Gabon: Vaalco Releases Vantage Rig After Completing Gabon Operations
US-based oil and gas company, Vaalco Energy has completed well workover operations on the South East Etame 2H well, located offshore Gabon, and released the Vantage-owned jack-up drilling rig.
Vaalco said in an operational update on Monday that the workover on the well restored production to 2,400 BOPD, in line with the production level before when the electronic submersible pump (ESP) failed in early March 2020.
The company added that it released Vantage’s Topaz Driller jack-up on 9 April 2020, and does not currently expect to perform any additional workovers to better preserve cash flow in the current uncertain environment.
With the completion of the 2019/2020 drilling campaign and the successful South East Etame 2H workover, total company production is approximately 20,000 gross BOPD – 5,400 BOPD NRI to Vaalco.
During the first quarter of 2020, Vaalco brought two new wells online – the South East Etame 4P and South East Etame 4H, experienced normal operational downtime associated with simultaneous production, drilling, and completion operations.
The company also brought production back online as a result of performing two workovers. Production for the first quarter of 2020 was 18,298 gross BOPD or 4,944 BOPD NRI to Vaalco which was near the high end of first-quarter guidance of 5,000 BOPD NRI.
Vaalco also stated that it had two liftings during the first quarter of 2020, one in January and one in February, but the next lifting for 85,000 barrels of oil that was scheduled for March was delayed to 1 April due to poor weather conditions.
As a result, the sales volumes for the quarter were down when compared to the fourth quarter of 2019, despite the higher production in the first quarter of 2020.
Cary Bounds, CEO of Vaalco, said: “We continue to execute operationally and have restored 2,400 gross BOPD of production with the successful workover of the South East Etame 2H well. We have now released the Vantage drilling rig after completing the successful 2019/2020 drilling campaign and executing two workovers that restored production from wells that were shut in due to ESP failures.
“We are proud of the highly successful and transformational drilling program that has added meaningful production and significantly reduced our operating costs per barrel. For the first quarter of 2020, production was 4,944 BOPD NRI, which is […] our highest production since Q4 2015.
“This gives us the confidence to reaffirm our full-year 2020 production guidance of 4,400 to 5,000 BOPD NRI. In addition, our strong production has helped to lower our operational breakeven cost of approximately $31.00 per barrel and, coupled with our current hedge portfolio, positions us well to navigate through the uncertain macro environment we face today.
“Thus far, Vaalco’s operations have not been disrupted by the global COVID-19 pandemic, and we have managed through the logistical challenges that we have faced since the outbreak”.
Source:www.energynewsafrica.com
OPEC+ Slashes Production, Saves Oil Industry From Collapse
In a watershed moment for the oil and gas industry, OPEC and its allies in the OPEC+ group finalized a deal on Easter Sunday that, in conjunction with efforts from the G20 and International Energy Agency, could see up to 20 million barrels of oil per day removed from a severely oversupplied oil market. The deal is set to boost the oil price and provide some much-needed stability for an industry in crisis.
Initially announced Thursday, the agreement was delayed as Mexico refused their share of production cuts. The original OPEC+ deal would have seen a cut of 10 million barrels of crude per day from an October 2018 baseline, for an initial two-month period. With OPEC+ letting Mexico off the hook, the official OPEC+ cut now stands at 9.7 million barrels, as Mexico agrees to cut 100,000 barrels per day instead of 400,000 barrels per day.
In reality, however, the OPEC+ deal will cut more than the quoted 9.7 million barrels, since current production levels are much higher than the October 2018 baselines used to calculate the production cuts. The deal sees Russia and Saudi Arabia absorbing the brunt of the cuts, each agreeing to cut their production down to 8.5 million barrels per day. Saudi Arabia’s production stood at 12.3 million barrels per day, and Russia was producing 11.29 million barrels of oil per day in March. Both countries, however, used 11 million barrels per day as their baseline in the deal.
“These production adjustments are historic. They are largest in volume and the longest in duration, as they are planned to last for two years. We are witnessing today the triumph of international cooperation and multilateralism which are the core of OPEC values,” Secretary General of OPEC H.E. Mohammed Barkindo. Barkindo also noted that the OPEC+ deal paves the way for further collaboration with the G20.
In a meeting on Friday, the G20 nations also agreed to take action to stabilize the market. The United States, for example, is set to use the Strategic Petroleum Reserve to store vast quantities of oil. Additionally, the US will see production cuts of at least 2 million barrels as the market responds to a lack of demand. The US has also reportedly offered to take on an additional cut of 300,000 barrels per day on Mexico’s behalf, although the details of how such a deal would play out have not been released.
The OPEC+ group is expected to request the G20 to cut over 3 million barrels per day of production. The G20 energy ministers agreed Friday to create a task force to monitor the situation and formulate strategies. The Texas Railroad Commission, the agency that regulates the state’s oil and gas industry, is also scheduled to meet on Tuesday to discuss regulating formal cuts, though the US has largely maintained that the free market will determine oil production cuts.
