Offshore Africa Magazine Jan. 2021

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VOL. 11

ISSUE 1 - FEBRUARY 2021

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AF R I C A

George Owusu

-Interview with Ghana’s Oil Man

• Mr. George Yaw Owusu

Aker Energy Back to Pecan, Under New Plan Nigeria Steps on the Gas in 2021 Ghana Begins Major Seismic Sweep at Keta Basin Total Eyes Mayotte as Base for Mozambique LNG Tema LNG Project is Ready

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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 Congratulations to CONSHIP – A leader in Oil & Gas Logistics

GILBERT DA COSTA

C

ONSHIP has emerged as a top logistic solution provider in Ghana’s fledgling oil and gas sector. The company has diversified into airfreight, marine and husbandry logistics and projects around the world.

CONSHIP has achieved great success through unparallel efficiency and creating optimized delivery systems and schedules, ensuring the most fuel and time efficient journeys for cargo.

The firm represents a significant departure from traditional logistics business model.

The company operates a large fleet of vehicles across its main operating centres- Tema, Accra and Takoradi.

Logistics play an integral part in the oil and gas sector. At a time the oil and gas industry is reeling under the effects of the Covid- 19 pandemic, CONSHIP has consistently innovated to respond to critical needs of its clients and the sector.

As the company marks its 25th anniversary, Offshore Africa congratulates its Founder/ Chairman MC Vasnani, Chief Operating Officer Mrs. Vasnani, and the entire staff of CONSHIP.

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.11.1

VOL.

5

EXPLORATION & PRODUCTION

Aker Energy Back to Pecan, Under New Plan

By Our Reporter

A

ker Energy, a Norwegian E&P firm, with license to explore and produce oil at the DWT/CTP block, is expected to resume its Ghana development agenda in 2021, under a revised Plan of Development (PoD) -with an entirely different technical approach.

“It is a completely new technical project that takes into account the persistent low oil prices. We all know oil prices will struggle in the coming years, so the idea is to come up with a plan that is commercially and technically viable,” a competent industry source told Offshore Africa. “It is a much simpler project, nothing complex or sophisticated about the new plan.” Bidding for long lead-in items, such as an FPSO, is due to start in the next few months.

Under the revised Petroleum Agreement, approved by the Ghanaian parliament at the end of 2019, Aker Energy is not required by law to submit the new plan to the Ghana Government for approval. Article 8.16A gives Aker Energy the right to amend, vary or adjust its development plan without the consent of the Minister. It says, “Contractor (Aker Energy) shall have the right to amend, vary or adjust their Development Plan within twelve months of the final investment decision

by Contractor without the

consent of the Minister, provided such amendment, variation or adjustment shall not result in an increase in total capital expenditure in respect of the Pecan field.”

Restrictions on a range of key issues; from local content requirements to approval of key decisions, were all relaxed by the authorities in Accra. Aker Energy announced the suspension of Final Investment Decision (FID) for the Pecan project in early 2020, months after Ghana had granted unprecedented concessions to facilitate the $4.2 billion project.

Ghana hopes to add 100,000 bopd to its current oil production level when production from Pecan field commences.

Production at Ghana’s flagship Jubilee field is expected to decline in 2021, according to the Bank of Ghana.

Highly placed sources, who are privy to Aker Energy’s new development plan, say it is radically different from the initial

plan and may not fulfil long-held expectations, particularly among Ghanaian stakeholders.

A report by Rystad Energy on the offshore Pecan project estimated that the 300-million-barrel field will be profitable when oil sells at $49 a barrel. Aker Energy says proven resources are estimated to be between 450 and 500 million barrels. The company says it sees a potential in the area of up to one billion barrels in reserves.

And while resources from satellite fields are factored into the production equation, Aker Energy says it could achieve a balanced price of around $30 per barrel. But the Norwegian firm says it is focused on making the field development economical on a stand-alone basis, not counting surrounding reserves.

Aker Energy’s CEO Sven Jakob Likness had announced farreaching changes to the initial plan of development, starting with the design of FPSO. “Aker Energy will also consider changes to the subsea plant on the seabed, and whether new technology can improve the project economy.”

The previous field development plan submitted to Ghana’s Ministry of Energy had plans for up to 26 subsea wells, including 14 advanced, horizontal oil producers and 12 injectors with alternating water and gas

• Aker Energy initial PoD

injection (WAG) and the use of multiphase pumps as artificial lift, to maximise oil production.

Analysts say the recent election win by the NPP-led administration may also have contributed to the decision

by Aker Energy to resume operations in Ghana’s promising upstream petroleum sector.

However, concerns are also emerging about Ghana’s unpreparedness to deal with the debilitating impact of energy transition.

Aker Energy is operator of the DWT/CTP block with 50 percent ownership. Partners include Lukoil with 38 percent, GNPC 10 percent and Fuel Trade (2 percent).

Ghana Begins Major Seismic Sweep at Keta Basin OFFSHORE VOL.11.1

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ith Ghana poised to implement a major multiclient 3D geophysical survey in the relatively underexplored but highly prospective Eastern (Keta) basin offshore Ghana, strong indications are emerging that the basin could easily overtake the Western Tano offshore basin as Ghana’s next oil and gas hotspot. Initial observations point to some very exciting prospects.

“Whilst the primary play will undoubtedly be the late Cretaceous turbiditic channels found in Jubilee, we are also excited about the possibility of extensive late Cretaceous and Tertiary basin floor fans

containing very large volumes of hydrocarbons, which could exceed the existing discoveries offshore Ghana,” said Thomas Tsiboe-Darko, TG-Geopartners managing director.

TG-Geopartners, working with Ghana’s Petroleum Commission, is driving the acquisition of 14,000 square kilometres of 3D long-offset broadband multi-client seismic over open blocks that will be available for application.

Advanced new acquisition and imaging techniques will provide improved illumination of complex structures. The seismic shoot is expected to begin in early 2021, and could take up to 10 months to complete, with final processed volumes available in both time and depth by the second quarter of 2022.

The use of new imaging

technologies will help improve subsurface understanding and increase exploration success rates. “The upcoming new multiclient 3D seismic acquisition programme will help unlock and accelerate development of what will surely be the next wave of major oil discoveries in Ghana.”

Ghana says it is looking for established producers, oil majors, with deep pockets, relevant expertise and experience, to negotiate a deal for the allocation of oil blocks. In August 2020, the Ministry of Energy unexpectedly issued a public invitation to interested explorers and producers to apply for “direct negotiations” for 11 offshore blocks in the Eastern (Keta) basin.

The basin had previously attracted a huge interest from some oil majors. But checks

by Offshore Africa suggest the Covid-19 pandemic, persistent low oil prices and the long-term threat posed by the energy transition phenomenon had muted enthusiasm.

EXPLORATION & PRODUCTION

Nigeria’s Oil Struggling to Remain Competitive • Armed militants consistently threaten Nigeria’s oil fields

Nigeria, Africa’s top oil producer, says its short-term goal is to make its oil and gas industry more competitive, attract more investments and expand production to three million barrels per day (bopd) by 2023. Oil production in Nigeria slumped to 1.17 million barrels per day in December 2020, in compliance with cuts directed by OPEC and allies.

“We need to agree on terms that will give us a more competitive environment. We should find a way of producing oil cheaper at the largest volume possible, given the circumstances and future of oil itself, and of course, given our requirements and needs,’ declared Vice President Yemi Osibanjo, in a recent speech to stakeholders in Abuja.

With oil prices persistently low, oil producers with lower costs of production have become more attractive to investors. The longterm survival of producers will depend on their competitiveness.

“Today, we have one of the highest production costs in the world. You will be surprised that some assets (in Nigeria) are producing oil at as high as $60 per barrel, or even beyond that,” noted Mele Kyari, Group Managing Director at state-owned Nigerian National Petroleum Corporation. “But there are also assets that produce oil for as low as $9 per barrel.

So, we have this wide range of production costs in our environment, clearly linked to inefficiencies. The overall result is that we are producing oil at an average of $34 per barrel. This is not acceptable.”

The NNPC expects to bring

production costs down to around $10 per barrel by the end of 2021. It is ambitious but a doable target, in the opinion of the state oil company chief.

Despite its 32 billion oil reserves and conservative 200 TCF of proven natural gas resource, Nigeria has struggled to attract investment in the past decade.

Officials say the country attracted only 4 percent of $75 billion oil and gas investments in Africa in the past four years (20152019), due mainly to the delay in passing the reform -driven Petroleum Industry Bill (PIB) into law, according to the Lagos Chamber of Commerce and Industry.

“This underscores the need to create a competitive environment to attract investment in the oil and gas sector,” noted Dr. Muda Yusuf, Director- General of LCCI.

Tullow Sees Crude at $45 Per Barrel for 2021

T

ullow Oil expects an average oil price of $45/barrel (Brent) in 2021 and $55/ barrel (Brent) in 2022 and beyond as the firm works to reduce its heavy debt, generate impressive cash flows over the 2020s that will enable it to generate significant shareholder rewards, if it can get over its current hurdles.

OFFSHORE VOL.11.1

• Helicopter landing at the FPSO Evans Atta-Mills

Tullow Oil has seen its share price drop nearly 90 percent in the past year on the back of Covid-19 and the collapse of oil prices. The collapse puts the highly leveraged oil producer in a tough spot.

The company, which has a massive $2.4 billion in net debt, expects $7 billion in operating cash flow. From there it expects $4 billion in cash flow available for debt service and shareholder returns with significant upside.

Tullow’s most significant assets are its stake in the TEN and Jubilee oil fields in Ghana.

7

This is low-cost oil. It expects 2021 production at roughly 65,000 barrels a day. In 2020, production averaged 75,000 barrels per day.

Equatorial Guinea and Gabon.

It says it focused on investing in producing assets with significant growth potential and value creation.

The company’s other production includes fields in Ivory Coast,

Tullow Oil’s risk are large.

Specifically, the company’s risk

is whether price between $55/ barrel forecast for the decade.

If they do, the company will be able to generate ample cash flow and strong shareholder reward.

However, if it can’t rollover debt it risks bankruptcy.

LOCAL CONTENT

Maximizing the Multiplier Effect of Local Content

K

en McGhee, Chairman and Director of rising boutique consultancy Africa Ubiquity Group spoke to Africa Oil & Power about how the consultancy aims to employ local business service providers to train indigenous talent, leveraging crosssector collaboration and sustainable development in the wake of the repatriation of oil and gas workers in Equatorial Guinea and across the continent.

OFFSHORE VOL.11.1

What role will Africa Ubiquity Group play in local content development both in Equatorial Guinea and on the continent?

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One of the key success stories on the continent in terms of local content development is the Ghana Supply Chain Development (SCD) Program.

Having designed the program from the ground up in collaboration with a local team, we mobilized Ghanaian business service providers to train locals who had expressed interest in working in the oil and gas sector, and connected them with contracts with International Oil Companies (IOCs). This gave micro-, small- and medium-sized enterprises the chance to get a foothold in the industry.

In a nutshell, Africa Ubiquity Group leverages this idea of using locals to train locals to procure small-scale contracts.

For example, one of the first contracts signed in Ghana through the SCD Program was for painting fences at a pipe yard – valued at maybe $30,000. Yet there is a multiplier effect when it comes to small entities getting contracts with big firms. With this in mind, our services center on designing training programs for both public and private sectors, as well as advising on policy development – using

• Ken McGhee, Chairman of Africa Ubiquity Group

off the shelf Corporate Social Responsibility (CSR) investment projects that have been previously effective in advancing local content.

What are the preconditions for this model to be scalable to other African markets?

Ghana worked because of Ghana.

In addition to having a Petroleum Commission – which serves as a buffer between the Ministry of Energy and Petroleum and IOCs – there was a lot more national content to Ghana’s oil and gas sector from the start.

Ghana also made a commitment to learning “best practices” from other markets and having the foresight to see how producing countries like Equatorial Guinea and Nigeria were approaching local content policies.

Another key factor is funding, in which we had the support of the U.S. Agency for International Development. Yet even without the funding, having top-level support from local governments would facilitate a win-win scenario, whereby any company would be remiss to bring in its own external consultants to conduct trainings and other CSR initiatives. On a similar note, an

enabling environment is critical to the success of the model and its ability to be adopted by government or IOCs. Equatorial Guinea has one of the most conducive environments because companies work exclusively with the Ministry of Mines and Hydrocarbons, which is in part why Africa Ubiquity Group will maintain a base in Malabo, among other strategic locations.

Local content frameworks have to require some degree of social investment. Otherwise, local content is confined to hiring percentages.

How can emerging hydrocarbon producers leverage their status as newcomers, in terms of drawing on local content “best practices” from other markets?

Ghana has been more successful in local content because it made a commitment from the start to learn from others, and consequently, avoided a lot of the growing pains. In this sense, emerging producers like Mozambique and Senegal should be on the springboard, building local content clauses directly into their production-sharing contracts. Local content is the

way of the future, and ultimately, significantly more cost-effective in the long-term, in terms of reducing travel and expatriate costs, while still paying a very healthy wage to local employees.

If local content policies are initiated from the start, then governments don’t have to undo existing practices retroactively.

How would you characterize your long-term market outlook?

I am very optimistic; I have always believed that there is too heavy of an expatriate influence within several key areas of oil and gas production. In a rather perverse way, COVID-19 has countered this, and more processes are going to be in local hands. There are several local content models that have been adopted by other oil- and gas-producing countries, which African countries can follow.

While we cannot control the factors in the West, we can develop African content to create a foundation whereby the extractive sector is going to last, and more importantly, local citizens will be the long-term beneficiaries.

Africa Oil & Power

LOCAL CONTENT

Why Former Nigerian Vice President Atiku Abubakar Dropped out of Intels barrel prices to insist on lower fees for logistical services in Nigeria. Until then, they had all been classifying the exorbitant costs of logistics under cost oil and thereby getting reimbursed by the state.

Why Abubakar?

Volpi met Abubakar back in the 1980s when the latter was working for the Nigeria Customs Service at Apapa port in Lagos.

Abubakar left the civil service in 1989 having worked his way up to deputy head of customs.

A veritable money tree for the presidential candidate in 2019, Intels is no longer the force it once was since Muhammadu Buhari has been in power.

