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Ghana’s Energy Minister Took The Fall For An “Overpriced” Electricity Deal

BoakyeAgyarko, Ghana’s charismatic Minister of Energy, has become the first in Nana AkufoAddo’s cabinet to be fired by the President.

The economist and politician, who was a vice president of the Bank of New York, was sacked over government’s embarrassment about a controversial power purchase deal, according to the local media.

The press release announcing Mr.Agyarko’s ouster gave no reasons, only saying that the former minister should hand over his office to the Minister of Lands and Natural Resources, John Peter Amewu. In the last week, Amewu has been named the substantive Energy Minister, through a shuttle of cabinet positions announced by President Akufo-Addo.

Agyarko’ sacking came after several weeks of complaints by Ghana’s vocal press and civil society groups about AkufoAddo Government’s handling of the renegotiation of the “Ameri Deal”, a power purchase transaction originally procured by the previous administration.

Agyarko led a committee which reviewed a 2015 electricity transaction entered into by the John Mahama government which the Akufo-Addoadministration promised to review because the $510Million, five year deal with Dubai-based company Africa & Middle East Resources Investment Group (AMERI) was over-priced by $150Million.

The government then tabled, in parliament, AMERI II, a 15-year contract to be taken over by a new company Mytilineos. The ministry claimed the reviewed deal would save the taxpayer $405Million, a claim which the highly influential Africa Centre for Energy Policy (ACEP) immediately declared as misleading.

ACEPnoted that, rather than any savings, the AMERI II deal would cost the taxpayer $937.5Million. Workers of the Volta River Authority, the country’s main generator and supplier of electricity, called for Mr.Agyarko’s dismissal.

That the government then proceeded to withdraw the new deal from debate in parliament, pledging to come back with another reviewed document, is the most significant indication that it accepted it was wrong.

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The 230,000BOPD Kaombo Project Comes Onstream in Angola

TOTAL has started up production of Kaombo, currently the biggest deep offshore development in Angola, located on Block 32, 260 kilometers off the coast of Luanda. 
Kaombo Norte, the first Floating Production Storage and Offloading (FPSO) unit, has been successfully brought on stream and will produce an estimated 115,000 barrels of oil per day, while the second one, Kaombo Sul, is expected to start up next year. The overall production will reach an estimated 230,000 barrels of oil per day at peak and the associated gas will be exported to the Angola LNG plant.

A total of 59 wells will be connected to the two FPSOs, both of which are converted Very Large Crude Carriers, through one of the world’s largest subsea networks.

Together, they will develop the resources of six different fields (Gengibre, Gindungo, Caril, Canela, Mostarda and Louro) over an area of 800 square kilometers in the central and southern part of the block.
The Kaombo development will monetise an estimated 650 million barrels of reserves and “contribute to TOTAL’s’s growing production and cashflow in Africa,” stated Arnaud Breuillac, the company’s President Exploration & Production at TOTAL. “It will account for 15% of the country’s oil production. 

TOTAL operates Block 32 with a 30% participating interest, along with Sonangol P&P (30%), Sonangol Sinopec International 32 Limited (20%), Esso Exploration & Production Angola (Overseas) Limited (15%) and Galp Energia Overseas Block 32 B.V. (5%)

Shell Joins The North West African Rush

By Mohammed Jetutu, North Africa Correspondent

Royal Dutch Shell has joined other majors in the rush for hydrocarbon opportunities in the Northwest African segment of the Transform Margin.

The company signed two Production Sharing Contracts with the government of Mauritania, the only country so far in that geologic province, where crude oil has been produced.

The contracts are for the exploration and potential future production of hydrocarbons in the offshore blocks C-10 and C-19.
The two tracts are located offshore, in water depths ranging from 20 to 2,000 metres. The total area of two blocks is approximately 23,675 square kilometres. The new block C-10 consists of three previous blocks – C-10, C-28 and C-29.
BP, ExxonMobil TOTAL and ENI have taken positions in this part of the continent, mostly in Senegal and Mauritania. Chevron has interests in Morocco, which is in the northernmost flank of the margin.

Crude oil was discovered in Mauritania’s Chinguetti field in 2001 and brought on stream by Woodside in 2006. The rapidly depleted output forced out the Australian independent from the asset, barely a year after first oil.
But the point had been made; Mauritania was an oil producer,Senegal is the next country in the region to be an oil producer, that is if the development plan devised by Cairn Energy and Woodside comes to fruition, delivering 100,000BOPD, at peak from the SNE field, with 2023 as tentative date for first oil.

