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Chamber Opens Applications for 2020 Africa Energy Fellowship Programme

Selected fellows will be provided with critical support to local content development programmes across the continent.

The African Energy Chamber is launching its first Fellowship Programme in 2020.

The aim is to provide young energy professionals with the tools and experience to become future leaders across the industry.

Applications are open throughout October 2019, for a one-year programme that will start in January 2020.

In line with its growing international cooperation, the Chamber will be welcoming young professionals from across Africa, North and South America, Asia and the Middle East to join its office in Johannesburg for 12 months. The Fellows will be provided with an opportunity to apply analytical skills on concrete challenges and problems across the energy sector, and an opportunity to specialize in upstream oil & gas and local content development. They will be working in collaboration with the Chamber’s dedicated oil and gas sector advisors and experts located around sub-Saharan Africa, and help deliver research and consulting projects that address on-the-ground challenges faced by Africa’s oil & gas sector.

“Our range of partners from across government agencies, national and international oil companies, Oil service companies, investment banks and institutional investors offer the perfect network and ecosystem for a young professional to develop herself or himself and grow as a leader,” declared NJ Ayuk, Executive Chairman at the African Energy Chamber and CEO at the Centurion Law Group. “We are truly excited to get this fellowship programme started and see it grow over the coming years. Ultimately, our goal is to contribute to training and nurturing the next generation of energy leaders by bringing on board any young people willing to grow and contribute to the development of Africa’s energy industry”

Selected fellows will be joining the African Energy Chamber for 12 to 16 months and join a team that provides comprehensive and thought-provoking research on the African oil & gas industry and energy sector at large, along with critical support to local content development programs across the continent. A large part of the roles will focus on sharing and presenting data and informed views to the Chamber’s partners and the industry, and developing the right capacity building programs to institutional and private parties across the continent.

The 2020 Fellowship Programme will be focusing on the following key aspects of the value-chain: upstream oil & gas, midstream, downstream and local content. Interested applicants should send their resume at the soonest to mickael@energychamber.org and highlight the contribution they wish to bring to the work of the African Energy Chamber.


Between extortion and the sanctity of Petroleum contracts in Nigeria, DRC and Senegal

By NJ Ayuk, CEO of Centurion Law Group

In mid-August 2019, a commercial court in the United Kingdom gave reason to a claim by engineering company Process and Industrial Developments Ltd (P&ID), which demands over $9Billion from the Nigerian government over a failed gas deal. The decision follows a 2017 arbitration award and turns it into a legal judgement, which could allow P&ID to seize Nigeria’s international commercial assets.

P&ID’s claim is based on a 2010 contract signed with the government of Nigeria for the construction and operation of a “gas processing plant to refine natural gas (“wet gas”) into lean gas that Nigeria would receive free of charge to power its national electric grid,” the company’s website states. Under the deal, the Nigerian government should have provided the necessary infrastructure and pipelines needed to supply gas to the plant. P&ID would build the plant for free and then operate it and commercialize the output for a period of 20 years.

The company claims that over this period it would have earned $6.6Billion in profit, an incredible figure that becomes ever more fantastic as the company claims that the yearly 7% interest it is supposedly charging on this capital has now accrued to $2.4Billion, at the rate of $1.2Million a day, which closes the full amount at a perfectly round $9Billion.

The whole situation is in itself extremely puzzling.

Afterall P&ID, a company created specifically for this project, is claiming it is entitled to the full amount of what it would have gained over a period of 20 years of work, even though that period would not be over for another decade and some. Further, it is already charging interests on capital it would, if the project went forward, it would still be a decade away from generating. On top of that, it has chosen to pursue the matter in a British court, and has a separate law suit in an American court, when the contract was signed in Nigeria, under Nigerian law, and should be pursued in a Nigerian court, as the Nigerian legal team has repeatedly stated.

Nigeria is seeking an appeal to the decision, but P&ID is not wasting any time in trying to seize Nigerian assets abroad, and it might well manage to do so, at least in part.

Further, P&ID has never even broken ground on the construction of this power plant, which it claims would have benefitted so many thousands of Nigerians. The company has reportedly spent $40Million on preparatory work, although it is impossible to attest what that work has been.

Even just looking to the amount spent, work done and compensation sought, the figures seem simply absurd. $9Billion corresponds to 20% of Nigeria’s foreign exchange reserves, it would be unthinkable that a nation state would pay that much capital to a small unknown enterprise that invested not but a small fraction of that amount in the country and done none of the contracted work. Further, it is perplexing that a British court would even consider such a decision.

