Offshore Africa Magazine Vol. 10 Issue 9 - November, 2020 Edition

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VOL. 10

ISSUE 9 - NOVEMBER 2020

GHC10/$10/N1,000

AF R I C A

Ghana Pledges Sweeping Oil Reforms

Petroleum Chamber Seeks Waivers South Africa Celebrates Jubilee-like Success BP Hunkering Down on Africans Operations

Somalia Aims to Become Oil Hotspot Mozambique: Heading for Prosperity or Chaos?

Introduction Rigworld Petroleum Services Limited (RPSL) has been fully licensed by the National Petroleum Authority (NPA) as an Oil Marketing Company (OMC) to engage in the procurement, storage and distribution of petroleum products through our state of the art retail network as well as bulk supplies in the downstream sector of the Ghanaian market.

BUSINESSES

RPSL has two major business arms: RETAIL BUSINESS Stations focuses on the development and construction of our innovative state of the art stations where petroleum products would be retailed to the motoring public and the COMMERCIAL B2B unit which focuses on direct bulk sales to industries and entities.

RETAIL BUSINESS

RPSL will partner with would be investors to build Retail Business outlets as well as construction company owned state of the art Retail Business retail stations to retail petroleum products. RPSL wants to take petroleum product retailing in the country to another level by offering the following at selected forecourts: • Self-service fuelling • Cashless payments i.e. RPSL Fuel, Visa, Master Cards as well as mobile money solutions • Future plans for electric car charging points • Wifi spots • Free air on the forecourt Our objective is to innovate the Retail station offerings and give our customers an experience second to none in the industry whilst expanding our retail presence on a selective basis nationwide.

COMMERCIAL

We proactively explore and develop business relationships with companies and enterprises for the supply of fuels for their operations. We have established and continue to seek for relationships with customers in the following industries; • • • • •

Manufacturing Construction Mining Oil and Gas Bunkering

gese we seek to supply quality products at the most competitive prices possible on the market. We intend to continue expanding and deepen our portfolio in these sectors.

BUNKERING

We have positioned ourselves to be a company of choice for marine bunkering services arising from our strategic partnership with key players in the downstream sector in Ghana, backed by qualified staff with the requisite technical experience in the field. We are able to meet customers demand both onshore and offshore

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EDITORIAL

ISSUE -

A FRIC A

PUBLISHER/EDITOR-IN-CHIEF GILBERT DA COSTA Publisher@offshoreafricamagazine.com Editor-in-Chief@offshoreafricamagazine.com EDITOR KATE DA COSTA Editor@offshoreafricamagazine.com REPORTERS Patience Aremu Editorial@offshoreafricamagazine.com MARKETING EXECUTIVE ELIZABETH AMOAH adverts@offshoreafricamagazine.com CIRCULATION/ SUBSCRIPTION KWAME ABOAGYE Email: subscriptions@offshoreafricamagazine. com LEGAL CONSULTANT GODWIN DJOKOTO TAKORADI REPRESENTATIVE FELIX BENTUM Takoradi@offshoreafricamagazine.com EUROPEAN UNION BUREAU KWAME AGYEI-NYARKO Fatcoin Group Kneppelweg 5 NL-1104 MA Amsterdam Phone: +31 6 271 60131 Email: kanyarko@yahoo.com Email: Amsterdam@offshoreafricamagazine.com LONDON BUREAU AL-HAJI ABDUL TANKO Aimex Focus Ltd 125 Roman Road, Bethnal Green London E2 OQN,UK Phone: +44 794 979 3126 Email: London@offshoreafricamagazine.com

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editorial Africa’s Oil Recovery Could Be Long and Difficult

GILBERT DA COSTA

The year 2020 will remain one of the worst in oil and gas history.

The repercussions in Africa will remain for a long time to come.

Low oil prices, deferment of major final investment decisions, have stagnated critical inflows into Africa’s energy sector. The expectation is that the end of the pandemic and rebalancing of the market will automatically translate into revived investments in Africa.

This is not likely to be the case.

The future belongs to oil-rich African nations that are pragmatic in their outlook, reform-minded and offer competitive advantages for oil and gas investments. The more established, traditional oil producers were majorly uncompetitive and now need to respond to current realities.

Without massive reforms to reduce above-the ground risks, capital inflow is unlikely to pick up even under improved market conditions, unless fundamental changes are implemented.

With energy transition increasingly intrusive, oil-rich African countries need to move quickly to attract credible investors.

Editor-in-Chief, Offshore Africa magazine Gilbert Da Costa is a journalist who worked for many years as the Nigeria correspondent for Cable News Network (CNN), British Broadcasting Corporation (BBC), Voice of America (VOA), TIME magazine and Associated Press.

Born in Accra, Da Costa provided some of the most exciting, factual and unbiased reporting of top stories during his time in Nigeria- the long period of military dictatorships and the return to civil democracy in 1999.

A lawyer, Da Costa has had many outstanding experiences in his 30 -year career, including a minute-by-minute live reporting for CNN on the sudden death of both military ruler General Sani Abacha and politician Moshood Abiola in 1998. He was credited with CNN’s electrifying coverage of Nigeria between 1993 and 2001.

Working in Nigeria offered him the opportunity to cover the oil and gas industry in great detail. He also covered the Boko Haram phenomenon extensively and was the first foreign reporter to visit Maiduguri and Limankara, in the troubled northeast, on assignment for TIME magazine in 2005.

Da Costa has interviewed several leading international personalities, including four serving Nigerian presidents.

INTERNATIONAL ADVISORY BOARD CHARLES DARKU: Ex Tullow Ghana Managing Director NJ AYUK: Founder & CEO, Centurion Law Group RANTI OMOLE: Executive Chairman, Radial Circle MC VASNANI: CEO/MD, Conship NIALL KRAMER: CEO, South Africa Oil & Gas Alliance (SAOGA) PROFESSOR JOHN SUTTON: London School of Economics

OFFSHORE VOL.10.9

VOL.

5

EXPLORATION & PRODUCTION

South Africa Celebrates Jubilee-like Luiperd-1x Well

By Gilbert Da Costa

The deepwater Luiperd-1x well, offshore South Africa, drilled at the end of October, encountered 73 meters of net gas condensate pay in “well developed good quality” reservoirs after drilling to a total depth of about 3,400 meters,’ Total, the operator, said.

The Luiperd prospect, located in the Ousteniqua Basin 175 km of the southern coast of South Africa, lies to the east of the game-changing Brulpadda find in the same exploration block 11B/12B. Overall, this play could prove up over one billion boe in basin floor cretaceous fans on this massive margin, finally delivering on the Jubilee (Ghana) promise of 2007.

The Luiperd discovery (said to be one of the world’s largest this year) could be 50 percent larger than the play-opening Brulpadda discovery last year, which logged 34m of gas condensate and oil

pay in mid-Cretaceous high net-to-gross (N/G) sands, and 23m gas condensate in the Lower Cretaceous with similarly high N/G and without encountering an oil water contact.

In the adjacent South Outeniqua Block, Total is scooping a proposed work programme of drilling, VSP and CSEM, with reports of up to 10 possible further wells.

A visibly elated South African Minister of Mineral Resources and Energy, Gwede Mantashe, visited the DeepSea Stavanger drillship within hours of the announcement. “This is an important project in South Africa. We are excited about the operations, which brings the much-needed investment in South Africa’s upstream petroleum sector,’ he said.

“We are very pleased with this second discovery and its very encouraging results, which prove the world-class nature of this offshore gas play,” Total said in a statement.

South Africa has in recent years run into electricity shortages, forcing the country to burn expensive diesel to keep the lights on. A major polluter, the country also relies on coal to generate 90 percent of its electricity.

South Africa’s new found gas condensate resources in the area are expected to kickstart the country’s gas-to-power programme and help replenish gas supply to the Mosel Bay gasto-liquids plant.

The development of LNG could help transform the South African economy, spur re-industrialisation, reduce the country’s over-reliance on coal-fired power stations and contribute to increased regional

Eni Announces Last Topside Module Lifting for Coral-Sul FLNG

OFFSHORE VOL.10.9

• The lifting of topside modules for the Coral -Sul FLNG facility

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is the world’s first newly-built deepwater floating liquefaction plant.

With a capacity of 3.4 million tons of liquefied gas per year, it will be located offshore Mozambique and put in production the considerable resources of the Coral gas field in the Area 4 of the Rovuma Basin.

Eni’s local content plan is also providing training and working opportunities in Mozambique and abroad, confirming the continuous commitment of Area 4 Partners to the long term and sustainable development of the country.

Eni announces the lifting and installation of the last of the 13 topside modules of the Coral-Sul FLNG facility, currently under construction in South Korea. This lifting, which marks the end of the onshore-modules fabrication campaign configuring the entire gas treatment and liquefaction plant, is to schedule and in line with the expected sail-away in 2021 and gas production start-up in 2022.

The massive 70 thousand tons topside was lifted onto the hull one module at a time and is now complete. However, construction continues with integration and commissioning activities. “This

is a great achievement for Area 4 Partners, in middle of all struggles caused by the Covid-19 pandemic, and confirms our commitment to the successful development of the Coral South Project.” stated Roberto Dall’Omo, the General Manager of Eni Rovuma Basin.

Construction of the Coral-Sul FLNG hull and topside modules started in September 2019.The hull was launched in January 2020 and this was followed by the lifting of the first topside module in May 2020. The work is being carried out at the Samsung Heavy Industries shipyard in South Korea.The Coral-Sul FLNG

The Coral South Project is the pioneering project operated

by Eni Rovuma Basin on behalf of the Area 4 partners, namely Mozambique Rovuma Venture (MRV, an incorporated joint venture owned by Eni, ExxonMobil and CNPC), Galp, KOGAS and Empresa Nacional de Hidrocarbonetos E.P. It is based on six ultra-deepwater wells in the Coral Field, at a water depth of around 2,000 meters, feeding via a full flexible system the Coral-Sul FLNG.The Coral field has approximately 16 trillion cubic feet of gas in place and was discovered by Eni in May 2012.

trade. Plans to build a gas pipeline from Mozambique to South Africa is likely to be put on hold.

South Africa’s struggling economy benefitted ZAR 1.5 billion during the Luiperd-1x drilling. The project employed 195 South African professionals with a variety of specialized skills, ranging from drilling engineers, aviation and marine specialists, petroleum geologists and oceanographers.

Ahead of the October drilling, President Cyril Ramaphosa took personal interest in the project, in the hope that success could help revitalize the country’s floundering economy. The government literally rolled out the red carpet for the crew and operator. Offshore Africa sees an exciting future for oil and gas in South Africa.

ExxonMobil Plans Expansion into Namibe Basin ExxonMobil has signed risk service agreements (RSAs) to become the operator of Namibe deepwater blocks 30, 44 and 45 two years after penning a memorandum of understanding to explore the basin.

The RSAs—signed with the Angolan National Oil, Gas and Biofuels Agency (ANPG) and NOC Sonangol—differ slightly from production-sharing contracts, with the latter usually awarded following formal licensing rounds, whereas the ExxonMobil agreement wenias an ad hoc deal.

Jeronimo says ExxonMobil would pay for the exploration work for these three blocks, with Sonangol later reimbursing the American major should oil be discovered and produced, according to news agencies.

ExxonMobil general manager Andre Kostelnik told reporters his firm had already spent $50mn to buy and evaluate seismic data. The blocks are located 50-100km from Angola’s coast at depths of 1,500-3,000m.

ExxonMobil’s Angola blocks 15, 17 and 32 combined produced 135,000bl/d in 2019—down from 169,000bl/d in 2016—and the company is Angola’s third-biggest producer with a 19pc market share, according to a US government report. ExxonMobil signed the Namibe RSAs despite major reductions in its capex this year as a result of the coronavirus pandemic and the decline in oil prices.

EXPLORATION & PRODUCTION

Shell Farms into South Africa Offshore Block

P

rivately-owned oil firm Impact Oil & Gas has signed a farm-out agreement with Shell for the 50% working interest and operatorship in the Transkei & Algoa exploration right, offshore South Africa.

Transkei & Algoa blocks are located offshore eastern South Africa and cover approximately 45,838km² in water depths up to 3,000 meters.

Shell has also been granted the option to acquire an additional 5% working interest should the joint venture elect to move into

the Third Renewal Period, which is expected to be approximately in 2024.

The Algoa block is situated in the South Outeniqua Basin, near Total’s Block 11B/12B, containing the Brulpadda gas condensate discovery and where Total has recently announced a further significant gas condensate discovery, following the successful drilling of the Luiperd1X exploration well, which it is currently testing.

The participating interests in the Transkei & Algoa blocks following completion of the farm-out by Impact will be as follows: Shell (Operator), 50% and Impact, 50%.

• Offshore South Africa is becoming a hotspot for oil exploration

• Mr. Wassam Al Monthiry, MD, Tullow Ghana

FPSO Abigail-Joseph Achieves First Oil, in Nigeria Yinson is pleased to announce that FPSO Abigail-Joseph has received its 1st Oil Certificate on 28 October 2020 following successful 72-hour Stabilisation Testing. This marks the commencement of the firm charter of the FPSO for a period of 7 years, with options to extend for a further 8 years.

Tullow Oil and partners have invested $18 billion in two offshore oil assets offshore Ghana in the past 10 years, says Wissam Al Monthiry, Managing Director, Tullow Ghana, while providing an overview of the UK explorer’s current operations in Ghana. In addition, Tullow says it paid over $500 million in taxes and royalties, as well as $35 million invested in “socioeconomic projects.”

Ghana has provided Tullow its most outstanding success so far, transforming it from a littleknown exploration firm into a leading independent explorer in Africa. “Tullow Ghana has a bright future, and Ghana remains extremely important for the future of Tullow Plc,” he declared.

Despite the bright spot that Ghana has become, the longterm future of hydrocarbons is currently under scrutiny, with energy transition gaining traction in the contemporary world energy agenda.

