Energy Resources

Big Men: The Story Of Oil In Africa

A new documentary highlighting African oil corruption in the Niger Delta is set to open across the U.S. this week in theaters.  It was filmed by Rachel Boyton in late 2006 as she was trekking through the oil-rich Niger Delta region of southern Nigeria and tells her chronicle of the petroleum-fueled pursuit of wealth and status in Africa. Below is the trailer to the film.

The central narrative of the film is that it takes place in Ghana, some 200 miles to the west. Boynton somehow convinced Dallas oilman James Musselman and his British-born colleague Brian Maxted–the chief executive officer and chief operating officer, respectively, of a privately held exploration company called Kosmos Energy–to let her shadow them with cameras and microphones as they drilled their way through layers of Ghanaian politics and bureaucracy, and the white-hot core of Wall Street, in order to reap the financial rewards of an amazing discovery. Kosmos had raised $825 million in private equity investment from Warburg Pincus and the Blackstone Group and located the country’s first known oil reserves: a multi-billion barrel, deep-sea deposit, 40 miles off the Ghanaian coast in the Atlantic Ocean and dubbed the Jubilee Field.

As to why oil executives would have a documentary film maker follow them around, Musselman explains that “Rachel is very persuasive, She was passionate about the story. I thought it was a good story that just got better, frankly, as time went on. We don’t enjoy great reputations a lot of the time. I thought this was a good story to show how in Ghana, we could transform the lives of a whole lot of people for the better. And I thought her contrast back to Nigeria was really good. I’d seen some of her previous work and I thought she’s gonna do a good job. It wouldn’t be any kind of expose’ or anything bad. I trusted her.”

I look forward to seeing this film myself.

Tunisia gives Royal Dutch Shell oil exploration deal

In a move to attract foreign investment, Tunisia has award Royal Dutch Shell with an oil exploration deal.

Royal Dutch Shell has won a $150 million oil exploration deal in Tunisia as part of plans to attract investments to the energy sector, the industry minister said on Saturday.

“Shell will drill oil wells in the centre of the country at a cost of $150 million,” Lamine Chakari said.

Exploration and drilling operations will take place in the areas of El Jem, Kairouan, Sousse and Sfax, he said, without giving more details.

This is a continuation of African nations discovering more oil and gas deposits. Such discoveries are a good opportunity for economic development.  Resource management is another issue. Overseeing all this requires, sound governance and environmental protection.

Tanzania looks at natural gas as source of economic development

As most nations, Tanzania is always looking for new ways for economic development. Natural gas just might be the answer for Tanzania.

Tanzania is a blessed country with natural resources which could make any developing country green with envy and the discovery of natural gas is one example of the richness of the country.

For UK based gas specialist Eng. Teddy Chungu, the success of the ongoing construction of a natural gas distribution pipeline for compressed natural gas (CNG) from Ubungo to Mikocheni by the Tanzania Petroleum Development Corporation (TPDC) will only be pronounced when gas flows into the distribution pipeline and residents of Mikocheni are able to utilise natural gas for domestic and industrial purposes.

According to the international gas specialist, 57 houses at Mikocheni will soon be lit with natural gas. Ultimately, we will see industries at the Mikocheni Light Industrial Area use natural gas to power their boilers.

Eng. Chungu says, “This will be a success – It will be a signal that all parties involved are committed to tap into the country’s virgin natural gas reserves.” True to his word, the mega natural gas distribution project undertaken by main contractor, BQ Contractors Limited in a joint venture with UK based Excellium Construction Limited is near completion courtesy of the quality partnership between the client and the contractor.

And the involvement of experts like engineer Chungu has incredibly proved credible in the transfer of knowledge and technology to local work-force but mainly underlined on BQ’s enterprising experience as a trusted partner in the expanding fuel and gas industry.

With expectations running high on the achievements made by natural gas exploration companies, Eng. Chungu feels that the discovery of virgin gas reserves in the country is an enormous stimulant to economic development in Tanzania.

While natural gas is set to become a major source of energy and fuel, the engineer notes that Tanzania has the ability to export natural gas to other countries, especially to Europe which is currently experiencing depreciating reserves.

Natural gas might attract foreign investment in the energy sector if the outcome is viable. That depends on the infrastructure for extraction, shipping the gas domestically and abroad. An opportunity has presented itself, and it is up to the Tanzanian government to layout the right plan.

