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The Rise and Fall of an Oil Giant: How Canada’s Province of Alberta Gained its Oil Prominence and Lost its Lustre

Section: In the news · June 19, 2020 · No comments |

By Gerard Kreeft

Many Africans, who have worked in the oil and gas industry encountered Albertans, who inevitably have been sent abroad to work in Africa’s oil and gas industry, either in a technical, managerial or training capacity.

Many Africans also have been invited to the city of Calgary, Canada’s equivalent to Houston, Texas, the world’s oil capital, and participated in technical training sessions. In particular, learning to survive Alberta’s winter cold with temperatures sometimes plunging as low as -50C. Boot camp of a technical nature.

Province of Alberta

Canada is one of the world’s largest oil and gas producers averaging 4.7MMBOPD(millions of barrels oil per day) according to CAPP(Canadian Association of Petroleum Producers). Some 78% of this production comes from Alberta and additional smaller production comes from the neighbouring province of Saskatchewan and Offshore East Coast Canada.

To understand Alberta’s DNA it is necessary to go back in time and dust off our history books. In particular re-visiting Democracy in Alberta: Social Credit and the Party System(1953), the authoritative book by C. B. Macpherson, Professor of Political Science, University of Toronto.

Macpherson takes us back to the early formation of Alberta: an agrarian co-operative landscape. In 1900 Alberta’s population was 73,000 persons. The common theme was a one-staple economy, based on a homogeneous farming community with its key emphasis on wheat. The United Farmers of Alberta (UFA) came to power in 1921 and governed the province until 1935. The UFA’s sole goal was to promote the interests of Alberta farmers. Central Canada, its business and financial interests, and the Federal Government were seen as the ‘bad guys’.

By 1935 the Social Credit Party swept into power. The new norm had become ‘virtually a one-party system, cabinet rule, and a revised tradition of direct delegate democracy’.

Times have changed—the UFA and the Social Crediters have passed on but we also have had various Governments —but the common theme is that the province in the past had a one staple economy. The wheat and the farmer may have disappeared but the new commodity became oil and the farmer who Macpherson described as petit bourgeoisie has been superceded by a more urban set of elites- lawyers, engineers, geologists, oilmen, government bureaucrats, wheeler-dealers. Their class or status can also be described as ‘petit-bourgeoisie’…but urban as opposed to rural. As oil production increased oil prices surged. The money poured into Alberta. It was party time.

Now Alberta’s population is more than 4Million people. The Calgary- Edmonton corridor is Alberta’s most urbanized area and one of Canada’s four most urban areas.

Macpherson’s assertion that once a quasi-party state (Alberta) has been established in a quasi-colonial and predominantly petit-bourgeois society it may persist indefinitely if growth is assured. That growth is now not assured.

For the last 70+ years, since the founding of Alberta’s oil industry the province has achieved a level of unknown prosperity. Alberta’s per capita GDP, before COVID-19 struck was the highest in the country: C$ 80,000 (US$60,000) compared with C$60,000 (US$45,000) nationally. Yet the present signs are not encouraging:

Due to the impact of the Russia – Saudi Arabia oil price war and COVID-19, Western Canada Select (WCS) the price obtained for many Alberta oil and gas producers, averaged only US$3.50 per barrel in April 2020, more than 90% lower than it was a year earlier. West Texas Intermediate(WTI) averaged US$16.55, 74.1% lower than it was a year earlier. The differential of WTI over WCS was US$13.05 in April 2020.

Prices of WCS have improved somewhat, in mid-June WCS was up to US$24.60 per barrel but that is still painfully down from oil prices of a year ago.

Although the price of WTI and WCS are extremely low, what is really painful for Canadian producers is the discounted rate that Canadian producers receive. The reason? Alberta is landlocked. It sole access to overseas markets is via the TransMountain Pipeline to Vancouver, British Columbia which has a limited capacity of 300,000BOPD capacity. All other oil not consumed in Canada is shipped to the USA.