113 million dollars! This is the tidy sum that Atiku Abubakar has pocketed by selling his shares in Intels, a firm owned

by Orlean Invest (founded by the Italian Gabriele Volpi). The deal between the two parties was sealed a year ago and the funds were transferred in three instalments over the course of 2020.

A longstanding shareholder in Intels, which since the mid-1990s has been developing offshore logistics bases in Onne, Calabar and Warri in the Niger Delta for the oil industry, Abubakar had witnessed Intels’ gradual loss of its virtual monopoly in the sector.

The firm’s profitability also took a serious hit in the wake of the 2008 financial crisis, with still worse to come when the bottom fell out of the oil market in 2014.

The oil companies in charge of various offshore developments, first and foremost Total and ENI, took advantage of the collapsing

COVID -19:

Volpi saw Abubakar as a golden asset for his logistics businesses, not least because his partner was on very good terms with Bamanga Tukur, the head of the Nigerian Ports Authority who later served as minister for industry under President Sani Abacha from 1993 to 1995.

After leaving the civil service, Abubakar went into business and into politics too, serving as Olusegun Obasanjo’s vice president from 1999 to 2007.

Since unsuccessfully running against Muhammadu Buhari as the candidate of the People’s Democratic Party (PDP) in the 2019 presidential election, he has been spending most of his time Dubai where he is preparing for a

Risky diversification Orlean Invest also invested massively in Angola with Sonangol in the 1990s, creating the Sonils logistics base on which 60% of the country’s production is dependent. In 2014, Volpi’s firm also founded JV ENH Integrated Logistics Services in Mozambique, though the companies present in Cabo Delgado province - Total and ENI - have been wary of becoming dependent on it.

Both Volpi and Abubakar supported Whitmore Asset Management financially so that the oil firm Oando could acquire ConocoPhillips in Nigeria in 2012 for over half a billion dollars.

Whitmore is owned by Adewale Tinubu, the boss of Oando and the nephew of the former governor of Lagos, Bola Tinubu.

Adewale Tinubu was forced to reach a financial arrangement with Volpi (who was dissatisfied with his management of Oando) after losing a case at the London Court of International Arbitration in 2018.

• Tullow oil workers at an offshore location

Oil Workers Fear for Future

T

he COVID-19 pandemic has ushered in a crisis of confidence for the oil and gas workforce, according to Global Energy Talent Index (GETI), the world’s largest energy recruitment and employment trends report, released in January 2021.

Based on key findings from over 16,000 energy professionals, the report noted the following: • 8 in 10 oil and gas professionals feel less secure in their jobs than they did a year ago • 42% believe the sector has

contracted over the past 12 months • But 2/3s expect advances in engineering to open up important opportunities in the next three years In addition, the survey revealed:

region for their job

For the first time in GETI history, over the past year more professionals in the oil and gas sector report a fall in pay (29%) rather than an increase (28%)

Renewables and petrochemicals remain the biggest sources of competition for talent, winning the votes of 50% and 25% of those open to switching sectors, respectively

However, 49% expect pay to rise in the next 12 months, compared to just 18% who expect further reductions

A sense of precarity hovers over the whole sector. Forty-two per cent of survey respondents believe the oil and gas market has contracted over the past year – and 24 per cent characterise this as a “strong contraction”.

89% of professionals would consider relocating to another

However, there remains plenty of hope for the future. Fifty-seven per cent of respondents believe their employer is resilient to both recent and future changes and sixty-four per cent expect the sector to grow over the next three years. The same number feel that advances in engineering techniques and technologies will be among the most important opportunities for oil and gas businesses over the period.

OFFSHORE VOL.11.1

• Former Nigerian VP Atiku Abubakar

likely seventh presidential bid in 2023 - a campaign that would be greatly aided by the windfall from selling off his shares in Intels.

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EXCLUSIVE INTERVIEW

George YAW Owusu -Interview with Ghana’s Oil Man

Ghana marked ten years of oil production from the Jubilee field last December. To get some perspective and insights into Ghana’s oil and gas sector, Offshore Africa’s Editor-in-Chief Gilbert Da Costa sat down for an illuminating chat with Mr. George Yaw Owusu, (Chairman/CEO of Mansa Holdings), the man many in Ghana see as the Father of Ghana’s Oil and Gas. Mr. Owusu’s untiring and sacrificial efforts led to a major commercial oil find, the biggest in Ghana’s history.

(Excerpts from the interview.)

Ghana had just marked the tenth anniversary of oil production from the Jubilee field. You played a major role in the country’s first major oil discovery in 2007.

Tell us a bit about your role in this historic moment.

OFFSHORE VOL.11.1

In 2002, a year after President Kufour had been elected, his administration was eager to encourage oil exploration in Ghana. A number of our neighbouring countries in West Africa had discovered oil. At the time I was working for Shell Oil in Houston. An event was organised in Houston so that Energy Minister Dapaah could encourage oil exploration in Ghana. Only one company, Vanco, showed any interest. I assisted Vanco in securing an offshore oil block, but they were not successful.

10

I then partnered with a geologist and an Irish oil company to secure a second offshore block.

No sooner had we secured the block when oil prices dropped sharply. The geologist and the oil company withdrew, and I was left alone holding the block.

I went to almost every major oil company in Houston to get them to take on the project, but there was no interest, given Ghana’s 100 years of failed attempts at discovering oil. At the time Ghana was referred to as the graveyard for oil companies. It turned out my first major discovery was not oil, it was Kosmos in Dallas.

Jim Musselman, the founder of Kosmos, had the courage and foresight to drill for oil in Ghana.

They came to Ghana in 2004 and made a discovery at the West Cape Three Points block in 2007. I moved back to Ghana to serve as the country manager for Kosmos and as the only incountry employee, and I set up

the whole operation from day one. We set up shop in Takoradi and began exploration. In 2010 the discovery produced its first oil. Other companies joined in as the exploration progressed, including Tullow, Sabre Energy, and Anadarko. First oil was done at a very fast pace. We had a big ceremony at Takoradi. The late Atta Mills was President at the time when the taps were opened for the oil to flow.

opportunity we had in our hands.

What matters most is what all of us, as a country, do with the resource and what we are able to provide for future generations.

Since the discovery was made in 2007, which was the 50th anniversary of Ghana’s independence, GNPC named it the Jubilee Field.

It is difficult to objectively assess the state of any industry after what we have all gone through in 2020. Global oil and gas have suffered a huge setback and obviously, Ghana is not immune. The downturn has affected many adjacent industries, so in a way, so many of the gains through the years have been eroded by fundamental market forces, and that is the reality.

Of course, since then there have been several discoveries.

The hope that was Jubilee would open the door for more discoveries. Companies had drilled more than a hundred wells along our coast since 1896, and came up empty, but now we have an opportunity to change the “oil and gas graveyard” narrative about Ghana.

Many in Ghana see you as the father of oil in Ghana because of the role that you played. How do you feel when people see you and say, this is the person who helped Ghana to discover oil?

Well, it is certainly humbling for anyone to have had the opportunity to contribute to his country. But I see that more as a man who stood on the shoulders of many visionaries who had played their own parts in Ghana’s oil and gas journey. I am fortunate to have been able to contribute in a significant way to the economy of the country I love.

It will never be about accolades because, for me, it never was. I am an entrepreneur who set out in the face of incredibly difficult circumstances to believe in the

It’s been quite a while since 2007. Today we’re in 2021.

We have been producing oil for ten years now. What is your impression about the current state of the oil and gas Industry in Ghana?

But I am hopeful.

As an entrepreneur, I have no choice but to be optimistic.

Ghana has significant oil reserves and exploiting that resource remains a major source of wealth for the country, together with cocoa and gold.

Oil has always been a cyclical

industry and we are presently emerging from a significant downturn. What may be different this time is that around the world, there is an increasing shift to renewables such as wind, solar, and geothermal. There is a likelihood that demand for fossil fuels will be reduced progressively over the next several decades. This suggests that we have a limited window to capitalize on our resource.

That fact remains, that the industry is not as it was just ten years ago. I don’t think fossil

• Mr. George Yaw Owusu

EXCLUSIVE INTERVIEW

From the beginning Ghana has shown a willingness to learn from the experiences of others.

Ghana’s government reached out to the Norwegians and other people who had been in the business and said ‘Look, what is wrong, what is happening?’ The government had to make it more attractive for investors to come here because Ghana did not have any history of oil discovery, but the terms were just as strong as those of some of the major oil producing countries.

fuels are going away tomorrow, but there is ample evidence of market shifts. As a country, our challenge will be avoiding an overreliance on oil resources, taking a cue from the fact that no industry rides high forever and diversifying our investment, particularly with a focus on developing our private sector to bring emerging technologies to our market.

It is not just the revenues that go into government coffers, but also the opportunity to build technical capabilities that must not be squandered. The way to maximize the benefit to the country is to make oil exploration as easy and profitable as possible for both the government and the exploration and production companies. In this way, we encourage development of infrastructure and capabilities that can benefit Ghana well into the future.

I think the main challenge for Ghana would be to attract investors. When you have the potential but you are not attracting investment, it’s like the oil will remain buried in the ground. How can Ghana begin to attract investment?

As a relatively stable democracy in the region, Ghana has an excellent opportunity to become the major hub for oil services.

Investment always follows opportunity. Some of the keys to attracting investment are commitment to the rule of law, a forward-looking regulatory framework, economic stability and manageable currency risk.

A lack of predictability in any of these areas is a formidable enemy to robust investment.

My focus is on investment in training and developing the knowledge base here in Ghana. If we can equip our people and give them the incentive to invest in their own future, I believe our country will be much better for it, not only for today, but for decades to come.”

By taking heed and lowering terms Ghana was able to attract companies to come and invest. Companies like Tullow, Kosmos, Anadarko came in and the oil industry prospered. At the moment COVID has caused significant demand destruction and that, coupled with oversupply, has created a need once again to revisit terms to assure that they are sufficiently attractive

to stimulate investment. After all, we are competing with all oil producing countries around the globe, including Guyana and others. The world can only consume a certain amount of oil per day. Renewables are coming, electric cars are coming, and technological advances are making nearly everything more fuel efficient. If we don’t do enough to attract investment now, in the next 20 to 30 years, we will look back someday and regret our missed opportunities today.

When you and others discovered the Jubilee, it was one of the biggest worldwide discoveries in the last ten years or something like that. That obviously would have been the time to have hit on the momentum and built upon that, but that did not happen. Is Ghana paying the price for not exploiting the opportunities that came with the Jubilee discovery?

You are absolutely right. We are paying the price because the discovery was made in 2007.

In 2008, there was a change of government. Political agendas shifted. New people looked at the same information through a different lens, much different from that of the people who discovered it. While the political tug of war continued, the momentum fizzled.

Currently, there is not a single development project going on in Ghana. We were all thinking Aker Energy’s Pecan project was going to start, but nothing happened. Now the service

providers are suffering.

But now it’s like no one is even coming forward to take up the offer that the ministry made recently for direct negotiations. It comes back to the same question, what can we do?

The major factor here is the price of oil. If the price of oil was $200, believe me, everybody would be exploring everywhere.

It’s about $55; it went all the way down to $16. Most of our oil discoveries are deep offshore, where the cost of extraction is high. That is not the first oil to exploit when prices are low. There must be sufficient incentives for companies to explore, especially in virgin territory, places where oil has not been found, like the Keta Basin.

Tell us what you are doing at the moment, in terms of business operations in Ghana.

I spent decades in the oil and gas industry, working mostly in the United States for oil majors, and saw first hand how companies worked to create opportunities and capture value. I knew also how easily opportunities and oil wealth can elude the citizens of foreign countries if the resource is not managed carefully.

In the years after 2007, I have been fortunate to build an indigenous engineering company with an ambitious vision and a great group of individuals working every day to achieve that. We have partnered with respected multinational companies to form joint venture companies where necessary to enhance our capabilities.

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We have made much progress in most of these areas. Ghana enjoys considerable support from the world community, yet there is still much to be done.

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EXCLUSIVE INTERVIEW In the industry, at least from my vantage point, there are many gaps and well-documented problems. More than building a company to provide a service, what drives me every single day is a quest to be part of the solution.

For instance, we have a Local Content/Local Participation law (LI2204), aimed at promoting local participation in the sector, as well as retaining a maximum share of the value generated from exploiting our petroleum resources.

What I hoped to tangibly contribute is to help bridge the gap between theory and practice. Our universities produce graduates every day, most with limited exposure to the actual machines and facilities in the industry. It is impossible for them to contribute without transforming their “book knowledge” into realworld experience. So in many cases, we work with our joint venture partners, who have the experience and technical knowhow to train our professionals and technical personnel. It takes a lot of financial sacrifice and patience, but I strongly believe that there is no greater investment than one that transforms a mind.

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Gradually, we will not have to shut down entire operations to ship equipment in need of repair to Europe and America, along with the hefty costs and long lead times, because there will be capable Ghanaians who can do the job quicker, at a lower cost and with the same degree of skill.

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Two years ago, we began the groundwork for a 16-acre Mansa Technology and Engineering Centre (MTEC) in Takoradi, as a multi-purpose industrial compound with facilities purposefully established to provide support services including equipment repair and fabrication, machining and coating, for both oil and gas, and mining sectors. This may help push/accelerate industrialization in Ghana.

My focus is on investment in training and developing the knowledge base here in Ghana.

If we can equip our people and give them the incentive to invest in their own future, I believe our country will be much better for it, not only for today, but for decades to come.

What do we need to do make local content and local participation laws more beneficial?

The local content and local participation laws are actually very simple. If you are a foreign company you cannot do business in the petroleum industry unless you form an incorporated joint venture company with at least 10% indigenous Ghanaian ownership. Period. You then must put a program in place to transfer knowledge and technology to that indigenous Ghanaian partner over time.

Sounds simple. In practice, it creates a significant business challenge. Both partners risk seeing the participation as a government mandated reward for the local partner unrelated to proportionate, or any, value contributed by the local partner.

This can create resentment on the part of the foreign company and entitlement on the part of the local company.

lifetime.” The Ghanaians I know want to learn to fish, not just sit back and be fed.

Likewise, the local content rules say that you have to source goods and services from indigenous Ghanaian companies in specifically prescribed amounts that increase over time. It is a complex reality and the challenge here is that until the industry develops to a sufficient degree, the Petroleum Commission has no choice other than to make exception after exception to keep oil flowing.

