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.

MOROCCO: What is going on in Morocco?

In Africa generally, a lot of petroleum exploration has been ongoing, especially in the west coast. In Ghana, Gabon and Namibia, there's been frenetic activities lately, not to mention ongoing work in stalwart producing nations like Nigeria. But the northern end of the coast, off Morocco - where the Atlantic meets the Mediterranean at the Straits of Gibraltar, little is known about the rocks or the oil pools. Recently, there seems to be a convergence of oil majors in this "secret coast". Why could this be?

Some high-profile players are betting that a lack of historic work could mean big discoveries are still lurking there. In January, Chevron (NYSE: CVX) bought up to three offshore blocks in Moroccan waters. And just last week, BP (NYSE: BP) said it will farm into three offshore licences there held by Kosmos Energy (NYSE: KOS)

The statistics back up their enthusiasm: estimates are that up to 10 exploration wells could be drilled off the secret coast over the next 12 to 18 months, more than all the wells drilled there since 1990. Soon, this "secret coast" may end up making the headlines like the hitherto unknown shale formations in the US.

MOROCCO: BP Takes Non-operating Interest in Moroccan Blocks

With a much anticipated drilling programme set to test Morocco's offshore potential, BP has taken a non-operating interest in the adjacent Essaouira offshore, Foum Assaka offshore and Tarhazoute Offshore blocks, and will fund Kosmos' share of the cost of a well in each of them. Tarhazoute was recently converted from a reconnaissance contract. Kosmos described the Agadir Basin as "one of the last remaining underexploited salt basins along the Atlantic Margin".

BP has taken stakes in Kosmos' acreage offshore fromAgadir, but not in its Cap Boujdour Offshore Block, which is within the disputed territory of Western Sahara. Foum Assaka was licensed in 2011 to Kosmos and Pathfinder Hydrocarbon Ventures, now part of Fastnet Oil and Gas, lde by John Craven, whose Cove Energy was a highly successful early mover in Mozambique.

SOUTH AFRICA: Government Publishes Fracking Reglations

Determined to frack its way into the future, the South African government has gazetted regulations for petroleum exploration and exploitation, the majority of which deal with hydraulic fracturing in the country, providing guidelines for environmental impact assessment, detailing equipment standards to ensure safe drilling and  specifying that all operators must obtain a water licence before starting work.

Interested parties have until 14 November to submit comments on the proposals, then the government will make any adjustments and the regulations will be promulgated. Three companies, Royal Dutch Shell, Challenger and Falcon, filed applications for exploration in the Karoo Basiin before the government placed a moratorium on licensing in February 2011.

DR Congo hears call for new approach to settle sea border with Angola

Democratic Republic of Congo's latest national conference has heard a call for a new push to settle the maritime border dispute with Angola and enable the country to take a potential share of the region's offshore oil. The 'Concertations Nationalés' held from 7th September to 5th October in Kinshasa, gathered MPs, Senators and Civil Society organisations to discuss the country's political and economic future. Kinshasa University geologist Professor Ezequiel Kasongo Numbi Kashemukunda, a former MP of President Joseph Kabila's Alliance de la Majorité Présidentielle and former diplomat, called the government to stop wasting time and energy in trying to secure the recognition of its claims over the continental shelf beyond the 200 nautical mile limit.

CONGO: CNOOC Makes Oil and Gas Discovery

Operator CNOOC has made an oil and gas discovery with the E-1 exploration well on the Elephant prospect in Haute Mer A licence area. Partner Oryx Petroleum said the discovery would be tested in early 2014 as part of a multi-well drilling and testing programme on the block. "Reservoir quality, crude quality and viscosity appear to be better than originally anticipated while the areal extent of the reservoir appears to be slightly smaller than expected", said Oryx chief operating officer Henry Legarre. "Although subject to testing, the discovery gives us confidence that there is further upside potential and opportunity to expand the prospect inventory in the licence area".

GHANA: FMC Technologies wins multi-million dollar contract

Tullow Ghana has given FMC Technologies a $340 million contract to supply subsea systems for the Tweneboa-Enyenra-Ntomme development. FMC will supply subsea trees, manifolds, tooling and associated subsea control systems. It has been operating in Ghana since 2008 and has recently completed the assembly and testing of the first Ghananian-built subsea trees at its support base in Takoradi.

Sierra Leone: Oil shows for Lukoil

Lukoil and Oranto petroleum have completed their first well offshore Sierra Leone and found an "oil-saturated reservoir" with its first exploration well offshore Sierra Leone. The well on the Savannah structure on Block SL-5-11 was drilled to more than 4,700 metres in water depths of more than 2,000 metres using semi-submersible Ocean Rig Eirik Raude.

In a statement issued late Monday, the government congratulated Lukoil and said full appraisal of the amount of potential oil would be completed by the end of the year. Lukoil who farmed into the block in mid-2011, has a 49% stake in Block SL-5-11 partnered with Oranto. The block is located in a basin where multiple sizeable oil fields have recently been discovered.

