Africa countries vie in licensing round beauty parade
A clutch of sub-Saharan African states have launched new upstream licensing rounds on the back of improved oil prices but investor appetite is likely to be shaped by regulatory uncertainty and perceived political risk.
Sub-Saharan Africa has delivered key exploration finds recently, from major gas discoveries by Anadarko in Mozambique's offshore Rovuma basin and BP in offshore Mauritania and Senegal to oil discoveries in Ghana's waters in the west to the inland basins of Uganda and Kenya in the east of the continent.
Upstream licensing rounds are planned by existing exporters and by countries rarely on the radar of firms until now. The latter include Guinea, which has already signed a technical agreement with Total for three offshore blocks that will test if Guinea's waters are an extension of the prolific gas-rich Senegal-Mauritania basin. The National Office of Petroleum of Guinea (Onap) aims to award blocks to firms in October.
Guinea's neighbour Sierra Leone on 21 May extended bids for its upstream licensing round to 27 September from June. The delay has been caused by political instability and violence surrounding hotly contested elections in March and April that resulted in president Julius Maada Bio being sworn into office on 14 May. Sierra Leone's proposed state-take of around 70pc in upstream contracts may also deter potential investors.
Liberia is also planning a licencing round this year, in the Harper basin, but a closely watched drilling programme by ExxonMobil at offshore block 13 in 2016 and by Anadarko in 2012 resulted in no commercial discoveries. National Oil Company of Liberia has not been slow in promoting licensing rounds having marketed them in 2014, 2009, 2007 and 2004.
Exporters Ghana, Cameroon and Congo (Brazzaville) may have more luck.
Ghana this month announced plans to award six upstream blocks in its main oil and gas producing offshore Tano/Western basin this year and an additional three blocks in the same region in 2019. The round follows the entry of ExxonMobil into the country's offshore in January and a maritime boundary dispute ruling in its favour against Ivory Coast by the International Tribunal for the Law of the Sea last year.
Cameroon has a 29 June deadline for eight blocks on offer in its bidding round. Improved cost recovery terms for operators may see increased appetite for acreage take-up.
Congo (Brazzaville) has launched a second phase licensing round for 2018-2019, centred on four onshore and 11 offshore blocks. The round will be formally opened in September and firms have until June, 2019 to bid. Blocks are being offered in ultra deep, deep and shallow waters and in the onshore areas of Conkouati, Nanga and Niambi.
Uganda, Namibia, Kenya and Gambia are amongst states also planning rounds. Ivory Coast, Equatorial Guinea and Mozambique are in negotiations with firms that bid for blocks at the end of last year. Sudan, Madagascar, South Sudan, Zambia and South Africa say they are open to direct negotiations for blocks.
Africa's largest oil and gas exporter Nigeria has pencilled in a second marginal field licensing round but uncertainty surrounds this ahead of national elections planned for February. Recent rounds have been mired in controversy and some licences revoked after the failure to pay signature bonuses or legal action by firms including Shell and ExxonMobil to prevent blocks being awarded by defending their titles to blocks.
Angola has suspended a planned onshore round to Angolan firms. But state-owned Sonangol is showcasing offshore blocks 20/11 and 21/09 in Houston from 29 May to 6 June to potential new operators. The blocks contain sub-salt oil, condensate and gas discoveries made by Cobalt International which is under bankruptcy protection.