Now, the USA is awash in oil, due to the impact of fracking of shales in the Williston Basin, North Dakota as well as the Permian Basin of Texas and New Mexico.

The Americans really do not need Canadian oil. Accordingly, Canadian producers must accept huge discounts if their oil is indeed brought to market.

Despite the low oil price the Provincial Government is predicting in its 2020 April budget a WTI price of US$58 per barrel, increasing to US$63 per barrel by 2022/2023.

Alberta was scheduled to produce 3.81MMBOPD in 2020; based on OPEC’s intervention it is anticipated that Alberta will be forced to cut its production by 1MMBOPD.

Pipeline Politics

Much of Alberta’s oil production to date has been focused on oil sands production, located in Northern Alberta. These are also commonly called “the tar sands”. The crude bitumen is a thick, sticky form of crude oil so heavy and thick (viscous) that it will not flow unless heated or diluted with lighter hydrocarbons.

Alberta’s oil sand production in 2019 was 2.9MMBOPD. Alberta also produced 800,000BOPD of conventional crude. In the past, oil sands production predictions were as high as 5MMBOPD. CAPP (Canadian Association of Petroleum Producers) is still predicting oil sands production of 4.2MMBOPD by 2035. This, in my view, is excessively optimistic.

A false optimism also abounds on the pipeline front. The expansion plans for the TransMountain Pipeline, adding an additional capacity of 590,000BOPD has become stuck in regulatory and environmental haggling. The Federal Government chose to step in and purchased the TransMountain Pipeline for C$4.5Billion. The Federal Government now has to deal with judicial reviews and objections and consultations with various indigenous communities who vigorously object to this activity taking place on their ancestral lands.

Cynicism abounds concerning the purchase of the Trans Mountain Pipeline by the Federal Government. Was it to solely placate Alberta’s oil interests? So that the Federal Government could be seen to be in lockstep with the Alberta Government? Knowing full well that such a pipeline will likely never be built, given the regulatory clamour and environmental protests.

Plans for The Keystone Pipeline, which was to be used to transport oil sands crude to the USA, is also in limbo given that Joe Biden, Democrat Presidential Candidate has expressed his opposition to this project. Indeed, President Obama and his Secretary of State, John Kerry were much against the Keystone Pipeline with both declaring Alberta’s tar sands to be the world’s dirtiest oil.

Business as Usual?

Canada has pledged to respect and implement the Paris Climate Agreement. Yet all good intentions aside, the road ahead is an uncomfortable journey:

Any pipeline plans are unlikely to be implemented;
Oil sand projects are unlikely to be expanded and perhaps discontinued;
Discounted Western Canadian Select vs West Texas Intermediate Oil is a guarantee that oil prices will continue to bottom out, ensuring a virtual moratorium on oil production.
Are Alberta’s oil and gas resources fast becoming ‘stranded assets’?

Alberta’s Provincial Government has made some feeble efforts to move in the direction of an Energy Transition. For example its C$1.1Billion commitment to the ‘Petroleum Diversification Programme’, providing royalty credits to companies that build large-scale projects to turn ethane, methane and propane feedstocks into products such as plastics, fabrics and fertilizers.

The Government also mentions Canada LNG which will transport LNG to Pacific Rim countries. The Government claims that Alberta natural gas will be sourced; but the lion’s share of the project’s natural gas will come from Northern British Columbia!

Will there again be a populist revolt such as when the UFA were turfed out by the Social Credit Party in 1935, and the Social Crediters in 1971? The present Alberta Government is anxiously looking about in a hope of saving its oil economy. Can the one dimensional characterization of Macpherson’s petit-bourgeois class become more divergent?

Now that the oil has for all intents and purposes disappeared, what will be the driving force that Albertans will have to find? The great big party is over, the atmosphere in Alberta is like attending a funeral. Alberta’ Premier, Jason Kenney, announced that due to the impact of COVID-19 and the collapse in oil prices, Alberta may incur this year a deficit of C$20Billion.

