All posts tagged oil-blocks


Malabu: ENI’s Descalzi Has Won the Politics, but Can He Escape Judicial Conviction?

By Toyin Akinosho

ENI is wrestling with the request by the Italian Public Prosecutor for conviction of the Company, its former and current CEOs and the managers involved in the Malabu case.

The company says the pursuit of convictions “are completely groundless”.

Mr. Descalzi has held the reins of the Italian E&P major for six years. His appointment, last May, for a third term of another three years by the President of Italy, is clear indication that he has won the politics of the most important challenge to his reputation.

Sergio Mattarella’s government is either convinced  that Desclazi is untainted by the Malabu case, involving alleged corrupt dealing with Nigerian officials in the course of the purchase of the Oil Prospecting Licence (OPL)245, or it would rather have a seasoned technocrat at the helm of its largest energy company to steer the country into the green economy, however smeared that technocrat is.

So, the political arm of the Italian government has signaled that it is comfortable with the 65-year-old, hard-working graduate of Physics from the University of Milan, but the country’s Judiciary has indicated, consistently, that it is not sure he is clean.

The fact that the state prosecutor is still pursuing “a conviction of the current CEO” says a lot about how it is convinced of wrongdoing.

ENI has insisted on its innocence, both in court and in public. “During its indictment, in the absence of any evidence or tangible reference to the contents of the trial investigation, the Public Prosecutor has told a story based on suggestions and deductions as already developed during the investigation. This narrative ignores both the witnesses and the files presented within the two years long and more than 40 hearings proceeding, that have decisively denied the prosecutorial hypothesis”.

Descalzi, who has been ENI’s CEO since May 2014, is on course of being the longest serving CEO of ENI in 30 years, if this case does not stop him.

He joined the company in 1981 as a young reservoir engineer. His career took off in 1994, when he was appointed Managing Director of the company’s subsidiary in Congo. Four years later he was Vice President & Managing Director of NAOC, a subsidiary of ENI in Nigeria. From 2000 to 2001 he held the position of Executive Vice President for Africa, Middle East and China. From 2002 to 2005 he was Executive Vice President for Italy, Africa, Middle East, covering also the role of member of the board of several Eni subsidiaries in the area. In 2005, he was appointed Deputy Chief Operating Officer of the Exploration & Production Division in Eni. From 2006 to 2014 he was President of Assomineraria and from 2008 to 2014 he was Chief Operating Officer in the Exploration & Production Division of ENI. From 2010 to 2014 he held the position of Chairman of ENI UK.

ENI’s press release earlier today, July 22, 2020 repeats the claim it has always made: “ENI and Shell paid a reasonable price for the license directly to the Nigerian Government, as contractually agreed and through transparent and linear means. Furthermore, Eni neither knew nor should have been aware of the possible destination of the money subsequently paid by the Nigerian government to Malabu. Moreover, the payment was made after an inquiry carried on by the UK’s Serious Organised Crime Agency (SOCA).

“So there can therefore be no bribes from ENI in Nigeria, no existence of an ENI scandal. ENI recalls the decision of the Department of Justice and the US SEC, which decided to close its own investigations without taking any action against the company.

“The multiple internal investigations entrusted to international third parties by the company’s supervisory bodies have long since highlighted the absence of unlawful conduct. ENI trusts that the truth can finally be re-established following the defensive arguments that will be presented at the end of September, pending the Milan Court’s forthcoming verdict”.

 

 


Nigerian Bid Round: DPR Says ‘Hold on, We’d Communicate Soon’

Nigeria’s Department of Petroleum Resources (DPR) says it will communicate the next steps of the ongoing bid round of marginal fields soon.

Several of the 500+ companies who have been notified of their prequalification had fruitlessly attempted to access the portal, on Monday and Tuesday, to pay for the next step of the round.

But officials at the regulatory agency told Africa Oil+Gas Report, they were still dealing with matters arising over the pre-qualification process and that access to the portal was closed for now.