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Small private Libyan firm exports oil through blockade
Small private Libyan firm exports oil through blockade
London, 19 September (Argus) — A small Libyan private firm appears to have been granted an exemption from an oil blockade, which has more than halved the country's exports. Arkenu Oil, which describes itself as a private oil and gas development and production firm, is scheduled to export 1mn bl of Sarir and Mesla crude from Marsa el-Hariga to Italy's Trieste on the Maran Poseidon, according to an official document seen by Argus . The tanker has been chartered by Turkish trader BGN and is currently loading its cargo. This is the first Arkenu shipment set to be exported since the country's eastern-based administration ordered a blockade on oil fields and terminals on 26 August in response to an attempt by its rival administration in the west to replace the central bank governor. It is also Arkenu's third known shipment since July. Arkenu exported a 1mn bl cargo on the Zeus on 10 July and another 1mn barrel cargo on the Yasa Polaris on 16 August, according to official documents and ship-tracking data. These were also Sarir and Mesla grade. Arkenu's exports are significant given that crude sales have historically been the preserve of NOC and a handful of international oil firms that hold stakes in the country's upstream such as Eni, TotalEnergies and OMV. Arkenu, which is based in the eastern city of Benghazi, is supposedly able to export its own crude based on an agreement with NOC which allocates it an unspecified share of production from its subsidiary Agoco's Sarir and Mesla fields in return for carrying out work to boost output at the sites. But there remain questions related to the legality of the deal, the nature of the work Arkenu is supposed to be carrying out and the company's technical capabilities. The three known Arkenu cargoes are worth around $240mn at prevailing market rates, Argus estimates. There has been no increase to Agoco's production capacity since the Arkenu deal was struck, one Libyan oil industry source said. Sarir and Mesla accounted for most of Agoco's roughly 280,000 b/d output in 2023. Arkenu and NOC have yet to reply to a request for comment. "The Haftar family is deliberately and selectively allowing crude exports that generate dollars outside the Libyan state, and they are doing so within the context of a blockade they imposed," said Jalel Harchaoui, a Libya specialist at the UK's Royal United Services Institute. "While the Libyan state struggles to figure out how to import food and medicine next month owing to the central bank crisis, the Haftars' strange oil blockade permits crude exports that profit a private Libyan entity," Harchaoui added. The leadership crisis at the central bank has degraded Libya's ability to carry out international financial transactions. "The only beneficiary from these Mesla and Sarir sales is an unknown private Libyan company with an account in Switzerland and the UAE, with zero dollars being deposited in the state," the oil industry source added. General Khalifa Haftar's Libyan National Army (LNA) controls the country's east and southwest and is the real force behind the blockade. Haftar is understood to be allowing some exports to continue as long as these revenues do not reach the central bank in Tripoli, which is controlled by the rival administration in the west. Libya's crude exports have averaged 410,000 b/d so far this month, according to Kpler. While this is well below pre-blockade levels of around 1mn b/d, it is well above levels seen in some past blockades. Rising exports in recent days suggests Libya's total crude production has picked up from an earlier Argus estimate of around 300,000 b/d to possibly around 500,000 b/d. Libya was producing 1mn b/d before the blockade. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Citgo auction result delayed amid last-minute motions
Citgo auction result delayed amid last-minute motions
Houston, 18 September (Argus) — The US court-appointed special master overseeing the auction of US refiner Citgo plans to object to a last-minute motion from the Venezuelan government to delay the sale process by four months. The Republic of Venezuela and state-owned oil company PdV filed a motion on Tuesday seeking a four-month pause in the sale of its refining subsidiary Citgo, which is being auctioned off to satisfy debts owed by PdV. Special master Robert Pincus said in a court filing today that he intends to object to Venezuela's motion for a pause. The last-minute motion from Venezuela comes days after the US District Court for the District of Delaware was expected to announce results of the winning bidder. The court asked for a second extension to the auction process in August, delaying announcing a successful bidder to on or about 16 September with a sale hearing on 7 November. But Pincus is now dealing with last-minute legal challenges filed last week outside of the Delaware courts by so-called "alter ego" claimants seeking to "circumvent" the Delaware court's sales process and "jump the line" for enforcing claims against PdV, the special master said in a filing last week. Bidders for Citgo's 804,000 b/d of refining capacity, terminals, retail fuel stations and other plants expect the assets to be sold free and clear of future claims by PdV creditors. Unresolved legal liabilities could lower the value bidders are willing to pay for Citgo, decreasing the pool of money available to those owed by PdV. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US seeks to purchase 6mn bl for SPR
