key development – Page 63 – Tanzania Petroleum

Total closes Anadarko’s Mozambique LNG acquisition for $3.9 bln

October 1, 2019/in key development/by Hussein Boffu

Total said it closed the acquisition of Anadarko’s 26.5 per cent operated interest in the Mozambique LNG project for US$3.9 billion.

This follows Total reached a binding agreement with Occidental in May this year to acquire Anadarko’s assets in Africa (Mozambique, Algeria, Ghana and South Africa) and signed the subsequent Purchase and Sale Agreement in August.

“Mozambique LNG is one of a kind asset that perfectly fits with our strategy and expands our position in liquefied natural gas,” said Patrick Pouyanné, chairman and CEO of Total.

“As the new operator, we are fully committed to the Mozambique LNG project and we will bring the best of our human, technical, marketing and financial capacities to further strengthen its execution. Total will of course work on the strong foundations established by the previous operator and its partners, in order to implement the project in the best interest of all those involved, including the government and the people of Mozambique.”

Mozambique LNG is the country’s first onshore LNG development. The project includes the development of the Golfinho and Atum fields located within Offshore Area 1 and the construction of a two-train liquefaction plant with a capacity of 12.9 million tonnes per year (Mt/y).

The Area 1 contains more than 60 Tcf of gas resources, of which 18 Tcf will be developed with the first two trains. The Final Investment Decision (FID) on Mozambique LNG was announced on June 18, 2019, and the project is expected to come into production by 2024, Total said.

The Mozambique LNG project is largely de risked since almost 90 per cent of the production is already sold through long-term contracts with key LNG buyers in Asia and in Europe. Additionally, the project is expected to have a domestic gas component for in-country consumption to help fuel future economic development.

Total operates Mozambique LNG with a 26.5 per cent participating interest alongside ENH Rovuma

Área Um, S.A. (15%), Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Ltd. (10%),

Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique B.V. (10%), and PTTEP Mozambique Area 1 Limited (8.5%).

The French major said the closing operations are still ongoing in relation to Anadarko’s assets in the other countries comprising Algeria, Ghana and South Africa.

Total estimates itself as the second-largest private global LNG player, with an overall portfolio of around 40 Mt/y by 2020 and a worldwide market share of 10%. With 22 Mt of LNG sold in 2018, the group has solid and diversified positions across the LNG value chain. Through its stakes in liquefaction plants located in Qatar, Nigeria, Russia, Norway, Oman, Egypt, the United Arab Emirates, the United States, Australia or Angola, the Group sells LNG in all markets.

Uganda Push Ahead The East African Crude Oil Pipeline(EACOP) Project

September 27, 2019/in key development/by Hussein Boffu

Uganda and Tanzania are pushing ahead with their plans for the East African Crude Oil Pipeline (EACOP) despite Total’s decision to put work on hold, following the breakdown of talks on the sale of Tullow Oil’s Ugandan stakes.

“Uganda and Tanzania are closely working together to facilitate the development of the [EACOP] to transport crude oil from the transport hub in Uganda to the port of Tanga, in Tanzania,” said Ugandan Minister for Energy and Minerals Irene Muloni, at the recent Uganda International Oil and Gas Summit (UIOGS). “The final investment decision [FID] is pending the finalisation of the legal and commercial agreements and the government, together with the oil companies, are working towards achieving this very milestone.”

While there have been disagreements between the companies and the government, Muloni continued, engagement is continuing.

“We shall keep in touch [with the oil companies] and resolve these small residual issues,” said Ugandan President Yoweri Museveni.

The project will involve the production of 230,000 barrels per day. Public hearings will be held in various districts on the EACOP plan’s environmental and social impact assessment (ESIA), from October 17 to 30. Within Uganda, the link will run for 296 km, from Kabaale in the Hoima district to the Mutukula border crossing with Tanzania. The pipe will cross 10 districts in Uganda.

