to create substantial value for our shareholders by converting resources to reserves in a cost-effective manner,” Cary Bounds, the Company’s Chief Executive Officer stated.
Norwegian oil company Equinor’s emergency response center on Friday received reports of a fire in the engine room of the tanker Dubai Harmony.
The ship is moored at the quayside at the Sture terminal in Øygarden municipality in Hordaland, Norway.
The public emergency rescue service and authorities have been notified of the situation, and Equinor’s emergency response organization is assisting on site, Offshoreenergytoday.com reported on Friday.
According to the company, the ship’s captain has reported that all the 23 people aboard the ship have been accounted for. There were 102 people at the Sture terminal when the incident occurred. Personnel who do not have emergency tasks have been evacuated from the terminal as a precautionary measure.
Equinor added that 22 people with emergency preparedness duties are now at the terminal.
“The emergency response organization in Equinor will maintain continuous contact with the public rescue service and other relevant authorities, and we refer to the local Police for further information,” Equinor said.
The Sture terminal receives crude oil from the Oseberg area through the 115 kilometer Oseberg transport system (OTS) from Oseberg field center, and crude oil from the Grane field through the 212 kilometer Grane oil pipeline (GOP).
The Svalin field was connected via the Grane pipeline in 2014. Crude oil from the Edvard Grieg field has been transported to Sture via GOP since the end of 2015, and from 2016 the Ivar Aasen field will be connected by the same pipeline with more oil for Sture.
The plant has two jetty facilities which can accommodate oil tankers up to 300,000 dead weight tonnes (dwt), five crude oil caverns with a capacity of one million cubic meters, a 60,000 cubic meter LPG cavern and a 200,000 cubic meter ballast water cavern.
Equinor is the operator of the Sture terminal with a 36.24% interest. Other partners are Petoro (48.38%), ConocoPhillips (2.40%), ExxonMobil (4.33%), and Total (8.65%).
The Africa Centre for Energy Policy (ACEP), an energy think tank in the West African nation, Ghana, says it is highly disappointed in the manner in which the private sector participation aspect of the ECG Financial and Operational Turnaround Project has been carried out.
ACEP argues that investigations that were carried out by MiDA and government affirm that significant flaws were occasioned in the procurement of PDS as the concessionaire.
“It is evident that PDS does not have the financial muscle to invest as required by the LAA and the BSA,” ACEP said in its update regarding the ongoing investigation into the ECG concession agreement with Power Distribution Services Ghana Limited.
The Power Distribution Services Ghana Limited took over the distribution business of the Electricity Company of Ghana (ECG) on March 1, 2019.
However, on July 30, 2019, government, through the Information Minister Kojo Oppong-Nkrumah announced the suspension of PDS over what government described as fundamental and material breaches in the agreement.
Government then commissioned investigation into the issue and promised to let Ghanaians know the outcome of its findings after one month.
Commenting on the leaked report of the US-based FTI Consulting firm, which was contracted by Millennium Development Authority (MiDA) to look into the deal, ACEP noted that “from the FTI report, the investigative team could not establish the relevant facts needed for them to have established the validity of the guarantees.
“It appears that they lacked the needed authority to even properly engage with Al Koot for them to have been cooperative. They made efforts to prove that MiDA and the financial advisors did nothing wrong but did not show evidence of advice they gave on the financial capacity of PDS.”
The energy think tank said from the review of all the events, it can conclude that Cal Bank, Donewell and MiDA did not make any serious effort to verify the authenticity of the demand guarantee.
“These parties cannot pretend not to know that for a guarantee of $350 million, the engagement with the top hierarchy of Al Koot was necessary. This could have been achieved through video conferencing to authenticate the published faces on Al Koot’s website.
“It is, therefore, surprising that FTI could not inquire through its investigation why the parties did not see it fit to engage the top hierarchy of Al Koot.
“Whiles ACEP awaits conclusion on government’s review of the circumstances, it will be surprising to see PDS given the nod to continue with the concession,” it said.
Below is the full statementACEP’S UPDATE ON PDS’ CONCESSION CHALLENGES
On 30th July 2019, the Ministry of Energy released a press statement on the suspension of the PDS concession agreement citing issues of fundamental and material breaches on the obligation of PDS to offer demand guarantees. Following the suspension, the government of Ghana and the Millennium Development Authority (MiDA) commissioned parallel investigations with varied approaches; while the government set up a committee from its stock to investigate the validity of the demand guarantees issued by PDS, MiDA outsourced FTI Consulting to carry out a forensic audit into the demand guarantees submitted by PDS to understand the facts relating to the issuing of the guarantees and the subsequent retraction by Al Koot.
