Energy Leaders Give Insight On The Future of Kenya's Oil & Gas Transition

Under the theme ‘Moving Kenya Forward: Oil Production and New Exploration Under COVID-19,’ Africa Oil & Power and the African Energy Chamber provided energy industry leaders a platform to share strategies and thoughts on how Kenya’s oil and gas sector can deal with the implications caused by COVID-19.

The Kenya webinar featured Hon. Dr. Elly Karuhanga, Chairman of the Uganda Chamber of Mines & Petroleum & Chairman, Private Sector Foundation Uganda; Doris Mwirigi, Chief Operating Officer of Energy Solutions Africa; Toks Azeez, Sales and Commercial Director for Sub Saharan Africa, Baker Hughes; Mwendia Nyaga, Chief Finance Officer of Oilfield Movers and Brian Muriuki, Managing Director & Country Chair of Royal Dutch Shell Ghana.

Kenya’s oil and gas industry is in a state of transition, as its major oil and gas development — Blocks 10BB and 13T in Turkana — has been put on hold, with Tullow Oil submitting a notice of force majeure to the Kenyan Ministry of Petroleum and Mining, citing complications from COVID-19.

Meanwhile, Uganda’s Lake Albert Project is moving ahead, with Total announcing plans to acquire Tullow Oil’s stake in the project. The massive development in Uganda, which is set to include a pipeline and refinery, could easily have an impact on regional oil and gas developments and opportunities.

According to Dr. Elly Karuhanga, “Force majeures are reactive for companies, it is something that is beyond their means or the problem there are facing. So, it is unfortunate that this has happened in Kenya, but it is also unfortunate that Tullow had to exercise this in their business. When you think about the reasons they faced, they had no alternative.”

In East Africa, Kenya has the most natural resources and is the most explored country in the region. In order to have a knock-on effect and attract investors in this climate, East African countries need to keep exploring and looking at other projects. In Kenya, there are offshore blocks operated by Eni and hopefully with a great oil flow they will help the economy.

For companies like Baker Hughes, transition into deep-water explorations is expected to be less difficult, because it is already involved in offshore projects across Africa and has actively interacted with Eni in Kenya.

“For us it is more about, how do we get our local partners in Kenya who have been involved in the onshore activities, to then up their game a little bit to meet the offshore requirements and that’s going to take a lot of back and forth, integration, cooperation to get them to a point where the skillset of that personnel and the equipment that they have and intend to acquire will be able to meet the requirements of deep-water play,” said Toks Azeez, Sales and Commercial Director for Sub Saharan Africa, Baker Hughes.

Speakers encouraged synergies and regional collaboration to overcome the challenges faced by the oil and gas industry. Local companies as well as countries need to come together to find a solution to them. According to Mwendia Nyaga, Chief Finance Officer of Oilfield Movers. “Companies can scale up from the location at which they are based and start working in other places. For me it is cooperation, synergizing and not over complication.”

African governments are advised to think about the long-term effects COVID-19 has on oil and gas projects as well as how to regain investors’ appetite, “You should always look at fiscal incentives that allow fair and equitable taxation on revenues, but allow an investment environment that is lucrative, because every dollar in our industry can go anywhere in the world."

"East Africa, big companies and the small-medium sized oil and gas companies, will look at the investment climate as to where they get greater bang for their buck and that will mean that if the East African region does not have favorable fiscals then the dollars will go elsewhere, where you will get better bang for your buck, so there is a balance.

When government is looking at this to be able to enable an environment where investment will be made, knowing that the risk is carried by the investors initially,” said Brian Muriuki, Managing Director & Country Chair of Royal Dutch Shell Ghana.