US President Donald Trump tweeted his support for the OPEC+ deal on Sunday.
“This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia,” he said.
Finally, in a reported, but not confirmed, side deal, Saudi Arabia, Kuwait and the United Arab Emirates could agree to reduce production by an additional 2 million barrels of oil per day.
OPEC has “Breathed Life” into Africa
The historic production cuts provide a much-needed financial boost to Africa’s oil and gas producers, including Nigeria, Angola, South Sudan, Sudan, Gabon, Congo-Brazzaville and Equatorial Guinea, as the sudden drop in oil and gas prices coincided with the COVID-19 health crisis and the economic repercussions of closing businesses and restricting movement to deal with the pandemic.
In a statement, Nigeria’s Minister of State for Petroleum Resources, Hon. Chief Timipre Marlin Sylva, said he expects the oil price to rebound by $15 per barrel in a short-term outlook.
“This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel,” he said.
NJ Ayuk, Chairman of the African Energy Chamber, lauded the efforts of the OPEC+ deal, as a stable oil market will provide economic relief and save jobs throughout the continent.
“OPEC has hit a home run,” Ayuk said. “OPEC has breathed life and given hope to African nations, oil workers, investors and the African business community. We need to focus on exploration soon again. Now we have the ball; we need to run with it and start the process of bouncing back. We need to defend the African oil industry like a junkyard dog in the face of a hurricane.”
South Sudan, a member of the OPEC+ alliance, also welcomed the deal.
“South Sudan is East Africa’s only producing country. Our production was over 350,000 barrels per day before the civil war. At the present moment, we are producing about 185,000 barrels per day with a target on attracting more investment into the oilfields to get our nation to 300,000 barrels per day. The current price war and coronavirus has affected our economy,” the country’s Minister of Petroleum Hon. Puot Kang Chol said.
“We welcome all efforts to stabilize the oil market and South Sudan will continue to play its role. Our government will continue doing its utmost best in making the oil production and fighting the Coronavirus a priority and we will continue collaborating with all our partners,” he added.
OPEC+ Cuts Respond to Slashes in Demand
Each nation, aside from Saudi Arabia and Russia, which are both cutting substantially more, is expected to cut 23 percent of production from May to June. Iran, Libya and Venezuela are exempted from the production cuts, and Mexico is only cutting 100,000 barrels per day.
After this initial two-month period, overall production cuts will lower to 8 million barrels per day from July to December and then lower to 6 million barrels per day from January 2021 to April 2022. The OPEC+ group will meet in July to discuss further action, if needed.
With about 40 percent of the world’s population ordered to stay home to stem the spread of COVID-19, demand for oil and gas has decreased by about 30 percent, from over 100 million barrels per day to under 85 million barrels per day, according to the Energy Information Agency.
The International Energy Agency, which called for the G20 meeting of energy ministers on Friday, argued the market conditions were too much for OPEC+ alone to handle.
“The extreme volatility we are seeing in oil markets is detrimental to the global economy at a time when we can least afford it,” said Dr. Fatih Birol, Executive Director of the IEA.
“Today’s oil crisis is a systematic shock that threatens global economic and financial stability. It requires a global answer. That is why the G20 can be an indispensable forum for decisive leadership when it is urgently required,” he added.
Brent crude was averaging $55.70 per barrel in February, but, with an oil price war and the impacts of COVID-19, both Brent and WTI have reached their lowest level in years, with Brent hitting $22.76 per barrel in March, its lowest price since November 2002.
As demand for oil and the price of oil has declined, storage capacity is also reaching its limits. In just a few weeks, analysts predict oil production may be shut in due to a lack of global storage capacity.
Source: www. energynewsafrica.com
OPEC’s Historic Deal Is A Victory For African Oil Companies, Investors –African Energy Chamber
The African Energy Chamber has congratulated OPEC and OPEC+ Member countries on reaching a much-needed historic deal to cut production and maintain market stability.
After repeatedly calling and lobbying African producers to join OPEC in restoring market stability, the Chamber is particularly pleased to see the wide support for OPEC amongst all of African producing countries.
On Easter Sunday, OPEC and OPEC+ member countries finally decided to cut oil production by 9.7 million barrels a day starting on May 1st, 2020 and until June 30th, 2020. From July 1st, 2020, production cuts will be readjusted to 8 million barrels a day until the end of the year. Finally, OPEC and OPEC+ member countries have agreed on a production cut of 6 million barrels a day from January 1st, 2021 until the end of April 2022. The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and the Russian Federation, both with the same baseline level of 11 million bopd.
“The spirit of cooperation has triumphed and under the leadership of Africa’s own son, H.E. Mohammed Sanusi Barkindo, OPEC reaches yet another truly historic deal for our continent and for global energy markets,” NJ Ayuk, Executive Chairman at the African Energy Chamber said.