While the government team concludes emphatically that the were no valid demand guarantees from Al Koot Insurance, FTI concludes that they did not have any information to suggest that PDS, Cal Bank, Donewell and/or personnel from MiDA had committed or conspired to commit fraud or other malfeasance in relation to the demand guarantees. The report however raises a number of questions about how the demand guarantees were procured. ACEP has taken time to digest the two reports and can conclude that both reports represent the first episode of theatrical play to identify the fundamental breaches of national interest. There is nothing conclusive in both reports to suggest that the only individual who could have possibly gone wrong is the representative of Al Koot who led the execution of the demand guarantees.
FTI Report
The FTI report was issued with strict rules on publication to the effect that it was only for the consumption of MiDA on the 3rd of September 2019. By midday 5th of September the document was widely available on social media. The leakage of the document, which is still not on the website of MiDA could have come from FTI or MiDA. ACEP will leave the public to conclude on the likely source of the document. However, we can conclude on the basis of the analysis from FTI that they could not deliver on the mandate given to it by MiDA, which they themselves allude to subtly, and also attempt to hide the failures of MiDA and the transaction advisors.
This is not to say that the report is not entirely useful. The report is useful to the extent that it raises further questions and confirms ACEP’s position that the exchange of bank guarantee for insurance guarantee was not in the interest of the people of Ghana, but those who kept their eyes on transaction deadlines to hand ECG over to PDS at all cost even if it meant bending the interest of the Ghanaian public.
We will proceed to deal with some of the confirmations and claims that provide new lead for further investigation.
The Financial Incapacity of PDS
The financial weakness of the PDS consortium to take over the assets of ECG could not have been unknown to MiDA and government if it was a priority during the bid process, Parliamentary ratification, and negotiation of the agreement. As highlighted by the FTI report and previously by government and MiDA, PDS could not raise the Payment Securities in the form of either a demand guarantee or a letter of credit issued by a qualified bank. In spite of this glaring exhibition of weak financial muscle, the Advisors endorsed the variation for the demand guarantees instead of insisting on it.
One of the Conditions Precedent (CP) was for PURC to publish the new tariff in line with the tariff methodology developed as part of the MCC Compact II.
From the FTI report and MiDA’s press statement, the PURC’s delay in announcing the tariff has been endorsed by the financial advisors (IFC and Hunton) as a relevant excuse for PDS’ inability to raise the required bank guarantees. This endorsement is surprising and presents the situation as though the CP on the tariff was hierarchically more important than the payment guarantee. The CPs were to be met by the parties before the transfer date. PDS was not to watch government meet its CPs before they met theirs. Beyond that, two important points are worthy of note; a. The guarantees could have been raised if PDS had the financial credibility with its banker. MiDA in its press statement issued on August 8, 2019, stated on page 4 that due diligence was done on Meralco and found that it had a market capitalization of $7.4 billion in 2017.
Incidentally Meralco is both the technical lead and financial lead on the transaction. This raises fundamental questions;
Why could Meralco not leverage on its resources to produce the demand guarantees?
Where was Meralco when the local companies were the ones paying premium for both advisory services and insurance guarantees (which of course is now deemed fraudulent by government)?
iii. Is Meralco a front in the PDS consortium, for which reason they are quiet in all the conversation on the guarantees?
In the absence of the revised tariff by PURC, the Minister of Finance issued a CP4 Letter
Agreement which sought to provide guarantee cashflow of one-twelfth of revenues received by PDS before anybody is paid along the value chain. If this guaranteed cashflow could not enable PDS to procure demand guarantees, then the consortium carried fundamental risks that the advisors have been unwilling to admit that it was a deal breaker.
It is intriguing from the foregoing conversation on the financial capacity of PDS to note that thus far, the financial burden of raising the guarantees seem to be borne by only the 51 percent interest held Ghanaians as shown in the FTI report. What then is the role of the financial lead Meralco and the 19 percent shareholder AEnergia SA?
Did FTI exonerate IFC and Hunton Andrews Kurth (“Hunton”) from blame?
