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The Market is Thrown Open to the African Born Operator

Or is it?

Angola’s just concluded bid round exercise favoured, mainly, the country’s homegrown independents.

Nigerian owned companies are expected to be the primary beneficiaries of the ongoing divestment of 22 oil mining leases (OMLs) by AngloDutch Shell and ExxonMobil.

The Egyptian founded Pico-Cheiron recently finalized the $926Million purchase, along with the London listed Cairn Energy, of Shell’s equity in 13 onshore concessions and the Badr El-Din Petroleum Company (BAPETCO). in Egypt.

On the surface, it would seem the market has been flung open for homegrown African owned independents to grab E&P assets being sold by the state and being divested by the majors.

Believe us when we reiterate: There is a growing number of African born operators who want to put in sweat equity develop the asset and, in the process, build capacity.

But there’s a tendency we also see. The African independent can be more easily taken by the rentier instinct, and skew its work towards extracting enough to keep company owners financially comfortable and the rest of the system: tax to the state, reserves addition, increased output, community improvement, poorer.

For the most part since our founding in November 2001, this trade journal has eulogized the African homegrown independent.

Now we wonder if the concept is not overrated.

We ask you to connect with us as we interrogate this idea in our copies.

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local

entrepreneurs, technical enterprises or financing institutions.

It has been published by the Festac News Press Limited since November 2001, AOGR is a paid subscription based monthly, hardcopy and pdf publication delivered around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com Contact telephone numbers in our West African regional headquarters in Lagos are +2348130733523,+2347062420127, +2348036525979 and +2348023902519.


NNPC Mulls a 50,000BPSD Refinery on Kolmani River

By Macson Obojemuinmoin

The NNPC Ltd, Nigeria’s state hydrocarbon company, has proposed a condensate refinery as part of the ‘development’ of the Kolmani River field in the north of the country.

In the said proposal, NNPC clearly notes that it…

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Angola to Take Over Presidency of African Petroleum Producers’ Organization

The African Petroleum Producers’ Organization (APPO) has elected Diamantino Pedro Azevedo, Minister of Petroleum Resources of Angola, as President for the year 2022

Samou Seidou Adambi, Minister of Water and Mines of Benin, will be the Vice President and Celestin Enanto, Executive Board Member for Benin, Chairman.

The elections were unanimously made at the 41st Ministerial Session of the APPO Council of Ministers.

The next Ordinary Session of the Ministerial Council will be held in Angola during the last quarter of 2022 at a date to be communicated by the host country.

The 41st Ministerial Session “resolved to continue the exploitation of its Member Countries’ huge oil and gas resources for the economic emancipation of its people while also exploring the use of renewable energies”, according to a closing statement released by the APPO secretariat.

Top on the agenda of the Ministerial discussions was the Future of the Oil and Gas industry in Africa in the light of the Global pursuit of Energy Transition, with ministers acknowledging the reality of climate change and expressing their support for any human efforts aimed at tackling the dangers of climate change.

“The Session noted that the current approach to energy transition is unilateral imposition where the developed countries that have for over one hundred years used fossil fuels to grow their economies and societies and have all along been aware of the dangers of fossil fuel emissions, are now telling the world that fossil fuels are dangerous to mankind and that all should abandon it”, the statement adds.

The Ministers noted that this aggressive drive for Energy Transition is coming at a time that African economies are poised to launch themselves into industrialization, which requires a lot of energy, whereas the economies of the developed countries now require less energy because of their transformation from manufacturing to knowledge production and artificial intelligence.

The Ministers identified the imminent challenges that the oil and gas industry will face in Africa as international financiers withdraw funding for the industry, and oil and gas research institutions in the developed countries that have always led the technological development are closing their petroleum faculties.

 

 

 


Africa Wants to Finance African Oil & Gas Projects

Africa’s Oil and Gas Ministers are mulling the idea that a greater percentage of financing of oil and gas projects  on the continent should be financed by Africa based financiers.

