Tanzania adds Rukwa project to National Energy Strategy – Kibo

The Tanzanian Ministry of Energy and Minerals (MEM) has included Kibo Mining’s Rukwa coal-to-power project as a strategic component of the Tanzanian government’s National Energy Strategy.

The MEM would undertake to “participate proactively in procuring the establishment of this vital infrastructure node in the Mbeya region” and confirmed its support for the expedited development of the project, Kibo pointed out in a statement to shareholders.

The Rukwa project was situated close to the Mtwara Corridor – an area in which the government had committed to infrastructure development and which had seen recent multimillion-dollar investment in coal, coal-fired power stations and uranium exploration.

The most recent discussions between Kibo and the MEM would now allow the company to conclude the final selection process for an appropriate development partner acceptable to the company as well as the State.

Kibo CEO Louis Coetzee said the inclusion of Rukwa in the National Energy Strategy was the company’s most significant milestone since its readmission to the London Stock Exchange's Aim, in 2010.

“The Rukwa project is intended to be one of the cornerstones of a regional infrastructure development node on the Western gateway of the Mtwara Corridor, and we are honoured to have this opportunity to continue to build value for our shareholders and the people of Tanzania,” he commented.

Kibo was currently developing five project areas in Tanzania, of which the Rukwa coal project was the most advanced.

A significant mineral resource of thermal coal at Rukwa had already been defined, providing what the company believed to be nearer-term development and commercialisation potential.

“This is further supported by strong support expressed by the Tanzanian government for the expedited development of a coal mine and mine-mouth coal- fired power plant based at the Rukwa project,” the company noted.

Through a subsidiary of its majority-owned Mzuri Energy, Kibo signed a memorandum of understanding in 2012 with an Asian conglomerate to develop a 250 MW to 350 MW power station alongside the Rukwa coal project.

Elections Jitters in Kenya affecting oil and gas investments

With next week’s elections on 4th March just days away, international investors in Kenya's burgeoning oil and gas sector are holding back investments for exploration. They are waiting to see the outcome of next week's presidential election, worried about the potential for violence and possible policy changes under a new government.

Huge petrochemical discoveries in eastern Africa from southern Sudan all the way down to Mozambique have attracted bids from international oil companies for exploration and drilling rights.

Kenya's sector is the least mature, with medium-sized companies heading the search for commercial reserves. These firms are more vulnerable than majors to the risk such as political instability and violence, which five years ago strangled the Kenyan economy and forced political rivals to form a shaky coalition government.

With President Mwai Kibaki leaving the political stage after a career of over 50years, Kenya's forthcoming change in leadership is also creating concerns that the government may alter contractual terms.

Companies such as Canada’s Simba Energy were prepared to begin drilling in 2013 but had to consider feedback from some potential farm-in partners, said Hassan Hassan, Simba's Chief Operating Officer. So they have decided to wait and see.

The uncertainty is affecting new money. Explorers already licensed in Kenya are locked into strict investment agreements and are still releasing capital towards operations. It takes on average US$30m to drill a well. If they do not do so then there are penalties to be inflicted upon them.

The main concern making investors jittery is possibility of a trade sanctions, a one of the leading front-runners in the race, former Finance Minister Uhuru Kenyatta, faces trial for crimes against humanity related to the election violence in 2007/2008.

If Mr. Kenyatta is elected, western governments will face a dilemma over how to balance a principled stance against strategic interests such as security and trade ties with Kenya. The petrochemical story in the region has made Kenya even more strategic due to its location and level of economic advancement in comparison to its neighbours.   

The United States has cautioned that "choices have consequences" as relating to electing leaders that have been indicted for crimes against humanity. Officials in other Western capitals have said any talk of economic sanctions is premature, but some investors are anxious either way.

The stakes are rising. British explorer Tullow Oil this month announced Kenya's first potentially commercial flow rates, taking it a step closer to production.

Tullow's venture partner, Africa Oil, estimates there are 23 billion barrels of oil beneath two onshore basins that extend from southern Ethiopia to the southwestern tip of Kenya.

Kenya's next president will most probably oversee multi-billion dollar investments and new legislation to govern production agreements and how to spend hotly anticipated petrodollars.

Some oil players are concerned that the leading presidential hopefuls have not laid out more detailed plans for infrastructure, taxation and the handling of oil proceeds.

If Kenya is to produce and export oil and help its landlocked neighbours export too, it will need a pipeline network stretching hundreds of kilometres to link inland oil fields to the coast. It will need a new refinery to supply the domestic market from its own crude. The existing facility in Mombasa is dilapidated and runs only at partial capacity.

And while there are laws that set out how oil revenue is spent, they are old and vague. The 13-page Petroleum Act became law in 1986. Back then, few expected a serious oil find.

Nine oil companies operating in Kenya including Tullow, Anadarko and Africa Oil have formed the Kenya Oil and Gas Association. It wants the government to legislate faster.

