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.”
An Energy Think Tank in the Republic of Ghana, Africa Center for Energy Policy (ACEP), has advised the government to focus on addressing excess power generated by the Independent Power Producers and not renegotiating the take or pay agreements with the producers.
Executive Director of the Think Tank, Ben Boakye has noted that the sector’s real challenge is the reckless signing of power agreements which must be addressed.
“The problem the energy sector has is not because we have take-or-pays. It is because we have excess [capacity]. The problem is the reckless signing of more than we need.”
During the mid-year budget review, the Finance Minister said the country was in a “state of emergency” as far as the energy sector was concerned.
The “obnoxious” take-or-pay contracts were cited as a critical risk to the economy by the Minister.
The West African country’s installed capacity of 5,083 MW is almost double the peak demand of around 2,700 MW.
Of the installed capacity, 2,300 MW has been contracted on a take-or-pay basis meaning Ghana is contractually obliged to pay for the excess capacity though it does not consume it.
“This has resulted in us paying over half a billion U.S. dollars or over GHS 2.5 billion annually for power generation capacity that we do not need,” the Finance Minister said during the budget review.
He noted that the government intended to renegotiate and convert all take-or-pay contracts to take-and-pay contracts.
But Mr. Boakye said the country could also explore other alternatives beyond converting all contracts.
As another option, he suggested that the country could opt out of some contracts “and pay the damages.”
“If you recognize that damages for cancelling the contract is better to wait for five years to pay $1 billion, then you take the option and pay the $200 million to save the difference.”
Source: citinewsroom.com
Ghana Energy Awards, GEA, is set to launch the third edition of the Awards at the Challenge House, Abelemkpe, Accra on Wednesday, July 31, 2019.
The launch is to announce the theme for this year’s awards and open nominations for the various categories for energy sector companies and personalities in the country to apply for nominations.
Dr Kwame Ampofo, the Chairman of the Awarding Panel, said the Awards is chiefly to honour hardworking individuals and organizations in the country’s energy sector while at the same time promoting competition and quality service.
According to him, the award scheme is programmed to get better every year in terms of quality delivery, attendance, assessment of nominees which is a totally transparent process and a reflection of major activities in the industry.
Last year, he said, was far more impressive in terms of attendance, publicity and the overall organisation, however, this year, “we are expecting and working toward a better event in all regards,” he added.
The Awards is considered by industry players and regulators as truly the ‘Mother of all awards’ in the country’s energy sector.
He believed innovative awards such as the special Non-Competitive category which both previous editions have been received by noble personalities make the awards scheme unique and separate it from all other awards.
Dr Ampofo revealed that the 2019 Awards will feature a special set of awards for high-level achievers in the country whose patriotism and efforts have moved the country forward. This set of awards is non-political but for politicians who the entire country will admit deserve acknowledgement for their labours to ensure economic growth.
Henry Teinor, organiser of the awards said that this third edition of the awards will be exciting as more industry stakeholders will be involved in the entire awards process.
He said the Organising Committee decided to do the launch three clear months to the event so that prospective candidates will have ample time to gather their documents and evidences to support their applications.
“We are watching out for projects, new deals, strategic achievements of companies in the sector. We are also looking out for organizations that ensure compliance with industry regulations and standards,” he added.
Some prominent categories of the awards are the Energy Personality of the Year, both male and female categories, the Rising star award, Energy Reporter, Energy Institution, Energy efficient organization of the year, as well as the Non-Competitive categories.
Ghana Energy Awards is scheduled for the last Friday of every November and is endorsed by the Ministry of Energy and World Energy Council, Ghana and is validated by Mazars Ghana.
The Public Distribution Services (PDS) Ghana Limited has responded to the decision by government to suspend the concession agreement between them.
In a statement signed by CEO of PDS, it said, “PDS wishes to state for the record that it has always acted and will continue to act in good faith at all times.
“PDS will go through due process by complying with the terms of the Transactions Agreements executed between it and ECG on one hand and GoG through MoF on the other hand.”
Government, through the Information Minister, Kojo Oppong Nkrumah, yesterday July 30, 2019, announced that it had suspended its agreement with PDS over some breaches.
Government of Ghana has, with immediate effect, suspended its concession agreement with Power Distribution Services (Ghana) Limited.
PDS took over the power distribution business from the state power distributor, Electricity Company of Ghana (ECG), from March 1, 2019.
However, barely four months into its operation, government has suspended the deal.
A statement from the Ministry of Information said the decision was taken after government had discovered some breaches in the company’s obligation in the provision of payment securities.
