Issue 641 31•May•2016 Week 21

™™Hold up South Africa’s hopes to increase gas consumption will rely on LNG supplies in the near term. ™™Forward Libya’s oil production is rising amid signs of a political thaw, although the role of General Khalifa Hifter remains a concern. ™™Formation Structural issues in have hamstrung accountability and transparency, the NEITI report on 2013 has revealed. ™™Sandcastles Mozambique’s ENH has struck a co-operation deal with China but faces mounting internal problems and external financial pressure. AfrOil AfrOil Organised By:

Cape Town, 31st October - 4th November 2016

Total E&P, , ExxonMobil, BP plc, Ministry of Energy and Mineral Development - Uganda, Oando Energy Resources, Petroguin-EP, Petrosen, Pluspetrol, Spa, Maersk Olie OG Gas A/S, FirstEnergy Capital LLP, Ministry of , Energy & Mines - Mauritania, Agence de Gestion et de Coopération entre la Guinée-Bissau et le Sénégal, ONGC Videsh, Ministry of Mines & Petroleum - Ethiopia, PetroSA, Impact Oil & Gas, Bureau of Energy Resources / U.S. Department of State, , Richmond Energy Partners, SacOil Holdings, Lekoil, Shoreline Natural Resources, Moni Pulo Ltd, Rhino Resources, Petroleum Agency SA, JOGMEC, Velocys, Kalahari GeoEnergy Ltd, United International, FAR Limited, Shell International Exploration and Production, NVentures, Kosmos Energy, Mirabaud Securities, Stellar Energy Advisors, Moyes & Co Inc., Orient Energy Review, Ghana Oil & Gas Service Providers Association, Gulf Technology, University of the Witwatersrand, International Trade & Development - UK, Danvic Petroleum International Corp., Sonangol, International Energy Solutions, Preng & Associates, Sound Oil, Monetizing Gas Africa Inc., Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Petroleum Training and Education Fund (PetroFund), Allen & Overy LLP, Engen Oil, Africa Fortesa Corp, Geological Bureau (Union des Comoros), T5 Oil & Gas, Ministry of Energy and Mines - Eritrea, Ambit Energy Corporation, Woodside Energy, OMV, Oil & Energy Services Ltd, South African National Energy Association, Tower Resources, CGG, Makerere University, ACAS Law, Ophir Energy plc, Manokore Attorneys, Fugro N.V., CMS Cameron Mckenna, African Institute of Petroleum, Svenska Petroleum Exploration, Africa Oil+Gas Report, Africa Oil Corp, Mitsui & Co, Ministry of Mines & Energy - Namibia, Petrolin Group, Instituto Nacional de Petróleo - Moçambique, ONHYM - Morocco, Upstream Oil & Gas Newspaper, Ministry of Energy and Petroleum - Kenya, Discover Exploration, RPS Energy, PGS, Ministry of Hydrocarobons - Republic of the Congo, Presidency of Mines and Petroleum - Madagascar, NAMCOR, Seplat, Aker Solutions, CNBC-TV Africa, ITE Group plc, Global Pacific & Partners

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P2 www.africa-oilweek.comwww.NEWSBASE.com Week 21 31•May•2016 AfrOil Contents AfrOil

www.NEWSBASE.com AfrOil Africa Oil & Gas Monitor

COMMENTARY South Africa’s turn to gas 4 Africa’s new deal on energy 6

Pipelines & Transport Libya’s eastern port resumes exports 7

Investment offers up compressor work 8

Performance In Amenas to restart in late June 8 NEITI adds up 2013 discrepancies 9 Militant strikes hit terminals, Lagos water supplies 10

Policy Tensions mount in Mozambique 11

Projects & Companies Sasol spuds first well on Mozambique’s PSA 12 South Sudan plans restoration work 12

News in brief 13

our customers 20

Have a question or comment? Contact the editor – Ed Reed ([email protected]) Copyright © 2016 NewsBase Ltd. All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

Week 21 31•May•2016 www.NEWSBASE.com P3 AfrOil Commentary AfrOil South Africa’s turn to gas Delays in developing South Africa’s own gas resources, combined with low prices for LNG, make liquefied supplies a leading choice, writesNicholas Newman

South Africa South Africa is in a bind. While the country power outages and the use of private generators. remains a leading light of the continent, it is los- What: ing some of its standing and energy supplies are Obstacles Additional LNG supplies at least partly at fault. Coal meets three-quarters Three factors stand in the way of an immediate will prove attractive to of the country’s power needs, with the rest com- switch towards gas. The first is the shortage of South Africa’s import ing from diesel, renewables and gas. domestic gas supplies, which has forced South plans. Plans are afoot to change this, with gas Africa to rely on imported pipeline gas from intended to play an important role in meeting neighbouring Mozambique for 77% of its cur- Why: this challenge. By 2025, South Africa aims to rent gas use. The country is taking retire 10 GW of coal-fired power capacity and The second, which is more time-consuming efforts to step up gas “gas will be a cornerstone of base-load power”, and expensive to fix, is the lack of a nationwide consumption. said South African Energy Minister Tina Joe- gas pipeline network. mat-Petterson in Parliament in September 2015. The third factor, the legislative environment, What next: Consequently, the Department of Energy is being addressed by the oil and gas component Supplies are likely to recently invited expressions of interest for the of the long- awaited Mineral and Petroleum come from the US, while construction of at least 3,126 MW of clean Resources Development Act (MPRDA) being Mozambique’s additions gas-fired power. separated out into a draft act that is expected to are facing challenges. The case for the government’s gas-to-power be passed in 2017. policy is strong, given its low price, its envi- ronmental benefits and the potential security Supply options of supply opportunities. There are several possibilities available to South Given this, it is unsurprising that the South Africa for ensuring greater gas supplies in African government, together with Eskom and the short, medium and long terms, including independent power producers (IPPs), including importing LNG by tanker, and exploring and petrochemical giant Sasol, is eager to encourage developing and offshore reserves, in gas-to-power developments in order to reduce addition to imports from Mozambique either by

Power lines in Johannesburg Source: Ed Reed

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pipeline or direct imports of LNG. Shell and Chevron – opting to withdraw from Importing LNG to increase supplies may projects in the Karoo. be the quickest and easiest option. “LNG is a cheaper and more flexible solution than the rival Offshore gas options since it can be sourced globally,” Stand- An outlier, under present conditions, is the dis- ard Bank’s Paul Eardley-Taylor has noted. covery of viable new domestic offshore gas fields. South Africa’s power supply problems are Despite some exploration activity, South Africa an opportunity for established LNG exporters is only at the beginning of the exploration cycle such as Qatar and rising star Australia, as well and it is unclear what resources may be available as the newest entrant, the US. Eardley-Taylor and at what price development could occur. said the US was the most likely source and Since 2012, leading industry participants there have been rumours of some interest in such as ExxonMobil, Eni, Anadarko Petro- supporting proposals from Cheniere Energy, leum, Shell, Statoil and Total have undertaken which began exporting gas from the US Gulf pre-drilling work off the western and southern Coast earlier this year. coasts of the Cape and Natal. However, even LNG is the feedstock of choice for IPPs, as assuming commercial gas discoveries are made, well as Sasol and Excelerate Energy, and indus- these assets would not be added to South Africa’s try insiders are confident that South Africa’s first gas balance until well into the next decade. IPP 3.1-GW power plant is likely to opt for an integrated LNG-to-power solution. Imports of Mozambique supplies LNG could begin as early as the end of 2018, There are proposals, led by South Africa’s SacOil with assessments of potential LNG import facil- Holdings, which is 42% owned by Africa’s larg- ities at Saldanha Bay, Coega and Richards Bay est pension fund, South Africa’s Public Invest- already under way by Transnet, the state-owned ment Corp. (PIC), to build a 2,600-km pipeline port, pipeline and railroad operator, according to from the Rovuma Basin gas fields of northern reports in Engineering News in May. Mozambique to Johannesburg at an estimated Indeed, the director for LNG development at cost of US$6 billion. Excelerate Energy, Gonzalo Ramirez, has sug- While the company has put forward its own gested a floating storage and regasification unit calculations, it seems likely that by the time the (FSRU) within two years. While the weakness gas arrives in Johannesburg it would be more of the rand could reduce South Africa’s buying expensive than the all-in cost of direct LNG power when sourcing LNG, the head of depart- deliveries to South African ports. In addition, ment at the IPP office, Karen Breytenbach, has this pipeline would only prove viable with the said this should not be a “big stumbling block”. development of a regional gas market. An alternative medium-term means of Shale of the Karoo increasing imports from gas-rich Mozambique A medium-term option is to explore and would be to sign up to become customers of Eni develop the 390 trillion cubic feet (11 trillion and Anadarko’s proposed LNG export plant. cubic metres) of shale gas that is estimated by the Should these plans be realised, Mozam- US Energy Information Administration (EIA) bique LNG could become available in 2021. to lie in the Karoo Basin. Even a worst-case sce- The two companies are working on an onshore nario, under which just 12 tcf (339.8 billion cubic plant that would take gas from Areas 1 and 4, metres) of shale gas is extracted, would still boost but Eni is also separately working on an off- Eskom’s generating capacity by 2,000 MW. shore project, the Coral floating LNG (FLNG) Domestic shale gas has the advantage of being plan. The Italian company has raised the pos- priced in rand, avoiding the foreign exchange sibility of reaching a final investment decision risk that arises from imports of LNG, which (FID) on Coral this year. would be priced in US dollars, as well as fluctua- There remain a number of uncertainties as tions in price that arise from the world’s trade in to the timing and economic viability of Mozam- LNG being indexed to the . bique’s LNG plans. South Africa could well have However, potential explorers face the established LNG supplies from the US and other challenge of complex geology, with dolerite world markets before Mozambique is ready to intrusions making and export gas in this way. Moreover, just like the horizontal drilling difficult. There is also vocif- proposed pipeline, it needs a regional gas market erous objection from environmentalists to frack- for economic viability alongside the certainty of ing in a pristine and water-scarce environment. customers in Asia, in particular India. Nevertheless, Reuters in March quoted a South Africa is well positioned to secure a South African government representative as mixture of gas supplies from a range of places, stating that “exploration activities are scheduled including its own resources. The changing to begin in the next financial year”. nature of the LNG market, though, must Delays in exploiting shale have, though, led to make this one of the preferred choices in the a number of heavy hitters – such as Royal Dutch short to medium term.v

