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IMF Not Impressed By Mozambique’s Performance

The International Monetary Fund (IMF) is not very excited by the economic outlook in Mozambique, a country which looks forward to be Africa’s next oil producer and perhaps its largest gas hub in the medium term.

“The outlook remains challenging. Growth has declined in 2016 and is now projected at 3.4% (down from 6.6% in 2015)”, reports the IMF staff team which visited the southeast African country from December 1-12, 2016.

“Inflation, which is expected to peak soon, is still high. Increased spending on wages and salaries is putting pressure on fiscal policy, although the 2016 budget deficit is still expected to narrow to about 6% of GDP, in line with the revised budget law adopted by Parliament in July 2016.

The team does not discountenance the loan that the country’s last government, which gave up power in 2015, had kept hidden. “Total public debt, mostly denominated in foreign currency, increased to distressed levels in 2016 owing to the addition of the previously undisclosed loans worth $1.4 billion (10.7% of GDP) combined with the impact of the exchange rate depreciation.

Mozambique looks forward to its first crude oil production: Sasol the South African synfuel giant is developing some small crude oil reservoirs in an essentially gas prone field onshore. (Fuller details here)The country also expects commissioning, by Italian giant ENI, of a 3.3Million Tons Per Annum (3.3MMTPA) floating LNG by 2020.

But the IMF team, headed by Michel Lazare, were focused on the current economic term sheets.

“There have been several positive economic developments over the last few months”, the report concedes .“The monetary policy tightening since October 2016 has resulted in a rebalancing of the foreign exchange market, with the metical appreciating by about 8% vis-à-vis the US dollar since end-September, following a 40% depreciation over the first nine months of the year.

Moreover, the current account deficit of the balance of payments has been narrowing rapidly, helped by a marked drop in imports and somewhat more stable exports, which are supported by higher global coal prices. As a result, despite limited foreign direct investment flows and donor financing, the stock of international reserves has recently started to increase and is expected to cover about 3.5 months of non-mega project imports at end-2016”.

The report notes that“additional policy adjustments are required to further consolidate macroeconomic and financial stability, and pave the way for a Fund-supported programme.

“Notably, further fiscal consolidation is needed in 2017. Special attention should be given to containing the expansion of the wage bill and gradually eliminating general price subsidies. Protecting critical social programs and reinforcing the social safety net should cushion the impact of these measures on the most vulnerable segments of the population. Preserving fiscal sustainability also requires limiting the fiscal risks presented by some large public enterprises. Mobilizing additional revenue by curtailing tax exemptions and strengthening revenue administration is also essential. In addition, the staff team stressed that a strong commitment to fiscal adjustment is an essential element to facilitate ongoing debt restructuring discussions with creditors.

“On the monetary side, the mission welcomed the central bank’s commitment to reduce inflation while safeguarding financial stability. To address financial sector vulnerabilities, the mission urged the central bank to remain vigilant to risks, ensure adequate liquidity provision to the economy, and continue to step up supervision and enforcement of prudential regulations.

“The mission welcomed the agreement reached with the General Prosecutor’s Office and the Embassy of Sweden on the detailed terms of reference and the selection of an international company to conduct the ongoing independent audit of EMATUM, Proindicus and MAM. In due course, it will be important to consider strong governance reforms to address findings and recommendations from the audit report.

“Discussions on a new IMF-supported program will continue in the first part of 2017. The mission thanks the authorities for their continued hospitality and close cooperation.”

Aveon Offshore delivers the Foundation Support Structures (FSS) For Egina Subsea

Aveon Offshore, the Nigerian engineering and fabrication services company, says it has successfully completed fabrication of six Foundation Support Structures and loaded out these components in respect of the Egina Subsea Production System (Egina SPS) project. The load out and sail away of these structures occurred at the end of November 2016.

The Egina oil field is being developed by TOTAL Upstream Nigeria (24%) in partnership with CNOOC (45%), Sapetro (15%) and Petrobras (16%). Egina is the French major’s third deep offshore development in the West African country. Production is scheduled to begin in 2018.

Aveon Offshore, who was awarded part of the subsea contract by the American oil service company FMC Technologies, says it has already delivered some of the project scope including sixteen Umbilical Termination Boxes and subsea tree fabrications (Frames, Permanent Guide Base and Gasmats) throughout 2015 and 2016 and assures that “the fabrication of remaining subsea tree fabrications will be completed for delivery by the end of the 1st Quarter of 2017.

The fabrication of six Manifolds is also close to completion which will allow delivery during the first half of 2017 together with five completed Subsea Distribution Modules. Twenty one multibore production well jumpers will be delivered throughout 2017 and 2018”.

Aveon Offshore’s contract, awarded in 2013, was for the fabrication and load-out of approximately 5,000 tons of subsea structures including six manifolds with associated Suction piles, various subsea tree frame elements, jumpers and control systems for the Egina Project.