It would be recalled that the Independent Power Producers (IPPs) in the West African country threatened to shutdown their power plants over failure of ECG/ PDS to settle their huge indebtedness to the tune of about $700m.
After weeks of debate, the Ministry of Finance intervened by releasing an amount of GHc 200m to settle part of the debts.
It is not clear whether the recent issue also influenced government’s decision to suspend the deal.
A former Chief Executive Officer of Ghana’s National Oil Company (GNPC) Mr Alex Mould is incensed by the country’s government’s plans to re-negotiate all ‘take-or-pay’ power purchase agreements signed under the previous regime to take-and-pay.
The former government official, in a Facebook post on Tuesday, July 30, 2019, described the decision, which was contained in a mid-year budget review presented by the country’s Finance Minister Ken Ofori-Atta, in parliament, as irresponsible, arguing that the move would scare away prospective investors.
“The irresponsible statement by the Finance Minister to renegotiate all take-or-pay power agreements to take-and-pay will scare away prospective investors, not only in the power sector but even more in the development of any future gas Exploration and Production field.
“If investors agree to take-and-pay agreements, government will have to provide even greater security support packages to make the financing of the development of these gas fields intended for Gas2Power possible,” he explained.
“An analogy is where a caterer agrees with a company to provide meals for 200 staff, based on the demand forecast at the time.
“She then gears up, enters into debt to buy equipment to provide 200 meals a day; only to find out later that the company decides unilaterally, or for some other reason, to reduce the meals to 150 people, there will be consequences for everyone involved…the off-taker, the supplier, the supplier’s banks etc. How does the caterer pay for the debt with reduced revenue and reduced margins?” he posited.
Below is the full post
The irresponsible statement by the Finance minister to renegotiate all take-or-pay power agreements to take-and-pay will scare away prospective investors not only in the power sector but even more in the development of any future gas Exploration and Production field;
If investors agree to take-and-pay agreements government will have to provide even greater security support packages to make the financing of the development of these gas fields intended for Gas2Power possible
The finance minister has been ill advised and it shows his teams lack of experience in financing infrastructure projects;
An analogy is where a caterer agrees with a company to provide meals for 200 staff based on the demand forecast at the time.
She then gears up, enters into debt to buys equipment to provide 200 meals a day ; only to find out later that the company decides unilaterally, or for some other reason, to reduce the meals to 150 people
There will be consequences for everyone involved – the off taker, the supplier, the supplier’s banks etc.
How does the caterer pay for the debt with reduced revenue and reduced margins?
It’s a joke; they cannot do it for new IPPs; no new projects will achieve Financial Investment Decision (FID); perhaps they can do it for old IPP plants that have fully amortized their initial costs.
If this is done unilaterally, or without Agreement with the stakeholders in the IPP financing, this may actually cause the breach of financial covenants between the IPP and its financial institutions; this could actually result in default, and potentially judgement debt against the state
The World Bank provided up to $700m in Guarantees – it’s largest ever financial guarantee to a project – to back a take-or-pay E&P Gas field development and also the financing of 4 take-or-pay power plants in Ghana; lets see if they can go renegotiate with the World Bank – that’s where they need to start so we see how serious they are;
The financial institutions that financed these plants will not agree to a renegotiation unless Govt provides more support or guarantees in the form, possibly, of StandBy Letters of Credit to provide comfort of default from the already bankrupt power sector;
A take-or-Pay contract will have lower tariffs than a take-and-pay contract!
Lastly it was disingenuous of the finance minister to deceive the public with the amount of dependable (24/7) sustainable power generation capacity which is more in the neighbourhood of 3,500mW rather than the 4,593MW
The issue I raise here is with the Minister’s statement that has to do with him saying that he will renegotiate “ALL” IPP PPAs to make them take-and-pay from take-or-pay
It is possible to renegotiate those old IPPs that have most likely paid down all their initial capex but quite impossible to do that for relatively new IPPs, and impossible to do that for new IPPs
We should also not confuse the Put-Call Option Agreements, PCOA, with take-or-pay Agreements.
PCOA replaces the Government Support and Consent Agreements that basically mitigates the political and country risk when a default occurs due to Gov’t interference ie country specific – since Gov’t controls PURC, and the whole power value chain, gov’t interference is a huge risk for the investors and their financial institutions
The take-or-pay on the other hand is more related to off takers payments for power received – ensuring debt service payment of the capital expenditure financed by the investors financial institution; it is a project financing requirement in the power sector (and in most infrastructure project).