“We in oil and gas are at cross roads, where demand for our products is globally reducing.

But we believe that even the most pessimistic view will admit that oil will continue to make a large proportion of the global energy mix,” he insisted. “That may decrease over the coming years, and that may affect oil prices.

So, that presents a big macroeconomic challenge for us to co-exist with. But every challenge brings opportunities.”

And while most integrated oil and gas companies are the reducing their exposure to oil and gas, Mr. Al Monthiry reckons the fittest, low-cost, greenest oil and gas companies may survive the energy transition. “We are working to make Tullow Ghana one of them.”

Despite achieving great success in Ghana, Tullow Plc has struggled financially in recent years dealing with a substantial debt challenge.

The Yinson team achieved the delivery of first oil for production within 20 months after signing the contract with client FIRST Exploration & Petroleum Development Company Limited (“FIRST E&P”), as Operator of the Nigerian National Petroleum Corporation (“NNPC”) / FIRST E&P OMLs 83 & 85 Joint Venture (the “NNPC/ FIRST E&P JV”). The asset is operating in the Anyala and Madu fields within OMLs 83 & 85.

FPSO Abigail-Joseph is Nigeria’s first integrated oil and gas greenfield project that has been wholly executed by an indigenous oil company, and is the Group’s

fourth offshore production asset to operate in Nigerian waters.

Ademola Adeyemi-Bero, Managing Director of FIRST E&P is enthusiastic embarking on the next operational phase of the relationship with Yinson, building on the strong and collaborative partnership during the project development phase: “As a Nigerian independent with an offshore integrated oil and gas focus, the partnership with Yinson should enable our company to deliver world class operations that delivers value to the JV. We look forward to a long-term relationship that delivers mutual bottom-line benefits to both companies.”

FPSO Abigail-Joseph has a storage capacity of 550,000 barrels and is designed to produce 50,000 barrels of oil per day with gas lift and gas injection capacities at 15 MMSCFD and 39 MMSCFD respectively.

Source: Yinson

OFFSHORE VOL.10.9

Tullow Invests $18 Billion in Ghana

By Joe Appiah

7

SPOTLIGHT

CNOOC and Boru Bid for OxyAnadarko Assets in Ghana

Paris Opposes Unfreezing of Libyan Assets in France • The Fnac des Ternes building is part of the property concerned by the dispute

• CNOOC and Boru are bidding for offshore assets held by Oxy-Anadarko in Ghana

The Chinese major CNOOC has put in a substantial offer to acquire Occidental Petroleum’s 30,000 barrels a day in Ghana, but it is not the only firm in the running.

OFFSHORE VOL.10.9

It seems that the US firm Occidental Petroleum (Oxy) has decided to confer the soughtafter status of preferred bidder on the Chinese state-owned CNOOC and on Boru Energy for the acquisition of its holdings in Ghana.

8

According to our sources, a team from the Chinese major travelled to Accra in late September to meet with Ghanaian officials and obtain the approval of the authorities, who are in the midst of gearing up for the presidential election in December. CNOOC is understood to have submitted by far the highest bid for a share in Jubilee and TEN (Tweneboa, Enyanra, Ntomme), in which Oxy has a 27% and 9% stake respectively. These holdings equate to some 30,000 bpd, which Oxy acquired when it took over Anadarko in 2019.

Total initially sought to acquire Anadarko’s entire African portfolio from Oxy for $8.8bn but ultimately only managed to reach a deal in Mozambique.

Algeria opposed Total’s expansion in the country while Ghana threatened to impose substantial capital gains taxes on Oxy if it ceded Jubilee and TEN to the French major.

The spectre of capital gains taxes CNOOC is well aware of the problem posed by capital gains

taxes. On a deal that could be worth close to $800m, the finance ministry could demand several hundred million dollars from Oxy. Some bidders, such as the Emirati-Norwegian firm Petronor, included a local partner in their offer to Oxy in the hope of securing capital gains concessions from the Ghanaian treasury. By contrast, CNOOC is bidding alone without any partner, which would make it difficult for Oxy to obtain even a partial exemption from this tax.

Boru Energy vies with CNOOC To prevail over CNOOC, Boru Energy is counting heavily on the ties that its founder, Aidan Heavey, has with senior Ghanaian figures. Boru is owned by the former boss of Tullow Oil, who has hand plenty of time to build up a network in Ghana.

In 2007, Tullow discovered the Jubilee deposit, which went into production in 2010, and then the TEN reserves in 2016. Founded in 2019 and financed by Carlyle, Boru is still seeking to acquire its first major asset.

A sale shrouded in mystery The process of Oxy selling off its assets in Ghana has been rather less than transparent. The shortlisted firms have not been informed of the identity of their rivals or of the sum that they have bid. Everything has been handled in-house by two of the firm’s senior executives: the vice president in charge of strategic planning, Sunil Mathew, and the director of business development, Brennan Campbell.

The Directorate General of the French Treasury has refused to release the assets of the Libyan sovereign wealth fund claimed by the Kuwaiti group in its €1bn dispute with Libya. These assets include the Fnac building in Paris’ Ternes district, and sums held with Société Générale.

assets, had not been met. Al Kharafi will soon challenge the Directorate General of the Treasury’s decision before a French administrative court.

Nearly ten years into the Libyan conflict, a €1bn debt is still being bitterly fought out between Paris, Tripoli and the small Persian Gulf state capital, Kuwait city. As Africa Intelligence understands, the Directorate General of the French Treasury notified the Kuwaiti construction group Al Kharafi this summer that the assets of the Libyan Investment Authority (LIA), frozen since September 2011 under a decision of the United Nations Security Council, cannot be released.

After a project for a vast seaside resort in Libya signed during the Gaddafi era was abandoned before work ever begun, an Egyptian arbitration court ordered the Libyan state and the LIA to pay the Kuwaiti group €1bn in compensation.

This case is full of legal twists.

Initially, all seizures orchestrated

by Al Kharafi were validated by an appeal court in Paris, which, in September 2019, overturned a first court’s 2016 ruling. This had awarded the Kuwaiti company shares of Financière CER. Owned by the LIA subsidiary Lafico since 1992, Financière CER owns the Compagnie Des Exploitations Réunies (CER), which is none other than the owner of the Fnac des Ternes building. Among the assets seized included financial assets: a $151m Euro medium term note held with Société Générale and several hundred million euros of securities placed at BIA bank.

Al Kharafi’s informal appeal was processed by the French Ministry of Finance’s Department of Multilateral Affairs and Development (SAMD). This department led by Guillaume Chabert reports directly to the Directorate General of the Treasury. The SAMD did not reverse its January decision to refuse the release of the assets.

It argued that the LIA was not a party to the contract with the Kuwaiti group. In other words, for the French administration this condition, one of the few exceptions to the freezing of

Real estate and financial assets in Al Kharafi’s crosshairs

A new judicial front also opened in June in Egypt with the annulment on appeal of the 2013 arbitration. The LIA also failed to gain immunity in its battle against Al Kharafi in Paris (LLA, 18/09/19). This would have protected the state assets from being seized. Against all odds, in another case regarding assets held with Société Générale Option Europe, the Versailles Court of Appeal had issued a judgment in June 2019 granting immunity of enforcement to the Libyan fund (LLA, 22/11/19).

These two radically opposed rulings will each be given their final call by the French Court of Cassation.

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LOCAL CONTENT

Pandemic Pain Persists for Ghana

By Joe Appiah Oil production at Ghana’s prolific offshore Jubilee field is on a steady decline, having reached peak oil earlier in the year. Oil production in the West African nation could come to a complete halt by 2037 if new fields are not brought online.

But the immediate concern really is the impact of the Covid-19 pandemic and low oil prices on Ghana’s upstream. According to Ghana’s Petroleum Commission, 98 contracts valued at $389 million have been cancelled, while a staggering 500 Ghanaian oil and gas workers have lost their jobs.

Most aren’t coming back anytime soon. Investigations by Offshore Africa suggest that even if oil prices stay at $45 until the end of 2021, 70 percent of the jobs lost will not come back by the end of next year.

Offshore drilling contracts by Aker Energy, AGM, GOSCO, Amni Petroleum, Medea, Springfield, Eco Atlantic were also terminated.

“The cancellation of these contracts, such as the five-year Maersk Drilling contract, which

was terminated in June 2020, together with associated subcontracts will have a devastating toll on local businesses,” revealed Egbert Faibille, CEO of the Petroleum Commission.

The impact on the national economy is even more profound.

Loss of critical revenue means fiscal deficit is widening at an incredible 16.4 percent of GDP in 2020, and 9.3 percent of GDP in 2021, according to the IMF in its latest assessment.

This is said to be the largest fiscal deficit in Ghana’s history. The government had projected a prepandemic deficit of 4.7 percent, which was subsequently revised to 11.21 percent of GDP. Government debt is expected to increase from 62.8 percent of GDP in 2019 to 76.7 percent in 2020, and 74.7 percent in 2021, raising debt sustainability concerns, especially for external debt servicing with various Eurobond coupon payments due in the coming months.

“External reserves are forecasted to drop from 3.6 months of import cover in 2019 to 2.7 months of import cover between

2020-2021. The IMF says the economy is projected to grow at 0.9 percent in real GDP terms in 2020, picking up to 4.2 percent real GDP in 2021. This is also dependent on the pace of overall global economic recovery.

In 2019, the IMF projected Ghana to grow its economy at 6 percent and in April 2020 revised its outlook to 1-2 percent, with big implications for job, and the oil and gas sector.

The Jubilee field commenced production in late 2010, contributing around 90,000 bpd to Ghana’s total oil output of about 200,000 bpd. Ghana has seen significant reduction in oil revenues this year. The government had projected total oil revenue of $1.5 billion (made up of Royalties-$254.4 million; Carried and Participating Interest- $817 million; Corporate Income Tax-$493 million and surface rentals-$1.6 million).

Oil revenues represent the third largest source of foreign exchange after cocoa and gold.

Since 2010, Ghana has secured a little under $6 billion in oil revenues, of which 70 percent has been used to support the

national budget and operations of the Ghana National Petroleum Corporation.

The Petroleum Commission says it expects exploration and appraisals to resume in 2021, by companies such as Amni, Eco Atlantic, Midea, GOSCO; while Springfield E & P, AGM Petroleum and Eni are billed to submit appraisal programmes.

ExxonMobil has acquired 3D seismic over its offshore Block.

The contractor is undertaking geological studies to identify possible locations of oil and gas deposits.

“It only makes a fair case that time during which no work was done due to the Covid-19, there should be restitution to restore the period. That is the position the Petroleum Commission has taken,” assured Mr. Faibille.

With Aker Energy delaying final investment decision for its offshore Pecan project, some in Ghana are beginning to see the deepwater Cape Three Block, held by ExxonMobil, as a possible next development target in Ghana.

OFFSHORE VOL.10.9

Schlumberger’s Sacked Ivorian Staff Say the Company is Taking Advantage of Weak Labor Laws to Stiff Them of Fair Severance

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s layoffs proceed at Schlumberger the world’s largest oilfield services company former workers in Ivory Coast say they’re being cheated of fair compensation.

African nations, according to a union representative.

The country received ITUC’s second-worst rating in the organization’s 2020 global rights index, dedicated to countries where there are “systematic violations of rights.” (The US is in the same category.)

Four former Ivorian workers told our reporter that when Schlumberger laid them off, it didn’t pay them adequate severance and failed to uphold terms of a 2010 agreement

Headquartered in Houston, Schlumberger is taking advantage of the West African nation’s weak governance and feeble unions to avoid giving the workers the pay they are due under an employee agreement, they say.

This practice is not uncommon among global corporations based in the West, according to Joe Drexler, an international labor expert and adjunct professor at the University of Denver.

Ivory Coast has among the weakest labor laws in the world , according to the International Trade Union Confederation (ITUC), an organization that advocates for workers’ rights.

Schlumberger lays off workers in Africa Following the fall in oil prices, Schlumberger in May said it would lay off 35 Ivorian workers, including engineers, analysts, and equipment operators. The company had 60 workers in Ivory Coast before the pandemic, another document shows.

The oilfield services giant has also cut local staff in other

Workers allege Schlumberger cheated them of fair severance

According to the agreement, Ivorian workers are entitled to severance benefits including a fixed sum of about $5,400, in addition to two months of gross salary per year at the company, with a maximum of 36 months of payment.

When Schlumberger laid off workers, however, the company said the agreement was no longer valid and offered workers far less compensation, according to another internal document we

obtained.

Three pay stubs show that analyst roles at Schlumberger in the Ivory Coast earn a base salary of $400 to $600 a month.

With various bonuses, however, analysts can earn over $2,000 a month, one of the former employees said.

Negotiations go nowhere Schlumberger and an Ivorian union rep spent weeks this summer negotiating new terms of severance without reaching an agreement.

By August, when the negotiations ended, Schlumberger had upped its offer. Still, the former workers say the offer is far from the original agreement and far from what they’re willing to accept.

The former workers say they’re prepared to go to court to fight for more compensation.

LOCAL CONTENT

MODEC Boosts Ghana’s Covid-19 Testing Capabilities MODEC Ghana has provided testing kits, laboratory equipment, consumables, reagents and PPEs worth more than $600,000 to the Ministry of Health for distribution to four Covid-19 testing centres, namely; (Noguchi Memorial Institute for Medical Research (Accra), Kumasi Centre for Collaboration and Research (Kumasi), Takoradi Veterinary Laboratory (Takoradi), and National Public Health Reference Laboratory (Tamale).

“Since the inception of Covid-19, we have supported other institutions in various ways to see to it that they are actually able to test, treat and manage Covid-19 cases,” MODEC Ghana’s Managing Director Theo Ahwireng noted at a presentation ceremony in Accra. “We believe strongly that we should not rest on our oars at the moment. We must keep on with the fight until we have eradicated Covid-19, and we think this is an opportune time to give the testing agencies more capacity to be able to do that.”

