In the year that slide in global oil prices defined the landscape of the industry, Businessday West Africa Energy takes a look at the key events that have shaped the West African oil and gas year.

Nigeria, Ghana, Gabon have lowest fuel pump price in West Africa

Nigeria, Ghana and Gabon have the lowest fuel pump price in West African sub region. According to latest data on global petrol prices, Nigeria has the lowest pump price of fuel in the sub-region at $0.43 per litre followed by Ghana and Gabon with $0.79 and $0.84 per litre respectively as at September 28, 2015.

Outside of the West African sub-region, the lowest pump price of fuel is obtained in Libya at $0.14 per litre followed by Algeria with $0.22 per litre. Nigeria is the third African country with the lowest pump price of fuel followed by Nambia, Sudan, Chad and Egypt with pump prices of $0.74, $0.76, $0.77 and $0.78 per litre respectively.

Within the West African sub-region, the highest pump price of fuel is obtained in Senegal, Mali, Bukina Faso, Cote d’Ivoire, Republic of Benin, Sierra Leone and Liberia with the pump prices of $1.31, $1.23, $1.20, $1.12, $0.96, $0.91 and $0.86 respectively. While in Africa, Djibouti, Zimbabwe and Malawi have the highest fuel pump price at $1.72, $1.56 respectively.

Eni committed to $7 billion gas project in Ghana despite drop in oil price

Eni has reassured Ghana’s Petroleum Ministry that the company is committed to the country’s oil and gas industry despite the current downturn in crude oil price.

Umberto Carrara, executive vice president for Sub-Sahara African during a courtesy call on the Petroleum Minister, Emmanuel Armah-Kofi Buah said the drop in crude oil price has caused several Exploration and Production (E&P) companies to slash tens of billions of dollars in capital spending but stated that Eni is fully committed to the Offshore Cape Three Points (OCTP) Sankofa Gas Project in Ghana.

Endorsed by the World Bank and IFC, the OCTP Sankofa Gas Project which will usher in Ghana’s third FPSO is undoubtedly the biggest gas investment in the sub region in recent times, making Ghana to permanently take her seat in the league of hydrocarbon producing nations.

The project is being developed in two phases; the first phase involves construction of an FPSO and subsea facilities for oil production, whilst the second phase is to ensure the development of the natural gas resources and transportation to the local gas market. Recoverable reserves are estimated at 162mmbls for oil and 1.07 TCF for gas. The projected total Investment is about US$ 7.28 Billion and it is expected to produce 60,000 bopd by 2017 and 180 MMScfd of Gas by 2018.

Ghana, Nigeria, Liberia offer lowest diesel prices in West Africa

Ghana, Nigeria and Liberia offer the lowest diesel prices in West Africa according to the latest global diesel prices dated October 26, 2015 and monitored by West Africa Energy. According to the data, the cheapest diesel price in the sub-region is obtained in Ghana with a pump price of $0.71 per litre while the product retails for $0.74 and $0.86 per litre in Nigeria and Liberia respectively.

The highest retail price for diesel in the sub-region is obtained in Guinea, Senegal and Bukina Faso with $1.20, $1.18 and $1.12 per litre respectively. Both Togo and Mali occupy the fourth position in the sub-region’s highest retail price for diesel with $1.09 per litre.

For the rest of Africa, however, the lowest pump price for diesel is found in Libya, Algeria and Egypt with $0.11, $0.13 and $0.23 per litre respectively. Somali, DR Congo and Central Africa Republic offer the highest pump price of diesel in Africa with $1.45, $1.42 and $1.34 respectively.

 

Lukoil may quit most projects in West Africa as no large discoveries made

Russia’s Lukoil oil company may leave almost all of its projects in West Africa as it has made no large discoveries there, Leonid Fedun, the company’s vice president said.

“Many of these projects need more studies, but I am rather pessimistic. No decisions have been made, but we have not made any big commercial discoveries,” he said.