Statoil, Exxon Make Large Gas Discovery Off Tanzanian Coast


A large gas discovery off the coast of Tanzania has been made.

Statoil and ExxonMobil have confirmed they made a large gas discovery in the Zafarani prospect offshore Tanzania in Block 2. Earlier this month, the company reported that Zafarani-1 had encountered gas shows in a good-quality reservoir. Statoil spudded the well in early January 2012 with the Ocean Rig Poseidon (UDW drillship). Logging results reveal that it is a high-impact discovery, far proving that the well holds up to 5 Tcf of gas-in-place. Zafarani-1 has encountered 393 feet (120 meters) of excellent quality reservoir with high porosity and high permeability, reported the operator. The gas-water contact has not been established and drilling operations will continue until total depth is reached. “This discovery is the first Statoil-operated discovery in East Africa and an important event for the future development of the Tanzanian gas industry. It is also a demonstration of how Statoil’s exploration strategy of early access and high impact opportunities strongly supports the company’s ambition for international growth,” said Executive Vice President for Exploration Tim Dodson in a statement Friday. “This discovery could potentially be a catalyst for large scale natural gas developments in Tanzania,” added Tanzania Petroleum Development Corporation Managing Director Yona Killaghane. The International Monetary Fund recently stated in a country report, “Tanzania’s prospects of becoming a major producer of natural gas by the end of the decade appear good. There could be large foreign direct investment inflows over the next five years, and a substantial increase in exports and government revenue beginning around 2020.” So far, roughly 26 licenses have been awarded in the country, making it the highest number in the East Africa region. Zafarani is the first exploration well that has been drilled in the license, which covers approximately 2,120 square miles (5,500 square kilometers). The water depth at the well location is 8,470 feet (2,582 meters). The well will be drilled to reach an expected total depth of around 16,730 feet (5,100 meters). Statoil operates the license on Block 2 on behalf of TPDC and has a 65% working interest while ExxonMobil Exploration and Production Tanzania holds the remaining 35%. In the case of a development phase, TPDC has the right to a 10 percent working interest.

This is huge for Tanzania.  If all works out, the economic benefits are astronomical.  In just a short amount of time, it has become a major player in the African energy market if all the assumptions remain true from the initial discovery. Being strategically located facing Asia, the fastest growing energy consuming region in the world, getting and shipping the gas won’t be that challenging, which only means more money stays in the country for development.

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Africa goes Nuclear

Two nuclear reactors at the Koeberg Nuclear Power Station, near Cape Town, came online in 1984 and ’85. The nation is working on smaller-scale reactor design as much of energy-starved Africa looks toward a future with nuclear power.

Senegal became the latest African country to pledge to build a nuclear power plant by the end of this decade, and former colonial power France has already offered technical assistance. Algeria, Egypt, Ghana, Kenya, Morocco, Tunisia, and Uganda are also hoping to have plants online by the decade’s end in response to rising fuel costs and overtaxed electricity grids. And booming South Africa is looking to add to its nuclear capacity with at least six new plants by 2023.

Senegalese Energy Minister Samuel Sarr slipped off to a conference in Paris for an extraordinary announcement: His country is hoping to enrich uranium and build shimmering Homer Simpson-style cooling towers over a landscape where erratic power outages have long forced homes and businesses to rely on generators and candles.

Why It Matters

Africa needs more electricity in order to progress. Nuclear plants are costly to build, but are clean and relatively cheap to refuel. To guard against accident and terrorism, though, nukes require stable and capable governments, both of which are in short supply. Senegal is hoping to do it by 2020. And the former French colony has company.

Today, South Africa’s two nuclear power reactors stand alone on the continent, but by the end of the decade, that could very well change. Several less-developed African nations are speeding up plans to modernize their economies through heavy reliance on nuclear power.Beyond transformers and electrical grids, however, nuclear power requires the less-tangible infrastructure of workplace safety regulation, government oversight, anticorruption measures, stable governance, and antiterrorism controls – all things that many African nations are infamous for not having. “It is not a technical challenge,” says Igor Khripunov, associate director for the Center for International Trade and Security in Athens, Ga. “Building nuclear power is a nationwide challenge.”

