All posts tagged gas


Egypt, Ethiopia Far from a Truce over Massive Hydroelectric Project

An agreement is still quite far-fetched between the three countries in the conflict over the largest hydroelectric power project in Africa.

Egypt’s Irrigation ministry says that the current round of negotiations, which concludes Friday, is not heading anywhere.

Egypt, Ethiopia and Sudan have been in talks regarding the impact on the flow of water in the River Nile, from the construction of the Grand Ethiopian Renaissance Dam (GERD) by Ethiopia.

At 6,450MW, the dam, formerly known as the Millennium Dam, will be the largest hydroelectric power plant in Africa, when completed.

Located in the country’s Benishangul-Gumuz Region, 15km east of the border with Sudan, it will also be the seventh largest in the world.

The gravity dam on the Blue Nile River has been under construction since 2011.

As of October 2019, the work stood at approximately 70% completion., but the filling of the reservoir, scheduled to begin in July 2020, is what is being held up by complaints from Egypt, which insists that the work will drain away large volume of water from its own section of the river.

An emergency meeting and videoconference of the Executive Council of the African Union, chaired by the South African President Cyril Ramaphosa, a week ago, resulted in considerable ease of tension.

After the talks, Egypt, Ethiopia and Sudan agreed to postpone the impoundment of the gigantic dam.

Sudanese Prime Minister Abdalla Hamdok said in a statement that it had been “agreed that the filling of the dam would be postponed until an agreement was reached”.

Mr. Hamdok added that “Sudan is one of the main beneficiaries of the dam, but also one of the big losers if the risks are not limited, which is why it reminds Egypt and Ethiopia of the absolute need to find a solution, “.

The Nile, which flows over some 6,000 km, is an essential source of water and electricity for a dozen countries in East Africa. Egypt gets 97% of its water needs from this river.

 


Algeria Extends LNG Supply Agreement to France

TOTAL and Sonatrach have signed an agreement that extends Algerian LNG supply into France by three years.

Algerian state hydrocarbon company Sonatrach will deliver up to 2MillionTonnnes per year of LNG to the LNG terminal at Fos Cavaou, on the entry port to the Mediterranean.

Fos Cavaou is a key gateway to the French and European markets.

The agreement also includes the sub-charter of an LNG tanker from TOTAL by Sonatrach.

Algeria’s initial agreement to supply LNG to France was signed in 2004.

 


TOTAL Wraps Up Financing for Mozambique LNG

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.

 


Nigerian Companies Are the Biggest Defaulters on Ghana’s Concession Rentals

Sahara Energy Fields, Brittania U and Erin Energy, all founded by Nigerian businessmen, are among the the eight Exploration and Production Companies, that were in default of one payment or another to Ghanaian Tax authorities as of February 2019, the latest date for which data are available.

With $587671.23 behind in both arrears and 2019 outstanding, Swiss African Oil owed the most, according to  Public Interest Accountability Committee, Ghana’s equivalent of NEITI. SAO was followed by Brittania U and Sahara Energy Fields, both Nigerian owned companies, indebted to the tune of $456, 879.26 and $409,315.07 respectively. The fourth most indebted to the Ghanaian state was Gosco/Heritage, with $334,850.00 in both arrears and 2019 outstanding.

Erin Energy, also a Nigerian founded company, owed $151,200. The least indebted companies were Medea $78,050; UB Resources, $37,050 and Springfield, $33,650.


Chevron Advances Process of OMLs 86 and 88 Sale

The sale of 40% equity held by Chevron on Oil Mining Leases (OMLs) 86 and 88, is in top gear. Companies who have shown interest in acquiring the asset are expected to make full disclosure of their financial and operating capacities by the end of April 2020.

OMLs 86 and 86 are located in shallow waters at the mouth of the current Niger Delta Basin.

OML 86 contains the Apoi fields; the largest being North Apoi.

It also holds Funiwa , Sengana and Okubie fields. One recent discovery: Buko, straddles Shell Nigeria operated OPL 286 and is either on trend with, or even on the same structure as the HB field in OPL 286. OML 88 holds the Pennington and the Middleton fields, as well as the undeveloped condensate discovery, Chioma field.

If Chevron manages to sell off its holdings in OMLs 86 and 88, it would have disposed off all the legacy shallow water assets it acquired when it purchased Texaco in 1999.

Between 2013 and 2015, Chevron sold its stakes in OMLs 83 and 85, both of them former Texaco Nigeria assets.

It’s instructive, then, that Chevron’s largest producing asset in Nigeria, the Agbami field, was “inherited” in  that same turn- of –the- century merger with Texaco; this deepwater field alone produces 165,000BOPD, more than a third of Chevron’s total operated crude oil production in Nigeria.