The solution: develop capabilities and enforce the laws as written. It is amazing the lengths

I remember several years ago, when negotiating an agreement with a foreign company to act as the local participant, that their London attorney said, “Why don’t you just be quiet and collect your reward.” It is not the money that is of greatest importance. It is the knowledge and technology transfer that creates long term value. Once we get that right we will be on the way to having the work performed entirely by capable and competitive local companies. It was the Chinese philosopher Lao Tzu who said it best, “Give a man a fish and you feed him for a day.

Teach him how to fish and you feed him for a

companies would go to find loopholes in the law just to make a shortsighted gain. They put the rest of us, and in fact the whole country at a disadvantage.

It is best if indigenous companies can partner with a foreign company interested in mutual gains, and gradually work to transfer knowledge to the local partners. That is ideal, but greed and inefficient systems undermine this objective until we end up sabotaging our own progress.

There are rules and regulations for a reason. I also can say with certainty that there are honest foreign partners who acknowledge the reality of Local Content and Local Participation policies and know that it is possible to create win-win scenarios.

Again, much of the challenge lives with the Petroleum Commission to enforce the regulations, and I support their work completely. If we are able to manage our systems well, we will be the architects of our own success.

• Mr. George Yaw Owusu

OIL & GAS PEOPLE

Opoku-Prempeh, Ghana’s Energy Minister Designate in clinical epidemiology in Netherland’s Institute of Health Science. He also studied leadership and government at the Kennedy School of Government, Harvard University.

• Mrs. Kadijah Amoah

• Dr. Matthew Opoku-Prempeh

Aker Energy AS has promoted Country Director, Mrs. Kadijah Amoah as Chief Executive Officer, CEO, of Aker Energy Ghana Limited, effective 4 January 2021.

In a statement issued by the company, CEO of Aker Energy AS, Håvard Garseth, notes that, the move shows Aker Energy’s commitment to become a fully Ghanaian operator managed and run by Ghanaian employees.

“This sends a strong signal that Aker Energy is committed to become a fully Ghanaian operator managed and run

by Ghanaian employees. Mrs. Kadijah Amoah has as Country Director proved her drive, intellect and passion for her native country and the company and we are looking forward to her management of this transition”, he said.

It further notes that, Mr. Håvard Garseth, will continue to safeguard the technical delivery of the Pecan project while supporting Mrs. Amoah’s management of the transition to become a fully run Ghanaian operator.

Dr. Matthew Opoku Prempeh is the member of parliament for Manhyia South in Ghana’s Ashanti region, the stronghold of the ruling National Patriotic Party (NPP). Born on May 23, 1968, in Ashanti New Town, a suburb of Kumasi, Matthew Opoku Prempeh is perhaps a classical case of a round peg in a square hole in Ghana’s politics under President Akufo-Addo.

Having studied medicine at Kwame Nkrumah University of Science and Technology (where he was a students leader), he obtained an advanced degree

• Dzifa Bampoh

His medical background made him fit for a role as health minister. But President AkufoAddo saw him as playing a different role in his cabinet.

First, he appointed him to the education minister position in his first cabinet. And now the biggest surprise of all: Minister of Energy in 2021.

Nevertheless, many can remain hopeful that Dr. Opoku-Prempeh’s success at the ministry of education could propel him to achieve what his predecessorsBoakye Agyarko and John PeterAmewu- could not achieve at the ministry of energy.

Many attribute his latest appointment to two things. First, to please party faithfuls in Ashanti who have been clamouring for more “juicier” cabinet ministerial appointments. The energy sector is currently one of Ghana’s hottest seats. Second, it could have been a thank you message to the appointee from his boss for successfully, and perhaps some may say, diligently executing the government’s flagship free senior high school policy.

Ghana’s oil and gas sector is desperately in need of a wellfocused, dynamic, purposeful, pragmatic leadership and direction. Will Dr. Matthew Opoku-Prempeh be the man to turn things around at the ministry of energy? Only time will tell.

LEKOIL Nigeria Appoints Aisha Muhammed-Oyebode as Chairman Chairman of the Board. Prior to this appointment, she served as Interim Chairman and brings her vast experience to the Board.

Mrs. Khadijah Amoah urged Ghanaians to take charge of the vast energy resources the country is blessed with.

Dzifa Bampoh Bids Farewell to Tullow Ghana

Many in Ghana’s oil and gas industry have clamoured for thorough-bred professional to run affairs at the Energy Ministry. The oil and gas sector is such a complex, labyrinthine, quagmirical activity that Ghana has failed to make progress in recent years. By the time a “novice” settles down and begins to understand how things operate, four years is over, and nothing is achieved.

•

Aisha Muhammed-Oyebode

LEKOIL Nigeria Limited, the oil and gas exploration and production company and affiliate of Lekoil Limited Cayman, announces the appointment of Aisha Muhammed-Oyebode as

An Africa-focused oil exploration and production company with world class assets in Nigeria and West Africa, Lekoil Cayman operates in Nigeria through LEKOIL Nigeria which has significant interest in a number of strategic Nigerian oil and gas assets which are important to Nigeria’s energy future. The assets include the Otakikpo marginal field where LEKOIL has 40% interest; Ogo discovery and OPL 310 where LEKOIL has 17.14%; OPL 276 where LEKOIL has 45% and OPL 325 where LEKOIL has 62% interest.

Muhammed-Oyebode is the CEO of the Murtala Muhammed Foundation and Group Chief Executive Officer, Asset Management Group, AMG, Limited. She is a development specialist, international NGO expert and human rights activist with special focus on women and girls’ initiatives. She is a distinguished advisor on social impact and corporate social responsibility with expertise in Africa.

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Kadijah Amoah is CEO of Aker Energy Ghana

Riverson Oppong Honoured “I wish to inform you that after 31/2 years, my last day with Tullow is 31stDecember 2020,” said a terse email message sent to Offshore Africa at the end of 2020.

Indeed, for three and half years, Dzifa Bampoh served as Tullow Ghana’s Communications and Investor Relations Manager. She previously worked for Joy FM, a radio station in Accra.

“I have nothing but gratitude for all your support and collaboration over the period,” the message concluded.

Offshore Africa wishes Dzifa the best for the future. The new communications team at Tullow Ghana is led by David Amoah.

One of Ghana’s bright young oil and gas talents, Dr. Riverson Oppong, has received a certificate of excellence for his contributions to Ghana’s fledgling oil and gas sector.

“For your incredible contributions to the oil and gas development in Ghana. Through your insightful analysis and astute recommendations, you have helped to shape the nascent petroleum industry in Ghana.

You have also projected the name of Ghana on the world map through your various networks, publications and lectures. Many

Ghanaian youths take inspiration from your many international recognitions and awards,” noted the citation (co-signed

by Kwabena Osei-Prempeh, Group CEO/MD of GOIL) that accompanied the award.

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Dr. Oppong is the commercial manager at Ghana Gas Company, and an active member of the Society of Petroleum Engineers (SPE).

•

Dr. Riverson Oppong receives his award

OUR FACILITIES Set on two acres of natural surroundings in the oil city of Takoradi, just a 45 minute flight from Accra, RTC is fully equipped with advanced simulators, helipad, water survival training pool, medical center, prime onsite accommodation, restaurant and fitness center. Our top international experts and instructors have extensive experience for delivering effective training in a variety of safety and survival courses.

We have built an extensive team of training instructors who have worked within the maritime and offshore training sectors for many years, and are led by individuals with vast experience in the training sector and its varied needs. You can read about them in greater detail on our team page.

You can see our full list of maritime and offshore training capabilities by visiting the following pages: Offshore Training Courses Maritime Training Courses se centre boasts state of the art facilities to rival anything available in the West Africa today and is the only one of its kind in Ghana: Purpose built training pool with a Helicopter Underwater Escape Trainer (HUET), providing emergency survival training for the oil and gas and offshore and onshore sectors TEMPSC (Totally Enclosed Motor Propelled Survival Craft) allowing for training in mustering and boarding of a survival craft.

We have aviation and marine life rafts, along with life jackets for various climates around the world and full PPE to train delegates in helicopter emergencies and sea survival based scenarios. Full fire training ground, complete with training stack and helideck to provide the full range of fire control training for both offshore and marine delegates and not forgetting ‘‘e Kitchen’ – providing freshly prepared hot meals daily

OUR SERVICES

OFFSHORE SURVIVAL TRAINING

MEDICAL TRAINING

HSE TRAINING

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Head Office 5th Flooor, 335 Place, Block 6, N1 North Dzorwulu, Accra - Ghana.

Training Centre Off Kejebril Township Ahanta West Takoradi, Ghana

Contact +233 (0)558 467 745 +233 (0)540 107 926 Email Us info@rigworldtraining.com enquiries@rigworldtraining.com

COMPANY NEWS

CONSHIP Marks 25th Anniversary

C

onship is a 100% Ghanaian owned and operated company.

Over the years, it has diversified its operations into other areas of the logistics Industry, such as Airfreight, Marine and Husbandry, Logistics and Projects. The discovery of oil in commercial quantities in the Western Region (Offshore) of Ghana brought with it enormous opportunities for the Logistics and Supply Chain Industry.

The company has three other operational branches strategically located in Tema, Accra and Takoradi. The Tema branch is strategically located on Plot number 21/22 of the commercial warehouse area of the Tema Main Harbour, with

a floor area of 2395.74m2. The facility comes equipped with a two-unit warehouse with net internal floor area of 614.24m2 and volume of 3,562.59m3 for Container Freight Station Operations and Customs Bonded Warehousing operations.

The Accra branch is located in the newly constructed Swiss Port building. The 342sqm office located in the north wing of the new building houses the staff of Conship’s ever growing Air Freight operations and is strategically located at the Airport to conveniently serve its customers The Takoradi branch is located in the Western Regional Capital, Takoradi where Conship has an Onshore Logistics Base at Apowa with a total floor area of 3980.62m2 to provide the needed logistical support for our clients.

Aside being a giant in the provision of services in the Oil and Gas industry, Conship

has strong strengths in all areas of logistics including the vertical markets which

include Telecommunication, Consumables, and Contract Logistics amongst others.

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Heirs Acquires 45% of OML 17 from Shell, Total and ENI

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Heirs Holdings, the leading African strategic investor, in partnership with affiliated company Transnational Corporation of Nigeria Plc (“Transcorp”)), Nigeria’s largest publicly listed conglomerate, have acquired a 45% participating interest in Nigerian oil licence OML 17 and related assets, through TNOG Oil and Gas Limited (a related company of Heirs Holdings and Transcorp), from the Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and ENI. In addition, TNOG Oil and Gas Limited will have sole operatorship of the asset.

The transaction is one of the largest oil and gas financings in Africa in more than a decade, with a financing component of US$1.1 billion, provided by a consortium of global and regional banks and investors.

OML 17 has a current production capacity of 27,000 barrels of oil equivalent per day and, according to our estimates, 2P reserves of 1.2 billion barrels of oil equivalent, with an additional

1 billion barrels of oil equivalent resources of further exploration potential.

Heirs Holdings’ strategy of creating the leading integrated energy business in Africa is executed through a series of strategic portfolio holdings.

Transcorp also operates OPL281, under a production sharing contract with the Nigerian National Petroleum Corporation (“NNPC”). Similarly, Heirs Holdings’ subsidiary, Tenoil is the operator of OPL 2008, under a production sharing contract with NNPC. Tenoil also owns the Ata Marginal Field, which will commence production in Q2, 2021, with 3,500 barrels of oil per day.

Chairman of Heirs Holdings, Tony Elumelu stated: “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of

• Tony Elumelu, Chairman of Heirs Holdings

our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely highquality management team that we have assembled.

integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.”

“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from

Heirs Holdings (www.

HeirsHoldings.com) is a leading pan-African investment company. Its investment portfolio spans the power, oil and gas, financial services, hospitality, real estate, and healthcare sectors, operating in twenty-three countries worldwide.

COMPANY NEWS

Eni Ghana and Partners Support Rural Clean Cooking Pilot Project

• Ghana’s President Akufo -Addo inaugurated the Eni-operated OCTP gas project.

• A recipient of the cookstoves

Eni Ghana supports Micro, Small and Medium Enterprises in Host Communities

The initiative represents the first milestone of the Rural Clean Cooking pilot project developed with World Bank and the Ghana Alliance for Clean Cookstove (GHACCO) to reduce exposure to unhealthy wood-smoke and decrease pressure on the depletion of forest resources.

The 10 beneficiary communities are Sanzule, Krisan, Eikwe, Bakanta, Atuabo, Anokyi, Asemda, Ngalekpoley, Ngalekyi and Baku, all of which located in the OCTP Onshore Gas Receiving Facility’s area of influence. Prior to the distribution, an awareness campaign was carried out in

all ten communities in order to sensitize them about the use and benefits of the cookstoves.

The cookstoves have been produced locally by indigenous Ghanaian manufacturers and tested by the Institute of Industrial Research (IIR) of the Council for Scientific and Industrial Research (CSIR).

The Rural Clean Cooking pilot project is part of a broader Local Development Project, with a budget of over $9M, developed

by Eni Ghana with its OCTP partners, Vitol and GNPC to promote inclusive economic growth and well-being of people living in the OCTP’s area of influence.

Eni is Operator of the OCTP Integrated Oil & Gas Development Project (Eni 44.44%, Vitol 35.56%, GNPC 20%), which produces oil and non-associated gas of the Sankofa and Gye-Nyame reservoirs.

The initiative will benefit youth in ten coastal communities neighboring Eni Ghana’s area of operations, namely Sanzule, Krisan, Eikwe, Bakanta, Atuabo, Anokyi, Asemda, Ngalekpoley, Ngalekyi and Baku, fostering innovation and the adoption of new technologies amongst MSMEs to enable them to manage their operations more efficiently through pragmatic record keeping and financial management. Also, the project will help develop market linkages with medium- and large-scale businesses, increase households’ income and reduce exposure to vulnerable situations.

Total Piles Pressure on South Africa Over Block 11B/12B Development Total is taking a harder line with the South African government as it lobbies to get the country’s new oil bill onto the statute books quickly.

French oil major Total is running out of patience as the South African government procrastinates over publication of the country’s future oil bill. A first version of the new law was made public in December 2019 but the final text has still not been submitted to parliament for adoption.

