The Buzz: This Week in Africa
At the close of this week Brent Crude is trading at $54.03 per barrel, WTI at $50.91 per barrel and natural gas at $3.41 per million BTU (beginning of day, December 16, 2016). Here are AOP’s top five stories from the last seven days.
How high can it go?
The landmark deal signed by OPEC members and 11 non-OPEC countries to reduce output by a total of 1.8 million barrels per day has already had a clear impact, as oil and gas prices continue to rise this week. But there is little agreement from the world’s prevailing energy agencies on when the prices will stabilize.
In a report by the International Energy Agency, the prediction is supply will decrease within the next six months. OPEC, the force behind the deal, is less hopeful, predicting supply levels won’t fall until the third or fourth quarter of 2017, according to Bloomberg. The Energy Information Agency, with the least optimistic outlook of all, says even that is too soon and that supply is predicted to grow by an average 420,000 barrels per day next year.
The predictions get even murkier as questions about how long the deal will last circulate, especially with production pressures from Nigeria and Libya. Both countries were exempted from the deal because of internal conflicts disrupting oil production, but Libya’s oil production has gone up 47,000 bpd from October to November, and Nigeria increased production by 63,000 bpd in the same time period. Nigeria has announced plans to increase oil production to 2.2 million bpd, compared to the 1.5 million bpd reported in August.
Election upset in Ghana spells change
Nana Akufo-Addo, the 72-year-old lawyer and statesman, was declared Ghana’s next president Friday night, ousting President John Dramani Mahama of the National Democratic Congress, a change that is sure to trigger changes for the country’s oil and gas industry.
Akufo-Addo was elected on promises to stifle corruption and boost the economy through tax cuts, industrialization efforts and business incentives. While his government will benefit from the country’s oil revenue, he has stated clearly a desire to wean Ghana off commodities, from oil and gas to cocoa, and industrialize the country, as Côte d’Ivoire has done. At a minimum, the election will see changes to top posts in the oil and gas industry after Akufo-Addo takes office in the new year.
World Bank to provide funds for Ghana oil and gas
The World Bank Group will provide $517 million to support the the $7.7 billion Sankofa oil and gas project in Ghana. The development bank is committing money through loans and guarantees to support the project, which is being developed by Eni and upstream trader Vitol Ghana. The project is expected to generate $2.3 billion in revenue for the Ghana government annually, and add 1,000 MW power capacity to the grid. The Sankofa field, combined with gas from two other new fields in the country, could eliminate Ghana’s need to import gas from Nigeria. The gas component of the project is said to open in 2018.
Nigeria signs debt deal with majors
Nigeria’s Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu signed a debt deal with oil majors on Thursday to clear unpaid bills totaling $5.1 billion, according to Oil and Gas Investor. The deal, signed with Shell, Chevron, Total, Eni and ExxonMobil, includes a discount on the debt of $1.7 billion, lowering the original amount from $6.8 billion, and gives the government five years to repay the balance. The deal is expected to boost investment in the country.
Eni to sell 30 percent stake in Zhor
Italy’s Eni will sell a 30 percent participating interest in Egypt’s massive offshore gas field, Zhor, to Russia’s Rosneft. The conditions include a consideration of $1.125 billion and the pro quota reimbursement of past expenditures, according to Rigzone. Rosneft also has an option to buy a further 5 percent stake in the project. Eni, which discovered the field in August 2015, currently holds a 90 percent stake in the block. BP holds a 10 percent stake. First gas is expected by the end of 2017.