Gabon selects seven firms for final oil block talks

Gabon’s oil ministry said on Monday it had selected seven firms for a final stage of negotiations as part of an offshore licensing round the government hopes will reverse a chronic decline in output.

The new blocks are located in deep offshore waters — an exploration play that is expensive and uncertain but potentially very rewarding given the similarity of geological structures to oil-rich Brazil, where billions of barrels of oil have been discovered.

Former Organisation of the Petroleum Exporting Countries member Gabon produces about 230,000 barrels a day, down from a peak of close to 400,000 barrels a day in the 1990s.

An oil ministry statement said Impact Oil & Gas, Repsol, Perenco, ExxonMobil, Marathon, Petronas and Ophir were ranked highest after bidding for a total of nine blocks.

"These companies listed are invited to finalise negotiations for the signature of the relevant CEPPs (exploration and production sharing contracts) as soon as possible," according to a statement signed by Oil and Hydrocarbons Minister Etienne Dieudonne Ngoubou.

The statement showed that other companies such as Cobalt, Noble, Royal Dutch Shell and Total had been ranked in second or third place for the blocks.

The ministry said it had the right to open negotiations with the lower-ranking firms if talks with the first-choice companies were unsuccessful.

Bids for another eight blocks offered during the licensing round "did not reach the expectations of the Gabonese Republic", the statement added.

Source: Reuters

PWC: Only 54% of oil and gas staff think fraud programmes work

A total 91% of respondents to PricewaterhouseCooper’s (PWC) latest Africa oil and gas review indicated that their companies have anti-fraud and anti-corruption programmes in place. However, of these, On the brink of a boom notes that only 54% believe the programme is effective at preventing or detecting fraud and corruption.

Meanwhile, 6% of respondents said their anti-fraud and anti-corruption programmes were futile – the same levels as PWC’s 2012 research. More worrying is that 9% of the companies indicated that they had no programmes in place at all.

Oil and gas to boost Nigerian growth

Since the oil and gas sector is expected to grow by 2,3% per year at best, its success is still vital to the Nigerian economy, notes a report by McKinsey Global Institute. With the right reforms, Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy reports that liquids production could increase from 2.35 million barrels a day on average to a new high of 3.13 million barrels a day by 2030, adding US$22-billion dollars to GDP by 2030.

Natural gas output could grow by as much as 6% per year, adding US$13 billion dollars to GDP by 2030. In total, the report says that the oil and gas sector has the potential to contribute US$108 billion dollars per year by 2030, up from US$73 billion dollars in 2013. But, this assumes the sector overcomes obstacles such as security and can attract fresh investment.

Wood Group Ghana signs local engineering company on as a service provider

Hydra Offshore has signed a two-year contract to provide local engineering support to Wood Group Ghana (WG Ghana) to provide subsea engineering services for work in Ghanaian waters. The contract follows the initial Memorandum of Understanding signed by WG Ghana and Hydra Offshore in December 2013. This was for Hydra Offshore to partner the group to deliver services to the Ghanaian oil and gas industry.

Hydra Offshore will initially second engineers through WG Ghana into Wood Group Kenny (WGK), which was awarded an engineering services contract earlier this month by Tullow Ghana.

WGK will support Tullow Ghana and its partners through the execution phase of the Ten project offshore. WGK will provide Tullow Ghana with project engineering resources, specialist technical support and technical assurance services across the subsea, umbilical, risers, flowlines implementation work scope through to first oil, scheduled for 2016.

Tanzanian firm becomes first publicly owned oil & gas group in East Africa

Tanzania-based energy group Swala Oil & Gas has listed on the Dar es Salaam Stock Exchange (DSE), becoming the first publicly owned oil and gas company in East Africa.

The company is the twentieth to list on the DSE and the second to list under the Enterprise Growth Market (EGM), an equity market specifically intended for small and medium-sized enterprises (SMEs) and start-ups.

