The Sankofa Gye Nyame Gas Project: Transparency, Savings And Pricing
There have been lots of assertions that Sankofa Gye Nyame (SGN) projects’ gas price is higher than the price of Gas that is landed in Ghana from Nigeria or is higher than the price of Jubilee gas or TEN gas.
In the development of a project, whether ENI was to develop the project or GNPC was to develop the project, the cost would be about the same or maybe even less when ENI develops it because ENI is the single-A rated company or at worst B+.
If ENI goes to raise money for the project, it would raise money at a far cheaper price than Ghana will raise because this is a 25-year project at least. So we have to look at the total economics of the project and then decide whether we want to embark on this project or not and that was the main criteria for negotiation between ENI and the government of Ghana, unlike Jubilee which is an oil project.
There was no gas in the calculation of whether they would do this project or not. ENI had to make a decision whether they would invest in ‘SGN field development which has about 150million barrels of oil (oil in condensate combined). It also had gas of approximately an additional 180/190 million barrels of gas equivalent. That was the data they submitted to us in the plan of development.
If you look at the amount of the gas, it is much larger than the oil and the revenue or the economics of the oil alone will not be able to support the development of this project. So the only way this project could be developed is if gas and oil field is developed as an integrated project and that was the decision the government took at that time, that yes we want the gas to be the driver of this project.
In summary, it is predominantly a gas field development that was approved. The oil is going to be 40,000 barrels per day for about five years and it drops to 20,000 barrels per day for the next 3 years or so and finally dwindles to 10,000 and no financial institution or no investor would invest in the project only based on the oil flows. The only way an investor would invest in this particular project is if the gas was included. Now we had a big problem with the gas because they had an alternative to liquefy the gas and export it which would then make the risks and economics similar to that of an oil only development.
Remember, with oil, it’s quite easy to finance because there is a very little the country risk in the off-taker. First of all, the field is offshore gas. Secondly, the off-taker would be an international trader or a refinery of repute like TOR. So anybody who is financing this project would look at the risks and economics of the project and the rate of return and also the financing cost. They would also want to know whether financing institutions would be able to get enough banks who have a country risk for that tenure.
Remember, most banks have a country risk for one year, some even six months. When you go to three years, the number of banks drop exponentially. When it goes to five years I can count on my fingers the number of banks that would finance a Ghana project with that tenor. When it goes to 10 years now, we have left banks I can count on my fingers on one hand.
It also depends on what support government is going to give to the project. If government is not going to give any support there would be no bank. I can assure you that for a 10-year gas development project with no government support there will be zero Banks interested. This particular sector is very technical, it is very financial and a lot of people are misconstruing based on literature that they are reading. I even heard somewhere someone said the cost of recovering oil from the ground is $10/bbl.
Jubilee field which is a world-class field has reserved, we can’t even count. It’s going to produce 120,000 barrels per day for the next 10 years or so. The cost of producing oil from Jubilee is more than $24/bbl. Jubilee is a world-class field. There are no many world-class fields in the world.
TEN nor SGN are not world class fields. The cost of producing this oil has been misconstrued to make people think that the people negotiating on behalf of the Government of Ghana knew nothing and don’t have data to support the negotiations.
The negotiations that are done whether you do it by tender or you do it by concession or by direct negotiations is all dependent on the economics. How much is the investor prepared to take as the rate of return for the risk he is taking? Ghana government’s risk is almost zero risk in Ghana yet investors in GoG 10year bonds in Ghana are paying 19% in cedis and almost 10% for the same risk dollar bonds. An investor who is coming here and added risk of an offshore field, deep water – very risky conditions – they expect a higher rate of returns.
The price of gas from such a development will depend on the number of reserves you have, how fast you are going to produce them, and the cost of the project, and the return to the investor. There is no magic, if you change the rate of return you get a different gas price. If you change the cost of development, you get a different gas price. If you change the number of reserves you get a different gas price.
At the time when the petroleum PoD was brought, certain assumptions were made, they assumed how much reserves they can extract from the field based on the science – not the actuals but projections backed by science. This is the proposal that was in the PoD. They assumed the cost of the project of about 7.3bn which include the cost of the FPSO lease and operations for 20 years.
All of that was assumed in the PoD document that went to the ministries.
Of course, the ministry had to consult all the companies like GNPC, Petroleum Commission, most likely in parliament. It’s a public document. It is stated exactly how this project is going to be financed based on how the assumptions are made. It was also stated that if there were any costs savings it would reflect in the price of gas not the price of oil. The project cost would split between gas and oil.