The portal itself, on the DPR website, says: “Next step of the bid round to be communicated, soon”.

For the purpose of further payments, the notice on the portal adds: GIFMIS Code for Application Fee: 1000289370 and GIFMIS Code for Bid Processing Fee: 1000289383.

The matters arising that the officials spoke about has to do with the fact that there were companies who could make the qualification, but who are owing government a tax, tariff, fee or the other. A company may have fulfilled all obligations to government, but a director on its board may be a director in another company that is delinquent in paying statutory fees. Prequalificiation of such a company is on hold until the director clears himself.

Companies so affected have to comply by close of business on Friday, July 24, 2020.

In effect, the Nigerian government has taken advantage of the bid round to reclaim some of the debts owed to it.

As an update to our last report, there are no clear schedules for the remaining steps of the bid round, now.  The best thing to do is keep visiting the website of the DPR, https://www.dpr.gov.ng/


Chevron Announces Agreement to Acquire Noble Energy

Chevron Corporation announced today that it has entered into a definitive agreement with Noble Energy, Inc. to acquire all of the outstanding shares of Noble Energy in an all-stock transaction valued at $5Billion, or $10.38 per share.

Based on Chevron’s closing price on July 17, 2020 and under the terms of the agreement, Noble Energy shareholders will receive 0.1191 shares of Chevron for each Noble Energy share. The total enterprise value, including debt, of the transaction is $13Billion. The acquisition of Noble Energy provides Chevron with low-cost, proved reserves and attractive undeveloped resources that will enhance an already advantaged upstream portfolio.

The American major says that Noble Energy brings low-capital, cash generating offshore assets in Israel, strengthening Chevron’s position in the Eastern Mediterranean. Noble Energy also enhances Chevron’s leading U.S. unconventional position with de-risked acreage in the DJ Basin and 92,000 largely contiguous and adjacent acres in the Permian Basin.

“Our strong balance sheet and financial discipline gives us the flexibility to be a buyer of quality assets during these challenging times,” said Chevron Chairman and CEO Michael Wirth. “This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources. Noble Energy’s multi-asset, high-quality portfolio will enhance geographic diversity, increase capital flexibility, and improve our ability to generate strong cash flow. These assets play to Chevron’s operational strengths, and the transaction underscores our commitment to capital discipline. We look forward to welcoming the Noble Energy team and shareholders to bring together the best of our organizations.”

Transaction Benefits, according to Chevron include:

  • Low Cost Acquisition of Proved Reserves and Attractive Undeveloped Resource: Based on Noble Energy’s proved reserves at year-end 2019, this will add approximately 18 percent to Chevron’s year-end 2019 proved oil and gas reserves at an average acquisition cost of less than $5/boe, and almost 7Billion barrels of risked.
  • Proved reserves to be acquired for under $5 per oil equivalent barrel
  • Delivers $300 million in anticipated annual pre-tax synergies
  • Accretive to ROCE, free cash flow and earnings.

“ This combination is expected to unlock value for shareholders, generating anticipated annual run-rate cost synergies of approximately $300 million before tax, and it is expected to be accretive to free cash flow, earnings, and book returns one year after close,” Wirth concluded.

“The combination with Chevron is a compelling opportunity to join an admired global, diversified energy leader with a top-tier balance sheet and strong shareholder returns,” said David Stover, Noble Energy’s Chairman and CEO. “Over the last few years, we have made significant progress executing our strategic objectives, including driving capital efficiency gains onshore, advancing our offshore conventional gas developments and significantly reducing our cost structure. As we looked to build on this positive momentum, the Noble Energy Board of Directors and management team conducted a thorough process and concluded that this transaction is the best way to maximize value for all Noble Energy shareholders. The release says that

Noble Energy’s assets will enhance Chevron’s portfolio in:

  •  U.S. onshore
  • DJ Basin – New unconventional position with competitive returns that can be further developed leveraging Chevron’s proven factory-model approach.
  • Permian Basin – Complementary acreage that enhances Chevron’s strong position in the Delaware Basin.
  •  Other – An integrated midstream business and an established position in the Eagle Ford.
  • International o Israel – Large-scale, producing Eastern Mediterranean position that diversifies Chevron’s portfolio and is expected to generate strong returns and cash flow with low capital requirements.
  • West Africa – Strong position in Equatorial Guinea with further growth opportunities.