They tried. In section 3 of the FTI report, the consultants copiously reproduced parts of a supposed presentation made by IFC and Hunton to an informal MiDA board meeting to present key actions and risks before the transfer date. The financial consultants are quoted to have indicated the risk associated with the insurance guarantees and in particular the PDS as follows,
“We are not confident that the insurance companies have analysed PDS’s credit and understandthe risk they are assuming”. It stands to reason that if there were credit risks that made it difficult for PDS to raise guarantees as indicated by IFC and co, the remedies proposed in section 3.1 of the FTI report, should have been a secondary to advice to fix the credit risk of PDS which also had implication on their ability to invest. Therefore, ACEP is of the opinion that merely highlighting the risk with insurance guarantee did not eliminate the major risk associated with the financial incapacity of PDS. It can be concluded that the primary advice that the IFC, Hunton and MiDA could have given was that there was too much risk with PDS and the structure of their finances which make them financially incapable of taking over the assets of ECG.
FTI calls on the Vice President to answer
The report highlights that the decision on the change of Payment Securities from bank guarantees to insurance guarantees occurred at an informal meeting. It must be noted that the said meeting did not have the quorum required for such a decision to be made even in principle.
FTI also cites an email that suggests that the decision to accept insurance guarantee was an instruction from the Vice President without reference to advice from the financial advisors and MiDA on such decisions. FTI does not cite any trace of MiDA’s advice in respect of the change from bank guarantees to insurance guarantees. It appears at this point that during that critical moment where the insurance guarantees had to be substituted with the bank guarantee, the decisions were not taken by the board, but rather the Office of the Vice President with invitation to representatives from the MiDA board, ECG board, Ministries of Energy and Finance as well as the Chief of Staff. This position calls on the Office of the Vice President to explain the circumstances that led to him taking the decision that is painted as unilateral and political rather than strict corporate governance decisions on the part of MiDA board with the advice of the financial advisors.
ECG’s concerns ignored
It is quite evident that ECG had raised concerns over the procedure to change the bank guarantee to an insurance guarantee. Even with the change, ECG had raised concerns about a change in the counterparties to the demand guarantees. Subsequently, the company had written to the Ministry of Finance and MiDA raising concerns that:
“The payment securities had been signed on behalf of Al Koot by Al Nouri, a manager in the reinsurance department; and
A confirmation should be obtained that Al Koot was in compliance with laws and
regulations in relation to the large exposure that the company had undertaken towards
ECG.” If MiDA and the transaction advisors had addressed these important concerns appropriately they would have uncovered that; a. Al Koot did not have the level of capitalisation to absorb the risk. As can be seen from the Ministry’s engagement with Al Koot, the company’s total capitalisation was about 50 percent below the risk guaranteed.
This would have given meaning to the cut-through clause which the financial advisors are purported to have asked MiDA to ensure were captured in the demand guarantees.
Al Nouri did not have the authority to bind Al Koot in such a scale of transaction.
Approval from the Central Bank of Qatar was required in compliance with underwriting practices of Al Koot. It is even surprising to note that no effort was made by MiDA to interface with Al Koot directly to verify the authenticity of the payment guarantee despite the insistence of ECG. ECG is said to have been provided with scanned copies. This leaves the question as to why MiDA held on to the original copies of the demand guarantees and did not carry out the required due diligence.
Are the guarantees valid?
The FTI report itself raises concerns about the validity of the demand guarantee. It indicates that based on their review of Al Koot’s Delegation of Authority, Al Nouri, the officer who signed the guarantee on behalf of Al Koot, does not have the authority to bind the company in relation to the demand guarantee without the Board’s approval.
The report concluded that there was no indication that this approval was given. The report also cites a case and examines previous relationship between JoAustralia and Al Koot, and communications between JoAustralia and Al Koot to reconnoiter the possibility of holding Al Koot responsible. While this can be explored in court of law to verify its application to the specific case cited, and weigh the testimony of JoAustralia, it clearly appears that the testimony of JoAustralia palpably contradicts the testimony of Al Koot from their engagement with the government delegation. This indicate that had ECG called on the guarantee at any point it would have been subjected to a torturous litigation in attempt to activate the guarantee. ACEP is of the opinion that the guarantee was only a paper insurance which could not be actioned within the framework of the Lease and Assignment Agreement (LAA) and the Bulk Supply Agreement (BSA) which requires prompt payments for defaults by PDS for the following reasons:
Al Koot’s authorities have denied any contact between ECG, MiDA, Cal Bank and the insurance parties on the demand guarantees prior to their execution. ACEP is of the view that this could have been avoided if the parties sought to at least use technology to verify the persons they were dealing with in Al Koot. The faces of the senior executives are published on the websites of Al Koot which could have been verified with a video conference call.