At a total distance of 1,443 km, it will be the longest electrically heated pipeline in the world, keeping the crude at a temperature of 50 degrees Celsius in order to allow it to flow. Above ground, there will be two pump stations, 19 block valves and four electrical substations. The pipeline tariff will not exceed $12.77 per barrel.

Muloni also said that front-end engineering and design (FEED) work was under way on the proposed 60,000 bpd refinery and product pipeline.

Concerns had been expressed for the round given the breakdown of talks on the Lake Albert development. Tullow had agreed to sell down its stake in the country to Total and CNOOC Ltd, reducing its stake to around 11%. Following the collapse of this sale, Total suspended technical work and laid off a number of staff that had been working on the project.

In comments at UIOGS, the Petroleum Authority of Uganda (PAU) said the sector should provide support to other parts of the economy. Crucially, the government was said to be in discussions with the three oil companies on resolving outstanding issues in order to press ahead with a final investment decision (FID).

Museveni has taken a tough line in discussions with the three companies. The Ugandan president has said he had made a number of concessions to the companies’ needs, including the construction of an airport in the region and road upgrades.

The president, who was also talking at UIOGS, expressed caution, saying a number of countries had been unable to benefit enough from their oil producing assets. “We have negotiated agreements, I have already squeezed the oil companies, quite reasonably. You will not see repeated here some of the mistakes seen in other countries. For instance, the flaring of gas … it’s really irresponsible.”

A second round is under way, with roadshows to be held in London, Houston and Dubai. Bid submissions for Uganda’s second licence round are due on November 22. There are five blocks available under the round. Further out, the government is considering offering areas in northeast Uganda, in the Moroto-Kadam Basin.

In related news, Uganda’s Teclab has been contracted by Armour Energy to carry out 2D seismic in the Ntoroko District. Australia’s Armour won a block in Uganda’s first bid round, which was completed in 2016. The licence was signed in 2017, giving the company four years to carry out first phase work. This involved reprocessing existing seismic and shooting 100 km of 2D.

In Armour’s various presentations, the company has made much of the EACOP

Aminex Is More Confident To Proceed With Preparations For the Chikumbi-1 Well In Tanzania

September 25, 2019/in key development/by Hussein Boffu

Aminex is becoming more positive on its delayed farm out in Tanzania, giving it sufficient confidence to get under way with preparations for the Chikumbi-1 well.

The London-listed minnow struck a deal with ARA Petroleum in July 2018, expecting at the time that it would be completed by November 2018. ARA was to take a 50% stake in the Ruvuma block, in exchange for $5 million in cash and cover up to $35mn in work commitments, in order to reach first gas.

The cash was to be paid in two instalments, with $3mn on closing and $2mn 180 days later. ARA has now agreed, under a binding heads of terms, to provide the first $3mn ahead of the completion of the farm out. The second tranche will be paid on closing of the farm out.

A new stop date for the farm out has been extended to the end of June 2020. In July, the company said it had pushed this date out to the end of October. If the deal has not been completed by this point, the advance will be converted into an interest-bearing secured loan. This would be repayable by the end of June 2021. ARA is backed by Oman’s Zubair Corp.

Aminex had $1.86mn of cash at the end of 2018, with no debt. It raised $2.4mn in February to reprocess 2D seismic on the Kiliwani North block and to acquire 3D seismic around Songo Songo Island.

ARA was to cover costs for the work associated with the Chikumbi-1, in addition to acquiring and processing 200 square km of 3D seismic on the Ntorya area and install an early production system (EPS). The Chikumbi-1 well was previously known as Ntorya-3 and is intended to target the same reservoir from the first two Ntorya wells but also a deeper target. The company had hoped to spud the well in 2018.

“We are encouraged by the ongoing discussions with the Tanzanian authorities to be able to accelerate the planning for the early spud of the Chikumbi-1 well, through the tendering of services, ordering of long lead items and securing a contract for a drilling rig,” ARA’s CEO Sultan Al-Ghaithi said.

A Chinese-backed company completed a gas pipeline in Tanzania in 2015, from Mtwara in the south to Dar es Salaam. Earlier this month, the Tanzania Petroleum Development Corp. (TPDC) said it would choose a contractor in October to construct a link from Dar to Bagamoyo.