Mr. Ahwireng observed that while the nation had two covid-19

• Mr. Theo Ahwireng

CONSHIP DONATES COMPUTERS TO SCHOOL

testing centres at the onset of the pandemic, conscious efforts quickly expanded Ghana’s testing centres to at least four. A testing facility in Takoradi was very important for the oil and gas industry.

Deputy Health Minister Dr. Bernard Okoe Boye was convinced Ghana’s robust Covid-19 testing approach helped to control the spread of the virus. “The policy of tracing, testing and treating has been very key to Ghana’s success story. Our objective still is to zero active cases in the shortest possible time, and that will be possible with partnership like this, where we get the necessary items in testing, tracing and making sure that we keep a safe environment.”

• The computer lab donated by CONSHIP

Leading oil and gas logistics company CONSHIP has donated a computer lab (including computers and accessories) to a primary school at Ashaiman, near the port city of Tema.

Ashma Basic 1 & 2 Primary received the items from CONSHIP’s founder and CEO MC Vasnani.

“Businesses cannot be successful when the society around them fails. This is why at Conship we strive to make an impact by giving back and making lives better for the next generation,” wrote Mrs. Vasnani, Chief Operating Officer at CONSHIP, in an online posting.

Uniport Student Wins N1m in Nigerian Content Essay Competition

The prize giving ceremony was held in Yenagoa, Bayelsa State and the essay by the 18-year-old was adjudged the best amongst over 6000 entries submitted by undergraduates who must be within their first and 2nd year in the university.

The topic for this year’s essay contest was “Research &

Development as a key lever for Local Content Implementation in Nigeria’s Oil and Gas Industry.”

Miss. Oluwadamilola Elizabeth Oluwafela, a 200-level Medical student, Obafemi Awolowo University, Osun State emerged the first runner up and won a cash prize of Five Hundred Thousand Naira (N500,000.00), while Mr. Somtochukwu Samson Eze, a 100-level Medicine and Surgery student of University of Nigeria, Nsukka, Enugu State placed third and won a cash prize of Three Hundred Thousand Naira (N300,000.00).

• Prize winner Abasiekeme Edet receives his cheque for one million naira

OFFSHORE VOL.10.9

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second-year student of Pharmaceutical Sciences at the University of Port Harcourt, Rivers State, Mr. Abasiekeme Edet has won One Million Naira (N1,000,000) at the 4th edition of the Nigerian Content Development and Monitoring Board (NCDMB) Annual National Undergraduate Essay competition.

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Other finalists received HP laptops as consolation prizes.

In his keynote address, the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote disclosed that the competition was geared towards developing human and material capacities, which is one of the key mandates of the Board.

• ExxonMobil Ghana presented Covid-19 materials to Korle Bu

GAS

APICORP Gas investments in MENA jump by 29% The Arab Petroleum Investments Corporation, a multilateral development financial institution, has released its MENA Gas & Petrochemicals Investments Outlook 2020-2024 on the MENA region’s planned and committed investments for the period 2020 to 2024. The report features key regional developments in the regional gas and petrochemicals landscape and the dynamics shaping it over the short and medium terms.

Regional Developments 2020 is witnessing one of the biggest gas demand shocks on record, with a year-on-year (y-o-y) reduction of 4% globally.

This stands in stark contrast to 2019, which was a record year for liquefied natural gas (LNG) LNG Final Investment Decisions (FIDs). The 2020 global crisis is expected to reduce the annual

growth rate for global gas demand during 2020-24 to 1.5% compared to the pre-COVID-19 estimate of 1.8%.

Despite the global demand shock, the MENA region’s committed gas investments held steady compared to last year.

Planned investments meanwhile increased by 29% to reach USD126 bn, mainly due to the strong ongoing regional gas drive for cleaner power generation and improved monetization as a feedstock for the industrial and petrochemicals sectors.

Notably, the petrochemicals sector witnessed a y-o-y increase of USD4 bn in planned projects compared to last year’s outlook, while committed projects decreased by USD13 bn due to the completion of several projects in 2019.

The share of government

• APICORP’s CEO Dr. Ahmed Ali Attigu

investments in committed and planned gas projects (92%) is higher than it is in the petrochemicals sector (72%).

Given the increasing size of projects, such investments typically rely on a 70:30 or 80:20 debt/equity ratio.

In terms of committed petrochemicals investments, Egypt tops the region, followed

by Iran and Saudi Arabia, owed

to localization of specialty chemical industries and feedstocks import substitution.

Egypt also saw a USD10 bn uptick in planned gas activities, mostly related to recently awarded offshore blocks to companies such as Chevron, bp and Noble, as well the development of its midstreamdownstream infrastructure to bolster its position as a gas hub.

OFFSHORE VOL.10.9

Cheaper Gas Driving Lower Power Costs in Ghana

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Electricity charges have remained stable in Ghana, and even declined somewhat, in recent years, due to a deliberate government policy to drive down the cost of natural gas from two key suppliers, Eni and Tullow.

Ghana currently receives around 180 MMscfd and 125MMscfd of natural gas respectively from three offshore blocks operated by Eni and Tullow.

The country is also supposed to have a contracted 120 MMscfd of gas delivered from Nigeria via the West Africa Gas Pipeline, but this is often irregular and inconsistent.

Ghana’s Deputy Energy Minister (Petroleum) Dr. Mohammed Amin says the government had renegotiated tariffs for gas supplies from Eni. “The gas price of $8.8 per MMTBU to $6.08 per MMTBU. We have been able to renegotiate, very difficult to renegotiate because some of these commitments are long-term commitments. But we managed to renegotiate.”

The country currently generates more electricity than it needs, prompting calls to step up the export of power to neighbours, under a regional power pooling

arrangement. According to Ghana’s Energy Commission, the country has a storage capacity of 5,083MW, but peak national demand is 2,700MW. The country is said to be losing US $500 million per annum in paying for power it does not need. Around 80 percent of the population have access to electricity, with plans to achieve universal coverage by 2030.

But critics say electricity costs in Ghana remain rather high. Dr. Amin sees a more competitive natural gas cost as a way to bring down electricity tariffs. “And

so, gas as an input cost, needs to be looked at all the time.

If it’s going to be higher and unaffordable, electricity will be expensive. Everything depends on electricity. It is the fuel for the engine of the economy,” noted Dr. Amin.

Another important intervention in achieving lower electricity tariff was the decision by the government to scrap the $3 per MMTBU charge imposed by the previous government on gas supplied free to Ghana by Tullow Oil.

• Ghana’s President Nana Akufo Addo at the start of gas production at OCTP, which was Ghana’s first non-associated gas production

“Also, we restored the price of Jubilee gas to zero from $3 per MMBTU. Even though Jubilee gas was supposed to be free for Ghanaians to enjoy, the NDC government imposed a tariff of $3 per MMBTU for Ghanaians to pay. We have decided to give it to Ghanaians for free, and this what the government of President Akufo Addo has done,” he revealed. “All of these have contributed to reducing the high cost of electricity, which we inherited from the NDC.”

GAS

Understanding LPG Pricing Along the Value Chain in Africa

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PG is the fastest-growing oil product in Africa and its future growth path is relatively clear of downside risks. In Sub-Saharan Africa, where biomass dominates the energy mix, CITAC expects LPG demand to triple from current levels to 12mn mt in 2035.

LPG’s robust fundamentals have spurred growing interest in how LPG is priced along the value chain—from FOB supply zone to end-consumer.

Using examples from Morocco, Senegal, Côte d’Ivoire, Burkina Faso, Mali, Niger, Cameroon, Congo-Brazzaville, South Africa and Zambia, this Industry Insight seeks to identify the key principles that underpin LPG price regulation in Africa, highlighting common ground but also some of the differences in approach that invariably result from country-specific supply chains and regulatory frameworks.

The guiding principle behind official LPG price structures is that regulator-determined

allowances for the various activities in the value chain should: • Reflect the actual costs, including cost of capital, incurred by an efficient market player operating in a safe, compliant manner.

• Attract ongoing investment to the sector (if such investment is deemed necessary based on existing capacity relative to demand).

In countries where LPG pricing is controlled, regulators use this ‘(Efficient) Cost-Plus’ approach to pricing. In general, official price structures are clearly divided into ‘Import Parity’ and ‘Downstream’ portions.

Given that price structure allowances are always expressed on a unit basis, the regulator has the challenging task of defining typical, or ‘benchmark’, costs for each activity in the value chain. This is just one of the many considerations facing regulators as they seek to quantify acceptable cost and margin allowances in the LPG value chain.

In the medium- to long-

term, LPG pricing in Africa is likely to remain subject to heavy regulator involvement, particularly in the residential sector, as governments seek to navigate the twin challenges of mass deforestation and huge population growth. In subsidised markets, benchmark price structures will continue to be necessary as a means of calculating the magnitude of any under- or over-recoveries owing to or from commercial players.

Sahara Energy is the Dominant LPG supplier in Ivory Coast

Although the 2014 population and housing census (RGPH 2014) in Cote d’Ivoire showed that 78% of households use wood and charcoal as their cooking fuel while 22% use gas, the National LPG consumption has grown from 175KT in 2013 to 380KT in 2019, following increased availability of the butane gas and deliberate policy intervention by

the government.

According to 2020 YTD records, Sahara Energy has invested about USD84 million to supply 200,578.22MT of LPG to the West African nation. Last week, the Sahara Gas LPG vessel berthed in Ivorian waters discharging 10,000MT of LPG, further driving increased departure from other sources of cooking fuels that pose huge threats to healthcare and the environment.

The Sahara Gas vessel is owned

by West Africa Gas Limited (WAGL), a joint venture between

Nigerian National Petroleum Corporation (NNPC) and energy conglomerate, Sahara Group. The JV also has the Africa Gas LPG vessel in its fleet. Sahara Gas and Africa Gas have delivered 373,651.22MT and 268,206.22 MT of LPG to Cote d’Ivoire since the commissioning of the vessels in March 2017.

Olayemi Odutola, Country Manager, Sahara Energy Resources in Cote d’Ivoire, said “Working in collaboration with various stakeholders, Sahara Energy is delighted to be driving access to clean energy in Cote d’Ivoire. This is equally the

case across the continent where our LPG vessels play a critical role in ensuring households and communities have a viable cleaner option for cooking and ultimately living healthy lifestyles,” he said.

Sahara Energy is already in a Joint Venture with Petroci Holding towards achieving the construction of a 12,000MT LPG storage facility to increase storage and supply of the product in Cote d’Ivoire. The $43 million project will be executed in two phases, with commissioning scheduled for November 2021 and October 2022, respectively.

Hwange’s Net Zero Natural Gas Plant in Zimbabwe a Game Changer An actual game-changing ecofriendly technology is being implemented for Hwange Thermal Power Plant units 7 and 8 being built by Chinese firm, Sinohydro. The US$1,1 billion plant is designed to produce 600 megawatts when both units are commissioned in two years’ time.

The process, known as magnetohydrodynamics, or open cycle in simpler terms, involves burning coal with oxygen instead of air to generate electricity without emitting any sulphur oxide (SOx) dioxide.

scrutiny from environmentalists since sulphur oxides, mainly sulphur dioxide (SO2) emitted by coal-fired power plants, produce long-term risks for numerous cardiovascular diseases like asthma and tuberculosis.

Thermal power stations the world over have been under

The expansion of the Hwange Thermal Power Plant is expected

to feed 600 megawatts into the national grid and will go a long way in easing the country’s electricity crisis. Currently, Zimbabwe requires about 1 800 megawatts at peak periods, but frequent breakdowns at the existing antiquated units have reduced production to less than 500 megawatts.

OFFSHORE VOL.10.9

Sahara Energy Resource Limited has since 2014 ploughed over $450 million into facilitating the supply of Liquefied Petroleum Gas (LPG) to Cote d’Ivoire as the nation continues its quest for cleaner cooking fuel options.

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COMPANY NEWS

How Assala, Total and Perenco Increase Profits Thanks to Covid-19 and at Gabon’s Expense In Gabon, oil companies have increased profits during the current public health crisis and negotiated very profitable fiscal benefits with Bongo’s government.

• Libreville, capital of Gabon

The Covid-19 pandemic has not been all bad for oil companies in Gabon. Maurel & Prom, Total, Perenco and Assala Energy, for example, were able to increase profits in these strange times.

Operating costs eliminated Operating costs, including employee’s salaries and maintenance, have sharply decreased in Gabon since the public health crisis began in March 2020. According to our sources, Assala Energy was able to decrease theirs from $11 to $7 a barrel, even lower than the $9 goal they had set in-house.

Why such a sharp decrease? A large number of Assala Energy’s workers have been temporarily laid off by their service providers.

Where they usually have 450 full-time workers, after a massive pairing-down of their subcontractors, they now have only 200 to 300. There are fewer rotations and each team now has to work longer hours. Oil workers and managers currently

stay six weeks on site rather than the usual four. When contacted, Assala nonetheless asserted the operating costs had not changed.

At Perenco, sources indicate costs have decreased from $13 to around $10 per barrel.

All staff was first ordered to take paid holiday in order to reduce the number of people on-site. They were then placed on temporary leave and their wages partially covered by the state. Shrinking their payroll has allowed companies such as Assala and Perenco to reduce costs.

Gabon’s public finances put to the test

In addition to enjoying increased profits, with the help of Upega, the Gabonese oil workers union, companies have convinced the Ministry of Finance to cover any additional costs related to Covid-19 measures.

This includes, for example, all transportation costs from Libreville to Port-Gentil, which must now be made solely by helicopter, mostly through HeliUnion Gabon. The special budget line also includes any additional costs for catering services.

At the end of the year, Gabonese tax authorities will compensate oil companies by reducing the amount of tax on any additional costs incurred from

the pandemic. No industry in Gabon other than oil has been graced with such goodwill from the state.