Pls note that both Bui and Sunon Asogli, both signed by the NPP gov’t where take-or-pay Agreements
If the IPP has paid off its initial capex then there is the need to renegotiate
The IPP needed a take-or-pay Agreement in order to secure the original capex financing
If we send a message out to the power sector investor community that we would no longer be entering into take or pay agreements, as explicitly stated by the Finance Minister, it would be impossible for them to reach Financial Investment decision, nor raise the funding from the project finance banks
UK oil major, BP posted a profit of $2.8 billion for the second quarter 2019, which is similar to the company’s performance in the same period last year, while its production increased during the period.
BP said on Tuesday that its underlying replacement cost profit for the second quarter of 2019 was $2.8 billion, similar to a year earlier. The quarter’s result largely reflected continued good operating performance, offset by oil prices lower than in the second quarter of 2018, the company said.
Underlying RC profit is after adjusting RC profit for a net charge for non-operating items of $861 million, mainly relating to impairment charges, and net adverse fair value accounting effects of $175 million (both on a post-tax basis).
The company’s non-operating items in the second quarter of $0.9 billion, post-tax, were related mainly to impairment charges.
BP reported oil and gas production for the quarter averaged 3.8 million barrels a day of oil equivalent, 4% higher than a year earlier.
With the start up of the Total-operated Culzean project (BP 32%) in the North Sea this quarter, four upstream major projects have begun production in the first half of the year.
Final investment decisions were made for the Thunder Horse South Expansion Phase 2 project in the U.S. Gulf of Mexico and the MJ project on Block KG D6 offshore India. BP and partners also agreed additional investment expected to increase and extend production from deepwater Block 15 offshore Angola.
BP CEO, Bob Dudley, said: “At the midpoint of our five-year plan, BP is right on target. Reliable performance and disciplined growth across our businesses are delivering strong earnings, cash flow and returns to shareholders.”
Organic capital expenditure for the second quarter and half year was $3.7 billion and $7.3 billion, respectively. BP reported $3.5 billion and $7 billion for the same periods in 2018.
Source: offshoreenergytoday.com
The newly appointed Managing Director of the West Africa Gas Pipeline Company Limited (WAPCo), Greg Germani, has told energynewsafrica.com that the company intends to expand its regulating and metering station in Tema to increase its capacity.
The move, according to Mr Germani, is as a result of the increasing demand in supply of gas for power plants in the Tema power enclave.
“Right now we are seeing a growing demand at Tema and we need to expand our Tema facility to meet the demand. So we are working with the support of the Ministry of Energy, Ghana National Petroleum Commission and Eni to expand our facility at Tema to increase the capacity so that more gas will be able to be delivered to the Tema enclave”.
Mr Germani said the Tema facility is being expanded from its current capacity of 140mmscfd to over 200mmscfd to meet the anticipated demands.
He noted that gas supply from Nigeria to Tema has increased saying, “We are starting to see flows from 90 to 110 mmscf a day”.
He said the completion of WAPCo’s new facility at Takoradi to receive natural gas from Ghana Gas facility has made it possible for WAPCo to transport natural gas from Takoradi to Tema. In June an average of 30mmscf of natural gas was transported daily from Takoradi to Tema, he said.
He said the pipeline is available and is run efficiently to operate at over 90 percent reliability to deliver gas from both ends, whether from Nigeria or from Takoradi in Ghana.
Russia’s state mineral exploration agency Rosgeologia has outlined plans for an aggressive new search for oil and gas resources in the Arctic, Moscow business daily Kommersant reports.
The exploration programme, which would run between 2020 and 2045, was proposed by Rosgeologia head Sergey Gorkov in a July 25 meeting of Russia’s state commission for Arctic development, the newspaper stated, citing a copy of his presentation. It would be funded with rubles 292.5bn ($4.6bn) in support from Russia’s sovereign wealth fund and the state budget.
According to Gorkov, finding new Arctic resources would help Russia expand the use of its Northern Sea Route (NSR). Moscow views the Arctic shipping route’s development as a strategic priority, with government officials setting out plans earlier this to expand its cargo trade to 92.6mn mt by 2024, up from 20.2mn mt last year.
The exploration programme would involve geological studies as well as parametric and appraisal drilling. Its first phase between 2020 and 2024 would cost a projected rubles 89.3bn, while the second between 2024 and 2035 would cost rubles 104.6bn. The final stage up until 2045 would require 98.6bn rubles.
Following its recent meeting, the Arctic commission’s head, Deputy Prime Minister Yury Trutnev blasted the work of Russia’s natural resources ministry in developing Arctic reserves as “unsatisfactory”.
“Little money is allocated, and geological exploration is carried out in insufficient quantities; fields are not being developed,” he said.