For the last 75 years oil has literally been the fuel that has driven the economy. All the talk about diversifying the economy was pious nonsense. Instead it smothered innovation. Perhaps this type of crisis is necessary to stimulate a new generation. Getting back to basics. Perhaps something as basic as encouraging more tourism in the Rocky Mountains of Banff and Jasper and elsewhere in the province..

Question: How much oil money is beneficiai for an economy? What is the tipping point when a petro-economy fails to encourage innovation and diversification? In that sense can the lessons of Alberta also be useful to Africa, where oil in a number of countries, i.e Algeria, Angola, Congo Brazzaville, Egypt, Equatorial Guinea, Gabon, Ghana, Mozambique and Nigeria is a prominent factor of economic growth?

Macpherson has made a key assertion: once a quasi-party state has been established in a quasi-colonial and predominantly petit-bourgeoisie society, it may persist indefinitely, if growth is assured. This is not only a lesson directed to a developed economy such as Canada. His assertion could also provide valuable lessons to many of Africa’s emerging economies which are heavily oil dependent.

Gerard Kreeft, MA (Carleton University, Ottawa, Ontario, Canada) Energy Transition Advisor, has more than 30 years experience in the energy sector. He was the founder of EnergyWise. He has managed and implemented oil and gas conferences in Alaska, Angola, Brazil, Canada, Kazakhstan, Libya and Russia. He is a Canadian/Dutch citizen.

Rystad Predicts Massive Plunge in Libyan, Nigerian Reserves

Section: In the news · June 18, 2020 · 1 comment |

By Ahmed Gafar, in Lagos

Rystad Energy is revisiting the concept of Peak Oil.

The Norwegian consultancy is arguing that the effects of COVID-19 will ultimately force significant reduction in appetite for frontier exploration.

The company has startling predictions for the growth or decline of crude oil reserves in African jurisdictions, especially the Top Four holders of crude.

Rystad says of Libya, where the warlord Khalifa Haftar has only just been stopped in his drive to take Tripoli: “With no imminent peace in sight, future production potential falls further by 4Billion barrels”.

About Nigeria, Rystad says: “after a decade-long debate on oil policy reforms, potential reserves are expected to fall further by 6Billion barrels”.

Rystad acknowledges positive news on oil policy reforms in Algeria, but in spite of that, it expresses the gloomy view that “shale exploration potential is expected to fall by 7Billion barrels of oil”.

For Angola, Rystad forecasts “less deepwater exploration as peak oil demand comes sooner due to COVID-19”.

But it does not say how much future reserves increase Angola will lose.

In Uganda, The Winner Takes All

Section: Kickstarter · June 17, 2020 · No comments |

By Toyin Akinosho

TOTAL’s announcement of a half-a-billion-dollar purchase of Tullow’s entire equity in a Ugandan oilfield development, last April, sounded like a loud, symbolic statement of optimism.

In a dry white season, during which over four billion people were in lockdowns across the globe, the statement seemed to assert: “Uganda, we got you”.

At the heart of the transaction is the 230,000BOPD (Barrels of Oil Per Day) Lake Albert upstream and midstream project.

Tullow will receive $575Million, with an initial payment of $500Million for its 33.3334% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. It will pick up the remaining $75Million cheque when the partners take the Final Investment Decision to launch the project. In addition, the Irish independent will receive conditional payments linked to production and oil price, which will be triggered when Brent prices are above $62/bbl.

Tullow got to reduce its debt and command an immediate surge in its share price. TOTAL secured such a prize for less than $2 a barrel and for Uganda, finally, a clear line of sight to Final Investment Decision for a development that had been on the drawing board for over a decade.