Doris Mwirigi, Chief Operating Officer of Energy Solutions Africa closed by sharing her belief that the oil and gas industry is in a transition, seeing that oil prices are slowly recovering to pre-COVID-19 prices. “In Kenya we are already at the forefront in terms of green energy and if you look at it, we are still very dependent of fossil fuels. So, you find that we are ahead in terms of green energy, however, I am still an oil girl and believe that oil and gas will recover, and in any case as you can see globally, the oil prices are prices are coming up and if you look at the equity market the oil prices are good for oil companies, so I think oil and gas will still play a major role in the oil and gas mix and we will be here,” she said.

Mwirigi also touched on the involvement of women and how the EqualBy30 initiative will empower more women in the oil and gas sector, “When you talk about adding women, it should not be just about diversity, but a business decision because companies headed by women do better. So, it’s not even a cry for help or diversity but business sense.” 

Covid-19: African Energy Chamber Supports South Sudan

The African Energy Chamber has provided financial and material support to the government of South Sudan to support its efforts to respond to the global Covid-19 pandemic. The number of reported cases in South Sudan is currently nearing 1,000, with 10 deaths already confirmed.

The donation comprises a cash grant and sanitizing products, and represents the long-standing commitment of the Chamber towards the prosperity of South Sudan. It was received in Juba by H.E. Daniel Awow Chuang, Undersecretary at the Ministry of Petroleum, who will, in turn, coordinate the relief activities with the Ministry of Health.

"It is our wish at the Chamber that our contribution will support the laudable ongoing efforts of the government of South Sudan to respond to the pandemic," stated NJ Ayuk, Executive Chairman at the African Energy Chamber.

"This ongoing pandemic goes beyond the oil sector only and we are calling for a much broader support for South Sudan, its workers and its refugees. Short-term relief is critical to the country, especially when it comes to alleviating the economic pain caused by the pandemic and felt throughout the country," concluded Ayuk

Unfortunately, the ongoing pandemic and the crash in oil prices have slowed the good progress that was made by the peace agreement signed by H.E. President Salva Kiir and Riek Machar.

Economic stability and development remain critical to ensuring a successful and long-lasting peace, and the ongoing crisis gives an opportunity to address the fundamental vulnerabilities of the country's economy. Politicians, energy stakeholders, and the international investment community must come together to think about adopting the right approach to ensure a sustainable recovery post Covid-19.

In light of the consequences of the Covid-19 pandemic across African oil markets, the Chamber has multiplied initiatives and efforts to bring relief and guidance to the industry. Since the start of the pandemic, the Chamber has notably published a Common-sense Energy Agenda of top key policy measures to support the industry, and a set of Guidelines for the Movement and Safety of Oil Workers amidst sustained travel restrictions.

Namibia's Ministry Of Mines And Energy Is Optimistic About The Future

With the recently introduced reforms in Namibia's renewable energy sector and the growing presence and entry of international oil companies entering the hydrocarbons sector, the Ministry of Mines and Energy is optimistic about the country's energy future.

"There are very positive and encouraging signs when we talk about the hydrocarbons sector. We have had a couple of investors that are keen on entering the market and potentially finding something," said Hon. Tom Alweendo, Namibia's Minister of Mines and Energy during a webinar hosted by the African Energy Chamber in partnership with Africa Oil & Power on Friday.

"On the renewable energy sector, we have been able to introduce some reforms that have made it possible for independent power producers to come into the sector and produce clean energy, especially through solar and wind," he added.

Minister Alweendo was joined by the Chamber's Executive Chairman, NJ Ayuk, who encouraged a practical and realistic energy transition that addresses the continent's energy needs first.  

"Oil and gas are going to be around for a long time and will remain a major part of many countries across Africa. The same can be said for clean energy. We have to be environmentally conscious and ensure that lowering carbon emissions remains a key priority," said Nj Ayuk. "But, we have to also look at where we stand as a continent and address our needs first," he added.

Although Namibia is largely a consuming country, it hopes to grow its upstream industry, improve energy security through diversifying its energy mix. In achieving this, the country is looking forward to collaborating with the private sector to review its policies in order to attracter further investment.