The Petroleum Bill has been eagerly awaited for a number of years already and the oil groups have increased pressure on the government to have it brought into law following Total’s second discovery of gas condensate on block 11B/12B at the end of October.

According to our information, Total wants to make the pursuit of its activities on block 11B/12B conditional upon publication of the law. The text should set out the legal regulations which will govern the marketing of Total’s

gas and which the group needs to know about before it commits to further development work.

Adewale Fayemi, the head of Total’s operations in South Africa, is already engaged in direct talks with energy minister Gwede Mantashe. Since the end of 2019, moreover, Fayemi has also been head of the Offshore Petroleum Association of South Africa (OPASA), the main lobbying body for oil companies active in South Africa.

Total plans

This business diversification activity is part of a broader Local Development Project developed

by Eni Ghana together with OCTP partners to promote inclusive economic growth and well-being of the people in OCTP’s area of influence. The overall investment for the Local Development Project exceeds $9M. Eni Ghana’s Managing Director Giuseppe Valenti commented that “in partnership with NBSSI, Eni Ghana aims to strengthen the entrepreneurial culture and spur the creation of micro and smallscale businesses that will grow to support the local economy of the Ellembelle District”.

NBSSI is a governmental agency under the Ministry of Trade and Industry (MoTI) mandated to promote and develop Micro, Small and Medium Enterprises (MSMEs) to contribute towards reducing unemployment rate in the country by providing training opportunities and business development services for micro and small enterprises, in particular youth and women-led.

Once the new law has been promulgated, Total and its partners, Qatar Petroleum, Canadian Natural Resources and Main Street 1549 Proprietary, plan to bring another drilling rig to South Africa to drill two appraisal wells on the Brulpadda and Luiperd prospects where the finds were made, respectively in February 2019 and October 2020.

Total also hopes to drill a new exploration well on the Blaasop prospect. The company is banking on the Petroleum Bill being adopted in 2021 to give it time to drill the new wells before its exploration rights expire in September 2022.

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Eni Ghana, on behalf of its partners in the OCTP project, GNPC and Vitol, has completed the distribution of 600 improved domestic wood fuel cookstoves in coastal communities in the Ellembelle District of the Western Region, with the aim of enhancing access to modern, clean and safe energy sources.

Eni Ghana, on behalf of its OCTP partners Vitol and GNPC, has signed a cooperation agreement with the National Board for Small Scale Industries (NBSSI) to support Micro, Small and Medium Enterprises (MSMEs) in the Ellembelle District, Western region. Under the agreement, 800 MSMEs will get entrepreneurship, financial literacy and technical skills training.

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DOWNSTREAM

Why Angola’s Sonangol Can’t Shake Off Trafigura As a result of Gaspar Martins’ difficulty in building a new terminal for Sonangol, the Swiss trading house Trafigura remains the only firm able to stock imported oil products in large quantities in Angola.

The national oil company Sonangol’s Sonangol ’s head of distribution and marketing, Luís Maria, Maria, is struggling to make any progress on the Terminal Oceânico da Barra do Dande (TOBD) build. The purpose of the new oil terminal, located in Bengo province, is to meet rising domestic demand for oil products, currently around 130,000 bpd, and to create a two-week backup stock by providing an additional 641,000 cubic metres of storage. Angola’s total storage capacity is just 698,000 cubic meters. It is understood that the government is looking for a new partner after several recent disappointments and has set aside $3m to assess the project.

OFFSHORE VOL.11.1

A fairly unreliable Emirati

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However, in November 2019, Sonangol chairman Gaspar Martins signed a memorandum of understanding with a Dubai sheik, Ahmed bin Dalmook Juma Al Maktoum, Maktoum, the founder of Africa Middle East Resources Investment (Ameri Group), Group), to build the petroleum storage tanks estimated to cost over $600m.

A distant cousin of the emir of Dubai, Al Maktoum holds a diplomatic passport and is well received by the African leaders he visits. He was received by President João Lourenço during his time in Angola in 2019.

However, a year after putting his initials on a first agreement in

principle with the Angolan state, he had not managed to raise any money for the assessments needed for the TOBD. To keep Luanda happy, he financed a small tractor assembly unit in mid-2020 using financing set up by one of his advisors, Averi Capital, Capital, founded by the Dubai-based Portuguese financier Gaspar Lino.

Lino. Al Maktoum has also shown interest in the Luanda airport expansion project, but his lack of results on the TOBD could damage his reputation in Angola.

Delay after delay The TOBD projet was launched under ex-president José Eduardo dos Santos.

Santos. It was one of the former head of state’s daughter Isabel dos Santos’ Santos’ firms,Atlantic firms, Atlantic Ventures, Ventures, that won the contract. Lourenço cancelled the contract in 2018 and held a tender that year to find a new contractor. However, the fall in oil prices in 2016 had badly affected Sonangol’s finances and the company chairman of the time, Carlos Saturnino,, called the bidding Saturnino off. Some construction giants, such as Portugal’s Mota-Engil and the CNPC subsidiary China Petroleum Pipeline Construction Co, Co, had submitted a bid.

In August 2019, with oil prices climbing back to a $64/ barrel average, Sonangol relaunched the project and tasked Mauro Graça, Graça, under Maria’s supervision, to get the terminal up and running as soon as possible. Garça joined the national oil company in 2009 after building a career in the private sector with Total and Mobil Angola.

Angola.

Sonangol was no longer planning to finance the project on its own

and wanted to find a partner via a joint venture of which it would only hold 50%, or even 33% if several investors wished to join. Garça was given until 30 December 2019 to find a partner and have the TOBD operational by the end of 2022. There is even less chance of achieving this deadline now that one year later Al Maktoum has not been able to raise the necessary funds.

Trafigura still omnipresent As it stands, Pumangol Pumangol,, a subsidiary of the Swiss trader Trafigura and Sonangol, controls most of the petroleum storage depots in Angola.

Trafigura had been untouchable under the Dos Santos administration thanks to its local partner, Cochan Cochan,, owned

by Gen. Leopoldino Fragoso do Nascimento, Nascimento, aka “Dino “Dino”. ”.

Nascimento is currently being investigated by attorney general Hélder Pitta Grós.

Grós.

But the trader is not as close to Lourenço and his government, which had the state buy back Cochan’s shares less than a year ago, and Pumangol’s capacities are becoming increasingly insufficient. Cargoes often have to wait days at sea before being able to offload their petroleum products, resulting in higher prices at the pumps.

Angola is also working on increasing its refinery capacity. It only has one refinery in Luanda that with 50,000 bpd barely covers a third of the country’s needs. Martins is counting on two new plants, a 3.2m tonne one in Cabinda led by Russian-British investment fund Gemcorp and a 10.6m tonne one in Lobito.

However, the financing for these structures, respectively due for 2022 and 2025, is far from finalised.

• The Cabinda refinery in Angola

Nigeria Under Pressure to Maintain Fuel Subsidy as Oil Prices Rise

• The dysfunctional Port Harcourt refinery

The sustained increase in global crude oil prices appears to have triggered a return to petrol subsidy era.

The price of the international oil benchmark, Brent crude, has been on an upward trajectory, rising from $41.51 per barrel to close at $51.22 per barrel on December 31.

The increase has been on the rise since November 13, 2020 when the pump prices of Premium Motor Spirit (petrol) were last increased in the country.

Fuel marketers had in December expected another upward adjustment of PMS prices to reflect the further rise in crude oil prices.

However, a N5 reduction in petrol price, effective December 14, was announced by the Federal Government – a development that left them reeling in shock and questioning the deregulation of petrol price.

Apart from the increase in global crude oil prices, the devaluation of the naira last year also led to a significant rise in the cost of imported petrol.

If the pump price of petrol is left unchanged amid the rise in oil prices, it means the NNPC would again bear the latest subsidy cost on behalf of the government as it did for several years before its removal last year.

DOWNSTREAM

Kenya Seeks Compensation over Uganda’s Oil Jetty Delay The Kenyan government wants to be compensated over the Kisumu loading pier, which was completed in 2018 but cannot be used until Uganda has finished a similar facility on its side of Lake Victoria. Kenya wants Indian group Mahathi, which is building Uganda’s jetty and has accumulated delays, to pay some $22.8m.

When Kenyan President Uhuru Kenyatta visited the lakeside city of Kisumu on 10 January, he was still worried about the financial future of the infrastructure there, especially an oil jetty that has not been used for three years.

On the advice of finance minister Ukur Yatani, Kenyatta late last year quietly sollicited his Ugandan counterpart Yoweri Museveni to seek $22.8m in compensation from Indian construction firm Mahathi, which has accumulated delays in building a similar jetty in Uganda, now due for completion in August.

The jetty, designed to facilitate oil shipments between the neighbouring states across Lake Victoria, has been in working order since February 2018. But only when Uganda completes its own oil jetty near Kampala will the one in Kisumu become properly operational.

US grants to support major upgrades at Egyptian refineries

T

he US Trade and Development Agency (USTDA) has awarded grants to Egyptian General Petroleum Corp. subsidiaries Amreya Petroleum Refining Co. (APRC) and Suez Oil Processing Co. (SOPC) to fund feasibility studies for proposed modernization and upgrading at each of the operators’ existing refineries in northern Egypt.

Part of USTDA’s ongoing collaboration with Egypt’s Ministry of Petroleum & Mineral Resources (MOPMR) to help realize the joint US-Egyptian priority of transforming the country into a leading energy hub, the grants to SOPC and APRC—worth a combined $1.4 million—will fund studies for projects aimed at increasing efficiency and profitability of the two refineries, as well as works designed to reduce environmental impacts at both sites, USTDA said.

• Suez Oil Refinery Co

Valued at just over $694,000, USTDA’s grant to SOPC will cover an already awarded feasibility study to Honeywell International Inc. subsidiary UOP LLC for projects related to modernizing and enhancing capacity of the existing naphtha complex at the operator’s 3-millon tonnes/year (tpy) refinery in Al Zaytiyat, Suez, at the entrance of the Suez Canal on the Red Sea, said Hussein Awad, SOPC’s chairman.

Specific major projects to be executed under the refinery modernization program include:

• Refurbishing the existing delayed coking unit.

• Upgrading or installing a new hydrotreating unit.

• Installing a new vapor recovery unit.

• Installing a new asphalt unit at the existing vacuum distillation unit.

• Unidentified energy efficiency investments.

SOPC has yet to disclose a definitive timeframe for the program’s intended completion.

Cash-strapped treasury

Nairobi maintains Mahathi and its partners, the Ugandan firm Fortune Energy and Kenya’s Siginon Group, should pay it the $22.8m to cover the opportunity costs generated by the jetty’s long inactivity. Yatani and Keter enjoy the full support of Kenyatta, who has taken a keen interest in this project, paying numerous visits to its various underused infrastructure components. Other than the jetty, which cost Kenyan taxpayers some $18m, the port of Kisumu was thoroughly refurbished early last year at a cost of $27m.

OFFSHORE VOL.11.1

Yatani is desperate to plug the hole in the Kenyan state’s finances and needs Museveni’s government to put pressure on Mahathi. Kenyan oil minister Charles Keter is already talking to his Ugandan counterpart Mary Goretti Kitutu about this.

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• Intertek Ghana has attained ISO 9001:2015 certification from Ghana Standards Authority. Top company officials with the certificate. Intertek’s operational processes for the testing of products, inspection and calibration are up to internationally recognized standards

SPOTLIGHT

Shell Profits in ENI/ GNPC Fallout

T OFFSHORE VOL.11.1

he Anglo-Dutch major Shell has taken advantage of the deterioration in relations between the state-owned GNPC and its longstanding partner ENI, whom the government has accused of manoeuvring it into signing an unfavourable contract on Sankofa.

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Tema LNG Terminal Co (TLTC), which is financed by the panAfrican private equity firm Helios Investment Partners, is hoping to launch commercial operations at the Tema LNG gas terminal in April or May at the earliest. Run by the Spanish firm Reganosa, this terminal with an annual capacity of 1.7 million tonnes will be supplied with LNG imported by the Anglo-Dutch major Shell.

The gas will then be delivered to the state-owned Ghana National Petroleum Corp (GNPC), which will in turn distribute it to its clients, namely the country’s power plants.

Shell more competitive than ENI? As we previously reported, the decision to import gas from Shell despite the country having substantial resources of its own in the west is proving

controversial. It seems that this strategy may be motivated by the major’s very competitive pricing on its LNG compared to the local gas produced in the west, the cost of which is bumped up by the need to transport it to the east.

In addition, the Ghanaian authorities believe that the gas reserves in the west are insufficient and too unreliable to cater to the country’s needs.

The Italian operator ENI and its partner GNPC are however in a position to increase production at Sankofa (180 million cubic feet of gas a day) without developing new projects. For the time being, reserves even exceed demand to the extent that GNPC is unable to take up all the output from the site.

But the government is turning a deaf ear to these excess reserves as it concentrates on developing

its partnership with Shell, whose operations in Ghana are run by the Kenyan Brian Muriuki.

Africa Centre for Energy Policy (ACEP), a think tank which is campaigning for greater transparency in the extractive industries, believes that this choice is simply going to add to Ghana’s debt.

GNPC unhappy with ENI contract This situation is reflection of tensions that have arisen of late between the public company and the Italian major. GNPC has become convinced that it was manoeuvred into signing an unfavourable contract on Sankofa which it is unable to renegotiate.

At the heart of the conflict is the take-or-pay clause, which obliges GNPC to purchase 90% of the gas produced at Sankofa, whether it is in a position to use it or not.

However, there is another clause in the contract that allows the public company to compensate for this paid for but unused gas by optionally taking delivery of more gas than provided for in the contract at no additional cost.

Such a “compensation” clause

does not seem to feature in the LNG supply deal with Shell.

Ghana’s gas dreams Tema LNG will afford Shell a strong foothold in a country which has hopes of establishing itself as the gas hub of the region.

In becoming on 6 January the first west African country to procure a floating storage and regasification unit (FSRU), Ghana has taken a considerable lead over its rivals. As demand does not justify the deployment of a fleet of FSRUs across the Gulf of Guinea, Accra is now in pole position and has already begun negotiations to sell its LNG to its neighbours (Benin, Togo, Ivory Coast and Burkina Faso).

Tema LNG Terminal Co has a twelve-year licence for the Tema LNG terminal starting from the launch of commercial operations.