Aminex’s chairman, John Bell, said the new agreement with ARA demonstrated a commitment to the gas assets, “which when on production will play an important role in meeting domestic demand for gas from the people and businesses of Tanzania and a possible international market through export arrangements with neighbouring countries”.

Vitol and Mozambique’s ENH Join Forces to Trade LNG, LPG Globally

September 23, 2019/in key development/by Hussein Boffu

Swiss major, Vitol Inc and Mozambique’s state oil company ENH has formed a shareholding trading commodity company named ENH energy Trading, says a press release issued on September 19, 2019

The ENH trading plan to trade liquefied natural gas(LNG), liquefied petroleum gas (LPG) and condensate to the global market allowing Mozambique’s ENH to create new value, build capacity and develop expertise in commodity trading.

Mozambique national oil companies ENH and Vitol have respectively 51 and 49 percent share in the company

: “Our expectation for this JV is to embark on a path into international commodity trading markets to support our growth. As the national oil company of Mozambique operating actively in the upstream, we are confidently expanding our operations overseas, and building a reputable asset for future generations.” Dr. Omar Mithá, Chairman, ENH, says.

In addition, Russell Hardy, Vitol CEO says: “We are delighted to be forming this partnership and be part of Mozambique’s growth story. We very much look forward to replicating our previous experience of partnering with a NOC and working with ENH to build ENH Energy Trading into a successful trading company with the expertise to serve Mozambique’s energy needs.”

Mozambique has been the site of recent large scale natural gas discoveries. The country has up to 125 trillion cubic feet (tcf) of natural gas in place, making it among the world’s most significant hydrocarbon finds in the last decade

On June 18, 2019, US-based firm Anadarko Petroleum announced a final investment decision (FID) on the Mozambique LNG project. Industry experts predict that Mozambique could become the world’s third-largest exporter of liquefied natural gas (LNG).

ExxonMobil sees Rovuma and Golden Pass advantages @ Gastech in Houston, Texas

September 20, 2019/in key development/by Hussein Boffu

The record year for FIDs of additional LNG liquefaction capacity, with potentially more projects approaching sanction, has led to fears that the current supply glut could be replicated in the middle of the next decade.

And it has brought into sharp focus the need for competing projects to be differentiated. ExxonMobil pushed the go button on its 15.6mn t/yr Golden Pass joint venture with Qatar Petroleum (QP) on the US Gulf Coast in February. It is also making good progress, having received approval from the Mozambique government in May, with development plans for the 15mn t/yr Rovuma LNG project.

The firm is confident that its two projects have what it takes to stand out from the crowd, Alex Volkov, ExxonMobil’s vice-president for global LNG marketing, tells Petroleum Economist at the Gastech conference in Houston.

Rovuma has the advantage of geography, says Volkov, given that is close to growing demand centres in south Asia, China and other emerging markets in Asia-Pacific, as well as a “reasonable distance” from the Atlantic Basin if it needs to divert supply there.

The “sheer size” of the resources in Mozambique’s Area 4 gas fields, is another boon. “This is a legacy type of development,” says Volkov. “It is 15mn t/yr in its first phase but that is just what it is, a first phase. The resource base is such that it allows us to build subsequent phases when the market is ready for them.”

And Rovuma LNG has also benefited from “tremendous” support from the host government, says Volkov. “Obviously, it is a developing country—a lot of things needed to be done on the ground to provide for security, for ease of doing business. The project itself is in a remote area of Mozambique. We enjoyed tremendous support from the government, which understands the value the project brings to the country.”

Golden Pass has an obvious cost advantage in being a brownfield site, having been initially developed to import LNG to the US before the implications of the shale gas boom were fully realised. “Substantial portions of the infrastructure are already in place—the jetty is there, the channel is there, the tanks are there,” says Volkov. “It is one of the remaining brownfield projects that obviously hold cost advantages over greenfield developments on the US Gulf Coast.”