There has, however been only gas discoveries in the province, since the SNE field was discovered in 2014.
Shell, itself a net gas producer, will operate the exploration programme with a 90% interest. Société Mauritanienne des Hydrocarbures et de Patrimoine Minier, the national oil company of Mauritania, holds a 10%.

Following the customary government approvals of the contracts, Shell will set up an office in Nouakchott and begin exploration activities, starting with reprocessing and analysis of existing seismic data and acquisition of new data.

Shell and the government of Mauritania have agreed in a Memorandum of Understanding to jointly evaluate further offshore exploration opportunities, examine new ways of meeting the country’s domestic energy needs, and build capability in the energy sector.

TOTAL Exits South Sudan License Talks

•The Ministry of Petroleum of South Sudan has terminated negotiations with French international oil company TOTAL
•The French oil major has been working since 2013 with Tullow Oil and KUFPEC to enter a new petroleum agreement for blocks B1 and B2.
•The company formerly held an exploration agreement for Block B, which was split into three parts in 2012.

South Sudan’s Ministry of Petroleum announces that it has formally terminated negotiations with French international oil company TOTAL for exploration and production sharing agreements (EPSA) for oil licenses B1 and B2.

Prior to the country’s independence in 2011, TOTAL held a petroleum agreement for the 120,000-square kilometer Block B, but ceased activities in the area in 1985. In 2012 the government of South Sudan split the area into three licenses: B1, B2 and B3. Alongside Tullow Oil and the Kuwait Foreign Petroleum Exploration Company (KUFPEC), TOTAL has been negotiating with the Ministry of Petroleum for a new EPSA since February 2013. In 2017, the Ministry of Petroleum awarded the EPSA for Block B3 to Oranto Petroleum, as talks continued with TOTAL and partners on blocks B1 and B2.

Under Section 100 of the Petroleum Act of 2012, the Ministry of Petroleum is permitted to enter new petroleum contracts, at its discretion, with contractors that had concluded an EPSA with Sudan before secession. However, after more than five years of difficult negotiations, the parties have now reached a complete impasse. The Ministry of Petroleum of South Sudan has stated its willingness to proceed with the signing of a draft EPSA, but “TOTAL has insisted on an extremely long exploration period and on economic terms that are not viable for the government”, the Ministry says in a release.

“The Ministry of Petroleum regrets that negotiations with TOTAL have concluded with no deal, but looks forward to bringing new investors into talks for these licenses.” said Hon. Amb. Ezekiel Lol Gatkuoth, Minister of Petroleum. “South Sudan needs to move quickly to bring investment to blocks B1 and B2, and after a long period of talks Total has been unable to agree on economic terms and a timeline that work for the country. Without this cornerstone in place, the Ministry of Petroleum cannot continue to negotiate an EPSA with Total. We are keen to discuss the exploration of Blocks B1 and B2 with new parties.”

The Minister of Petroleum will speak at the Africa Oil & Power conference in Cape Town on September 5-7 and anticipates strong interest from international companies in the licenses. Following this event, the minister invites potential investors to attend the South Sudan Oil & Power 2018 conference in Juba on November 21-22, to learn about the Ministry of Petroleum’s development plans for its exploration and production acreage.

Contact: Mr. Steven Puoch Riek Deng, Executive Director, Office of the Minister, Ministry of Petroleum | | +211 950 800 039 / +211 922 555 344

Equatorial Guinea orders cancellation of all contracts with CHC Helicopters

Calls on Oil companies to comply with local content regulations

The Ministry of Mines and Hydrocarbons of Equatorial Guinea has mandated all petroleum operators including but not limited to Noble Energy, Exxon Mobil, Kosmos Energy, Trident, Marathon Oil Corporation and other operators to cancel all contracts with Canadian-based CHC Helicopters, due to noncompliance of Equatorial Guinea’s national content regulations.

“It is the responsibility of the Ministry of Mines and Hydrocarbons to ensure strict compliance to our country’s National Content Regulation of the Hydrocarbons Law,” said H.E. Gabriel Mbaga Obiang Lima, the Minister of Mines and Hydrocarbons. “These laws are in place to protect and promote local industry, create jobs for citizens, promote the sustainable development of our country, and we are aggressively monitoring and enforcing the compliance of these requirements.”