At the end of this period, the joint venture will transfer its assets back to GNPC. For the duration of the contract, TLTC will also have an obligation to train GNPC staff.

Africa Intelligence

GAS

• Eni-powered gas dispenser

In accordance with Eni’s decarbonisation and energy transition strategy, through which it aims to become a leader in the sale of low carbon impact of products by 2050, Eni gas e luce has announced the signing of an agreement with Be Charge dedicated to the development of charging infrastructures for electric mobility. The company is part of the Be Power Group S.p.A. The agreement with Be Charge provides for the nationwide installation of co-branded public charging stations for electric vehicles. The charging station

Test drilling for Oil and Gas Begins in Namibia’s Okavango • Okavango delta

The search for oil and gas in the watershed of Namibia’s worldfamous, wildlife-rich Okavango Delta moved one step closer to reality when a multimilliondollar drilling rig from Houston, Texas, broke ground on the first test well in Namibia in midJanuary.

The rig, retrofitted for drilling in the desert, had arrived in December on the 600-foot-long transport ship Yellowstone, also laden with at least 23 massive trucks for pulling loads, bundles of drill pipe, and seismic testing systems on trucks with off-road tractor tires.

Because of the pandemic, Walvis Bay was eerily quiet at the time.

Instead of the usual bustling of beach-going visitors, the only activity was the din around the Yellowstone as workers in reflective overalls helped offload equipment being lowered to the ground by dockside cranes.

will be powered by renewable energy, supplied by Eni gas e luce, certified by guarantees of European origin, fed into the grid and produced by plants powered 100% by renewable sources. The joint commitment, the growth of the charging network and the increasingly cutting-edge services aim to accelerate the transition to increasingly sustainable and electric mobility.

From March 2021, all electric car owners in Italy will benefit from a 50% discount on the first charge at one of these stations using the Be Charge charging app. Further benefits will be given to Eni gas e luce customers. Be Charge is currently the second largest national operator of the charging network in Italy in terms of size and power.

The agreement with Eni gas e luce will further accelerate the growth of the infrastructure which currently has over 3,000 charging points installed and over 3,500 under construction, both in alternating current from 22 kW and in direct current with

powers from 75 kW to 300 kW.

The offer includes Wallbox, the wall-mounted charging solution compatible with all electric car models, and E-Start Hubs, that offers services for charging electric cars and corporate fleets that can be customized according to the needs of your business.

“Thanks to Be Charge, Eni gas e luce adds the possibility to recharge your electric car on public ground to the range of services dedicated to electric mobility, launched a year ago”, commented Alberto Chiarini, CEO of Eni gas e luce.

Eni gas e luce Eni gas e luce is the company, wholly owned

by Eni SpA, dedicated to the marketing of gas, electricity and energy solutions to families, buildings and businesses. The company operates in 6 European countries with more than 1,600 employees. With over 9 million customers in Europe, Eni gas e luce is the market leader for the sale of natural gas to households, buildings and

Cameroon’s LNG Enters New Global Markets

• Cameroon’s FLNG vessel

The National Hydrocarbons Corporation of Cameroon (SNH) says 14,197,820 million BTU (Anglo-Saxon energy unit) of liquefied natural gas (LNG) was exported from floating LNG plant, Hilli Episeyo (in Southern Cameroon) to several destinations in Europe, Asia, and South America in 2021.

Prior to aforementioned developments, the LNG exported

by SNH were mainly destined for the dynamic and ever expanding Asian markets (China, India, and Taiwan), which account for a massive 73% of the global LNG demand. A phenomenon that is driven by its shift away from coal to a gas powered economy.

According to SNH, during the period, Cameroonian LNG found new destinations, such as ; Thailand, Pakistan, Kuwait, South Korea, and Turkey notably.

With these new destinations, the SNH is therefore broadening its customer base and reconfiguring the geography of Cameroonian LNG market.

The LNG carrier Hilli Episeyo is the first floating natural gas liquefaction project in Cameroon.

It started production in March 12, 2018, thereby bringing Cameroon into the privy of global LNG producers.

Equinor Writes off its Tanzania LNG Project

• Tanzania’s President John Magufuli

Equinor has decided to write down the book value of its Tanzania LNG project (TLNG) on the company’s balance sheet by 982million USD. This will be reflected in adjusted earnings for EPI division in fourth quarter 2020 results to be reported on 10 February 2021.

While progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet. The TLNG project has an anticipated breakeven price well above the portfolio average for Equinor and is, at this time, not competitive within this portfolio. Equinor will continue to engage with the Government of Tanzania in negotiations on a commercial, fiscal and legal framework that may provide a viable business case for TLNG in the future.

Equinor maintains an attractive portfolio of project development opportunities in oil and gas as well as renewables. This portfolio requires strict prioritization, ensuring capital is allocated towards projects yielding the most competitive returns. As shown at the Capital Markets Update in February last year, Equinor’s oil and gas projects with expected start-up by 2026 have an average breakeven below $35/bbl based on today’s estimates. Similar for non-sanctioned oil and gas projects with expected start-up within this decade, the average breakeven is below $40/bbl.

Equinor has been present in Tanzania since 2007 when the company signed a Production Sharing Agreement (PSA) with the Tanzania Petroleum Development Corporation (TPDC). Equinor is the operator with a 65% participating interest, along with ExxonMobil’s working interest of 35%. TPDC has the right to participate with a 10% interest. Equinor made nine gas discoveries in Block 2 offshore Tanzania with estimated volumes of 20 Tcf of gas in place.

World Oil

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Eni gas e luce and Be Charge sign an agreement to accelerate the transition to electric mobility

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GAS

Nigeria Steps on the Gas in 2021 S

By Our Reporter

tate-owned Nigerian National Petroleum Corporation (NNPC) is overly excited about natural gas prices rebounding in 2021. Even more exhilarating for Abba Kyari, group managing director, is the new focus on monetizing the country’s huge natural gas reserves.

Despite the abundance of gas, power supply in Africa’s most populous nation has remained a perennial challenge as outages are regular over prolonged periods. The lack of infrastructure to store, process and transport gas to power stations remain a major drawback.

With 200 tcf of proven reserves and a potential for an additional 600 tcf, Nigeria says there are yet opportunities for even more gas discoveries. Existing reserves emerged during exploration for oil, and Mr. Kyari reckons a distinct focus on gas exploration, is what Nigeria currently needs.

• Gas flaring close to the dysfunctional Port Harcourt refinery

“We are a gas country than an oil country. We haven’t focused on gas, so we couldn’t deliver on our gas assets. But in 2021, we are changing our focus, and we have decided to be a gas country.

A gas country means you must monetise your gas assets,” he said, in a recent webinar.

Nigeria declared a decade for gas in 2020 and Mr. Kyari says the domestic market will henceforth be the primary market for locally produced natural gas.

We are going to grow domestic consumption of gas by injecting more gas into the domestic market for power generation and other gas-based industries.”

Nigerian officials say two factors have contributed to the low level of gas exploration in Nigeria.

The domestic gas market was not attractive to investors. Secondly, the fiscal framework for gas exploration was not clearly defined.

Gas producers in Nigeria have persistently complained about low prices offered by the government for gas purchased for domestic use-mainly for power generation. Appeals for downright deregulation of pricing have gone unheeded.

The government is constructing a major gas pipeline to supply natural gas to northwestern Nigeria. The 614-kilometre Ajaokuta-Kaduna- Kano (AKK) gas pipeline (at a cost of US$2.5 billion) will transport 2.2 billion scf/d of gas from the oil-rich Niger Delta.

Nigeria currently flares 7.6 billion tonnes of gas from 176 flaring sites in the oil-rich Niger Delta, making the country the sixth largest gas flaring country in the world.

While flaring has declined significantly in the past 10 years or so, a critical lack of infrastructure at some oilfields to harness associated gas, huge expense in building gas pipelines, limited local, regional and international market, as well as the difficult terrain in the Niger Delta, have made the gas gathering process a daunting task. Overall, Nigerian loses $2.5 billion annually from nonmonetization of flared gas.

Nigeria is also planning a major foray into LNG with a 2021-2031 “Decade of Gas” agenda that could see the country become the second largest LNG producer in the world, after Qatar.

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No Clear Route to Market for South African Gas Fields, says GlobalData

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T

he large offshore South African gas discoveries of late represent the potential for vast change in the country, however, as yet there is no clear route to commercialisation for the partners, says GlobalData, a leading data and analytics company.

Conor Ward, Oil & Gas Analyst at GlobalData, comments: “The discoveries of Brulpadda and Luiperd offer South Africa the chance to develop significant gas resources and reduce its reliance upon imports. However, Sasol, a state-owned oil and gas company, currently supplies around 80% of the country’s gas demand via its pipeline from Mozambique. Development of South Africa’s newly discovered gas resources face competition from established imports flowing from Mozambique, LNG

• Hon. Gwede Mantashe, South Africa’s energy minister

regasification and a currently unclear domestic gas outlook.”

The gas currently being imported via Mozambique is priced at approximately US$6-7/ mcf.

GlobalData has estimated a breakeven cost for the potential Brulpadda and Luiperd development of approximately US$3/mcf making it competitive against current imports.

As the major Mossel Bay Gas to Liquids plant is running out of feedstock due to depletion of domestic fields, the country will

unlikely be able to take advantage of newly discovered resources fast enough to secure supply in the near term. An alternative solution currently being

considered is LNG regasification, at least for the near term, as a contract period of just five to eight years has been stipulated in the tender documents.

GAS

Tema LNG Project is Ready

Final countdown has commenced for the start of Africa’s first offshore liquefied natural gas (LNG) import project with the arrival of a floating regasification unit (FRU) at Tema, in early January. Sources say the supply of gas from Tema LNG could begin in the next few weeks.

The US$350 million facility can receive, regasify, store and deliver roughly 1.7 million tonnes of LNG a year, representing a third of Ghana’s gas consumption, and help provide power for key industries in the Accra/Tema industrial hub.

Shell will supply the LNG under

a long-term contract, and the gas will be delivered to customers of Ghana’s public utility service.

The purpose-built FRU was built by Jiangnan Shipbuilding, a subsidiary of China State Shipbuilding Corporation.

Tema LNG awarded Spanish firm Reganosa Servicios SL the contract for the operation and maintenance (O&M) of the FRU, FSU and the associated 6km gas pipeline linking the terminal to the existing pipeline network.

Offshore Africa will bring you all you need to know about the Tema LNG project in a comprehensive report in our March edition.

• The Floating Regasification Unit at the Tema port

Total Eyes Mayotte as Possible Rear Base for Mozambique LNG • Mamoudzou, the main town in Mayotte

French group Total, alarmed at the deteriorating security situation in the northern Mozambican province of Cabo Delgado, where it is developing two liquefaction trains worth $20bn, is seeking to relocate some of its activities.

According to our information, the major headed by Patrick Pouyanné has been negotiating with authorities in Mayotte to use the French overseas department to help with its offshore operations. Mayotte would initially serve as a logistics platform, in particular for storing some of the equipment needed for offshore work. The island’s authorities have pulled out all the stops in their bid to get Total to establish itself there. They hope this will boost the economy and revitalise the department, where 84% of people live below the poverty line.

Mayotte has highlighted its many strengths in its attempt to woo Total. It is located about 500 km from the Mozambican town of Pemba, the capital of Cabo

Delgado province. On the logistics side, it has a deep-water port and a small naval base in Dzaoudzi.

A detachment of the French Foreign Legion commanded

by Col. Hugues Latournerie is permanently deployed on the island. It also boasts a fully functional hospital complex, a rarity in the region.

Total subcontractors drag their feet Mayotte already imagines itself as the major’s sole and permanent rear base in the region, and hopes that Total will base the families of its expatriate workers there.

That particular project is however not likely to happen in the near future. The Covid-19 pandemic has forced the firm to deploy its workers without their families, and this policy will remain in force at least until June.

Other logistical constraints could dampen the island’s high hopes.

The 1,930m runway at DzaoudziPamandzi, the main airport, is not big enough to accommodate very large aircraft. French President Emmanuel Macron has just over a year left to make good on his election campaign promise of an extension of the runway to 2,600m before his term ends in 2022.

Another problem is that Total works with a host of subcontractors in Mozambique

who are reluctant to move to Mayotte. The major has however asked these firms to assess the costs of shifting some operations there. This fallback solution could help it avoid any future shutdowns of its activities.

Its operations in northern Mozambique are currently at a standstill after jihadist violence in Cabo Delgado forced the group to repatriate most of its workforce to the capital Maputo late last year.

A jihadist inusrgencey has been raging in the province since October 2017. The villages of Mute and Monjane, a few dozen kilometres from the Afungi peninsula, where Total’s liquefaction train site is located, suffered terror attacks in December.

Paris plumps for Mayotte Security is the overriding argument for the move to

Mayotte, which becomes increasingly attractive as the situation in Cabo Delgado worsens and delays the development of Total’s infrastructure. The firm is in close contact with Mozambican authorities on the matter, as it has to obtain their authorisation to cross Mozambican borders and use Mayotte as a rear base.

French authorities for their part are fully in favour of the Mayotte option, which they see as the “patriotic” choice. A range of French companies are involved in the Mozambican gas mega-project, and the French government thus takes a keen interest in the Cabo Delgado insurgency. Armed forces minister Florence Parly on 12 January told French MPs that she was looking into how to provide training to support the Mozambican armed forces.

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Total is hoping to set up a logistics base in Mayotte for its Mozambican offshore operations.

The French island for its part is looking at the bigger picture and dreams of becoming the major’s permanent rear base in the Indian Ocean.

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Rigworld, a Hydrasun Network partner is a member of the Rigworld group of companies an indigenous engineering company specializing in a wide range of engineering services including but not limited to the production and maintenance of both high- and low-pressure hoses for the Petrochemical industry especially within Ghana and Africa at large.

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Email: info@hydrasunrigworld.com info@rigworldsolutions.com jonathan.vanderuit@hydrasun.com

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SPOTLIGHT

• President Akufo-Addo with Aker Energy executives in early 2020

What are Offshore Africa Editors Predicting for 2021?

Oil prices are slowly picking up (currently above $50 per barrel), but we hope 2021 doesn’t bring the wild swings in prices that we had in 2020. No one would have come close to anticipating the developments that we saw unfold in 2020.