Week 21 31•May•2016 www.NEWSBASE.com P5 AfrOil Commentary AfrOil Africa’s new deal on energy

The AfDB’s New Deal on Energy hopes to supply power to all Africans within a decade, writes Martin Clark. The task is a mighty one

Africa The African Development Bank’s (AfDB) new to tripling its climate change financing to about strategy for delivering energy across the conti- US$5 billion per year. What: nent has plenty of implications for the region’s Adesina said that Africa had what it takes to The AfDB has been talking oil and gas industries. Further details of the achieve universal access, while simultaneously up renewable power for bank’s New Deal on Energy, intended to help reducing the carbon intensity of its growth. For Africa. deliver electricity to all Africans by 2025, were now, at least, it remains more a question of: “any released last week at the AfDB’s annual meetings power is better than no power at all”. Why: in Lusaka, Zambia. Key goals include expanding grid power by The continent is The 51st annual meeting of the AfDB was 160 GW, connecting 130 million people to the under-served by power held under the theme of energy and climate grid, another 75 million people connected to generation and has change and included a high-level forum: “Africa’s off-grid sources, and 150 million households to substantial renewable Energy - What’s the New Deal”, to address issues clean cooking energy. power potential. in delivering power and energy to people across Adesina also identified off-grid connections the continent. as key to scaling up rural energy access in the What next: Whilst the AfDB’s plans will not cause sleep- short term. “Political will is crucial. We have Africa will need all power less nights among Africa’s top oil executives, it to make sure things happen faster,” he told del- generation options is clear that a long-term trajectory has been set egates, adding that the expansion of off-grid in order to tackle its to wean the continent away from fossil fuels and connections was not only faster, but cheaper as a problems and, even so, over to a “clean” energy future. And the bank is means to connect more people to some form of prospects of achieving certainly putting money behind its plans. power supply. the 2025 target remain The AfDB has pledged to commit US$12 bil- remote. lion over the next five years to invest in energy. impact It also intends to help provide US$50 billion in The bank’s ideas have been welcomed by interna- public and private financing for multiple energy tional partners too. French Minister of the Envi- sector investments. ronment, Energy and Marine Affairs Segolene Officials and business leaders from across the Royal, who is also responsible for international world gave a broad thumbs-up to the plan as a climate relations, urged a similar acceleration in means both to co-ordinate and stimulate further renewable energy projects. energy investment. She also called on leaders to speed up the Influential figures in Lusaka included the deployment of the Africa Renewable Energy former Nigerian president, Olusegun Obasanjo, Initiative, aimed at increasing installed renew- and business executives such as the president able capacity by 10 GW by 2020 and by 300 and CEO of General Electric Africa, Jay Ireland. GW by 2030. Such a jump in clean power generation Climate change agenda would inevitably have an impact on local The goal of universal access to power is nothing demand for hydrocarbons. new, of course, but there is hope that this time the Although the bulk of Africa’s oil and gas flagship strategy of AfDB President Akinwumi production is exported in one form or another, Adesina will make good on its promise. many local economies also consume a large vol- Clean energy and reducing Africa’s carbon ume of imported fuels for industry, transport footprint are among the other top priorities of and power generation. the so-called ‘New Deal’ and as such, interna- Shifting new electricity production away tional oil and gas companies will no doubt be from fossil fuels in the long term would begin paying close attention. to halt growth in African demand for oil, gas or Approximately 621 million people do not coal products. have access to electricity in Africa, while at least There is still some way to go before this hap- 600,000 die each year from household air pollu- pens, with South Africa, a leading economy in tion because they rely on biomass for cooking. the continent, only just gearing up to shift some According to Adesina, while Africa’s of its new power infrastructure to imported nat- immense development needs oblige countries to ural gas. The government recently formed a unit use coal and fossil fuels to power industries, this to oversee the importation of LNG. should be done in a phased approach with a view to replacing them eventually with cleaner energy. Methane gas project At the same time, the AfDB has committed With much of Africa’s power production still

P6 www.NEWSBASE.com Week 21 31•May•2016 AfrOil Commentary AfrOil

very much dependent on coal, gas and oil, there will be no overnight shift. The transition to cleaner energy sources also mirrors a wider trend extending far beyond Africa. The continent’s unique and unfortunate sta- tus of being the least developed area of the world means governments will continue to prioritise any and all options to foster devel- opment and growth, before choosing only car- bon-light alternatives. It may well be that this also presents an opportunity for oil and gas companies seeking to expand and diversify away from their traditional business at the wellhead. Big names traditionally associated with Africa’s oil and gas industry have the potential to help drive renewable investments in the con- be turned into an economic asset. tinent and may be interested in acting in such a The power complex, about 130 km from Solar power in Namibia capacity. Eni, for instance, announced plans in Kigali, draws on a volatile reservoir where vol- Source: Ed Reed mid-May to build renewable generation near canic and bacterial activity in the lake generates to existing facilities. This included a 150 MW methane deposits that, if unmanaged, could solar plant in Egypt, near its Belayim field, with erupt violently with disastrous effects on local an in-service date of the end of 2017. lives, wildlife and the environment. The project Africa’s needs are such that a combined was developed by the US’ Contour Global on a approach is required. Rwanda’s inauguration 25-year concession, supported by development of the first 25-MW phase of the KivuWatt financing from the AfDB and other institutions. methane gas-to-power project at Lake Kivu, The era of clean and renewable energy is timed to kick off during the AfDB meetings, upon us. Given Africa’s immense development underlines how innovation and a small – and, challenges, though, the era of gas and oil is a long for the most part, unwanted – gas resource can way from being finished yet.v