But Golden Pass has another potential ace in its pocket—the marketing structure of the project, where the total output is contracted to Ocean LNG, a 70:30 joint venture between QP and ExxonMobil. “The other joint ventures we have with QP bring opportunities,” says Volkov. “Having Golden Pass as another supply point alongside Ras Laffan will allow us to bring significant transportation optimisation and generate additional value.

“That is an important distinction between Golden Pass and any other Gulf Coast project, which is basically a single supply point in isolation.”

credit :club Mozambique

Asian Oil Companies, IOCs , Join Traditional Supermajors In East Africa

September 18, 2019/in key development/by Hussein Boffu

The future for East Africa’s oil and gas industry is bright. One leading indicator is that the exploration and development of the oil and gas sector have become powerful magnets for increasing foreign direct investment (FDI) in the region over the last 12 years with the addition of Asian NOCs and smaller independents oil companies are scrambling for solid ground in East Africa’s oil and gas sector.

Some years back, European major oil companies such as France’s Total, Royal Dutch Shell, US supermajor ExxonMobil, Singapore’s Pavilion Energy and UK-based firm Ophir Energy were the ones dominating the East African oil and gas industry and exploring oil and gas resources.

However, in recent years, many Asian companies including NOCs from China (CNPC, the China National Offshore Oil Corporation [CNOOC], the China Petroleum and Chemical Corporation have been joined large oil companies of the world.

Also these smaller players which are from Europe such as Tullow Oil, France’s Maurel et Prom and the U.S. firms, Anadarko, Australia’s Swala energy and London based firm Aminex are important because their business operations are focused solely on exploration and producing oil and gas resource whilst those big boys dabble into everything: from discovering, developing, extracting, refining, transporting to marketing oil and gas-related products.

Smaller independent oil companies also have high-risk tolerance in contrast to major oil firms, which may shift investment to the downstream sub-sector of the oil and gas industry in the period of lower oil price.
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Sometimes, they move to other oil-producing countries and leave the gas fields to small independents oil companies.

What Does Saudi Oil Attack Means On Global Oil Supply

September 17, 2019/in key development/by Hussein Boffu

Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, on Sept 14, 2019.PHOTO: REUTERS

LONDON (REUTERS) – The strike on the heartland of Saudi Arabia’s oil industry, including damage to the world’s biggest petroleum-processing facility, has driven oil prices to their highest level in nearly four months.

Here are some facts about the impact on oil supply and spare capacity.

WHY IS IT SO DISRUPTIVE FOR GLOBAL OIL SUPPLIES?

The attack on Saudi oil facilities last Saturday (Sept 14) not only knocked out over half of the country’s production, but it also removed almost all the spare capacity available to compensate for any major disruption in oil supplies worldwide.

The attack cut 5.7 million barrels per day (bpd) of Saudi crude output, over 5 per cent of the world’s supply. But the attack also constrained Saudi Arabia’s ability to use the more than two million bpd of spare oil production capacity it held for emergencies.

The kingdom has for years been the only major oil producing country that has kept significant spare capacity that it could start up quickly to compensate for any deficiency in supply caused by war or natural disaster.

Most other countries cannot afford to drill expensive wells and install infrastructure, then maintain it idle.

Before the attack, the Organisation of the Petroleum Exporting Countries (Opec) global supply cushion was just over 3.21 million bpd, according to the International Energy Agency (IEA).

Saudi Arabia – the de facto leader of Opec – had 2.27 million bpd of that capacity. That leaves around 940,000 bpd of spare capacity, mostly held by Kuwait and the United Arab Emirates

Iraq and Angola also have some spare capacity. They may now bring that production online to help plug some of the gap left by Saudi Arabia – but it won’t be enough.

HAVEN’T OPEC AND ITS ALLIES BEEN CUTTING OUTPUT? CAN’T THEY JUST REVERSE THOSE CUTS?

Yes, Opec and its allies such as Russia have cut output to prevent prices from weakening because the market has been oversupplied.

Those cuts aimed to reduce supply by 1.2 million bpd. But much of that was from Saudi Arabia so it now cannot be reversed quickly.