At the 41st ministerial session of the African Petroleum Producers’ Organization (APPO) , the ministers identified the imminent challenges that the oil and gas industry will face in Africa as international financiers withdraw funding for the industry, and oil and gas research institutions in the developed countries that have always led the technological development are closing their petroleum faculties.

“The Council resolved to look within the continent at both public and private sources to raise the necessary capital to continue to finance the oil and gas industry”, according to a statement on the resolutions released by the APPO secretariat. “They agreed that Africa needs to” re-strategize as the game is fast changing.

“Furthermore, the Council called on the technologically advanced and financially capable countries to lend their support to African countries as they grapple with the challenges of Energy Transition”.

 


The Shell Nigeria Divestment Update: NNPC, Government and Sundry Complications

By Toyin Akinosho

UK Major Deals with the Nigerian Risk

Shell, the European major, was in discussion in London, UK, in the first week of December 2021 with the five companies remaining on the queue to purchase its equity in 18 Oil Mining Leases (OMLs) in Nigeria’s onshore and shallow water terrains.

The price tag to purchase this bulk is…

Please read more.

 


LOCAL CONTENT, GLOBAL INSIGHT, 2021

The latest monthly edition of the Africa Oil+ Gas Report has been released.

Some of the highlights:

COVER FEATURE

  • Angola Lists ‘Locals Only’ Services
  • A Target $2.5Billion Spend in Mozambique
  • Ghana: Get a Local Partner
  • Nigeria: The 10 Year Plan

KICKSTARTER

  • Shell Divestment: The Final Five

 FARM IN FARM OUT

  • MAP of Marginal Bid Round Winners

The link to the edition is here

https://africaoilgasreport.com/wp-content/uploads/2021/12/AOGR-VOLUME-22-NO-9-2021-global-Local-contents.pdf

Other stories in the copy include:

BRIEFINGS

  • Afreximbank: The Lender Chews It All
  • ENI, TOTAL, Will Be the Last Majors

FULL DISCLOSURE

  • PIA: The Promise Vs. The Delivery

 IN THE NEWS

  • Bullish on Libya

SPREADSHEETS

  • Angolan Operators’ Production
  • Nigerian Indigenous Producers: October 2021 Output
  • Angolan Rig Activity November 2021
  • Nigerian Rig Activity, November, 2021

MAPS

  • Equatorial Guinea E& P Map, Ghana E&P Map; Mozambique’s Activity Map; Angolan Activity Map; Nigerian Independents; Marginal Fields Activity Map

Plus, the regular features; Nigerian Independents Output, Concession Status, Angolan Production by Companies, Petroleum Rights, etc.
Contacts: +2348028354297, +2348124374087, +2348038882629, +2348036525979

 


ENI Commits to Invest $1Billion in Egypt’s Gulf of Suez and Nile Delta

The Italian player ENI has signed an agreement with the Egyptian General Petroleum Corporation (EGPC), committing to spending a minimum $1Billion on exploration and extraction in the Gulf of Suez and Nile Delta regions, the country’s Oil Ministry says in a statement, which does not specify a timeframe.

Tareq Al-Mulla, Egypt’s Minister of Oil and Mineral Wealth, and Alisandro Politi, ENI’s Executive President of Natural Resources Activities signed the agreement “of commitment to search for oil and development and exploitation in the Gulf of Suez and the Nile Delta between the Oil Corporation and Eni Italian Company and issued under law No. 185 for 2021”, the statement says.

ENI is also committed to spend at least $20Million extra dollars to Drill four (4) wells, “and the agreement comes within the new curriculum of the Ministry of Oil and Mineral Wealth to increase production rates and countering the natural shortage of energy by using the latest technologies in some areas are currently producing”, the statement, translated from Arabic says.

Egypt and ENI have lined up a number of joint initiatives on carbon capture, utilization and storage (CCUS), to be announced during the upcoming COP27 global climate summit in Sharm El Sheikh next year. Carbon capture is expected to be a big theme at COP27, with Oil Minister Tarek El Molla stressing its importance to the oil and gas industry and to combating climate change

 

 

 


Baker Hughes Executes Services Agreement on OML 65 Development

Sirius Petroleum reports that it has now executed a legally binding Master Services Agreement with Baker Hughes relating to the development of the Oil Mining Lease (OML) 65 in Nigeria’s Niger Delta. “This follows the Memorandum of Understanding (MOU) signed with Baker Hughes Company Limited earlier this year”, the London headquartered company says.