In order to convince Nourredin Bongo, head-of-state Ali Bongo’s son and General Coordinator of Presidential Affairs, Upega made it clear that oil companies would surely take their business elsewhere if they did not make a few concessions. Shell already sold its parts to Assala Energy in 2017 and Total has recently sold almost all of its holdings to Perenco. Very few of Africa’s oil-producing states took such measures to cover Covid-19related costs, due to the high risk involved.

OFFSHORE VOL.10.9

Senegal’s New Oil Minister Will Get on Well With Macky Sall

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The Senegalese president has decided to appoint a close associate, who is more of a technician than a politician, to the key oil ministry post. The oil and gas sector is going to be particularly important as the start of production at the Tortue and Sangomar fields approaches.

New minister of petroleum in Senegal Sophie Gladima. ©Senegalese Ministry of Mines and Geology President Macky Sall, who has been gunning for oil minister Mouhamadou Makhtar Cissé after having lost confidence in him several months ago, decided as part of his early November government reshuffle to hand over the key oil portfolio to someone particularly close. The new minister Sophie Gladima was previously Minister of Mines, as the head of state himself used to be. She has known him for three decades after having

studied geology with him at Cheikh Anta Diop University and the Institut des Sciences de la Terre in Dakar.

• Sophie Gladima, new minister of petroleum in Senegal

Good news for COS-Petrogaz Unlike her predecessor at the ministry, Gladima is not a politician and can be expected to take a more technical approach to its management. This will give more space to the president office’s oil and gas strategic orientation committee, COSPetrogaz, headed by Ousmane Ndiaye. When he was head of operations at Société Sénégalaise des Phosphates de Thies (SSPT), Ndiaye was Gladima’s superior while she was gaining work experience at the state-owned company.

COS-Petrogaz, which was set up in 2016, has become increasingly influential. The committee, which is employing an increasing number of executives, has just

been put in charge of overseeing the country’s new local content legislation. Alongside Ndiaye, who was also Macky Sall’s boss at Petrosen, is Mamadou Fall Kane, his number two, who trained at Paris’s Sciences Po school of political science and used to be the Senegalese president’s economic adviser

The Senegalese oil and gas sector has been in a state of excitement since the Tortue gas and Sangomar oil finds in 2015 and 2014 respectively. Tortue, which Senegal shares with Mauritania, and Sangomar should both come into production by 2022 or 2023.

COMPANY NEWS

Energy Transition: Pivotal Moment for ENI

By Our Reporter

• Energy transition is driving the world’s energy agenda

The oil and gas industry is under scrutiny as concerns over climate change increase across the world.

Italian multinational oil and gas giant Eni S.p.A has responded to the scrutiny with a pledge to gradually reduce its exposure to oil. CEO Claudio Descalzi says Eni expects to reach the peak of oil production by 2025, and could see a decline from 2030.

“We think we are going to reach the peak of our production by 2025, then we will remain stable.

Then after 2030, oil production may start to go down, and then we will remain with gas,” Claudio revealed in a clip of a video interview with Wood Mckenzie, made available to Offshore Africa. “Clearly, for us, gas is something we are going to use to facilitate the transition.”

Africa-focused Eni says it discovered more than 6 billion

boe reserves worldwide since 2014, making it one of the world’s most endowed integrated oil and gas firms. The Italian supermajor is keen to implement an efficient exploitation of its huge gas reserves, with gas prices projected to remain at current levels for the foreseeable future.

To sustain its long-term

upstream operations till 2050, Eni expects to discover additional 12 billion boe of reserves.

“Clearly, our engagement in the upstream will be different. We are going to continue to produce but we need to be sustainable from a cost point of view because we want to be carbon neutral by 2030. And that is a target, it is not an aspiration.”

Eni has unveiled what has been hailed as the most ambitious climate pledge yet by an oil supermajor. Eni has announced plans to cut down its greenhouse gas emissions by 80 percent over the next three decades. Eni also says that its renewable projects will achieve an installed capacity of 3GW in 2023, and 5GW in 2025.

Maersk Drilling Plans Gide, SCPA 3K Advise Petroci on to Reduce Emissions by 50% by 2030 LPG Project

During a Council of Ministers meeting held on 9 September 2020, the government of Côte d’Ivoire approved the acquisition

by PETROCI Holding of a stake in the share capital of SAHARA PETROCI Energy S.A (SAPET Energy), a joint venture that will develop, operate and maintain the storage capacity.

This decision was formalised by the signature of a shareholders’ agreement between PETROCI Holding (35%) and SAHARA (65%).

This new storage facility, the total cost of which is estimated at CFA23.9 billion (approx.

EUR36.6 million), will increase Côte d’Ivoire’s LPG storage capacity by 60%, thereby increasing consumption autonomy from 15 to 27 days and securing its LPG supply.

The project will thus promote the uptake of LPG use, initiated by the government with a view to curbing deforestation and safeguarding the environment.

The Gide team was headed by partner Nicolas Jean(Projects -Finance & Infrastructure),working with associates Perrine Delandre, Célia Alaoand Constance Emiéon project aspects; partner Julien Davidon Corporate / M&A aspects; and partner Alexandre Gauthier and associate Thomas Brusqon public law aspects.

SCPA 3K partner Adama Konéalso acted for PETROCI Holding on aspects of Ivorian law. SAHARA International was advised by BILE-AKA, BRIZOUA-BI

M

aersk Drilling plans to reduce carbon dioxide (CO2) emissions from its drilling operations by 50% by 2030.

This follows previous initiatives by the company, such as the first offshore rig to operate onshore power and the upgrade of two large jackups to hybrid, lowemission rigs.

One of these, the Maersk Intrepid, has been undergoing upgrades with client Equinor to convert it to a hybrid rig with low levels of NOx emissions, reduced energy consumption and CO2 emissions.

In addition, Maersk Drilling recently announced it was joining a consortium progressing a CO2 storage project in Denmark.

The company said its new emissions reduction target supports the ambitions of the Paris Agreement. It estimates it can achieve around half the targeted figure via further efficiency gains and known technical solutions and concepts,

with the other half delivered via investments in innovation.

It will measure the target as tonnes CO2 emissions relative to contracted days, drilled meter, and revenue, with 2019 being the baseline year.

• Maersk Venturer

OFFSHORE VOL.10.9

Gide and SCPA 3K advise Petroci on the construction of a liquefied petroleum gas (LPG) storage infrastructure in Abidjan. The teams of international law firm Gide, working with Ivorian law firm SCPA 3K, under the coordination of Nicolas Jean (Gide), advised the national oil operations company of Côte d’Ivoire, PETROCI-Holding, on the construction of a liquefied petroleum gas (LPG) storage facility with capacity of 12,000 metric tons in the port of Abidjan, in partnership with SAHARA Energy Logistics Holdings Limited (SAHARA).

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OIL & GAS PEOPLE

Petrotrade’s ENGIE Appoints Gillian-Alexandre New Huart to Lead its Access to Energy Operations Business in Africa Manager is NGIE is delighted to announce the appointment of Gillian-Alexandre Huart as Anita Scott

E

• Anita Scott

P

OFFSHORE VOL.10.9

etrotrade says it is excited to announce that Anita Nayram Scott has joined its Ghana team as the Operations Manager from November 2020. “In her new role, she will consolidate our Storage, Pre-berth, Vessel and Discharge Operations, Customs Declaration, Order Approvals, Loadings, Depot-Customs-NPA Reconciliations and our general day-to-day operations within coastal West Africa.”

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She comes on board with over fourteen (14) years of invaluable experience in petroleum downstream sector in Ghana; having been very instrumental in the setup and operational leadership of Rama Energy Limited (BDC (BDC)) in Ghana. Prior to joining Swift Petrotrade Group (SPG), (SPG), Anita has worked in similar roles at Tema Lube Oil Company, Rural Energy Resources Limited (OMC (OMC), ), First Deepwater Discovery (GH) Limited (BDC (BDC)) and at Nasona Oil Company Limited (OMC (OMC). ).

Anita holds an MBA in Finance from Sikkim Manipal University.

University.

She also possesses an LLB and a BSc in Chemistry from Kwame Nkrumah’​University of Science and Technology, Kumasi.

Kumasi.

CEO of ENGIE Energy Access, its Access to Energy business in Africa, tasked with providing millions of households and businesses across the continent with clean and affordable energy.

ENGIE launched its Access to Energy (A2E) strategy back in 2018, in line with the ambition of expanding its African footprint and impacting millions of lives on the continent. The strategy has now evolved into a full-fledged business with the successful integration of solar home system companies, Fenix International and ENGIE Mobisol; and mini-grids provider, ENGIE PowerCorner under one entity and one name – ENGIE Energy Access.

With this integration, ENGIE Energy Access is now one of

the leading off-grid, Pay-AsYou-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.

Prior to his appointment as CEO, Gillian-Alexandre Huart, was the Managing Director EMEAI (Europe, Middle East, Africa and India) at ENGIE Impact. He began his career as a consultant with Accenture before

• Gullian-Alexandre Huart, new CEO at Engie

joining ENGIE in 2002. Since then, he has held various senior management positions across the Group in Europe, Asia and the Middle East.

In his new role, he will be responsible for driving ENGIE’s ambitious goal of maintaining market leadership and providing long-term impact on the lives of Africans.

The Oil Billionaire Who Will Decide Ghana’s Pecan Project

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orwegian billionaire Kjell Inge Rokke, who built most of his fortune in oil and gas, says the time has come to start investing more heavily in renewable energy.

The 62-year-old suggested that a tipping point has been reached in the energy industry, while underscoring his conviction that the world will continue to need fossil fuel for years to come.

Born 25 October 1958, Rokke is a self-made man of great interest to Ghana, particularly operators in the fledgling oil and gas sector. He owns the Norwegian investment company Aker ASA. Aker Energy, which acquired Hess Corp’s interest in Tano Cape Three Points block offshore Ghana, is a firm owned 50 percent by Aker and 50 percent

by TRG, the businessman’s privately held holding company.

Ghana is a relatively recent and small player in Africa’s hydrocarbons sector, but assets (at the Deepwater Tano Cape Three Points), held by Norwegian startup Aker Energy, could help

production rise from a little less than 200,000 barrels per day (bpd) to about 420,000 bpd by 2023, according to Ghanaian officials.

Ghanaians were waiting anxiously for the final investment decision (FID) for the Pecan project, earlier this year, when the industry was thrown into a tailspin with the twin tragedy of prices collapse and Covid-19 pandemic. Studies point to up to one billion barrels reserves of crude could be found at the Ghana acreage.

Rokke also owns AGM Petroleum, another firm with equally exciting prospects offshore Ghana. AGM Petroleum operates the South Deepwater Tano (SDWT) where a discovery was made at the Nyankon-1x well with the drilling of the first exploration well.

Aker Energy officials are tightlipped on when the muchawaited FID announcement will happen, something Ghanaian operators and oil officials have waited with bated breath.

Rokke’s latest public comment that the time has come invest in

• Kjell Inge Rokke

renewable energy is bound to make a few people nervous. “A good hunter is a patient hunter,” Rokke said during a webcast panel discussion. He also said that investors who started “too early” have “burned through cash.”

In as little as five years, Aker’s exposure to digital solutions and IT, primarily through its majority stake in Cognite AS, could make up between half and two-thiirds of the company’s value, Rokke predicted. “Quote me on that five years from now,” he said.

Rokke, who started out as a fisherman aged 18, and has no secondary of higher education, has a real net worth of $3.8 billion, and reputed to be the richest Norwegian.

OIL & GAS PEOPLE

Petrotrade Group Appoints Ghana General Manager

I

SAAC ABANGA has joined Petrotrade Ghana team as Acting General Manager from September 2020, pending his final approval by the Board of Directors.

He comes on board with a total of fifteen (15) years of postgraduation experience in the oil and gas industry mostly in West Africa. Prior to joining Swift Petrotrade Group (SPG), Isaac has worked as The Operations Manager for Mangifera Energy Resources Limited; an oil trading company (OTC) in Ghana, Head of Operations at BF Energy Group (#OMC), Operations Supervisor at First Deepwater Discovery (GH) Limited (BDC); the Ghana branch of a Nigerian petroleum trading company and as The Operations and Marketing

Puma’s CEO Wins Fortune’s Mort Powerful Women 2020 Award • EMMA FITZGERALD: Courtesy of Puma Energy

• Isaac Abanga

Manager at Rural Energy Resources Limited. He has also worked as The General Manager at R&P Oil Company Limited (OMC).

Isaac holds an MBA in Finance from Sikkim Manipal Institute of Medical Sciences, BSc. in Accounting from Data Link University College and a Higher National Diploma (HND) in Accountancy from Tamale Technical University.

It’s been another tumultuous year for Puma, the energy company in which trading company Trafigura and Angolan state energy company Sonangol each hold large stakes. In 2020, the energy sector as a whole suffered as demand was hit by global lockdowns, and Puma’s sales volumes dropped nearly 17% in the first half of the year.

But FitzGerald, an industry veteran, has continued her strategy of simplifying and cost cutting, including selling assets in Australia this year and focusing on infrastructure and growth markets across Africa, Asia, and South America, where Puma has sprawling retail gas station networks.

Total E&P Nigeria appoints Bandele as new Deputy Managing Director

• Victor Bandele

The Board of Directors of French giant, Total Exploration and Production (E&P) Ltd has announced the appointment of Mr Victor Bandele, as its new Deputy Managing Director in charge of the oil firm’s Deepwater District with effect from September 23, 2020.

According to a report from the News Agency of Nigeria (NAN), Bandele, who is a fellow of the Nigerian Society of Engineers, takes over from Mr AhmaduKida Musa, who has retired from the company after a successful 35-year career.

The statement pointed out that prior to his current position, Bandele was the Executive Director in charge of the company’s Port Harcourt and Joint Venture District, where he supervised the activities of

3 main technical divisions and 2 support entities within the district.

It states that Bandele joined the company as a Trainee Reservoir Engineer in 1993.