Other topics explored during the discussion guided by the theme: The Future of the Namibian Energy Industry included plans on the development of the Kudu gas project to which the minister provided that the ministry is currently relooking the project's business model and hopes to move forward thereafter.

On other key projects, Minister Alweendo said the 37,500 bpd barge-mounted refinery in Walvis bay was due to finalize in March this year but, was deterred by the pandemic. Despite this, the ministry is exploring other avenues in order to reach completion on the $370 million project by the end of 2020.

The Angola-Namibia cross border Baynes hydroelectric dam is currently undergoing feasibility studies and is planned to commence with construction in June this year. The 600MW output will be split in 300MW for Angola and 300MW for Namibia.

COVID-19: African Energy Chamber Issues Advisory Guidelines For Oil Workers’ Safety

Amid the ongoing effects of lockdowns in oil and gas-producing countries such as Nigeria, Angola, Algeria, Egypt, Libya, Congo, Gabon, Ghana, Equatorial Guinea, South Sudan and Cameroon, the African Energy Chamber (www.EnergyChamber.org) hereby issues pragmatic commonsense advisory guidelines for governments, oil companies and personnel.

This is aimed at mobilizing, demobilizing and putting back our energy sector to work safely across the continent. The guidelines are open for free consultation on www.EnergyChamber.org.

In light of the prolonged Covid-19 pandemic, the oil & gas industry has been heavily strained, increasing the need to pay critical attention to workers’ safety and putting in place procedures to ensure their transitioning in and out of the workplace. Currently, travel restrictions have forced oil operators to maintain their personnel for extended periods of time on remote sites, increasing the risks of Lost Time Injury.

“We must always prioritize the health, safety and well-being of brave oil workers who continue to defy insurmountable odds to keep energy production ongoing across the continent,” stated NJ Ayuk, Executive Chairman at the African Energy Chamber. “All upstream oil & gas operators are experiencing similar challenges due to reduced workforces and extended periods of lockdown and travel restrictions. Our guidelines put the safety of workers, host communities and oil operators at the core of the industry’s operations and sector recovery.”

“These non-exhaustive guidelines will assist operators and governments in ensuring the movement and safety of offshore and onshore oil workers so oil & gas operations can continue while preventing any additional spread of Covid-19,” concluded Ayuk.

In order to ensure that oil & gas health and safety standards and practices adapt to a new normal, the African Energy Chamber has worked with its partners to issue this new set of advisory guidelines. These guidelines notably take into account local regulations in host countries, and are heedful of the need to protect local communities from exposition to any potential Covid-19 transmission.

Such advisory guidelines notably include a series of agreements and protocols governing health monitoring and travel authorizations given to oil workers before, during and after their mobilization on site. They take into account the best international healthcare practices in order to ensure both a safe continuation and resumption of onshore and offshore activities, while preserving the health of oil workers, host countries and host communities.

Agreement Between Eni, Springfield Exploration & Production Excites Ghana

Following study of technical evidence from Springfield E&P (SEP)'s West Cape Three Points 2 (WCTP2) License and Eni's Offshore Cape Three Points (OCTP) License offshore Ghana, the Government of Ghana has declared earlier this year that the Afina-1x Cenomanian reservoir and the Sankofa Cenomanian reservoir are "one and the same". This conclusion calls for a Unitization Agreement between both operators in order to develop the reservoir that straddles both of their blocks.

This Unitization Agreement of the Afina and Sankofa Fields was requested by Minister of Energy, Hon. John-Peter Amewu, in a letter sent to SEP and Eni in early April 2020. The government's direction then requested unitization talks to be completed within 120 days (four months). Shall both parties fail to comply with the government's directive to agree on a Unitization Agreement, the Minister of Energy is empowered to stipulate the terms and conditions of such an agreement per Regulation 50(6) of L.I. 2359.

While both operators have until August 2020 to complete their negotiations, the African Energy Chamber is hopeful that it will result in the very first Unitization Agreement between an International Oil Company and a Ghanaian operator in the country, ushering a new era for Ghana's upstream sector.