The MSA formalizes the terms of the appointment of Baker Hughes as the approved services provider to Phase 1 of the approved work programme (AWP) of the OML 65 Licence, a large onshore block in the western Niger Delta, Nigeria. Baker Hughes will provide a range of drilling and related Integrated Well Services under a mutually agreed pricing structure to deliver the initial nine well programme to Sirius and the joint venture COPDC Petroleum Development Company Limited (COPDC) in which Sirius is a 30% shareholder.

Phase 1 of the AWP will focus initially on the redevelopment of the Abura field, involving the drilling and completion of up to nine development wells, intended to produce the remaining 2P reserves of 16.2 MMbbl, as certified by Gaffney Cline and Associates (“GCA”) in a CPR dated June 2021.

The execution of the MSA with Baker Hughes constitutes the fulfilment of a key condition precedent to the drawing of the first tranche of funds under Sirius’ senior secured prepayment facility as the first stage of the OML 65 development programme, announced earlier this year.

“This marks a significant milestone for Sirius and its operational partners, and we look forward to working with the team on this innovative project.” said Toks Azeez, Sales & Commercial Executive for Subsaharan Africa at Baker Hughes. “Our leading Integrated Well Services solutions leverage new digitalization capabilities and will help deliver cost effective and efficient operations for the development of this important onshore opportunity.”

 


Bolloré May Sell African Logistics Assets to MSC

French logistics group Bolloré has received an offer from the Mediterranean Shipping Company (MSC), a Switzerland based operator in container transport and logistics, to acquire 100% of Bolloré Africa Logistics, comprising of all the Bolloré Group’s transport and logistics activities in Africa, based on an enterprise value, net of minority interests, of €5.7Billion.

Bolloré says it has granted the MSC Group an exclusivity until 31 March 2022 “to submit a put option”. Closing this sale will then require obtaining regulatory authorisations and the approval of the competent competition authorities.

“The Bolloré Group has decided to study this offer, which protects jobs and preserves its projects and commitments on the continent. It remains fully convinced of the potential of Africa, where it will continue to be actively involved in television (Canal+, MultiChoice), communications, entertainment, publishing and as a broadband internet access provider”, the group says in a statement. “The Bolloré Group reaffirms its commitment to invest and expand in the region.

“The two groups share many similarities. MSC is a European family group with a long-term vision that places its employees at the heart of its business strategy.

“The MSC Group has made significant investments in Africa in recent years and has great ambitions for the African continent. Its investment capacity, resources and market expertise would provide a new impetus to the projects that the Bolloré Group has designed, built and developed.

This transaction, if it comes to fruition, will not be completed until several months later*. The satisfaction of the Bolloré Group’s customers and partners remains a priority and, therefore, Bolloré Transport & Logistics will continue to honour its commitments by pursuing its projects, its investments and its goal to develop logistics ecosystems in Africa.

The Bolloré Group will ensure that its transport and logistics activities concerned with the MSC group’s offer continue to act independently of MSC so long as the competent authorities have not approved this project.

*MSC has an exclusivity period until 31 March 2022

 

 


Predictions 2022: How Africa Will Become a Hotbed of Consolidations, Acquisitions and Mergers

By Gerard Kreeft

The Energy Transition will continue to be dominated by two extremes: the continued growth of renewables-wind and solar-and a continued pushback by the oil and gas sector to maintain more than just a foothold in the energy landscape.

Not so much an energy transition, but an exchange of political power, disguised as an energy transition. Such a transition of energy power is fast finding its mark in Africa. A fast-moving continent which will see new players, both national and international. Both the oil and gas and renewable sectors could become a hotbed of consolidations, acquisitions and mergers.