On the assumption that Al Nouri legitimately represented Al Koot, JoAustralia reveals that Al Koot only fronted for a 10 percent fee on the premium and retroceded 100 percent of its risk to other reinsurance companies. This means, that there is no risk that sits on the books of Al Koot as far as demand guarantees are concerned.
Thus far, only one Ghanaian insurance company, Best Assurance, is cited as having received 15 percent of the retroceded risk amounting to about $52.5 million. This raises a range of new issues as to the capacity of the local insurance company to have absorbed the amount of risk.
Is the NIC aware of this retrocession as it clearly exceeds the capitalization of the insurance company?
Why did the insurance company not take their interest as part of the locally ceded risk but rather received the risk through JoAustralia back to Ghana?
The holders about 80 percent of the risk were not disclosed by JoAustralia.
JoAustralia Makes a lot of claims in their engagement with FTI after they attempted to engage Al Koot to the extent that Al Koot still bares the Risk earlier retroceded. However,
FTI makes not further attempt to crosscheck that with Al Koot.
Conclusion
ACEP is highly disappointed with the manner in which the private sector participation aspect of the ECG Financial and Operational Turnaround Project has been carried out. The investigations that were carried out by MiDA and government affirms that significant flaws were occasioned in the procurement of PDS as the concessionaire. It is evident that PDS does not have the financial muscle to invest as required by the LAA and the BSA. From the FTI report, the investigative team could not establish the relevant facts needed for them to have established the validity of the guarantees. It appears that they lacked the needed authority to even properly engage with Al Koot for them to have been cooperative.
They made efforts to prove that MiDA and the financial advisors did nothing wrong but did not show evidence of advice they gave on the financial capacity of PDS. Rather, they emphasize delay in tariff announcement and portfolio PPA as main reasons for PDS’ inability to secure the demand guarantee. From the review of all the events, ACEP can conclude that Cal Bank, Donewell and MiDA did not make any serious effort to verify the authenticity of the demand guarantee. These parties cannot pretend not to know that for a guarantee of $350 million, the engagement with the top hierarchy of Al Koot was necessary. This could have been achieved through video conferencing to authenticate the published faces on Al Koot’s website. It is therefore surprising that FTI could not inquire through its investigation why the parties did not see it fit to engage the top hierarchy of Al Koot. Whiles ACEP awaits conclusion on government’s review of the circumstances, it will be surprising to see PDS given the nod to continue with the concession.
UK oil and gas supermajor BP considers selling some heavily carbon-intensive oil projects and not develop others in order to have its business compatible with the Paris Climate Agreement, BP’s chief executive officer Bob Dudley said at a conference call.
“There are going to be projects that we don’t do, things that we might have done in the past. Certain kinds of oil, for example, that has a different carbon footprint,” Dudley said in a call organized by JP Morgan, as carried by Fortune.
The comments from the top manager of one of the largest oil companies in the world come as Big Oil has been facing increased investor pressure to start addressing climate change risks and set emission reduction targets if the world is ever to achieve the Paris Agreement targets.
“We are certain we’ve got a path, it may not be linear, to being consistent with Paris goals,” Dudley said.
BP is considering selling some of the most carbon-intensive projects in its portfolio, its CEO said, but declined to name specific projects because those projects have partners and governments involved in them as well.
BP, like the other supermajors, has come under shareholder pressure to start aligning its business to the Paris Agreement targets.
Earlier this year, BP’s shareholders voted in favour of a climate change shareholder resolution, pushing the UK oil and gas supermajor to set out a business strategy consistent with the climate goals of the Paris Agreement.
Earlier this week, BP said that would begin deploying continuous measurement of methane emissions in its future BP-operated oil and gas processing projects as part of program to detect, measure, and reduce methane emissions.
Last week, Carbon Tracker warned that Big Oil is currently betting US$50 billion on oil and gas projects that would be unviable in a low-carbon world. The US$1.3-billion Zinia 2 deepwater project led by BP
The Nigerian Navy in Ikot Abasi, says it has uncovered illegal Automotive Gas Oil (AGO) depot at Liverpool Street in Eket Local Government Area of Akwa Ibom.