The project is being executed at Aveon Offshore’s 300,000 Sqm fabrication yard in Rumuolumeni near Port Harcourt.

In order to accommodate the workload generated by the project, capex investment was made by FMC Technologies and TOTAL, to upgrade Aveons’ site in Rumuolumeni. As a result a dedicated Carbon Steel workshop, Duplex welding facilities and Painting workshops of over 8,000 sqm, Electrical power and distribution and more were added to the yard’s existing infrastructure and existing premises such as Quayside were completely reinforced. The project has generated more than 3,000,000 productive man-hours in the last three years.

Qua Iboe Terminal Is Back Up

By Johnson Adaeto

ExxonMobil operated Qua Iboe Terminal (QIT) in Nigeria is back, producing excess of 150,000Barrels of Oil Per Day.
The terminal was back up in late October 2016, but the American major has been hush about it.

The facility was shut in in mid July 2016, after Militants breached the crude loading line taking crude from the company’s main export pipeline to the terminal itself.

Network, a Nigerian company which exports its crude through the terminal, was producing over 2,000BOPD as of yesterday. Frontier Oil and Universal E&P, have also re-commenced exporting their crude through the facility.
ExxonMobil exports over 400,000BOPD through the terminal, located in the country’s south east offshore.

In repairing the facility in three months, ExxonMobil had fulfilled a target it set for itself. Shell had taken over eight months to repair a comparable facility: the crude loading line taking crude from the Trans ForcadosPipleline to the Forcados terminal, which was damaged in February 2016. It took eight months to be repaired. Industry analysts say the ease with which ExxonMobil was able to repair its facility, compared with Shell, is down to the nature of the host communities; “the Ibibiosof AkwaIbom state are the most peaceful people in the broad swath of the Niger Delta”, says Sam Ojehonmon, an oil and gas consultant.

Ranking managers at Nigerian independents who export their crude through the Forcados Terminal however allege that “Shell takes its time to repair facilities like this, even though one should not rule out the fact that there’s more vigorous militant as well as oil bunkering activity in Delta state, than in other states in the zone”, one manager argues, insisting he would not give his name “The desire to continue oil bunkering feeds the bombing”, he says. Once there are noral operations, bunkering is less. So the bombings are a way of saying: Keep off, we are busy”.

These comments say something instructive about what the so-called militancy in this volatile region really means.

Kachikwu To Formally “End” JV Cash Calls Thursday

IbeKachiku, Nigeria’s Minister of State for Petroleum, will formally announce the resolution of Joint Venture funding challenges as well as end to Joint Venture Cash Calls on Thursday (December 15, 2016) in Abuja.
All the Managing Directors of the concerned companies, including TOTAL, Shell, Chevron, ENI (Nigerian Agip), ExxonMobil and Pan Ocean are invited.
The highlight of the deal, already widely publicized, is that the outstanding debt of approximately $6Billion owed these companies by NNPC will be paid over the next five years.
IOCs will now fund the operations fully and recover whatever debts NNPC owes going forward.
He Ministry of Petroleum has, several times in different forums, congratulated itself for this achievement.
“What this does is that we have taken NNPC out of the treasury”, declared Gbite Adeniji, Senior Technical Adviser, Upstream&Gas to the Minister of state for Petroleum, at the most recent breakfast meeting of the Nigerian South Africa Chamber of Commerce. “In the next three quarters, you’d find the impact of this agreement on the forex situation”.
Shell, TOTAL, Chevron and ENI have reportedly signed the agreement, according to sources familiar with the deal. ExxonMobil has so far demurred, asking that the Joint Operating Agreement be reviewed so as to reduce NAPIMS interference and regulations under the new scenario.

Electric Vehicles Expected to Account for 15 to 35% of World’s Vehicle Sales in 2040

Electric vehicles could make up 15 to 35% of total new vehicle sales globally in 2040, according to IHS Markit, a Nasdaq listed consulting company focused on critical information, analytics and solutions.

The findings are part of a new research project, Reinventing the Wheel, that will be conducted over the first half of 2017.

“The key question is whether we are approaching a transformative shift akin to the first decade of the 20th century, when the internal combustion engine, cheap gasoline, bicycle technology and mass production combined to usher in the automotive age,” said Dr. Daniel Yergin, vice chairman of IHS Markit and chairman of the study, who wrote about the beginning of the automotive age in his most recent book, The Quest. “Converging developments along multiple tracks are leading us to focus on this important question.”

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Ghana’s Crude Oil Production Shoots up by 50%

By Ngozi Lee, in Accra

Ghana’s production has leaped from 100,000BOPD in August to 150,000BOPD in early November, 2016, as result of the TEN cluster of fields coming on stream.

The cluster, which came online in August, added 50,000BOPD to the existing Jubilee oilfield production, which had recovered from a set back to around 100,000BOPD. “Gross production from the Jubilee field has been steady at around 100,000 BOPD since August, as remedial works on the positioning of FPSO Nkrumah improved.