“This clearly shows that in times of critical need we can set aside our differences and unite behind historic deals that will make the difference at home for our companies and our employees. The Chamber will continue to put all its resources behind supporting this coordinated industry effort beyond 2022. Compliance is key, so let’s get to work,” added Mr Ayuk.
The decision is truly historic and builds upon the Declaration of Cooperation of 2016 and takes production cuts levels even higher. Over the years, it is the joint efforts of OPEC member countries along with their allies within OPEC+ that have resulted in building an industry coalition able to put the interests of the market first. African producers are playing a key part in this effort, bot via OPEC member countries Nigeria, Angola, Algeria, Libya, Gabon, Equatorial Guinea and Congo, but also thanks to the support of additional producers such as Egypt, South Sudan, Chad or Niger.
Source: www. energynewsafrica.com
Ghana: TOR MD’s Bribery Scandal: US-Ghanaian Lawyer Takes On Gov’t
A US-based Ghanaian lawyer, popularly known as Kwaku Azar, has questioned the kind of due diligence the Akufo-Addo administration conducted before appointing Asante K. Berko as the Managing Director of the Tema Oil Refinery.
In a Facebook post, the Ghanaian lawyer said: “Unlike the poor guy who got remanded for stealing cocoyams, you will not see Asante Berko, current TOR MD, remanded for his role in facilitating $4.5M bribe payments to government officials, including a misery $66,000 to our MPs while he, Berko, pocketed a cool $2M for his role in the illegal scheme.
“What due diligence was made before his appointment?
“128/1820 is a bona fide scam and sham! Da Yie!” he concluded.
Mr Berko has allegedly been charged by the Securities and Exchange Commission (SEC) of the United States of America for arranging, at least, $2.5 million in bribes paid to former government officials in Ghana, West Africa, to gain approval for a power plant project.
The bribes were allegedly arranged by Mr Berko when he was an Executive Director with the US bank, Goldman Sachs.
The US Security and Exchanges Commission, in a statement, said it had “charged a former executive of a financial services company with orchestrating a bribery scheme to help a client to win a government contract to build and operate an electrical power plant in Ghana in violation of the Foreign Corrupt Practices Act (FCPA).”
The SEC’s complaint alleges that Mr Berko, a former executive of a foreign-based subsidiary of a U.S. bank holding company, arranged for his firm’s client, a Turkish energy company, to funnel, at least, $2.5 million to a Ghana-based intermediary to pay illicit bribes to Ghanaian government officials in order to gain their approval of an electrical power plant project.
The complaint further alleges that Berko helped the intermediary pay more than $200,000 in bribes to various other government officials, and Berko personally paid $66,000 to members of the Ghanaian parliament and other government officials.
According to the complaint, Berko took deliberate measures to prevent his employer, Goldman Sachs, from detecting his bribery scheme, including misleading his employer’s compliance personnel about the true role and purpose of the intermediary company.
Mr Berko was appointed as the Managing Director of TOR in January 2020, after the resignation of Isaac Osei.
Source:www. energynewsafrica.com
Ghana: Sunon Asogli Power Invests $1Million In 330kV/161kV Auto Transformer To Ensure Stable Supply Of Electricity
Ghana’s largest independent power producer, Sunon Asogli Power Ghana Limited has invested US$1 million to install a 330kV/161kV interconnecting auto-transformer to ensure stable power transmission and efficient electricity supply in the West African nation.
The amount covers civil works, transportation, installation and commissioning.
The West African country has been facing power congestion on its 330kV Aboadze-Volta transmission line, thus, contributing to shortfall in power supply.
The line mainly transmits electricity from three power plants namely; Amandi plant (192MW), Karpowership (450MW), and Sunon Asogli power plant 360MW (330kV capacity).
However, due to limited capacity of the transformers on the line, the current maximum transmission capacity of the Aboadze-Volta transmission line is only 340MW, which means many generators connected to the line cannot be dispatched.
Despite the government of Ghana owing Independent Power Producers (IPPs) close to GHS1.3 billion including Sunon Asogli Power Ghana Limited, the company decided to acquire and install a 330kV/161kV auto-transformer between Sunon Asogli Power 330kV substation and the existing 161kV Kpone collector substation.
This project will add extra 200MVA transmission capacity for the 330kV Aboadze-Volta transmission line which would not only alleviate congestion to ensure stable power transmission and supply, but also add more than 1500GWh of electricity per year to Ghana’s national grid theoretically, that would be transmitted from the 330kV network to the 161kV network.
In addition, the 330kV/161kV auto transformer would forestall the limitation and halting of power transmission to neighbouring countries when the Volta substation trips and reduces the possibility of tripping the 330kV substation, when power transmission lines to neighbouring countries trip.
With this project executed, the operation of the electricity system becomes more reliable, safer and economical.
Source:www.energynewsafrica.com
Ghana: MD Of Tema Oil Refinery Charged For Alleged Bribery
The Managing Director of Ghana’s Tema Oil Refinery, Asante K. Berko has allegedly been charged by the Securities and Exchange Commission (SEC) of the United States of America for arranging at least $2.5 million in bribes to be paid to government officials to gain approval for a power plant project.