Ten African countries pursuing nukes

In February, Nigerian authorities pursued talks with Iran for an exchange of nuclear know-how. The oil giant is joined by Uganda, which passed nuclear laws in 2008 and hopes to have a plant by 2020, and by Kenya, whose government is seeking $1 billion for its own plant. Algeria, Tunisia, Morocco, and Egypt have pledged to go nuclear by 2020 and are considered the likeliest to do so. Ghana’s cabinet had vowed to bring a plant on line by 2018, until the new government scrapped the plans. And Niger – the country whose bountiful uranium has powered the nuclear age abroad and funded civil war at home – was soliciting South African support for its own plant, before February’s coup spiked the idea.

The energy conundrum

For Africa, energy is not a problem easily solved. Much of the continent lacks the rail infrastructure or the regional integration to haul in coal, or the purchasing power to consistently provide fuel to oil- or natural-gas-fired power plants. But once a costly nuclear plant is built, the uranium costs are comparatively minor. Western groups often push Africa to move toward wind, solar, and hydro power, but Africa’s leaders are looking for significantly more firepower. “I think it’s immoral for certain first-world countries to propose wind and solar solutions to Africa as if they’re going to be industrially important,” says Kelvin Kemm, CEO of a South African energy consultancy. “Imagine losing 10 percent of your country’s power if it doesn’t rain. There’s no modern economy that can look toward developing on the basis of that.” Fission presents its own problems, however. For one, it would double the total wattage of a grid like Kenya’s – something the planning section of the International Atomic Energy Agency (IAEA) strongly warns against. It’s a fiscal challenge, too, incurring high credit costs, upfront financing, and steep maintenance costs.

‘An absolutely lunatic idea’

“It is an absolutely lunatic idea,” says a nuclear physicist and energy analyst for an international think tank, who asked not to be named because he didn’t want to be contacted about his comments. He calls Senegal’s nuclear power project a “prestige undertaking.” Nuclear braggadocio is off the menu at Senegal’s Energy Min­istry, where spokesman Malick Ndaw is quick to play down the endeavor. After all, Senegal is also building wind farms, solar plants, a hydropower dam, and two coal-fired plants. Mr. Ndaw says they’ll need them all – plus the nuclear plant – to prevent a lack of power from crippling the country’s development. “All of our industries are in an energy crunch, without exception,” he says – words that resonate with Bara Gueye, chief engineer for Senegal’s Ciments du Sahel. Like many African industrialists, the cement manufacturer has to provide his own electricity, which explains why, according to industry analysts, energy prices gobble up 15 to 20 percent of manufacturing costs, inviting cheaper imports.

The new nuclear market

France may help finance Senegal’s project. Europe’s storied nuclear state is “always available to help” a former colony, Ndaw says, though he won’t say how. South Korea is exporting more nuclear technology, as is Japan. Russian designs for offshore nuclear plants may prove compelling for African countries. So, too, may South Africa’s pebble bed reactors, small-scale nuclear plants still being developed. “Then, China looms large on the horizon,” adds Mr. Khripunov of the Center for International Trade and Security. With so many new players competing, analysts say Africa may become the growth market for nuclear power exporters – even if not by the deadline of Mr. Sarr, the Senegal energy minister. “Twenty years from now, many of these countries may be ready for it,” says Holger Rogner, head of the IAEA’s planning section. “But you have to start now to get there.”

Africa has around 18 percent of the world’s recoverable uranium, but technology and nuclear know-how are in shorter supply and countries including China, Japan, Russia, and South Korea have begun exporting nuclear technology there.  For now, Africa has the lowest per capita energy use of any continent and makes up only 3 percent of global energy consumption. But that is set to increase dramatically over the next decade, boosted by population growth and urbanization. Going nuclear would be beneficial for numerous African nations.  The benefits of nuclear energy would greatly enhance the continent.  The challenge of nuclear energy would be nuclear waste storage.  This would require sound infrastructure and good safety regulation. As the quoted article says, African nations would face a challenge in this regard.  None the less, nuclear energy has to be looked at since it has the biggest jolt to power the largest amount of people. A nuclear Africa might make some Western environmentalists (not to mention nonproliferation advocates) uncomfortable, but lighting up a dark continent is going to take more than good intentions.

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India plans to invest more in African gas and oil sector

Indian firms plan on expanding their presence in Africa.

