The Buzz: This Week in Africa
At the close of this week Brent Crude is trading at $51.75 per barrel, WTI at $49.11 per barrel and natural gas at $3.20 per million BTU (beginning of day 02 June 2017). Here are AOP’s top five stories from the last seven days.
Mozambique’s Coral FLNG project clears FID
Eni and its partners signed the $8 billion deal to develop the Coral FLNG project offshore Mozambique this week, brining a long-awaited and much-anticipated project within reach for Mozambique.
Eni is expected to fund 60 percent of the cost of building the FLNG vessel, and financing has been secured by 15 major international banks and five export credit agencies, according to Reuters.
Partners of the deal include China National Petroleum Company, Korea Gas Corp and Empresa Nacional de Hidrocarbonetos. ExxonMobil also invested $2.8 billion this year for a 25 percent stake in Area 4, which includes the Coral development.
Africa Oil & Power to Start Monday
Africa Oil & Power, Africa’s elite energy event, will kickoff Monday in Cape Town, and run through Wednesday.
The conference, which will focus on how companies and governments can position themselves for a resurgence in a market recovery after a period of sustained low oil price, includes speakers from governments and corporations, such as H.E. Gabriel M. Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea; H.E. Ezekiel Lol Gatkuoth, Minister of Petroleum of South Sudan; and Dr. Emmanuel Ibe Kachikwu, Minister of State, Petroleum Resources of Nigeria.
Register for the conference here.
U.S. decides to withdraw from Paris Climate Agreement
On Thursday 1st of June, U.S. oil initially showed fluctuation, then quickly recovered and extended gains in North American trade, as expectations of the U.S. administration’s decision regarding withdrawing from the Paris Climate Agreement overshadowed recent fears of a global supply glut. The New York Mercantile Exchange Crude oil for July delivery grew by 1.26% at $48.93 a barrel by 11:10 AM ET (15:10GMT) while on the ICE Futures Exchange in London, Brent oil for August delivery traded up 0.85%, at $51.19 by 11:12 AM ET (15:12 GMT).
On Wednesday 31st of May, American Petroleum Institute (API) data showed a fall in U.S. crude stockpiles of 8.67 million barrels. OPEC /non-OPEC members, including Russia, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) from January to June until the end of March 2018. This has led to an increase in May output and the first monthly increase for the year, due to higher supply from Nigeria and Libya, the two OPEC states exempted from the deal. Overall OPEC output rose from 250,000 bpd to 32.22 million bpd. Thus far, the production cut agreement has had little impact on global inventory levels as a result of the constant rise in U.S shale oil output to counteract the 1.8 million barrel per day production cut agreement.
Budget, Tender Planned for Uganda Pipeline
Less than a week after the Tanzanian and Ugandan governments finalized an agreement to build the Hoima-Tanga oil pipeline, Ugandan officials are sourcing funds for the $3.5 billion project, and have already floated a tender for the engineering, procurement and construction management services, according to The Monitor.
The 1,445 kilometers pipeline is crucial to Uganda’s ability to commercialize crude oil discoveries at Lake Albert. The partners of the Lake Albert project, Tullow Oil Uganda, Total E&P and China National Offshore Oil Company, are expected to raise 70 percent of construction costs. The remaining 30 percent is expected to come from equity raised by the partners and the national oil companies of Tanzania and Uganda.
Senegal’s oil sector to get $29 million boost from World Bank
Senegal, which has yet to produce oil and gas, has begun negotiations with oil and gas super majors Total and BP to develop the untapped oil and gas resources offshore. At the same time, the World Bank has committed $29 million to back Senegal’s efforts to create a strong regulatory framework and transparency, according to CNBC Africa.
Though the $29 million is earmarked for the oil industry, it is unclear exactly how the funds will be spent except to “help the government oversee the oil and gas development and be more transparent in its negotiations.”
Eni’s Port Harcourt Refinery Deal Voted Down by Nigerian Senate
Citing a lack of transparency, the Nigerian Senate voted this week to halt the concession agreement for Eni to repair, operate and maintain the Port Harcourt refinery, according to Reuters.
Eni’s local division, Agrip, planned to take over the refinery with indigenous company Oando in order to increase the country’s refining capacity. However, the senate determined the project was a “non-transparent transaction.”