Pipelines & Transport Libya’s eastern port resumes exports The reopening of Libya’s eastern Marsa al-Hariga regions in late 2014, one based in Tripoli and port has allowed the country to increase oil output the other run by an internationally recognised to over 300,000 barrels per day, after the compet- government in Tobruk. The political divi- ing versions of Libya’s state-run National Oil Corp. sions led to competing NOC administrations (NOC) agreed in mid-May to resume exports. in the east and the west. Some progress has Exports from the terminal, near Tobruk in the been made in the creation of a Government of east, resumed on May 19, with the departure of National Accord (GNA), which is supported the tanker Seachance, loaded with 660,000 barrels by the United Nations. However, authorities of crude. On May 24, the Libyan News Agency in eastern Libya have tried to sell crude inde- (LANA) announced that “production today has pendently. A tanker from eastern Libya was passed the 300,000 bpd mark”, citing a spokesman forced to return with its cargo after the UN for the Tripoli-based NOC. Production is expected blacklisted the shipment in April. to increase to up to 360,000 bpd “soon”, according The eastern government, the House of Repre- to the spokesman. The extra output is expected to sentatives (HoR) has been working with General depend upon progress at the Sarir oil field, com- Khalifa Hifter, who heads the Libyan National bined with the availability of electricity. Army (LNA). Reports on May 26 suggested the Before the agreement between the rival general was marching towards Tripoli in order to NOCs, Hariga had been under a three-week “liberate” it from the GNA. blockade as a result of rival government wran- Fighters from the Misrata militia, allied to the gling, reducing exports to 200,000 bpd. Produc- GNA, are believed to be making progress in their tion had been blocked from the eastern oilfields fight against Islamic State (IS), moving to within of Messla and Sarir. 15 km of the centre of Sirte, Reuters reported on Libya holds Africa’s largest proven crude May 29. The GNA is also holding talks with the reserves, estimated at 48 billion barrels, but Petroleum Facilities Guard (PFG), which is con- the country split into two separately governed trolled by Ibrahim Jathran.v

Week 21 31•May•2016 www.NEWSBASE.com P7 AfrOil Investment AfrOil Sonatrach offers up compressor work Algeria Algeria’s Sonatrach has invited preliminary bids for construction of six gas compressor sta- tions expected to cost a total of US$1 billion. The stations are part of Sonatrach’s US$3.2 billion investment programme aimed at bolstering capacity to support fresh gas output which is intended for export. Thought to have been shortlisted for the con- tracts are 16 international firms, including Bon- atti and Technicas Reunidas. Algiers has targeted a 13% increase in gas out- put by 2019 and will build 1,650 km of pipeline by 2020 to support production at six new fields. The bidding round was launched as Algiers hosted the first European Union-Algeria bilat- eral business forum for energy, on May 23-24. European partners, with a keen eye on energy security, have earmarked Algerian gas imports as project doubling France’s capacity for Algerian a promising alternative to Russian supplies. pipeline gas, via Spain, was agreed by European During talks aimed at attacting investment partners in June 2015. into Algerian upstream and circumvent bureau- Sonatrach expects gas exports to Europe to cratic hurdles to development, EU Climate and top 50 bcm in 2016. This would be an increase Energy Commissioner Miguel Arias Canete from the 44 bcm recorded in 2015, 45 bcm in described Algeria as a “reliable” partner, but 2014 and 48 bcm in 2013. warned Algiers must make its gas offering com- Data suggest pipeline deliveries to Italy and petitive in order to attract investment. Brussels Spain have averaged 82 million cubic metres per wants Sonatrach to stop automatically taking a day since January 1, up from 58 mcm per day in controlling stake in upstream contracts. It would the same period of 2015. also prefer hub-priced contracts to oil-indexed Algiers also wants to capitalise on two LNG deals. plants launched in 2013 and 2014, but faces Sonatrach will renegotiate its European con- tough competition from US LNG suppliers, who tracts in 2019-21 and could be open to hub-pric- are also targeting European markets. ing, given sluggish crude prices. Two pipelines Europe accounts for over 85% of Algerian provide Algerian gas to Italy and Spain, with LNG exports, but Sonatrach only shipped 16.4 capacity of 30 billion cubic metres and 12 bcm bcm to European customers in 2015, down 8% per year respectively, and an interconnector from 2014.v

Performance In Amenas to restart in late June Algeria Output at the In Amenas Algerian gas pro- – when it accounted for 11.5% of Algeria’s total cessing plant, which had been hit by a major ter- natural gas output – at an opportune time as the rorist attack in 2013, is expected to resume full country is currently talking to the European capacity within a month. It is anticipated that the Union about boosting its energy exports. facility will ramp up to its full volume of 9 billion Algeria currently ranks as the EU’s third larg- cubic metres per year during the third week of est gas supplier. June, an official from Algeria’s Sonatrach told In order to improve and maintain exports to Reuters on May 25. the EU, Algeria needs to attract investment to The person, who did not wish to be identified, discover and develop new assets as well as sus- told the news service that production testing at taining existing ones. It must address various In Amenas’ third gas train had been successfully areas of operational concern raised at a meeting launched the previous week, paving the way for in March, Reuters reported. an official opening very soon. Referencing a Sonatrach document from Although the plant’s second train is under- that meeting with EU officials, foreign compa- stood to be in planned maintenance, In Amenas nies want improvements in quality offers, data, is set to return to its pre-attack production levels financial terms, taxes and flexibility.v

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Large-scale declines 500 NEITI adds up 2013 465.3 450 399.4 discrepancies 400 350 319.4 313.9 Nigeria Nigeria lost US$5.96 billion in 2013 as a result of offshore processing agreements (OPAs), crude 300 swaps and theft, according to a report released 250 last week. The Nigeria Extractive Industries

Transparency Initiative (NEITI), in its delayed barrels Million 200 report on 2013, said outstanding revenue from Nigerian National Petroleum Corp. (NNPC) 150 and its subsidiaries stood at US$3.8 billion. 100 Furthermore, under-assessment and under-payments by companies, owing to a 50 dispute on pricing, amounted to US$599.8 million in 2013. 0 NNPC’s accounts for the year report 800.488 Joint ventures PSCs million barrels (2.19 million barrels per day) 2012 2013 were produced in 2013, while the volume lifted under various contracts was 800.338 million bar- in the audit opinion, they were not in the interest rels, a difference of 150,000 barrels. Revenue to of the [Nigerian] federation,” it said. NPDC has the government from all sources was US$58.07 benefited from the transfer of interests, while the billion in 2013, from US$62.99 billion in 2012. government’s coffers have not. The report picked out a number of problems NNPC did not justify the transfer beyond in 2013, one of which was the transfer of equity noting it was the ministry’s authority to reassign interests to Nigerian Petroleum Development the interests and that it was intended to bolster Co. (NPDC) in 2010-11 of the stakes in eight oil NPDC’s upstream capacity. mining licences (OMLs). These were found to Various refunds were also found to be miss- be under-valued, based on the other sales car- ing, according to the NEITI audit. The National ried out by Shell Petroleum Development Co. Petroleum Investment Management Services (SPDC) on the same blocks to third parties. (NAPIMS) paid out US$536.9 million in cash The sale was struck with a price of US$1.8 calls on the NAOC blocks held by NPDC in billion, while PwC’s audit in 2014 found these 2013. NAPIMS, in 2014, provided evidence of to be worth US$3.4 billion. Furthermore, only a refund of US$389.1 million, leaving a balance US$100 million of the amount has been paid, of US$147.9 million outstanding. However, leaving a shortfall of US$1.7 billion. there was no evidence of the refund in the fed- In addition to those eight blocks, another eration account. Similarly, cash calls were paid four were assigned to NPDC in December on the SPDC blocks transferred to NPDC and a 2012 from the Nigerian Agip Oil Co. (NAOC) similar process of refunds claimed, on OML 42, joint venture. Nothing has been paid to date on although again no sign of the refund was found this transfer, NEITI said. in the account. “The assignments were not transparent and Shortcomings were also identified by the Small-scale rises NEITI report in NNPC’s liftings, involving 70 Brass, Forcados and Qua Iboe crudes. 64.59 It also said Nigeria LNG (NLNG) had pro-

60 vided US$1.289 billion to NNPC during 2013, but this had not been passed on to the govern- ment. NEITI said this brought the amount paid 50 46.25 out by NLNG but not received by the federa- tion account to US$12.92 billion in the years 40 from 2005 to 2013. The report went on to criticise the use of 30 “pioneer tax status” by companies in Nigeria. Million barrels Million Tax holidays provided to 12 companies from 19.34 20 18.06 2009 to October 2014 has cost Nigeria US$1.17 billion in waivers, the report said. Pioneer status should not be granted to companies “unless it is 10 evidently clear” that their work is actually pio- 3.06 3.21 neering, it said. 0 Service contracts Sole risk/independents Marginal fields The NEITI had missed its deadline for filing

2012 2013 of the 2013 report, which had been due by the end of 2015, according to EITI rules.v

