Total ventures into offshore Kenya

Total has made a major play off East Africa as it snapped up a huge chunk in five Kenyan offshore blocks.

The French supermajor has hatched farm-in agreements with US stalwart Anadarko and London-listed independent Cove Enervy for the quintet of blocks in the Lamu basin, it announced on Wednesday.

The deal for a 40% cut in the blocks follows reports early last month that Total was eyeing acreage in Kenya although it was unclear if this would be on shore or offshore.

Total is taking 20% of Anadarko's share in blocks L5, L7, L11a, L11b and L12 although the latter will stay on as operator with a 50% share. The French player is also getting its hands on 5% of Cove's holding in the blocks with Cove holding on to a 10% cut.

The agreement sees Dynamic Global Advisors sell out its entire 15% stake in the blocks to Total, however.

The blocks cover a total area of 30,500 square kilometres with water depths ranging from 100 to 3000 metres. A 3D seismic survey programme is currently underway.

No purchase price was revealed but Cove said drilling operations are set to kick off in the second half of next year.

Total's senior vice president for exploration, Marc Blaizot, commented: “This transaction is part of a bold exploration strategy that consists in acquiring large stakes in high-potential frontier plays.

"Recent discoveries in offshore Mozambique and Tanzania offer a very promising outlook for these Kenyan permits.”

Last month news wire Dow Jones reported that Total had shown an early interest in one block in Kenya. The report cited Kenyan petroleum official, Martin Heya, as saying Total Kenya Limited was in contact with the government in May with regards to acreage.

Kenya represents a new frontier in oil and gas exploration as the country does not currently produce any oil.

Total has been active in East Africa recently after being awarded oil and gas exploration rights in neighbouring Tanzania last month. Total beat off competition from nine other bidders for the acreage on the northern side of Lake Tanganyika.

The Tanzania Petroleum Development Corporation has divided the Tanzanian side of Lake Tanganyika into two blocks, with the southern portion awarded to Australia's Beach Energy in 2008.

China to Lend Tanzania One Billion Dollars for Pipeline

China and Tanzania are to sign a $1.06 billion loan agreement to build a natural gas pipeline from the southern part of the east African country to its commercial capital, a Tanzanian newspaper wrote.It is hoped the project will put an end to the country's chronic energy shortage.Last month, Energy and Minerals Minister William Ngeleja said in a presentation to parliament that the government was seeking loans from China to finance construction of the pipeline from Mtwara to Dar es Salaam.

The Guardian on Sunday newspaper reported $300 million of the loan will be used to construct processing plants at Mnazi Bay, and that Finance Minister Mustafa Mkulo and Ngeleja were expected to fly to Beijing next week to sign the loan agreement.

Must project

"This is a must project for the future of this country ... we have secured financing from the Chinese and the agreement will be signed next week," Ngeleja was quoted saying.

"Some people have been misleading the public by saying the Chinese own this project, but the truth is it's government owned ... The Chinese are financiers and the project will boost gas supply as well as reducing or ending the power supply problem in the country."

Tanzania's chronic energy shortages have resulted in rolling power outages, undermining economic growth in the country.

Away from hydropower

The Tanzanian government said it plans to shift its focus to investment in thermal plants fuelled by natural gas and coal in attempts at weaning itself off weather-dependent hydropower, which accounts for 55 percent of the country's energy sources.

The paper reported the project will be carried out by the China Petroleum and Technology Development Company (CPTDC) a unit of China National Petroleum Corp (CNPC) , and state-run Tanzania Petroleum Development Corporation.

Aminex Takes over Ruvuma Basin

London-listed Aminex has taken over operatorship of Tanzania’s Ruvuma basin permit in a reshuffling of licence interests ahead of drilling of a key exploration well later this year.

Previous operator Tullow Oil has handed over the reins with immediate effect to Aminex as the partners on the Ruvuma production sharing agreement prepare to spud the Ntorya-1 well in the Mtwara block at the underexplored play in November.

Following a re-assignment of interests by Tullow to partners, Aminex will hold a 56.25% interest with Tullow on 25% and remaining stakeholder Solo on 18.75%. The stake transfers remain subject to Tanzanian government approval.

Aminex said the transfer of operatorship was “a logical and practical move” given that it is already operating a well using the Caroll Rig-6 that will be moved to the drill the Ruvuma well once its present drilling job at Nyuni-2 is completed.

Ntorya-1 is a follow-up to the Likonde-1 well drilled last year that provided strong evidence of oil and gas but was not a commercial discovery.