The bribes were allegedly arranged by Mr Berko when he was an Executive Director with the US bank, Goldman Sachs. He was appointed Managing Director of the Tema Oil Refinery in January 2020, replacing Isaac Osei, who resigned.
The US Security and Exchanges Commission, in a statement, said it had “charged a former executive of a financial services company with orchestrating a bribery scheme to help a client to win a government contract to build and operate an electrical power plant in Ghana in violation of the Foreign Corrupt Practices Act (FCPA).”
The SEC’s complaint alleges that Mr Berko, a former executive of a foreign-based subsidiary of a U.S. bank holding company, arranged for his firm’s client, a Turkish energy company, to funnel, at least, $2.5 million to a Ghana-based intermediary to pay illicit bribes to Ghanaian government officials in order to gain their approval of an electrical power plant project.
The complaint further alleges that Berko helped the intermediary pay more than $200,000 in bribes to various other government officials, and Berko personally paid $66,000 to members of the Ghanaian parliament and other government officials.
According to the complaint, Berko took deliberate measures to prevent his employer, Goldman Sachs, from detecting his bribery scheme, including misleading his employer’s compliance personnel about the true role and purpose of the intermediary company.
Chief of the SEC Enforcement Division’s FCPA Unit, Charles Cain said, “As alleged in our complaint, Berko orchestrated a scheme to bribe high-level Ghanaian officials in pursuit of firm business and his own enrichment. Berko’s misconduct was egregious and individual accountability remains a key component to our FCPA enforcement efforts.”
He continued, “The firm’s compliance personnel took appropriate steps to prevent the firm from participating in the transaction and it is not being charged.”
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of New York, charges Berko with violating the anti-bribery provisions of the FCPA and federal securities laws.
The SEC is seeking monetary penalties against Berko among other remedies.
The SEC’s case is being handled by Asita Obeyesekere and Paul G. Block of the FCPA Unit and Kathleen Shields, Mark Albers, and Marty Healey of the Boston Regional Office.
Attempts to speak to Mr Asante K. Berko has proved futile as he could not be reached via telephone.
Click on the link below for the court document
comp-pr2020-88
Ghana: Sunon Asogli Power Ghana Ltd Supports KKMA, KTC To Fight Covid-19
Ghana’s largest independent power producer, Sunon Asogli Power Ghana (GH) Ltd. has donated 400 gallons of disinfectant(bactericide) to the Kpone Katamanso Municipal Assembly and the Kpone Traditional Council.
The donation which formed part of the company’s corporate social responsibility is to enable them to prevent the spread of the novel Coronavirus in the Kpone municipality.
Presenting the items on behalf of management and staff of the Sunon Asogli Power Ghana Ltd, Mr. Mfum Kwakye (Local Administration /HR Manager) posited that as partners in development in the municipality, it beholds on them to support the assembly in the fight against the Covid-19 pandemic.
He urged Ghanaians to observe all the protocols outlined by World Health Organisation and Ghana Health Service to fight the disease.
Receiving the items, Hon. Solomon Appiah the MCE of the KPONE Katamanso municipal Assembly, thank the management and staff of Sunon Asogli Power for their continuous support to the Kpone Community.
Mr Appiah recounted the assembly’s support in showing solidarity to Wuhan China some few weeks ago.
He was optimistic that with the right attitude this (Covid-19) too shall pass.
On his part, the Paramount Chief of Kpone thanked the Sunon Asogli Power Ghana Ltd for items and thanked the assembly to use it to the benefit of the whole community.
He advised Ghanaians to take the precautionary measures seriously and stay safe.
Source:www.energynewsafrica.com
Nigeria: Federal Gov’t Cuts Oil Benchmark To $30 Per Barrel
Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed, has said the Federal Government has proposed the reduction of the country’s oil benchmark from $57 to $30 per barrel following the dramatic fall in crude oil price on the international market.
Ahmed, who disclosed this at the end of a meeting between the federal government and the leadership of the National Assembly in Abuja, said the meeting was meant to review the 2020 budget and Medium Term Expenditure Framework, (MTEF) due to the impact of the Coronavirus pandemic on the global economy.
The minister proposed a review of the 2020 budget using a $30 per barrel price benchmark as against $57 proposed by President Muhammadu Buhari in December last year.
She said the move was part of the measures to prepare for the worst-case scenario and insulate the Nigerian economy against any form of unexpected crisis.
Zainab Ahmed also told the leadership of the National Assembly that budgeted revenues for the Nigeria Customs Service have been reduced from N1.5 trillion to N943billion “due to anticipated reduction in trade volumes.”
“The privatisation proceeds will be cut by 50 percent, based on the adverse economic outlook on sales of the Independent Power Projects and other assets,” the minister said as carried by Vanguard.
“The Federal Government is working on Fiscal Stimulus Measures to provide fiscal relief for taxpayers and key economic sectors. “We will incentivise employers to retain and recruit staff during the economic downturn.”
