Energy

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.

Australian Mining Companies Head Towards Africa

Due to rising operating costs, taxes and ageing mines, Australian mining companies are looking abroad especially to Africa for new business opportunities. Old gold mines in Western Australia have high costs that are growing as wages rise in the resources sector. Australian resources companies now have more projects in Africa than in any other region of the world. More than 220 Australian mining and oil companies have 595 projects operating in 42 African countries , and that number is only expected to grow as start-up costs remain low. Rick Crabb is the chairman of Paladin Energy, a uranium miner with operations in Malawi and Namibia says that “There’s still a lot of opportunity there. I think, in due course, Africa will be a producer of raw materials but also a big consumer. It may well be the last frontier and there’s huge untapped potential.”

Africa’s valuable resources sector lies in the dramatic increase in Australian investment there. Confidence is soaring thanks to the positive outlook for commodity prices, and Australian mining companies have become increasingly ambitious in their search for the next big thing. For a start, Africa’s economic recovery is on track and much of its natural resources remain unexploited. Commodity prices – underpinned by increased demand for minerals and metals from energy-hungry countries such as China and India – are at an all-time high. The International Monetary Fund (IMF) predicts four of the world’s 10 fastest-growing economies in the next five years will be from sub-Saharan Africa. The IMF anticipates the continent will grow by 4.7%, above the global average of 4.3%.

Newcrest Mining chief executive Greg Robinson says the heavy processing required to produce gold pushes Australia right up the cost curve.,“Most of the gold industry in Australia is sitting in the third and fourth quartile, and most of the cost is sitting in the processing,”. In reaction to this reality, Australian mining companies have began to develop gold, copper and iron ore mines across the continent. According to Australia’s department of foreign affairs and trade, investment in Africa is expected to rise to over $50 billion over the next three years.

African countries are now in an advantageous position as more mining companies from developing countries like China, India and Brazil, have started to look at the under explored opportunities in a continent whose mining sector was earlier dominated by mining concerns from the developed world, such as the U.S.A., Britain, Europe, and Australia. Brazil’s Vale SA and China’s Minmetals Resources Ltd. are among the major players from the developing world who are trying to make serious inroads into the African mining sector.

Australian iron ore veterans like Sundance Resources chairman George Jones and Energio chairman Ian Burston hold similar opinions about the region’s potential but recognise the need for more foreign capital to develop transport lines and ports. Equatorial Resources managing director John Welborn describes West Africa as “Pilbara 60 years ago” and says investors are paying attention.

More and more Australian explorers are heading to Africa to take advantage of the opportunities, both in terms of the quality of deposits and the comparatively cheaper costs.

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.

Nigeria to build new power plants to meet growing energy demand

General Electric Co. (NYSE: GE) and Nigeria signed an agreement for the U.S. company to build power plants as Africa’s most populous nation continues to privatize and expand its power generation capacity, Reuters said Monday. Nigeria, which has Africa’s second-largest economy, aims to increase its electricity generating capacity by 10 gigawatts, and GE will potentially invest 10 percent to 15 percent in individual projects.

The memorandum of understanding between Nigeria and the Fairfield, Conn., company is part of an effort to increase the number of Nigeria’s natural gas-fueled power stations, though the company has yet to confirm either the type or number of plants to be built.

Nigeria, which has the world’s seventh-largest natural gas reserves, hasn’t been able to build up capacity for its 162 million citizens. The nation produces one-tenth of the 40,000 megawatts need to provide the populace with power.
Nigeria’s lack of capacity has left much of the useful natural gas trapped underground.

President Goodluck Jonathan unveiled plans 18 months ago to privatize the nation’s electric industry, with state-owned generation and distribution assets sold off; however, strife in Nigeria’s northern sections caused by a violent Islamist insurgency and political disputes put other plans on hold.

The nation’s 7.68 percent growth in gross domestic product was mostly fueled by non-oil sectors, according to Reuters.

Given Nigeria’s population size and growing energy needs this makes sense. Another reason why this makes sense is that Nigeria has, produces, exports lots of gas and oil. Several African nations are looking at using nuclear energy as the best and most practical way to meet their growing energy demands. Nigeria has to look down that road as a way to diversify and not be just reliant on one energy source.

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Statoil, Exxon Make Large Gas Discovery Off Tanzanian Coast

Tanzania

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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Power for Europe from Africa

Sketch of possible infrastructure for a sustainable supply of power to Europe, the Middle East and North Africa (EU-MENA) (Euro-Supergrid with a EU-MENA-Connection proposed by TREC)

The DESERTEC concept aims at promoting the generation of electricity in Northern Africa, the Middle East and Europe using Solar power plants, wind parks and the transmission of this electricity to the consumption centres, promoted by the non-profit DESERTEC Foundation. The concept has been talked about here.

Under the DESERTEC proposal, concentrating solar power systems, photovoltaic systems and wind parks would be spread over the desert regions in Northern Africa like the Sahara desert. Produced electricity would be transmitted to European and African countries by a super grid of high-voltage direct current cables. It would provide a considerable part of the

Extent of Sahara Desert ecoregion

electricity demand of the MENA countries and furthermore provide continental Europe with 15% of its electricity needs. By 2050, investments into solar plants and transmission lines would be total €400 billion. The exact plan, including technical and financial requirements, will be designed by 2012.

From vision to reality – by 2050 Europe is scheduled to get around 15 percent of its power supply from the Sahara and other desert regions. Aglaia Wieland is head strategist at the Desertec Industrial Initiative (Dii), and Paul von Son chief executive.  They are two of the key minds behind the implementation of the Desertec international energy project.The energy will be supplied by gigantic solar power generators and wind farms. Wieland and von Son are due to have a business plan completed by the end of this year.

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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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