Week 21 31•May•2016 www.NEWSBASE.com P9 AfrOil Performance AfrOil Militant strikes hit terminals, Lagos water supplies Nigeria The Avengers (NDA) claimed a number of attacks last week, making good their two-week ultimatum of May 12. The group claimed responsibility for the attack on a pipe- line to Chevron’s Escravos tank farm, a Nigerian National Petroleum Corp. (NNPC) trunkline on May 27 and the Brass to Bonny trunk line on May 28. The NDA has threatened that more attacks are still to come, with a subsequent report warning: “Something big is about to happen”. As a result of the group’s attacks, water supplies to Nigeria’s largest city, Lagos, were shut down. quoted the company’s group managing director, Patrol boats for NLNG The group had previously attacked Chevron’s Ibe Kachikwu, as saying that communities had Okan platform and, in February, Royal Dutch the responsibility of ensuring the protection of Shell’s subsea Forcados export link. pipelines in their domain. “We warned Chevron but they didn’t listen,” The states in the region will nominate four or the group said on Twitter. “The Niger Delta five representatives to work with security agen- Avengers just blew up the Escravos tank farm cies to secure facilities. Kachikwu said that vio- main electricity feed pipeline.” Before the attacks, lence was not an option in resolving the Niger the Escravos terminal’s exports had been run- Delta’s problems and that the threats should stop. ning at around 160,000 barrels per day. He did, though, go on to say there was a need for The Lagos state ministry of information con- the amnesty programme to be restructured, in firmed that water supplies in the city had been order to address the critical issue of neglect. cut owing to a shortage of gas in pumping sta- “The Niger Delta Governors must be involved tions, following attacks on oil and gas pipelines. in providing lasting solutions to the resurgence In recent months, Nigeria has seen a resur- of pipeline vandalism and there is urgent need to gence in incidents of pipeline sabotage. Along create business opportunities for the locals in the with the vandalism of the Okan and Escra- region,” Kachikwu said. vos facilities, Chevron’s Marakaba and Eni’s The NDA’s response to the talks [was] to Ogbembiri and Bayelsa pipelines have also been describe it as an “insult” to the people of the targeted. A previous amnesty agreement seemed Niger Delta. “What we need is a sovereign state to have reduced the influence of groups such not pipeline contracts,” the group said. as the Movement for the Emancipation of the At the same time, security forces are taking an Niger Delta (MEND), although the collapse in increasingly aggressive stance in the Niger Delta. oil prices has led to a reduction in stipends for Reports on May 30 in the Vanguard newspaper former militants of about 75%. said the Nigerian army had carried out an early On May 29, the Nigerian army announced morning raid in Kurutie, in the Gbaramatu king- that it had captured 10 suspected NDA militants dom of Delta State in pursuit of the NDA. Gov- following a search of the Oporozoa community ernment Ekpemupolo – also known as Tompolo in Delta State. Local residents had allegedly – is from the region and is also being pursued by reported the suspects after being intimidated the government under a criminal warrant. and threatened during an invasion by the group, Tompolo distanced himself from the NDA on although some sources quoted by local media May 29. He also called on the group to halt its stated that those arrested were innocent and had campaign and to “embrace the path of dialogue” been captured while trying to flee the area. with the federal government. Tompolo went on to note the army raids in the Gbaramatu king- Response dom but said that he was not there. In an effort to stem the violence, the Nigerian “The contractors in charge of repair works government has taken some steps, offering of attacked pipelines are equally culpable in the talks with stakeholders in the Niger Delta in act of pipeline vandalism as they now sponsor addition to increasing the number of security their allies in the communities to continue to forces in the region. destroy pipelines to get more repair works,” A statement from the NNPC on May 26 Tompolo went on.v

P10 www.NEWSBASE.com Week 21 31•May•2016 AfrOil Policy AfrOil Tensions mount in Mozambique Mozambique Mozambique’s complicated international Bank’s (AfDB) recent report. The country’s falter- financing is coming under increasing pressure, ing economy has put pressure on its ability to make although the East African government continues payments, including on bonds such as that issued to receive support from China. Mozambique has by Empresa Mocambicana de Atum (EMATUM), struggled in recent times to make payments on the so-called “tuna bond”. This had been sold on its various debts and its rating has been down- the basis that funds would go into improving the graded by a number of agencies. country’s fishing prospects but cash was side- Furthermore, the country has shown some tracked into providing new security vessels. signs of sliding back into violence, with a number Reports last week suggested a payment of of worrying reports on tension between the ruling US$178 million, owed to Russia’s VTB Bank, party, Frelimo, and its historic opponent, Renamo. had not been paid, although no notice of default A mass grave was said to have been found was given on the loan, which had been provided in the province of Sofala in April, near Goron- to Mozambique Asset Management (MAM). A gosa, although the government has denied finance ministry spokesman told Bloomberg these reports. The leader of Renamo, Afonso that talks were under way on the payment with a Dhlakama, is believed to be hiding in the view to restructuring the debt. Gorongosa region. The lack of clarity on Mozambique’s debts There have been a number of alleged assassi- has caused some consternation from interna- nation attempts against Dhlakama in the last 12 tional lenders, such as the International Mon- months, including an attack on his motorcade etary Fund (IMF). A letter from the Group in September 2015. of 14 donors said there had been a “serious breach of trust, poor governance and lack of Auditing fiscal transparency”. Transparency International issued a statement Demands are growing on Maputo to come on May 25 condemning the abduction and clean on the true state of its debts and obliga- shooting of Jose Macuane, in Maputo. He was tions, while donors have asked for Mozambique in a serious condition and has been hospitalised, to provide insights into the shareholdings of the NGO said. MAM and a second government-backed com- Macuane is an activist who has been critical pany, Proindicus. of corruption in Mozambique’s government. The Fitch Ratings downgraded Mozambique to attack has been read as a warning against those CC, from CCC, on May 23. The agency noted seeking to scrutinise the government’s actions. the existence of US$1.4 billion in previously “Corruption fighters speak for the people, undisclosed loans, including those to MAM and they hold governments to account and they Proindicus, which are guaranteed by the sover- must have the freedom to speak openly about eign. “Fitch now estimates annual public debt government problems and how to fix them,” service costs to have almost doubled due to the said the vice chair of Transparency Interna- hidden loans, to around 4.5% of GDP,” it said. tional, Elena Panfilova. The statement went on to note the call for a CNPC deal forensic audit of government accounts on the Meanwhile, China National Petroleum Corp. question of US$2 billion of debt, “amid allega- (CNPC) announced on May 24 that it had tions of corruption and kickbacks that [have] signed a co-operation agreement with Empresa ultimately lined the pockets of government offi- Nacional de Hidrocarbonetos (ENH). Mozam- cials while leaving the people of Mozambique to bique President Filipe Nyusi visited Beijing on pay the bill”. May 18 and oversaw the CNPC deal with ENH, alongside Chinese President Xi Jinping. Debt payments Under the deal, the two companies have Mozambique’s GDP growth slowed in 2015 to agreed to work together in the oil and gas arena, 6.3%, in the face of economic and political chal- including on exploration, production, process- lenges, according to the African Development ing and marketing. Specifically, it said, CNPC will participate in exploration and production in Mozambique, promoting gas field services and also cultivating “technicians and managerial tal- ents for Mozambique’s oil industry”. CNPC entered Mozambique in a deal, signed in 2013, with Italy’s Eni. Under this agreement the state-backed Chinese company acquired an indirectly held stake of 20% in the block. Eni is working on a plan for onshore liquefaction, alongside Anadarko Petroleum, while also developing a floating LNG (FLNG) plant on the Coral field.v