Source:www.energynewsafrica.com
Liberia: Minister Hints Of Major Gasoline Crisis
Liberia’s Minister of Commerce, Professor Wilson Tarpeh has announced the current supply of gasoline on the Liberian market is at an all-time low-and is expected to run out within the coming weeks.
Addressing the Plenary of the House of Representatives, Prof. Tarpeh blamed the situation on the inability of major importers to finance the importation of gasoline owing to the problem of reconciliation and dredging at the Freeport of Monrovia.
He, however, assured the House Plenary that the situation is expected to be addressed within a month following the arrival of 19,000 metric tons, about 6,650,000 gallons of gasoline within four weeks.
“In the current situation, the level of petroleum product in the market is very low, precariously low and there are two primary reasons for this: the inability of importers to finance import as the result of the situation that we have with the reconciliation and the dredging of the port,” Prof. Tarpeh reportedly said, in his testimony before the House of Representatives.
“As we speak, our current level can go within seven to nine days, and the order that we are expected to receive has been put up for another ten days. But we are confident that the importers said we expecting 19,000 metric tons which is 6,650,000 gallons of gasoline within the next four weeks.”
The Commerce Minister’s revelation comes in the wake of recent acute gasoline shortage that led to the sacking of the Deputy Managing Director for Operations of the Liberia Petroleum Corporation (LPRC), Bobby Garseyu Brown, and the suspension of all petroleum importers’ licenses by President George Manneh Oppong Weah.
The President’s action was based on the findings of the Special Task Force commissioned to identify the cause of the recent petroleum shortage in Liberia as well as variances between importers stocks balances and the acute stock balances of the LPRC.
“All petroleum importers licenses 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 the license 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,” a statement from the Executive Mansion said in the wake of the President’s action.
However, in less than a month, the situation is about to resurface, and it is happening at the time the Government is focusing on combating the deadly coronavirus virus that is raging across the world and disrupting international trade.
Source:www.energynewsafrica.com
MiDA Briefs Residents Of Larteh Akuapem On Low Voltage Bifurcation (LVB) Project
The Millennium Development Authority (MiDA), the implementing agency for the Ghana Power Compact II and its partners have engaged with a cross-section of residents and community leaders at Larteh Akuapem in the Akuapem North Municipality about the ongoing Low Voltage Bifurcation (LVB) Project in the area at a Town Hall Meeting.
The engagement which saw officials of the Electricity Company of Ghana (ECG) and Power Factor (GH) Ltd, the Works Contractor for the LVB Project, also in attendance was to raise awareness and deepen community knowledge of the objectives behind the project.
Organized by Colan Consult, one of the four Community Engagement and Resettlement Action Plan (RAP) Consultants for MiDA, the meeting discussed the project’s benefits, expected impacts on their assets and livelihoods, measures put in place by the project to manage the impacts and threw light on any other issues that may concern Project Affected Persons (PAPs).
Community Leaders and ECG’s customers had pertinent questions answered during the meeting.
Representatives of a Grievance Redress Committee (GRC) set up by the project to manage grievances that may emanate from the project, were out-doored to the gathering.
The LV Bifurcation Project being implemented by MiDA in seven districts of ECG’s Southern Distribution Area, will directly benefit an estimated 560,000 Customers, living in 53 towns and communities.
The beneficiary ECG districts are Kaneshie, Dansoman, Achimota, Mampong Akuapem, Roman Ridge, Kwabenya and Legon.
Frequent power outages, resulting from the inability of existing transformers to carry loads from increasing electricity demand in these areas, distribution losses and poor-quality lighting, are some of the challenges being addressed through the project.
The Chief Executive Officer of MiDA, Martin Eson-Benjamin, explained that the Project was being carried out in collaboration with the major beneficiary, ECG.
“We are installing 24 higher capacity transformers in Larteh and Akropong to improve the quality of electricity in these two towns and ensure Customer satisfaction.” he said.
He also explained that the project was being implemented in needy communities selected by ECG, adding that “the use of Compact funds will enable ECG to invest its own resources for planned service upgrades in other communities.
He called for cooperation and forbearance from the communities, as the implementation of the projects will be accompanied occasionally, by planned outages.
Mr. Eson-Benjamin added that the interventions under the Millennium Challenge Corporation (MCC) funded Compact Program are necessary and the beneficiary communities are implored to accept the challenges that the occasional outages, to be carefully supervised by ECG, may bring. However, every effort will be made to advise and inform the affected communities well ahead of any planned outages.
Ing. Mark Wilson, the Mampong Akuapem District Manager of ECG, expressed ECG’s appreciation for MiDA’s intervention in the fast-growing Larteh Township and reiterated the need for the community’s support and collaboration during the implementation of the much-needed LVB Project.
Ing. Wilson was particularly thankful to the Chiefs, the Elders and customers in Larteh for the excellent support and cooperation they have given to the utility company during the many years of power supply to the Larteh Township.