The leader of the team, Lt. Commander Umaru Sidi, said this when he handed over the recovered items to the Nigerian Security and Civil Defence Corps (NSCDC), Akwa Ibom Command on Wednesday in Eket.
He said that the Navy while on patrol got information and deployed their men to the scene on Tuesday, shipsandports.com.ng reported.
Sidi said he handed over the four underground tanks and a tanker truck with registration number KAM 413 XA, hoses and valves among others on the directive of the Chief of Naval Staff.
Receiving the items, Adeyinka Ayinla, the State Commandant of the NSCDC, described the illegal depot as acts of sabotage.“My officers in charge of Anti-vandalism called me that they got information from Nigerian Navy about an illegal depot in the area,” he said.Ayinla, who described the perpetrators as saboteurs, said they “normally come through the creeks into Qua River to carry out their nefarious crime in the state”.
He explained that the Qua River was also used as an oil depot where they lift illegal AGO to various parts of Akwa Ibom and beyond.
He also called on the residents of Akwa Ibom to give useful information to NSCDC in order to nib crime in the bud in the state.
The government of Kenya has received financing from the Agence Française de Développement (AFD), the European Union (EU) and the European Investment Bank (EIB) and intends to use part of the funds for payments under the Last Mile Connectivity Project.
The project involves electrification of approximately 280,475 customers in 32 counties across the country for a period of three years.
The scope of work for the consultant is as detailed in the issued Terms of Reference (ToR) which can be accessed on the Kenya Power and Lighting Company Limited’s website (www.kplc.co.ke)
The Kenya Power and Lighting Company Limited (KPLC), which is the contracting authority, hereby invites consultants to show their interest in delivering the services as described in the ToR.
Eligibility criteria to AFD’s financing are specified in sub-clause 1.3 of the “Procurement Guidelines for AFD-Financed Contracts in Foreign Countries”, available online on AFD’s website www.afd.fr
Interested consultants must provide information evidencing that they are qualified and experienced to perform those Services. For that purpose, documented evidence of recent and similar services shall be submitted.
If the consultant is a Joint Venture (JV), the Expression of Interest shall include a copy of the JV agreement entered into by all members (a maximum of two members only).
Alternatively, a letter of intent to execute a JV Agreement in the event of a successful proposal shall be signed by all members and submitted with the Expression of Interest, together with a copy of the proposed agreement.
The consultants are to note that sub-contracting is not allowed and they are encouraged to use local experts.
Evaluation of the Expression of Interests will be based on the following criteria, for which respective minimum thresholds for eligibility are also mentioned:
Successful completion of similar types of contracts in an English speaking country; a minimum of two contracts.
Experience in supervision and management contracts in transmission lines; medium voltage lines, low voltage lines and distribution substations; a minimum of two contracts each with a minimum value of €3 million.
Experience in project supervision and management of similar projects in Africa; a minimum of one project, including supervision of environmental and social specifications.
A minimum annual average turnover of €2 million in the last three years.
The statement of Integrity (attached Appendix 1) shall be dully filled and signed.
ISO 9001 certification is required.
Among the submitted applications, KPLC will shortlist on the basis of the above listed criteria a maximum of six consultants, to whom the Request for Proposals to carry out the services shall be sent.
Expressions of Interest must be submitted to the address below not later than 01 October 2019 at 10h00 East Africa Time.
Attention to:
General Manager, Corporate Affairs and Company Secretary,
The Kenya Power and Lighting Company Limited,
Stima Plaza, 2nd Floor, Kolobot Road, Parklands
P O Box 30099 – 00100 Nairobi, Kenya
Tel: +254 20 3201258
Email: [email protected]
Interested consultants may obtain further information at the address below during office hours between 09h00 to 12h00 and 14h00 to 16h30 (East Africa time).
Contract Project Manager,
AFD/EU/EIB LMCP,
Stima Investment Building II, 7th Floor,
Mushembi Road, Parklands,
P O Box 30099 – 00100, Nairobi.
Tel. +254 20 3201211
Email: [email protected]
Consultants who wish to witness the opening of the Expression of Interest may do so on 01 October 2019 at 10h30 East Africa Time at the address below:
Street Address:
Stima Plaza, Kolobot Road,
Parklands,
Floor/Room number: Auditorium
Nairobi,
Kenya
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