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. 

Tanzania watchdog okays BP sale of fuel firm stake

- Tanzania's competition regulator on Friday approved the sale by London-based BP of a 50 percent stake in a fuel marketing business in the east African country to Puma Energy, a subsidiary of Dutch commodity trader Trafigura.

The deal follows an announcement by the oil major in November that it had agreed to sell its southern African network to Trafigura for $296 million, part of a trend that oil majors are exiting fuel retail businesses.

The go-ahead was granted by Tanzania's Fair Competition Commission (FCC) after BP announced it would sell interests in forecourts and supply businesses in Namibia, Botswana, Zambia, Tanzania and Malawi to Puma Energy.

Oil traders such as Trafigura have not historically involved themselves in fuel retail business.

Tanzania's government, which owns the remaining 50 percent stake in BP Tanzania, did not object to the acquisition.

Gulf Power Ltd Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project description The project is the development of an 80 MW Heavy Fuel Oil (“HFO”) diesel power plant, including a 66kv interconnector and backup metering equipment on a 20 years build-own-and-operate basis in the Mombasa Road area of Nairobi, Kenya (the “Project”). The project will have a 20 year Power Purchase Agreement (“PPA”) with Kenya Power and Lighting Company (“KPLC”), the national transmission and distribution company. The developer of the Project is Gulf Power Limited (“GPL” or the “Company”), a special purpose company incorporated in Kenya by a consortium of Kenyan investors with a view to enter the power generation business in Kenya. The Project is one of 3 Independent Power Projects (“IPPs”) for which KPLC had sought Expressions of Interests (“EOI”), in June 2009. These IPPs were expected to generate 60-80 MW each using medium speed diesel engines with HFO as the fuel. The projects were awarded through a competitive bidding process based on the lowest electricity charges. GPL submitted an EOI to bid for the Project. In the final bidding held on December 15, 2009, GPL was the lowest bidder for the development of an 80 MW plant on the Mombasa Road, Athi River Site and on that basis was awarded the concession.

Kenyan firm plans 80 MW diesel plant

 Kenyan firm, Gulf Power, plans to generate 80 megawatts (MW) of power from thermal sources for the national grid.

Several parts of Kenya are experiencing severe drought, which could lead to the use of diesel to generate power as has happened in the past.

Meteorologists are forecasting depressed rainfall within the first six months of 2011.

The east Africa nation relies heavily on hydroelectric dams for power, which have proved inefficient in times of drought.

"The generating system will comprise heavy fuel oil-powered generators capable of generating a net electrical output of 80.32 MW," Gulf Power said in a statement.

The firm said it had applied for a power generation licence from the sector regulator.

Another power generating firm, Iberafrica, said  it would buy 320,000 tonnes of heavy fuel oil for its 110 MW power plant in the capital for use over the next 24 months.

Africa poised to become energy powerhouse

A CONTRIBUTOR | APRIL 2011 | SOURCE: The Citizen

Africa could hold the key to solving the world’s looming energy crisis but unlocking the continent’s vast potential will not be easy.

As supplies of oil and gas from traditional sources diminish, international energy companies are pushing into increasingly volatile and environmentally-sensitive territory in their scramble to meet demand.

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Among the most controversial projects on the starting blocks for 2011 are a proposed $17 billion development of the world’s third largest hydroelectric dam in the Amazon rainforest and the possibility of drilling in Alaska’s Arctic Refuge.

But it is in Africa that many believe the most potential lies for boosting energy supplies. Over the next two decades, 90 per cent of new resource development in oil and gas will be in the developing world, and much of that in Africa.

Industry experts are asking whether Africa’s transformation into an energy powerhouse could offer an answer to the energy conundrum – both as an oil producer and a testing ground for large-scale clean energy. But potential investors need also to be aware of the risks.

Africa already accounts for 10 per cent of the world’s oil supplies but a second generation of oil production has emerged in the last three years, most recently off Ghana’s coast. This has been spurred in part by rapid advances in drilling technology which have prized open new reserves.

"Everyone knew the Guinea basin was a very rich deposit for hydrocarbons, but until recently all the attention focused on a small group of countries that were seen as worthwhile investments,” says Philippe de Pontet, an analyst at political risk consultant Eurasia Group, adding: “ [But today] even countries that were totally off the radar are getting a fresh look.”

Compared to Middle East crude, African oil has many advantages. It is light and low in sulfur – a quality highly prized by refiners – it is located primarily offshore and favorable production sharing agreements are readily available.

“With the decline in production [of this kind of oil] in Europe, there should be a constant demand for crude from Africa in the future,” says Olivier Jakob, an analyst at Petromatrix.

While some of the biggest finds have been in Uganda and Ghana, Sebastian Spio-Garbrah, founder of risk consultant Da Mina Advisors, says that exploration off the shore of Kenya and in Tanzania and South Sudan is the most crucial for the Asian market, due to lower shipping costs. “There you have the real prospect that exploration... could rise dramatically.” However, concerns remain over the environmental impact of so many large-scale energy projects in developing countries.