US seeks to purchase 6mn bl for SPR
Washington, 18 September (Argus) — President Joe Biden's administration is trying to purchase 6mn bl of sour crude for delivery to the US Strategic Petroleum Reserve (SPR) as part of a plan to issue solicitations when prices are "favorable for taxpayers." The US Department of Energy (DOE) today released a solicitation to purchase up to 6mn bl of sour crude for delivery in February-May to the SPR's Bayou Choctaw site in Louisiana. If the purchase is successful, it would be the largest single purchase since the Biden administration launched its crude purchase program in early 2023. The solicitation offers a chance for the administration to buy crude for the SPR at a lower price than earlier purchases. Nymex WTI crude futures for delivery in February settled at $68.41/bl on Tuesday. The lowest-priced crude purchase under Biden was a 1.7mn purchase at a price of $72/bl in June 2023, and the average purchase price is about $76/bl. Bids for the solicitation are due by noon ET on 25 September. DOE has already purchased more than 50mn bl of sour crude for the SPR, of which 30mn bl have already been delivered. On 9 September, DOE said it purchased 3.42mn bl of sour crude for the SPR's Bryan Mound storage site at a price of $72.46/bl from the trading firm Macquarie Commodities Trading. The crude will be delivered in January-March, adding to an earlier purchase of nearly 2.5mn bl that will be delivered to the Bryan Mound site over the same time frame. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
TMX is a fossil fuel subsidy of at least C$8.7bn: IISD
TMX is a fossil fuel subsidy of at least C$8.7bn: IISD
Calgary, 18 September (Argus) — Canada's newest crude pipeline to the country's west coast amounts to a fossil fuel subsidy of at least C$8.7bn ($6.4bn), a research and policy think-tank said. The federal government is unlikely to recover its C$34bn investment to construct the 590,000 b/d Trans Mountain Expansion (TMX) connecting oil producers in Alberta to the Pacific coast, qualifying the project as a major subsidy for the fossil fuel industry, according to the International Institute for Sustainable Development (IISD) on Wednesday. This runs contrary to the government's policy to eliminate direct support for the oil and gas sector , a goal Justin Trudeau's Liberals said was achieved in 2023. The government was the first G20 country to hit this milestone, following a 2009 commitment by the group to reach the goal by 2025. The subsidy as it relates to TMX could be as high as C$18.7bn, the Canadian non-profit said, but noted the entire amount could still be recovered by increasing tolls and/or implementing a levy. This levy could be against either all producers, or all shippers, of crude in the Western Canadian Sedimentary Basin (WCSB), whether they use TMX or not, the IISD suggested. About 90pc of Canada's crude production comes from western Canada, with much of that derived from Alberta's oil sands region. "A levy in the range of C$1-2/bl . . . over a 10-year period would be sufficient to recover the entire cost of the subsidy and the loss to the Canadian taxpayer," according to the IISD. Alternatively, fixed tolls on TMX would need to be more than doubled to C$24.53/bl from C$11.37/bl to recover all capital costs for the line that went into service on 1 May this year, according to IISD's figures. Variable tolls would be added to this. The terms in the original contracts signed between shippers and then-owner Kinder Morgan were no longer appropriate as they did not reflect the rising risks of the project, said the IISD. Kinder Morgan suspended the project in 2018, which led to the Canadian government buying both the expansion project and the original 300,000 b/d Trans Mountain line from US midstream company that same year. The federal government has maintained its plan to sell the pipeline once operational, but the final tolls are yet to be determined. Whether the operator or shippers will bear the brunt of the massive cost overruns is also still unknown. Tolls, representing cash flows for any prospective buyer, will help dictate the price that the expanded Trans Mountain system will fetch. The IISD suggests a sale price is likely to be between C$17.6bn-26.6bn, resulting in a net loss to the government of between C$8.9bn-18bn assuming its cost of investment climbs to nearly C$36bn before a sale is reached. But despite warnings by opponents it would go underused, TMX has been as advertised, opening a new frontier for oil sands operators and disrupting trade flows throughout the Pacific Rim. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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