The Nigerian National Petroleum Corporation (NNPC) has expressed its desire to extend Nigeria’s trade relations with Turkey beyond crude oil.
The Group Managing Director of NNPC, Mallam Mele Kyari, disclosed this during a courtesy call by the Ambassador of the Republic of Turkey to Nigeria, His Excellency Melih Uluren, at the NNPC Towers, in Abuja.
A press release by the corporation’s spokesman, Mr. Ndu Ughamadu, stated that the Turkish national oil company has trade relations with NNPC.
The GMD promised to build on the existing trade relations with Turkish Petroleum, adding: “We are looking forward to greater cooperation between NNPC and Turkish Petroleum such that we find business in other areas like infrastructure development that both countries will be interested in promoting to the benefit of both countries”.
Speaking earlier, the Ambassador of Turkey to Nigeria, His Excellency Melih Uluren, said his country was eager to deepen economic ties with Nigeria.
He congratulated Mele Kyari on his appointment as NNPC GMD, stressing that his choice for the position was well thought-out as his reputation as an astute leader was well known in the diplomatic community.
JSE-listed coal miner Wescoal has entered into a long-term coal supply agreement with Eskom to supply coal for the next 10 years from its Greenfield development project, Moabsvelden.
The contract was secured with Eskom through Wescoal’s wholly-owned subsidiary Neosho Trading 86.
The signature of the coal sales agreement (CSA) marks the conclusion of 16 months of negotiations with Eskom, which commenced early in 2018.
Moabsvelden is located approximately 5km from the current Vanggatfontein mine in Delmas and formed part of the assets acquired from Keaton Energy during 2017.
Development work, that includes box cut mining and associated mining infrastructure, will commence during Q3, 2019 with first coal to Eskom expected in January 2020.
This project is expected to contribute circa. 3 Mtpa of mined coal towards Wescoal’s production capacity and says Wescoal, “presents a new growth opportunity for all our key stakeholders, namely employees, communities and shareholders”.
The signature of the Moabsvelden CSA falls squarely into the scalability pillar wherein Wescoal announced its intention to fast track the development of internal (organic) growth opportunities.
Source: Esi-Africa.com
Ghana’s Information Minister, Kojo Oppong-Nkrumah has revealed that government has commenced a full scale inquiry into the purported breaches in the concession agreement it signed with the Power Distribution Services Ghana Limited, a private entity which was mandated to manage electricity distribution business in the West African country.
According to the minister, investigation into the alleged breaches in the agreement is expected to be completed within 30 days.
He told journalists at a press briefing in Accra, capital of Ghana on Thursday that the team conducting the inquiry comprises insurance investigation experts, officials of the Energy and Finance Ministries and officials of the Electricity Company of Ghana (ECG) as well as Millennium Development Authority (MIDA).
“The inquiry will determine the nature of the breaches and advise on suggested next steps. By Tuesday, the team is expected in DOHA-Qatar as part of the inquiry. All interested parties are cooperating with the inquiry at this stage,” Kojo Oppong-Nkrumah said.
Government of Ghana, through the Information Minister, Kojo Oppong-Nkrumah, last Tuesday, July 30, 2019 announced the suspension of PDS over some breaches in the concession agreement signed with government.
“The decision follows the detection of fundamental and materials breaches of PDS obligations in the provision of Payment Securities (Demand Guarantees) for the transaction, which have been discovered upon further due diligence.
“The Demand Guarantee were key prerequisite for the lease of assets on the 1st March, 2019, to secure the assets that were transferred to the concessionaire,” the statement indicated.
Giving details on government’s next line of action, Mr Oppong Nkrumah said the inquiry will determine the nature of the breaches and advise on suggested next steps.
“By Tuesday, the team is expected in DOHA-Qatar as part of the inquiry. All interested parties are cooperating with the inquiry at this stage. A second team has been tasked to continue engagement with the American government through its agency the Millennium Challenge Corporation,” he said.