“There’s certainly more talk of environmental protection,” says Julian Lee, an analyst at the Center for Global Energy Studies. “It’s not clear whether this will translate into regulation on the ground, but it will become much more important. Companies have fewer places to hide these days and are closely scrutinized by NGOs, if not governments.

Regulation is no silver bullet in Africa, but it is hoped it could help pen a new chapter for African oil.

According to Mr de Pontet, the Gulf of Mexico Spill acted as a wake-up call for governments in relation to the tourism, fishing and farming industries. “Even in Angola the government is looking to enforce tougher regulations for offshore drilling. The BP spill gave additional momentum,” he says.

Not only is Africa rich in natural gas and oil, but the continent also has plenty of sunshine, strong winds, countless powerful river systems and hydroelectric dams. Africa’s electricity supply continues to depend heavily on carbon-based energy sources, but an increasing number of governments are looking at the potential of wind turbines, solar panels and other forms of cleaner energy.

Opportunity for development in renewable energy in Africa is huge, with the potential to draw in foreign investment as well as funding from the World Bank’s Clean Technology Fund to spearhead a green revolution. (Agencies)

Energy experts believe renewable technologies could even allow poor communities without electricity to leapfrog the West’s high-carbon technology, in the same way mobile phones jumped over landline technology in many developing African countries. At the end of 2008, Africa’s installed wind power capacity was just 593 megawatts, but by the end of last year it was just under one gigawatt (1000 megawatts).

African Oil Supply – Taking Stock

CGES  | SOURCE: Quarterly Oil Supply

Oil production from the non-OPEC countries of the continent of Africa was much lower than expected in 2008.

Output fell by around 40,000 bpd instead of rising by 120-140,000 bpd, as predicted by the CGES and most other forecasters, including the IEA and OPEC. This year, however, the CGES expects oil production in non-OPEC Africa to rise by 85,000 bpd.

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The biggest disappointment was Congo (Brazzaville), where output was expected to rise sharply as Total’s 65,000-bpd N’Kossa field came back on stream after a fire in May 2007 and Total’s 90,000-bpd Moho Bilondo deepwater offshore oil field started up.

However, detailed monthly data for Congolese oil production, published by the Energy Industries Transparency Initiative (EITI), show that output of oil liquids (crude, LPG & NGLs) averaged only 237,000 bpd in 2008 — significantly lower than most analysts had assumed but up 13,000 bpd on the 2007 figure.

Although Moho Bilondo came on stream in April 2008, a month ahead of schedule, output only reached 34,000 bpd by the end of last year, limiting its contribution to the annual average.

Production wells are still being drilled and the field is not expected to reach capacity until 2010. Output from Congo (Brazzaville) is expected to increase again this year as output continues to rise from Moho Bilondo, but the gains will be limited by lower output from existing mature fields, which are declining at around 10% according to the EITI data.

Sudanese Oil

Oil production in the Sudan was also lower than predicted, averaging only 462,000 bpd in 2008 — down 22,000 bpd on the previous year. The Sudan had hoped to maintain its output close to 500,000 bpd last year following the completion of the Dar Blend export terminal, but rising production of Dar Blend from Blocks 3 & 7 was more than offset by a sharp fall in the supply of Nile Blend, which averaged 205,000 bpd in 2008, down 40,000 bpd (17%) on the year before. Yet despite this setback, the Sudan’s oil production is expected to recover in 2009.

The 50,000-bpd Gumri field started up in January, lifting the supply of Dar Blend and another 50,000-bpd field, Qamari, is also expected to start up this year. The Sudan hopes to raise Dar Blend output to 300,000 bpd by the end of 2009, but this may be optimistic, since last year’s 275,000-bpd target was not achieved: output of Dar Blend averaged 199,000 bpd in 2009, up 24,000 bpd on the previous year.

The CGES expects the Sudan’s oil production to average 500,000 bpd in 2009 — significantly lower than the official target of 600,000 bpd — as falling output of Nile Blend continues to offset the gains from Dar Blend.

The picture is mixed across the rest of non-OPEC Africa. Output is rising in Egypt, where new small fields are more than compensating for declining output at mature fields. Egyptian crude oil and condensate production averaged 673,000 bpd in 2008 — up 30,000 bpd (5%) on the previous year— and had exceeded 700,000 bpd by the middle of this year.

Oil output is also thought to be rising slowly in Gabon, where new fields developed by smaller independent oil companies are at least compensating for the declines at Rabi and Mandji. However, accurate and up-to-date information is hard to obtain. Although Gabon is participating in the EITI process, the latest report, published in March 2008, covers 2006 when output was just below 240,000 bpd. This year, Vaalco plans to expand output from its Ebouri and Etame fields by around 5,000 bpd.

Elsewhere in Africa output is falling slowly in Cameroon, Chad, Equatorial Guinea, the Ivory Coast, Mauritania and Tunisia, although higher output is expected from the Ivory Coast in 2009 following the start-up of CNRL’s 20,000-bpd offshore Olowi field in May and new wells at the Baobab and Espoir fields.

For a full insight into African oil, take a look at the African Oil & Gas Sourcebook 2010