Forecast 2016 gross production from both the Jubilee field and TEN field come to 89,000BOPD (average annualised).
Jubilee field output had crashed to less than 70,000BOPD for most of the year prior to August, because of the problem crated by the malfunction of the FPSO’s turret system.

TEN is expected to increase in output in 2017, but would still remain less than the anticipated peak production of 80,000BOPD.

Change in Strategy Quickened Aje’s Trip to First Oil

The decision to change the field development strategy from a full, integrated oil, gas condensate and LPG all at once, to a phased development beginning from crude oil production, accelerated the pace of the Aje Field to market.
The Final Investment Decision for the Field was taken at the onset of one of the biggest crude oil price crashes in history, although the asset’s equity partners were not fully cognisant of it as of then. “We took the decision when the price was at $74”, Bolaji Musah, acting Managing Director, Yinka Folawiyo Petroleum (YFP) Company Limited, told a gathering of petroleum geoscientists at a technical meeting recently.
Aje field is located in Oil Mining Lease (OML) 113, in the Benin Basin, offshore Lagos, Nigeria’s financial hub. It commenced commercial production in May 2016.

The industry became even more challenging in the course of the project construction. “We were drilling Aje-5 when crude prices touched $27”, Musah said.
The first cargo of Aje crude, some 218,000 barrels, were exported in mid -September 2016, when crude oil prices were slightly above $40.

“If we had kept to the integrated oil, gas condensate and LPG development at once, we wouldn’t have been here today”, he explained to the Nigerian Association of Petroleum Explorationists (NAPE).
Musah’s statement was a veiled reference to Chevron’s operatorship of the field. The US oil major took charge as technical advisor in 2006 and exited the asset in 2011. Its plan for integrated oil, gas condensate and LPG development was t have taken Aje to first gas in late 2017 and oi production much later.

Aje field reserves are relatively marginal (The FID was taken at 35Million Barrels of Oil P50), even more so for an offshore asset at a water depth in excess of 100metres. “It is a poor boy kind of development”, Musah declared.

Folawiyo Aje Services Ltd (FASL) is a wholly owned subsidiary of YFP and serves as the Technical Advisor for the JV. It is made up of consultants and staff from the JV partners, who include New Age Exploration Nigeria Limited, EER (Colobus) Nigeria Limited, Pan Petroleum (Panoro Energy) Aje Limited and PR Oil & Gas Nigeria Limited. The Aje field currently producers around 6,000BOPD and it is the first full scale commercial oil production in Nigeria, outside of the Niger Delta region.

Leave NLNG Alone, Sell The Fuel Depots, Avuru Urges

Austin Avuru, Chief Executive Officer of Seplat, Africa’s largest home grown E&P independent, has identified five main assets, owned by the Nigerian state, which “are serving as drain on the country’s economy”.
Four of the five are in the oil and gas sector.

In his contribution to the ongoing national debate regarding sale of national assets, Avuru wrote that Nigeria needs“a critical injection of a fairly large dose of foreign exchange to stabilise the economy and arrest the drift of the Naira. The economic management team has put out the figure of between 10 and 15Billion US dollars as the minimum cash injection required. The quick question is: How can you possibly generate that kind of volume of forex over the next six to 12 months?

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GE To Expand Egyptian Facility By Mid 2017

GE Oil & Gas is in the process of almost doubling its local service facility in Egypt from 3,000km2 to 5,000km2.
The property, located in the free zone, is on course to be fully operational by mid-2017. It will be home to more than 100 high-value technical, engineering and service jobs held by Egyptians.

“It will handle the assembly, disassembly, repair, maintenance and testing of products serving firms both in Egypt and internationally”, the company declares.It will include a training centre for GE customers and employees. “The learning programmes will help expand local Egyptian expertise regarding the operation and service of the GE products being handled at the facility”, the company explains.

Egypt’s upstream oil and gas sector continues to be a major bright spot for the country’s economy, following a string of new discoveries in 2015. It’s a sector experiencing growth, and GE Oil & Gas is expanding its local service facility to deliver additional capabilities to customers working in this industry. “We are proud to be a partner to GE, one of the world’s leading providers of advanced technologies and services,” stated Mr. Mohamed Khodair, Chairman of the General Authority for GAFI. “By creating the right investment environment, GE is now able to expand its operations and investment in the free zone which will support Egypt industrially and economically.”

PreSalt Won’t Give Angola What It Wants

Angola’s plan to maintain production over two million barrels of crude oil per day in the near term is predicated on huge discovery of oil in the PreSalt section of the deepwater Kwanza Basin.
But that’s not going to happen, even though Angolan officials have not admitted the stark evidence in front of them.
“PreSalt is the biggest factor in helping Angola accomplish the goal of stabilising production of oil above 2Million Barrels Per Day within the next five years”, Paulino Jeronimo, Chief Executive of the state hydrocarbon company Sonangol, told The Oil &Gas Year, in 2014. At the time, he…
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