Any savings on the project would only affect the gas price and that is where the focus should be, because there were significant savings at the time of doing this project oil prices were about 4 dollars. The time the PoD was submitted the oil prices were in the 80/90 dollars range. By the time of executing the project prices of oil had dropped and prices had also dropped on the services.
In the negotiation on the gas price the first data that were received were savings of $691 million which translated into some good savings of 55 cents per hundred million. All of a sudden the savings dwindled from $691 million to about less than $200 million. Why? How transparent was that? There were other costs to be incurred. In the agreement, GNPC was supposed to bear those costs. Why?
If you have a project, an overall project where the rate of return is greater than 10% and you can finance less than 10% why would you let somebody finance it. GNPC decided that they could raise some money 5/6 % may be lower than government and finance these additional part of the project which were not as risky as drilling the ENP. GNPC was supposed to raise the money. GNPC had the money.
GNPC had access to the money to raise. What did GNPC do with the money, they lend it to BOST instead of using the money for the project. So at the time that they were supposed to finance it, they didn’t have the money to do it. So they had to go back to ENI. When they went back to ENI, this savings dwindled from $691million to less than $200million.
So the price that were set at $9.8 which would then have benefited for the deductions from the savings of $691million now is going to result in less than $1.5mmmtu which is another problem we have. We should have allowed the total reductions based on the 691million. Then gone and sat down with ENI and our financiers to see how we are going to finance the remaining amount of how much it was going to cost. If we had done the calculation we would have realized that it was better for us to reduce the gas price than to allow ENI or somebody else to invest in this.
Source: Alex Mould, Former GNPC Boss
Ghana-Togo Maritime Dispute: Peaceful Resolution Always Better Than Full-Scale Arbitration -Lawyer
One of Ghana’s Legal luminaries and arbitration advocate, Nana Prof. S.K.B Asante, believes seeking international arbitration on Ghana’s maritime dispute with Togo must be a second option.
The West African country has indicated that it will not hesitate to seek international arbitration if their counterparts from Togo fail to cooperate with its Technical Delegation Team that is negotiating a maritime dispute along the eastern border of the country.
Already, both countries have failed to come to a consensus after three rounds of negotiations on the maritime boundary demarcations.
Speaking in interview with Accra based Joy FM at a breakfast meeting to commemorate the Centenary of the International Chamber of Commerce (ICC), Nana Prof. Asante argued that arbitration must be the final option.
According to him, “peaceful resolution is always better than a full-scale arbitration which is a drawn-out business but I’m hopeful these peaceful methods may prevail. This is a matter which is under the active consideration of the government. I hope that we can resolve the matter peacefully.”
Commenting on the same issue, Ghana’s immediate past Attorney General, Marietta Brew Appiah-Oppong also implored the government to ensure the delimitation of the country’s border boundary with neighbouring Togo to avert future dispute
She said a definite resolution of the border boundary with Togo will save Ghana the experience it went through with the four-year-old maritime dispute with Ivory Coast.
“We should remember that litigation is always the last resort especially when it comes to your neighbouring state or country. I believe that negotiations will take place between Ghana and Togo on that particular boundary,” she said.
Meanwhile, Head of Ghana’s Technical Team negotiating the maritime boundary delimitation with Togo, Lawrence Apaalse, has revealed to the Ghanaian Times that there is no consensus in sight in the raging disagreement between the two countries on their boundary on the high sea.
Mr Apaalse who is the Chief Director of the Ministry of Energy said that though there was no solution in sight, negotiations with their Togolese counterparts would continue.
“Giving the three rounds of negotiations so far, it is quite possible that we are not reaching consensus very soon,” he said.
Togolese officials between December 2017 and May this year, seized two seismic vessels from Ghana setting the disagreement and the subsequent negotiations in motion.
Source: Myjoyonline.com
Noor Abu Dhabi Commences Operations With A Capacity Of 1,177MW
Emirates Electricity and Water Company (EWEC) has revealed that the Noor Abu Dhabi, one of the world’s largest independent solar plants, has commenced operations.
The plant, located in Sweihan in Abu Dhabi, has a total capacity of 1,177MW, and is a joint venture between the Abu Dhabi Power Corporation and a joint effort between China’s Jinko Solar Holding and Japan’s Marubeni Corporation.
The $871 million plant will allow Abu Dhabi to increase renewable energy production, helping offset carbon emissions by one million metric tons per year, the equivalent of removing 200,000 cars off the street, as the region reduces its reliance on natural gas.