Non-Opec members such as Russia are pumping near capacity, with perhaps only 100,000-150,000 bpd of available additional production.

WHAT ABOUT IRAN?

Iran holds spare capacity but it cannot get the oil to market because of sanctions imposed by the government of United States President Donald Trump.

Iran’s exports have fallen over two million bpd since April. Washington has said Iran was behind Saturday’s attack, so is unlikely to ease sanctions to allow Iran to plug a gap it believes was created by Teheran.

Iran, for its part, said after the attack that it would pump at full volume if sanctions were eased.

AND VENEZUELA?

US sanctions have also impacted the Venezuelan oil industry. But Venezuelan output has been in freefall for years and state oil company PDVSA is unlikely to be able to boost production much even if sanctions were eased.

WHAT ABOUT US SHALE? CAN SHALE PRODUCERS PUMP MORE?

The US has become the world’s top crude producer after years of rapid growth in supply from the shale sector, much of it pumped from fields in Texas. The US has also grown as an exporter, and shipped more crude to international markets in June than Saudi Arabia.

Shale producers can move quickly to pump more when prices rise, and can bring production online in a matter of months.

That is a much faster time line than most traditional oil production.

If the Saudi outage looks like it will be prolonged and oil prices rally significantly, then shale producers will raise output.

But even if shale producers pump more, there are constraints on how much the US can export because oil ports are already near capacity.

SO WHAT HAPPENS NOW? WHAT ABOUT OIL IN STORAGE?

It all depends on how long the outage lasts.

Saudi Arabia, the US and China all have hundreds of millions of barrels of oil in strategic storage. That is the storage that governments keep for exactly this scenario – to compensate for unexpected outages in supply.

They can release oil from strategic storage to meet demand and temper the impact on prices. Mr Trump said on Sunday that he had authorised a release from the US Strategic Petroleum Reserve.

The IEA, which coordinates energy policies of industrialised nations, advises all its members to keep the equivalent of 90 days of net oil imports in storage.

Oil from storage should keep the market supplied for some time, but oil markets will likely become increasingly volatile as storage is run down and the possibility of a supply crunch rises.

The IEA said last Saturday that the markets were still well supplied despite the Saudi disruptions.

“We are massively oversupplied,” said Mr Christyan Malek, head of oil and gas research for Europe, Middle East and Africa at JP Morgan, adding it would take five months of a five million bpd outage to take global crude supply levels back to a 40-year normal average.

“Having said that, this attack introduces a new, irreversible risk premium into the market,” he added.

WHAT HAPPENS IF THERE IS ANOTHER SUPPLY DISRUPTION?

With no spare capacity, future disruptions would cause oil prices to rise. A higher price over time will encourage producers to invest and pump more, while at the same time reducing consumption.

Opec member Libya is in the middle of a civil war, which threatens its ability to continue pumping oil. Another big Libyan disruption would add to the shocks and highlight the lack of spare capacity.

Nigerian exports have also suffered from disruptions.

Even before the Saudi attack, spare capacity was falling.

Consultancy Energy Aspects has said it expects Opec spare capacity to fall to below one million bpd in the fourth quarter from two million bpd in the second quarter of 2019

LP Gas:Harmonizing Development And Growth In Nigeria And Africa

September 17, 2019/in key development/by Hussein Boffu

Did you know Nigerians consumed 600,000MTPA of LPG in 2018? This makes up just 5% of the total households in Nigeria. Nigeria’s consumption in 2008 was 80,000MTPA in 2008 and grew 650% to 600,000MTPA in 2018! 47 per cent of the LPG supply in the country in the first quarter of 2019 was imported while 53 per cent was produced locally.

The fastest growing LPG industry in Africa shows no signs of slowing down and this means that you should see how you can take advantage of this huge growth in the market.

Come join LPG Summit and NLPGA as we take a deep dive into the intricacies of the Nigerian LPG market with the most important stakeholders in the industry as we discuss what is needed to harmonize development and growth in Nigeria and Africa in the coming years. There are 50+ exhibitors from around the globe showcasing their latest LPG solutions and technologies.