However, this issue represents an important cautionary tale for African governments everywhere. Very few things matter more in the struggle to attract investment and build a favourable business environment that will push the economy forward than the absolute sanctity of the contracts signed.

Investors need to know that their investments are safe and that they will be protected by the law in case the other parties falter on their obligations, as it seems to have happened with the Nigerian government. It is by no means the first time a situation like this happens. Just in March, an international court ordered the Democratic Republic of Congo to pay South African DIG Oil Ltd $617Million for failing to honour two oil contracts. This is an unacceptable and unjustifiable loss of capital for the people of the DRC. Particularly taking into account that the loss is incurred because the country’s leaders failed to comply with a contract that could have brought a considerable amount of wealth for the country for many years to come, in both royalties and taxes, as well as help develop its oil industry.

Senegal’s government under President Macky Sall was very smart to avoid this kind of litigation when it was confronted with the issue of the Timis Corporation and its ownership of acreage that included the Tortue field, which is estimated to contain more than 15Tcf of discovered gas resources. If President Macky Sall would have proceeded with terminating a valid contract for the acreage, the Timis Corporation would have engaged in arbitration and would have probably gotten a favorable judgment against Senegal. In the process, the gas fields would have sat dormant and produced no returns for Senegal and its citizens. Sometimes leaders are confronted with tough choices and it takes a profile in courage to find solutions and still respect the sanctity of contracts.

Even with criticism from civil society groups, Equatorial Guinea has honored contracts with U.S. oil companies that many oil analysts believe are unfavorable to the state. This principle has kept Equatorial Guinea’s oil industry stable and US firms continue to invest in new projects like the EGLNG backfilling project with Noble, Atlas Oranto, Glencore Marathon and the state.

African leaders and African nations cannot afford this sort of mistakes anymore. If on the one hand, contracts must be respected, protected and followed through, the people in charge of evaluating and signing those contracts must have the project’s feasibility as the dominant reasoning behind any decision. What is the purpose of signing contracts for fantastic projects where there is neither the capital nor the conditions to pull it through? Our economies live out of their reputation too. No investor wants to work in a system where contracts are not honoured and where their investments are not protected.

While P&ID’s request for $9Billion in compensations seems absurd, companies that see the contracts they sign with African governments, or any governments, disrespected, must have the right to claim compensation, just in the same way that African leaders must be responsible for the contracts they sign and must make sure that situations like this do not repeat themselves. Enough money has been wasted on lawsuits that could be used to benefit the lives of Africans. This is true for the oil and gas industry and in any other industries.

NJ Ayuk is the CEO of Centurion Law Group, Executive Chairman of the Africa Energy Chamber, author of the new book, Billions at Play: The Future of African Energy and Doing Deals.

 


Sonangol Preps for First Presentation on Sale of Assets

By Veronica Gespucci, in Windhoek

Sonangol will be making its first technical presentation to the public on its planned asset sale in October 2019.

It will be in Luanda.

The Angolan state hydrocarbon company will be selling equity or whole in a total of 50 subsidiary companies and other assets, twenty of them in 2019.

The sale is part of the Privatisation Programme (ProPriv), which lists 195 state-owned enterprises to be fully or partially privatised by 2022.

There will be a roadshow in Dubai after the Luanda outing.

Sonangol -owned assets make up about a quarter of the entire Privatisation bucket list. The once powerful state energy firm will dispose of 20 companies and assets by December, with 26 planned to be sold by 2020, three in 2021 and one in 2022.

The list includes divestments in the subsidiaries and assets of Sonangol Cabo Verde – Sociedade e Investimentos and Óleos de São Tomé and Príncipe, as well as stakes in Founton (Gibraltar), Sonatide Marine (Cayman Islands), Solo Properties Knightbridge (United Kingdom), Societé Ivoiriense de Raffinage (Cote d’Ivoire), Puma Energy Holdings (Singapore) and Sonandiets Services (Panama), by 2021.

Sonangol will sell also its stake in WTA-Houston Express and French company WTA, as well as assets in Portuguese real estate companies Puaça, Diraniproject III and Diraniproject V, in Sonacergy – Serviços e Construções, Sonafurt International Shipping and Atlantis Viagens e Turismo.

Sonangol also holds assets to be privatised in Angolan companies in the Health, Education, Transport, Telecommunications, Energy, Civil Construction, Mineral Resources and Oil and Banking sectors.

Sebastião Gaspar Martins, Sonangol’s non executive chairman, says the sale of these non-core assets will make the company “financially more robust.” Sonangol is expected to have the wherewithal, going forward, to focus on hydrocarbon properties.