UPDATE ON PDS SUSPENSION
Reference to the Press Statement Issued by the Ministry of Information dated 30th July 2019, on the matter of the suspension of the concession agreement between Government of Ghana and PDS, Government hereby updates the Ghanaian Public as follows;
The full scale inquiry into the detected breaches has commenced and is expected to be completed within 30 days. The team conducting the inquiry comprises insurance investigation experts, officials of the Energy and Finance ministries and officials of the ECG and MIDA as well. The inquiry will determine the nature of the breaches and advise on suggested next steps. By Tuesday, the team is expected in DOHA-Qatar as part of the inquiry. All interested parties are cooperating with the inquiry at this stage.
A second team has been tasked to continue engagement with the American government through its agency the Millennium Challenge Corporation. This engagement is about the possible next steps after the inquiry and channels for sharing information as part of this inquiry. That team is expected to also be in the USA possibly next week as part of their engagement.
Final efforts to ensure a smooth transition between ECG and PDS officials are proceeding without incident.
We reiterate that this breach was discovered by the due diligence of the Ghanaian authorities through ECG and with the support of state agencies.
For the avoidance of doubt, the provision of the payment guarantee has always been a condition precedent and was never changed to a condition subsequent as being speculated by some persons.
Initial Due Diligence led by the transaction advisors did not detect anything wrong with it.
The second level checks (this time led by the Ghana side) initially yielded a response from Al-Koot confirming the guarantee.
It was a third level check by the Ghana side that detected anomalies within Al-koot thereby triggering a fourth level check.The fourth level check involved sending an initial team from the Ghana Mission in Qatar to engage with Al-koot officials for further verification. This fourth level further proved the anomalies and suggested untoward action which is now the subject of the full scale inquiry.
Government will update all stakeholders on the outcome of the inquiry and proceed in accordance with law and the terms of the agreement as it works towards a final resolution of this matter.
A report released by Africa Oil Week and Menas Associates about what lies in store for Africa’s oil and gas industry has concluded that, on balance, the continent’s economic performance is promising, particularly as global oil markets finally recover from their 2015-2016 lows.
Africa’s proven oil and gas reserves respectively account for 7.5% and 7.1% of global totals.
Experts predict that 2019 and beyond will see deep offshore exploration and mega gas finds, with the development of trans-continental pipelines, gas-to-power initiatives and refining potential.
The report delves into major trends for 2019, including political transitions and regional integration through the African Continental Free Trade Agreement (ACFTA) which promises to reduce barriers to intra-African trade, facilitate the movement of people and strengthening Africa’s prominence on the world stage.
A rosy picture is painted for natural gas as global consumption rises. Africa’s gas production grew by 8% between 2017 and 2018 – largely out of Egypt.
In terms of opportunities, sub-Saharan Africa’s two largest producers of oil – Nigeria and Angola – are expected to launch bidding rounds this year. Equatorial Guinea, Uganda, Gabon and Congo Brazzaville have ongoing rounds, Ghana launched its first licensing round at the 2018 edition of Africa Oil Week, and Madagascar is hoped to offer a number of blocks this year.
Africa Oil Week will feature two days dedicated to national showcases and bidding rounds at their upcoming event with 16 countries – including Côte d’Ivoire, Equatorial Guinea and Mozambique -presenting their national hydrocarbon sector to Africa Oil Week’s audience.
Read the report to find out more about the state of the oil and gas industry in Africa, including country profiles of the countries showing particular promise in the coming year.
A former Minister of Power in the erstwhile Mahama administration in the Republic of Ghana, Dr. Kwabena Donkor has rejected claims by government that the suspension of the concession agreement with Power Distribution Services Ghana Limited was a result of government’s effort at uncovering an alleged fraudulent act perpetrated by the PDS in order to secure the said contract.
Contrary to the claims by government, Dr Donkor is convinced that government officials only managed to ‘discover’ the said fraudulent document upon a tip-off by some individuals and not through its own due diligence as has been reported.
He said, but for the tip off, government would have had no clue as to what was really going on in the power distribution chain in the country.