The plant consists of over 3.2 million solar panels, over an area of eight square kilometres, and besides its size, it sets a record for the world’s most-competitive tariff, at just 8.888 fils per kWh.
Mohammad Hassan Al Suwaidi, chairman of EWEC, said: “The completion of the project marks a significant milestone in the UAE’s Energy Strategy 2050, launched in 2017, to increase the contribution of clean energy in the total energy mix to 50 per cent by 2050 while reducing the carbon footprint of power generation by 70%.
“This is in line with the sector’s transformation strategy by providing alternative sources of energy that can help us improve the sustainability of the water and electricity sector.”
Source: Esi-Africa.com
Ghana: Vice President To Speak At Ghana International Petroleum Conference
Ghana’s Vice President Dr. Alhaji Mahamudu Bawumia is expected to deliver a keynote address at this year’s Ghana International Petroleum Conference (GhipCon).
The conference, which is under the auspices of the Ministry of Energy, the National Petroleum Authority (NPA), in partnership with the Chamber of Bulk Oil Distributors Companies (CBOD) and the Association of Oil Marketing Companies (AOMC’s), will take place at the plush Movenpick Hotel in Accra, capital of Ghana, from 10th to 12th July, 2019.
The theme for the conference is “Regional Collaboration; A Catalyst for Transformation”.
GhipCon 2019 promises to be an exciting platform for panellists drawn from across the West African sub-region including Senegal, Mali, Burkina Faso, Nigeria, Cote D’Ivoire and Togo.
Panelists would discuss issues of governmental and regulatory policy, and best practices for the advancement of the industry.
For participation, visit https://www.ghipcon.com/2019/site/ or call +233 (0) 54 012 1426.
Nigeria Hosts 2019 PowerAfrica Conference In August
West African country, Nigeria, will be the host for this year’s PowerAfrica Conference scheduled 20th and 23rd August, 2019, in Abuja.
This year’s PowerAfrica Conference, which is the 6th edition, is expected to bring together academics, professionals and other stakeholders to review the state of power and energy challenges in Africa and proffer sustainable solutions.
Ahead of the conference, General Chair of 2019 IEEE PES-IAS PowerAfrica Conference Engr. Tunde Salihu, has explained what the conference is all about, objectives and expectations.
Qtn. Would you please introduce IEEE, PES and IAS?
Ans…IEEE has the largest membership of any professional body in the world. We are responsible for about one third of all standards in electro-technology. IEEE delivers access to industry’s most essential technical information; provides both local and global networking opportunities and offers career development tools to its more than 400,000 members globally.
Both PES and IAS are specialty societies in the IEEE. PES is the Power and Energy Society while IAS is the Industry Applications Society. They are collaborating to sponsor the PowerAfrica Conference, now in its 6th edition.
Qtn. What are the objectives of the conference in Africa?
Ans. PowerAfrica Conference (PAC) seeks to bring together academics, professionals and other stake holders to review the state of power and energy challenges in Africa and proffer sustainable solutions.
Qtn. What is the Power Africa conference in Abuja aiming to achieve?
Ans. The conference theme is: “Power Economics and Energy Innovations in Africa”, because we have recognized that finance is a major problem in tackling energy access and quality in Africa. So, we are trying to address this through new cost-effective innovations.
Qtn. What are the criteria for choosing the hosting country each year?
Ans. IEEE is a world class organization, so the major criteria are the readiness of a proposed hosting country to provide world class facilities and good ambience for the conference attendees. It is also important for the hosting nation to show that there are capable volunteers to host an international event successfully.
Qtn. Who can participate in this event, and how?
Ans. Everybody working in the power sector or carrying out research such as engineers, financiers, lawyers, policy makers, researchers from various departments and stake holders such as power consumers can attend the conference. Also, students are particularly welcome to gain new insights in their profession and widen their network.
Qtn. What, in your opinion, can be done by governments and investors to develop the power sector in Africa?
Ans. The most important effort from government is sincerity. Governments need to find a way to reduce corruption in the area of contract awards so that people can get more mileage from power projects. Governments in Africa also need to carry out campaigns to make consumers realize that energy is expensive and people should be ready to pay cost-reflective tariffs to encourage investment. Investors coming to Africa should try to be more open in their projection and so must come up with more sophisticated business models suitable to the political and economic climate in Africa.
Qtn. Which African countries do you think are currently making progress in the power sector?