The company listed on the EGM with 99-million shares after a successful initial public offering (IPO), which raised TZS6.65-billion.

The IPO was oversubscribed by nearly four-million shares and raised nearly TSZ2-billion more than the maximum subscription of TZS4.8-billion.

Former Tanzanian President Ali Hassan Mwinyi, who officiated the listing event, said Swala’s oversubscription indicated an investment appetite among Tanzanians and a growing confidence in the national bourse.

DSE CEO Moremi Marwa added that the EGM was aimed at providing SMEs access to the capital market.

“Listing on the DSE comes with transparency, good corporate practices and proper disclosures. Swala has made the right decision to join the family of companies aiming at being open and transparent to their shareholders, the public and the world at large,” he commented.

Swala chairperson Ernest Massawe noted that the listing was a step closer to the company realising its ambition of achieving a successful venture based on a public-private partnership.

“We are now ready to start our 2014 seismic programme and we look forward to fruitful results. I am confident that Swala, as a public company, will be able to capitalise on its achievements to date and continue to deliver for all its stakeholders,” he maintained.

By Natalie Greve

Africa trades billions in secret crude oil deals, experts warn

Sub-Saharan Africa’s top 10 oil-producing countries have sold more than US$254 billion in crude through state-owned oil companies over the past three years without publicly accounting for the money.

Governments in sub-Saharan Africa are selling crude petroleum in shadowy deals worth hundreds of billions of dollars, according to a new report.

The lack of transparency over staggering amounts of oil revenues is causing concern in countries that have weak budgetary oversight and long track records of corruption, Natural Resource Governance Institute said.

Its research found that sub-Saharan Africa’s top 10 oil-producing countries have sold more than US$254 billion  in crude through state-owned oil companies over the past three years without publicly accounting for the money. This is equivalent to 56 per cent of their combined government revenues, the institute said in its ‘Big Spenders’ report released on Monday.

Among the biggest purchasers were mega Swiss commodity traders, including Glencore, Arcadia and Trafigura, which snapped up one-quarter of the sales between 2011 and 2013, the institute said. It called for new regulations for nationally owned oil companies and big trading firms to disclose their deals.

The sales to Swiss traders were worth an estimated US$55 billion — more than twice as much money as these 10 countries — Angola, Cameroon, Chad, Côte d‘Ivoire, Republic of Congo, Equatorial Guinea, Gabon, Ghana, Nigeria and South Sudan — received in net foreign aid, it said.

“The payments made by Swiss companies generate a significant portion of public revenues in some of the world’s poorest countries, and are subject to governance risks as they take place in environments of weak institutions and widespread corruption,” it said.

Kenya is bracing for the launch of commercial oil production within the next few years. The Government has shown little interest in transparency with contracts signed with oil prospecting firms remaining shrouded in secrecy. There are fears this secrecy may continue into sales of oil and spending of resource wealth in coming years.

The push from Natural Resource Governance Institute is part of its efforts to expand the transparency rules for oil, gas and mining as it presses governments to account for how they spend their resource wealth. Currently, more than one billion people live in dire poverty in resource-rich countries.

So far global regulations for resource extraction payments have focused on publicly traded companies. They do not cover all aspects of agreements with a government, including oil provided to a national company for future sale.Switzerland is considering new regulations on extractives disclosure for natural resource companies, but the regulations are modeled after similar rules in the European Union and the United States and would not cover commodity trading firms and their deals with national oil companies.

“Switzerland should accept its responsibility as the world’s leading commodity trading hub and pass regulation that requires Swiss companies producing or trading in natural resources to disclose all payments made to government and state-owned companies, including payments associated with trading activities,” the report said.

The difficulty in compiling the data, which came from media reports, government and company publications and market intelligence, exemplifies the need for transparency, it said.

Among the report’s findings:

1.      Sales by national oil companies account for more than half of government revenues in the Republic of Congo, Angola, Nigeria and Equatorial Guinea.