He was involved in many subsurface fields, management and development activities onshore and offshore, including some non-operated assets of the company until 2004 when he became the Geosciences and Reservoir engineering (GSR) team leader for the offshore OML 99 Assets.

The new Deputy Managing Director has held several important positions in operations, projects and management within Nigeria and

overseas. These include serving as GSR Manager for Akpo Field which was the first Deepwater development project executed by Total in Nigeria.

He was Executive General Manager, GSR and Assets management within the JV District and also worked as Petroleum Architect in the Development Studies entity at Total’s headquarters in Paris.

He returned to the Nigerian subsidiary as Executive General Manager, Special Duties, JV District in 2015, and was later appointed to the Board of Directors of Total E&P Ltd, as the Executive Director, JV District, where he made several landmark achievements.

Seadrill Replaces CEO

O

ffshore drilling contractor Seadrill has replaced CEO Anton Dibowitz. Seadrill’s CFO Stuart Jackson will take Dibowitz’s place, with immediate effect.

responsibilities of the Chief Financial Officer will be divided into two new roles: Grant Creed will become Chief Restructuring Officer and Neil Gilliver will become Chief Accounting Officer

Seadrill, which recently got more time from creditors to come up with a $7.3 billion debt restructuring solution, said that following Jackon’s taking of the CEO role, the role and

Glen Ole Rodland, the Chairman, said: “On behalf of the Board, I would like to recognize the significant contribution Anton has made to Seadrill during 12

The outgoing CEO Dibowitz joined Seadrill in 2007.

years with the Company, heading our commercial activities for many years and for the past three years as Chief Executive Officer. He has provided strong leadership in challenging market conditions; we thank him and wish him well in his future endeavors. Anton is standing down as Chief Executive Officer with immediate effect but will remain as an advisor to the company until the end of Q1 2021.

OFFSHORE VOL.10.9

This disclosure was made

by Country Communication Manager, Total E&P Nigeria Ltd, Mr Charles Ebereonwu, in a statement that was issued in Lagos.

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• Seadrill’s Stuart Jackson

DOWNSTREAM

Ghana Clings to Loss-making Refinery

By Kate Da Costa Despite guzzling billions of cedis of public funds over the years, Ghana’s Tema Oil Refinery is in a sorry state. The state-run facility has not made a profit in several years.

TOR has endured frequent shut-downs, bankruptcies, gross inefficiencies and even shady deals. Workers are currently up in arms against the management, highlighting a very difficult future for the inherently troubled 50-year-old facility.

Some industry watchers have urged the government to sell off the complex to an investor who can provide much-needed investment and run the outfit profitably. The Ghanaian government says it has recently paid off one billion cedis of TOR’s debts owed to third parties, financial institutions and other banks.

And while blaming the refiner’s recent woes on mismanagement by the erstwhile National Democratic Congress-led

administration, the NPP (incumbent) government says TOR owes a further $345 million, as well as 84 million cedis owed in statutory obligations to the Ghana Revenue Authority and social security agency SSNIT.

• Loss-making TOR

The former government was also blamed for failure to carry out three Turn Around Maintenance (TAM), which the current government completed in 2019. “And that was why when we came, TOR couldn’t function and was virtually shut down because the furnace, as a result of lack of maintenance, had to explode at some point.

And this reduced the capacity of TOR, from 45,000bopd to 25,000bopd,” Deputy Energy Minister (Petroleum) Dr. Mohammed Amin lashed out in response to claims by opposition National Democratic Party that it left behind a profit-making TOR and sister outfit Bulk Oil Storage and Transportation.

2013 and 2016. A further c67 million has been absorbed by the government, and TOR has successfully carried out long overdue TAM. And TOR has been able to process eight million barrels of crude oil since September 2019,” he stated, affirming steps taken so far to revamp the refinery.

“TOR has cleared an outstanding c1 billion debt incurred between

Oil watchers say unending losses are unsustainable in a country

where resources are very scarce, and the government is said to have engaged in unprecedented borrowings in recent years.

Another state-owned outfit in the downstream is struggling BOST. The government says it owes bulk petroleum distributors and suppliers US$624 million and some GH¢459 million cedis in operational losses, from the NDC era.

Puma Energy Wins Eni’s Kenya: How National Oil lost Sh2.3bn in fuel racket Refueling Contract

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• Puma Energy clinches Eni contract in Ghana

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Cash-strapped National Oil Corporation of Kenya (Nock) lost more than Sh2.3 billion in a mega scandal involving diversion of fuel products and falsification of credit and delivery notes by officials.

A report by Auditor-General Nancy Gathungu says officials of the State-run agency failed to account for at least 2,280,017 litres of automotive oil (diesel) and 230,458 litres of petroleum motor spirit (super petrol) valued at an aggregate Sh2,270,336,000 based on the pump prices at the time of audit in December 2018.

W

e are delighted to announce that our Bunkering team in Ghana has won a contract with ENI to supply around 1,000 m3 of gas oil to refuel up to three vessels every month.

This was no easy task given the tender process is extremely rigorous. It involves, above all,

really understanding the client’s needs and priorities.

As Karl Gidiglo B2B Key Account Manager Bunkering said, “I feel very elated about this deal.

Personally it reinforces the belief that team work, working hard and smart pays.”

This was a great effort that represents an important win for the team, congratulations to everyone involved.

The audit report says crooks took advantage of Nock’s weak recordkeeping and order processing procedures to make a killing.

For instance, the corporation did not schedule vehicles transporting petroleum products to its customers or undertake daily and monthly stock reconciliation—making it a playground for thieving officials and their cronies.

“In addition, instances of malpractices identified in the generation and processing

of unauthorised credit notes, illegal diversion of product consignments, dispatches not supported by transporter documentation or not delivered to intended sites,” Ms Gathungu said in the corporation’s books of accounts for the year to June 2018.

The theft was unearthed after the oil firm failed to reconcile variances in stocks amounting to Sh1.42 billion and Sh1.72bilion in the 2018 and 2017 financial years respectively.

Sh6bn bailout Nock chief executive Gideon Morintat told the Senate early this month that KCB had, in a letter dated August 13, 2020, demanded full settlement of its loan in 30 days, failing which the bank would institute recovery measures.

Nock said KCB had reneged on an April 2020 plan that consolidated the loans and gave a moratorium on principal and interest up to February 2021 in anticipation of a lump sum repayment.

DOWNSTREAM

Africa’s Growing Modular Refineries Threaten Total’s Market Share With the public health crisis having already taken a toll on Total’s sales of petroleum products on the continent this year, the spectre of competition from modular refineries is giving the major cause for further concern.

Things are looking decidedly bleak for Total in the African refined petroleum products market: in the third quarter of this year, the company only managed to shift 541,000 bpd of these products - a far cry from the pre-crisis 683,000 bpd in the first quarter and the 737,000 bpd sold in the last quarter of 2019.

However, its financial report published in late October shows that the French major, which is run by Patrick Pouyanné, at least performed better than in the second quarter of 2020, when the Covid-19 pandemic was at its height and it sold just 463,000 bpd of petroleum products in Africa.

Total has been hit hard by the public health crisis, which has resulted in a drastic fall in demand as well as in the price of oil, and the immediate future is not looking too rosy either: in addition to the pandemic, the major and other distributors in Africa will have to contend with the launch of several modular refinery projects on the continent which will be in direct competition with them.

In Equatorial Guinea, Total did everything it could to prevent the construction of a modular refinery with a capacity of 5,000 bpd (rising to 10,000 bpd) on the island of Bioko close to the capital Malabo. This project, which has yet to be formally launched, will be financed by Marathon Oil to the tune of $50m.

VFuels emerges to the fore Nigeria is one of the first countries to opt for a project of

• The Azikel modular refinery in Nigeria

this kind: in early November, the Lagos-based WalterSmith Petroman Oil announced that its modular refinery in Igibwe in Imo State (5,000 bpd) will come on line “soon”. It has been constructed by the Lebanese firm VFuels, which is also involved in building a modular refinery (10,000 bpd) in the Liberian capital Monrovia and, according to our sources, is also working on similar projects in Ghana, Guinea-Conakry and South Sudan.

The one ray of light in the short

term for Total is in Angola, where at the start of this year the major teamed up with the stateowned Sonangol to jointly run the existing network of 45 petrol stations. The major is banking on this joint venture to boost its petrol sales in the country.

From 2018 to 2019, Total was selling some 700,000 bpd of refined products on the African continent, though its main market remains Europe, where it sold almost two million bpd of petroleum products in 2019.

Emissions Standards:

What Do They Mean for You? ARA and other stakeholders are due to submit a harmonized fuel specification to the African Union for final consideration.

The proposal is also expected to include identifying costs and funding for upgrading existing oil refineries in Africa, as well as putting in place the needed infrastructure to assist in longterm plans to tap into the global energy transition phenomenon.

“We are working to harmonise the fuel specifications, encourage inter- regional trade and address health concerns,” Anibor Kragha, Executive Secretary of ARA observed. “The goal is to implement AFRI 6, which is the continent’s version of EURO 6, by 2030 for diesel, gasoline etc.”

Africa’s population is skyrocketing, and is projected to be one of the fastest growing by 2040. “Between now and 2040, one in two people born in the world is going to be an African. By 2040, Africa will be using more oil than any region of the world,” noted Mr. Kragha.

Zimbabwe Wants to Become a Regional Petrol Hub Zimbabwe has plans to build new infrastructure and efficiently use existing ones to become a regional hub in the petroleum sector. This will facilitate fuel distribution and increase the capacity of its storage facilities.

Zimbabwe through its national oil company (NOIC) wants to position itself as a regional hub for the distribution of fuel by building an oil pipeline that will have the capacity to transport 50 million liters of oil per day between 2022 and 2025.

He noted further that fossil fuel usage in Africa will grow by 45 percent by 2040.

Despite the current global drive for renewables and a transition to cleaner fuels, and even though renewables are expected to grow at about 12 times current usage globally, it will constitute only 10 percent of energy use on the African continent. “So, there will still be room for oil and gas in Africa,” he said.

The ARA is pushing for an orderly transition to cleaner fuels in Africa. “We need an orderly transition to cleaner fuels, addressing public health challenges,” argued Mr. Kragha.

He however observed that cleaner fuels need ‘cleaner’ “By 2022, we plan to design a new pipeline from Beira unloading port to Mabvuku with an expected capacity of 50 million liters per day, so we would like to invite you to be part of our plans,” said Daniel Mckenzie. Ncube, President of NOIC during a briefing, with other African countries in the sub-region.

• The old dysfunctional Port Harcourt refinery

vehicles to make the air cleaner, noting “cleaner fuels in vehicles that are not configured will get sub-optimised outcomes.” The UN Environmental Programme and several Africa-targeted financial institutions are involved in the AFRI Fuels policy.

Africa’s CO2 emissions is about 2 percent of the global total and is projected to reach 3 percent in 2040, making the continent the least contributor to carbon emissions.

In addition, the government plans to rehabilitate and modernize the oil transportation systems by pipeline and rail in collaboration with Mozambique.

Note that Zimbabwe is already operating on the Feruka pipeline which was built in the late 1980s and which has the capacity to transport around 6 million liters of oil per day.

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Countries on the African continent are inching towards a deal to implement a harmonized fuel specification known as AFRI 6 by 2030, and thereby restricting exhaust emissions in Africa to a maximum of 10 ppm sulphur content. The African Union is collaborating with the African Refineries and Distributors Association (ARA) to drive the process.

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GULF OF GUINEA

Buhari Picks Retired Army Officer to Manage Lucrative 2021 Niger Delta amnesty Budget

T

he battle for the post of administrator of the amnesty programme whetted the appetites of Niger Delta leaders but President Muhammadu Buhari has once again chosen an exarmy colonel.

(MEND) who agreed to lay down their arms in 2009. President Buhari regularly raises doubts about the programme’s future but it is nevertheless renewed year after year. Memories of the dark years between 2006 and 2009 revive fears that the violence which caused serious damage to the oil industry could return. Production dropped sharply at the time as a result of the acts of vandalism which were regularly committed against crude oil transport installations.

Eta Enang unsuccessful

• President Muhammadu Buhari

Milland Dixon Dikio’s arrival a few days ago at the head office of the Niger Delta Amnesty Programme is another example of President Muhammadu Buhari’s tendency to appoint former military officers like him to sensitive posts. Unknown to the general public, the retired colonel was sent to Sierra Leone in the 1990s as part of ECOWAS’s ECOMOG peacekeeping operation.

He is an Ijaw from Rivers State, as was former colonel Paul Boroh, who first held the post at the start of the Buhari era.

The substantial resources made available to maintain peace in the region have resulted in bitter power struggles being fought for the post. Dozens of millions of dollars are distributed every year to some 30,000 former militants of the Movement for the Emancipation of the Niger Delta

According to our sources, Buhari’s Niger Delta adviser, ex-senator Ita Enang, made great efforts to add the administrator’s post to his existing one, as did one of his predecessors, Kingsley Kuku (2011-2015). To give himself the best possible chance of successs, he visited the creeks of all the MEND leaders who accepted the 2009 amnesty in exchange for comfortable compensation payments, among them Government Ekpemupolo, aka Tompolo, Boyloaf, and Ateke Tom. In July, Enang also succeeded in getting legal action against Tompolo dropped by the Federal High Court in Lagos.

The court decided to drop all

action on the 40 different charges laid against Tompolo, notably regarding his security firm Global West Vessel Specialist. Enang was handicapped, however, by the fact that he is not an Ijaw and that he comes from a state far from the Niger Delta nerve centre, Akwa Ibom State. In addition, Niger Delta minister Godswill Obot Akpabio, a former governor of Akwa Ibom, does not get on well with Enang. He clearly did not give his support, therefore, to the efforts of his sworn enemy. Enang was senator for Akwa Ibom before becoming senior special assistant on senatorial questions to President Buhari in 2015.

Big money The government is investing massively to maintain peace in the oil-rich delta region.