Earlier efforts had depended on bringing foreign technology, which US sanctions banned in the wake of the 2014 unrest in Ukraine. This brought to a close the Rosneft-ExxonMobil Kara Sea programme later that year after one well had been drilled. Russia is therefore working on developing its own technology, both to cut costs and protect itself from outside threats.
Rosgeologia is subordinate to the natural resources ministry. Gorkov took over as its head in April after his predecessor Roman Panov resigned following the arrest of his deputy on fraud charges.
Source: naturalgasworld.com
A cross-section of tanker drivers who lift petroleum products from Ghana’s only refinery, Tema Oil Refinery (TOR), have threatened to stop operation if management of the facility fails to fix its deplorable parking space.
The drivers, on Monday, parked their gas and oil tanker vehicles at the TOR tanker park for hours even when some of their leaders informed them about the refinery’s preparations to work on the park.
According to them, the clay park and passage to the loading gantry, which is about two kilometers, has deep gullies with exposed stones, which become very slippery and risky whenever it rained.
Mr George Nyaunu, Chairman of the National Ghana Petroleum Tanker Drivers Union, told the media that the nature of the park made it difficult for them to commute smoothly to the gantry, a situation he described as very risky.
Mr Nyuanu explained that, even though the tankers park and drove to the gantry empty, it could explode when the master pin detaches and causes it to topple over in the process of keeping sturdy on the slippery galley-riddled park.
He noted that authorities must not wait for such an incident to occur before responding to their needs, stressing that any explosion from a tanker due to the deplorable nature of the park could jeopardize the entire refinery.
He indicated that their action was not politically motivated, therefore, government should see it as an opportunity to fix the park for the general good instead of painting them in other party colours.
Executives of the Tanker Drivers Union
According to him, they had written several letters to the management of TOR, but were yet to get favourable response hence their action, adding that their last letter to TOR was on July 2, 2019, giving them “a seven-day ultimatum to find an amicable solution to the problem. Failure to adhere to this letter, the drivers will advise themselves”.
Mr Shafiu Mohammed, Chairman of the Gas Tanker Drivers Union, on his part, questioned why there were no sheds for waiting drivers, adding that drivers did not even have a place of convenience.
Mr Mohammed added that it was disheartening for them to be treated without dignity as they had to hide in their tankers whenever it rained.
Mr Moses Kwaku Otoo, an officer of the Industrial and Commercial Workers Union (ICU), the mother union of the drivers, appealed to the management of TOR to urgently shapen the park and provide the needed amenities to ensure the safety of drivers, trucks and the refinery.
Meanwhile, Dr Kingsley Antwi-Boasiako, Public Affairs Manager of TOR, says his outfit shared the plight of the drivers and had been interacting with them on the best way to repair the park and the road.
Dr Antwi-Boasiako added that TOR was committed to a safe and smooth transportation of petroleum products from the refinery.
He indicated that they were currently mobilizing logistics including trucks and bulldozers, to begin work on the park and the road leading to the gantry.
Source:GNA
Power development company, Ncondezi Energy (Ncondezi), has signed a Joint Development Agreement (JDA) with China Machinery Engineering Corporation (CMEC) and General Electric Switzerland (GE) to co-develop and construct the integrated Ncondezi 300MW coal-fired power project and coal mine in Tete, Mozambique.
This agreement follows the project’s recent inclusion by Chinese and Mozambique governments on the list of key infrastructure projects in the first half of 2019.
Ncondezi non-executive chairman, Michael Haworth said: “The board welcomes CMEC and GE to the project as partners and co-developers and looks forward to working with two world class companies who will bring complimentary skills, resources and experience to deliver the project.”
CMEC will be the main EPC and O&M contractor for the project, while GE will be the exclusive subcontractor for the power project core technology, including the boiler, steam turbine, generator, and air quality control solutions which will ensure the plant meets the emission standards established by the World Bank.
GE will also supply the required parts and serve as a field advisor for the power plant maintenance.
Ncondezi is expected to hold a 40% equity interest in the project.
A company statement noted that the JDA is the key outstanding milestone to formally engage with the Mozambican Government and state power utility, Electricidade de Mocambique (EDM), on the electricity tariff and key project commercial agreements such as the Power Purchase Agreement (PPA) and Power Concession Agreement.
According to Haworth, the parties will now finalize and agree on the joint development programme to financial close, with a focus on achieving the development co-funding conditions starting with the submission of an updated electricity tariff to EDM and opening up tariff negotiations over the next six months.