As I see it, TOTAL has prevailed in Uganda in the eight years since it first entered the country’s E&P sector, via the acquisition of 33.3% of what was then Tullow’s Blocks 1, 2 and 3A for $1.45Billion. It had gradually stamped its authority, muscled out Tullow and raced past the sure footed, hard-tackling energy bureaucrats at the country’s Petroleum Authority and Minerals and Energy Ministry.

The French major is the decisive winner.

Tullow, which helped to nurture East Africa’s potential as a prolific oil producing region, and proudly displayed a badge describing itself as “Africa’s leading Independent”, now had to pack its bags.

I started having the nagging suspicion that TOTAL had taken charge in late 2015, when I witnessed, first hand, a very public argument between two ranking Ugandan and Kenyan civil servants regarding which was the optimal route to lay the EACOP, the pipeline that will ferry the crude oil produced in landlocked Uganda to the Indian Ocean for export.

“The route through Kenya is the one we have always known,” Hudson K. Andambi, (then) senior principal superintendent geologist at the Kenyan Ministry of Energy and Petroleum, said at the Africa Oil Week in Cape Town.

“We are still evaluating the routes and the least cost route is what we will consider”, declared Fred Kabagambe-Kaliisa, (then) Permanent Secretary at the Uganda’s Ministry of Energy and Mineral Development, at the same conference, minutes after the Kenyan had spoken.

It was the second public hint that the Ugandans might jettison the long- anticipated, widely expected pipeline route from Hoima, in Uganda’s oil rich province, to the Kenyan coastal town of Lamu.

I walked up to Mr. Kabagambe-Kaliisa after his presentation and asked him, pointedly, if TOTAL was behind the change. “We will take on board any concerns by our partners,” he responded, carefully weighing his words.

With crude oil found in commercial quantities in the Kenyan hinterland, over a thousand kilometres from the coast, operator Tullow had looked forward to an evacuation pipeline, originating from Uganda, that would link up with one that collects Kenyan crude, with both crudes heading for a Kenyan coastal port. The agreement signed by Presidents Uhuru Kenyatta and Yoweri Museveni in August 2015, three months before that public contestation between the Kenyan and Ugandan officials, was anchored on a 1,500 kilometre pipeline from Hoima through Lokichar in Kenya’s border region, and required guarantees from the Kenyan government regarding security, route optimization and financing.

But two months after that Kenyatta-Museveni agreement and a month before the subject spat at Africa Oil Week, Ugandan and Tanzanian officials, as well as staff from TOTAL, signed a separate agreement, creating “a working framework for the potential development of a crude export pipeline from Hoima to Tanga Port of Tanzania,” the Ugandan Ministry of Energy said in a statement, which raised some concern in Nairobi.

And now we were at this conference, I knew that Tullow should be worried, very worried.

The decision to pump the Ugandan crude through a separate pipeline from that with which it planned to pump the Kenyan crude to market, meant that Tullow would be investing in two expensive pipeline projects, each costing no less than $3.5Billion. This, at a time of plunging crude oil price, should unnerve the company, a midsized independent struggling with losses.

It might not be surprising to some, then, that in January 2017, Tullow announced that, for a sum of $900Million, it had agreed to sell, to TOTAL, two thirds of its entire stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System. It came to 21.5% of the project’s entire stake. CNOOC invoked its right- of-first -refusal and asked for half of the 21.5%. But Kampala, never in a hurry to close any deal, dragged the timing of grant of the official consent for the sale, which itself impacted the Final Investment Decision.

The sticky point was the Tax that the government would receive from the sale and purchase.

Tullow’s inability to consummate the sale signaled to its shareholders that it wasn’t creating value. Share prices kept falling. Tullow was hemorrhaging worth.

With government still playing hard ball, two and half years after the intent for the 21.5% sale was announced, TOTAL pulled rank and announced the suspension of all activities, including tenders, on the EACOP. The Chinese, not known to express anger in public, decided that this was time to talk. “It is now very difficult to negotiate with government”, Gao Guangcai, CNOOC’s Vice Project Manager, told a conference in Kampala. The implication of TOTAL’s action was that the project could not continue.