“We were given a tip-off on July 16 that the document guaranteeing the funding of the project for PDS was fraudulent and that the person who signed it, did not have the power to do so,” he said.
Dr. Donkor, who is also the Member of Parliament for Pru East, expressed worry over how long it took the country to verify the information after it had been provided by a whistle blower. He says instead of two weeks, government should have, within three days, ascertained the truth or otherwise of the claim by the informant.
He questioned why the Finance and Energy Ministries, the Millennium Development Authority (MiDA) and the Attorney General supervised the handing-over of the country’s property to a private company without doing the necessary checks and due diligence.
“Are we saying we handed over our property to PDS without due diligence? We were either being irresponsible or unpatriotic,” he said.
The former Power Minister is laying the blame squarely at the doorstep of the Finance Minister for supervising a sham.
He said the Ministry refused to hand over the necessary documents to parliament despite persistent requests.
“We asked for it but however, there is a weakness in Parliament. Too often the majority side and the executive want to push things through so when you ask, they will say we will provide it and often than not, documents are not provided and this is one of the examples,” he noted.
Ghana’s electricity regulator, Energy Commission, has appointed the Electricity Company of Ghana (ECG) as the interim operator of the electricity retail sale functions in the southern distribution zone under the license number EC/ESL/ 02-19-001.
According to the Commission, its decision is based on the validity of the said license becoming impaired due to the suspension of the operation of Power Distribution Services (Ghana) Limited over some breaches in the concession agreement signed with Government of Ghana.
A statement issued by the Board of Energy Commission to that effect urged the PDS to facilitate and provide ECG with the needed access to all billing systems, metering operations, payment accounts among others, required for the effective operations of the retail sales license
Government of Ghana, through the Information Minister, Kojo Oppong-Nkrumah, announced the suspension of PDS over some breaches in the concession agreement signed with government.
“The decision follows the detection of fundamental and materials breaches of PDS obligations in the provision of Payment Securities (Demand Guarantees) for the transaction, which have been discovered upon further due diligence.
“The Demand Guarantee were key prerequisite for the lease of assets on the 1st March, 2019, to secure the assets that were transferred to the concessionaire,” the statement indicated.
Eskom’s financial, operational and environmental performance will continue to be challenging for some time before significant improvements are realized, South Africa’s power utility group has declared in a statement.
The group recorded a net loss after tax of R20.7 billion for the year (March 2018: R2.3 billion), and EBITDA of R31.5 billion (March 2018: R45.4 billion).
According to the power utility, the EBITDA (earnings before interest, tax, depreciation and amortization) margin declined to 17.5% (March 2018: 25.6%, restated), mainly due to increased primary energy and employee benefit expenditure, combined with largely-stagnant revenue growth during the year.
Eskom further stated that there was a substantial increase in depreciation and net finance cost resulting in a growth in net loss.
The company said: “Primary energy costs (including coal, liquid fuels and Independent Power Producers) increased to R99.5 billion (March 2018: R85.2 billion).
“Usage of OCGTs, Eskom and IPPs, increased substantially driven by poor plant performance and supply constraints at a cost of R6.5 billion (March 2018: R0.3 billion).
“Expenditure on renewable IPPs increased to R22.2 billion for the year (March 2018: R19.0 billion) primarily due to the commissioning of new renewable IPPs during the year.
Audit modification
On the positive side, the company reported that progress was made in cleaning up the prior year audit modification relating to the completeness of irregular, fruitless and wasteful expenditure and losses due to criminal conduct.
“Despite our efforts, the auditors issued a modified opinion relating to the accuracy and reasonableness of the PFMA reporting,” Eskom revealed.
Irregular expenditure for the current year totaled R6.6 billion, of which R1.5 billion relates to new transgressions.
The remaining R5.1 billion is attributable to issues which had been detected previously and are continuing until the related contract is condoned, or to prior year transgressions identified during the year as part of the clean-up process.
“It is to be expected that new instances of irregularities will be detected as we continue our governance clean-up exercise. We have also made progress in clearing the reportable irregularities previously reported by the external auditors, Jabu Mabuza newly appointed chairman said.