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So gazing into the crystal ball to see what will happen in 2021 is extremely difficult. There are so many unanswerable questions.

Will the pandemic continue to impact economic activity, effectively putting a ceiling on commodity prices? How will local issues impact the sector? When exactly will Aker Energy resume its Ghana project? Will Africa’s quest to attract more investors be successful?

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Given the backdrop of continuous uncertainty in the macro-environment, I think 2021 will likely be a year of continued capital discipline across the industry. Capital markets around the world will continue to look at the sector with the skepticism we saw creep into the markets during 2019.

As a result, we are likely to see what capital is available to the industry focus on less expensive assets. Oil and gas companies will change how they recruit and hire based on the implementation of digital transformation projects.

We are already seeing an uptick in new job titles posted by oil and gas companies- many of which now include the word(s) “digital” or “innovation.”

The push to automate human process and increase efficiency will continue. Oil and gas

operating companies can no longer rely on consistent yet sub-par efficient operations. For example, 85 percent utilization of an asset (pipeline, plant etc) is no longer good enough.

The current price climate pushes hard towards the energy transition, and decreasing access to capital for oil and gas means oil and gas operating companies will have no choice but to target as close to 99.9 percent utilization and efficiency as possible. Digital and automation solution with low to no hardware will be the fastest and cheapest way to get there.

So what are likely to be the biggest oil and gas developments in 2021? Let’s start from Ghana, and then beam the spotlight on the rest of the continent.

A global pandemic, collapsing prices and the green energy revolution all spelt trouble for oil and Africa’s oil has suffered the most. Thankfully, Aker Energy is warming up to return to its deepwater Ghana project. Many of the people we’ve spoken to say, “it’s not the same project as was originally planned.”

Nevertheless, this is good news for Ghana.

Despite the hiccups, Springfield is hoping to strike a unitization deal with Eni this year, so the partners can move into production expansion. This is a win-win outcome for all.

Strangely, Ghana is commencing a major seismic sweep at the Eastern (Keta) Basin this year.

How do you offer blocks for licensing in August and then

few months later announce a 3D geophysical survey in the same area? Seismic data drives exploration. We hope therefore that the right things will be done so Ghana can have the success it had long anticipated for its promising oil and gas sector.

Midea, Amni, Eco-Atlantic, Springfield, AGM Petroleum GOGSCO, ExxonMobil and Eni are some of the E&P firms expected to implement exploration and appraisal drillings offshore Ghana in 2021.

Hopefully, Ghana can wrap up its delayed first licensing round and award the two offshore oil blocks to Eni and Lagos-based FIRST E&P. Will GNPC finally finish its work at the onshore Voltaian Basin, in readiness for exploration?

Some Ghanaian officials and institutions behave as if the rest of the world is waiting for their country. Most of them simply don’t know how the oil and gas industry operates. Well, with energy transition knocking at the door, soon the oil could end up in the ground.

We are getting very disturbing credible signals that corruption has crept into Ghana’s fledgling oil and gas industry. “Powerful” people -some not with any official title- are demanding for gratification from investors interested in investing in Ghana’s oil and gas. Investments drive economic growth and create jobs and prosperity.

On the African front, insecurity could derail Mozambique’s gas dream in 2021. Total is

- By Gilbert Da Costa getting increasingly impatient, and ExxonMobil is keenly studying the situation. Senegal is progressing well, while Nigeria is banking its oil and gas hopes on the reform-driven Petroleum Industry Bill (PIB). Will Nigeria finally get its act together in 2021? Given its huge population, monstrous challenges and massive dependence on hydrocarbons, Nigeria’s stability is tied to far-reaching oil and gas reforms.

Only 20 exploration wells were drilled in Africa in 2020 (the lowest in history), and overall, well activity dropped 72 percent from 2019. It is also not a good sign that not a single FPSO order will come from Africa in 2021, according to IHS Markit, a business information provider.

Will Uganda finally get its FID? Will Tanzania step up its game with E&P companies, and come up with a workable plan for its sizeable gas reserves? What about Liberia and Somalia, or even Kenya? Egypt is a country to watch for some big things.

And South Africa, will it finally enact the relevant laws that is holding back investments in its promising oil and gas? Angola, Gabon, Equatorial Guinea are not planning any major changes to its oil and gas regimes and practices.

Overall, Offshore Africa sees 2021 as the year for oil and gas companies to come to terms with new realities, and seek to forge a way forward for the future. A future that is fraught with uncertainties. Those who understand the future and act today, will succeed.

rigworldtraining

Rigworld Training Expands with Purchase of SMTC Ghana Rigworld Training Centre (RTC) and SMTC Global Ghana have signed an agreement which will see Rigworld Training acquire 100 percent of the SMTC Ghana Training Facility.

This means, RTC would assume all training services being provided through SMTC Ghana. SMTC has operated in partnership with the Regional Maritime University (RMU) within its campus in Nungua, Accra. This acquisition therefore, will make Rigworld Training Centre accessible to clients with facilities in Takoradi and the recently acquired facility on the Regional Maritime University campus in Accra.

The RTC facility in Takoradi which provides internationally accredited safety and skills development courses within Ghana and beyond, has over the years played a critical role in the capacity building and skills development in the oil & gas, maritime, mining, construction and other safety critical industries. This

Steve Taylor (Managing Director)

Speaking on the new partnership and what it means for clients, the Managing Director of Rigworld Training Centre, Steve Taylor, said: “We see good growth opportunities in the market where increased safety as well higher demands for “localized services” are needed for our clients. With the expansion of our facility into Accra, this unique offering to customers and the company’s strong market position forms a great platform for generating growth; and building an even stronger business based on world-class customer service and global operating procedures.”Expressing his thoughts on the latest feat, the CEO, Kofi Abban, added that “We are focusing our business strengths and building our leadership in our core business areas. We believe that this acquisition can bu provide the enhanced growth and financial capacity needed to strengthen our safety services leadership.”

Following the effects of Covid-19 and the resulting downturn in the oil and gas sector, the company conducted a thorough and necessary evaluation geared towards accelerating the transformation and development of the business. This acquisition is one example of how company intends to spread its wings, aside introducing online trainings to accommodate the current learning climate. This achievement is worth celebrating and shows bigger future prospects for Rigworld Training; Ghana’s leading safety training services provider.

DOWNSTREAM: SPOTLIGHT ON STAR OIL

An Assessment of Petroleum Price Regulations on the Financial Performance of Oil Marketing Companies in Ghana: A Case Study of Star Oil Authors:

Abstract

Dr. Riverson Oppong Mr. Issah Mohammed

Petroleum price regulation was implemented in Ghana with the ratification of the National Petroleum Authority Act, 2005 [Act 691] that further established the National Petroleum Authority (NPA) as the regulator for the downstream petroleum industry whose key directive is to control, supervise and oversee the operations of the industry and to create a Unified Petroleum Price Fund (UPPF) for price unification in the industry. This transpired against the context of a timeframe in which petroleum products were imported, marketed and priced under state control. The study’s findings showed that the financial performance of the OMCs which was measured using ROE was higher during the period of price regulation between 2013 and mid–2015 (June 2015) compared to the deregulation periods (i.e. mid–2015 to 2019). However, the OMCs’ gross sales have dramatically appreciated relative to the regulatory era during the deregulation phase. The study recommends refinement of the pricing methods to ensure that it accommodates and addresses the issues posed by major downstream industry stakeholders in order to ensure the sustainability of the margins of the sector and thereby improve the financial and overall operational efficiency of which is expected to have a trickle-down effect on the economy.

Keywords: Petroleum price regulation, Oil marketing companies, Return-on-Equity, Star Oil Company Limited, Trend analysis Introduction

OFFSHORE VOL.11.1

According to Kilian et al. (2006), supply and demand of oil and gas are only part of the factors or elements in the complex function of price comprising of environmental, socio-economic, and geopolitical factors.

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Diverse economies or states have regulations for pricing petroleum products. The petroleum sector is oligopolistic with very few dominant companies. Given the market formation of the petroleum industry, price regulation has become necessary to protect consumers, especially in developing economies. Porter (2011) posits that price regulation ensures uniformity of prices across a given country.

Given the considerable instability associated with global oil prices, price regulation minimises the impact of the same on local prices of goods and services. According to scholars (Fullerton Jr et al., 2015; Tornye, 2015), consumer price for petroleum product can vary considerably or tellingly from the ex–refinery price due to excise duty and value-added taxes (VAT), which in several states amounts to a considerable percentage of the price.

However, Rockoff (2008) also stipulated or argued that price regulation does not achieve its intended purpose in most cases.

Sowell (2008) also argued that price regulation using price ceilings could create an artificial demand which leads to a shortage of supply. A study by Akosa and Ahmad (2019) also evaluated the ramification of price deregulation of petroleum prices in Ghana. They established that it had both favourable and adverse effects on the economy.

The favourable facet involves the increased inventory of petroleum

products while on the other side (i.e. adverse) the unpredictability of prices was a significant concern.

In their report, Holditch and Chianelli (2008) estimated that global energy requirements would rise by 50%–60% by 2030, and these requirements would be precipitated by crude oil, natural gas, coal, nuclear energy and derivations of renewable sources of energy. Universally, price subsidies and petroleum products tax rebates are mostly the two frequently used techniques of partly nullifying outrageous oil prices on the world commodity market (Kojima et al.

2010; Aress 2011). Also, most of the governments in developing economies face increased exposure to volatility in petroleum prices, either on the import or export side and sometimes, both according to a report by UNCTAD (2005). And Ghana is a peculiar example, as we are net importers of petroleum products.

Ghana experienced extreme price volatility in the industry before the implementation of regulatory policies in 2005, including the enactment of the National Petroleum Authority Act, 2005 [Act 691] which established the National Petroleum Authority (NPA) as the regulator of the downstream petroleum sector. These policies have been revised and updated to accommodate various changes in the economic landscape. Overall, the pricing frameworks of petroleum products in Ghana are anchored on Import Parity of Prices (IPP), which is to ensure uniformity of prices nationwide. The distribution and transportation charges associated with petroleum products are also regulated to certify or establish that transporters and distributors charge reasonable profit margins.

This study will seek to examine how regulation of petroleum prices in Ghana’s downstream oil and gas industry impacted the Return– On–Equity (ROE) of oil marketing companies (OMCs). The study seeks

to ascertain the effect of petroleum price regulations on the Return– On–Equity (ROE) of oil marketing companies (OMCs) in Ghana and further ascertain the impact of petroleum price regulations on the trend of the gross sales of the oil marketing companies (OMCs) in Ghana.

Financial Performance and Price Regulation

Financial performance denotes a firm’s overall efficiency in employing its resources to generate revenue. Financial performance is highly subjective as it offers insight into the current and future account of a company as accordingly stated

by Richard et al. (2009). Measuring financial performance of a firm gives insight into the efficiency of its operations, innovation, and growth (Al–Matari et al. 2014).

There are numerous approaches to measuring financial performance which is widely categorised into either market based or accountingbased measures. Accounting– based estimates are extracted from financial statements such as income statements, balance sheets and cash–flow statements. The market–based measures are derived from the shareholder’s future expectations of the organisation (Al–Matari et al. 2014). Some examples of the market–based measures include market–to–book estimates, price-earnings ratio and Tobin–Q. The study will employ accounting-based measures to ascertain or verify the financial performance of SOC. The regulation of prices in any sector has a direct impact on the gross revenue and thus is expected to affect the overall organisational performance. Price regulation of oil prices is employed as a shield against shocks resulting from the volatility of international prices (Bumpass et al. 2015).

Empirical Review/Evaluation

According to Wabobwa (2011), who assessed the effect of oil price regulation on the financial

performance of the National Oil Corporation of Kenya (NOCK) from July 2010 to June 2011. The study concluded that the gross profit margins for the six months before the establishment of price regulation suggested growth in profitability of the corporation and a decrease after the institution of the regulations. The scholar also found that the price cap had a major impact on the generated revenues of the firm.

In a study by Dalen et al. (2006) conducted on pharmaceutical companies in Norway by evaluating the correlation existing between the introduction of price regulations and competition within the manufacturing industry.

It was found that there was an improvement in market share in the pharmaceutical sector, and this led to increased profit margins.

It was also established that the institution or introduction of pricing regulations had a favourable influence on the profit growth of the pharmaceutical companies.

In another study by Carranza et al. (2009), where they used the descriptive approach to evaluate the effect of price cap policies on the financial performance of petroleum marketing companies in Canada. The primary goal was to determine how price cap creates a critical unintended influence on market prices as well as the profitability or productivity of the companies in the long term through changing the shape of the market’s structure. From their regression analysis, the scholars noticed that pricing regulation impacted the profit growth of a company that is involved in the industry. Their findings were attributed to the changes in the structure of the market.

A report by Kigunda (2012) and Wanjogu (2015), also evaluated the relationship existing between price caps and profit growth of the oil marketing companies in Kenya.

DOWNSTREAM: SPOTLIGHT ON STAR OIL

The focal point of the study will be Star Oil Company (SOC) Limited, and make use of the company’s financial statements for the period between 2013 and 2019 inclusive, for both the regulated and deregulated periods as secondary data. The study will also employ data and reports from the National Petroleum Authority (NPA) for that same period.

Net income

2017

36,115,12041,119,008

2019

2016 41,039,106

2018

2015

32,839,605 37,093,709

41,119,008

2014 20,937,022

37,093,709

2013

20,937,022 36,115,120

Gross Sales (GHc)

41,039,106

Years

2019

2018

2017

2016

2015

2014

32,839,605

30,000,000 20,000,000 10,000,000 0

20,937,022

2013

Gross Sales (GHc) 20,937,022

36,115,120

37,093,709

41,119,008

20,937,022

Regulation era

Deregulation era

2014

2015

2016

2017

2018

2019

20,937,022

32,839,605

41,039,106

36,115,120

37,093,709

41,119,008

Years Gross Sales (GHc)

Linear (Gross Sales (GHc))

2,000,563

2,157,690

12,238,733

33,307,979

35,465,669

38,098,856

38,098,856

32.12

12,238,733

2,157,690

16,599,697 35,465,669

23,885,646 6.08

7,421,770

2,000,563

33,307,979

6.01

31,307,416

7,421,770

2,315,112 31,307,416

16,599,697

23,885,646

69.50

7,285,949 23.71

2,315,112

7,285,949

31.78

4,970,837

2,315,112

2,315,112

4,970,837

(GHc)

46.57

Net Income

Equity (GHc)

ROE (%) Shareholders Equity (GHc)

Shareholders

Return–On–Equity (ROE) for 2013–2019

(3.2)

Sales–to–Equity Ratio (SER): Sales–to–Equity Ratio is an indicator of how well capital was being used for revenue generation.