The authorities got the message and the parties went back to the table.

By April ending 2020, the global economy had seized up; the Ugandan authorities had come around and Tullow was going to make a distress sale: accept $425Million less for a much larger stake than it had negotiated it would take three years and three months earlier. TOTAL, the European supermajor with piles of cash, is the winner that takes all.

Widespread Interest expressed in Nigeria’s Marginal Field Bid Round

Section: Farm in, Farm Out · June 17, 2020 · 1 comment |

Over 300 companies have applied to be prequalified for the Nigerian Marginal Field Bid Round, with many others unable to gain access to the portal, in the three weeks since the round was launched.

The Department of Petroleum Resources, the industry regulator, meanwhile, postponed the terminal date of registration of Bids to June 21.

Nigerian Ministry of Petroleum sources say it is likely that over 500 companies would have applied by that date.

The ongoing exercise is the first government supervised oil and gas asset sale since the acreage bid round in 2007.

Marginal fields are undeveloped discoveries that have lain fallow in acreages operated by International Oil Companies for at least 10 years.

It would take around $150,000 for a qualified application to get all the way to signature bonus and a number of Nigerian businessmen. “Once you get to the point of being qualified and all you have to pay is the signature bonus, you’re there”, says a retired reservoir engineer who spent over 25 years with a super major in Nigeria. “There is the impression that a marginal field licence has conferred on you some entitlement”.

The entire exercise, up to the submission of technical/commercial bid, ends on August 16, 2020. In between, from June 21 to August 16, the following will happen: (1) Evaluation of submission and preparation of report, June 22 to July 5; (2) Announcement of Pre-Qualified Applicants and Issuance of Field Teasers, July 5; (3) Data Prying, Leasing, Purchase of Reports, July 6 to August 16; (4) Payment of Application and Bid Processing Fee and Submission of Technical and Commercial Bid; July 6 to August 16. The schedule means that the heavy lifting will happen between July 6 and August 16.

TOTAL Wraps Up Financing for Mozambique LNG

Section: Gas Monetization · June 16, 2020 · No comments |

By Foluso Ogunsan

The TOTAL operated Mozambique LNG (MLNG) project, to monetise the reserves in the country’s deepwater Area 1, is making progress in spite of COVD-19 challenges.

“The financing was more or less been agreed and finalised and signing hopefully it will happen very soon”, says Paul Eardley- Taylor, Head of Oil & Gas Southern Africa, Standard Bank.

Eardley-Taylor, who is perhaps the most optimistic public speaker about Mozambique’s gas prospects, says the country “really has a couple of three unique aspects to it in terms of LNG, which is why volatility really doesn’t affect it. The first one is the obvious one, it’s bang in the middle of the map, if you use the Mercator projections, ideal for Asia or Europe. Secondly you have a large glob of gas in a single location, round about 150Tcf. Thirdly Mozambique is non-aligned and really contributes to security supply in other jurisdictions”.

The two train, 13MillionTonne Per Annum (13MMTPA) MLNG, is one of the two large sale LNG projects under development in Africa’s southeasternmost edge. Final Investment Decision for the project was taken in mid-2019.

FID for The ExxonMobil led Rovuma LNG, which is to monetise the Area 4 reserves, was postponed indefinitely, last April.

What about the insurgency?

“Mozambique is an enormously long country, so it’s important to know where the insurgency is near and not near”, the Standard Bank executive explains. “The insurgency has generally been about 100, 150 kilometres to as far as 300 kilometres from the site”.

“As we generally understand, (the 3.3MMTPA) Coral FLNG is more or less on time in terms of completion, largely unaffected by COVID-19 in South Korea and Singapore,” Eardley-Taylor explains. “So we expect that by third quarter or thereabout of 2022, it comes online”.