The conclusion of such an agreement would ensure efficient reservoir exploitation, avoid unnecessary competitive drilling and maximize economic recovery of the hydrocarbons reserves from both licenses.

This would not be the first such agreement in Ghana. In July 2009, a Unitization and Unit Operating Agreement (UUOA) was signed for the development of the Jubilee Field, appointing Tullow Oil as its operator. The field entered into production a year later and has been successfully producing since then, becoming the crown jewel of Ghana's oil & gas sector. 

"Oil and gas works best with an enabling environment. The Government of Ghana and the Ministry of Energy are demonstrating a very pro-active attitude towards the development of the country's oil & gas sector.  Their directive to push for negotiations on a Unitization Agreement on Afina and Sankofa to be completed within 120 days is proof of political will that works to benefit the energy sector and the country," stated NJ Ayuk, Executive Chairman at the African Energy Chamber.

"Fast-tracking the development of these fields is very positive given current market dynamics and ensures that a credible Ghanaian operator will start producing at a time when other players are shying away from investing in Africa's upstream," he added.

"We are very bullish that Springfield E&P can move ahead, make the deal work for Ghana's oil sector and become a remarkable example of what African E&P companies can achieve for our industry and our continent," concluded Ayuk.

SEP is a majority interest holder (84%) and operator of the WCTP2 License, with the Ghana National Petroleum Corporation and its exploration company, EXPLORCO, holding the remaining interest. SEP drilled the Afina-1 well in October 2019, making two gas and light sweet oil discoveries at a water depth of 1,030 meters, and consequently more than doubling its proven oil reserves to 1.5 billion barrels and adding 0.7Tcf of gas.

On the other side, Sankofa is a part of the Eni-operated OCTP Block, where Eni holds a 44.44% interest, Vitol 35.56 %, and GNPC 20%. The OCTP Block is reported to have reserves of about 40 billion cubic metres of unassociated gas and 500 million barrels of oil, and has been producing since 2017 from the John Agyekum Kufuor FPSO.

Oil Producer Urges African Countries On Energy & Economic Diversification

If there is one thing that the current COVID-19 and oil prices crises have demonstrated, it is that African oil-producing nations are still not economically diverse.

Despite repeated actions taken by governments over the past decade to diversify their economies, especially following the 2014-2016 African recessions, not enough has been done. Economic crises in African oil-producing countries this year will be so severe they could reach double-digit economic recessions.

As countries like Nigeria, Angola, Gabon, Congo or Equatorial Guinea deal with unprecedented lows in oil prices and struggle to keep their economies afloat, the current downturn could well be the historic turning point these economies need to seriously put diversification at the top of economic policies priorities.

To be clear, diversification does not mean the end of oil, quite the contrary. Efficient diversification goes through a better use of oil revenues to fuel other sector of the economy, build a stronger industrial base and create jobs. But it also means diversifying national hydrocarbons output and increasing production, monetization and valorization of natural gas.

In fact, for many African oil producers, successful economic diversification depends on their abilities to increase hydrocarbons production and make better us of flared and associated natural gas to generate power for industries, produce fertilizers for farmers and manufacture petrochemicals for their growing domestic markets.

With 188.8 Tcf of proved natural gas (BP, 2019), Nigeria has Africa’s largest discovered gas reserves and the 10th biggest in the world. In 2019, it was the world’s sixth largest LNG exporter with a 6% global market share, ahead of Algeria (3%), Angola (1%) and Equatorial Guinea (1%).

Yet, out of the 20.8 million tonnes of LNG Nigeria exported last year (IGU, 2020), 54% went to Europe, 37% to Asia, and the rest to the Americas and the Middle East. In short, none of Nigeria’s LNG goes to Africa.

The only Nigerian gas that reaches African markets is the limited, and often interrupted, supply that goes through the West African Gas Pipeline (WAGP) to Benin, Togo and Ghana. Even then, the lack of stable gas supplies from the pipeline has forced these countries to rely on additional domestic or international sources of gas to fuel their power plants.