2.      Glencore, a top global commodity trader, buys all of Chad’s oil, and its payments in 2013 were equal to 16 per cent of the government’s revenue, yet the terms of the oil sales are not publicly disclosed. It struck the deal for exclusive rights without a competitive tender after investing US$300 million in two oilfields there.

3.      In Nigeria, Swiss companies bought $37 billion over three years, equal to 18 per cent of government revenues and more than one-third of its oil. A former central bank governor for Nigeria has alleged that US$20 billion has gone missing in Nigerian oil revenues.

4.      Nigeria awards term contracts to a list of companies that are eligible to buy oil throughout the year, but the report says it is a politicised process “depending on their relationship with the officials in charge and influence of their local contacts or sponsors.”

Source: Reuters.

Israeli billionaire finds 3 billion barrel oil reserve in DR Congo

An oil company owned by Israeli billionaire Dan Gertler said on Thursday it had discovered reserves of around 3 billion barrels in the Democratic Republic of Congo, an amount similar to the proven reserves of oil producers Britain and South Sudan.

The crude was discovered around Lake Albert on Congo's eastern border with Uganda, Oil of DR Congo said in a statement.

An analysis of seismic survey data "indicates around 3 billion barrels of oil in place", it said.

"These are very positive results from our extensive seismic campaign," said Giuseppe Ciccarelli, Oil of DR Congo's CEO. "We continue to believe the project has the potential to provide significant revenues and multiple other benefits to the people of (Congo)."

The nearby Ugandan blocks are estimated to hold a similar amount of oil and are being developed by British company Tullow, France's Total and China National Offshore Oil Corp (CNOOC).

Oil of DRCongo said it now plans to prepare for the drilling of two exploration wells on the site by building infrastructure and relocating local communities.

Resource-rich Congo produces just 25,000 barrels of oil per day from onshore and offshore fields in western coastal areas and is seeking to increase production dramatically to boost growth and relieve poverty.

Oil made up just 1.7 percent of Congo's gross domestic product in 2012, according to the International Monetary Fund. Oil of DRCongo said production of 50,000 barrels per day at Lake Albert would expand Congo's economy by 25 percent.

But industry sources point to the difficulty of exporting the oil from eastern Congo - a region hundreds of kilometres from export points on the shores of the Indian and Atlantic oceans.

LUCRATIVE BUSINESS?

Oil of DR Congo operates blocks one and two at Lake Albert on behalf of Foxwhelp and Caprikat, both subsidiaries of Gertler’s Netherlands-based company Fleurette which has several interests in Congo’s mining sector.

Campaign groups such as Global Witness say Gertler, an influential figure in Congo with close ties to President Joseph Kabila’s government, received concessions at low prices before selling them on for large profits, particularly in a series of mining deals between 2010 and 2012.

In January, Reuters revealed that Gertler had sold one of his Congo-based oil companies, Nessergy Ltd, to the government for US$150 million - 300 times the amount paid for the oil rights.

Gertler, who has joint Israeli and Congolese citizenship and says his firm has invested more than US$7 billion in the local economy, vigorously denies receiving favourable deals at knockdown prices.

A spokesman said at the time that the Nessergy rights had dramatically increased in value since they were obtained in 2006, partly due to the discovery of significant nearby oilfields.

By Peter Jones

Source: Reuters

George Soros urges China to disclose resource payments

China should publicly disclose what it pays African governments for oil, gas and minerals extracted as a way to level the playing field for companies worldwide, billionaire investor George Soros said on Monday.

The move will also help countries on the continent get a fair deal for their natural resource wealth.

“China has to line up to join the regulations,” Soros said at a forum on natural resources held on the sidelines of the US-Africa Leaders’ Summit that runs through Wednesday. “Otherwise they are spoilers.”

Sub-Saharan Africa has immense riches in gold, gems and rare minerals and new discoveries of oil and gas off east Africa promise to make it a leading exporter of hydrocarbons by 2030. Yet its citizens see only a fraction of that wealth on a continent that has among the world’s highest poverty levels.