The LV Bifurcation Project is one of the four Sub-Project Activities that make up the ECG Financial and Operational Turnaround (EFOT) Project and is being funded by the US Government’s the Millennium Challenge Corporation (MCC), through the US$308 million Ghana Power Compact Program.
The LV Bifurcation Project Activities in all the selected ECG Districts are expected to be completed by August 2020.
Source: www.energynewsafrica.com
Ghana: Tullow Terminates Maersk Drillship Contract
UK oil and gas firm, Tullow Oil has terminated the drilling contract with Maersk Drilling for the Maersk Venturer drillship in Ghana.
Maersk Drilling said it had received a notification from Tullow Ghana “of early termination for convenience of the drilling contract.”
The Maersk Venturer drillship has worked for Tullow offshore Ghana since February 2018, with an expected end of the contract in February 2022.
The rig is now expected to end the contract in June 2020.
“As a consequence of the termination, Maersk Drilling’s revenue contract backlog is reduced by USD 175m covering the period from the end of the contract to February 2022,” Maersk Drilling said.
“Subject to commercial prospects, Maersk Drilling will take measures to reduce Maersk Venturer’s operating costs following the end of the contract,” the company said.
Confirming the latest development to energynewsafrica.com, Head of Communications at Tullow Oil Plc George Cazenove, said “I can confirm we have terminated this contract. This is due to prevailing market conditions within the industry.”
The Danish offshore drilling company a couple of days ago issued an update on the impact of COVID-19 and lower oil prices on its business, warning that the situation “is assessed to have implications for the commercial and operational assumptions underlying the financial forecasts for the remaining part of 2020.”
“The lower oil price environment is likely to impact offshore activity with delays or cancellations of existing tenders and postponement of sanctioning of new projects adversely impacting the prospects for new contracts,” Maersk Drilling said on March 20.
The company thus revised down its financial guidance for 2020 for EBITDA before special items to USD 325-375m (original guidance of USD 400-450m). The guidance for capital expenditures remained unchanged at USD 150-200m.
“The severity and duration of the COVID-19 situation and the lower oil price environment are currently difficult to predict, but given the strong balance sheet, high liquidity reserve, and long debt maturity profile, Maersk Drilling has the financial strength and flexibility to withstand and navigate in this challenging business environment, also in case of a prolonged period of uncertainty,” the company assured.
At the end of 2019, Maersk Drilling’s net debt amounted to USD 1.1 billion corresponding to a leverage ratio of 2.6x, and the liquidity reserves amounted to USD 710 million, including an undrawn revolving credit facility of USD 400 million.
The loan facilities have final maturities in 2023 and 2025. Maersk Drilling complies with all financial covenants with a significant headroom and has no newbuilding capital commitments, the company said last Friday.
Source:www.energynewsafrica.com
Ghana: Bulk Oil Distributors CEO Urges President Akufo-Addo To Lock Down Ghana Immediately To Prevent Spread Of COVID-19
The Chief Executive Officer of the Chamber of Bulk Oil Distributors (CBOD), Senyo Hosi is urging the President of the Republic of Ghana, Nana Akufo-Addo, to consider locking down the country immediately to prevent further spread of the coronavirus.
The West African nation has reported about 68 cases of the coronavirus with majority of them being imported.
Health experts are warning the situation could escalate.
The development compelled President Akufo-Addo to close the country’s land borders as well as the airspace to international flight on Sunday night.
Despite these actions, Senyo Hosi believed the country could have stopped the ‘importation’ of the virus if the President had closed the borders earlier than he did.
In an opinion piece, the CEO of CBOD, said: “We failed to shut the tap on COVID-19 by not shutting our borders early. The COVID-tap is now running among the citizenry through community spread. Just as in the analogy of the flooding tap, we need to shut the COVID tap now.
“This means just one thing…LOCK GHANA DOWN NOW! Whether in regions considered epicenters or nationwide, Ghana must be locked down now. Every day we fail to act escalates our situation, especially when we know we do not have adequate health infrastructures or resources to deal with the consequences. Will people suffer for it? Yes, but millions more will suffer more permanently if we do not lock down now. It is war! We must clearly define our strategy and choose our casualties. A 100 now or a million later?
“The true character and measure of leaders are not established in happy moments but in challenging moments when difficult decisions are made to steer the larger population to better times. This is time for leadership not electoral syllogism.
“Dear Mr President, please LOCK GHANA DOWN NOW before it locks us OUT! Ghana is its people and not just a geographic location.”
LockDownNow- 24.03.2020 (1)
Low Oil Prices Induces Cut-Backs Within The Oil And Gas Sector (Article)
Brent crude is now trading below the US$30 per barrel mark compared to US$68.60 trading price recorded on January 03, on fears the deadly Covid-19 will push the world into recession with an oversupply of the commodity.