“However, some irregularities will remain open until finalization of court cases or conclusion of investigations by external parties,” Mabuza added.
Decreased investor confidence in Eskom
Eskom noted that its access to funding in both the domestic and foreign markets has been restricted due to decreased investor confidence, as a result of reputational damage owing to the audit modifications in the 2016/17 and 2017/18 financial statements related to the completeness of irregular expenditure, previously reported governance issues, ongoing operational challenges, as well as uncertainty regarding our proposed restructuring.
Jabu Mabuza, Chairman of ESKOM
As a result of the extensive challenges confronting the organisation, Eskom has embarked on a comprehensive strategic review to develop a turnaround plan that would put the organisation on a path towards achieving structural, financial and operational sustainability.
The turnaround plan supported by the nine-point generation recovery plan; is enabled by four pillars, namely cost containment and sales growth, cost-reflective tariffs, balance sheet optimization, and business separation.
Group chief financial officer, Calib Cassim said: “In terms of cost savings, we must reduce our overall annual cost base by at least R33 billion in 2022/23, with cumulative cash savings of approximately R77 billion required over the next four years. This pillar also covers growing sales volumes in order to increase revenue.
“When it comes to cost-reflective tariffs, we submitted the MYPD 4 revenue application to NERSA, based on revenue that caters for prudent and efficient costs as well as a reasonable return that matches our debt service commitments.”
Cassim added: “The debt relief pillar saw Eskom approach government for financial assistance to reduce debt and interest to a sustainable level. Government has committed to providing R230 billion over the next 10 years.”
Source: Esi-Africa.com
A consumer advocacy group in the Republic of Ghana, Chamber of Petroleum Consumers (COPEC) has petitioned Ghana’s Parliament to consider by rejecting the proposed increases in petroleum sector levies announced by the Finance Minister in Parliament last Monday.
The chamber urged the legislative body to do so in the interest of consumers in the West African country.
“We humbly indulge your honest house to consider the plight of the ordinary Ghanaian and dismiss the implementation of tax increment on petroleum products, which will only pose huge financial burden on the citizenry of the Republic of Ghana,” a petition signed by executive secretary of COPEC, Duncan Amoah, said.
Presenting a mid-year budget review statement in Parliament on Monday, July 29, this year, Finance Minister Ken Ofori-Atta said, “Government proposes to increase the Energy Sector Levies by GHp20 per litre for petrol and diesel and GHp8 per kg for LPG, so as to increase the inflows to enable government issue additional bonds to pay down our energy sector debt obligations.
“Based on current indicative prices for petrol and diesel, this translates to GHp90 per gallon.”
However, COPEC, in its petition, kicked against the proposed levies.
“As a country committed to curbing the menace of climate change, COPEC is of the opinion that when the LPG price increases, people will be demotivated in attempt to move from non-environmentally friendly fuels to LPG, hence derailing the aim of government’s LPG penetration target.
“COPEC believes that government can source for alternative means of revenue generation including employing prudent measures to check perennial leakages in the energy sector, where the state loses over GH¢1.6 billion yearly to fuel smuggling, as well as revamping and equipping State Owned Enterprises like TOR to be more productive and profitable.”
Halliburton, one of the world’s largest providers of products and services to the energy industry has announced the execution of an integrated services contract with Petrobras for pre-salt development in the Santos Basin.
The two year and six month contract will provide drilling and completion services to drive greater efficiency by applying pre-salt expertise and integrating multiple product offerings and technologies.
“We are pleased to win this work and to collaborate with Petrobras to provide a tailored application of Halliburton technology,” Anouar Fraija, Vice President of Halliburton Brazil said.
“This contract is a testament to our continuous commitment to safety, superior service quality and helping operators maximize their asset value.”
Halliburton has an established track record in Brazil’s pre-salt fields, which have some of the most complex wells ever drilled, and require a broad scope of technologies and capabilities to achieve economical and operational success.
Halliburton also maintains a technology center in Rio de Janeiro, which serves as a global center of expertise for deepwater innovation and training.