“The current situation in global and African energy markets is giving tremendous opportunities for Africans to take a strong position on economic diversification. In that aspect, Nigeria is the country that could take the lead position in becoming the African gas producing platform the continent needs,” stated Kola Karim, CEO & Managing Director of Shoreline Natural Resources during an Invest Africa podcast last week. He is right, and unless the current crisis leads to serious gas-market policies and initiatives to monetize gas across Nigeria and Africa, oil dependence-related hardships will continue and only get stronger.

More needs to be done to monetize gas in Africa. Thankfully, the continent has demonstrated several successful gas monetization projects across industries and beyond just electricity generation. In Benin City, Nigeria, NICPO has been developing for years a network of CNG outlets that take customers beyond petrol and diesel and offer them a domestic, more cost efficient, and cleaner fuel to put in their cars.

On a bigger scale, domestic gas is already being valorized in the Indorama Eleme fertilizers plant in Port Harcourt, currently under expansion, and in the soon-to-be commissioned Dangote Fertilizers plant in Lekki. In neighboring Cameroon, Victoria Oil & Gas has been supporting the development of a strong industrial and manufacturing base on the outskirt of Douala by connecting several customers to natural gas.

Also in the Gulf of Guinea, Equatorial Guinea is building a regasification terminal to process its own natural gas across several industries such as power and cement on its mainland. Further North in Abidjan, the government has been pushing for the procurement and deployment of CNG buses that also run on domestic natural gas. Success stories abound all around us, yet they need to be expanded and replicated for Africa to truly embrace the benefits of economic diversification.

For this ambition to be achieved, the development of enabling environments and sound market policies is crucial to facilitate investments into gas production and gas transportation and processing infrastructure. “Nigeria has already taken the opportunity to maximize its gas with the West Africa Gas Pipeline.

As an industry, if we are able not only to ensure stable gas supplies through that pipeline but also lay additional connections to North Africa and Europe through Niger, and to East and Southern Africa through the Central African Republic, then a country like Nigeria gives itself the opportunity to industrialize the whole continent through the production and export of its domestic gas while creating several thousands jobs,” Kola Karim added.

In that regards, incentives to be given to such critical midstream infrastructure, along with market policies to support gas valorization, form key parts of the African Energy Chamber’s Common-sense Energy Agenda released this month.

Africa needs to get used to a post-COVID-19 world where $50/barrel is the new $100, and where diversification needs to be the key priority in order to create a new hedge and natural buffer against future downwards cycles. “Diversification needs to become our new reality,” added Kola Karim.

“For Nigeria, it is time to stand up and focus on gas to become the gas platform producer that the continent needs. This pandemic should afford us all the opportunity to view our countries from an internal point of view and prepare ourselves and our economies for the next big crisis,” he concluded.

Africa Opens Doors To New Chinese Investments In Energy

The South Africa-China Economic and Trade Association (SACETA) and Africa Oil & Power (AOP) have entered a new partnership that will introduce Chinese technology, finance and know-how to a range of African projects, and build critical new commercial links within the private and public sectors.

The partnership agreement, signed today, sees Africa's leading energy event organizer join hands with China's top trade and investment association in South Africa. AOP looks forward to welcoming Chinese delegations to its events later in 2020, including conferences in Angola, South Africa, South Sudan and Senegal, and to facilitating profitable partnerships between Chinese enterprises and African companies and governments.

"China's impact on the African energy sector has been tremendous, but there is so much room still to grow in electrification, energy infrastructure building, and project financing," says AOP Acting CEO James Chester. "This partnership expands the AOP community with the aim of bringing meaningful investment into African projects."

"SACETA has more than 160 Chinese member companies based in South Africa in the sectors of energy, finance, infrastructure, mining, ICT and more," notes Wenan Wang, Chairman of SACETA. "The partnership signed will to some extent help bring more investment to the African energy sector and gradually solve the problem of power shortages on the continent."