 


Chikezie Nwosu To Take Charge as Chief Executive at Waltersmith

Walersmith Petroman has appointed Chikezie Nwosu as Chief Executive Officer.

He will be in total charge of running the assets of the company, including the 7,000BOPD Ibigwe field in Oil Mining Lease(OML) 16, onshore Eastern Nigeria, the 5,000BSPD refinery currently under construction, and the 8% equity that the company has in NDWestern, which itself holds 45% in OML 34.

Abdulrazaq Isa and Danjuma Saleh, the company’s co-founders and Executive Chairman and Executive Vice Chairman respectively, will transmute, in the next six months, to non –executive chairman and non-executive vice chairman respectively. They will move “upstairs” to run a holding company, which includes other investments the company currently has and will have in the future.

Nwosu’s appointment is the first of many such appointments of planned at Waltersmith, which, Mr. Isa says, “is moving to the next phase of evolution” where owner/founders no longer run the company on hands on basis.

“We’d have a brand new management, including a CFO and a General Counsel, taking office in our new headquarters on Glover Road in Ikoyi”, Isa says. They take over a debt free company and set new targets for growth”. Isa insists, repeatedly that, as an owner/founder who is still going to be very much around, he wouldn’t be looking over Nwosu’s shoulders.

Nwosu is a widely regarded technical operative in the Upstream sector of the industry in Nigeria.

Chairman of the Nigerian Council of the Society of Petroleum Engineers (SPE) for 2017/2018, he was, until December 2018, the executive director, technical at Addax Petroleum.

He, in fact, had been interviewed for Executive Director position at Seplat in 2017; with the potential to take over as CEO at some point in the next three years. But he didn’t take it.

Between his leaving Addax and taking the Waltersmith job, Nwosu was Executive Vice President at Tolea Energy in the Netherlands. He had spent 16 years with the AngloDutch major Shell before leaving as Regional Discipline Manager, Petrophysics, in 2012, when he joined Addax as General Manager, Development & Asset Management.

 


ENI Opens the Tap in Egypt’s Baltim South West

Italian explorer ENI has started up production of the offshore Baltim South West gas field in Egypt.

It is another fast discovery to market by the aggressive operator.

ENI discovered the field in June 2016 and took Final Investment Decision (FID) in January 2018. Baltim South West thus comes on stream 39 months after discovery and 19 months after FID.

The field is located in shallow waters 12 kilometres off the Mediterranean coast of Egypt in the Baltim South development lease. It lies within the Great Nooros area, some 10km from the Nooros field, an area in which ENI says it “first recognised great gas production potential and where it is conducting other new exploration projects”.

With the start-up of the first well, BSW1, the field is now producing with an initial rate of 100 million standard cubic feet per day (scf/d) from a new offshore platform connected to the existing onshore Abu Madi Gas Plant through a new 44 km long, 26 inch diameter pipeline.

The development programme anticipates the drilling of further five wells with the objective of achieving a production target of 500Million scf/d by the second quarter of 2020. Volumes produced by Baltim South West will further contribute to Egypt’s natural gas export capacity. The overall gas potential from the Great Nooros Area is approximately 3Trillion cubic feet (Tcf) of gas in place, of which about 2Tcf are in the Nooros field and the remainder in Baltim South West.

ENI has a 50% interest, through its subsidiary IEOC, while BP holds the remaining 50% interest of the contractor’s stake in the Baltim South development lease. The project is executed by Petrobel, the Operating Company jointly held by Eni and the state corporation Egyptian General Petroleum Corporation (EGPC) on behalf of Medgas, jointly held by contractor (ENI and BP) and EGPC.

 

 


Sylva in Petroleum: Four Years of More of the Same

An Editorial Opinion of the Board of Africa Oil+Gas Report

It is unlikely that Timipre Sylva, a career Nigerian politician more likely keen on dealmaking than overseeing reforms, will follow up on the hot button issues of value addition in Nigeria’s Hydrocarbon landscape.

The passage of the Petroleum Industry Bill, the sale of a slice of NNPC equity in upstream JVs, disposal of state owned infrastructure that the corporation is unable to properly run, the removal of gasoline subsidies: these value yielding initiatives will not likely be delivered in the next four years.

Sylva’s predecessor as Nigeria’s Minister of State for Petroleum, Ibe Kachikwu, took a stab at some things, but he didn’t get very far. He succeeded in pushing the payment of cash call arrears for JV operators, got the President to sign off on policy to licence gas flare sites and launched a policy document each on oil and gas.