The center’s capabilities allow Halliburton to translate offshore knowledge into new technologies that reduce uncertainty and increase efficiency and reliability.
Shell has sold its non-operated interest (22.45%) in the Caesar-Tonga asset, U.S. Gulf of Mexico, to Equinor for $965 million. The transaction is subject to approval of the lease assignments by the regulator.
The transaction represents Shell’s focus on strategically positioning the deepwater business for growth and is consistent with its strategy to pursue competitive projects that deliver value in the 2020s and beyond. The sale contributes to Shell’s ongoing divestment program.
Shell has a leading deepwater portfolio with an exciting development funnel and strong exploration acreage in the U.S. Gulf of Mexico, Brazil, Nigeria and Malaysia heartlands, as well as in emerging offshore basins such as Mexico, Mauritania and the Western Black Sea. Shell currently is the largest leaseholder and one of the leading offshore producers of oil and natural gas in the U.S. Gulf of Mexico.
In April 2019, Shell announced it had signed an agreement to sell its interest to Delek CT Investment. Subsequently, Equinor exercised its right of first refusal under the joint venture operating agreement. The transaction has an effective date of January 1, 2019.
The field is operated by Anadarko Petroleum, holder of 33.75% interest. The remaining interest in the asset following the completion of the divestment is distributed between Equinor (46.0%), and Chevron (20.25%).
U.S. oil and gas company, Hess has reported a net loss of $6 million in the second quarter of 2019, compared to a net loss of $130 million for the same period last year on the back of increased oil production and reduced expenses.
Hess also decided to trim its full year capex guidance.
Hess Corporation on Wednesday reported revenues of $1.7 billion compared to $1.56 billion in the same quarter of 2018.
On an adjusted basis, the company reported a net loss of $28 million in the second quarter of 2019. In last year’s second quarter, Hess reported an adjusted net loss of $56 million.
According to the company, the improved adjusted results reflect increased U.S. crude oil production and reduced exploration expenses, partially offset by the impact of lower realized selling prices and higher depreciation, depletion, and amortization expenses.
The company’s CEO, John Hess, said: “Our production is now expected to come in at the upper end of our full-year guidance range, while our capital and exploratory expenditures are projected to come in below our original full-year guidance.
“In Guyana, we have just increased the estimate of gross discovered recoverable resources for the Stabroek Block to more than 6 bboe and continue to see multibillion barrels of additional exploration potential.”
Hess’ Exploration and Production (E&P) net income was $68 million in the second quarter of 2019, compared to $31 million in the second quarter of 2018.
Higher production driven by Bakken & GoM
The company’s average realized crude oil selling price was $60.45 per barrel in the quarter, versus $62.65 per barrel in the year-ago quarter. The average realized natural gas liquids selling price in the second quarter of 2019 was $12.18 per barrel, versus $20.51 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.92 per mcf, compared to $4.12 per mcf in the second quarter of 2018.
Net production, excluding Libya, was 273,000 boepd in the second quarter of 2019, up from second quarter 2018 net production of 247,000 boepd, or 234,000 boepd excluding assets sold. The higher production was primarily driven by the Bakken and the Gulf of Mexico.
Libya net production was 20,000 boepd in the second quarter of 2019, compared with 18,000 boepd in the prior-year quarter.
E&P capital and exploratory expenditures were $664 million in the second quarter of 2019, compared to $525 million in the prior-year quarter, reflecting increased drilling in the Bakken and greater development activity in Guyana.
For full-year 2019, Hess’ E&P capital and exploratory expenditures are projected to be $2.8 billion, down from original guidance of $2.9 billion.
Source: Offshoreenergytoday.com
The Minority in Ghana’s Parliament has hinted of plans to further investigate the operations of the Power Distribution Services Limited (PDS).
According to the Minority Spokesperson on the Mines and Energy Committee, Adams Mutawakilu, government has been unfair to Ghanaians by not adhering to earlier concerns raised about the agreement.
This comes after the government announced a suspension of the concession agreement with PDS, after the detection of fundamental and material breaches of obligation in the provision of Payment Securities.