Ans. There are many African countries making progress in the power sector in Africa. In the area of energy access for example, Egypt, Morocco, Algeria etc., have achieved or almost achieved 100% access to electricity for their people. However some countries are not doing so well in that aspect, for instance, Nigeria (59.5%) access and Liberia (19.8%). Commendably, some other countries such as Ghana have achieved about 80% access to good quality electricity supply. We also note that governments in Africa are working assiduously to share and access knowledge and information within and without the continent to bring about better access and quality of electricity to their constituents. PAC is a definite partner in this regard.
Qtn. What should delegates to the conference expect at the event?
Ans. Our delegates should expect high quality interactions with top professionals, academics and policy makers who share a common interest in the access to energy for African growth and development. The delegates should also expect a good time networking with people from diverse cultures and outlook so as to enrich their knowledge and horizon. We have also prepared opportunities for them to take in the cultural and technical richness of Abuja, the beautiful capital of Nigeria. I and my wonderful team are leaving no stone unturned to give all conference attendees a memorable experience.
Qtn. What are the objectives of the conference in Africa?
Ans. PowerAfrica Conference (PAC) seeks to bring together academics, professionals and other stake holders to review the state of power and energy challenges in Africa and proffer sustainable solutions.
Qtn. What is the Power Africa conference in Abuja aiming to achieve?
Ans. The conference theme is: “Power Economics and Energy Innovations in Africa”, because we have recognized that finance is a major problem in tackling energy access and quality in Africa. So, we are trying to address this through new cost-effective innovations.
Qtn. What are the criteria for choosing the hosting country each year?
Ans. IEEE is a world class organization, so the major criteria are the readiness of a proposed hosting country to provide world class facilities and good ambience for the conference attendees. It is also important for the hosting nation to show that there are capable volunteers to host an international event successfully.
Qtn. Who can participate in this event, and how?
Ans. Everybody working in the power sector or carrying out research such as engineers, financiers, lawyers, policy makers, researchers from various departments and stake holders such as power consumers can attend the conference. Also, students are particularly welcome to gain new insights in their profession and widen their network.
Qtn. What, in your opinion, can be done by governments and investors to develop the power sector in Africa?
Ans. The most important effort from government is sincerity. Governments need to find a way to reduce corruption in the area of contract awards so that people can get more mileage from power projects. Governments in Africa also need to carry out campaigns to make consumers realize that energy is expensive and people should be ready to pay cost-reflective tariffs to encourage investment. Investors coming to Africa should try to be more open in their projection and so must come up with more sophisticated business models suitable to the political and economic climate in Africa.
Qtn. Which African countries do you think are currently making progress in the power sector?
Ans. There are many African countries making progress in the power sector in Africa. In the area of energy access for example, Egypt, Morocco, Algeria etc., have achieved or almost achieved 100% access to electricity for their people. However some countries are not doing so well in that aspect, for instance, Nigeria (59.5%) access and Liberia (19.8%). Commendably, some other countries such as Ghana have achieved about 80% access to good quality electricity supply. We also note that governments in Africa are working assiduously to share and access knowledge and information within and without the continent to bring about better access and quality of electricity to their constituents. PAC is a definite partner in this regard.
Qtn. What should delegates to the conference expect at the event?
Ans. Our delegates should expect high quality interactions with top professionals, academics and policy makers who share a common interest in the access to energy for African growth and development. The delegates should also expect a good time networking with people from diverse cultures and outlook so as to enrich their knowledge and horizon. We have also prepared opportunities for them to take in the cultural and technical richness of Abuja, the beautiful capital of Nigeria. I and my wonderful team are leaving no stone unturned to give all conference attendees a memorable experience.
LPG Tanker Explosion Kills Crew Member In Turkey
One crew member has reportedly died while fifteen others have been injured in an LNG tanker explosion at the port of Aliaga, Turkey.
At the time of the incident, the Italy-flagged tanker Syn Zania was anchored at the Petkim petrochemical plant operated by the Azerbaijani state oil company SOCAR, media outlets cited Aliaga province’s sub-Governor Erhan Gunay as saying.
He added that a Petkim worker was also hospitalized due to injuries sustained following the explosion that occurred in the evening hours of June 1 at Petkim Pier 5.
In a statement on the matter, Petkim said that a fire “broke out due to an unspecified reason during the connection to the Italian flagged Syn Zania for the filling of liquid hydrocarbons.”
The fire was soon extinguished and teams at the site continued cooling works.