NGN65bn ($171m) have already been allocated to the 2021 amnesty programme budget which Buhari presented to the senate in early October. Next year, the Niger Delta wll also receive NGN63bn ($165m) from the Niger Delta Development Commission (NDDC). The Ministry of Niger Delta Affairs, which was set up in 2008, has been granted a further NGN23bn ($60m).

OFFSHORE VOL.10.9

Behind the Scenes of Total’s Urgent Talks with Pretoria Over Block 11B/12B Gas Prices

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Encouraged to get cracking by the recent gas discoveries off the coast of South Africa, Total is trying to prompt fast action on sector regulations from Ramaphosa’s government.

Immediately after announcing it had made a second discovery of gas condensate on the Luiperd well of its block 11B/12B, South Africa, in late October, Total charged ahead with the next step: negotiating with Pretoria over the implementation of the tax and legal regulations to sell the gas. The French major’s country head, Adewale Fayemi, is in direct contact with Minister of Mineral Resources and Energy Gwede Mantashe. For the past year, Fayemi has led the Offshore Petroleum Association of South Africa, or OPASA, the leading industry lobbyist in the country.

Fayemi has been trying to get the South African government

to finalise the long-awaited Petroleum Bill for months and hopes this recent gas discovery could speed up the process.

Total only has a short time frame to work with: the group’s exploration right to block 11B/12B will expire in 2022 and it is hoping to have finalised all talks on its gas sale agreements by then.

The PetroSA damper A core component of the negotiations is the price of the future gas output. The French oil group is hoping to supply a gas-to-liquids plant owned

by PetroSA in Mossel Bay, a coastal town some 175km from block 11B/12B. The national oil company currently pays $6 to $7 for 1,000 cubic feet of gas. Total would like to quickly negotiate its prices but the current climate is ill-favoured to any price hikes.

PetroSA has been struggling and

• South Africa’s Energy Minister Gwede Mantashe on a visit to the semisubmersible Deepsea Stavanger within hours of the second gas discovery

recorded nearly $120m (1.97bn rand) of debt for the fiscal year 2018/2019.

Mantashe has also embarked on a vast overhaul of the oil and gas sector that could drag on for months. The energy minister would like to merge three branches: PetroSA (E&P), IGas (gas sales and imports) and Strategic Fuel Fund (stock management).

Total, which owns 45% of block 11B/12B, explores the field alongside Qatar Petroleum (25%), Canadian Natural Resources (20%) and local firm Main Street 1549 Proprietary (10%). Main Street 1549 is jointly owned by the South African private equity firm Arostyle Investments and Canada’s Africa Energy Corp.

GULF OF GUINEA

NGO Penplusbytes Issues ‘Drilling Down Oil in West Africa’ Report Penplusbytes, a leader in enhancing the capacity of journalists in various areas, is pleased to announce the commencement of the second phase of its project - “Drilling Down Oil and Gas in West Africa”. The project, which is supported by Open Society for West Africa (OSIWA), seeks to throw sunshine on the extractive sector of Ghana and Cote D’Ivoire. Its first phase focused on building the capacity of journalists from the two beneficiary countries to effectively monitor, and bring to the fore key issues about legal regimes for revenue utilization, local content, resource governance inter-countries disputes confronting the subregion oil and the impact of the sector on the lives of citizens in the Sub-Region.

Under this second phase, Penplusbytes is commissioning a comparative study in Ghana and Cote D’Ivoire. The study seeks to map out the oil and gas sector legislations of both countries with the following aims: 1. To highlight the policies, laws and regulations that govern

the oil and gas sectors.

• Officials of Accra-based Penplusbytes

2. To examine the extent that existing policies, laws and regulation contribute to the good governance of the sector.

3. To provide a comparative analysis of the policies, laws, regulations, and the extent to which they contribute to good governance in Cote d’Ivoire and Ghana.

4. To develop a set of recommendations that can contribute to the good governance of this sector in both Cote d’Ivoire and Ghana.

The outcome of this project intervention is to produce an evidence-based research study to ensure transparency and accountability of this nascent industry as well as contribute to the body of knowledge by drawing lessons and best practices to improve effective management of the natural resources of these countries.

Commenting on the importance of this project, Executive Director of Penplusbytes Ms Juliet Amoah, said: “The oil and gas sector has been the backbone of

many economies of the world.

In West Africa it could become more of a backbone if managed well and transparently. It is therefore imperative to constantly undertake studies in the sector to draw invaluable lessons from international best practices to proffer recommendations to help better manage our natural resources so as to make it a blessing rather than a curse”

Under this project, Penplusbytes will solicit vital insights from the media, academia, regulator, oil companies, service providers and civil society organizations (CSOs) and other relevant government agencies and departments including a desk review of the sector. This is to ensure that varied views are strongly represented and impact the way the sector is governed across the sub region using Ghana and Ivory Coast as case studies.

Erdogan Aims to Form Pro-Turkish Bloc Along West African coast

Turkish president Recep Tayyip Erdogan, who has hosted his Guinea-Bissauan opposite number Umaro Sissoco Embalo twice in the last six months, is developing Ankara’s relations with the small African country on all fronts as he tries to create a pro-Turkish arc along the Guinean coast.

Last month, 36 gendarmes travelled from Bissau to Ankara to take part in a training course on intervention techniques with their Turkish counterparts.

Turkey is also providing the aircraft in Guinea Bissau’s colours which Embalo uses for

his official voyages. He used it recently to travel to Bamako, where he was the sole head of state to attend the ceremony to install new transition president Bah N’Daw. Coincidentally, Turkish foreign minister Mevlüt Çavusoglu travelled to Bamako on 9 September to meet the putschists of the Comité National pour le Salut du People.

• Turkish President Tayyup Erdogan and GuineaBissaun President Umaro Sissolo Embalo

OFFSHORE VOL.10.9

The Turkish government is working all out to win favour with Guinea Buissau and Senegal. It aims to create a proTurkish African bloc stretching from Saint Louis in the north to the Nimba mountains in the south.

Atlantic opening The arc Erdogan is seeking to create includes Gambia and Guinea, the two African countries most closely aligned to Turkey, and both of which share a border with Guinea Bissau. Turkish diplomats are also working flat out to extend the arc to Senegal, which was guest of honour at the Turkey-Africa Economic and Business Forum in Istanbul on 8 and 9 October. Erdogan visited Senegal in the early part of the year.

25 Moving eastward, Turkey wants Mali and Niger to be part of the African bloc. This would give Turkey an opening on to the Atlantic Ocean and a major area of expansion for the conglomerates most closely connected to Erdogan’s entourage. On 8 October, in an

illustration of Turkey’s wish to expand its influence eastwards, the Turkish parliament authorised the Ministry of Defence to send troops to join the UN’s peacekeeping mission in Mali, MINUSMA.

INTERVIEW- GHANA UPSTREAM PETROLEUM CHAMBER

CHAMBER SEEKS CONCESSIONS TO REVIVE GHANA’S OIL SECTOR

G

hana, like other oil-producing nations around the world, has struggled in the wake of the Covid-19 pandemic. Critical investments to speed up development of new offshore assets have been held back.

In particular, the decision by Norwegian firm Aker Energy to pull the plug on its Pecan development project is having profound repercussions in-country.

terms, establishing the ground rules and at some point, farm-in or out with partners as desired.

In fact there is much they share in common, which makes the Chamber’s shared platform of benefit to all. They collaborate a lot more than it would seem.

Even before the onset of Covid-19, the industry was in a limbo due to lack of any development project. The Pecan development project,

by Aker Energy, was struck down by Covid-19. What are your expectations going forward?

It has certainly been a trying period but at this stage things can only get better. There is a lot at stake and we remain hopeful that much of what has been put on hold for the moment, will be revived in due course. What we do now, will shape the nature of any revival.

• Mr. David Ampofo, CEO, Ghana Upstream Petroleum Chamber

Offshore Africa’s Publisher and Editor-in-Chief, Gilbert Da Costa, recently sat down with David Ampofo, CEO at Ghana Upstream Petroleum Chamber (GUPC) to discuss pertinent issues in Ghana’s upstream oil and gas sector.

Congratulations on your recent appointment to head the Chamber.

Thank you.

OFFSHORE VOL.10.9

Tell me a bit more about the Chamber

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The Chamber brings together companies in the upstream sector - both exploration and production companies as well as service companies. It is a platform to share ideas and experiences, and for working together for the well-being of the industry. It was born out of what used to be the Exploration and Production Forum - a loose association of CEOs of several IOC’s who met monthly to compare notes. Two years ago, given the growth that had taken place in the industry, the decision was made to create something more formal to promote the Oil and Gas Industry and as well take on the many challenges facing the industry. That is how the Ghana Upstream Petroleum Chamber came into being.

But it appears you have more E&P firms in the Chamber. I think MODEC is currently the only service provider in the group?

A big part of my work, from the beginning, has been to expand membership and that process is underway. The founding members were primarily E&P companies but now we also also have MODEC and Subsea 7 and we are working to expand membership to include more service companies including Ghanaian service companies.

This is important for us; bringing IOCs and Ghanaian companies together under one roof to share ideas for the progress of the industry. We want to make the Chamber much more representative of the industry.

What I find interesting about the Chamber is the fact that you have companies who normally compete for assets and contracts coming together to form this group.

Actually I wouldn’t describe our members as competing against one another. Yes, different E&P companies may bid for the same block but once it’s over, they get on with it. In the end, they have their own blocks and petroleum agreements, that lay out fiscal terms among other

At the moment, what the Chamber has been concerned about is engaging government for license extensions, given the disruptions to drilling projects and project developments caused

by COVID. The sooner there can be clarity on agreed rescheduled timelines, the easier it will be for plans to be developed to continue from where many have left off.

So, the more clarity there is, the better. It will make it easier for the companies that have suspended operations to go about restarting work. Supply chains need to be and up and running again. Covid has certainly taken its toll but we are hopeful of a revival soon.

As you know, the key part of the oil and gas chain is the development phase, which offers jobs and contracts to contractors and service providers.

Yes, and that’s the stage Aker Energy was at before COVID. The development stage is one of the key phases of the oil and gas life cycle. It covers the period after an economic discovery has been made and details the processes required to take the discovery up to the production phase. Interestingly, the cost and duration of this phase depends on the location of the field, the size and complexity of the facilities and the number of wells needed to achieve the production and economic targets.

Ghana has been lucky to have the Jubilee, Sankofa and TEN Development projects, and Aker’s Pecan project which unfortunately had to be suspended due to what was essentially situation of force majeure . But I think the so called new normal provides us all with an opportunity to do some rethinking and reengineering on how best to succeed in this sector as well. Many industry participants are re-evaluating current operating structures and operational arrangements to find more efficient ways of doing things. Aker’s slow down has been disappointing but I have no doubt at all in my mind that they will take some well considered steps going forward.

Based on your work with oil and gas companies operating in Ghana, what are their main challenges?

You have to remember that the companies fall into two distinct groups. Those existing before the PC (Petroleum Commission) came into being as a a Regulator and those who came into being in the era of the PC. For those with Petroleum Agreements in place before the coming into being of the PC, there is a natural inclination to stick with the provisions of their agreements which include stability clauses.

Variations to the fiscal regime already agreed upon can be destabilizing.

There are several challenges that face all companies and there is an overall desire for additional incentives for resource exploration to be brought into effect. A simplified and uniform taxation regime would also remove some of the present challenges. And then there are the more specific challenges born out of the Covid pandemic which make it necessary for the industry and government to agree work period extensions.

Local content is an area I am very much interested in, and hoping that through the Chamber, any challenges here, can be addressed so that industry progress in that area will be more visible. I was in the western region recently and I was impressed with what I saw. I visited a few local service companies involved in fabrication work and they are doing great things. The transfer

INTERVIEW- GHANA UPSTREAM PETROLEUM CHAMBER of skills and knowledge is paying off. Can we do more? Yes. The Chamber is keen to champion meaningful local content. We want to see international service companies working hand in hand with Ghanaian service companies in all key areas, including fabrication and logistics.

Currently, the Ghanaian government has offered offshore blocks in the Eastern Basin to E&P companies, through direct negotiations. To what extent are your members involved in the process?

As you know, most of the activities are in the Western Basin, because that is a largely de-risked area. That is certainly not the case with the Eastern basin. That may account for the direct negotiations for blocks in the Eastern basin. Once the situation returns more to the pre Covid period, we will have more clarity. But as I say, there is not much activity taking place in the Eastern Basin.

Interestingly, the Eastern Offshore Basin had previously attracted a huge interest from major exploration and production firms. I guess the current depressed market conditions may be keeping down interest in the latest Ghana offer?

We are in difficult times, and if you want to attract investment, you need to go out of your way to offer something more. That is just the way it is. Do not forget that there is also a major energy transition underway globally with renewables becoming a lot more fashionable than fossil

fuels. We have to take all that into consideration and provide the right incentive framework for the development of assets that are located in very deep water. The technology and capability for that belongs to a few oil majors and that is why the presence of a company like ExxonMobil is essential if we are to operate at such depths. In fact Ghana should be attracting other companies of that size and capability.

I believe the Ghanaian government is willing to reconsider reviewing the current fiscal terms for exploration and production in the country. But in specific terms, what are the concessions and reviews you will like to see the Government make, as part of a drive to revive the sector?

Currently, license extensions are very important. It clears the way for new plans and for a revival of activity offshore. I think taxation is another area that we could have a productive discussion on.

Governments require resources for development and we must work together to ensure we are maximizing in a sustainable way, taxation resources.

There are some proposals on the table including that of a sliding scale that provides more when there is more. But we need to finetune much of what is under discussion and stakeholders have to stay engaged. Not very much can be done unless there is a frank and continued discussion based on mutual respect and trust. Either way, the bottom line is that taxation policy has to facilitate the

growth of businesses whilst providing government with development resources. Policy and administrative impediments to resource exploration ought to addressed.