Adam Mutawakilu said government should have been more diligent prior to the signing of the concession agreement with PDS claiming the documents presented by PDS prior to the signing of the deal was not genuine.
Mr. Adam Mutawakilu further accused government of not sticking to aspects of the deal which was approved by Parliament.
“The Minority raised issues about the same guarantee or security and insisted that the PDS was expected to have provided the right document before the handing over of the assets of ECG. On several occasions we called on Government that PDS had not provided the right documents and that it was paper documents that was not backed on liquidity and cash…”
“Government had to wait for all this while before coming out to say they had done their due diligence… Government has not been fair to the people of Ghana by not sticking to what Parliament had approved and amending it to suit PDS.”
The Member of Parliament for Damongo also argued that Government’s decision to scrap the agreement deal could have dire consequences for the country on the International front in the future.
He also accused some government officials of sidestepping the agreed rule of engagements for the concession deal.
“We believe that the suspension of PDS goes beyond the provision of the guarantor…We have information on of alleged people fronting and the agreements we had as challenges and in the coming days, we will come out with the truth.”
“The inconsistencies of Government in respect to the concession will cast some bad image for Ghana in the international community but I still maintain that doing the right thing should have been done a long time ago.”
Source: Citinewsroom.com
Ghana’s Information Minister, Kojo Oppong-Nkrumah, has dispelled concerns that a decision by government to review some of the current power purchase agreements (PPAs) will result in judgement debts.
According to him, the government is cautiously working to convert the take-or-pay agreements to take-and-pay with some Independent Power Producers (IPPs) in a way that will prevent possible legal issues like a breach of contract.
“Not that we intend to force it down their [IPPs’] throats. We can’t do that. The idea is also to explain to them where the sovereign tends to go, where the red line is, so we begin to work with them,” he said.
The Finance Minister declared “a state of emergency” in the energy sector on Monday, a situation he said was causing the state to bleed scare financial resources.
The challenges in the energy sector, Ken Ofori-Atta stated, could pose grave financial risks to the entire economy.
“At the heart of these challenges are the obnoxious take-or-pay contracts signed by the NDC, which obligate us to pay for capacity we do not need,” Mr Ofori-Atta indicated while presenting the mid-year budget review to Parliament.
He said the country was paying over GH¢2.5 billion annually for some 2,300MW in installed capacity which the country does not consume.
“We shall from August 1st 2019, with the support of Parliament, make take-or-pay contracts a beast of the past,” he stressed.
However, some energy analysts have raised concerns over the issue, arguing that former the move to review the agreements could lead to judgement debt.
Reacting to these concerns, however, Mr Oppong-Nkrumah said the successes already achieved in renegotiating some power deals are evidence that other renegotiations will also be successful.
Oilfield services provider, Baker Hughes, a GE company, managed to reduce its loss as its revenues increased in the second quarter of 2019.
BHGE on Wednesday posted revenue of $6 billion for the second quarter 2019, up 7% sequentially and up 8% year-over-year. The company’s revenues in 2Q 2018 were $5.55 billion.
The company’s GAAP operating income was $271 million for the quarter, which means it increased 54% sequentially and increased more than three times year-over-year.
Adjusted operating income (a non-GAAP measure) of $361 million for the quarter was up 32% sequentially and up 25% year-over-year.
Net loss attributable to BHGE was $9 million compared to a loss of $19 million in the prior-year quarter.
The company’s orders in the period, which totaled $6.6 billion, were up 15% sequentially and up 9% year-over-year.
Lorenzo Simonelli, BHGE Chairman and Chief Executive Officer, said: “We delivered a solid second quarter 2019 both commercially and operationally. The trends for our longer-cycle businesses remain intact. The Liquefied Natural Gas (LNG) new-build cycle is a strong positive for our company and our international Oilfield Services (OFS) business continues to be very successful.”
He added: “Our outlook for 2019 is unchanged and we remain focused on our priorities of gaining share, improving margins and delivering strong cash flows.”