Chevron anticipates the transaction to be accretive to ROCE, free cash flow and earnings per share one year after closing, at $40 Brent.

The acquisition consideration is structured with 100 percent stock utilizing Chevron’s attractive equity currency while maintaining a strong balance sheet. In aggregate, upon closing of the transaction, Chevron will issue approximately 58Million shares of stock. Total enterprise value of $13Billion includes net debt and book value of non-controlling interest.


African Energy Chamber Launches New Energy Jobs Portal

The platform will assist local and international companies in attracting local talent across 30 different skills set in the oil & gas, power and renewable energy sectors

The African Energy Chamber says it has launched a free-of-access jobs portal “in order to maximize the saving of local jobs and assist in the recovery of African energy markets after the COVID-19 crisis,”.

The Chamber says the portal it created with its partners is  for trained and qualified African workforce. “The collaborative platform is accessible at www.EnergyChamber.org/jobs and relays the latest jobs opportunities for Africans across the continent’s energy markets”.

The platform will assist local and international companies in attracting local talent across 30 different skills set in the oil & gas, power and renewable energy sectors. All energy companies operating in Africa are able to post their job offers for free, and these will be relayed on the platform and via the Chamber’s communications channels after approval by the Chamber’s admin and team. The jobs portal will be operated and maintained by the African Energy Chamber in order to avoid all fraud and guarantee the credibility of the offers available.

“Local content has always been the number one priority of the African Energy Chamber when advocating for an energy industry that works for Africans and builds truly sustainable business models. With this new platform, we are getting rid of a lot of entry barriers set on the job market by expensive recruitment agencies. This initiative of the Chamber is non lucrative and we encourage all African and international companies to work with us on boosting local jobs creation to support the recovery of our industry and build true sustainability,” declared Nj Ayuk, Executive Chairman at the African Energy Chamber.


AFC Takes Djibouti’s First IPP To Bankability

Africa Finance Corporation has worked up a $63Million strategic investment to construct and operate a 60MW wind project in the Ghoubet area, near Lake Assal in Djibouti.

AFC has made this investment as lead developer together with Great Horn Investment Holdings (GHIH) and inviting further investment from Climate Fund Managers (CFM), and FMO, the Dutch entrepreneurial development bank.

AFC has led the development of the project since 2017, developing it from concept to bankability, securing a 25-year take or pay power purchase agreement with Électicité de Djibouti as the off-taker, an implementation agreement and with the Government of Djibouti backed by a Government Guarantee. The Project also has MIGA guarantee cover. The wind project is expected to begin commercial operations in 2021.

AFC says it adopted, along with its partners, an all sponsor equity financing for this transaction, which enabled the start of construction within two years, a significant reduction from the typical 3-5 years development cycle. As part of this investment, Oliver Andrews, Chief Investment Officer, as well as Amadou Wadda Head of Project Development at AFC, have joined as nominee non-executive directors to the Board of the project and the holding company, Red Sea Power SAS, and Djibouti Wind LP.

Currently Djibouti’s power sector faces significant challenges, with less than 100 MW reliably available for the population. Its electricity demand is also expected to considerably increase due to various large-scale infrastructure projects including ports, free-trade zones and railways that the Government of Djibouti has undertaken.

 


ENERGY TRANSITION: EU Gives €46Million Climate Grant to Egypt, Morocco

The European Union (EU) has approved €45Mllion in grants for several European Bank for Reconstruction and Development (EBRD) programmes for green investments and climate change resilience.

The grants will benefit two countries in North Africa.