But overall, we must understand that if we want to be truly an investor friendly destination, it is not enough to simply declare it. You have to walk the talk and sometimes that involves taking some bold decisions.

Equatorial Guinea, for example, has carried out some significant license extensions. It might be useful to look around us if we want to remain competitive and this is what the Chamber is looking to do; to visit some of our colleague chambers in other oil producing countries in Africa and compare notes. We must remain competitive as a destination for petroleum investment and exploration. Do not forget that we as a country are relatively new in this upstream petroleum business. We discovered our first commercial oil in 2007 and by 2010, we were pouring first oil. Things happened extremely quickly for us. This is a good time to look back and ask ourselves whether the rules of engagement we put in place have continued to serve the purpose for which they were put in place. Monetizing our gas resources remains a major challenge; gas to power and more.

The perception most people have, particularly in developing countries, is that international exploration and production companies are only interested in exploiting hydrocarbons, and not contributing much to the development of their

host countries. How can the Chamber help to change that narrative in Ghana?

Yes, the industry suffers from that negative perception, born out of the past in some instances.

We need to overcome that and see things for what they are currently. It is one of the things that the Chamber is keen to do, because it sets the tone for stakeholder engagement. If you walk into a room and the people across the table think all you are out to do is exploit them, you are not going to get very much from them. So, we need to address that. We must change the narrative to one of shared prosperity.

Let’s talk about the energy transition phenomenon, which has captured the imagination of the global energy space. In terms of Ghana, how do you see it impacting on the oil and gas industry?

I think we should look at where the industry is going to end up in the not so distant future and work our way backwards. The point is that fossil fuels will be with us in this part of the world for a while, but that should not prevent us from going green.

There has to be an air of urgency in how we go about things. Yes, we are not yet likely to be flooded with electric cars anytime soon.

The fact still remains though, that the trend, is the trend. In my view, not only must we make the most of our fossil fuel as expeditiously as possible, we must also turn our attention in a big way to these alternative sources of fuel that are catching on and that are much more friendly to nature.

Ghana has imposed terms and conditions for Italian major ENI and Ghanaian operator Springfield E&P to combine their adjacent oil and gas fields, after the parties failed to reach an agreement, according to a letter from the energy ministry.

OFFSHORE VOL.10.9

Eni, Springfield Ordered to Unitize Offshore Ghana Oil Fields It said that seismic data had indicated Eni's Sankofa offshore field, which entered production in 2017, and Springfield's recently discovered Afina had identical reservoir and fluid properties.

The Oct. 14 letter from the oil ministry, said the decision was made to ensure optimum exploitation of the Afina and Sankofa fields.

"Regrettably, it has become obvious that the parties do not intend to comply with the ministry of energy's directives," the letter signed by Minister John Peter Amewu said.

Ghana directed Eni and Springfield to begin talks to combine their adjacent oil and gas fields in April and gave them until September 18 to reach an agreement.

Sankofa is part of Eni's Offshore Cape Three Points project off Ghana's Atlantic Coast, which it says has reserves of about 40 billion cubic meters of gas and 500 million barrels of oil.

27 A spokesman for ENI said the company was in contact with all stakeholders, including the relevant ministry in order to define a way forward and evaluate any case for a potential merger of the oil fields.

Springfield, a wholly-owned Ghanaian company, said in December that it had discovered

1.5 billion barrels of oil and 0.7 trillion cubic feet of gas at its Afina field.

"We look forward to working with ENI as the operator of the unitized field in maximizing the production and the economic benefits for all stakeholders," a spokesman for Springfield said.

SPECIAL REPORTS

A BIDEN PRESIDENCY: Implications for Africa’s Oil

By Gilbert Da Costa

W

ith Democratic Party’s candidate Joe Biden all but confirmed as the next occupant of the White House in Washington, Offshore Africa examines what his presidency could mean for Africa’s oil and gas sector.

A move to alternative power sources is already underway, but President Biden’s policies could speed up the transition process, says Carlyn Taylor, global coleader at FTT Consulting Inc. Biden is expected to introduce aggressive methane pollution limits, protect the Artic National Wildlife Refuge, and ban new oil and gas permitting on public lands and waters, and modify royalties to account for climate costs.

President Biden is not likely to have the same influence on OPEC as his predecessor did. He might

even take a tough line with Saudi Arabia and others on human rights. But Iran and Venezuela, squeezed hard by Trump, could start breathing easier now.

Oil production in the US, which increased by 3.9 million barrels per day under Trump, could fall by 2 million bopd by 2025 under Biden. And with oil expected from Iran, Venezuela and Libya back in the market, crude prices are expected to come under pressure as long-term demand struggles to cope with the influx.

African producers may benefit

• Ghana’s President Akufo Addo with US House of Rep’s Karen Bass, Rep Terri Sewell and the powerful Congressional Black Caucus in Accra in 2019. Rep Bass is tipped for a role in the Biden administration

from a steadier oil market expected to hover around $50 to $55 range by the end of 2021. Perhaps the impact of the incoming administration could be felt in emerging oil and gas producing countries in Africa.

With the acceleration towards renewables, how much of a future do new African oil and gas producers have? Will President Biden finally pull the plug from underneath Africa’s ambitious oil and gas dreams?

BP Hunkering Down on African Operations, little by little

T OFFSHORE VOL.10.9

he British oil major is looking to drastically reduce its investment in field development and exploration in Africa. Here are our revelations.

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The objective of new BP boss Bernard Looney is clear. He plans to reduce the group’s output from 2.6 million bpd to 1.5 million bpd over the next 10 years. The group has already started to wind down its production in Africa, which fell 20% year-on-year in 2019 to 156,000 bpd. Painful decisions are nevertheless going to have to be made regarding a number of E&P projects. Some will simply be put up for sale or abandoned.

BP’s priority is to gas projects over oil. According to our sources, one of the few African projects that the British group can be expected to complete is the Tortue gas project, which straddles the Senegalese and Mauritanian borders. BP will to hold on to this field, the first phase of development of which is expected to produce 2.45 million tonnes of gas annually by 2022/2023. Other phases, which will be more profitable thanks to the amortisation of much of the early investment cost, will follow Kosmos Energy discovered

the field in 2015. BP can also be expected to hold on to its gas assets in Egypt. Thess could include the giant Zohr field, of which has a 10% stake alongside main stakeholder ENI, and the West Nile Delta, in which it has an 85% interest.

• BP will continue with the Senegal/Mauritania gas project while dropping almost all other projects in Africa

Development under threat On the other hand, according to our information, BP is likely to leave Angola, where it produces on blocks 18 and 31, where it is also operator, and on blocks 15 and 17, where it is in partnership with ExxonMobil and Total, respectively. Separate tenders should be organised for operated and non-operated assets, probably in 2021. As we have already revealed, BP is the only major to not have officially launched new service contract tenders in Angola since the end of the Covid-19 shutdown. It has signed virtually no service contracts for nearly six months.

BP’s gas assets in In Amenas and In Salah in Algeria could also be sold. The group has been looking to leave the country for several years, the situation there having become much more complicated since the attacks on In Amenas in 2013. Faced with several disputes, including one with services company Petrofac over

work carried out for joint venture In Salah Gas (ISG), which runs a plant producing 9 billion cubic metres per year, BP has left its Norwegian partner Equinor to run the operation alongside Sonatrach for years.

Gambia, even though drilling is written into its contract, to the great frustration of Petronor, which is counting on BP to go into action before starting exploration work on its own account on the nearby A1 block.

Exploration likely to be put on stand-by

There remain Ivory Coast and Sao Tome, where BP shares seven blocks with Kosmos Energy. There is increasingly little prospect of it spending large amounts on exploration in these two countries, however, particularly since Kosmos has been left in poor financial form by the Covid-19 pandemic. In early September, moreover, Kosmos sold some of its assets in Sao Tomé, Namibia and South Africa to Shell.

In recent years, BP has acquired many exploration blocks in countries which have yet to prove their potential as hydrocarbons producers or where production is low. This is the case in Gambia (A4), Sao Tome (blocks 5 and 10), Ivory Coast and Madagascar.

The group left Antananarivo without drilling a single well.

It could also forego drilling in

SPOTLIGHT

NPP-led Government Pledges Sweeping Oil and Gas Reforms In the wake of heightened uncertainty brought upon the global oil and gas sector by Covid-19 pandemic and longterm threat posed by the energy transition phenomenon, a senior Ghanaian petroleum official says the West African nation will soon introduce reforms to revive its struggling oil and gas sector.

“We will pursue relevant reforms in the upstream petroleum sector. Covid-19 has affected the industry so heavily and therefore the industry is not going to be the same when Covid-19 is gone,” declared Ghana’s Deputy Minister for Energy (Petroleum) Dr. Mohammed Amin while speaking in Accra. “We have a number of reforms that we will pursue, including incentives that we need to give to companies who want to come into Ghana.

So, these reforms will be pursued to revive exploration activities after Covid-19.”

Though details of the proposed reforms are yet to be determined, Dr. Amin assured it will be farreaching enough to revive the dormant upstream sector. “We promised to give fiscal and nonfiscal incentives. This is the time for incentives because of climate

• Ghana’s Deputy Energy Minister (Petroleum) Dr. Mohammed Amin

change. Prices are going down and demand has been going down. For a company to agree to come to Ghana and invest, you have to incentivize that company.”

He blamed the opposition National Democratic Congress (NDC) for the stagnation that characterized Ghana’s upstream in the past seven years. Consequently, he said the ruling National Patriotic Party inherited what he described as a collapsing oil and gas industry.

He said while the NDC executed 13 exploration and production agreements between 2013 and 2016, not a single exploration well was drilled.

“At the end of 2016, when they left government, not a single well was drilled. The companies were supposed to have spent $890 million over the drilling campaigns. At the time they left office, only $15 million had been spent.”

Ahead of crucial general elections on December 7 2020, the current Ghanaian administration says it will make oil and gas exploration a major priority if re-elected.

“We need to get the companies back to do exploration. Because it is through exploration that we can make discoveries. And it is only through discoveries that we can produce oil,” Dr. Amin canvassed.

Ghanaian officials say the country has great prospects with the possibility of 72 offshore blocks, most of which are yet to be mapped out and explored.

“The opportunity is huge because our total offshore area is about 256,000sq kilometers. Of this, only 68,000 sq.km is covered by data. That means we have 187,000sq.km available for data acquisition,” observed Dr. Amin, in another presentation. “The 68,000sq.km that is covered by data, only 20 percent has been licensed.” Huge potential also exist at the onshore Voltaian Basin.

NDC Targets One Million Barrels Daily Oil Production

OFFSHORE VOL.10.9

• Former Energy Minister Hon. Emmanuel Kofi-Buah

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G

hana’s main opposition party, National Democratic Congress, says it expects to increase oil production to one million barrels daily if elected into office in general elections scheduled for December 7. NDC also plans to launch a 40-year gas masterplan in an ambitious drive to monetize natural gas assets.

“We are going to set Ghana on the road to achieving a target

of one million barrels of oil per day. And how are we going to

do that? We are going to do that by making sure we begin to attract investors again,” declared Hon. Emmanuel Kofi Buah, a former petroleum minister, at a pre-election energy forum hosted in Accra by the Chamber of Bulk Oil Distributors. “We will take steps to ensure that people who are coming to Ghana, to invest billions of dollars are comfortable.”

Ghana currently produces around 200,000bopd, but has struggled in recent years to attract new investors and boost oil and gas production. Concerns have emerged about declining production if new fields are not put into production quickly.

Ghana is still far from certain in terms of the country’s next oil and gas development phase.

Norwegian firm Aker Energy is yet to recommit to a final investment decision for its deepwater Pecan development project. The lack of projects has put a severe strain on contractors and sub-contractors amidst spending cuts by producing firms Tullow and Eni.

The NDC administration, which recorded 21 oil and gas discoveries during its eight-year tenure (1998-2016), says it will step up exploration drilling in the promising onshore Voltaian Basin, and other basins in a bid to expand oil and gas production.

“Our focus is to make sure we pursue drilling in the Voltaian Basin and other basins,” Hon. Buah assured. “When we say the next NDC government will prioritize the use of Ghana’s oil and gas resources to promote economic growth, jobs creation and industrialization, we know what we are talking about.”

The NDC says it is also keen on maximizing Ghana’s natural gas resources and pursuing an aggressive renewable energy agenda. “Beyond the use of gas for power production, we want to focus on a quantum leap in industrialization that has eluded this country, we are going to use gas to propel it.”

Oil watchers see the next few years as very crucial for Ghana’s fledgling oil and gas industry.

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COUNTRY FOCUS - SOMALIA

Somalia Aims to Become Africa’s Oil Hotspot

By Gilbert Da Costa

I

f it is proven that Somalia is endowed with roughly 100 billion barrels of oil- as suggested by preliminary surveys- the country could emerge as a hydrocarbon’s powerhouse on the African continent.

Petroleum officials say the expect the first exploration well, in nearly 30 years, to be drilled in the last quarter of 2021.

Offshore Somalia is one of the few remaining frontier areas in the world. Only one exploration well, Meregh-1, has been drilled along the country’s entire 1,200km-long margin. That was in 1982 and very little exploration has been undertaken in the country for at least 25 years, particularly in deeper waters.

OFFSHORE VOL.10.9

In July 2020, Somalia’s Ministry of Petroleum and Mineral Resources established the Somali Petroleum Authority (SPA), paving the way for the announcement in early August of the first ever offshore licensing round – a milestone for the country.

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The round comprises seven blocks, numbered 152, 153, 164, 165, 177, 178 and 204, covering a total of 30,168 km2. The Somali offshore can be divided into three basins: from north to south.

These are the Obbia Basin; the Coriole Basin, where six of the offered blocks are situated; and the Juba-Lamu Basin, containing the seventh block. Reports reaching Offshore Africa suggest the blocks could have a combined estimated reserve of 30 billion barrels.