The new probe will be drilled south of Likonde to a depth of about 2020 metres with drilling expected to take 25 days to reach target depth.

“Both Solo and Aminex have a strong focus on Tanzania and by gaining a greater participation in the PSA will jointly be able to advance the work programme more quickly,” said Solo executive director Neil Ritson.

Aminex chairman Brian Hall said the Ntorya prospect is “in one of the last major underexplored deltaic basins in Africa”.

Aminex was originally awarded the PSA with a 100% interest in 2005 and acquired the original seismic before handing over operatorship to fellow UK independent Tullow.

The Ruvuma basin, located both onshore and offshore Tanzania, has triggered strong exploration interest, with several successful deep-water gas wells drilled by Anadarko in the Mozambique sector of the basin.

Earlier this year, BG Group and partner Ophir Energy drilled an offshore gas discovery in the Tanzanian sector in a licence adjoining the Ruvuma PSA.

Brent Falls Below $111 on US Recession Fears

Brent crude fell below $111 a barrel on Monday, as fears of another U.S. recession slowing fuel demand overshadowed supply concerns over a major shutdown of offshore oil production forced by Tropical Storm Lee.

CNBC.com

U.S. employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy.
   
London Brent crude [LCOCV1  110.50    -1.83  (-1.63%)   ] fell 61 cents to $111.72 a barrel by 0248 GMT, after falling to as low as $111.46 earlier. Brent plunged almost $2 a barrel on Friday on the disappointing jobs data released in the U.S. 
   
U.S. light, sweet crude [CLCV1  84.05    -2.40  (-2.78%)   ] was down 67 cents to $85.78 a barrel, after settling $2.48 lower at $86.45. Friday's oil losses wiped out part of U.S. crude's 4.1 percent gain in the week through Thursday.  
   
"The macro situation is leading to fears of a double-dip recession. And there has been a recent trend of selling into strength when the market hits a soft patch," said Chen Xin Yi, a commodities analyst at Barclays Capital in Singapore. 
   
Asian stocks followed Wall Street lower on Monday, after the U.S. Labor Department said employers added no net new jobs last month and July's total was revised lower.
   
Compounding fears of a recession in the United States, Europe faces a string of political and legal tests this week that could hurt efforts to resolve its sovereign debt.
   
However, worsening economic woes may also raise the odds of more quantitative easing (QE) by the U.S. Federal Reserve . That could cheapen borrowing, weaken the dollar, and encourage investment in commodities as an asset class.  
   
"This is likely to bring further calls for quantitative easing, despite the Fed's apparent aversion," said CMC Markets market strategist Michael McCarthy in a research note.
   
Brent oil will fall further to $109.01 per barrel, while U.S. oil is also expected to fall more to $84.20 per barrel, according to Reuters market analyst Wang Tao.
 
Storm Watch
   
Providing some support for prices was oil companies' shutdown of more than half the crude production in the U.S. Gulf of Mexico due to Tropical Storm Lee, which is hindering efforts to restaff and restart oil and gas platforms in the basin.
   
Lee reached Louisiana's coast early Sunday, but was moving inland very slowly. Its 45 miles-per-hour (75 kmph) winds grounded helicopters on standby for oil and gas companies that would have otherwise ferried workers out to do post-storm assessments and restaff facilities. 
   
"Reports that about 60 percent of crude refinery capacity was halted while Tropical Storm Lee hit the coast could lead to further declines in crude stockpiles in the latest government inventory report," ANZ Bank said in a research note. 
   
Another storm, Hurricane Katia, intensified over the open Atlantic on Sunday, bulking up to a powerful Category 2 storm, the U.S. National Hurricane Center said.
   
The Miami-based hurricane center said it was still too soon to gauge the potential threat to land or to the U.S. East Coast with any certainty.  
   

But most computer models showed the storm veering on a northeast track out to sea after moving safely west of the mid-Atlantic island of Bermuda later this week.  
     
The European Union imposed a ban on purchases of Syrian oil on Saturday and warned of further steps unless President Bashar al-Assad's government ended its five-month crackdown on dissent.
   
In Libya, forces loyal to Muammar Gaddafi refused on Sunday to give up one of their last strongholds without a fight, raising the prospect of an assault on the town of Bani Walid. 
   
The EU has lifted sanctions on Libyan ports and oil firms, but few expect the country's normal oil production — around 1.6 million bpd — to be restored soon, after a civil war halted its oil sector this year.