India’s state-run companies are looking to acquire stakes in oil and gas blocks in Africa, form joint ventures in the continent and source natural gas to meet rising fuel demand at home, Indian Oil Minister S. Jaipal Reddy said Friday.

“Today as much as 21.5% of India’s crude oil imports are from Africa. In the years ahead, we seek more crude oil and liquefied natural gas from Africa,” Mr. Reddy said at a conference.

Africa is considered to have good hydrocarbon potential, with significant oil production coming from West Africa, and new promising gas discoveries in East Africa. Countries like China have already invested heavily in the region to develop its resources.

India, which faces a huge energy deficit and imports about 80% of its crude oil requirements, is scouting for hydrocarbon assets that can boost its energy security in the long term.

“Our companies are also interested in farm-in opportunities in producing blocks, especially in Libya, Algeria, Egypt and Nigeria,” Mr. Reddy said. He added that companies like GAIL (India) Ltd., Petronet LNG Ltd. and Indian Oil Corp. are interested in sourcing natural gas on a long-term basis from Africa.

He said the companies would “explore possibilities of equity participation” in natural gas export projects, gas processing businesses and gas-based petrochemical projects in Africa.

“There is no ceiling on imports from Africa. We are trying to maximise our [oil supply] sources in Africa,” Mr. Reddy said.

He didn’t specify which projects Indian oil companies were eyeing, how much they would invest and where the money would come from. He said that “with Africa’s economic development picking up momentum and its energy demands rising, India is keen to become a dependable supplier of petroleum products to Africa.”

Mr. Reddy also said that India’s crude oil imports from Iran remain on schedule and aren’t facing any bottlenecks.

Trade settlement between the two countries was hit after India’s central bank barred Iran-related payments from being processed through the Asian Clearing Union, a regional clearinghouse which the U.S. says is opaque and could be used by Tehran to finance its alleged nuclear-weapons program.

“The government of Iran is eager to help us in supplying oil in spite of many disturbing developments at the global level. Payment issues are being settled,” Mr. Reddy said.

Energy security is of top concern for India. Facing the critical challenge of meeting a rapidly increasing demand for energy, India is looking for more sources.  Africa naturally comes to mine.  Although India has significant reserves of coal, it is relatively poor in oil and gas resources. Its oil reserves amount to 5.9 billion barrels, (0.5% of global reserves) with total proven, probable, and possible reserves of close to 11 billion barrels. The majority of India’s oil reserves are located in fields offshore Bombay and onshore in Assam.

Due to stagnating domestic crude production, India imports approximately 70% of its oil, much of it from the Middle East. Its dependence is growing rapidly. The World Energy Outlook, published by the International Energy Agency (IEA), projects that India’s dependence on oil imports will grow to 91.6% by the year 2020.

Concerned about its growing reliance on oil from the Persian Gulf – 65% of its energy is imported from the region – India is following in the footsteps of other major oil importing economies, and seeking oil outside the Gulf. Indian firms’ investment in overseas oilfields is projected to reach $5 billion within a few years. Of particular interest is Africa

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Eni plans to invest $50 billion in offshore Mozambique gas

Eni Spa Italian multinational oil and gas company will begin developing natural gas off Mozambique’s coast.
Eni SpA expects to invest $50 billion developing natural gas off the coast of Mozambique and plans to begin producing fuel there by 2018, Chief Executive Officer Paolo Scaroni said.Italyâ€(TM)s biggest oil company estimates the Mambo deposit to contain 20 trillion cubic feet of gas, he said today in Doha, Qatar. Eni may transport the gas to market through a pipeline or by converting it into liquefied natural gas and shipping it to Asia. The producer may also sell the fuel locally in the form of compressed natural gas, Scaroni said. Eni announced the fieldâ€(TM)s discovery in October.“Our feeling is it would be a super-giant gas field and is well-placed to supply Asia by LNG,” he said at the World Petroleum Congress in Doha. Europe isnâ€(TM)t a likely destination for any gas from Mambo, Scaroni said.Eni, Anadarko Petroleum Corp. and BG Group Plc together with partners have found trillions of cubic feet of gas in waters off East Africa. The deposits are large enough to justify construction of at least eight LNG production trains, according to estimates by the companies. The producers may ship African gas to Asia and compete with fuel from Australia, where Royal Dutch Shell Plc, Chevron Corp. and other companies plan to invest about $250 billion in gas projects.
Mozambique holding large, vast amounts of gas has the  potential to bring  large scale gas development with a combination of both export to regional and international markets through LNG and supply to the domestic market.  This is great news for Mozambique, as such discoveries of energy will continue to spur meaningful investment in the region, generate significant revenue for the government and offer a multitude of opportunities for the people of Mozambique. Should the projects be developed, Mozambique will able to transship its output to two of the world’s top liquefied natural gas markets, Japan and South Korea, along with being in a prime position to service other rapidly emerging Asian gas markets, such as China and India.
The investment comes at a positive time looking at the context of economic and commercial relations between Italy and Mozambique. This is evident in trade figures between both countries.  According to ICE data, Italian sales to Mozambique have nearly tripled over the past 3 years, the first 5 months of 2011 registered a 13.1% growth in exports from  $15.5 to 17.6 million and 45.8% in imports from €135..5 to 202.6 million compared with the same period in 2010.  With trade expansion between both countries and investments, if managed right, Mozambique has a good chance of having good sustained economic growth and development.
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Namibia goes for clean energy route