Full details of the Financing of Mozambique’s gas projects are published in the June 2020 edition of Africa Oil+Gas Report.

COVID-19 Imposes Fewer Workers, Longer Onsite Days for Rigsite and Production Operations

Section: In the news · June 13, 2020 · No comments |

By ManUp Services

The COVID-19 pandemic pushed oil prices to a historic low in April when futures fell below zero dollars, kickstarting a new normal for operators and service companies going forward, or at least till the pandemic is contained.

Previously forecasted gains for 2020 have been hugely eroded as E&P companies are set to lose a whopping $1Trillion in revenue, according to analysts at Rystad Energy.

The social distancing guidelines and associated lockdown measures have thrown up operational limitations for exploration and production companies. Upstream operators are constrained to introduce measures towards protecting employees, particularly those working on remote facilities.

To contain the spread of the virus, offshore workers must balance maintaining social distancing while living and working in relatively confined spaces.

“Rigs, offshore production platforms, and other production facilities among others have generally reduced personnel aboard to avoid overcrowding”, says Isaac Ebhohimhen, Measurement & Allocation Manager, Aiteo Eastern Exploration and Production Company Limited, a key Nigerian operator. “This process reduces the chances of spread of the pandemic”.

To further ensure the health and protection of workers, companies have now adopted an extended work rotation from 14 to 28 days to reduce the likelihood of spread via frequent contact. This means that any personnel scheduled to go to the field is first quarantined for 14 days for close monitoring before certified fit to go to the worksite by a medical officer. Furthermore, projects not critical to oil & gas production have been suspended and non-core-crew members are unauthorized to mobilize to site except absolutely necessary or critical. This is to prevent the possible spread of the virus from outsiders to site-based personnel. Oil companies have deployed additional medical officers to production facilities for continuous personnel monitoring and early detection of signs and symptoms of the virus. Additional Personal Protective Equipment (PPE) has also been deployed to site for medical & work personnel. More importantly, as adopted by oil majors, medical facilities offshore have been upgraded to manage COVID-19 in the event of an eventuality.

Beyond protective measures being put in place for the safety of staff, the need for social distancing has also disrupted the normal flow of work as most oil companies are still working remotely while they figure out what changes need to be made in their office configurations. Since fewer workers are present on location, field personnel have to work longer days resulting in work-related stress, which has heavily impacted the speed and efficiency of operations, while movement restrictions on operational bases have introduced supply chain constriction and difficulty. In the light of travel restrictions, work activities that require expatriates have been suspended while office resumption plans contemplated by most operators post lockdown, is for departments to be divided into two groups working on two-weekly rotations to ensure social distancing. Despite the new normal in working conditions, companies, determined to keep operations running have adjusted to working from home and employees have reported issues such as having to work longer days, the pressure to remain productive amidst domestic distractions, discomfort due to lack of office type infrastructure, poor internet facilities, limitation due to lack of work tools like printers, scanners, etc.

So far, COVID-19 has remained resilient and continually portends a potent threat to lives and livelihood. National corporations such as the Nigerian National Petroleum Corporation are faced with a double whammy scenario; OPEC imposed reduction in production coupled with increased direct and indirect costs associated with battling the pandemic have directed operators to reduce operational budgets by 40%. This has severe implications such as drastically reduced activity and attendant diminished demand for oilfield personnel. Experts who spoke exclusively with ManUp believe that loss in man-hours would be regained with ramped-up demand in personnel and projects when activities pick up.

Optimism has never been an effective strategy to weather the severity and impact of operational slumps in the industry, rather, every downturn presents an opportunity to re-tool and adjust operating models to align with the prevailing realities of the time.

ManUp services are organized to alleviate the operational difficulties imposed by budget reductions availing service companies access to a platform, where a fast growing pool of skilled freelance oilfield personnel can be sourced quickly and competitively.