€21.1Million is earmarked for Morocco, under the EBRD’s Green Energy Financing Facility (GEFF), set up to support companies and owners wishing to invest in green technologies.

The GEFF programme is implemented through a network of more than 140 local financial institutions in 26 countries, supported by more than €4Billion of the EBRD funding.

In Morocco, the EU grant (via the EBRD) will enable local companies to invest in green technologies. EBRD believes the beneficiaries will reduce their operating costs by implementing climate adaptation measures, energy-efficient technologies and renewable energies, which will also improve their overall competitiveness.

Egypt will receive €24.8Million under the GEFF to support energy efficiency and renewable energy investments through local banks for loans to private companies. The EBRD’s investment should thus support the Egyptian government’s ambition to increase electricity production from renewable sources.

 

 


Nigeria Plans Hike in Local Content Fees in New Legislation

A doubling of the tariff paid by oil and gas operators into the National Content Fund is one of the key highlights of the ongoing revision of the 10-year-old Nigerian Oil and Gas Industry Content Development (NOGCD) Act in the country’ bicameral legislature.

The document, which has reached its second reading in the Senate, the upper house, proposes an increase, from one percent to two percent, “of every contract awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity or transaction in the upstream sector and designated midstream and downstream projects operation, activity or transaction in the Nigerian oil and gas industry shall be deducted at source and paid into the Nigerian Content Development Fund, established for purposes of funding the implementation of Nigerian content development in the Nigerian oil and gas industry”.  This is the amendment of Section 105 of the original act, which was enacted in 2010.

The new law also seeks to specify what percentage of a company’s gross earnings it must allocate for research and development and goes ahead to mandate companies to fund the country’s research needs. The amendment of  Section 38 says that: ”All operators shall set aside, annually and for the purpose of carrying out research and development activities in Nigeria, minimum 0.5% of the gross revenue received by the operator; The funds set aside under subsection(1) shall be applied as follows (a) fifty percent shall be allocated to Research and Development programmes in Nigeria; (b) Fifty percent shall be applied to research and development activities within the facilities of the operator established in Nigeria.”

The extant law also pays heed to Research and Development R&D, but neither decrees how it is funded, nor determines how much of a company’s earnings must be set aside for funding.

It simply states, in the same section: “The operator shall submit to the Board and update, every six

months, the operator’s Research and Development Plan (R and D Plan). (2) The Rand D Plan shall-

(a) outline a revolving three to five-year plan for oil and gas related research and development initiatives to be undertaken in Nigeria, together with a breakdown of the expected expenditures that will be made in

implementing the R and D Plan; and (b) provide for public calls for proposals for research and development

initiatives associated with the operator’s activities”.

The introduction of administrative sanction in Section 68 is another amendment that sticks out. In this proposal, the influence of the National Content Development Monitoring Board (NCDMB) has been expanded to include prosecutorial powers.

It says:  “A person who submits a plan, returns, report or other document and knowingly makes a false statement, commits an offence and shall be liable to administrative sanction which may include a fine of not more than five percent of the project sum, cancellation of the project or any other sanction as may be prescribed by the Board.  A person who submits a plan, returns, report or other documents and knowingly makes a false statement, and fails to provide satisfactory reason for the violation shall be liable to administrative sanctions including cancellation of project, withdrawal of certificates or any other sanction as may be prescribed by the Board.”

The story was earlier published in the June 2020 edition of the Africa Oil+Gas Report

 


Cameroon’s Gas to Power Market in Distress

By Sully Manope

The Cameroonian electricity company ENEO (Energy of Cameroon), has announced a 32.6% drop in the production of thermal power stations in the country in the first quarter of 2020.

The reduction (compared with production during the same period in 2019), was due to rationing carried out “at some power stations because of a fuel shortage caused by enormous cash constraints.

ENEO has been unable to pay companies that supply gas to its generators (including Victoria Oil &Gas) as well as companies that generate power from natural gas (Globeleq, Aggreko).