Relevant authorities launched an investigation into the incident, while SOCAR informed that the operations at the petrochemical plant in Turkey’s western Izmir province continued.
Africa Oil Joins Azinam In Orange Basin
Azinam and Africa Oil Corp. have entered into an agreement under which Africa Oil will join Azinam offshore South Africa. Africa Oil will acquire a 20% participating interest in Block 3B/4B in the Orange Basin.
The acquisition is subject to customary regulatory consents, following which Africa Oil will become the operator of Block 3B/4B.
Azinam will retain a 20% participating interest post completion. License partner Ricocure (Pty) Ltd.’s participating interest shall remain unchanged at 60%.
Block 3B/4B is located in the Deep Western Mid-Orange Basin South Africa, extending from circa 120 to 250 km offshore. The block covers an area of 17,581 sq km and lies in water depths ranging from 300 to 2,500 meters.
Block 3B/4B sits at the center of an exciting emerging play which is being explored by a number of international oil & gas companies.
The block contains play types and prospects similar to those being targeted by majors in adjacent blocks.
During the Initial License Period of three years Azinam, Africa Oil and Ricocure shall carry out a regional subsurface review of existing seismic, geological and engineering data and may reprocess parts of the existing 3D data in order to high-grade the exploration prospects on the Block.
Source: petroleumafrica.com
Two Die In Lagos Pipeline Explosion
At least two people were killed after a pipeline fire outbreak in Lagos, Nigeria on Thursday morning.
A spokesman for the Lagos state emergency management agency said oil bunkering activities caused the incident in the Ijegun area.
“But it is pertinent to know that we are able to rescue 12 people alive, four are now at LASUTH (Lagos State University Teaching Hospital) receiving treatment and eight are being taken to the burns unit at Gbagada.
But it is pathetic to know that in our preliminary investigation, we gathered that we have two mortalities but the operation is still ongoing and by the time we finish the operation we will be able to give you the comprehensive report”, said Lagos State Emergency Management Agency official, Olufemi Oke-Osanyintolu.
An eyewitness recounts the chilling incident.
“That point you see burning now, it is the actual point where the operation happened so that’s why you are seeing this fire, it is not just caused by an ordinary person, it is just caused by these bad guys so it pass through this gutter down to the canal. So the fire, you can go there and see by yourself. You can see all the whole shop along the gutter where the product has passed through all of them got burnt even people got burnt. Some are in the hospital now. People who residents are living inside about four (inaudible) away from here”, Jude Odiah said.
Lagos state firefighters were at hand to quench the inferno. These incidents occur relatively in one of Africa’s largest oil exporter.
While fuel is cheap, many live in extreme poverty in Africa’s most populous nation.
On Tuesday, July 2, more than 50 people were killed when a fuel truck spillage in the southeast of Nigeria caught fire.
Source: Reuters
Ghana: We Have Sufficient Fuel To Keep Our Lights On-GRIDCo
Ghana’s power transmission company, Ghana Grid Company (GRIDCo), has explained that the West African country has sufficient fuel to keep its generation plants working, hence there is not going to be power crisis.
According to GRIDCo, the country experienced power crisis in the past because of non-availability of fuel to keep the power plants running.
Speaking in an interview with energynewsafrica.com, Director of Systems Operation at GRIDCo, Mark Baah said due to the arrangement government has put in place, there is fuel to power the generators.
“The main cause of the past erratic power supply, christened ‘dumsor’, was as a result of unavailability of crude oil or gas, but there’s abundant gas now to fuel our thermal plants to generate power. And so, we have no problem in that regard,” he explained.
He added that “we are looking forward to implementing our arrangements in the long term in order to avert any situation of erratic power supply.”
According to him, some of the plants, like Karpower and Aksa, run on heavy fuel oil and “we are reliably informed that there’s enough fuel to power them.
“Others, like the Asogli Kpone Thermal and VRA plant in Tema and Aboadze, run on gas and we generate gas from here (Ghana) and import some from Nigeria, thus, the generators that operate on this fuel are very efficient. As I speak to you now, we have no challenges with fuel.
“I want to assure Ghanaians that, we will continue to give them constant and regular power supply,” he ended.
Aker BP Ready To Drill Norwegian Sea Well
Norway’s Petroleum Safety Authority (PSA) has given its consent to Aker BP to drill an exploration well in the Norwegian Sea, using the Deepsea Stavanger drilling rig.
The consent applies for drilling of the exploration well 6608/6-1 – named Vågar – in production license 762 in the Norwegian Sea.