NDEP, In Historic 25TH Annual General Meeting, To Announce Record Revenue Breaks

Section: In the news · June 10, 2020 · No comments |

Niger Delta Exploration &Production will be releasing some record financial achievements at its 25^th annual general meeting next Wednesday June 17, 2020.

The Nigerian integrated oil and gas company, with assets including a marginal field, share in an Oil Mining Lease, a natural gas processing plant and a Refinery (in Nigeria) as well as E&P stake in South Sudan, has been run as a structured organization owned by shareholders since 1996.

Today there are 1,623 company shareholders.

NDEP, in 2019, increased average daily production of its flagship asset, the Ogbele marginal field, to a record 7,500 Barrels of Oil. (7,500BOPD).

The company recorded its highest revenue from crude oil production in the past decade, as a result of three key factors, in the opinion of its management:

Strong asset quality
Operational excellence
Sustained share of profit from our associate (ND WesternLtd, which is a 45% equity holder in OML 34 in the Western Niger Delta).

NDEP is always proud to speak of its midstream to downstream achievements.

Ladi Jadesinmi, the Oxford trained lawyer and latterly accountant who is Chairman of the board of directors, speaks of “spectacular inspired piece of forward thinking” delivered by Management some 10 years ago, namely “ the foray into refining with NDEP successfully investing in a mini refinery”, adding that this was the first of its kind in Sub-Saharan Africa.

The Licence to Operate that refinery was granted by the regulatory authorities in 2012.

2012 indeed, was the year of breaks for NDEP

It was in that year that the company also commissioned “our 100 MM Scf/d Ogbele Gas Processing Plant. It was in that same year that NDEP led a consortium of companies via a special purpose vehicle (SPV)ND Western Ltd, to acquire the 45% equity interest divested by SPDC, TOTAL and NAOC in OML 34. “This our associate remains the leading JV partner to NPDC”, the company claims.

Of the year under review, however, NDPR, the NDEP subsidiary which operates the Ogbele marginal field, recorded an outstanding total production of 2,162,003 bbls (reconciled injected volume) of crude oil into the Bonny Terminal

Revenue from crude oil increased to ₦38.3Billion (2018: ₦29.4Billion) as a result of an increase in our production despite the market’s volatility, which caused the average realized price to drop to $65/bbl (2018: $74/bbl).

Revenue from diesel dropped in the year to ₦4.6Billion (2018: ₦5.2Billion) because of plant maintenance activities and outages due to integration to our Train 2 under construction.

Natural gas revenues dropped to ₦3.0Billion (2018: ₦4.4Billion) as a result of lower realised prices. Overall, total revenue grew by 16% to ₦46Billion (2018: ₦39Billion), a testament to the resilience of the company, NDEP management says.

Kenya’s Post COVID-19 Oil & Gas Future: Some Insight

Section: In the news · June 10, 2020 · No comments |

Kenya’s oil and gas industry is in a state of transition, as its major oil and gas development — Blocks 10BB and 13T in Turkana — has been put on hold, with Tullow Oil submitting a notice of force majeure to the Kenyan Ministry of Petroleum and Mining, citing complications from COVID-19.

Meanwhile, Uganda’s Lake Albert Project is moving ahead, with TOTAL announcing plans to acquire Tullow Oil’s stake in the project. The massive development in Uganda, which is set to include a pipeline and refinery, could easily have an impact on regional oil and gas developments and opportunities.

“Force majeures are reactive for companies, it is something that is beyond their means or the problem there are facing. So, it is unfortunate that this has happened in Kenya”, said Elly Karuhanga, Chairman of the Uganda Chamber of Mines & Petroleum & Chairman, Private Sector Foundation Uganda, “but it is also unfortunate that Tullow had to exercise this in their business. When you think about the reasons they faced, they had no alternative.”

He was speaking at a webinar themed ‘Moving Kenya Forward: Oil Production and New Exploration Under COVID-19,’ organized by Africa Oil & Power and the African Energy Chamber.