>> View Event Website: http://bit.ly/nigeria-mp

Tune in to representatives from Nigerian LPG Association, World LPG Association, The Global LPG Partnership, the Department of Petroleum Resources, the Nigeria National Petroleum Corporation and also the Vice President of Nigeria who will be making the opening keynote!

Nigeria LPG Summit 2019 will be held from the 26 – 27 November at Federal Palace Hotel in Lagos, Nigeria – Register your seat at the conference here at
http://www.lpgsummit.com/nigeria2019/registration-form/

Pipeline and LNG Progress In East Africa Will Fast Track Energy Market

September 11, 2019/in key development/by Hussein Boffu

Works on the oil facilities and oil and gas field development are key growth drivers for the East African countries including Uganda, Tanzania, South Sudan, Kenya and Mozambique to join the league of oil-exporting countries

But some are successful and other country’s first oil production will likely be delayed.

Kenya sold its first shipment of oil in late August for $12 million, but it’s still years away from turning oil exports into a viable commercial venture.
Work on Uganda-Tanzania Crude Oil Pipeline project has been suspended.
South Sudan discovered a small oil field in the Northern Upper Nile State, the first in the country since it seceded from Sudan 8 years ago.
Mozambique LNG is one of two LNG mega-projects that have been seeking sanction for over four years in Mozambique.

Uganda- Tanzania

The French major, Total has already been suspended work on the $3.5 billion Uganda-Tanzania oil export pipeline. According according to Reuters report , the project has been suspended after the collapse of Uk based firm Tullow oil plan to sell a stake in the project to France’s Total and China’s CNOOC.

According to the report published by fitch solution, Marco research pointed out that due to set back of the project implementation in Uganda the commencement of production would be delayed, likely until 2024 instead of 2022 as initially expected

In May 2019, Uganda announced a second licensing round to cover five blocks in the highly prospective Albertine Graben. Uganda is an attractive investment opportunity combining high-success rates of oil discovery, with a liberalized economy open to international investment.

Mozambique

US-based firm Anadarko Petroleum June 18 announced a final investment decision (FID) on the Mozambique LNG project. Industry experts predict that Mozambique could become the world’s third-largest exporter of liquefied natural gas (LNG

Jon Lawrence, an analyst with Wood Mackenzie’s sub-Saharan Africa upstream team, said: “Mozambique LNG is one of two LNG mega-projects that have been seeking sanction for over four years in Mozambique. The other is the ExxonMobil-led Rovuma LNG development. With strong LNG demand growth out of Asia, now is Mozambique’s time.”

Sitting close to the Asian Market where there is strong LNG demand growth, Mozambique has the opportunity to become a new source of global energy supply.

Kenya

Kenya expects first oil production to begin in 2022. The current 200,000 barrels of oil export is the early oil pilot scheme to test the market of Kenyan oil. Kenya also planning to build a pipeline that will transport crude oil from Lokichar Basin to Lamu Port. The country also plans to build a refinery to replace the one that closed in 2013.

South Sudan

South Sudan is an oil-exporting country. It recently made a discovery of crude oil in the northern oilfields of Adar holding over 5 million barrels of recoverable oil.

Partnerships and Local Content Collaboration Are Key To Harnessing Oil and Gas Potential In Uganda.

September 10, 2019/in key development/by Hussein Boffu

Uganda is one of the hot spots for oil development in sub-Saharan Africa

In May 2019, Uganda announced a second licensing round to cover five blocks in the highly prospective Albertine Graben. The second licensing round has been made at an important time for Uganda and the region as the country has moved steadily towards first oil and much of the all-important infrastructure is well underway including the East African crude oil pipeline(EACOP) pipeline and the refinery.

Uganda is an attractive investment opportunity combining high-success rates of oil discovery, with a liberalized economy open to international investment. However, partnerships and local content collaboration are paramount to drive Uganda’s growth in oil and gas opportunities.