Aker BP is the operator of this license with an ownership interest of 20 percent. Other licensees are Equinor, with a 60 percent, and Petoro, with a 20 percent interest.
Aker BP has already secured a drilling permit for this well from the Norwegian Petroleum Directorate (NPD).
The drilling location is around 100 kilometers north-east of the Skarv field and 170 kilometers south-west of Røstøyan.
According to the safety watchdog’s statement on Thursday, the drilling of the well is scheduled to start in the third quarter of 2019 and drilling operations are expected to last 27 days.
This is the first exploration well to be drilled in the license. Water depth at the site is 288 meters.
The well will be drilled by Deepsea Stavanger which is a semi-submersible mobile drilling rig of the GVA 7500 type, built in South Korea in 2010. It is owned and operated by Odfjell Drilling.
The PSA issued Deepsea Stavanger with an Acknowledgement of Compliance (AoC) on March 16, 2017.
Maintaining Safe And Reliable Energy Infrastructure: A National Security Concern
In March 2019, and at the height of one of the most recent power outages across the country, news broke that one of the transmission towers near the Head office of Ghana Grid Company (GRIDCo) at Tema has fallen over onto another tower, leading to the loss of 180 megawatts of power; creating power outages in parts of Tema, Accra, Kasoa and Kumasi. Officials of the state utility discovered that the bolts holding the pylon had been loosened causing it to fall over, concluding that it was an act of vandalism and not an attempted theft.
When the Minister of Energy Mr. John Peter Amewu later had the opportunity to tour the tracks, he also concluded that it was an act of sabotage by some unscrupulous individuals to thwart the efforts of the government in ensuring uninterrupted power supply. The minister also alleged that the act was possibly to score some political points by making the government unpopular.
Following this incident and within a space of two weeks, there was a reported arsonist attack on pipelines which belonged to Cirrus Oil Services, a private oil company at the Tema energy enclave. The report was that a suspected person had parked used car tyres on the pipelines and set them ablaze.
Although the pipelines were not in use at the time because they were newly constructed and undergoing a leak test with water in the lines, the development raised a lot of concerns at the time because they were initially thought to be conveying gas and connected to one of the generating plants within the Tema enclave.
But while there has been past attacks on energy infrastructures, these two incidents amplifies the vulnerability of Ghana’s energy infrastructures to deliberate physical attacks. It brings to the fore the need to urgently protect these assets from the many potential threats which includes malicious vandalism and theft of essential equipment belonging to the power and oil sectors of the energy industry.
Due to the greater risk of accidents that could result in loss of life, significant environmental harm, and/or disruption to the reliability and continuity of energy systems, maintaining safe and reliable energy infrastructure is a matter of national security. It is a national security issue also because of the central role these facilities occupy in the socio-economic development of the country. Again, it remains a national security concern because these illegal activities are sometimes perpetuated by criminal minds to intimidate and coerce policy changes.
Widespread Issue
Attacks on energy sector assets have become increasingly coordinated and prevalent in all regions around the globe. The threats to these vulnerable assets are quite significant and they are occurring with increasing frequency, and complicated by their remote and dispersed locations.
In the power sector for example, equipment like distribution transformers are being vandalized for their copper windings, oil, bolts and nuts. Transmission towers also come under attack for their members (angle irons) and bolts and nuts. Some of the clean transformer oil, aluminum and copper conductors, angle irons, bolts and nuts finds their way into the open market for purposes of cooking, and for smelting (door handles, caskets, three-legged pots etc.) and fabrication works.
Within the oil and gas sectors, illegal tapping of pipelines and bunkering are familiar acts of stealing petroleum by hacking into the systems and syphoning off oil and gas, and on most occasions causing spillage and compromising transmission systems.
Poor infrastructure, unemployment, and greed have been identified as some of the factors that influence people to attack energy infrastructures. Another reason has been linked to lack of trust between oil companies and host communities. Some acts of vandalism occur as a prank, while other persons vandalize to vent anger, frustration or anxiety without personal confrontation.
Nigeria, Mexico, Iraq, Russia and Indonesia are listed as the top five countries most plagued by oil theft, with close to 75% of the stolen oil finding its way into the international oil market, with the rest being refined at “artisanal refineries”. In Nigeria, it is reported that some unscrupulous Niger Delta indigenes and foreigners collaborate to carry out the illegal activities mostly during the night at oil terminals, pipelines and wellheads.