Africa possesses huge potential when it comes to the production of alternative energies. Hydropower alone could cover the current electricity requirements of the entire continent. Nonetheless, fossil fuels such as coal, oil and natural gas continue to be the biggest sources of power.The energy supply situation in Namibia is also largely dependent on fossil fuels, although sustainable concepts are gradually evolving there. Those people looking for the ideal solution have in the process come up with many smaller-scale solutions that, it is hoped, will make the country a future model of sustainable energy production. There’s the first biomass power plant in southern Africa, for example, and another project that supplies families with solar power generators.

The current problem with Namibia, countries that are in a similar dilemma, is that they lack the capacity for large-scale energy like Nuclear, don’t have significant oil resources, thus they have to find other sources of energy and renewable energy is the most economical for meeting their energy needs. This is also highlights the problem of lacking nationwide infrastructure, which if available would allow centralization of energy output, which would reduce the cost of energy.

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Unrest in Libya benefiting Russia

The turmoil in Libya continues to wreak havoc across world energy markets.  Oil prices resumed their rise on Wednesday, as the violence edged closer to Libya’s infrastructure. But several countries now look set to benefit from the price inflation, not least Russia.

Apparently Russia isn’t letting the crisis be a wasted opportunity.

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LUKoil, Russia’s largest independent oil producer thinking about investing in West Africa

We know that the Europe, U.S. and China have an interest in the oil resources that all over Africa.  Recently of late Russia is now showing much interest in the region as well.  The Moscow Times reports that LUKoil, Russia’s largest independent oil producer, has held top-level meetings with representatives from three West African states, including Liberia, as a part of a $9 billion overseas investment program.

The president of LUKoil Overseas, Andrei Kuzyayev, met Ghana’s energy minister, Joe Oteng Adjei, for discussions about the expansion of the company in Ghana, including the development of new projects, according to the latest corporate newsletter, Neftyanie Vedomosti. After leaving Ghana, Kuzyayev held talks in the capital of Sierra Leone, Freetown, and LUKoil Overseas senior vice president Dmitry Timoshenko visited Liberia’s capital of Monrovia.

Countries like Sierra Leone and Liberia, “which have just come through terrible civil wars … are today, with the interest of foreign investors, quickly resurrecting their shattered economies,” the company’s publication said.[…]

The West African continental shelf is an interesting prospect for many international companies, said Valery Nesterov, an oil analyst at Troika Dialog. “I think almost all Russian companies will be looking at the West African shelf — including Rosneft and TNK-BP,” he added.

LUKoil’s potential resources in the area currently consist of up to 35 million barrels. The company said in September that it might have more petroleum in West Africa than in West Siberia.

Russia’s new dash in Africa continues.  Russian companies are looking to expand abroad. What better place than Africa. The region needs foreign investment, Russia needs new markets.  Africa unlike Europe, Asia, and Latin America, Russian oil companies actually stand a chance to compete on equal terms unlike other regions of the globe that are dominated by American, British, French, Chinese, Norwegian, Canadian, Turkish, Brazilian energy companies.  The more foreign competition there is for Africa’s resources, the better economic opportunities available if managed competently.

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