He said: “The tariff and PPA process is expected to leverage off existing development work completed and not require material external cost to the company.
“Whilst key milestones are still to come, the JDA is an important step towards the goal of generating power in 2023,” Haworth concluded.
Source: Esi-Africa.com
South Africa’s Public Enterprises Minister Pravin Gordhan has announced that Jabu Mabuza has been appointed as the acting CEO and the interim executive chairman of the South Africa’s utility company, Eskom.
Mabuza will serve at the head of the embattled national power utility for at least three months as Gordhan struggles to find a long-term solution for Eskom’s ongoing leadership crises.
Mabuza’s appointment follows the resignation of Phakamani Hadebe, whose tenure will end on 31 July.
Hadebe announced his resignation as CEO back in May, citing health reasons for his departure.
“I have informed the Eskom Annual General Meeting (AGM) this afternoon [Monday] of my decision to appoint Mabuza as the interim executive chairman for Eskom and acting CEO of Eskom Holdings,” Gordhan said in a statement.
“Mabuza will assume the duty as acting Group Chief Executive Officer (GCEO) for Eskom due to the resignation of Hadebe, who leaves Eskom on 31 July 2019. Within the three month period during which Mabuza will be the Executive Chairman and Acting CEO, the Eskom board will conclude the process of identifying a suitable candidate to become the next Eskom GCEO,” added Gordhan.
Public enterprises spokesperson Adrian Lackay told EWN … “To ensure continuity and to ensure that the board is instructed to really go and embark on a process to find a suitable candidate for group CEO on a permanent basis for Eskom Holdings and to see what the market appetite is for that.”
The Government of Ghana risks being slapped with judgment debts if producers of fuel and power fail to comply with terms of proposals to cancel take or pay clauses in the energy sector.
That is according to the Executive Director of the Kumasi Institute of Technology, Energy and Environment (KITE), Ishmael Edjekumhene.
It follows the disclosure by the Finance Minister, Ken Ofori Atta that the take or pay clause is having a toll on the nation’s finances which is impacting on revenue.
The Minister lamented the impact of the take or pay clauses on the national finances.
The clause means that the government pays for fuel or power produced whether or not it uses them.
For instance, the take or pay clause in the agreement involving oil production by ENI and its partners on the Offshore Cape Three Points (OCTP) is making the government to pay 51 million dollars monthly for unused gas produced at the site.
A situation Mr. Ofori Atta says needs to be stopped.
But Mr. Edjekumhene intimated that this may not come easy.
“If the government is able to get these take or pay contracts reviewed, then that will be a great impact but the question is whether the producers are ready to talk and whether they will agree to the terms and at what extent,” he noted.
Considering the fact that the NPP government inherited about thirty Power Purchase Agreements, it will face a relatively daunting task to get the various producers to agree to their terms.
According to Mr. Edjekumhene, a complete cancellation of the take or pay clause may lead to judgement debts which the government will have to contend with.
“There will only be judgement debt if somebody refuses to reach an agreement but of collectively there is an agreement to buy the terms of the agreement, then that may not be the case as there will be a negotiated settlement,” he added.
Source: Citinewsroom.com
Consumers of LPG in the Republic of Ghana are expected to pay for 8 Ghana pesewas more per kilogram of LPG in order to enjoy the commodity. Thus, consumers who used 14.5kg will be paying almost GHS 1.20p extra on the current price.
Ghana’s Minister for Finance Ken Ofori-Atta announced the 8 pesewas increment when he presented the country’s mid-year budget statement in Parliament, July 29, 2019.
Meanwhile, The LPG Marketing Association, had expected the minister to take advantage of the mid-year budget review, to bring some form relief to Ghanaians.
“We note with grave concern that the product which used to be subsidized, has its price build-up being constituted of more than 23% taxes now.
For instance, in 2015 a typical 14.5kg LPG cylinder cost about ¢48 and a bag of charcoal then was also ¢40 whilst a bag of charcoal is now ¢45 the same 14.5kg LPG cost ¢80,” Secretary of the Association, Justice Adu Mante, said in a statement issued last Thursday.
The Finance Minister also opined that, Government proposes to increase the Energy Sector Levies by GHp 20 per litre for petrol and diesel and GHp 8 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 GHp 90 per gallon.
In addition, Government is also taking steps to relocate the Karpowership to Takoradi to immediately utilize Sankofa gas; Increase power exports by extending the grid to other West African countries; Streamline management of street lighting to ensure accountability and transparency in billing and payments; Increase productive uses of electricity and natural gas to spur industrialization; and engage gas suppliers with a view to reducing the price of natural gas.