Cost
The socio-economic and environmental impacts of theft and vandalism on energy systems could be huge, not to mention the negative impact it could have on business reputation and the potential damage to stakeholder confidence and value.
The attacks poses a greater risk of accidents that results in human fatalities, and significant environmental harm through pollution and fire. They lead to financial losses, and sometimes disruption to the reliability and continuity of energy systems. Leaks in pipeline systems could result in loss of corporate reputation, and also may in some cases lead to prosecution under environmental legislation. Other concerns is that the repeated attacks on the assets often impedes the expansion of energy systems, loss of economic activities for local communities, and loss of revenue to government; resulting in the reduction of funding for development initiatives.
In Nigeria for example, vandalism of pipelines has become a major issue for the state to fight on daily basis. For an economy that is heavily reliant on petroleum revenue, any form of attack on its pipelines come with a great socio-economic effect.
A recent publication by “World Pipeline” magazine shows that the Niger Delta which holds 95% of Nigeria’s oil reserves, accounts for over 90% of the region’s export and foreign exchange earnings, with the total Nigeria revenue being over 70% of this. The report continue that, in the area of the Niger Delta, oil theft has grown to such a degree that Nigeria is at present losing over 800,000 barrels per day (bpd) of crude oil, with this situation reflecting in Nigeria’s oil production decline from 2.2 million bpd to 1.4 million bpd between 2016 and 2017.
According to Shell Nigeria, 90% of its pipeline leaks are as a result of illegal activities. It reports that the number of sabotage-related spills is reported to have increased to 111 in 2018 compared to 62 in 2017, and that since 2012 the company has removed more than 1,160 illegal theft points. Some of the spillage recorded caused destruction to farms and lands, directly reducing the area of arable land. Pollution of water courses, as well as flora and fauna affected marine, aquatic life and water sources.
Copper theft is also impacting negatively on the bottom line of power utilities, and having a devastating effect on the South African economy. According to the South Africa Chamber of Commerce and Industry’s (SACCI’s) “copper theft barometer”, the stealing of copper cost the economy between $415 million and $581 million per year. The South Africa power company Eskom is reported as spending roughly $166 million a year to replace stolen copper cables. The stealing of cables have also been blamed for the several deaths due to electric shocks and burns arising from engineers carrying out repair works on vandalized sub-stations and copper cables.
Fighting the Menace
The fight against energy infrastructure theft and vandalism is being addressed seriously from diverse angles by state authorities, energy firms, and the public as a whole.
In South Africa for instance, the fight against infrastructure theft is being dealt with through intelligence-driven investigations. While industry players coordinate to fight the menace, the courts are also handing out significant sentences to perpetrators. Eskom is substituting copper conductors with aluminum, embossing unique markings on all aluminum conductors, replacing all normal bolts on pylons with anti-theft bolts, engraving support lattices on steel pylons with Eskom’s name on the steel. The power utility is also installing alarms on overhead lines so that if the line is cut or tampered with, the alarm triggered in the control room and the reaction unit is immediately dispatched to the location.
Shell Nigeria is partnering local communities to effectively patrol pipelines’ rights-of-way through direct surveillance and Global Memorandum of Understanding (GMoU) surveillance, proactively engaging government security agencies to prevent crude theft and vandalism. Shell is also undertaking awareness campaigns to educate community members, surveillance contractors and general public of the requirements of a 1990 Pipeline Act which prohibits any third-party activities 100ft from existing oil and gas right-of-way.
In the U.S. and Canada, security standards have been framed to help protect public safety, the environment and critical infrastructure from acts of vandalism and sabotage. The standards have been designed as a tool for producers to evaluate site security, introduce security solutions, and execute security incident management solutions as well as effective emergency response programs.
The oil giant BP, is among the list of companies using unmanned aerial vehicle (UAV) technology or drones for the purposes of monitoring and mapping infrastructure such as pipelines and electric transmission lines. The drones enables the companies to get a view without having to send crews out on foot. Aside from the convenience and time-savings, UAVs takes care of safety issues; for instance where terrain is dangerous, around water crossings or where wildlife is prevalent.
Ghana could learn from these and many other tried and tested examples to fight the menace which remains as a national security challenge, due to the pivotal role of energy in the socio-economic development of the country.
Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security ©2019
The writer has over 22 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.
African Energy Chamber’s Investment Push In China Attracts Biggest Players
A roadshow organized by the Africa Energy Chamber in Beijing in the Republic China for the upcoming licensing bid round in Equatorial Guinea attracted the biggest Chinese energy companies participating in the show.
