The Buzz: This Week in Africa
At the close of this week Brent Crude is trading at $53.81 per barrel, WTI at $51.06 per barrel and natural gas at $3.51 per million BTU (beginning of day, December 2, 2016). Here are AOP’s top five stories from the last seven days.
Oil prices surge after OPEC deal
Oil prices were at a 16-month high on Thursday on news of a long-awaited OPEC deal to slash production. The cuts will be made in an effort to raise fuel prices in an oversupplied market. “While OPEC’s adherence to the new allocations will be critical, the group demonstrated more cohesiveness than at any point since at least the 1.5 million barrels per day cut in 2008,” Jason Gammel of US investment bank Jefferies is quoted as saying in a Reuters article.
The details of the deal call for a combined production cut of 1.2 million barrels per day by OPEC countries, and another 600,000 barrels per day cut by non-OPEC countries such as Russia. Nigeria, Iran and Libya also received special concessions in the deal reached Wednesday. Nigeria was given leeway to recover from the impact of Niger Delta militant activity, which has led to a massive cut in production already. Libya was granted its concession on similar grounds. BMI Research on Friday, however, indicated that a stumbling block for the plan could be a revival of the US shale sector.
Senegal discoveries to be appraised
Two appraisal wells are to be drilled at the SNE oilfield by Cairn Energy and its joint venture partners in Senegal’s Sangomar Deep block. The drilling program expected to commence in the first quarter of 2017, according to a statement from licensee FAR Ltd.
The SNE-1 oil discovery was the world’s largest in 2014. The wells, to be drilled using the Stena DrillMAX drillship, are expected to optimize the SNE field development plan before it is submitted to the Government of Senegal for approval. Pre-FEED activities are focused on determining the size and scope of the project.
Tanzania-Uganda pipeline, agreement to be signed
An agreement should be signed in December between Uganda and Tanzania to finalize plans for the 1,443-kilometer oil pipeline between Hoima, Uganda and Tanga, Tanzania, according to allAfrica. The $3.5 billion pipeline is expected to transport 200,000 barrels of crude per day from Uganda to the Indian Ocean coast. Once the agreement is signed, FEED studies can begin.
Total, Tullow Oil and CNOOC are the developers of the Uganda–Tanzania Crude Oil Pipeline, and they plan to start social resettlement programs in the first quarter of 2017, according to Total.
Mozambique to sign concession contracts in 2017
Mozambique’s National Petroleum Institute (INP) will sign new exploration and production concession contracts by early next year, said an INP official at a Maputo oil and gas conference this week, as reported by Reuters.
The blocks include new areas of the Rovuma basin, where Anadarko and Eni are already developing a multi-billion project to develop gas reserves and export LNG. Mozambique launched 15 offshore and onshore areas for bidding in 2014, and INP awarded four blocks to ExxonMobil, Rosneft and Eni in that fifth bidding round.
New CEO named for South Africa’s Eskom
Matshela Koko, in charge of power generation at South Africa’s Eskom, has been appointed acting chief executive of the public power utility, effective from December 1. The move comes after the former CEO Brian Molege resigned amid accusations of corrupt activity in a report circulated by the Public Protector’s State of Capture report..
President Jacob Zuma also appears to have survived an intense three-day debate by the ruling African National Congress over whether or not he should stand down as president. The report calls into question coal deals between Eskom and the Gupta family, close family friends of the president, and questions Zuma’s relationship with the Guptas.