The value of natural resources extracted each year in Africa is estimated at US$500 billion  but revenues collected by their governments are scarcely one-tenth of that, according to Daniel Kaufmann, president of the Natural Resource Governance Institute. In addition, US$50 billion  a year leaves Africa in illicit finance through mispriced trade and corruption, said Mojanki Gumbi, a trustee of the Thabo Mbeki Foundation, which focuses on the political and economic development of Africa.

To increase accountability for natural resources, the United States and the European Union have passed laws requiring extractive industries listed on public exchanges to disclose their payments to governments.

In addition, 35 countries including many in Africa are party to the Extractive Industry Transparency Initiative (EITI), a coalition of governments, companies and civil society that works to improve accountability for management of revenues from natural resources by setting global standards for payment disclosure.

Soros called on Africans to urge China to participate in the initiative, and to expand payment disclosure from oil, gas and mining to include forestry and agriculture.

“It is a very important thing to get them to join, in fact so important that we have to be ready to reconsider the structure of EITI, or China won’t consider it,” he said.

Multi-national companies frequently complain that their competitive position in bidding for contracts is undermined if they have to adhere to US and European disclosure rules that would not apply to state-owned companies in China, which are big players in Africa.

Mo Ibrahim, a philanthropist from Sudan who made his fortune in mobile telecommunications, was cautious about whether the proposal would succeed. China does not like to engage with civil society, which is a central part of EITI, he said. However, Chinese companies are learning that failure to engage poses significant risks to their investments in Africa.

“It is the new kid on the block in Africa, and they are finding their feet. They are getting their workers kidnapped and they are learning that it is not just some nice forest you can come in and cut down, or you can go in and pick up some good iron ore,” Ibrahim said.

Moreover, Chinese companies already must disclose their payments to governments that are party to the EITI, and those that list securities in the EU and the United States will have to comply with new transparency rules that start taking effect next year.

Source: Reuters

South Africa: Skills needed to grease growth of oil and gas sector

South Africa is ideally positioned to become a major hub in the booming oil and gas sector on the continent, but a huge global shortage of skills exists in the industry, especially at middle management and executive levels, says Guy Lundy, a principal at global executive search firm Odgers Berndtson.

While local universities do produce “excellent” geologists and engineers, Lundy says the country also needs to encourage training in other relevant professions such as accountants, lawyers and tax specialists who understand the oil and gas industry.

He says universities should offer more industry-related courses and attract students from all over Africa and companies active in the sector need to focus on mentorship to enable the upskilling of young people.

Lundy suggests that government play a crucial role in opening up South Africa to foreign skills – companies should be incentivised to facilitate the entry of skilled foreign management, who can ensure the transfer of skills to local employees.

Standard Bank: East African oil and gas discoveries to kick-start economic transformation,

East African oil and gas discoveries are poised to fundamentally transform the economies of the region as the fuel resources usher in new investment in road, rail, power and industrial infrastructure, according to Standard Bank.

Uganda, Kenya, South Sudan, Ethiopia, Tanzania and Mozambique have emerged as one of the most prolific oil and gas exploration regions in the world over the last 10 years, says Mr Simon Ashby-Rudd, the London-based global head of oil and gas at Standard Bank, Africa’s biggest lender. These discoveries will establish the region as a major hydrocarbon province in the decades to come and drive wider economic growth throughout East Africa.

“Over and above the traditional oil and gas regions in Africa, notably West Africa, East Africa has essentially been a forgotten desert in terms of upstream oil and gas exploration over the last 40 years,” said Mr Ashby-Rudd. “This has changed completely over the last decade, oil and gas companies are starting to realise the potential in nations along the East African rift valley and Standard Bank believes this is going to fundamentally transform the region’s economy.”

Oil exploration in East Africa was sparked off by the discovery of between 1.5 and 2 billion barrels of commercially viable oil reserves in northern Uganda in the middle of the last decade. Last year the country announced that total known oil reserves in the country were estimated at about 3.5 billion barrels.