Week 21 31•May•2016 www.NEWSBASE.com P11 AfrOil Projects & Companies AfrOil Sasol spuds first well on Mozambique’s PSA Mozambique South Africa’s Sasol reached an important January. The firm commissioned a drilling rig milestone last week with the start of drilling from France-based drilling contractor Societe on its first test well in Inhambane, in Mozam- de Maintenance Petroliere, which arrived at the bique’s southeast. The well marks the first phase port of Maputo in March. of a field development plan, which includes The development of further resources is also the delineation and initial development of the expected under a phased development plan, Temane G8, Temane East, Inhassoro G6, and which will help to drive the growth of both Inhassoro G10 reservoirs. Mozambique and Southern Africa. The first In the initial phase, 13 production wells will phase of the PSA development is anticipated to be drilled. Oil and LPG production facilities will cost about US$1.4 billion. be set up close to Sasol’s gas processing plant in Sasol has been operating in Mozam- Temane, in Inhambane. A water disposal well bique since 2004 when it reached a joint ven- will also be drilled, while a fifth unit will be ture agreement with the country’s Empresa installed at the Central Processing Facility (CPF) Nacional de Hidrocarbonetos (ENH) and the to process the additional gas. International Finance Corp. (IFC) to develop “The spud of the first well in the PSA licence the Temane natural gas project and the neigh- area reaffirms Mozambique as the heartland of bouring Pande gas field. Gas is processed and Sasol’s oil and gas strategy in sub-Saharan Africa compressed at the Temane CPF before it is and provides a platform from which to drive piped to the Secunda complex in South Africa, socioeconomic growth,” said Sasol Exploration through an 865-km pipeline. and Production International’s vice president, Sasol is also upgrading its gas processing John Sichinga. facility in Temane in order to support addi- Sasol signed a production sharing agree- tional gas being piped from the Temane and ment (PSA) with Mozambican authorities in Pande fields.v South Sudan plans restoration work South Sudan South Sudanese oil production has fallen to under pressure. Bischok said talks were contin- 120,000 barrels per day, the country’s oil minis- uing with Khartoum on adjusting pipeline fees, ter told Bloomberg last week. The fall stems from saying one suggestion that had been made would damage to production facilities caused during reduce the tariff per barrel to US$12. the civil war, South Sudanese Petroleum Minister The minister also spoke to Turkey’s Anadolu Dak Duop Bischok was reported as having said. Agency last week, saying substantial damage had Production is coming from Paloch, in Upper occurred at the Tharjath and Unity fields. Nile State, only, he said on May 25 in an inter- South Sudan is also considering exports to the view with the news agency in Juba. No output is southeast, via Kenya. Such a project seems unlikely coming from Unity State. given South Sudanese production declines and a “This is a challenge and people are working lack of exploration to shore up reserves. on it,” Bischok said. “The repairs will cost a lot One potential partner may be Russia, South and it is the companies operating there which Sudan’s senior presidential adviser, Nhial Deng will do it.” Output is projected to begin rising in Nhial, commented to RIA Novosti on May 30. July, the minister said, with companies working Russian companies may be interested in the East to restore operations, following the creation of a African state’s mineral deposits, and has unity government at the end of April. been cited as a potential investor in hydrocarbons. On secession, in 2011, production had been Putting further pressure on Juba has been 350,000 bpd and had fallen to 160,000 bpd by inflation, which is the highest in Africa at 41.1% December 2013. Hopes for an increase in output in 2015.v will rely on stability and security. The minister said that, should peace be maintained, produc- tion could reach 300,000 bpd within eight to 12 months. Further making issues complicated for South Sudan is that exports can only go via Sudan. Pipeline tariffs on this are fixed, rather than a percentage, and as a result have taken an increas- ingly large share of revenue as oil prices came

P12 www.NEWSBASE.com Week 21 31•May•2016 AfrOil News in brief AfrOil

NORTH AFRICA Holdings, a petrochemical producer, as Carbon’s chief executive Basil El-Baz further part of plans to commit US$2 billion in the said during Egypt Investment Forum that country. The IFC will look for more ways to the Group’s total investments in the country Qalaa says new provide financing for Carbon Holdings, IFC amount to US$1.5 billion approximately. director for the Middle East and North Africa Carbon Holdings is in ongoing talks with will cut import bill Mouayed Makhlouf said. The Washington- four foreign banks, in hope of getting obtain a Egyptian investment firm Qalaa Holdings based lender plans to put about US$500 US$5.2 billion loan to back its US$7.5 billion is confident its new refinery will cut the million a year in Egypt over the next four Tahrir Petrochemicals project before the end country’s dependence on crucial oil product years with most of the money going to power of the current year. Tahrir Petrochemicals imports, particularly as a weaker currency and renewable energy projects, he said. complex is one of the biggest petrochemical and rising crude prices force the government “There are risks in Egypt, but there are a lot of projects ever in Egypt, it will be situated at to reduce its energy bills. The US$3.7- potential opportunities in the medium to long the southern end of the Suez Canal at Ain billion Egyptian Refining Co (ERC) will term,” Makhlouf said. Sokhna. The scheme will comprise a 4 mtpa have the capacity to produce 4.2 million The IFC, which promotes private naphtha cracker and petrochemical plant, tonnes of refined products annually, which businesses, has invested about US$1.4 billion according to Project Finance International, a ERC will sell to state-controlled Egyptian in Egypt since 2011 and has about US$1 Thomson Reuters unit. General Petroleum Corporation (EGPC) billion in assets there, he said. The most ZAWYA (UAE), May 30, 2016 at international prices under a 25-year populous Arab country relies on imports agreement. of energy and manufactured goods to meet Qalaa owns a 19% stake in ERC, which is consumer demand. It’s suffering from a drop Libyan oil guard claims to expected to become operational in the first in income from tourism and a shortage quarter of 2017. Egypt, which has turned of dollars that’s hurt business activity and have captured coastal town from a net energy exporter to an importer investment. Egypt’s credit outlook was cut to because of declining domestic production and negative from stable at S&P Global Ratings from IS the burden of costly subsidies, aims to end this month. Carbon Holdings is seeking A force that controls oil terminals in eastern petrol and possibly gasoil imports by 2019. financing to build a petrochemical complex Libya said it had captured the town of Ben The country is suffering from a shortage of that will lessen Egypt’s dependence on imports Jawad from Islamic State, pushing the militant hard currency and Qalaa chairman Ahmed for products used in industry and to make group back along a coastal strip they control Heikal said ERC will be exposed to EGPC’s plastics, Chief Executive Officer Basil El-Baz east of their stronghold of Sirte. Spokesman dollar shortages. However, he said there were said in the same interview in Dubai. The Ali al-Hassi said five Petroleum Facilities provisions in the contract that would allow company plans to complete financing this year Guard (PFG) fighters had been killed and 18 a rolling letter of credit for oil products that for the US$7 billion Tahrir petrochemicals wounded in fierce clashes in the coastal town, cover the three months going forward. “You complex at Ain Sokhna on the Gulf of Suez, and that fighting was continuing in the nearby have to remember what is the alternative for he said. town of Nawfiliyah. the government? The alternative is to import. BLOOMBERG, May 30, 2016 A Ben Jawad resident said that PFG forces So they will have to pay cash for the products,” had entered the town and were combing the Heikal said. area to secure it. If the PFG can hold Ben REUTERS, May 26, 2016 Carbon Holdings plans Jawad it could prove significant, signalling the start of a new front in the campaign to invest US$1.5 billion in against Islamic State. The PFG has declared IFC invests in Egypt its support for Libya’s UN-backed unity Egypt government. Other brigades that back the Petrochemicals Egypt’s Carbon Holdings plans to invest up government advanced last week to the The World Bank’s International Finance Corp to US$1.5 billion in the local market within outskirts of Sirte from the West. “We launched will invest US$25 million in Egypt’s Carbon the coming two years, its chief executive said. today’s attack to purge and liberate the central region from Daesh (Islamic State), and secure OPEC basket price this area under the umbrella of the ministry 70 of defense and the Presidential Council, the 62.16 60.21 Supreme Commander of the Libyan army,” 60 54.19 Hassi said.

50 REUTERS, May 31, 2016 45.46 44.83 45.02 43.12 40.5 40 37.86 33.64 34.65 AGOCO issues development 28.72 per barrel per 30 26.5

US$ tender 20 Source: OPEC Arabian Company (AGOCO) intends 10 to select a qualified Engineering Consultancy Firm “ECF” to develop in co-operation with 0 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 the Fields Development Team “FDT” of AGOCO, and in compliance with instructions & conditions stated in relevant sections in the