In Africa the oil majors are for the most part playing a retreating role; instead, new players, who for the most part are not well known, will become dominant players. Some of these new players are involved in the oil and gas sector and others in the renewables sector.

 Exiting but with some exceptions

In Africa the oil majors will continue divesting assets no longer deemed to have shareholder value. Shell has for all intents and purposes exited Nigeria, and BP and Equinor are not pledging new funding to oil and gas prospects in Angola.

ENI and BP have indicated that they will merge their upstream activities in Angola. Will this be a precedent for merging their additional assets in Africa? If this is to happen other companies will join the frenzy in order to merge and consolidate assets.

If not exiting immediately, the name of the game is to extend the life cycle of a project to ensure that all of the project’s economic value is harvested. In most cases not developing new fields but adding satellite fields and oil recovery projects to maintain low project costs.

The sole exception is high value, low-cost projects such as Mozambique’s two major LNG projects: Rovuma being developed by ExxonMobil and Mozambique LNG being developed by TOTALEnergies. Yet both projects could possibly suffer delay again, or require additional partners to further mitigate the financial risks.

Nonetheless deepwater exploration, not a task for the faint-of-heart, will continue. TOTALEnergies is continuing to attract attention with its exploration campaign off the southern coast of South Africa. Its Luiperd and Brulpadda discoveries have given a further stimulus for continued exploration.

Opportunities for new oil and gas entrants

Less headline grabbing is the unfolding of new entrants seeing new business opportunities. Some examples:

Reconnaissance Energy Africa, also known as ReconAfrica, has started an eye-catching drilling campaign in the Kavango Basin in the Kalahari Desert of North Eastern Namibia.  Drilling of their 6-2 well commenced in early January 2021. Well 6-2 is the first of three wells to be drilled in the totally undrilled Kavango Basin, viewed as a classic high risk/ high reward type of oil and gas play.

Savannah Energy has taken over key assets from ExxonMobil in Chad and Cameroon: in Chad the Doba Oil Field and in Cameroon the Chad-Cameroon Oil Pipeline.

Recently Perenco has strengthened its Gabon base. TOTALEnergies has divested interests in seven mature oilfields operated by Perenco.

 Angola’s recent onshore licensing round for the nine oil and gas blocks in the Lower Congo and Kwanza basins received 45 proposals from 15 different companies with a proposed investment sum of over $1Billion. At first glance, this looks like a positive response to help kickstart an oil economy.

Angola’s National Oil, Gas, and Biofuels Agency (ANPG) stated that the bid round was designated to attract foreign companies not normally present in country and Angolan companies to boost the national potential both in terms of business and workforce. Could the Nigerian example, where today 25 indigenous companies produce nearly 400,000BOPD, also work in Angola?

Professor Jason Bordoff, Co-Founding Dean of the Columbia Climate School, Founding Director of the Center on Global Energy Policy, and Professor of Professional Practice in International and Public Relations at Columbia University SIPA, recently indicated that private equity companies are turning their attention to assets being aborted by the oil majors. Private equity now accounts for 10% of all North Sea production, up from virtually zero in 2014. Bordoff concludes that Chinese banks have also shown an ability to fill these investment slots. Could Sub-Sahara Africa become part of this scenario?

 Africa’s new green energy players

An important part of the equation could well be Africa’s power sector, normally seen as a distinct and separate category and not associated with the oil and gas industry. Their story has in many cases not been properly told. In a period of great transition, we can anticipate movement from the power sector. Companies, large internationals and others regional in scope, who already have a proven track record. Some key players to watch:

 ACWA

ACWA is Saudi owned, has 42GW generating power with a value of $66billion, spread over 13 countries. In Morocco the company has developed three solar parks totalling 500MW for the Moroccan Agency for Solar Energy (MASEN).

 Enel

Antonio Cammisecra, CEO of Enel Green Power symbolizes Enel in Africa. “We’re Africa’s top privately-owned renewable energy operator. This is something we can definitely feel proud about but still, it’s a drop in the bucket if we consider the sheer size of Africa’s untapped potential and the huge amount of energy it needs.”