Economic activity is rebounding in China, and as the country recovers from the COVID-19 pandemic, it is now reaching out to African and global partners to assist in their fight against the virus. With oil, gas and power being central to China's One Belt One Road initiative and African countries embracing Chinese investment, AOP's events will be an important meeting place and venue for deal-making and strategic discussion on the current state and the future of Africa-China energy relations.

AOP will aim to provide dedicated exhibition space for Chinese companies at all its 2020 events, set up bilateral meetings between government and private sector and between companies, facilitate deals between African and Chinese firms, and its conferences will act as a gateway into African markets for Chinese firms and authorities with a strategic interest in African growth opportunities.

Oil Price War: South Sudan Petroleum Minister Holds Talks With OPEC

While oil prices rebounded last week on hopes of successful negotiations between Saudi Arabia and Russia, they went back down again today following the negotiations' delay. Oil prices currently average $25 to $30 a barrel, maintaining their historic low and hurting producers around the world.

Recently appointed Minister of Petroleum of South Sudan, Hon. Puot Kang had talks over the phone with H.E. Mohammed Sanusi Barkindo, Secretary General of OPEC today, to try to find an exit out of the current crisis. Hon. Puot Kang also pledged to join the OPEC negotiations on Thursday April 9th, with the hope of reaching a favorable agreement that will stabilize the market and bring benefit to South Sudan and its producing companies.

South Sudan has been part of the OPEC Declaration of Cooperation and OPEC+ for years and a consistent supporter of OPEC's measures to prevent volatility and maintain market stability. Because 98% of the economy of South Sudan depends on oil production and revenue, the country is one of the hardest hit by the current crisis and prices war.

"South Sudan believes that market volatility is negative for every player in the market and hurts out ability to attract new foreign investment, diversify our economy and promote peace," stated Hon. Puot Kang. "South Sudan is focused on boosting exploration and opening up new oil & gas fields, and the current scenario hampers our growth targets significantly," he added.

Hon. Puot Kang notably expressed South Sudan's willingness to work with OPEC and OPEC+ to end the price war in any way possible. He also further welcomed OPEC's support in the exchange of information and best industry practices on key matters pertaining to local content development, domestic capacity building, technology transfers and oil revenue management.

Govts Must Protect Workers, Oil Companies From Unnecessary COVID-19 Litigation

The African Energy Chamber is calling on African governments and the judiciary to take actions to shield oil & gas companies and their workers from lawyers trying to take advantage of the Coronavirus pandemic to create instability in the workplace.

While most Africans are trying to cope with the uncertainty and issues of Covid 19 and low oil prices, the Chamber is concerned about trial lawyers that are hungry for big checks at the expenses of oil companies and their workers. In this context, it is critical that the judiciary does its best to limit frivolous labor claims to ensuring the stability and continuity of petroleum operations during these difficult times.

“African oil & gas companies have enough to worry about at the moment, and frivolous lawsuits should not be one of them. This is not the time for lawyers to see our industry as a dairy cow and try to get a big payday at the expense of companies and their workers,” stated NJ Ayuk, Executive Chairman of the African Energy Chamber.

“We cannot love jobs and hate those who create jobs. Protecting jobs and fighting this virus should be our greatest priority. Governments have to send a message that investors and their investments will not be put at risk by greedy lawyers and bureaucrats. For Africa to come out of the twin crisis of low oil prices and the coronavirus stronger than before, we need everyone to show some common sense,” added Ayuk.

African energy companies and services companies operating onshore and offshore need to be given protection from unnecessary litigation. Most companies at the moment are focused on keeping operations intact with the right HSE processes, and ensuring that they can generate revenue for governments and protect the jobs they have created for every day Africans. This should remain a priority.

The Chamber is pleased with the support that is being provided across Africa by oil and gas companies working together with governments across a range of support measures, and it is important to keep resources focused on fighting COVID-19, not lawsuits.

