The Buzz: This Week in Africa
At the close of this week Brent Crude is trading at $52.40 per barrel, WTI at $49.53 per barrel and natural gas at $3.01 per million BTU (beginning of day 10 March 2017). Here are AOP’s top five stories from the last seven days.
ExxonMobil buys Eni Mozambique stake
ExxonMobil will buy a 25 indirect interest in Eni’s Area 4 in Mozambique for $2.8 billion, Exxon announced Thursday. The deal is still subject to approval by the Mozambican government, but would further diversify risk on the multi-billion-dollar gas project. Eni hopes to reach FID on the Coral FLNG project to develop Area 4 this year.
If the deal is approved, Eni East Africa will be co-owned by Eni and Exxon, each with 35.7 percent shares, and CNPC with a 28.6 percent share. Eni East Africa holds a 70 percent stake of the Area 4 concession, with Empresa Nacional de Hidrocarbonetos de Mozambique (ENH) owning 10 percent, Kogas with 10 percent and Galp Energia with 10 percent.
New Angola project on stream
Cabinda Gulf Oil Company, a subsidiary of Chevron, began oil and gas production from the Mafumeira Sul project offshore Angola, Chevron announced in a statement this week.
Mafumeira Sul is the second phase of development for the Mafumeira Field in Block 0, which has a capacity of 150,000 barrels of liquids and 250 million cubic feet of natural gas per day. Production is expected to continue to grow through 2018.
SacOil moves downstream
South Africa’s SacOil Holdings is expanding its reach, with the announcement of the acquisition of fuel distributor Afric Oil this week. SacOil is set to buy 71 percent of Afric Oil from seller Gentacure.
With the new acquisition, SacOil Holdings gains a foothold in South Africa’s and Zimbabwe’s fuel distribution and retail businesses. The firm currently produces oil from the Lagia oil field in Egypt and trades oil procured from Nigeria’s national oil company.
The transaction will be funded by a 95-million rand share issue, 52 million rand in cash and a second 52.7-million rand tranche of cash and shares in 2018, dependent on certain conditions. SacOil is also talking to financial institutions to provide 180-million rand in debt financing. The remaining 29 percent of Afric Oil will remain under the control of the Public Investment Corporation, which is the majority shareholder of SacOil.
Strong results from Tanzania gas well
Aminex announced in February that the Ntorya-2 well onshore in the Ruvuma Basin was seeing gas flow to the surface, but the company now says the results of the well “substantially exceeded” expectations, according to a company statement.
The well flowed dry, high quality gas at an average rate of 17 MMscfd, with no formation water produced during the test. The results show a potentially commercially viable project with “a significant volume of gas in place.”
“The Ntorya-2 test clearly supports our belief that there is a considerable gas basin to be exploited in our Ruvuma onshore acreage which we are looking forward to developing,” said Jay Bhattacherjee, CEO of Aminex.
Oil drops below $50 per barrel, shocks system
For the first time since 2016, US crude dropped below $50 per barrel with West Texas Intermediate hitting $49.29 per barrel on Thursday. WTI crude fell by 7.6 percent this week.
The news comes as as US companies continue to reboot oil drilling in shale basins, undercutting the production cuts made by OPEC and non-OPEC members in December.
Khalid al-Falih, Saudi Arabia’s energy minster, said that the OPEC efforts to cut supply were “reinvigorating rivals in the US shale patch,” according to the Financial Times.