The company claims to be Africa’s largest independent renewable energy player in terms of installed capacity. According to Enel’s 2019-2021 strategic plan the Enel Group is investing around €700Million in the continent, building 900 MW of wind and solar capacity.

Engie

Gillian-Alexandre Huart, CEO of ENGIE Energy Access, is Engie’s man in Africa. Its Access to Energy business in Africa, is tasked with providing millions of households and businesses across the continent with clean and affordable energy.

 Engie’s Energy Access is now one of the leading off-grid, Pay-As-You-Go (PAYGo) solar and mini-grid solutions providers in Africa, serving over one million customers and impacting more than five million lives in nine countries – Uganda, Zambia, Kenya, Tanzania, Rwanda, Nigeria, Benin, Côte d’Ivoire, and Mozambique. Engie Africa counts nearly 4,000 employees, and has 3.15GW of power generation capacity.

EDF (Électricité de France)

EDF partners with innovative start-ups to provide energy and services to a rural clientele in South Africa, Côte d’Ivoire, Ghana, Senegal, Kenya and Togo.

Such services enable more than 1 million people to light and power their low-consumption household appliances or also to be equipped by solar powered water pumps, thereby significantly improving their crop yields.

The company plans an extensive expansion of its solar and wind activities throughout Africa in the coming years.

Lekela

LeKela’s current portfolio includes more than 1.3GW of power involving projects in Egypt, Ghana, Senegal and South Africa.

The company’s focus is utility-scale projects which supply much-needed clean energy to communities across Africa.  The focus is on taking projects from mid-or late-stage development into long-term operation.

Scatec

Scatec is a Norwegian, renewable power producer, developing, building, owning and operating solar, wind and hydro power plants and storage solutions. Scatec has more than 3.5 GW in operation and under construction on four continents. The company is targeting 15 GW capacity by the end of 2025. In Africa the company has projects in Egypt, Mozambique, Rwanda, South Africa and Uganda.

Some final considerations

  1. Recently IRENA (International Renewable Energy Agency) and AfDB (African Development Bank) have jointly announced support of low carbon projects to enhance the energy transition. IRENA states in its Global Renewable Outlook that sub-Sahara Africa could generate as much as 67% of its power from indigenous and clean renewable sources by 2030. In the energy transition this would increase welfare and stimulate the creation of up to 2Million green jobs by 2050.
  2. Certainly public-private partnerships should be part of this mix. Governments to ensure a broad basis of support and energy companies who have the know-how and project management skills. A key bonus for oil/energy companies is knowing that renewables can be added to their reserve count.
  3. Developing Africa’s Green Deal should be the key theme for a new partnership among oil and gas companies, national oil and gas companies and electrical and transmission companies. Such collaboration should work closely with The Clean Energy Corridor which aims to support integration of cost-effective renewable power options to national systems, promote its cross-border trade and support creation of regional markets for renewable energy.
  4. The Clean Energy Corridor initiative has two African components: (1.) African Clean Energy Corridor (ACEC) for the member countries of Eastern and Southern African power pools.  (2.) West African Clean Energy Corridor (WACEC) within the Economic Community of West African States.
  5. Africa could well become a major hydrogen producer. For example, the Hyphen Hydrogen Project in Namibia will invest $9.4Billion over a period of nine (9) years. The project sponsors aim to produce 5GW of power by 2030, and 3GW of electrolysis capacity. A production of 300,000  metric tons of green hydrogen per year is anticipated once the project ramps up. According to the Government of Namibia a large focus would be on exporting hydrogen to Europe and to sell some of the output to neighbouring countries to “take advantage of the vision that our leaders have for the African Continental Free Trade Area”.
  6. According to Professor Jason Bordoff wealthy nations in 2009 pledged to provide $100billion annually in climate finance to low income countries. That has not happened. Now roughly $1Trillion-$2Trillion is required annually in clean energy investments in developing and emerging markets to achieve net-zero in 2050. In 2020 clean energy investments in these nations was only $150Billion.

 

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