 


VFuels wins bid for a Modular Refinery FEED in Equatorial Guinea

Equatorial Guinea’s Ministry of Mines and Hydrocarbons, supported by its strategic partner Marathon Oil Corp., has awarded VFuels Oil & Gas Engineering (VFuels) the feasibility study for the construction of a modular refinery in Punta Europa, Malabo.

The study will include the engineering and design of a 5,000Barrels Stream PerDay (BSPD) modular refinery to supply refined products for the country’s domestic consumption. The study is expected to be delivered within 12 weeks of the contract’s signature.

Equatorial Guinea is seeking investments for a modular refinery in the continental region, storage tanks and the promotion of other projects derived from methanol, among others, according to a government statement.

“This is an important step when it comes to implementing this project with an important goal to prevent stock outs, and provide refined products of higher quality to economic operators and the general public,” stated Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons. “The experience and track record of VFuels in engineering and design of modular refineries at an international level, could be beneficial to this project and Equatorial Guinea.”

The award follows up a meeting in January between President Obiang Nguema Mbasogo, Mr. Gabriel Mbaga Obiang Lima, Marathon Oil Chairman, President and CEO Lee Tillman and Executive Vice President Mitch Little, during which Marathon Oil reiterated its commitment to Equatorial Guinea and towards the development of the country’s Gas Mega Hub. Marathon Oil had then declared its support to construct a modular refinery in Punta Europa by undertaking a conceptual study on the Ministry’s behalf.

Both parties had also agreed to immediately commence feasibility studies related to methanol to gasoline and other methanol derivatives, in coordination with the Ministry of Mines and Hydrocarbons.


Sonangol Begins Second Round of Sale of Equity

Angola’s state hydrocarbon copay Sonangol has launched the second round of its widely anticipated international pubic bid for the sale of its stakes in 52 companies.

Nine companies are up for grabs in this tranche, three more than the six that were involved in the tender launched in January 2020.

The companies include Petromar, where it is divesting 30%; Sonatide Marine Limited, and Sonatde Marine Angola Limitada, 51%; Sonamet Industrial S. A and Sonacergy Services and Oil Construction Limited, 40%.

Sonangol will divest 33% from each of Paenal-Porto Amboim Shipyard and SBM Shpyard. It will sell 30% of Sonadiets Limitad and Sonadiets Services SA.

The companies for sale this time are all involved in oil and gas operations, whereas those in the January 2020 tender are enterprises in non-oil and gas functions

Bidders are expected to submit qualification documents to the Negotiation Committee for the Process of Disposal of Sonangol’s Quota in Mineral Resources and Petroleum Segment.

They are required to present a provisional bond and a value raging from $7000 to $15,000  or equivalent in Kwanzas, based on the existing foreign exchange rate.

The tender is being conducted under the terms of the country’s Public Procurement Law and applications will start to be received in mid May 2020.

 

 


TOTAL Swallows Tullow A whole in Uganda

The drawn-out deal is concluded at $2 per barrel

French major TOTAL and Irish independent Tullow have entered into an Agreement, through which TOTAL shall acquire Tullow’s entire interests in the Uganda Lake Albert development project, including the East African Crude Oil Pipeline.

The overall consideration paid by TOTAL to Tullow will be $575Million, with an initial payment of $500Million at closing and $75Million when the partners take the Final Investment Decision to launch the project. In addition, conditional payments will be made to Tullow linked to production and oil price, which will be triggered when Brent prices are above $62/bbl. The terms of the transaction have been discussed with the relevant Ugandan Government and Tax Authorities and agreement in principle has been reached on the tax treatment of the transaction.

Under the terms of the deal, TOTAL will acquire all of Tullow’s existing 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.

The transaction is subject to the approval of Tullow’s shareholders, to customary regulatory and government approvals and to CNOOC’s right to exercise pre-emption on 50% of the transaction. “We are pleased to announce that a new agreement has been reached with Tullow to acquire their entire interests in the Lake Albert development project for less than 2$/bbl in line with our strategy of acquiring long-term resources at low cost, and that we have an agreement with the Uganda government on the fiscal framework,” said Patrick Pouyanné, TOTAL’s Chairman and CEO. “This acquisition will enable us, together with our partner CNOOC, to now move the project forward toward FID, driving costs down to deliver a robust long-term project.”