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Rigs in Africa 120

100

26 25 80 25 26 20 20 29 26 27 20 Actemium’s Angolan offices and the Paris maintenance centre of expertise. 60 The project is the first for the company with BP in Africa. It has provided services for 40 FPSOs in the region such as Exxon Mobil’s 69 70 71 71 70 64 64 64 68 68 USAN FPSO in Nigeria and Total’s Girassol 20 FPSO in Angola. The company has African expertise with offices in Cameroon, Nigeria, 0 Algeria and the Democratic Republic of July August September October November December January February March April Land Offshore Source: Congo. “Actemium is already a strong player in Africa, especially in Angola, where we have Bid Document a Master Development Plan oil explorers and local companies, but there is been present for nearly 16 years,” commented “MDP” for development of number of pools as yet no guarantee that a sale will take place. Vinci Energies Oil and Gas commercial and reservoir aggregations. The target is a BTG, which once said it hoped to become director Jimmy Neron. “However, our new number of untouched oil and gas reserves of the Goldman Sachs of Latin America, has agreement with BP represents an important new fields/concessions belonging to AGOCO. been involved in a fire sale of assets after it milestone for Actemium in Africa. We look The aim is putting them on production so as was rocked by the arrest of its CEO and main forward to working closely with BP as we to increase production levels of the company. shareholder in the corruption combine our leading capabilities, know-how All specialised companies which have probe. and experience.” participated in this tender, please be informed BTG paid US$1.5 billion for the 50% ENERGY VOICE, May 26, 2016 that the proposals shall be submitted during stake in Petrobras’ African venture in 2013. the official working hours to the main Tender The deal has since come under scrutiny after Committee at the Arabian Gulf Oil company accusations the bank had underpaid for its West Eclipse wins Angola Headquarter- Alkeish- Benghazi- B.O. box stake. It claims it offered the highest bid in 263 the dead line is June 30, 2016, at 14:00. an auction. The stake includes interests in work Any proposal not complying with the Angola, Benin, Gabon, Namibia, Nigeria and The West Eclipse was awarded a new contract above mentioned procedures shall not be Tanzania. in Angola expected to commence in the accepted, i.e. any offer which does not comply The bank is also a partner in the bankrupt second quarter of 2016. The contract is for a with such tender or not clearly reflects the rig-leasing venture Sete Brasil whose contracts fixed 2 year period and adds backlog of about ability of the bidder to execute the work in a are under investigation. US$285 million inclusive of mobilisation. As required precision ,shall be ignored, and the BTG’s former CEO Andre Esteves was part of this agreement, the backlog for the lower prices shall not be the only standard for arrested in November after he was named West Polaris earn-out has been decreased by winning the bid. by Brazilian senator Delcidio do Amaral as about US$95 million. NOC, May 30, 2016 the financier of an effort to spirit a former The net effect of this agreement is an increase Petrobras director out of Brazil in order to of approximately US$190 million in backlog. prevent him cutting a plea-bargain deal with The rig is under contract to ExxonMobil until Sound reaches casing point federal prosecutors which would implicate June 2018. leading Brazilian politicians as the principle SEADRILL (BERMUDA), May 27, 2016 at Tendrara beneficiaries of corruption at the state-run Sound Energy is pleased to announce that the company. first Tendrara well has now been drilled to NEWSBASE, May 31, 2016 Victoria Oil looks further the third and final casing point at a measured vertical depth (MVD) of 2,475 metres and that afield after first profit in it has started the operation to set and cement Actemium wins FPSO work the 7-inch casing in the shale formation just Cameroon 50 metres above the target TAGI reservoir. in Angola Cameroon-based gas utility Victoria Oil & The company will now proceed to drill the BP has awarded a multi-million dollar Gas has posted its first profit as revenues from reservoir to the final TD. topside maintenance contract to Actemium its Logbaba field rose strongly. Profits for the SOUND ENERGY (UK), May 24, 2016 for its two FPSOs in Angola. The oil and gas seven months to December were US$1.63 division of Birmingham-based Actemium, million, while revenues for the period rose the Vinci Energies brand dedicated to to US$21.4 million. That compares with WEST AFRICA industrial processes is the first of its kind revenues of US$27.9 million for the 12 for BP’s Angolan operations. The two asset months to May. Victoria Oil has changed its deal will see Actemium become the key year end to December. BTG Pactual considers sale topsides maintenance provider for the Greater Victoria Oil is targeting industrial Plutonio (Block 18) and PSVM (Block 31). customers in the city of Douala and on a of Africa assets Under the five-year contract, Actemium will comparable basis sold 1.736 mcf per day of Brazilian investment bank BTG Pactual deliver onshore and offshore maintenance gas (846 mcf) for the seven months. Daily is exploring the sale of its 50% stake in an support services to the two assets, with scope production was 8.57 mcf per day (3.95 mcf African joint venture with Petrobras. The for additional ad-hoc services to support the per day comparable) at contract prices of bank is reportedly in talks with independent operations. The work will be executed through between US$9 to US$16 per million btu for

P14 www.NEWSBASE.com Week 21 31•May•2016 AfrOil News in brief AfrOil

its gas. Operating cash flows were strong, the West African country’s best-connected which the group has used to reduce debt, it Trinidad and Tobago lawyer. He was arrested on Wednesday in said. Chairman Kevin Foo added that Victoria the capital Monrovia after the launch of a Oil is starting to look at other opportunities to assist Ghana with government inquiry into the scandal. “He was within Africa that can be leveraged by our arrested early this morning at his residence,” a experience in Cameroon. “Our plan is to focus hydrocarbon expertise security source told Agence France-Presse. on development phase of projects and enter The Prime Minister of the oil-and-gas- GUARDIAN, May 25, 2016 at a point post discovery of gas and prior to rich island of Trinidad and Tobago says development of the field.” his country is poised to help fast-track the PROACTIVE INVESTORS (UK), May 31, 2016 development of Ghana’s hydrocarbon industry Mauritania seeks to draw with its century-plus experience in the industry. Addressing management of Ghana on Algeria’s experience in Obiang sworn in as Gas at the Atuabo Gas Processing Plant in the Western Region, Prime Minister Dr Keith hydrocarbons president Rowley said his country was excited to share Mauritania seeks to benefit from Algeria’s At the Palace of Congresses and Conferences with Ghana the benefits of over hundred experience in the fields of hydrocarbons and in Sipopo, Obiang Nguema Mbasogo S. E. years’ experience in the oil and gas industry. renewable energies, said Wednesday in Algiers was sworn in as President of the Republic of “We wish to assist Ghana by offering Mauritanian Minister of Foreign Affairs and Equatorial Guinea after winning the country’s opportunities for sport in pipeline Cooperation Isselkou Ould Ahmed Izid Bih. recent election. development, gas processing, electricity During his discussions with Minister In his speech, the President highlighted generation, and aluminium production.” of Energy Salah Khebri, the Mauritanian the political maturity shown by the people THE FINDER (GHANA), May 30, 2016 minister underlined the huge hydrocarbon of Equatorial Guinea in recent years. “Since and renewable energy potentialities of his the beginning of our democratic experiment, country and expressed its interest in drawing the people have shown incredible support in Top Liberian politician on Algeria’s experience in those fields, said the electoral constituencies within and outside Ministry in a communiqué. the country the political option presented by arrested in corruption The two sides also examined means to the Democratic Party of Equatorial Guinea, strengthen cooperation between Algeria and because they understand that the continuity of scandal Mauritania in the field of energy, particularly peace, political stability, economic and social A Liberian lawyer accused of paying “bribes” hydrocarbons and renewable energies. development our country has experienced on behalf of a company chaired by the former In this regard, Khebri insisted on the need should not be interrupted.” England cricketer Phil Edmonds has been to boost energy cooperation between the two The President emphasized that the next arrested in connection with hundreds of countries. seven years will be crucial to the development thousands of dollars of political inducements APS, May 25, 2016 of Equatorial Guinea and invited the people that he allegedly distributed on behalf of a embrace “this renewed spirit and continue our British mining firm. march towards the wellbeing and happiness of Varney Sherman is chairman of Liberia’s the nation.” ruling Unity party and is often described as EQUATORIAL GUINEA, May 20, 2016 Panoro seeks partner at Dussafu John Hamilton, CEO of Panoro, commented: “We are extremely pleased to have reached first oil production at Aje, offshore Nigeria. This is a transformational milestone and establishes Panoro as a full cycle E&P company. In Gabon, we continue to see enormous potential upside at Dussafu where we are working on securing partners to drill an exploration well. We feel this well will be the catalyst to move the project forward and unlock its inherent value. Having achieved production at Aje, we have established a strong platform from which to grow Panoro and add value for our shareholders. Looking forward, our strategy is to now expand our portfolio by acquiring further high quality production and development assets in West Africa. ” PANORO ENERGY, May 25, 2016