The discovery of oil in Uganda coupled with the fact that exploration licences in East Africa were comparatively cheap due to the fact that the region was not regarded as an oil rich area, ushered in further exploration activity in other countries along the Rift Valley. As a result, further oil discoveries were made in southern Ethiopia and Kenya with additional gas finds in Tanzania and Mozambique.

One of the biggest indicators that the region is likely to experience an oil- and gas-led boom in the next half decade is the fact that several projects in East Africa are likely to come on stream at similar times.  Mozambique and Tanzania’s gas and liquefied natural gas projects are expected to come on stream in 2019 with Kenyan and Ethiopia expected to begin commercialisation of their oil deposits over the next six to seven years. Uganda is set to begin oil production by 2018/19, while South Sudan is already producing.

“Oil investment could accelerate the economic growth of several economies in the region,” said Mr Ashby-Rudd. “While the discoveries might be fairly modest in a global context, they’re very significant in a regional economic context.”

Plans are now underway to construct an oil pipeline linking Uganda’s oil fields to the coastal port of Lamu in Kenya. In February this year Uganda signed a memorandum of understanding (MOU) with oil companies operating in the country to facilitate the development of an oil refinery in the country as well as a pipeline that enables crude reserves to be exported.

“A pipeline would really kick-start economic growth in the region as it would usher in additional investments, the necessary infrastructure which in turn will enable further investment in industrial operations,” said Mr Ashby-Rudd. “Oil thus becomes the catalyst for an economic transformation across the region. An oil pipeline could become the backbone on which an entire infrastructure corridor could be constructed.”

Mr Ashby-Rudd says Uganda’s efforts to link its oil reserves to the coast to facilitate exports could be replicated by other landlocked nations in Africa.  This would allow additional infrastructure corridors to be developed as a means of harnessing the economic potential of central and east African nations such as Tanzania and the Democratic Republic of Congo.

Burgeoning economic growth in East Africa is also likely to result in increasing demand for fuel within that region, which imported a collective $10bn of fuel and petroleum products in 2012. Standard Bank expects total demand for petroleum products in East Africa to treble by 2030 with Kenya likely to remain the largest market in the region, which the bank estimates will record compound annual growth rates of between 5% and 7% over the next half decade.

This is press release by the Standard Bank South Africa

Nigeria: Experts advocate oil firms cordiality with host communities

As Nigeria continues to battle insecurity caused by Boko Haram insurgents, oil and gas experts have advocated a more cordial and harmonious relationship between multi-national oil companies operating in the country and the host communities in order to prevent induced violent crisis. They also urged the Federal government to enact laws to protect the rights and interest of the host communities and the need for oil companies to relocate their headquarters to the areas of operation.

These were part of the resolutions at a one day conference on ‘awareness of oil and gas development activities and its implication on communities’ organised by OPL 274 host communities in Delta North, in conjunction with Pan Ocean Oil Corporation, held yesterday at Owa Royal Palace, in Ika North East local Government of the State. A development activist and legal practitioner, Dr. Akpos Mudiaga Odje, in a 17-page presentation said there was urgent need for the enactment of ‘laws specifically to protect the interest and right of host communities’.

Odje said, “there is still no express or implied contract between oil companies and host communities”, saying, “at best what we have is usually a memorandum of understanding, as there is urgent need for insertion of dispute and crisis avoidance clause in the MoU to avoid the unnecessary frustration that follows litigation and violence between HOSTCOM and oil companies.” He said most of the violence and destruction witnessed at the areas of operation can be traceable to the neglect and failure by these oil companies to carry out their social responsibility, as “the communities are reduced to a state of pandemic poverty and arrested development, thus prompting violent uprising and shutting down of oil rigs and productions”.
He pointed out that the relocation of oil company head offices to their areas of operation would create development and employment to teeming youths in the region, as that would promote peaceful co-existence between the communities and the oil companies.