GHANA:Finally, Ghana Passes Oil and Gas Industry Local COntent Law

Ghana has joined the list of Africa countries that has local content laws regulating operations in the oil and gas industry. The Petroleum (Local Content and Local Participation) Regulation, 2013 (LI 2204) which was presented before the Ghana Parliament in July 2013 has been passed into law despite opposition from foreign upstream oil and gas companies and their governments.

 

The purpose of the regulation include the promotion of value addition and job creation through the use of local expertise, goods and services, businesses and financing in the petroleum industry value chain and their retention in Ghana.

 

Speaking to the Daily Graphic, the Minister of Energy and Petroleum, Mr Emmanuel Armah-Kofi Buah expressed his appreciation to Parliament for the passage of the law and said Ghanaians had been moved from the back of the bus to the front. He said the law was a major step towards ensuring that the local content objective intended to help Ghanaians benefit from the country's new resource was realised.

 

However, some energy law experts believe the Ghanaian local content legislation still has the same problems with those operating in other parts of the continent. According to Harrison Declan, an Aberdeen trained energy law expert based in Nigeria, "while the passage of the local content regulation by the Ghanaian Parliament is a welcome development for the country, the same issues arising in local content legislations in Africa still rears its ugly heads. It seems in local content legislations, African governments have shifted their duty of providing education for their citizens to the foreign oil companies without any provision for compensating these companies. The result would be a situation where the foreign companies are forced to operate in less favourable business climate and would always pull out when a more favourable business climate presents an opportunity. In view of rising development of unconventional oil and gas sources, like Shale, African countries must ensure that those companies who comply with the local content laws are encouraged and compensated either in form of tax reliefs or other incentives".

Benin Sees Discoveries

South Atlantic Petroleum (SAPETRO) made a discovery onshore Benin in late October. The discovery was made with drilling on the company's onshore Block 1. It was reported by the company's VP Daisy Danjuma that SAPETRO discovered 87 million barrels of oil on the block.

Barthelemy Kassa, Benin's minister for mines and energy, said talks has started with the aim of starting production from the block by July next year.

It was also reported that the company discovered a further 110 million barrels of oil in the Seme Offshore Block but production would take longer to begin.

Tanzania Modifies its PSA Model

The Tanzanian government has changed its terms in its Production Sharing Agreements (PSAs) by toughing some of the terms and conditions for those companies that seek to cash in on the bonanza of gas that has been discovered off its shores

The Model Production Sharing Agreement has detailed the bonus to be paid by firms to the government upon the sharing of a contract, specified capital gains tax obligations, and outlined a new royalty structure. According to some experts, the new PSA mean higher fees for some companies in offshore areas.

"It's a significant toughening of the fiscal terms," Bill Page, energy and resources leader at Deloitte Consulting Tanzania, told Reuters of the new model agreement. "They have also indicated that they will expect to see more extensive exploration work obligations in the initial periods of the PSA," he said.

The model agreement for 2013, released by the state-run Tanzania Petroleum Development Corp. (TPDC), introduces a minimum signature bonus payment of $2.5 million and a production bonus of at least $5 million payable when production starts. The new PSA also calls for a new royalty rate of 12.5% of total oil or gas production for onshore or shallow operations and a 7.5% royalty rate for offshore production. Previously, special terms for deep water gas was set at a royalty rate of 5%.

Angola LNG Capacity Lagging

After a series of delays in bringing it online, Angola LNG is still not processing at capacity and it doesn't seem that it will reach that capacity anytime in the near future. According to Sonangol, the plant's output will fall short of design capacity through 2014. A number of issues are attributed to the short fall including a rig disaster that forced it to bring forward new supplies from other blocks.

"We started producing this year but we still have not reached maximum production capacity at Angola LNG, we are at around 20 percent," Paulo Fernandes, an executive at Sonangol's production department told attendees at an industry event in Luanda. Angola LNG's first export shipment went out in June and has since shipped another four cargoes. However, a rig disaster in July also delayed efforts to link two offshore blocks with the plant, preventing production from reaching full capacity.

There is a possibility that the plant will be at full capacity by the end of 2014, with Fernandes saying, "We had some problems at the plant's launch stage, but they were resolved and now we're in the phase of commissioning and will progressively get the 100% goal".

NIGERIA: Lekoil Raises Funds for Nigerian Projects

Africa-focused oil explorers Lekoil has secured a new £62 million funding package to pay for its Nigerian drilling projects.

The new share placing, which saw 113, 282, 000 new shares being placed, was successfully completed by Mirabaud as the firm looks to secure its operations in the country.

The £60 million net raised will fund the completion of the Ogo-1 well and future development of the Aje field off the Nigerian coast and also allowing the company to clear its loan with Afren.

"This equity raise reflects Lekoil's success in implementing the strategy, set out at the time of our IPO in May this year, to build a business focused initially on West Africa and diversified in terms of exploration, appraisal and near term production", said chief executive Olalekan Akinyanmi. "I am delighted that our existing and new shareholders have responded so positively".

The company, which announced a post-tax loss of $8.7 million last month, announced a second 'significant' discovery at the Ogo-1 site earlier this week.