The oil sector will remain a pillar in the fight against COVID-19. BP has made a significant financial contribution to the WHO’s COVID-19 Solidarity Response Fund for example, and Dangote Industries has done the same with the Nigerian Private Sector Coalition Against COVID-19. NNPC on its sides has already donated six brand new ventilators to the University of Abudja Teaching Hospital.

Shall the situation on our continent worsen, we will be very relieved to have companies with the ability to provide such support the same way Total supports France and Eni supports Italy as thousands of lives are lost. During these times of uncertainty, frivolous lawsuits against petroleum operators and their associates could disrupt the essential role businesses must play in overcoming the crisis and in the recovery.

Consequently, the Chamber calls on governments of oil and gas nations like Nigeria, Equatorial Guinea, Angola, Congo, Gabon, Ghana, Cameroon, South Sudan, Libya, Senegal or Algeria to extend liability protections to medical professionals assisting workers on oil fields, protection from frivolous labour claims, and also assist oil companies with issues arousing out of their inability to honor rotation of employees due to lockdowns.

Most Hard Hit African Countries Amid COVID-19 And Oil Price Plunge Named

Angola revises national budget and suspends CAPEX; Senegal’s first oil development faces debt arrangement challenges; Nigeria poised for a major revenue loss; Analysts predict Ghana will get half its projected revenue; Cameroon can expect to see a three percent drop in economic growth.

African oil-producing and reliant countries have been among the most hard hit by the COVID-19 pandemic and declining oil price. In particular, Senegal, Nigeria and Angola continue to face new challenges each day amid the threat of economic fallout.

Angola

In 2020, the Angolan government led by H.E. President João Lourenço, had set out to focus on economic diversification and uplift the country from nearly five years of recession. However, in the face of the oil price slump, the oil-reliant country has slowed the implementation of its planned economic reform strategy, which had included the privatization of state-owned companies and plans to reduce public debt to less than 60 percent of GDP by 2022 from approximately 90 percent in 2018 and, over 100 percent in 2019.

In response to the current market instability, the Angolan government which relies heavily on oil revenue has declared a state of emergency and made the decision to review its national budget. With this, it will object its budget on a reference oil price of $35 per barrel maximum - a significant cut from the initially drawn up $55 per barrel, Finance Minister Vera Davis de Sousa revealed on Friday, explaining that the country’s oil production is expected to tumble to 1.36 million barrels per day(bpd).

Further, Davis de Sousa shared that Angola would also be freezing 30 percent of its goods and services budget and its CAPEX would be suspended pending completion of the budget review. Meanwhile, the Angolan sovereign wealth fund has agreed to offer $1.5 billion on condition of future repayments through increased tax in the Bank of Angola’s growing debts.

“In this time, the Angolan economy will be best served by swift government action,” said NJ Ayuk, Executive Chairman of the African Energy Chamber. “With the finance minister already confirming that the country’s economy will shrink by 1.21 percent this year, signally a fifth year of recession, Angola needs a solid action plan that involves intense renegotiation strategies with domestic and foreign creditors, if it is to make it out on the other side,” he added.

Senegal

Since discovering oil and gas in 2014, the West African country emerged as a major player in the global oil and gas industry, with it moving rapidly on setting up a new Petroleum code in 2019, creating new entities such as COS-Petrogaz and revising local content regulations. As a result, the country has enjoyed increased foreign investment and entry of international majors. However, global market turbulence has had a hard knock-on effect on Senegal’s promising oil future.

In particular, the country’s first oil development, the $4.2 billion Sangomar deepwater offshore project has suffered immense pressure as project partner FAR Ltd fails to finalize debt arrangements. Citing current environment as a major contributor, FAR said: “the company’s ability to close the Sangomar Project debt arrangements that were ongoing during this time have been compromised such that the lead banks to the senior facility have now confirmed that they cannot complete the syndication in the current environment,” adding that neither the junior nor mezzanine facilities that were being arranged will be able to be completed for the foreseeable future. Project operator, Woodside and partner Cairn, continue to explore other options to see through project development.

