The Buzz: This Week in Africa
At the beginning of this week Brent Crude is trading at $57.59 per barrel, WTI at $51.23 per barrel and natural gas at $2.94 per million BTU (beginning of day 25 September 2017). Here are AOP’s top five stories from the last seven days.
Tullow Resumes Drilling in Ghana Following Boundary Dispute Resolution
Tullow Oil plans to ramp up development drilling at its TEN fields in Ghana, after a maritime boundary dispute between Ghana and the Ivory Coast was resolved this week, leaving the fields in Ghana’s waters, according to the Financial Times.
The ruling from the International Tribunal of the Law of the Sea — the organization that rules maritime law — will allow Tullow Oil to move forward with the TEN project. The company plans to restart development before the end of the year, and plans to increase output from 50,000 barrels per day to 80,000 barrels per day.
Off-Grid Solutions to Boost Kenya’s Power Access
Kenya, already leading the way in Sub-Saharan Africa’s push for universal power access, has launched an off-grid solar access program with the support of the World Bank. The $150 million project is expected to reach 690,000 households by 2020.
Kenya has already achieved an electricity access rate of 70 percent of the country’s population, using a diverse mix of power generation sources, especially geothermal, wind and solar.
Uganda Creates Tough Rules for New Oil & Gas Contracts
As new entrants seek to explore Uganda for oil and gas — following major discoveries at Lake Albert — the government has set tougher terms for the production sharing contracts, according to the East African.
New contract terms include a profit/loss scheme that will follow actual oil prices; restricting investors from recovering more than 65 percent of their production costs in a year; and the government of Uganda approving a company’s annual budget.
Agreements signed in the past gave precedence to companies’ recoverable costs and profit ratios were based on daily crude production.
Glencore, Angola LNG Ink Contract
Glencore will buy LNG from Angola LNG in a multi-year contract, according to Reuters. The deal follows Angola LNG’s recently-signed contract with Vitol and a contract with Germany’s RWE.
Angola LNG, which initially planned to market its LNG to the American gas market, has been on the hunt for new customers following the American shale revolution. The plant has a production capacity of 5.2mn tonnes per year.
OPEC Production Cuts Raise Oil Prices, Nigeria Remains Exempt
Brent Crude prices are at their highest in eight months, on the heels of a meeting of the Organization of the Petroleum Exporting Countries in Vienna this week, as OPEC leaders insisted the OPEC-led production cuts are working to reduce a supply glut, according to Bloomberg. The deal to cut production by 1.8 million barrels per day could be extended in 2018, but that is not yet confirmed.
Nigeria, which is exempt from the current production cuts, has been watched closely by analysts as the country successfully revived oil production this year. Still, Nigeria’s oil minister Emmanuel Ibe Kachikwu insists Nigeria is still below 1.8 million barrels per day of crude cap, producing about 1.69 barrels per day currently.