Tanzania ready to launch fourth licensing round

Tanzania is set to launch its fourth licensing round on 25th of October, where it would be offering deep-water acreage. Initially, it was said that a precondition for the auction to take place was putting a new gas policy in place. However, the auction would go ahead even though the gas policy is not yet in place.

Interested parties will be invited to bid for eight blocks, seven offshore and one in the north of Lake Tanganyika. The prospect has triggered some excitement in industry circles, not least because the auction has been much delayed, but also because the offshore blocks lie adjacent to big gas discoveries made by BG Group and Statoil, which plan a liquefaction facility to market the gas.

BENIN REPUBLIC: Benin Discovers 87 million Barrels of Oil

Benin said Thursday that it had discovered  87 million barrels of oil off its coast, a tiny amount compared to neighboring Nigeria's reserves, but which could boost the small country's economy.

"We have discovered oil in a significant commercial quantity with Sapetro company which works on Bloc 1 of the sedimentary basin off Seme Podji coast", energy ministers Barthelemy Kassa told AFP.  He further said the discovery would help finance the country's development project. "It is a historic development for our country because this will enable us to finance our development projects", he further stated.

Sapetro is a Nigerian gas exploration and production company. Its chief executive, Daisy Danjuma, wife of a former Nigerian army chief Theophilus Danjuma, said that first commercial oil production will begin in late 2014. 

NIGERIA: Fuel Importation may have been Suspended

The Nigerian National Petroleum Corporation (NNPC) has halted petrol imports as excessive orders has created a petrol glut, Reuters news agency reported on Thursday. Petroleum Pipelines and Product Marketing Company (PPMC), a subsidiary of the NNPC responsible for the supply of petroleum products to the domestic market will not make purchases in November, as it tries to work through a 10.2 million barrel (1.2 million tonnes) surplus petrol waiting offshore.

Traders reportedly hinted it was possible that the suspension may extend until the end of the year, which will hit European refiners that supply the market.

Spokesman of PPMC, Nasir Imodagbe, was quoted as stating he was not aware of any cancellation of orders, but that a decision to suspend imports would be that of the regulator, the Petroleum Product Pricing Regulatory Agency (PPPRA).

NIGERIA: Industry Consultant Allays Shale Fears

An energy law consultant in the Nigerian energy sector has allayed fears of the possibility of global shale development negatively affecting the Nigerian economy, which is largely dependent on revenues from sale of conventional oil and gas.

Speaking at an energy forum, Harrison Declan stated that "Nigeria it is believed, is one of such countries who find themselves in a precarious situation in the face of global shale development. Given the notoriety of such sentiment, one might have no choice but to hold same views. However, when a holistic view is taken of the entire scene, one observes that the future of the Nigerian economy vis-a-vis global shale development is not as bleak as is widely believed. The only market Nigeria has lost is the US market, there are still other markets. Also, shale would not live up to its hype".

NIGERIA: Shell Lifts Force Majeure

The Shell Petroleum Development Company of Nigeria (SPDC) has lifted the force majeure on Bonny Light exports, effective yesterday following the repair of recent spill points on the Trans Niger Pipeline (TNP).

A statement issued yesterday by SPDC spokesperson, Precious Okolobo, noted that the force majeure was declared on October 10 as a result of production deferment from the spills which were recorded on the 24-inch line of the TNP. He stated that "about 2,200 barrels of oil were spilled, of which more than 1,500 barrels have since been recovered. Further remedial measures, clean-up and repairs are continuing".

He said arrangements for payment of compensation were being made in conjunction with the people in Bunu-Tai and Nonwa-Tai, the two communities which the joint investigation confirmed were impacted by the spill.

ANGOLA: Oil Companies to Pay More Taxes

The Angolan government through Executive Decree No. 333/13 is set to increase the taxes payable by oil companies operating in the country.  The decree imposes a consumption tax on petroleum companies that will raise some costs by as much as 10 percent.

The law requires companies to follow a tax schedule that adds five percent to most services and supplies and double that for equipment rentals.. The law is to come into effect with its publication.

Zambia to reissue dormant petroleum exploration licences

Zambia plans to revoke and reissue petroleum exploration licences that have lain dormant since they were granted in 2010. Ministry of Mines, Energy and Water Development permanent secretary, Victor Mutambo said bidders had been selected for ten blocks to be re-licensed later this month. He said exploration had stalled as most of the companies granted licences lacked the necessary skills and were hoping to sell the blocks at a profit. "To some, we have already issued default notices because, if you hold a licence and you do not do anything, it means speculative tendencies and, doing forward, we just have to cancel these licences and re-advertise them", Mutambo told African Energy.

KENYA: Apache to Exit Kenya

Apache Incorporation, a US independent firm, plans to exit its sole asset in Kenya. The company holds a stake in Kenya's offshore Block L8. Apache plans to focus on projects elsewhere around the world.

Apache was part of the partnership comprised of Tullow Oil, Origin Energy, and Pancontinental Oil & Gas, that discovered Kenya's first natural gas offshore the East African country with the drilling of the Mbawa-1 well. The gas find was non-commercial.

According to Patrick Cassidy, a spokesman for Apache, "this move is part of the company's overall re-balancing program announced earlier this year".