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“There is the need to enforce the law but what said. Speaking when the management of the Savannah completes FTG I don’t like is the emphasis on what do we do Nigeria Extractive Industry Transparency about the money. Initiative (NEITI) submitted its 2013 audit work THE NEWS (NIGERIA), May 26, 2016 report on the oil and gas sector to the house, February 2015 saw us complete our first Lasun said that despite the high quality of ground operations in Niger, carrying out an Nigeria’s Bonny Light oil, the country was yet airborne Full Tensor Gradiometry (FTG) Nigerian reps order halt of to derive its full benefit. survey which acquired 36,949km of data and Lasun said the house would look at the was completed on time and on budget. The refineries privatisation report critically with a view to taking action results of this survey were integrated into our The House of Representatives Committee on it. He said Nigeria has been short changed subsurface model, complementing our large on Privatisation and Commercialisation has in multiple “folds because we’re losing by- existing dataset of 2D and 3D seismic, and directed the Nigerian National Petroleum products,” adding: “Since 1956, the oil wells have been instrumental in enhancing our Corporation (NNPC) to stop its planned still belong to the multinationals. But in some understanding of the exploration potential on privatisation of the nation’s refineries countries, after about 25 to 30 years, the oil our acreage. or joint investment ventures with some wells will go back to the country. That is not In July, we were extremely pleased to multinationals. The committee’s chairman, the case in our country.” announce the acquisition of the R3/R4 Ahmed Yerima, who gave the order, said the DAILY TRUST (NIGERIA), May 27, 2016 Production Sharing Contract (PSC), in process was in breach of relevant laws. addition to the R1/R2 PSC, cementing our Earlier in his submission, NNPC group position in the Agadem Rift Basin in Niger, executive director of Refineries Anibor NNPC, CBN deny details on a prolific basin where we now hold c.50 per Kragba had said the NNPC had no powers cent. of the acreage. Savannah has been an to privatise any of its refineries and that they licenses early mover into this emerging oil and gas were only seeking funds to get the refineries A panel of the House of Representatives set province, and we thank the Government back to work. Kragba, who represented the up to review and determine the number of Oil of Niger for their continued assistance minister of state for petroleum resources and Prospecting Licenses, OPL, and Oil Mining and cooperation as we have expanded group managing director of the corporation, Licenses, OML, currently in operation in our presence in country. To facilitate this Dr Ibe Kachikwu, said they decided to put Nigeria said the operations of the oil and transaction, we successfully raised US$36m in up some publications in certain national gas sectors are shrouded in secrecy. The the same month from existing shareholders as dailies on the matter in an effort to have committee’s chairman, Rep Gedeon Gwani well as from several new, blue chip investors, joint investment ventures with interested (PDP, Kaduna) accused the heads of the in an oversubscribed placing. I believe this companies. Nigeria National Petroleum Corporation was a testament to our high quality asset base LEADERSHIP (NIGERIA), May 26, 2016 (NNPC), Ibe Kachukwu and that of the and associated plans to explore and develop Central Bank of Nigeria, CBN, Godwin both of our license areas. Emefiele, of refusing to furnish the lawmakers The year ahead will see us continue to Oil companies owe Nigerian with information on oil exploration. He said demonstrate the value of our assets. In 2016, that the officials refused to respond to the we intend to return to operations on Agadem government US$2 billion committee’s inquiry, despite it establishing with the acquisition of 3D seismic over high The Nigerian House of Representatives has that the multinational companies have evaded graded parts of our acreage, in preparation for stated that oil companies granted mining the payment of US$2 billion to the Nigerian what we expect to be a significant exploration and oil prospecting lease in the country are government. drilling campaign over the coming years. indebted to the federal government to the Gwani lamented that several years after In the near term, we will also provide the tune of US$2 billion. This was disclosed the acquisitions, the facilities have remained market with an update to our view of the by the ad hoc committee investigating all in comatose. He said that the committee had prospectivity of both R1/R2 and R3/R4. oil prospecting licences (OPLs) and oil only received materials from the Director SAVANNAH PETROLEUM, May 26, 2016 mining leases (OMLs) granted by the federal of the Department of Petroleum Resources government. (DPR) during its investigation. Chairman of the ad hoc committee Gideon DAILY TRUST (NIGERIA), May 28, 2016 Nigeria to implement Gwani said the oil companies have refused to pay the compulsory fee to the federal Cabotage Act government adding that the companies which Ogoni opposition to further Nigerian Minister of Transportation ought to salvage the situation of the country Rotimi Amaechi has said that the Federal by making payment when due, owes the exploitation Government will enforce the Cabotage Act, government hundreds of millions of dollars A royal father in Rivers State, His Highness, to attract private investors into the nation’s thus compounding the problem. Chief Vincent Shango-Lolo, has said shipping industry. Amaechi, while fielding in LEADERSHIP (NIGERIA), May 27, 2016 that Ogoni people would not consent questions at the forum of the News Agency of to oil companies carrying on further oil Nigeria (NAN) in Abuja, said that the Cargo exploration and exploitation on their land Vessel Financing fund would be used to assist Nigeria has lost oil industry after the planned cleanup by the President Nigerians who have vessels on the coastal line Muhammadu Buhari-led Federal Government and would take equity in the national carrier. to foreigners because the people have gained nothing from “At the last stakeholders meeting we had with Nigeria has lost control of its oil industry to oil. the maritime investors, we agreed that there foreigners, Deputy Speaker of the House of Chief Shango-Lolo, who is the paramount is the need to implement the Cabotage Act. Representatives Yussuf Suleimon Lasun has ruler of Kinaaben, an adversely despoiled

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riverside community at B-Dere River bank, US$8 million (Q1 2015: US$31 million) due Emma Ezeazu, Acting General Secretary of Gokana local government area, lamented to a reduction in entitlement as stated above. Alliance for Credible Elections (ACE-Nigeria), that the oil firms have shattered the source Corporate costs for the quarter, after Mma Odi said that the activists were brought of revenue of the people, polluted their a one-off restructuring expense, reduced together to discuss the theme “Rebuilding the environment with no more aquatic life in the to US$3 million (Q1 2015: US$5 million). future activists pipeline” for a better society. communities. A human and environmental As previously reported, following our She said, “Our job today is to carry out rights activist, Comr. Celestine AkpoBari, restructuring activities, we are forecasting critical diagnosis on what ruptured the also reiterated the position of the monarch annual cost savings of 20-30%, and during pipeline and collectively agree on how to heal that Ogoni people would not agree to any the first quarter of 2016, total administrative the wounds and rebuild the pipeline.” She oil exploration activity in the area after costs across the Group’s business segments fell said that the discussion is in continuation government might have concluded the to US$7 million (Q1 2015: US$12 million). of late Comrade Emma Nnamdi Ezeazu’s cleanup, saying the people would do anything The total expense charged to date for the legacy of raising future activists with over 100 to stop further despoliation of their homeland. restructuring programme was US$9 million. participants to share, learn and be part of the VANGUARD, May 24, 2016 Cash and cash equivalents at March conversation to be forwarded to government 31, 2016, was US$82 million (December for implementation. 31, 2015: US$30 million) predominantly DAILY TRUST (NIGERIA), May 31, 2016 Seven Energy posts Q1 as a result of the US$100 million of new equity raised in February. Cash provided results by operating activities decreased by 33% to United ends flights to “I am pleased to report that during the first US$36 million compared to the same period quarter of 2016 Seven Energy’s gas deliveries last year (Q1 2015: US$54 million), impacted Nigeria from the south east Niger Delta continued to by the shutdown at the Forcados terminal. The US carrier, United Airlines, will stop grow, with average deliveries of 101 MMcfpd, The Group spent US$64 million on capital flying to Nigeria from June 2016 ending which compares to our average for the year in expenditures in the first quarter of 2016 (Q1 operations on its only African route because 2015 of 70 MMcfpd,” said Seven’s CEO, Phillip 2015: US$39 million) which predominantly of weakness in the energy sector and Ihenacho. “Our long held focus on gas is related to cash paid on the OMLs relating difficulties in repatriating money from tickets reaping benefits, at a time when the upstream to prior period costs and the 26 km Oron to sold in the country. This came barely six component of our business is challenged Creek Town pipeline. weeks after Spain’s national carrier, Iberia Plc, with a continued weak oil price, and with the SEVEN ENERGY, May 25, 2016 stopped flights to Nigeria, citing dwindling Forcodos terminal having been closed since passenger traffic as the reason. February, severely limiting oil production United Airlines said in a note to employees deliveries and cash flow from our assets in the Activists brainstorm on that the daily route from Houston to Lagos north west Niger delta.” had underachieved for years but was kept EBITDA (and EBITDAX) for the first solutions to pipeline alive because of its importance to Texas-based quarter of 2016 was US$17 million (Q1 2015: customers. The last flight will be on June 30, US$28 million), a decrease of 39% on the vandalism 2016, after which Delta Air Lines will be the same period last year. The contribution to Activists gathered in Abuja on May 27 to only major US carrier flying to Africa. The EBITDAX from the south east Niger Delta address the recurring cases of pipe lines Central Bank of Nigeria’s foreign exchange business for the quarter rose to US$14 million vandalism with a view of finding a lasting policy has restricted the movement of foreign (Q1 2015: US$1 million) reflecting the solution to its occurrence. Speaking during currencies abroad after the global slump in oil increase in gas sales in the region. In contrast the discussion held in commemoration of the prices depleted the country’s foreign reserves. the contribution from the OMLs decreased to first year memorial anniversary of comrade BLOOMBERG, May 28, 2016