Oil companies operating in Equatorial Guinea have been given 60 days to unwind contracts and find new suppliers, with only those companies in compliance with the local content provisions established in 2014 allowed to bid for contracts.

A compliance review of the entire sector is ongoing led by the Director of National Content and outside legal advisors of the Ministry.  The notice will be expanded to all service companies who are non-compliant as the review continues. Similar measures will be taken. 

Under the National Content Regulation of 2014, all agreements must have local content clauses and provisions for capacity building, with preference given to local companies in the award of service contracts. Local shareholders must be part of every contract as prescribed by law. The operators have an obligation to ensure compliance of their subcontractors. 

“We are eager to work with international companies who partner with Equatorial Guinea in the development of our industry,” said the Minister. “But we expect all companies operating in Equatorial Guinea to follow the laws of the Republic of Equatorial Guinea. As Minister, I will not hesitate to enforce the law to ensure compliance”.

Ghana Will Auction Three Blocks in 2018

By John Mac Tontoh

Ghana has mapped out nine (9) oil blocks in its offshore western Basin, of which six (6) will be allocated in the next 12-18 months.

The country will, for the first time, allocate blocks through open public competitive tender. That historic licencing sale will involve only three blocks.

The government wants to allocate another two blocks through direct negotiations and reserve one (1) for the state hydrocarbon company Ghana National Petroleum Corporation (GNPC), to explore in partnership with its chosen strategic partner with the view to developing its technical capacity and becoming an Operator.

In order to progress the proposed lease sale, Boakye Agyarko, the Energy Minister, inaugurated a Licensing Rounds Bids Evaluation and Negotiation Committee last May.

Ghana is proposing the  bid round for the last quarter of 2018.

The country had, hitherto, allocated oil blocks only through direct negotiations.

The 2016 Petroleum Exploration and Production Act, however, encourages a regular transparent, open auction of hydrocarbon acreages.

“Preparations for allocating more oil blocks in accordance with the Petroleum Exploration and Production Act (Act 919) has been put in motion”, Boakye Agyarko, the Minister of Energy, said at the launch of the Committee

“The remaining three (3) that will not be allocated this year, will form the basis of our second bidding round next year later. We are determined to identity further prospects in the Eastern, Central and the onshore Voltain Basins, to increase the number of blocks available for allocation”, the Minister highlighted.

“This will put to test all the allocation mechanisms prescribed by the Petroleum Exploration and Production Act (Act 919) in order to examine the efficacy of these mechanisms and to address any challenges that may emerge in the application of the law”.


Fuller details of Ghana’s Asset Sale going forward can be accessed here.



Nigerian Government to Conduct A Bid Round For Flare Gas

By Toyin Akinosho

President Muhammadu Buhari has signed a new legal framework on flare gas reduction, the implementation of which is expected to  lead to a government takeover of fields where flaring is taking place and a bid round of some of such fields before the end of 2018.

The Flare Gas Reduction (Prevention of Waste and Pollution) Regulation 2018, signed in early July 2018, is currently being gazetted. The document seeks the reduction of environmental/social impact caused by the flaring of gas; protection of the environment; prevention of waste of natural resources and creation of social and economic benefits from flare gas capture.

The regulation asserts the right of the government, under Section 9 of the Petroleum Act, to take natural gas produced with crude oil free of cost at the flare site and without payment of royalty. The provision of this regulation is applicable to all petroleum licences, including marginal fields.

Two key aspects of the regulation are the outlines of Bid Processes and the Penalties for supply of inaccurate data by a producer of flared gas.

The minister may, by a permit to access flare gas, authorize a Qualified Applicant selected further to competitive bid processes conducted by the Federal Government, to take Flare Gas on behalf of the government at any Flare site as specified in the permit.

Any producer may apply to the minister to utilize Flare Gas for commercialization, provided that such application shall(a) exclude any Flare Gas volume that is being offered in a bid process conducted by the Federal Government or has been assigned to a permit holder, (b) be made by the producer on behalf of a midstream subsidiary corporate entity, either existing or to be incorporated.

There is, of course, more.

Nigeria flares an excess of 800Million standard cubic feet of gas a day from 178 flare sites, according to the Ministry of Petroleum Resources. The country’s power sector, however, struggles to get enough gas to fire the turbine capacity of 7,000MW.

The government is hoping to use the regulation to bring more investment into the natural gas market.

To achieve this, ministry sources say, there is need for improved oilfield practices and improved regulatory supervision.

