Oil

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.

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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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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European Union to lift oil sanctions against Libya

With Gaddafi removed from power in Libya, the European Union will lift sanctions against Libya.

European Union diplomats say sanctions against several Libyan ports, oil companies and more than a dozen other entities could be lifted as soon as Friday.

The EU’s 27 members reached a preliminary agreement Wednesday in an effort to help Libya’s National Transitional Council resume normal economic activity.  Diplomats say they expect a final agreement on Thursday.

France, meanwhile, has asked the sanctions committee of the United Nations Security Council to allow Paris to release more than $2 billion of frozen Libyan assets.

The sanctions committee has already approved similar appeals by Britain and the United States, releasing a total of more than $3 billion in seized Libyan assets to address urgent humanitarian needs.

The NTC (National Transition Council) will be able to raise revenue through the resumed selling of oil on international markets as it pivots from being an insurgency led coalition to a governing one that is held accountable. The ability to use oil revenue to fund and rebuild will be crucial.

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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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Chart of the day – Most dependent nations on oil from Libya

Via the Economist, a look at which nations are most dependent on oil from Libya.  According to the Economist

Libya produces 1.7m of the world’s 88m barrels a day (b/d) of oil. OECD countries import 1.2m b/d, and China another 150,000. Our chart shows which of Libya’s main export markets are most dependent on it for their oil. At the top of the list, Ireland only accounts for a tiny fraction of Libya’s oil exports. Italy is by far the biggest importer: in 2010 it took 376,000 b/d from its former colony.

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