The webinar participants noted that Kenya has the most natural resources and is the most explored country in the East African region and argued that in order to have a knock-on effect and attract investors in this climate, East African countries need to keep exploring and looking at other projects. In Kenya, there are offshore blocks operated by ENI and hopefully with a great oil flow they will help the economy.

Toks Azeez, Sales and Commercial Director for Sub Saharan Africa for Baker Hughes, says his company expects the transition into Kenyan deep-water explorations to be less difficult, because it is already involved in offshore projects across Africa and has actively interacted with ENI in Kenya. “For us it is more about, how do we get our local partners in Kenya who have been involved in the onshore activities, to then up their game a little bit to meet the offshore requirements and that’s going to take a lot of back and forth, integration, cooperation to get them to a point where the skillset of that personnel and the equipment that they have and intend to acquire will be able to meet the requirements of deep-water play,” said.

Speakers encouraged synergies and regional collaboration to overcome the challenges faced by the oil and gas industry. Local companies as well as countries need to come together to find a solution to them. According to Mwendia Nyaga, Chief Finance Officer of Oilfield Movers. “Companies can scale up from the location at which they are based and start working in other places. For me it is cooperation, synergizing and not over complication.”

African governments are advised to think about the long-term effects COVID-19 has on oil and gas projects as well as how to regain investors’ appetite, “You should always look at fiscal incentives that allow fair and equitable taxation on revenues, but allow an investment environment that is lucrative, because every dollar in our industry can go anywhere in the world. East Africa, big companies and the small -medium sized oil and gas companies, will look at the investment climate as to where they get greater bang for their buck and that will mean that if the East African region does not have favorable fiscals then the dollars will go elsewhere, where you will get better bang for your buck, so there is a balance. When government is looking at this to be able to enable an environment where investment will be made, knowing that the risk is carried by the investors initially,” said Brian Muriuki, Managing Director & Country Chair of Royal Dutch Shell Ghana.

Doris Mwirigi, Chief Operating Officer of Energy Solutions Africa closed by sharing her belief that the oil and gas industry is in a transition, seeing that oil prices are slowly recovering to pre-COVID-19 prices. “In Kenya we are already at the forefront in terms of green energy and if you look at it, we are still very dependent of fossil fuels. So, you find that we are ahead in terms of green energy, however, I am still an oil girl and believe that oil and gas will recover, and in any case as you can see globally, the oil prices are prices are coming up and if you look at the equity market the oil prices are good for oil companies, so I think oil and gas will still play a major role in the oil and gas mix and we will be here,” she said.

Mwirigi also touched on the involvement of women and how the EqualBy30 initiative will empower more women in the oil and gas sector, “When you talk about adding women, it should not be just about diversity, but a business decision because companies headed by women do better. So, it’s not even a cry for help or diversity but business sense.”

Review of Report on AfDB President Will Take at Most Four Weeks

Section: In the news · June 10, 2020 · No comments |

The Board of Governors of the African Development Bank, while accepting the idea of an independent evaluation of whistleblowers’ accusations against the bank’s president, Akinwunmi Adesina, has determined that such an evaluation will be a review of the report of the Ethics committee, which had cleared the president of any wrongdoing.

The review will be entrusted “to a single person, neutral honest, of high calibre with indisputable experience and a proven international reputation”, the Board said in a release. And the review work must be carried out “within two to four weeks, taking into account the Bank’s electoral calendar”.

The election to the AfDB’s Presidency, for which Adesina is the only candidate to date, is due to take place at the end of August.

The statement says that the “review” of the report of the ethics committee was a decision taken “with the aim of reconciling the different points of view of each governor in the resolution of this case”.

The Board reiterates its confidence in the ethics committee “which has fulfilled its role in this matter”. However, the Bank’s whistle blowing and grievance handling policy “will need to be reviewed within three to six months of the review to ensure that this policy is properly applied and to review it, if necessary, to avoid situations of this nature in the future”.