The new regulation contains higher penalty for gas flaring than currently obtains and contains an overwhelmingly large number of references to “The Qualified Applicant” and “Permit Holder” of Flare Gas sites, two entities that are largely unknown in extant Nigerian Petroleum ecosystem.

The regulation says that the Department of Petroleum Resources may request a producer to provide Flare Gas Data and when that request is made, the producer shall provide such Flare Gas Data in the format required within 30 calendar days of the date of the request.

In the last 18 months, the MPR has called for data twice from flare gas producers. The Ministry will call again for data after the regulation has been gazetted.

Any individual, in any company, that signs a letter conveying the data has a duty to ensure that the data is accurate. Any person acting on behalf of a producer, who supplies inaccurate or incomplete Flare Gas Data to the DPR or any other duly empowered lawful authority, will be liable to criminal prosecution, the new regulation says.

Fuller details and discussions of the regulation are available here.

Zubairu is AFC’s New CEO

Africa Finance Corporation has announced the appointment of Samaila D. Zubairu as the Corporation’s 3rd President & Chief Executive Officer, succeeding Andrew Alli who comes to the end of his tenure, having successfully served in the position since 2008.

The appointment follows a six-month search process that saw over 100 candidates apply for the role. “Mr. Zubairu will formally take the post imminently”, the company says.

The 10 year old AFC is largely an Infrastructure funder and has been significantly involved in enabling E&P and power projects across the continent.

“Zubairu is a distinguished Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an accomplished Infrastructure development finance specialist with over 29 years of professional experience”, the AFC says of his Cee Vee. “He is the CEO of Africapital Management Limited, in which position he established a joint venture with Old Mutual’s African Infrastructure Investment Managers (AIIM) to develop the Nigerian Infrastructure Investment Fund1(NIIF1) for infrastructure private equity across West Africa. He also recently coordinated the $300Million acquisition of Eko Electricity Distribution Plc.

“He was the pioneer CFO for Dangote Cement Plc, during which he launched Africa’s largest syndicated project finance facility for a local corporate to actualize the Obajana Cement project and managed the watershed unbundling of Dangote Industries Limited to listed subsidiaries on the Nigerian Stock Exchange. He has led finance transactions for over US$3 billion covering: green-field project finance facilities, acquisitions, corporate transformation initiatives, privatization and equity capital market transactions.

Samaila is an Eisenhower Fellow and sits on the Eisenhower Fellowship’s Global Network Council as well as the Advisory Council of the President of Nigeria. He is also an Advisory Board member for KSE Africa a leading Operations and Management provider of captive power plants in the mining sector of Botswana and Nigeria and is the Chairman of MDSA Nigeria Limited, a fintech company providing micro loans across sub-Saharan Africa. Samaila is the Independent Director and Chairman Statutory Audit Committee as well as a member of Finance and General-Purpose and Establishment and Governance Committees of Aiico Insurance Plc. He also serves as an Independent Director and Chairman of the Finance Committee for New Nigeria Commodity Marketing Company.

“I look forward to joining AFC’s highly reputable team, and together, enhancing AFC’s position as an extremely capable project partner, able to deliver sustainable development projects across the Continent”, Zubairu says. ” I am confident of AFC’s market position as being best placed to surmount Africa’s multi-sectoral infrastructure challenges”.

“We Will Send the EFCC After You”, Wabote Warns

By Sully Manope

Simbi Wabote, the former Shell Nigeria Director who is now Executive Secretary of the Nigerian Content Development Monitoring Board (NCDMB), has announced the takeoff of a forensic audit of remittances that are due the board from all companies governed by the act of its establishment.

He said the board has engaged the country’s judicial sector on how the local content law works with regards to such remittances, and would take measures to ensure that operators who participate in its $200Million local content fund do not end up abusing the process and subsequently deflating the fund.

In his presentation at the Nigeria Oil and Gas (NOG) Conference in Abuja, Wabote said the NCDMB had concluded plans to hand over to the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices and Other Related Offences Commission (ICPC) any operator who failed to remit what was due to it as requested by the local content law.

“We were told by the agencies responsible for financial crimes that not remitting government fund in itself is a financial crime as it is contained in their acts, and as such, when we carry out this forensic audits, if we discover any breach of the processes, of course, we will hand over such to the agencies responsible to go after companies that want to sabotage the economy. The EFCC and ICPC will be responsible to go after such people who decides that they will not remit what is due government in terms of law,” he said.

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