SOUTHERN AFRICA June fuel increases to hit Namibian consumers hard Consumers who are already facing massive increases in food prices can brace for more shocks as a rise in fuel prices is sure to push up expenses even more. The Ministry of Mines and Energy confirmed that as of June 1, petrol prices will increase by 60 cents per litre while all grades of diesel will increase by 70 cents per litre. Once these increases filter down to transport and food prices consumers will have to fork out more to get to work and to put food on the table. “For the first time this year, oil has broken the US$50 level and stayed a shade above the

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EAST AFRICA National Oil in deal to set up Kenya Maritime College National Oil has entered into an agreement with the State Department of Shipping and Maritime in the Ministry of Transport and Infrastructure, the University of Nairobi and the National Youth Service (NYS) to set up the Kenya Maritime College (KMC). The proposed college will be the first of its kind in East and Central Africa and will provide training in vocational skills, graduate skills retooling, and certification and accreditation services for personnel and service providers in the maritime trade including oil and gas related activities. “As National Oil, we are proud to be part of its formation. Our role in the partnership is to bring on board our expertise in oil and gas which will form part of the curriculum,” psychologically important threshold. Equally, strategic reserve stockpile. Maqubela said said National Oil’s chief executive officer refined petroleum products have stayed there were about 40 million barrels in storage Sumayya Hassan-Athmani. The partnership above US$54 per barrel throughout the whole at South Africa’s reserve facilities in Saldanha between the four State institutions is meant to month of May. This slight increase in both Bay north of Cape Town and although it was establish the college whose mandate will equip crude and refined oil prices was caused by a in private hands, the government considered graduates in different disciplines with hands decrease of about 5 million barrels in the US it to be part of its strategic stockpile. on skills in maritime operations and related oil reserves and the oil pipelines blockade REUTERS, May 26, 2016 fields including oil and gas. in Nigeria as a result of terrorist attacks in STANDARD MEDIA (KENYA), May 27, 2016 that country,” Minister of Mines and Energy, Obeth Kandjoze, explained. “There is still an Lower the South African fuel over-supply of oil in the global market, but Kenya stabs Somalia in the relatively lower compared to the previous levy: Economist four months. This is so because the biggest oil The projected increase in the price of petrol back over oil and gas rights suppliers are still reluctant to cut supply due to by 50 cents per litre and diesel by as much Kenya and Somalia are set to appear fear of losing market shares,” said Kandjoze. as 75 cents per litre is going to have a severe before the United Nation’s top court, the NEW ERA (NAMIBIA), May 30, 2016 impact on deeply indebted consumers who International Court of Justice, on September are already battling to put food on the table. 9, 2016, over a border dispute that could cost Debt Rescue CEO Neil Roets said South either country billions of shillings in future South Africa sold 10 million Africans should prepare themselves for a slew profit. According to the Daily Nation, Somalia of other price increases that are dependent on lodged a complaint against Kenya accusing barrels of oil to traders the diesel price. the latter country of grabbing sea bed that South Africa defended the sale of 10 million “Virtually everything we consume is is potentially rich in oil and gas deposits. barrels of crude oil from its strategic reserves transported by road and we can expect “Mogadishu is seeking to claw back authority at below market prices in December, saying commodities such as food to increase further over its territorial waters, including an area of it still had reserves for 90 days. The state-run still. “There is no doubt that we are entering the Indian Ocean bordering Kenya’s territorial Strategic Fuel Fund (SFF) sold 10 million uncharted territory in terms of the full impact waters,” published newspaper. barrels of crude at US$28 per barrel to a unit that the fuel price increases are going to have.” The case was lodged in August 2014 of , Vitol and Taleveras, a Central Roets said the 50 cents per litre increase after the two countries failed to come to an Energy Fund (CEF) director Tseliso Maqubela expected for the petrol price is going to hit agreement over this issue. Somalia was said said. motorists hard and depending on how the to have requested the international court to The CEF said that South Africa had access rand performs and the steady rise in the price determine the case based on international to 90 days worth of oil reserves, dismissing of crude oil further increases were likely. More maritime laws and boundaries related to the a local newspaper report that the country’s unpleasant surprises may be on the horizon Indian Ocean. In 2015, Kenya claimed that strategic reserves had been drained to for the next few months. Economist Dawie Somalia’s claim over the land was invalid. 300,000 barrels, less than a day’s cover. Oil Roodt said the fuel price increase had been This was after the two countries reached a consumption in Africa’s most advanced expected because of the erratic performance memorandum of understanding in 2009. “The economy is around 400,000 bpd. Maqubela of the rand and the increase in the price of agreement had stated that the border would said that the condition of the sale was that crude. run east along the line of latitude although the oil would not be exported and so the BUSINESS TECH (SOUTH AFRICA), May 28, further negotiations were to be held through government considered it to be part of its 2016 the UN Commission on the Limits of the

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Continental Shelf,” published the Daily Nation because the Mozambican government’s Philip Thon Leek said South Sudan would on October 7, 2015. financial obligation will come from the take advantage of the EAC membership to TUKO (KENYA), May 28, 2016 proceeds of gas sales. “I don’t see any impact enhance co-operation, especially trade, with on us due to the debt crisis,” John Sichinga, partner states. “Since oil revenues financed head of exploration and production said. “We more than 90 of the country’s budget, regional Somalia, Kenya maritime are in Mozambique for the long haul. We integration will compel South Sudan to will ride the waves, the downturns and the explore other products for export such as case scheduled for upturns.” gold, gun Africa among others,” he said. REUTERS, May 30, 2016 South Sudan’s President Salva Kiir inked September the EAC Treaty last week. South Sudan The International Court of Justice (ICJ), applied to become a member of the EAC the principal judicial organ of the United Juba Parliament ratifies in 2011 but it was only in October last year Nations, will hold public hearings in the that the regional bloc said the country had case concerning Maritime Delimitation in South Sudan’s admission to met the threshold to be a member. With the Indian Ocean (Somalia v. Kenya) from its headquarters in Arusha, Tanzania, the Monday 19 September to Friday 23 September the EAC EAC now groups Kenya, Tanzania, Uganda, 2016, at the Peace Palace in The Hague, the South Sudan’s parliament has endorsed a Burundi, Rwanda and South Sudan. Leek said seat of the Court. The hearings will concern treaty about the admission of the country to that as South Sudan was in its initial stage of solely the preliminary objections raised by the East Africa Community (EAC), making developing laws and policies, it could adapt Kenya. it the sixth member state of the regional some polices for the region in order to boost ICJ, May 26, 2016 trading bloc. Speaking in parliament, trade. Specialised Committee of Foreign Affairs XINHUA (CHINA), May 30, 2016 Madagascar, Comoros and International Co-operation chairperson coast guards complete training The first batch of naval and coast guard officers of Madagascar and Comoros successfully completed training on specialized ship boarding at a special training session today. The training programme started upon the request of the United Nations Office on Drugs and Crime, (UNODC). The closing ceremony of the training programme was graced by Secretary to the Ministry of Defence Karunasena Hettiarachchi, Commander of the Navy, Vice Admiral Ravindra Wijegunaratne. DAILY MIRROR, May 27, 2016 Sasol says Mozambique gas project unaffected by debt crisis Mozambique’s debt crisis and lower oil prices will not affect Sasol’s US$1.4 billion gas project because costs will be covered by the South African energy company and recouped through gas revenues, the company said. Mozambique missed a loan repayment deadline this month, plunging one of the world’s poorest countries into a debt crisis. Slowing growth and delays to the start of offshore gas production have added to Mozambique’s cashflow problems with ratings agency Fitch downgrading the war-scarred southern African nation’s credit rating last week, warning that a default was likely. Despite the country’s cash-crunch, Sasol will continue with oil and gas developments

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