The roadshow in Beijing was aimed at showcasing the 27 oil & gas blocks on offer under the country’s 2019 oil & gas licensing round, and is promoting the high-potential that Equatorial Guinea has in minerals such as gold, diamond, base metals, bauxite and iron ore.
The winners would be announced during the upcoming GECF’s 5th Gas Forum in Malabo on November 27th, 2019.
This is the first investment roadshow organized by the Chamber in China, as it pursues its strategy of channeling Africa’s global outreach to energy investors and stakeholders worldwide.
“It has confirmed the appetite of Chinese companies for Africa, with the biggest public and private sector companies responding to the Chamber’s call to explore investment opportunities in Equatorial Guinea, including PowerChina, Sinohydro, Sinopec, Sinochem, Zhenhua Oil, CNOOC, CMEC, China Minmetals, Shenergy Group and CPP among others,” a statement issued by the African Energy Chamber and copied to energynewsafrica.com said.
“This two-day roadshow is a demonstration of what the Chamber can accomplish for African governments and private stakeholders. Our resources and reach have grown tremendously over the past few years and enabled us to position ourselves as a pillar of Africa’s global investment outreach. I am looking forward to seeing more deals being signed soon,” declared NJ Ayuk, Executive Chairman at the Chamber and CEO of the Centurion Law Group.
“We thank the Government of China, the Chinese energy sector for putting their trust and funding in the Chamber to organize this very successful roadshow, which is the first of many more we will be organizing in the future in China.
“The pro-activeness of the Ministry of Mines and Hydrocarbons to reach out to global investors is a winning strategy that should be followed by many others amidst such competitive market conditions.
“The Chamber would always be ready to support African governments and companies seeking to attract investors and build successful industries at home that promote local content, job creation and prosperity,” said Mickael Vogel, Director of Strategy at the Chamber.
“The Chamber’s future roadshows will be taking us back to Beijing but also to global energy centers such as Singapore, Moscow, Dubai, London and Houston. Africa is the last true global energy frontier and the time to engage with investors is now.”





ExxonMobil Opens Office In Ghana
US oil and gas giant, ExxonMobil has opened its new office in Accra, Ghana to progress offshore exploration programs.
ExxonMobil Exploration & Production Ghana (Deepwater) Limited acquired rights in the West African country, in 2018 to explore the ultra-deepwater block Deepwater Cape Three Points. The petroleum agreement was ratified in April 2019.
ExxonMobil plans to begin 3-D seismic acquisition later this year. Once the seismic program has been completed, together with partners Ghana National Petroleum Commission (GNPC) and GOIL Offshore Limited, the company will evaluate the potential for drilling its first exploration well in the country.
“This office will help us progress our exploration program in Ghana,” said Pam Darwin, vice president of sub-Saharan Africa exploration and new ventures at ExxonMobil. “We look forward to working closely with our partners and the government to bring value to the Ghanaian people through our business and community involvement.”
“We appreciate the support we have received from all of our stakeholders in Ghana, particularly from Energy Minister John Peter Amewu and his team,” Darwin added.
The Deepwater Cape Three Points block, located 57 miles (92 kilometres) off the coast of Ghana. It measures approximately 366,000 acres (1,482 square kilometres) in water depths ranging from 5,085 feet to 9,350 feet (1,550 meters to 2,850 meters).
ExxonMobil holds 80 percent interest in the Deepwater Cape Three Point block while Ghana National Petroleum Corporation holds 15 percent with GOIL Offshore Limited holding the remaining 5 percent.









Nigeria Oil Tanker Explosion Kills At Least 50 People
At least 50 people were reported dead, and 101 others seriously injured after they rushed to scoop fuel from an overturned tanker, which exploded in central Nigeria, officials said Tuesday.
The incident happened on Monday afternoon after a fuel tanker trying to avoid a pothole overturned and fell off the road in Ahumbe village in Benue State, according to Baba Aliyu, who works with Nigeria’s road safety commission.
The death toll could rise as many of the injured were in a critical state, Benue State government spokesman Terver Akase told CNN.
Nearby shops were also burnt down in the explosion after fuel from the crash spilled on them, officials said.
Fuel tanker accidents are frequent in Nigeria, an oil-producing nation, where crude supplies are often transported by road.
Nearly 10 people died when an oil tanker exploded in Lagos city last June. More than 60 people were killed in another tanker accident in Anambra state in 2015