The improvement in this ratio over time speaks favourably of the effectiveness of management in producing income by using the equity of the shareholders, which implies resource productivity. It is estimated as follows:

41,039,106

40,000,000

in Source: the short-term, the relationship Research findings (Author’s construct, 2020).

Figure–2: Graph of trend analysis between demand and supply would on gross sales from 2013 to 2019 result in the fluctuation of crude Table–2 and figure–2 illustrate the petroleum price regulation and its effects on gross sales from oil prices, and its frequency and Research 2013 to 2019. The gathered data suggests that thereSource: was a remarkable rise in findings the company’s sales magnitude largely depends on the One of the objectives of the study was to ascertain how price regulation impacts the Return on (Author’s construct, 2020). growth, as it increases from GHc 20,937,022 in 2013 and 2014 to GHc 41,039,106 in 2016 and marketing arrangement of crude equity of oil marketing companies in Ghana, with a focus on Star Oil Company (SOC) Limited. in 2017 to GHc 36,115,120. However, in both and 2019, sales growth oilslightly that isdecline in stock within a specific Table–2 and2018 figure–2 illustrate the The study establishes the relationship existing between petroleum price regulation and Return– timeframe.

However, long- and GHc 41,119,008, petroleum price regulation and increases slightly to GHc the 37,093,709 respectively.

These indicate thatits the On–Equity (ROE) from 2013 to 2019. Data to this finding is illustrated as crude follows in and term price of oiltable–1 can suggest effects on gross 2013 implementation of petroleum price deregulation had a favourable effect sales on the from gross sales of to the figure–1: the actual or real cost at which to 2019. The gathered data suggests company, and also suggests that the management made efficient use of the company’s assets in produce adequate or sufficient oil that there was a remarkable rise in Table–1: Trend analysis of Return–On–Equity (ROE). on sales though it was marginal. to improving meet2017 demand.

The assertion the company’s sales growth, as it Years 2013 2014 2015 2016 2018 2019 by Angelier (1991) relates to a finding increases from GHc 20,937,022 in

by Khadartseva and Cherkasova 8 2013 and 2014 to GHc 41,039,106 (2017) where they stated that

in 2016 and slightly decline in the Organization of Petroleum 2017 to GHc 36,115,120. However, Exporting Countries (OPEC) block in both 2018 and 2019, sales influences global petroleum (crude growth increases slightly to GHc oil) prices by using the pricing-over37,093,709 and GHc 41,119,008, volume technique. It coordinates respectively. These indicate that and unifies various petroleum the implementation of petroleum policies of the member countries. price deregulation had a favourable Source: Research Findings ROE (%) 46.57 31.78 69.50 23.71 6.01 6.08 32.12 The member countries adjust effect on the gross sales of the (Author’s construct, 2020). company, and also suggests that the Source: Research Findings (Author’s construct, 2020). the quantity of oil production to Figure–4.1: Graph of trend achieve stable prices and supply. management made efficient use of analysis on Return–On–Equity OPEC members collectively control the company’s assets in improving Figure–4.1: Graph of trend analysis on Return–On–Equity (ROE) (ROE) 81.9% of the total oil reserves while on sales though it was marginal.

80.00% 70.00%

69.50%

60.00%

ROE (%)

Average Shareholders’ Equity

2013

Net Income (GHc) Years

Table–1: Trend analysis of Return–On–Equity (ROE).

Data Analysis

ROE =

Gross Sales (GHc) 50,000,000

50.00% 40.00%

46.57%

20.00% 10.00% 0.00% ROE (%)

32.12%

31.78%

30.00%

23.71% Deregulation era

Regulation era

6.01%

6.08%

2013

2014

2015

2016

2017

2018

2019

46.57%

31.78%

69.50%

23.71%

6.01%

6.08%

32.12%

Years ROE (%)

Source: Research findings

Linear (ROE (%))

6

supplying 43.5% of the global crude oil production.

The findings agree with the conclusions from Pirog (2012), whose exploratory study disclosed that too much regulation could start increasing intermediation costs and, in effect, decrease the profitability of oil marketing companies. He also established that price regulations were anchored to historical data that misrepresents the actual cost of the product, leading to economic insecurity. He also concluded that price regulation had a significant ramification on the gross revenue

OFFSHORE VOL.11.1

Data Collection

32,839,605

One of the objectives of the study was to ascertain how price regulation impacts the Return on equity of oil marketing companies in Ghana, with a focus on Star Oil Company (SOC) Limited. The study establishes the relationship existing between petroleum price regulation and Return–On–Equity (ROE) from 2013 to 2019. Data to this finding is illustrated as follows in table–1 and figure–1:

20,937,022

The researcher adopts the event study design in this research.

According to Kothari (2003), the event study investigates the influence of a particular event within a sector, industry or the general market. In this research, the researcher seeks to evaluate the financial performance of oil market companies (OMCs) in Ghana during price regulation and deregulation regimes.

20,937,022

In this section, the research determines the relationship existing between the regulation of petroleum prices and the oil marketing company’s Return on equity from the period of 2013 to 2019. The findings for this analysis are presented below:

Table–1 and figure–1 illustrate the The second aim of this study was trend analysis of the association to gauge how petroleum price between price regulation and regulations affect the gross sales of Return–On–Equity (ROE). As the oil marketing company (OMC). seen in the table and graph, it The gross sales recorded from 2013 can be deduced that the Return– to 2019 are presented in Table–2, On–Equity (ROE) for Star Oil and the graph in figure–2 below: Company (SOC) Limited decline from 46.57% in 2013 to 31.78% Table–2: Trend analysis of Gross in 2014, and increased sharply to Sales from 2013 to 2019 69.50%. Further, from 2015, there was a sharp decline from 31.78% to 23.71% in 2016 and 6.08% in 2018. However, there was a significant rise in ROE in 2019, which rose to 32.12%. The increase in the organisation’s Return–On– Equity (ROE) can be attributed to the efficiency of the company in Source: creating profitFindings and increasing Research (Author’s construct, 2020). the value of shareholders. The efficiency with which the company generates profit can also be assigned to the rise in oil price on the global market. This finding conforms to Source: Research Findings Angelier (1991) stated that, Figure–2: Graphwho of trend analysis on gross sales(Author’s from 2013 toconstruct, 2019 2020).

(GHc)

Petroleum Price Regulation and its Effect on Return–On–Equity (ROE)

Design of the Study

Return–On–Equity (ROE): The Return–on–equity is a financial performance benchmark measured by dividing the net income by the shareholders’ equity. Since the capital of the shareholders is equal to the assets of a company less its debts, the Return on net assets is known as the ROE. In general, the higher the ROE, the higher the profit of the investment. The formula for calculating ROE is as follows:

(3.4)

Results and Data Analysis

Research Methodology

The study will make use of the Chi-square (χ2) test of differences and trend analysis to test the differences in financial performance with during price regulation and deregulation. The null hypothesis of the research is that there is no considerable difference in the financial performance of a company with or without price regulation. A test of 5% significance level will be assumed for the data analysis.

Total Shareholders’ Equity

Gross Sales

SER =

Petroleum Price Regulation and its Effect on Gross Sales

(Author’s construction, 2020).

Net sales

Gross Sales (GHc)

It was established that there was a significant decline in the profit margin, and these were attributed to the introduction of the price caps. The decrease in the profit margin was assigned to the rise in competition in the industry that increased after the institution of the price cap.

29

DOWNSTREAM: SPOTLIGHT ON STAR OIL of oil marketing companies as it establishes the price at which the oil marketing companies to sell or market their products, and therefore was anticipated to have an effect on financial performance.

Descriptive Statistics Descriptive Analysis of the Cofactors

For the analysis, Statistical Package for the Social Sciences (SPSS) and the Microsoft Excel was employed in performing the descriptive analysis.

The results gathered are presented as follows:

Mean

Gross Sales (GHc)

91,457,210.90

Shapiro–Wilk (S–W)

Statistic

Df

Sig. (p-value) Statistic

df

Sig. (p-value)

0.4581

6

0.394*

0.884

6

0.6522

Gross sales (GHc) 0.3014

6

0.394*

0.991

6

0.8874

ROE (%)

*.This serves as the lower bound of the main significance levels.

Median

Mode

0.2215

0.91

0.3978

61,547,545.10

89,547,654.12

50,478,554.40

Conclusion and Recommendations

From the above table–4, it can be seen that the analysis of the factors revealed that, the oil marketing company’s Return–On–Equity (ROE) recorded a mean value of 1.109% and a standard deviation of 0.2215%. Further, the analysis of the company’s gross sales also indicates that there was a mean value of GHc 91,457.210.90 and a standard deviation value of GHc 61,547,545.10. An acceptable measure of dependability was perceived between the mean and standard deviation for all variables during petroleum price regulation and deregulation.

OFFSHORE VOL.11.1

Kolmogorov–Smirnov (K–S)

Std. deviation

Source: Research findings (Author’s construct, 2020).

30

Price Regulation

performance of Ghana’s oil marketing companies (OMCs) which was not addressed in the research.

R is the correlation coefficient that indicates the correlation between the factors or variables of the research.

From the findings, the researcher observed that the variables of the study had a significantly strong positive relationship, as indicated by the value of 0.9769 (97.69%). Also, the standard error, which estimates the standard deviation on the company’s financial performance, was 0.4011 (40.11%).

Table–4: Results of descriptive analysis Return– 1.109 On–Equity (%)

Table–4.5: The Kolmogorov– Smirnov (K–S) and Shapiro–Wilk (S–W) Tests

The study further revealed that the gross profit margin for the six months after the institution of petroleum price deregulation illustrated growth in profitability of the company, and there was an increase during the six months of petroleum price regulation in 2015.

The findings also indicate that the introduction of deregulation had a negative impact on the profit margins of the companies, which implies there was ‘price war’ or competitive pricing between the competing parties, that is the oil marketing companies. It may also suggest inefficiency on the part of the executives to effectively utilise the capital of shareholders and assets of the company in maximising profits.

Test for Normality

The normality test was done to determine the normality existing between Return–On–Equity (ROE) and gross sales with the use of the values of Kolmogorov–Smirnov (K–S) and the Shapiro–Wilk (S–W).

The null hypothesis for this test is that the data is normally distributed.

These are presented in table–4.5 below:

a. This serves as the Lillierfors significance correction.

Presented in table–4.5 are the Kolmogorov–Smirnov (K–S) and Shapiro–Wilk (S–W) tests, and it shows that the Return–On–Equity

(ROE) value is 0.4581, and the value of the gross sales was 0.3014 from the Kolmogorov-Smirnov test. It can also be seen that the Shapiro-Wilk test shows that, the Return–On– Equity (ROE) value was 0.6522, and that of gross sales was 0.8874.

The chosen alpha (α) level is 0.05, and since the p–values in both cases are all greater than (p>0.05), then the null hypothesis that the data is normally distributed is accepted and also implies the data is normally distributed.

Regression Analysis

The model overview is used for analysing dependent variable variance response to fluctuations in independent variables. The multiple regression analysis was used in assessing the impact of petroleum price regulations and its influence on the financial performance of oil marketing companies (OMCs).

The study examined the financial performance variations of Ghana’s oil marketing companies (OMCs) due to changes in the regulation of petroleum prices, Return–On– Equity (ROE), and gross sales.

The analysed data are exhibited in table–6 below: Table–6: Regression Model Analysis

From the above analysis, it can be concluded that, during the implementation of the petroleum price regulation, it had a remarkable effect on the Return–On–Equity (ROE). The petroleum price deregulation which started in June 2015, made an immediate impact on the Return–On–Equity (ROE), as indicated by the rise from 31.78% in 2014 to 69.50% in 2015, but it declined heavily in 2016 and 2017, from 23.71% to 6.01%, and gained slightly in 2018 (6.08%).

Return–On–Equity (ROE) however, made a very significant rise in 2019 from 6.08% in 2018 to 32.12% in 2019. This suggests that, after the deregulation process in the downstream petroleum sector, oil marketing companies (OMCs) were finding it a little challenging to pay dividends to their shareholders, and this can be attributed to weak profit margins. Besides, from the analysis, it can further be concluded that, during the petroleum price regulation period, it had a significantly positive influence on the company’s Return–On–Equity (ROE); therefore impacting on the financial performance of the company positively. With regards to petroleum price regulation and gross sales, there was also a favourable impact on the financial performance of the company, though very marginal.

settle any outstanding loans. The oil marketing companies (OMCs) also need to reduce their direct costs such as piece-rate wages, direct labour and materials, commissions, fuel or power consumptions, among others. When these measures are taken, the financial performance of the companies will improve irrespective of the price regulation in place.

Reference

Akosa, F., and Ahmad, P. (2019) ‘The Political Economy of Petroleum Pricing in Ghana: Institutions, Power Dynamics, and Social Networks.’ Journal of Public Affairs [online], 1–12. available from <https://doi. org/10.1002/pa.2028> [28th January 2020] Al–Matari, E.M., Al–Swidi, A.K., and Fadzil, F.H.B. (2014) ‘The Measurements of Firm Performance’s Dimensions.’ The Asian Journal of Finance & Accounting [online] 6 (1), 24–49. available from <http://dx.doi. org/10.5296/ajfa.v6i1.476> [29th January 2020] Anderson, E. (2003) ‘Supply Chain Strategy in the Oil and Gas Sector.’ in Business Briefing: Exploration and Production 2003. London: Business Briefings Ltd, 108–111.

Aress, A. (2011) ‘Rising Fuel Prices, can it be Controlled?’ The Accountant-Journal of Institute of Certified Accountants of Kenya, June-July 2011 issue, 18–23.

Bator, F.M. (1958) ‘The Anatomy of Market Failure.’ The Quarterly Journal of Economics [online] 72 (3), 351–379. available from <https://doi. org/10.2307/1882231> [18th June 2020] Dalen, D. M., Strom, S., and Haabeth, T. (2006) ‘Price Regulation and Generic Competition in the Pharmaceutical Market.’ The European Journal of Health Economics, 7 (3), 204–211.

