The Buzz: This Week in Africa
At the close of this week Brent Crude is trading at $48.34 per barrel, WTI at $47.34 per barrel and natural gas at $3.02 per million BTU (beginning of day, November 25, 2016). Here are AOP’s top five stories from the last seven days.
Mozambique’s Coral gas project close to FID
Eni and Mozambique’s National Hydrocarbons Company (ENH) have approved the first phase of the investment plan to develop the Coral discovery in Block 4 offshore Mozambique. The first phase will include six subsea wells to be connected to a floating production unit. Gas will be piped ashore and exported from an LNG plant. Eni, the operator of the block, owns a 50 percent interest while its partners, Galp Energia, KOGAS and ENH each own a 10 percent stake and CNPC owns a 20 percent interest. FID for the project has yet to be approved by all the partners. ENH announced its approval Wednesday after the Eni board of directors authorized the plan on November 18. As soon as all partners approve the investment plan, they can arrange financing for the LNG project, which is estimated to need $50 billion to complete, according to Reuters.
African Petroleum to leave Liberia
African Petroleum announced Wednesday that the company will not be extending its expired production sharing contracts for blocks LB-08 and LB-09 in Liberia. The West Africa-focused exploration firm had been in discussion with the Liberian government about amending terms and extending the PSCs for the blocks, which expired in June 2016. However, an agreement was not reached, according to Reuters. The independent oil company has operations in Senegal, Gambia, Sierra Leone and Côte d’Ivoire.
ExxonMobil starts drilling in Liberia
ExxonMobil commenced deep water drilling operations at the Mesurado-1 well offshore Liberia, according to AllAfrica.com. Canadian Overseas Petroleum Limited, a partner in the project with a 17 percent interest, announced the drilling on Wednesday. The operation started Tuesday on Block LB-13 in approximately 2,500 meters of water. The well is the first operated by ExxonMobil in offshore Liberia.
Nigeria’s struggling economy needs boost from oil investment
Nigeria will need $14 billion annually over the course of five years to raise oil output to 2.2 million barrels per day, said Ladi Bada, chief executive of Shoreline Natural Resources. Currently, Bada estimates that Nigeria is investing $9 billion per year. “If we continue to invest $9 billion, we won’t grow volumes,” he told a business conference in Lagos late on Wednesday. Nigeria’s economic slump has continued as oil prices stayed sluggish in 2016, with GDP contracting by 2.2 percent in the third quarter of 2016 compared to 2015. It shrank 2.1 percent in the second quarter of 2016.
Oil price rises, expectations remain cautious
Oil prices were on the rise this week, hitting their highest levels in about a month, but expectations from energy experts are still cautious, as the head of the International Energy Agency announced investment in new oil production is likely to fall again in 2017.
Fatih Birol, head of the agency, said at a conference in Tokyo that this will be the first time in the history of oil that investments declined for three years in a row. Separately, a Wood Mackenzie report estimated that capital expenditure in upstream activities in Sub-Saharan Africa will be cut by about $100 billion over the next five years. OPEC is meeting next month to try to curb outputs, amid concerns that the US shale producers will increase production if oil prices hit $60 a barrel.