It will be recalled that between 2011 and 2012, Lukoil’s focused on the attempt to carry out exploration and subsequently, the appraisal of its 3 offshore blocks in Cote d’Ivoire, 1 block in Ghana and another block in Sierra Leone in addition to some additional acquisitions of upstream projects in the waters of other West African states.

Lukoil took over the operatorship of offshore exploration projects CI-101 and CI-401 (Republic of Cote d’Ivoire) and Cape Three Points Deep Water (CTPDW, Republic of Ghana) from Vanco Group. All of the three blocks are located close to each other on the deepwater continental slope in the Gulf of Guinea.

Lukoil entered these projects in 2006 with a share of 56.66 percent. Since then 3 deepwater exploration wells were drilled (Dzata and Cheetah prospects) within CTPDW block which discovered a field with hydrocarbon reserves of non-commercial categories.

Ghana’s government pushes for more taxes on petroleum products in 2016

Ghana’s majority in Parliament recently rushed through an emergency Energy Sector Levy Bill (2015) that will impose more taxes on petroleum products after it was introduced in the House on December 21 by the Finance Minister, Seth Terkper.

The new levies, which take immediate effect, were strongly opposed by the Minority members who argued that they would impose more hardship on the already suffering Ghanaian.
The Road Fund component of the price build-up is now GH¢0.40 per litre from the previous GH¢0.07 per litre. Also, there is a tax of GH¢0.05 on diesel and LPG as PSM; GH¢0.28 on petrol, diesel and LPG as PIS levy; GH¢0.05 on petrol as PSM; GH¢0.05 on petrol as recovery margin, GH¢0.05 on petrol, diesel and GH¢0.23/kg on LPG as forex under recovery and UPPF at GH¢0.09 per litre.

According to the Finance Minister, the urgent bill is to restructure, re-nationalize and consolidate energy sector levies to promote the prudent and efficient utilization of proceeds derived from the levies to facilitate sustainable long-term investments in the energy sector.

Pressure from high freight rates add to dampen Nigerian crude demand

Nigeria’s government in July this year through the state oil company, Nigerian National Petroleum Corporation (NNPC) banned 113 Very Large Crude Carriers (VLCC) from engaging in crude and gas loading activities in any of the terminals within Nigerian territorial waters.

The document giving the order was signed by Gbenga Komolafe, the group general manager of NNPC’s crude oil marketing division.

It stated that NNPC has prohibited 113 tankers “from engaging in crude oil/gas loading activities in any of the terminals within the Nigerian territorial waters until further notice.” The letter dated July 15 was addressed to terminal operators in Nigeria. The tankers were listed in an attached spreadsheet.

“The affected vessels have also been barred from movements within the Nigerian territorial waters forthwith,” it said.

The Nigeria National Petroleum Corporation (NNPC) defended its action, saying it was ordered by President Muhammadu Buhari with the ban of curbing the theft of the Nigerian crude oil.

Vessel owners, through International Association of Independent Tanker Owners (INTERTANCO) protested the ban, saying the Nigerian authorities failed to substantiate the allegation of crude oil theft against the vessels.

Democratic Republic of Congo’s National Assembly passes oil code

The Democratic Republic of Congo’s National Assembly voted for a new oil code amid a flurry of legislation passed, said Aubin Minaku, the assembly president.

The new law “will establish transparency by defining the terms for granting hydrocarbon rights,” Minaku said in his speech to lawmakers. It will also “assure the security of investments, and put in place a fiscal regime that will allow the Congolese state to profit from its hydrocarbons resources.”

Congo’s Senate had previously passed a version of the code and Minaku said the assembly used its constitutional right to pass its version of the code with or without amendments by the Senate. President Joseph Kabila would still need to sign the new code into law.

The DROC has crude oil reserves that are second only to Angola’s in southern Africa. As of 2009, the DROC’s crude oil reserves came to 180 million barrels. In 2008, the DROC produced 19,960 barrels of oil per day and consumed 11,000 barrels per day. As of 2007, the DROC exported 20,090 barrels per day and imported 11,350 barrels per day.