Oil prices fell heavily at the open in Asia on Monday 23, 2020 after a trillion-dollar Senate proposal to help the Covid-19 coronavirus-hit American economy was defeated and death tolls soared across Europe and the US. US benchmark West Texas Intermediate (WTI) was down 2.5 percent at US$22 per barrel while Brent crude, the international benchmark, fell 4.9 percent to US$25 per barrel, according to AFP.
Since the beginning of the year, international oil prices have taken a significant hit, largely as a result of the spread of the Coronavirus, emanating from China and spreading to other parts of the world. The spread of the coronavirus has significantly slowed economic activity across the globe. Travel restrictions and flight cancellation across the world, as well as close of shops and production outlets in and around China, collapsed the demand for oil and fuels.
The situation was worsened by the lack of an OPEC+ agreement around production cuts early March, and the subsequent price war between Russia and Saudi Arabia. Russia’s quest to halt the rise in Shale oil production, refused to go along with OPEC’s proposal last week to cut production to halt the free fall of price. Since the meeting, Saudi Arabia the de facto leader of OPEC had retaliated against Russia by announcing a huge discount on their crude price and promising to flood the oil market with cheap oil.
At the close of trading on Friday March 6, crude oil prices had recorded over 30 percent drop from the beginning of the year, to sell at US$45.27 per barrel. And at the opening of trading on Monday March 9, Brent Crude tumbled by more than 30 percent following the lack of agreement on production cut. The fall is the largest one-day drop recorded since the start of the Gulf War in 1991.
Last Friday, the market gave back early gains by falling by more than 10 percent, even as the world’s richest nations poured unprecedented aid into the global economy to stop a coronavirus-driven recession and US President Donald Trump hinted of intervening in the price war between Saudi Arabia and Russia. US crude futures for April fell US$2.69, or 10.67 percent, to settle at US$22.53 per barrel. Brent crude futures fell US$1.25, or 4.4 percent, to trade at US$27.20 per barrel.
Cumulatively, WTI and Brent crudes have both collapsed about 40 percent in the past two weeks since the breakdown of talks between OPEC) and its allies, including Russia, leading Saudi Arabia to ramp up supply (Reuters, 2020).
Worst yet to Come
Reuters reported last Wednesday that Saudi Arabia will maintain oil supply at 12.3 million barrels per day (bpd) over the next few months, with exports expecting to rise to a record 10 million bpd from next month. The growing supply glut in oil markets could end up filling all storage tanks worldwide, potentially causing prices to drop even further.
Industry Analysts speaking to Reuters, suggest that such a development would overwhelm the already troubled oil industry, forcing production shutdowns. According to the news agency, storage facilities both on land and offshore are already filling up, and Saudi Arabia has not yet started to increase its deliveries of crude.
Rystad Energy’s head of oil markets, Bjornar Tonhaugen is of the view that oil prices could slide as low as US$10 per barrel if such a scenario should unfold. “We believe we have not seen the worst of the price rout yet, as the market will soon come to realize that it may be facing one of the largest supply surpluses in modern oil market history in April, Rystad Energy’s head of oil markets suggests.
Meanwhile Reuters reports that the glut is causing traders to offer their cargos at steep discounts in a desperate effort to find buyers. “There are no buyers, refiners in trouble, exporters in trouble, and producers in trouble. This is a disaster with no end in sight” an oil trader from the U.S. is reported as telling Reuters.
The Pain
According to Gaurav Sharma of Forbes, the oil and gas industry’s pain always follows an oil price slump. And that it can be excruciatingly painful when it comes to market permutations in a cyclical business facing a once-in-a-generation event. In recent memory, the industry has either faced a demand crisis like the global financial crisis of 2008-09 or a supply glut that surfaced in 2015-16. However, as the first quarter of 2020 nears its end, the industry is staring at simultaneous oversupply as well as a demand slump with many writing off much of 2020.
Too much oil for too few takers with too many producers vying for their attention is not just a crisis but an unmitigated disaster for exploration and production (E&P) companies and the oilfield services (OFS) firms that keep them going, Gaurav suggests.
Nathan Sheets, chief economist at PGIM Fixed Income, wrote in an email to CNBC pointing out the reality, that the oil and gas industry consists of many firms that will be vulnerable in the event of a sustained downturn in energy prices. That the fact remains that “their pockets simply aren’t as deep as those of major sovereigns like Russia and Saudi Arabia, who they compete with in the oil market, and the price they need to cover their costs is higher.”
While the drop in price has some benefits like reducing overall energy costs, raising in household and corporate real incomes, lowering inflation and reducing current account deficits for oil importing countries; it inflict pain on oil exploration, production, and services companies too (Baffes, Kose, Ohnsorge, & Stocker, 2015).
Cut-backs
In the estimation of Wood Mackenzie, the oil industry could see US$380 billion in cash-flow vanish if Brent averages US$35 per barrel this year, relative to US$60. Also Standard and Poor (S&P) which had previously expected US$60 this year, has slashed this price assumption for the year to US$40 per barrel.