Folger, R., and Konovsky, M.A. (1989) ‘Effects of Procedural and Distributive Justice Reactions

Model R

R2

Adjusted R2

Std. error of the estimate

Change statistic R2 change F change df1

df2

Sig.

1

0.9543

0.5001

0.4011

0.9001

1

0.5014

0.9769a

a. Predictors: (constant), Return– on–equity (ROE) and Gross sales.

From table–6, the adjusted R2 was 0.5001 indicating that there was 50.01% variation in the financial performance of the oil marketing companies (OMCs) in Ghana due to changes in the regulations on petroleum prices, Return–On– Equity (ROE) and gross sales.

The estimated 49.99% indicates that some other variations or factors have affected the financial

It is also recommended that oil marketing companies (OMCs) need to also focus on measures that will enable them to reduce the cost of finance from financial institutions, as this is also draining the profit margins of the companies. There is a need for oil marketing companies (OMCs) to focus on hedging to mitigate rampant interest and inflation rates from within the economy. This will at least take care of all foreign exchange (forex) losses experienced when the companies

1.8024

3

to Pay Raise Decisions.’

Academy of Management Journal [online] 32 (1), 115–130. available from: <http://dx.doi. org/10.2307/256422> [9th June 2020] Hantke-Domas, M. (2003) ‘The Public Interest Theory of Regulation: Non-Existence or Misinterpretation?’ European Journal of Law and Economics [online] 15 (1), 165–194. available from <https://doi.

COMPANY FOCUS

Tullow Picks Maersk Venturer for Ghana Offshore Drilling Campaign

The duration of the final contract is around four years with expected start in Q2 2021.

The estimated value of the final contract is around $370 million, excluding the value of the additional services provided and performance bonuses. The operation will be supported by local partner Rigworld.

“The final contract has a progressive day rate structure for the full duration of the contract.

However, after the initial period of 18 months, the contract has a provision to shift to a marketlinked day rate structure,” Maersk Drilling said.

The final contract is conditional upon certain regulatory conditions being met. Maersk Drilling will publish an announcement upon the conclusion of a final contract, the Danish company added.

Maersk Drilling CEO Jørn Madsen said: “We’re delighted to get this opportunity to secure a long-term contract for Maersk Venturer, as Tullow once again shows confidence in Maersk Drilling’s ability to deliver stable and highly efficient operations to

their major development projects in Ghana. This also means that we will be able to continue our work with the Ghanaian community and local suppliers who have previously contributed to our West African operations,” Maersk Venturer is a 7th generation drillship delivered in 2014. It is currently warmstacked in Las Palmas, Spain, after finishing a campaign in Ghana for Tullow in 2020.

Maersk Venturer’s last assignment for Tullow in 2020 was the drilling of Ntomme-9 well, which started producing crude in the second quarter of 2020, according to field operator Tullow Oil. The UK explorer is very bullish about the performance of its Ghana assets.

Tullow has identified Jubilee

Maersk Voyager first to use remote headset technology in West Africa

For the first time ever, crew on Maersk Voyager successfully installed, commissioned and certified a drill floor workbasket using NOV’s remote headset technology called TrackerVision.

The TrackerVision system is an augmented reality technology solution that brings together software, communication devices and advanced hardware to conduct remote offshore maintenance.

The close partnership with NOV and its TrackerVision solution enabled Maersk Voyager to eliminate the need for an inperson service technician and replace the drill floor workbasket without interrupting operations.

Ensuring rig reliability with smart maintenance solutions When Maersk Voyager, offshore Angola, wasn’t able to send a service engineer to the rig due to COVID-19 travel restrictions,

the rig team used this as an opportunity to explore other options. They began to inquire with NOV to see if a remote commissioning of a workbasket would be possible. NOV and the rig team jointly put together a roadmap for remote installation, commissioning and testing and went through a step-by-step plan to ensure a smooth execution on both sides.

The work basket was overhauled in a NOV workshop and was sent to the rig for exchange.

Team Voyager commissioned the workbasket according to NOV procedure using noise-cancelling headphones and eyewear fitted with a small camera to enhance communication with the remote onshore technician.

The successful outcome ensured a seamless upgrade of rig equipment, improving rig reliability for the client, while saving time and money on travel and quarantine costs.

According to NOV, this was the first time that TrackerVision technology has been used for troubleshooting and commissioning offshore West Africa.

“The advantage of being firstmovers in remote commission and support is that Maersk Drilling, together with our partner NOV, are setting new

standards within the industry.

This is a new standard not only during COVID-19, but also for the future of offshore,” says Jacob Ostergaard, Electrical Supervisor, Maersk Voyager.

northwest and Jubilee southeast for further development. “In fact, the Jubilee southeast project, as we are calling it, is the next stage of development for Jubilee that is already underway. That project is very robust. Not only will it develop existing reserves.

It will add reserves. And it’s got a break-even price of around about $30 a barrel, so it’s highly economically attractive,” a senior company official said recently.

Maersk Rigworld Ghana Ltd – A joint venture to be proud of

Industry collaboration leads to increased efficiency This effective workaround solution is a prime example of industry collaboration among Maersk Drilling, the customer and third-party supplier.

“Industry collaboration is a key ingredient to a sustainable future.

All facets of industry talent, from the manufacturer to the end user need to work together to deliver a cost-effective product and service. This philosophy was put to the test on Maersk Voyager and proved effective. Close cooperation between Maersk Drilling, the customer, and National Oilwell Varco enabled a successful project through virtual communication and technology,” says Douglas Marks, Technical Section Leader, Maersk Voyager.

Remote commissioning and installation, in partnership with NOV, to replace or upgrade equipment is a solution that is now being considered across the Maersk Drilling fleet, especially in the face of increasingly difficult COVID-19 travel restrictions.

The philosophy in Ghana behind the Maersk Drilling / Rigworld joint venture is simple: develop maximum local capacity through a strong partnership.

The JV not only provides Maersk Drilling with a local operating partner to comply with Ghanaian requirements, but it provides many of the local rig services. It has also provided Rigworld with the stability needed to invest in facilities that go beyond being a pure labour supplier. Rigworld has been able to establish a logistics and warehousing facility in Takoradi costing US$400,000, and has now completed building an offshore training facility at Takoradi, for US$3 million.

OFFSHORE VOL.11.1

D

anish offshore drilling company Maersk Drilling has received a conditional letter of award from oil company Tullow for the provision of the Maersk Venturer drillship and additional services for a development drilling campaign at the TEN and Jubilee fields offshore Ghana.

31

GULF OF GUINEA

Piracy Pays in Gulf of Guinea

By Dryad Global

You don’t need a peg leg, eye patch, or parrot on your shoulder to be a modernday pirate, but guns and high-speed boats are useful.

Last year pirates hijacked three vessels, fired on 11, and boarded 161, according to a report in January by the International Maritime Bureau’s Piracy Reporting Center.

Maersk, the world’s biggest shipping company, is fed up. “It is unacceptable, in this day and age, that seafarers cannot perform their jobs of ensuring a vital supply chain for this region without having to worry about the risk of piracy,” said Aslak Ross, head of marine standards at Copenhagenbased A.P. Moller-Maersk A/S, told Bloomberg News. “The risk has reached a level where effective military capacity needs to be deployed.”

Crime on the high seas is hard to combat because distances are vast and the pirates can make their getaways before help arrives. The waters off Somalia used to be infested with pirates, but the European Union, NATO, and a U.S.-led task force managed to protect the shipping lanes. So the action has moved to the lightly patrolled waters off

• Map showing growing piracy threats in the region

Nigeria—the vast Gulf of Guinea, stretching from Gabon to Liberia.

“Globally,” the Piracy Research Center report says, “135 crew were kidnapped from their vessels in 2020, with the Gulf of Guinea accounting for over 95% of crew numbers kidnapped.

A record 130 crew members were kidnapped in 22 separate incidents.” The International Maritime Bureau advises ship captains to stay 250 nautical miles off the coast, beyond pirates’ reach, until ready to “commence cargo operations at a berth or safe anchorage.”

While the Gulf of Guinea is the most dangerous spot, the Piracy Research Center says pirates are also operating in the Singapore Straits and in the ports of Indonesia. On the bright side, there were no reports of piracy off Somalia in 2020.

lives of crew members. Shippers want an international naval coalition to crack down on the pirates, but such support appears unlikely because the value of shipping isn’t as great as it is off the Horn of Africa, the approach to the Suez Canal.

Poverty and unemployment are breeding grounds for the Gulf of Guinea pirates and need to be be addressed, but shippers such as Maersk can’t wait for those underlying conditions to be fixed.

Attacks are pushing up the cost of insurance while endangering the

“The perpetrators of such incidents are perfectly aware there is almost no risk of being caught,” Munro Anderson, a partner at London-based maritime security firm Dryad Global, told Bloomberg. For now, piracy pays.

OFFSHORE VOL.11.1

Benin Readies to Sell Seme and Resume Exploration with Oranto

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With a high chance he will be serving a second term come April, President Patrice Talon at last has the legislation in place to see oil firms return to the country.

As we understand, President Patrice Talon of Benin is on the point of validating by decree a new type of production-sharing contract as a string of application rules for the hydrocarbons law passed in 2020 in order to relaunch exploration in the country. Benin has not produced any oil since the Seme oil field was put on ice in 1998.

Although when he first came to power in 2016, Talon showed little interest in oil exploration, his highly ambitious minister of water and mining, the former MP and mayor of Parakou, Samou Séidou Adambi, set

about overhauling the country’s oil legislation to save the floundering industry.

Nigerians in offshore Using these new productionsharing contracts and once the presidential elections in April are over, the ministry should be able to resume talks with the three oil firms that still officially hold titles in the country. These are: FrazOil, a subsidiary of the Nigerian businessman Emeka Okwuosa’s Oilserv Group, owner of block 3; Oranto Petroleum, owner of permits 5 and 6 and chaired by fellow Nigerian oil tycoon Arthur Eze; and British firm Elephant Oil, owner of block B. Okwuosa hails from Nigeria’s oil-rich Anambra State.

Another Nigerian firm, Sapetro, run by Nigerian former defence minister TY Danjuma, operated

the Seme oilfield, block 1, until 2015 but falling oil prices and technical glitches forced it to abort its plans to get production back up and running. The field is understood to still contain some 20m barrels of recoverable oil.

A dozen oil firms have already contacted the ministry to offer their services for Seme. If none of these accept the exploration terms stipulated in the new legislation, Benin may decide to embark on a promotional campaign this year with the view to put these blocks and other available assets on offer via a call for tenders. As well as Seme’s barrels, the Beninese authorities can draw potential investors’ attention to the country’s proximity to the Aje field on OML 113 off the coast of Nigeria’s Lagos State where production

• Norwegian environmental group in a survey offshore Benin

began in 2017.

State company, new format The ministry of water and mining houses a small directorate general of hydrocarbons and fossil fuels of just around ten officials though there is also a national oil company to count on, Société Béninoise des Hydrocarbures (SOBEH).

Likely soon be renamed SNH Bénin, SOBEH has a staff of 15 or so led by managing director and Sapetro’s former local representative, Issifou Moussa Yari.

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.

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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.

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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

GULF OF GUINEA

Debt Crisis is Africa’s Greatest Risk -ADB President

N

igeria faces a debt service payment crisis as the oil-dependent Africa country continues to grapple with massive declines in oil revenues.

“With shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria,” noted Akinwumi Adesina, President of the African Development Bank (ADB).

the pandemic. Cumulative loss to Africa’s GDP is estimated at $173- 236 billion for 2020 and 2021 respectively. The Bank estimates that Africa faced an additional financing need of $125- 154 billion by the end of 2020 to respond to the crisis.

IMF estimates that Africa will need $385 billion in additional fiscal space by 2023.

Nigeria’s economy shrank by 3 percent in 2020 on account of falling oil prices and the effect of lockdowns on the economy.

Many African countries also face debt crises as the continent’s debt become increasingly unsustainable. Debt-to-GDP, which has been stable at 60 percent, has risen to 70-75 percent of GDP. The bulk of the debt has been from private bond issuances on the global capital markets-Eurobond.

GDP Growth in Africa is projected to recover to 3.4 percent as economies open up, commodity prices recover, tourism bounces back, and global value chains recover their manufacturing capacities.

“Many African countries face risks of debt distress. Out of 38 African countries for which Debt Sustainability ratings are available, 14 are in high risk of debt distress, while 6 are already in debt distress,” revealed Dr. Adesina.

With 60 percent of Nigerians in the informal sector, and the country registering very low figures for tax-to-GDP ratios, the ADB boss wants Nigeria to widen its tax base. The government, he said, should focus on corporate taxes, and ensure full compliance. He cited Estonia,

which taxes corporate incomes, but based on distributed profits.

“Taxing corporate revenues, instead of profits, will discourage investments needed to grow businesses and create jobs.

National resources tax can play a major role for Nigeria.”

The ADB chief also wants the Nigerian government to focus on ensuring that oil and gas companies pay their due taxes.

“Given Nigeria’s high reliance on oil and gas, and minerals, the government should ensure that these sectors pay taxes and royalties that are fair and transparent.”

Adesina further urged African

OFFSHORE VOL.11.1

The ADB reckons that 28-40 million people in Africa could fall into extreme poverty, and 30 million jobs could be lost due to

The ADB says Nigeria’s economy is expected to recover to growth of 1.5 percent in 2021 and 2.9 percent in 2022. But any meaningful recovery will require the infusion of more resources.

“It is crucial to ensure that the tax base expands,” urged Dr. Adesina, who spoke at a Tax Dialogue in Abuja, the Nigerian capital.

• Social tensions are on the rise in Nigeria

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governments to plug the loopholes that make it possible for multinationals to take out $60 billion illicit capital annually from Africa without paying taxes.

“If a company works in Nigeria, benefits from Nigeria, it should pay taxes in Nigeria.”

Africa is also in dire need of revamping its infrastructure, with Nigeria being a typical example. According to Dr. Adesina, “86 percent of small and medium sized enterprises in Nigeria spend $14 billion annually to buy diesel for their generators. Nigerian companies lose an average of 10 percent sales because they do not have access to reliable and affordable electricity.”

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