Altaaqa, which supplied the generator ENEO used to convert gas to electricity at Logbagba, in Douala City, suspended operations at ENEO’s Logbaba site in September 2019.

Production capacities at Aggreko operated generating plants at Maroua and Bertoua decreased by almost 60% during the period under review, ENEO reports. Generation from Globeleq operated Kribi and Dibamba gas-fired plants also fell drastically.

This drop in thermal energy production, was, very slightly, offset by increased hydropower production, which had an uptick of 3%.

Overall, the Song Loulou and Edéa hydroelectric plants, both on the Sanaga River, provided 65% of Cameroon’s energy supply over the period.

 


FAR Signs New JOAs, But Struggles for Partner to Fund the Next Gambian Well

Australian minnow, FAR, has reported “efforts to find an additional partner for the drilling of the next well in The Gambia”.

FAR is still smarting from the dismal results of the Samo-1 well, drilled in offshore Block A 2 in late 2018. The first exploratory well to be drilled in the Northwest African country in  40 years, Samo-1 was a dry hole.

The company signed new Joint Operating Agreements (JOA’s) in respect of the A2 and A5 Blocks, with the Malaysian state hydrocarbon company f Petroliam Nasional Berhad, PETRONAS).

This follows the granting of new Licences for those Blocks by The Government of The Gambia effective October 1 2019, after which FAR and PETRONAS took the opportunity to update the terms of the existing JOA’s by entering into new JOA’s with effect from 1 October 2019.

FAR remains as Operator under the new JOA’s which better reflect the terms of the new Licences.

FAR says it has “run numerous data room presentations for interested parties” and it is “working to conclude a farm-out before the restart of the drilling operations”.


Gasoline Prices Rise in Ghana, Kenya

Gasoline prices have risen in Kenya by Kenyan Shilling (Sh)5.77 higher per litre, while diesel and kerosene prices dropped by Sh3.80 and Sh17.31 respectively in changes announced by the Energy and Petroleum Regulatory Authority (EPRA) a week ago.

A litre of petrol will cost Sh89.10 per litre in Nairobi, the capital city, an increase from the current Sh83.33 while that of diesel will be sold at Sh74.57. Kerosene will retail at Sh62.46 per litre in the city.

“The changes in this month’s prices are as a result of the average landed cost of super petrol increasing by 31.54% from $188.7 per cubic metre in April to $248.21 per cubic metre in May 2020, diesel increasing 5.58% from $242.13 per cubic metre to $228.62 and kerosene decreasing by 51.84% from $262.44 per cubic metre to $126.39 per cubic metre,” says Pavel Oimeke, EPRA Director General, in a statement.

In Ghana, over the weekend of June 19-21, Shell and Goil, two of the country’s largest Oil Marketers, increased their prices by 4% percent, in addition to the 8% bringing the total increase to about 12% within a week.
But the Executive Director of Ghana’s  Institute of Energy Security (IES), Paa Kwasi Anamua Sakyi, says
other Oil Marketers were unlikely to increase their prices to match Goil and Shell at the pump, r due to competition for market share.

The combined Increase in the depreciation of the local currency Ghana Cedi against the US dollar, the world’s major trading currency, added to the rise in prices of crude oil in the international market, have put pressure on the pump prices in Ghana, the IES says.

Local Kenyan media explain that the recovery on the international crude oil market, “now reverses three months of a steep drop in prices that saw the product sell Sh18 per litre cheaper in April 2020.

They also attribute the marginal drop in diesel prices to “lower demand as summer catches on and the need for heating falls in Europe and America while kerosene, which falls in the same class with Jet A1, lost demand due to the grounding of air travel.

The Energy and Petroleum Regulatory Authority said the changes in the pump prices came as a result of shifts in landed costs of the three products, which decreased for diesel and kerosene and rose for petrol.

The Kenyan government in September introduced a Sh18 per litre adulteration levy on kerosene to discourage its use as an adulterant by a fuel cartel who targeted the wide price margin between kerosene and diesel to make millions.

 

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