Low oil price environment brings huge impact on operating performance of upstream oil and gas companies in the business of exploration and production (E&P), which typically reduces their ability to invest in additional capital investment (EIA, 2015). As lower oil prices reduces expected returns from future production, it equally decreases the incentives for upstream investment spending. As a result, new exploration and development projects may be delayed or canceled, dividend payments may be suspended, jobs may be lost, and reduced investments in producing fields can ultimately slow the growth in production (EIA 2015; Kaiser and Pulsipher 2006).
Already, the collapse in oil prices have seen some oil producers, especially in the United States and Canada announcing capital spending, dividend cuts, and job losses by the hour as many of their operations are unsustainable and deep in the red at US$30 a barrel for WTI Crude. Oil majors such as ExxonMobil, Chevron, Shell and BP are all evaluating their capital expenditure (capex) and operating expenditures (opex), with multi-billion dollar projects likely to be in limbo.
OilPrice.com reports that Apache Corporation has announced slashing its 2020 capital investment plan to US$1.0 billion-US$1.2 billion from a previous range of US$1.6 billion-US$1.9 billion. Murphy Oil Corporation, though is maintaining its commitment to dividend payment, has slashed its capital expenditure plan for 2020 by 35 percent. Chevron, Husk Energy, and many others are also looking at reviewing their investment plans after the price collapse.
Occidental Petroleum, weighed down by debt after its US$38 billion acquisition of Anadarko, announced last Tuesday that it’s slashing its quarterly dividend to 11 cents a share from 79 cents. It also said it plans to rein in spending this year by about 32 percent to about US$3.6 billion.
The cutters’ ranks are being swelled by independents like Apache Corporation, Devon Energy and Murphy, all of whom announced dramatic capital budget cuts of 30 percent or more, even before Big Oil got there. On the oil fields services (OFS) side, blue chip Halliburton has said it would furlough about 3,500 employees in Houston, oil and gas capital of the U.S., for 60 days. Driller Payzone Directional Services is halting operations, Liberty Oilfield Services said its executives would take a 20 percent pay cut and so the story goes, underpinned by a wider belief in the industry that the year 2020 is a lost cause (Bloomberg, 2020).
Tens of thousands of Texans are being laid off across the state in places like the Permian Basin shale fields in west Texas as companies shut down their drilling rigs, according to Ryan Sitton, a state oil and gas regulator. Drilling service company Canary LLC cut 43 workers last week. Recoil Oilfield Services laid off 50 workers after the water-transfer company lost all of its work with shale giant EOG Resources Inc. But the biggest blow so far came from Halliburton Co., the world’s dominant fracking-services provider, which said last week it would furlough 3,500 workers at its Houston headquarters.
The shrinking workforce is the direct result of a torrent of cuts in capital spending from U.S. explorers, some US$12.6 billion so far. All told, nearly two-thirds of the US$100 billion in global spending cuts could come in U.S. shale fields, according to Rystad Energy.
Written by Paa Kwasi Anamua Sakyi (aka Nana Amoasi VII), 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
Occidental Petroleum Cuts CEO, Staff Pay To Combat Falling Oil Prices
U.S oil and gas firm, Occidental Petroleum Corp has announced plans to cut employee salaries by up to 30%.
The pay of Chief Executive Officer, Vicki Hollub, who championed the Anadarko acquisition and convinced Berkshire Hathaway chairman Warren Buffett to invest $10 billion in the deal, will fall 81%.
Salaries of other top executives will be reduced by an average of 68%, the memo said.
Some workers who joined the company from Anadarko and are protected by terms of the acquisition agreement, will also see their salaries lowered by 4.9%.
Occidental will cut the salaries for some U.S. employees who earn more than $76,000 a year by up to 30% effective April 1, according to the memo and employee comments on website thelayoff.com discussing the salary cuts.
The reductions follow two cuts to its 2020 capital budget and an 86% reduction in its shareholder payout.
After those cuts, the company said it would be able to cover its expenses with oil in the low-$30 a barrel range.
Global oil prices have dropped 60% since January as fuel demand has plunged because of the Coronavirus pandemic that threatens to cause a global recession.
Already, Saudi Arabia and Russia are planning to increase supply in a bid to grab market share.
Occidental has pared spending on production, cut its shareholder dividend, dismissed staff and sold assets to avoid being overwhelmed by the debt taken on to pay for its $38 billion acquisition of rival Anadarko Petroleum.
The deal was an ill-timed bet on rising oil prices that soured within months of the deal’s closing.
Crude oil LCOc1 traded at $27.64 a barrel Wednesday morning in Asia, below the level that occidental recently said it needs to cover expenses.
“During this unprecedented time impacting our industry, and the global economy, we’re taking aggressive actions to ensure the health of the company while protecting jobs,” company spokeswoman Melissa Schoeb said in a statement.
“We notified our employees of a number of measures we will be implementing, including compensation reductions, which will impact everyone at the company starting with the management team,” she said.
Source:www.energynewsafrica.com