The current global environment also stands to slow down the country’s other activities in the sector specifically, the country’s first offshore licensing round which was launched earlier this year by the national oil company, PETROSEN as a means to further push the countries exploration and production.

Though the government is yet to share incentives for companies to continue activities, it has set up a fund to support the local economy.

“Senegal is undoubtedly one of the most promising oil and gas producers Africa has to offer. Led by H.E. President Macky Sall, the country is primed for new growth and investment. Despite what is happening in the global market, we hope to see Senegal build on its eight oil and gas discoveries, and enjoy first oil from the Sangomar oil field and first gas from BP’s Greater Tortue Ahmeyim LNG project,” said NJ Ayuk, Executive Chairman of the African Energy Chamber.

As it stands, Senegal has also seen Cairn Energy reduce its planned investment to below $330 million from the initial forecast of $400 million.

Nigeria

Nigeria is projected to suffer substantial revenue losses. With it having planned for an oil  price of $57 in 2020, the low oil price presents massive struggles for Africa’s largest oil producer. To this point, Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari said at a crude oil price of $22 per barrel, high-cost oil producers like Nigeria should count themselves out of the business.

To this, the Atlantic Council has predicted that COVID-19 would cause the country to suffer the biggest lost in the continent with $15.4bn, representing about 4% of the nation’s GDP, a fair assessment considering the country has over $58bn in oil projects set to suffer delays or cancellations.

Though the country is yet to announce incentives for continued oil exploration and production, it is set on protecting its oil production which contributes generously to its economy. Specifically, the country’s petroleum regulator has, according to Reuters, ordered oil and gas companies to reduce their offshore workforce and move to 28-day staff rotations in order to avoid the spread of coronavirus.

“Nigeria is at risk to suffer the biggest loss. With the low oil price pushing the country to cut its budget and companies to reduce their CAPEX, the global is waiting to see Nigeria’s next move,” said NJ Ayuk, “Although it is hard to see the light for Nigeria, with the commitment of companies and resilience of the government, the country can certainly weather the storm, “ he added.

Ghana

The fall in oil prices coupled with COVID-19 has also had heavy impacts on Ghana’s oil industry, which has been on a path of steady growth for over 10 years since Kosmos Energy’s oil discovery west of Cape Three Points in the country’s offshore. And, more recently, Springfield Group’s historic 1.5 billion barrels.

Having set a benchmark of $58.66 oil price per barrel until the end of 2020, Ghana’s projected oil revenue is set to take a hit, with analysts already predicting the country will get half its projected revenue.

Oil production activity is also expected to see delays as Tullow Oil revises production targets and terminates the drilling contract with Maersk Drilling for the Maersk Venturer drillship offshore Ghana.

“If prices should stay around the US$30 mark, then the government is less likely to get half of the revenue that it projected. Already, we’ve seen Tullow cut back it’s production. So aside the international fall in crude oil price that we have to match with in selling our own bit of oil that we get as a country, production is also falling in our own shores,” said Paa Kwasi Anamua Sakyi, Executive Director at the Institute for Energy Security.

Cameroon

According to an analysis of the economic and financial impacts released by the Press Secretariat of the CEMAC Economic and Financial Reforms Programme, Cameroon can expect a three percent drop in growth in light of the global crisis.

Operations in the oil also stand to be affected with the country already seeing a turn. Specifically, with companies such as Tower resources declaring force-majeur on its development in the Thali block in the country’s offshore. The company also revealed that activity on the NJOM-3 offshore well may also be suspended.

Although the government has not announced any incentives for continued activity in the sector, it has acknowledged the non-oil commodities that will contribute the most to the country’s economic decline.

Now is an extremely challenging time for African oil development, the African Energy Chamber encourages Africa’s oil producing countries to adapt to the changes, implement incentives and plan for the future. This global crisis can only be worked through with continued commitment, support and collaboration.

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