Chinese Company buys stake in ENI's Mozambique gas field

Italy's Eni SpA has sold a 20% stake in its giant natural gas field offshore Mozambique for US 4.2 billion dollars to China National Petroleum Corporation (CNPC), the latest in a string of Chinese deals aimed at boosting the country's overseas energy production.

The deal also firmly places the Chinese flag in the burgeoning East African energy sector, following an investment in oil discoveries in Uganda last year by Chinese National Offshore Oil Corporation (CNOOC). Analysts say oil and gas discoveries in East Africa are ideally placed to serve growing Asian energy demand.

Eni says it signed an agreement to sell 28.6% of its subsidiary Eni East Africa, which owns the Area 4 offshore gas field in Mozambique, to CNPC. This allows CNPC to indirectly own a 20% stake in the field, which has potential reserves of 75-trillion cubic feet of gas in place, equivalent to about four years’ total European gas demand.

This is a major boost for one of China's biggest import driven energy companies that looks to Africa and the world to secure its country's future energy demands. It also gives ENI a secure market for its LNG(Liquefied Natural Gas) production and cash required to develop expensive LNG processing and handling facilities. 

Mozambique - Cahora Bassa increases water discharge rate

Hidroelectrica de Cahora Bassa (HCB), the company that operates the Cahora Bassa dam on the Zambezi River, Mozambique, has increased discharge rate of water to ensure “the hydraulic and operational safety of the dam,” and warned people to avoid downstream areas.

Cahora Bassa discharges water at a rate of 1 800 cubic metres per second (m³/s). It has maintained this level of discharge for over a month, although much more water has entered the dam reservoir from upstream. As a result the Cahora Bassa lake is now 70% full. HCB will gradually increase the discharges to 2 800 m³/s.


This is a precautionary measure meant to safeguard the dam against operational risk, though there is a risk of rising water levels for people living downstream.

Gulf Power Thermal Power Plant to increase Kenya's electricity output

Kenya’s electricity generating capacity is set to receive an 80 megawatt (MW) boost when a new private power project sponsored by local investors is completed in the next 12 months. 

Gulf Power, an independent power producer (IPP) established by a consortium of Kenyan investors, will produce power from a thermal power plant on Mombasa Road, near Athi River, Nairobi.

Gulf has signed a power purchase agreement with Kenya Power Company for purchase and distribution of the electricity it will generate. 

Agreements were recently reached between the Government of Kenya, Kenya Power, the World Bank, JP Morgan Chase Bank of London and Gulf Power for two partial risk guarantees for US 35-million dollars and €7-million. 

The added electricity capacity will go a long way to boost power stability on the grid especially in areas around the capital  Nairobi. Kenya's current power generation capacity is  approximately 1,800MW.

Taking the mining sector forward - Tanzania

Once held up as the perfect example of how to develop a mining sector in Africa, Tanzania is now looking to regain lost momentum.

By Nelly Nyagah, Frontier Market Network

Tanzania’s mining sector is in a lull even as junior explorers troop into other African countries to grab opportunities.

Ranked as Africa’s fourth-largest gold producer and the world’s sole producer of Tanzanite, Tanzania has attracted a few international mining majors who control current production in six mines.

A decade ago, the East African nation was considered a benchmark for countries looking to successfully build a greenfield mining industry. Tanzania held its first multi-party election in 1995 and soon after started courting mining companies under very attractive terms. Gold royalties were set at 3% and corporate tax almost nil, with companies required to only pay US$200,000 annually. The generous terms attracted Australia’s Resolute Mining Ltd. who opened the first commercial gold mine, followed by Barrick Gold and Anglo Gold Ashanti. Gold accounts for over 50% of the country’s non-traditional exports.

However, there is little evidence to suggest a second wave of development and the country remains relatively under-explored. Potential investors perhaps assume that first movers like Resolute and Barrick locked up all prospective land. Eugene Obiero, a resources industry expert and Principal consultant for Visagio in East Africa, says this is not the case.

“Prime acreage in prospective mining districts is held by local individuals. One could say these are the culprits who are locking out junior exploration companies. So, for explorers to get into an area they have to either buy out the small individual owners or work with them as a group. This is an arduous undertaking considering the numerous interests,” says Eugene.

To rectify this problem and others, which include imbalances in earnings for the country, the government introduced a revised mining policy and Mining Act (2010). Although two years on the government and the majors are still negotiating over its implementation, the impact of the changes is being felt in areas such as ownership of prospective land.

“The new Mining Act, which was legislated in 2010, is very clear on the use-it-or-lose-it requirement; owners of land are required to file reports to prove that they are using it,” says Eugene. To force companies to relinquish idle lands, the Act also instructs a hike in rents (from $40 to $100) and transfer fees.

New opportunities are arising out of the tough requirements; locals are now looking for foreign companies to establish joint ventures and farm-outs. So, what options do potential explorers have in their bid to acquire prime prospective land?

“The best option is for foreign explorers to partner with large-scale acreage holders who are ready to present their acreage as equity in mining projects,” says Eugene, adding that outright ownership of acreage is very limited, and local content considerations also come into play.

The new mining policy includes an increase in royalties as follows; diamond and uncut gemstones (5%), uranium (5%), gold and all metallic minerals (4%), gems (cut and polished - 1%) and 3% for industrial and other minerals.

“Understandably the new fiscal regime is giving the majors jitters. They question the drastic increases and say they are unsure how the Act would be implemented. On the other hand, the government understands its obligations to the investors but is very keen to address questions by citizens on how they can benefit more from their wealth,” says African mining analyst, Stephen Okofor.

As the country seeks new investment to drive the sector forward, it also has to grapple with structural challenges in the operating environment.

“Lack of adequate supply and cost of power is a major issue. The lack of mining infrastructure is holding back projects, while the insecurity in remote locations where deposits tend to be located is troubling. Added to this are the problems with communities around mining operations,” says Eugene.

There are efforts being made to mitigate the problems, says Eugene, for instance, the rehabilitation of the central railway line, use of gas and coal to provide reliable power, and fixing the relationships between mining companies and communities.

“The existing mines will soon mature and new projects are few. The good news is that everyone is in agreement more needs to be done to fully exploit Tanzania’s mining wealth,” says Stephen.

This article was first published by Frontier Market Network 

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Sudan, S. Sudan agree to oil flow restart within 2 weeks -mediator

Sudan and South Sudan have agreed to order the resumption of the flow of southern oil exports through pipelines in Sudan within two weeks, an African Union mediator said early on Tuesday.

Landlocked South Sudan shut down its 350,000 barrel-per-day output over a year ago in a row with Khartoum over fees.

When asked when the orders would be given to resume oil flows, former South African President Thabo Mbeki, who is mediating between the two sides, told reporters: "The instruction to the companies is D-day (March 10) plus 14." 

According to Reuters