Shell at the Brink: Never Let A Good Crisis Go to Waste

By Gerard Kreeft

Since April 1 2020 Elisabeth Brinton was appointed Executive Vice President of Shell’s New Energies business, steering the company’s work in power, renewables and lower-carbon technology. According to her Linked-In site, ”this role covers Shell’s work in wind and solar, new mobility options such as electric vehicle charging, and laying the foundation for an integrated lower-carbon power business” .
Brinton is a former Silicon Valley entrepreneur and utility industry veteran… She joined Shell in 2018 from AGL Energy, Australia’s largest integrated energy company, where she was Executive Vice President, New Energy.  She “helped to increase adoption of renewable energy, build the world’s first residential virtual power plant and grow and sell a profitable smart metering business”. Brinton also
was previously the Corporate Strategy Officer for PG&E Corporation, the US utility company that specialises in renewables, customer solar, energy efficiency and electric mobility.

She has a monumental task of developing Shell’s renewable energy strategy. The situation is grim, especially from a shareholder’s perspective. Shell’s share  price has plummeted. Earnings season is fast approaching and shareholders are anticipating their golden share dividend. Not since WWII has Shell reneged paying out such a dividend. Will it be able to continue this tradition?

The signs are not good. Shell’s cash deficit between 2010 and the 3rd Quarter of 2019 was $22.9Billion, based on a study released by the Institute for Energy Economics and Financial Analysis. The other majors- BP, Chevron, ExxonMobil, and TOTAL- included had similar cash deficits. In total more than $200Billion! With a continued lower oil price, the future scenarios are bleak.

Shell plans to invest $2 – $3Billion a year on its power and low-carbon business compared with an overall spending budget of $30Billion per year between 2021 and 2025.

Prior to the current oil and gas crisis BloombergNEF estimated that investments in renewable energy in the period 2010-2019 was $2.6Trillion. Through 2025, $322Billion per annum would be spent, almost triple the $116Billion invested in fossil fuels. With most E &P budgets locked down future investments in the oil and gas sector look grim.

If there ever is a motivation to move on and recognize that renewables are the new boys on the block the time is now. To think that Shell, who are doing symbolic spending on renewables will survive is also an illusion. Shell continues to give a gold dividend and this will be paid for by debt financing, i.e. redundancies and the selling of more assets. In the meantime the share price continues to sink like a stone.

If you make a net comparison between Orsted, the Danish the Offshore Wind Farm giant and Shell then the following:

Shell’s latest share price (6 April 2020) was US$ 39

In May 2018 the share hit a high of $70

In other words, the share has lost almost half of its value.

Orsted’s share price on April 6, 2020 was $108

Orsted’s share price on July 1, 2016 was $35

In this period of time the share price has tripled, while Shell’s share lost almost 50% of its value.

True the Shell share continues to give shareholders a golden dividend of some 6%. Orsted for the last 4 years has only had a dividend of 1.68%.

Yet the true investment return must surely be seen in the spectacular and continued rise of the Orsted share which has tripled and has only had a small blimp in the current economic crisis. How long can Shell  afford this current policy? Simply throwing money at it will not solve the problem. What is missing is a strategic vision…and simply appointing a new EVP for Renewable Energy is too little too late. Shell can possibly choose two options:

Continue on its present course paying out its current dividend and financing this through assets sales and redundancies; or

Become a truly dedicated energy company increasing its new energy budget five-fold to at least $10- 15Billion per year. At the same time decrease the dividend and ensure that the Shell share can gain a true value. Ensuring true shareholder value will depend on creating a renewable business model that meets the requirements of todays’ shareholders.

P.S.

Since this article was written, Shell has announced its commitment to take significant additional action on climate change, including a commitment to achieve net zero emissions. There’s no clarity, however, on how that commitment is tied to day to day business.

Gerard Kreeft, BA (Calvin University, Grand Rapids, Michigan, USA ) and  MA (Carleton University, Ottawa, Ontario, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. He writes on a regular basis for Africa Oil +Gas Report.


AfDB Is Not Supporting the East African Crude Oil Project

The African Development Bank has refuted the claims in a news article that it plans to provide financial support to the East African Crude Oil Pipeline Project.

It doesn’t name the medium, nor cite the headline, but says it “strongly refutes the claims in the misleading article, which references a letter by a group of civil society organizations and climate change advocates asking the institution to withdraw from the project due to its potential social and environmental damage”.

The facts, according to AfDB:

  1. The NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF) has not provided financing to any Private Sector Company for upstream oil or gas pipeline projects in East Africa.
  2. No commitment was therefore made to any party to fund the East African Crude Oil Pipeline Project. The project is not included in the Bank’s lending programme.
  3. The Bank is strongly committed to renewable energies.

Then the bank beats its chest

“It is important to point out that the African Development Bank Group has for more than a decade played a leading role in crafting policies and delivering investments that promote sustainable development practices on the continent, including climate adaptation and resilience.

“The Bank is committed to facilitating the transition to low-carbon and climate-resilient development in African countries across all its operational priority areas”.

 

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