Ghana to use floating power plants to boost grid

Ghana is set to add power to its electricity grid by using a “powership”‚ a ship designed to produce electricity. The Karadeniz Powership Ayşegül Sultan‚ capable of producing 235MW has been launched and set sail for Ghana from Tuzla Sedef Dockyard in Turkey.

Karadeniz‚ a Turkish energy company based in Istabul‚ owns a fleet of floating power plants which are hired out to countries needing additional power. Countries such as Iraq‚ Liberia and Indonesia have used these sources of power.

The powerships produce electricity through the use of natural gas or heavy fuel oil‚ which is then fed into the grid of the recipient country.

The Electricity Company of Ghana‚ which is affiliated to the country’s Ministry of Energy‚ signed an electricity procurement agreement with Karpowership Ghana Company‚ a subsidiary of Karadeniz Holding. The agreement will see two powerships delivered to the country to provide a total of 450MW of power to Ghana’s grid.

Ship owners eye premium for Nigeria crude oil loadings

Ship owners now ask for a premium on freight rates for ships loading crude oil out of Nigeria following the NNPC requirement that all oil tankers loading in Nigeria would need to sign a “letter of comfort” to contain a spate of crude oil thefts.

NNPC released two versions of their template for the letter, which caused uncertainty and raised eyebrows among ship owners and charterers because it exposed both parties to legal responsibilities outside their control.

“NNPC’s guarantee terms would allow the Nigerian authorities to impose an arbitrary penalty for breach of local law – of which owners might be unaware – and then demand an indemnity for their losses without the need to prove any loss,” Michael White said.

It has complicated operations for Nigerian crude oil buyers, although loadings are continuing as normal, with some companies and ship owners signing amended versions of a letter.

However, it has emerged that two ship owners have started charging a premium of up to Worldscale 10 for ships loading from Nigeria because of the requirement. The SCF Altai, owned by Sovcomflot, was placed on subjects to Repsol for November 12 loading dates at Worldscale 87.5 on a West Africa to Spain route.

At the time other fixtures for a Suezmax on a West Africa to Mediterranean route were being done at around Worldscale 77.5 and 80. A representative of Sovcomflot said the ship was still on subjects at w87.50 but he declined to comment on the letter of comfort obligations it had agreed to.

Angola to ship more crude to meet Asian demand

Angola will export more crude in almost four years in October as the OPEC member satisfies Asian demand and offsets diminished revenue from lower oil prices.

Africa’s second-largest producer plans to ship 1.83 million barrels a day in October, the most since November 2011. This compares with 1.77 million barrels a day in September.

Angola slashed its budget by a quarter in response to the slump in crude prices, which have lost more than 50 percent in the past year. The African nation’s bid to recapture revenues is supported by demand in China, the world’s second-biggest oil- consumer, which imported near-record levels of crude in July.

“Angola continues to profit mainly from Chinese demand, in addition to some demand from India and Indonesia,” said Ehsan Ul-Haq, an analyst at KBC Economics in London.

The single biggest increase will be in shipments of Dalia, which will expand by more than 55,000 barrels daily to 245,000 barrels a day, according to the schedules. Total SA boosted output at Block 17 at the Dalia complex by 20,000 barrels a day in July, helping push production at the field toward 200,000 barrels a day, the International Energy Agency said.

 

Total reaches 2 billion barrel milestone in Angola

Total has reached the milestone of producing two billion barrels of oil from its deep offshore Block 17, which is located approximately 90 miles off the coast of Angola.

Block 17 is currently Total’s most prolific site with a production rate of over 700,000 barrels per day. Total operates the region with a 40 percent interest alongside Statoil, which holds a 23.33 percent interest, Esso Exploration Angola Block 17, which holds a 20 percent interest and BP Exploration Angola, which holds a 16.67 percent interest. Sonangol is the concessionaire of the license.

Arnaud Breuillac, Total President, Exploration & Production said in a company statement: “Block 17 is a global benchmark in the deep offshore and represents a unique industrial adventure, with 15 discoveries and a very high level of production”.

Frank Uzuegbunam