But in the absence of an act of parliament reforming extant hydrocarbon laws and operational norms, with those policies at its heart, Mr. Kachikwu’s documents have gone nowhere.  Those policy documents suffered the same fate as Mrs. Diezani Allison Madueke’s Gas Revolution Policy and President Olusegun Obasanjo’s Oil and Gas Reform initiatives.

At the core of the current challenges are two things (1) President Muhammadu Buhari’s statist mindset and his disdain for the Nigerian business class (2), the President’s unwillingness to closely track the ministry’s work, which provides undue advantage to personal aides, especially his chief of staff, Mr. Abba Kyari, to hijack the ministry of petroleum resources and run an upstream lease management agenda focused on handling assets to the NPDC rather than supporting transparent bid processes.

NNPC will remain as powerful and unaccountable as it was in the last four years; a commercial entity pretending to be regulator. NPDC, its operating subsidiary, will pay neither rent nor royalty for acreages it acquires and the state hydrocarbon company will continue spending billions of dollars to refurbish  moribund refineries that otherwise should be privatised –which translates to frittering away what should otherwise flow into the treasury, for the next four years.

We, at Africa Oil+Gas Report would be enormously encouraged if Mr. Sylva could be both courageous and tactful enough to cut through the fog and convince the President to provide an environment for the flourish of investment into what is potentially Africa’s largest hydrocarbon industry. But from where we are sitting, we don’t see that happening.

 


Mixed Signals from Tanzania’s Domestic Natural Gas Market

By Sully Manope, East Africa Correspondent

Indonesian owned, Paris listed operator, M&P, reported a sizeable drop in natural gas production in Tanzania for first half 2019.

But Orca Exploration says it had a surge in Natural gas deliveries from the Songo Songo gas project in the same country.

Each of the two companies operates one of the two key natural gas projects that feed Tanzania’s industries, power plants and factories.

M&P operates the Mnazi Bay project, which pumps gas directly into the 532 kilometre National Natural Gas pipeline and connects Mtwara, where the Mnazi Bay gas field is located in the south eastern region of the country with the commercial capital Dar es Salaam.
Orca Exploration operates a natural gas processing facility on Songo Songo Island, off the coast of southern Tanzania.

M&P says its natural gas production (gross) dropped 17% to 66.2Million standard cubic feet per day in first half 2019, from 77MMscf/d averaged in first half of 2018. It cites “a result of the lower demand for gas because of the early and heavy rainy season, which led to a marked increase in hydropower generation capacity at the expense of gas demand”

But Orca Exploration reports its own supply shot up by 68% to 56.6Million standard cubic feet per day (MMscf/d), year to year in the second quarter of 2019.The same project had delivered 33.7 MMscf/d on average in second quarter 2018. Indeed, in the first six months of 2019, the production averaged 59.0 MMscf/d.

Orca says the surge in deliveries “is as a result of higher sales volume to Tanzanian Electricity Supply Company (TANESCO)”. Orca’s plant supplies natural gas to a 25 km 12″ offshore pipeline and a 207 km 16″ onshore pipeline and is used by the power sector and industrial markets in the Dar es Salaam area.

 


Reprocessed 3D Seismic Data For Red Sea Bid Round

Schlumberger and TGS say that a new Three Dimensional (3D) seismic reimaging project will be available before the close of Egypt’s offshore Red Sea international bid round on 15 September 2019.

The project comprises reimaging data from three overlapping seismic surveys totalling 3600km2 that were acquired between 1999 and 2008—the only available 3D data in this part of the Red Sea.

It includes the integration of all legacy seismic and non-seismic data and will apply advanced imaging technologies to better define complex subsalt structures.

The project, which is supported by industry pre-funding, will be carried out by TGS and WesternGeco®, the geophysical services product line of Schlumberger.

The two companies say their collaborative approach “will help our clients identify high-potential play segments, assess exploration risks and accelerate hydrocarbon discovery.”

“The Red Sea 3D reimaging project follows a multi-client 2D seismic acquisition programme that was completed in March 2018 as the initial step in mitigating the complex salt imaging challenges in the area,” said Kristian Johansen, CEO, TGS. “The underexplored offshore Egyptian Red Sea area is made up of large, untested structures that offer exceptional growth opportunities for oil companies.”

Schlumberger and TGS have a long-term commitment with the Egypt Ministry of Petroleum and South Valley Egyptian Petroleum Holding Company (GANOPE) to acquire and process seismic data and promote the prospectivity of the Egyptian Red Sea.

 


Sasol’s Delay in Report Is a Pointer to Governance Risk

Africa’s largest publicly listed hydrocarbon company is pointing fingers at itself, indicating higher governance risk, in the opinion of S&P, the global ratings firm.