They point to neighbouring Uganda; where commercial production is finally slated for 2017 after being delayed almost a decade by rows over tax and infrastructure projects, and hope Kenya avoids such setbacks.

The major oil companies are poised to come in once the small-caps have done the dirty work. With days to go to the polls, it’s now a wait and see game. 

Mozambique Targets Gas Companies for Stock Exchange Listings

Mozambique’s stock exchange may add five new listings by 2018, the first as early as June, as companies exploring for gas raise funding for projects, said Anabela Chambuca Pinho, chief executive officer of the bourse.

“Foreign companies operating or those wishing to extract gas and oil in our country that are listed on other exchanges have to be listed on our exchange in Mozambique,” she said in an interview in Victoria Falls, Zimbabwe yesterday. “These companies will need to raise capital in our markets.”

The southern African nation, site of the world’s largest discovery of natural gas in the past decade, has attracted companies including Anadarko Petroleum Corp. and Eni SpA as it pushes for investments of as much as $30 billion into the industry by 2018. The economy of more than 23 million people expanded 6.8 percent in the third quarter. Vale SA, the world’s biggest iron-ore producer, is building a railway line to transport coal from a mine in Mozambique to the coast.

The Maputo, Mozambique-based bourse, known as the Bolsa de Valores de Mocambique, has a market capitalization of more than 30 billion meticais (US$977 million) with three listed companies as well as government and corporate debt, according to its website. Stocks include SABMiller Plc’s Cervejas de Mocambique SA, a brewer, and Cia Mocambicana de Hidrocarbonetos SA, a state-owned oil and gas company.

“By end of June, we expect one more company to be listed,” Chambuca Pinho said, declining to identify the business because of confidentiality agreements. “We are small in terms of numbers currently listed but we are growing.”

A company has to pay 28 million meticais to list its stock. The bourse recorded 250 trades in 2012, 191 of which were in the equity market and 21 on the bond market, Chambuca Pinho said. It trades from 9 a.m. to 12 p.m. on Tuesdays, Thursdays and Fridays, according to its website.

The metical weakened 0.5 percent to 30.7000 per dollar as of 9:24 a.m. in the capital, Maputo. The currency has dropped 3.3 percent against the dollar this year.

The story is courtesy of Bloomberg, By Godfrey Marawanyika - Feb 15, 2013 

Tullow says Kenya's discovered oil shows promise of commercial viability

Tullow Oil Plc released a set of Kenyan well test results yesterday which it said showed promise of commercial viability.

Tullow, said results from its Twiga South-1 well showed "the first potentially commercial flow rates achieved in Kenya."

The London-listed company has operations in several African countries but investors see its Kenyan drilling as particularly important.

Four flow tests were carried out on Twiga South-1 in January and early February and a fifth test is ongoing, Tullow said, predicting a total combined flow rate of over 2,850 barrels of oil per day for the well in western Kenya.

"That's better than the 500 barrels a day... they discussed as an expectation," said Macquarie analyst Mark Wilson. "They've pulled a rabbit out of the hat there on operational progress."

The tests also provide "real encouragement" for Ngamia, another Tullow prospect in Kenya's Rift Basin, the company said.

The  rig that was drilling at Twiga South-1 will now move to Ngamia-1A to re-enter the well there and perform four flow tests.

Tullow said these tests are expected to deliver rates similar to Twiga South-1.

To temper expectations Tullow said it will require considerably more exploration and appraisal before the commercial threshold for the basin is achieved.

Another keenly-watched prospect in its Kenya-Ethiopia portfolio, the Paipai-1 well, encountered "difficult hole conditions" Tullow said. It hopes to draw some conclusions on it by the end of February.

Africa Oil is a partner at Twiga South-1 and Afren Plc is a partner at PaiPai.

Tullow Oil discovers gas deposits at well in Northern Kenya

Tullow Oil has discovered deposits of natural gas at its  Paipai 1 well in northern Kenya, whose drilling began 2 months ago and is set to be completed in a month's time.

The deposits were struck at 4,100 metres, less than a kilometre to the target depth of 4,900 metres at the Pai Pai 1 well in Block 10 A. The block is half owned by Tullow, 30 per cent by Africa Oil and the remaining 20% by Afren Plc. This news was divulged by a official who did not want to be named due to the confidential nature of the process. 

In Kenya Tullow Oil continues to drill and test the following wells Twiga 1 , Ngamia 1 well, while other companies continue to drill in the Mbawa offshore block for natural gas and oil prospects off the coast of Lamu.

On the 13th of January 2013 Tullow oil also began drilling their Sabisa 1 well in the South Omo Block in Southern Ethiopia, which they co own 50/50 with Africa Oil Corp. The primary goal of this well  is to prove that the petroleum system to the north of the Lokichar basin, in northern Kenya where Twiga 1 and Ngamia 1 wells lie, extends North into Ethiopia.

Kenya in collaboration with Western partner organisations is working on laws for the exploration, production, logistics  and monetization of natural gas. Natural gas terms are not explicitly stated in the current energy laws and regulations.