Using new long-offset 2D seismic data it acquired between 2014 and 2016, TGS has identified four source rock intervals that basin modeling indicates could be mature for hydrocarbon generation. These range from pre-rift Triassic Karoo and synrift Jurassic sources to post-rift Cretaceous and Early Tertiary source rocks. The data has also demonstrated a range of traps and reservoirs.

In the north, Jurassic and Cretaceous limestone reefs, some up to 1,000 km2, are expected to provide excellent reservoirs, as are tilted fault blocks of pre-rift Karoo sandstones, while further south, large, well-defined toethrust systems with flat spots are

visible, again offering attractive potential. Sealing lithologies are expected throughout the area.

Play types identified by TGS include sandstones and shales in pre-rift tilted fault blocks, syn-rift sandstone wedges, carbonate build-ups, structural closures and gravity slides and thrust-bound anticlines. One of the most exciting aspects of the seismic interpretation is that, unlike much of East Africa where gas discoveries are the norm, TGS believe that there is a strong possibility of oil-prone prospects offshore the whole length of the Somalian margin.

Investors are already eyeing Somalia, with Turkey as well as the likes of Shell and ExxonMobil said to be interested in prospecting in the Horn of Africa country. Turkey’s President Tayyip Erdogan fired the first salvo, months ago, when he announced that Somalia had invited Turkey to explore for oil.

Turkey is a key ally of Somalia and has a played a major role in rehabilitating the infrastructure of the war-torn nation.

Dr. Alessio Checconi, Senior Business Development Manager, at TGS, was particularly fascinated with the central and southern blocks, which he described as having “incredible amount of structures, even on top of each other.”

With potential billions of reserves waiting to be taped, oil wealth could lift Somalia from its chronically fragile, violenceprone and underdeveloped status, and perhaps ease the political tensions that have been exacerbated by competition over the country’s limited pool of resources. However, realizing this potential and developing oil and gas industry will require Somalia to address profound insecurity that threaten to unravel the oil dream.

Somalia has been in the limelight in the last three decades; civil war, piracy, famine and terrorism have long defined the Somali story. Terrorist groups, Al Shabaab and Islamic State, have consistently threatened national security.

Phil McDonald, Regional Director (Africa), Castar Vali, is well aware of the above ground risks inherent in the Somalia oil Odysseus. While the situation has improved since the 2011 mayhem, McDonald craves caution. “The risk and threat is still there. In late August, a Panama-flagged vessel was hijacked between Yemen and Somalia.”

McDonald reckons a robust security mitigation mechanism is needed to provide the required security umbrella for oil companies to operate in Somalia.

The Somali government is undeterred and is pushing through with plans for drilling of an exploration well in late 2021. “We are hoping that the closing date for the licensing round is March, 2021. After that, we anticipate that we will award the blocks to bid winners and then mobilization will start, according to the minimum work programme obligations. We believe that they will mobilise within six months, and then we will start drilling,” declared Ibrahim Ali Hussein, Chairman/ CEO, Somalia Petroleum Authority. “By the fourth quarter of 2021, exploration drilling will start.”

While acknowledging the security threat posed to oil activities in Somalia, Hussein blames the volatile situation to mass youth unemployment and high levels of poverty in a country with 70 percent mostly idle youths.

“What we believe is that poverty and unemployment among the youths of Somalia is contributing significantly to the insecurity in Somalia. Young people are joining Al Shabaab because they are unemployed,” Hussein noted. “What we believe is that investment can bring stability and economic opportunities to young people. Exploration in oil and gas could help create jobs, and bring peace and stability to the country.”

COUNTRY FOCUS - NIGERIA

Nigeria’s Economy Hit Hard

by Low Oil Prices

By Niyi Ajibade

• Protestors at the recent Lagos anti-government rally

Panic is again creeping into the oil market as the price of Brent, the benchmark for Nigeria’s crude oil, fell to a four-month low at the end of October, as the market continue to struggle with oversupply due to Covid-19 lockdown restrictions across Europe.

Angry Nigerian protestors poured onto streets in October against police brutality. But it soon became obvious that the real source of anger was the worsening economic situation precipitated by the crash in global oil prices.

After years of prevarication, the Nigerian government announced on September 2 that it had fully deregulated the country’s heavily-subsidised downstream oil sector, and that domestic pump prices for gasoline would be determined by market forces.

This meant increases at the pumps, leading to skyrocketing prices of goods and services.

Food prices were particularly hit hard as Nigerians struggled to cope with hyper inflationary pressures.

For example, the price of a sachet of tomato puree is now N100 to N130 (from N50 previously). A bag of rice was N40,000 or more, in Lagos, a crate of egg N2,000.

Prices of sugar, garri and other

grains increased significantly in the past few months. Rising unemployment, high food prices, increasing poverty levels, and electricity tariffs are fueling anger in Africa’s most populous nation.

The Covid-19 pandemic also affected the income of Nigerians living abroad as Q2 2020 data showed. Nigeria recorded the lowest remittance from abroad since 2008. According to data from the Central Bank of Nigeria, remittances fell to $3.3 billion in the second quarter of the year, much lower than the average of $5.8 billion per quarter remitted to the country.

Apart from the low oil prices, Nigeria has struggled to sell its oil cargoes because India, its key oil market, has not been buying as much crude as in the past, partly due to the pandemic.

Nigeria depends on oil revenues for 90 percent of its foreign exchange earnings and 70 percent of overall national income. On October 20, a coalition of former oil rebels in the Niger Delta, now known as the Reformed Niger Delta Avengers, issued a statement threatening to resume attacks on oil installations if the federal government failed to meet the demands of protestors across

the country. The Niger Delta Avengers were responsible for the bulk of attacks on Nigeria’s oil infrastructure in 2016.

Nigeria, which has the capacity to produce around 2.2 million b/d of crude and condensate, imports all its domestically consumed gasoline due to the poor performance of the four stateowned refineries. The country depends on imports for all its petroleum products to meet its demand of around 450,000 b/d.

Even more disturbing is the fact that upstream oil and gas sector is facing stagnation as projects worth $162 billion remain in limbo amid worsening investment drought. With oil and gas reserves of some 30 billion and 200 trillion scf respectively, Nigeria is a solid hydrocarbons epicentre. But the government has failed to act to bring muchneeded investments.

Many projects, for instance, are still at the planning stage or bogged down by legal hurdles years after initiation. These projects were estimated to cost around $100 billion, boosting the nation’s oil production by as high as 875,000 bpd and revenue by about $1.5 billion.

With new discoveries and investor-friendly policies in neighbouring countries like Mozambique, Ghana, Senegal, Mauritania and South Africa, Nigeria is fast losing its attraction. The sector has become more competitive with new African producing nations introducing far-reaching incentives.

For instance, while most gas projects are idle in Nigeria, Mozambique, which has about half of Nigeria’s natural gas reserves, is at the verge of becoming one of the world’s largest gas producers with an estimated $128 billion flowing into the country’s gas sector before 2025.

The main laws governing Nigeria’s oil and gas exploration have not been fully updated since the 1960s because of the contentious nature any change to oil taxes, terms and revenue-

sharing create within Nigeria.

The Nigerian legislature is currently debating an oil reform bill that would privatise Nigerian National Petroleum Corporation (NNPC), amend changes to deepwater royalties made late last year and scrap key regulatory agencies in favour of new bodies.

Nigeria needs to make the best use of its oil wealth before it becomes worthless, the federal government warned recently, adding to a growing concern about the failure of the world’s most used and most traded commodity.

As the world moves towards a more renewable energy future, crude oil’s participation in the global energy mix will decline over the next two decades, Nigeria’s petroleum minister, Timipre Sylva, said during a meeting with parliamentary leaders. The meeting was called to discuss the Petroleum Industry Bill that should reform the country’s oil industry but has taken decades to draft.

“It is quite unfortunate that since the year 2000 when attempts were made to come up with a draft copy of PIB, to 2007, 2009, and 2012 when draft bills were submitted to different sessions of the National Assembly by the executive arm of government without passage, up till 2018 when the legislators came up with one, that we are yet to put on the ground regarding laws for effective regulation of the oil industry,” the minister said.

President Buhari had pledged far-reaching reforms in 2020 and a new direction in the beleaguered oil and gas sector.

“I am confident that in 2020 we will be able to present a radical programme of reform for oil and gas that will excite investors, improve governance and strengthen protection for host communities and the environment,” Mr. Buhari assured in his New Year message.

Are the proposed reforms before the national assembly sufficient to revive the sector and excite investors? Time will tell.

OFFSHORE VOL.10.9

N

igeria is officially in recession for the first time in more than a decade, bringing an end to three years of low but positive growth. The economy contracted by 6.1 percent in Q2 2020, from a growth of 1.87 percent in the preceding quarter.

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COUNTRY FOCUS - MOZAMBIQUE

Mozambique: Heading to Prosperity or Chaos?

Oil and gas major Total has joined forces with the Mozambique government to bolster security measures around its natural gas project in the southern African country following a ramp-up of Islamic insurgent activity in the area.

A new Memorandum of Understanding between the government and Total, the operator of Mozambique Liquefied Natural Gas (LNG) project in the north of country, will see a joint task force established to ensure the security of the project’s activities.

The $20 billion Mozambique LNG project in the country’s first onshore LNG development and will exploit a significant natural gas find off the coast of Northern Mozambique.

The final investment decision for an even larger $30bn onshore LNG project, Rovuma LNG, led by ExxonMobil, Eni, is anticipated in 2021.

OFFSHORE VOL.10.9

Members of an armed group calling itself “Al Shabaab” launched their first assault in Mocimba da Praia district in October 2017, attacking government institutions, including a police station and killing two police officers. Since then the attacks have grown incredibly violent.

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The insurgency in Mozambique’s Cabo Delgado province has been continuing, and growing. In midAugust, insurgents took control of the port town of Mocimboa da Praia in the province after running battles in which a reported 55 Mozambican soldiers were killed and 90 wounded. The police chief announced gleefully,

at the end of October, the killing of “108 terrorists in heavy fighting in the Cabo Delgado operational theatre in the past 72 hours.”

The insurgency has left 2,000 dead and 310,000 displaced, and 712,000 people in need of humanitarian assistance. More than 350,000 people are facing severe food insecurity, according to the UN. Currently, Cabo Delgado is home to Africa’s three largest liquified natural gas (LNG) projects: Coral, FLNG Project (Eni and ExxonMobil) worth $4.7 billion, the Mozambique LNG project (Total, formerly Anadarko) worth $20 billion, and the Rovuma LNG Project (ExxonMobil, Eni and CNPC) worth $30bn.

The marginalisation of the Muslim population in Cabo Delgado appears to have fanned the flames of insurgency.

Poverty, joblessness, land dispossession, and human rights violations have left an excellently fertile ground for people to turn to the insurgents. Despite the vast amounts of money invested into the region, tangible benefits for the population have not materialized.

The Mozambique military has tried to quell the attacks, aided by a growing number of foreign private military contractors, such as Wagner Group from Russia, from the US, South Africa’s Dyek Advisory Group, which in April 2020 actually attacked an Islamist base in Mbau.

The country shares borders with South Africa, Malawi, Eswatini, Tanzania, Zambia and Zimbabwe, all of which are members of the Southern African

• Mozambique’s rebel leader Alphoso Dlakhama and his group

Development Community (SADC).

Zimbabwe, for instance, relies on Mozambique for much of its food and electricity imports. A large risk would be if the insurgency spread further throughout Northern Mozambique and become an entrenched problem, significantly damaging other SADC states along with it.

Comparable situations can be made with Nigeria and Mali. Both countries suffered Islamist attacks, and their response was so slow that the violence quickly spread to other nations. For example, in Mali in 2012, Al-Qaida-linked rebels Ansar Dine conducted military attacks. But because Mali was slow to respond, the violence spread quickly to Burkina Faso and regional neighbours. A considerable fear is that Mozambique insurgency difficulties could become similar to the Boko Haram insurgency in northeastern Nigeria. The insurgency has gone on to severely disrupt Nigeria’s neighbours security.

The Mozambique government is forecasting revenues from the Rovuma Basin sector totalling $35 billion to $63 billion over the projects lifetime. But first it has to address the insecurity that is threatening the dream even before it begins. Indeed,

there is no guarantee that the wealth will materialize, nor that it will be shared equitably among Mozambicans.

Mozambique is looking for help from outside, writing to the European Union in September for help in training its armed forces. Neighbouring Zimbabwe is even urging military intervention by the African Union.

The war in Mozambique can be traced back to the days whiteruled Rhodesia (now Zimbabwe) was hell-bent on thwarting the Zimbabwe nationalists who were operating from Mozambique.

South Africa and CIA were also complicit in the grand Mozambique conspiracy.

But analysts say the root cause of the insurgency is a lack of jobs and development as the region has been neglected since the 1970s. Rights campaigners say people have lost access to the land they relied on for food, shelter and income. What is more, people are deemed unqualified for jobs in the new industries, such as mining and gas extraction, that tap the region’s mineral wealth.

Until the grievances of the people are addressed holistically, chances of Mozambique benefitting from its huge gas resource looks very slim at this point.

Tanzania Confirms Terror Attack Near Its Southern Gas Fields About 300 suspected Islamist militants carried out an attack in Tanzania at the end of October, the first such raid since Islamic State-linked fighters began an insurgency in Mozambique three years ago.

The gunmen attacked Kitaya village in the gas-rich region

of Mtwara and retreated to Mozambique, Inspector General of Police Simon Sirro told journalists on Tanzania’s Indian Ocean island of Pemba, without giving more details. Kitaya is on the banks of the Ruvuma river that separates the two countries.

Police have since arrested

“both locals and foreigners in connection with the terrorist incident,” he said.

Tanzania is working with regional neighbors to “flush out the terrorists,” he said, without naming the group behind the raid.

Some of the gunmen involved in last week’s attack were Tanzanians who authorities believe were behind a string of murders in the coastal town of Kibiti in 2017, Sirro said.

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