“A further delay in the release of South Africa-based integrated chemicals and energy group Sasol Ltd.’s year-end results indicates higher management and governance risk, and suggests potential disclosure restatements in last year’s financial statements”, S&P says in a statement.. “We rate Sasol (BBB-/Stable/A-3) two notches above South Africa (BB/Stable/B)”, S&P declares.

The release of results for fiscal 2019 (ended June 30, 2019) was initially delayed from Aug. 19, 2019 to Sept. 19, 2019. However, this has been extended to no later than Oct. 31, 2019, which is within the respective equity and bond listing authorities’ regulatory deadlines.

“The further delay follows the Board’s decision to commission additional work and to give time for further investigation into particular points raised in the original board-commissioned independent review of recent cost and schedule changes in the Lake Charles Chemicals Project (LCCP)”, S&P says in a note to investors.

The investigation began after Sasol announced further increases to the capital cost estimate in May 2019. A preliminary report was provided to the Board on Aug. 14, 2019. The additional investigation includes assessing if any potential control weakness identified in the preliminary report, as well as the root cause for the changes in the cost and schedule estimate, were present in the previous fiscal year.

The review and subsequent additional work followed Sasol’s announcements in February and May 2019 of cost overruns, with LCCP’s capital expenditure exceeding the $11.1 billion it had communicated in September 2018 by $1.5Billion-$1.8Billion. In its Aug. 16, 2019 and Sept. 6, 2019 announcements, Sasol’s Board indicated that it expects no change to the earnings guidance in the company’s trading statement of July 25, 2019, and has also confirmed its previous LCCP capital cost guidance of $12.6Billion-$12.9Billion. The LCCP ethane cracker unit achieved beneficial operation at the end of August 2019.

S&P says it expects “that the financial results for fiscal 2019 will include information on the qualitative aspects of LCCP cost estimation/projection controls, specifically reporting and oversight, further informing our view on Sasol’s management and governance risk”.

 


Accra based Springfield on a Historic Deep-water Journey

By Toyin Akinosho, Publisher

In a matter of weeks, Springfield E&P will be the first home-grown, African owned E&P operator to spud a well in a new deepwater licence.

Its planned drilling of Oak-1, for which it had contracted the Stena Forth drillship, is significant history making.

The 11 year old company plans to follow up the well with another, the Afina-1, both of them in West Cape Three Points (WCTP) Block 2, offshore Ghana.

By all accounts Springfield will be drilling the wells as a full blown operator.

Oak-1 is on trend with the Beech structure, on which Hess Corp. discovered oil in Beech-1 in 2013, in 1,713 metres of water.

Both prospects are to be tested on the basis of interpretation of an 800 sq kilometre, three dimensional (3D) seismic data, acquired by PGS and paid for by Springfield, in 2017.

It will not be the first time that a company owned by African businessmen would drill, or be part of drilling, in deepwater, but there’s a context.

“Other African owned E&P companies with licences in Ghana, including Amni, Oranto, Brittania U and Sahara, were all awarded their different blocks in the country before Springfield.”

The Nigerian founded Erin Energy, now in bankruptcy, was drilling wells in over 400 metres of water offshore western Niger Delta. It was running a 40,000BOPD Floating Production Storage Offshore (FPSO) facility, the Armada Perdana, until it stopped being a going concern in mid-2018. Its licence to OML 120 was revoked by the government in June 2019.

London listed Afren discovered the Ogo field in 2013, said to be one of the largest discoveries in the world in that year, with, in part, funding raised by LEKOIL, the AIM listed firm founded by a Nigerian entrepreneur.

But Erin Energy (formerly Allied Energy, a subsidiary of Camac, and listed in NYSE Amex), was an operator by default; it came from being a non-operating partner to Statoil, which discovered the asset, Oyo field, in 1995, and ENI, which put it on stream in 2010 and was producing it until it pulled out of that asset. At no time from discovery to commissioning was Erin in operational charge of Oyo field.

LEKOIL, meanwhile, was, on Ogo discovery, also a non-operating partner to Afren, a company founded by a diverse mix of nationalities and which also has ceased to exist.

Springfield was awarded the WCTP Block 2 in 2016, with Ghana National Petroleum Corporation (GNPC) and its operating subsidiary, GNPC Explorco, as carried partners.

Other African owned E&P companies with licences in Ghana include Amni, Oranto, Brittania U and Sahara. They were all awarded their different blocks in the country before Springfield but have not announced any concrete drilling plans.

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