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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.

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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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

Namibia

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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India Seeking To Buy Manganese Ore Mining Assets

With its continuation in finding new energy sources India is looking to buy manganese ore mining assets in South Africa.

Indian steel ministry is in talks with the South African government for buying manganese ore mining assets for state-runManganese Ore India Ltd MOIL.BO, a government official said on Wednesday. “We are talking to the government of South Africa. We have requested them to allot us certain mines, we are looking at it aggressively,” Dalip Singh, joint secretary in the ministry of steel, said.

More investment in South Africa should be welcomed. The opportunity and economic development does benefit both sides.

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India eyes Angola’s oil

India is interested in getting oil from Angola.

India is keen to source more crude oil from Angola on firm basis, and has also expressed interest in acquiring oil and gas assets in that country.

The Petroleum Secretary, Mr S. Sundareshan, told reporters here at the Petrotech 2010 that these were some of the issues taken up with the Angolan Oil Minister, Mr Jose Maria Botelho de Vasconcelos, at the Ministerial level bilateral meeting.

Currently, India imports around 9 million tonnes a year of crude oil from Angola.

Looks to source LNG too

Besides, India is looking at sourcing liquefied natural gas (LNG) from Angola, which is setting up a 5.2 million tonne a year LNG facility.

Angola's Oil Minister Jose Botelho de Vasconcelos

Asked whether the Indian side would be given special treatment in acquiring oil and gas blocks, Mr

Sundareshan said, “We have sought special considerations. They have said they will look into it. But, we

will participate in any transparent process.”

Also, Indian public sector refineries are exploring the possibility of participating in refinery projects in Angola. The Secretary said recently a team of Indian companies – Indian Oil Corporation, Engineers India, and Bharat Petroleum Corporation – had gone to Angola to study prospects.

This development comes with China’s as Angola’s largest oil buyer and will certainly raise some eyebrows in Beijing, especially given the Indian and Chinese rivalry.

China has good relations with Angola as of now, so expect Beijing to outbid New Delhi on future and upcoming oil, gas projects, just like they have down across all of Africa. India has to be proactive on the continent and not act complacent like in the past.
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China and Ghana rebuffed from buying stake in U.S. oil firm

Ghana and China’s CNOOC rejected from buying stake in Kosmos Energy.

Ghana’s state-owned oil company and China’s Cnooc Ltd. made an unsuccessful joint bid of $5 billion for a U.S. company’s stake in one of Africa’s most promising oil regions, an official of the Ghanaian company said monday.

The offer was for a 23.5% stake in Ghana’s Jubilee field, one of the continent’s largest oil deposits, and other nearby assets. The field, thought to contain 1.5 billion barrels of crude, is scheduled to start producing oil in December, heralding Ghana’s entry into the ranks of Africa’s major oil producers.

The stake is owned by Dallas-based Kosmos Energy LLC, which previously held talks with Exxon Mobil Corp. about the oil-field stake.

Kosmos Energy, majority owned by private-equity firms Blackstone Group LP and Warburg Pincus LLC, “has now decided to remain [in Ghana]. That is for sure,” said Gabriel Q.A. Osatey, chief geophysicist of Ghana National Petroleum Corp., or GNPC, on the sidelines of an oil conference in New Delhi.

Kosmos declined to comment.

[cnooc1101]GNPC and CNOOC’s bid comes after Exxon in August pulled out of a $4 billion deal.

The joint bid from Cnooc and GNPC is the latest evidence of China’s interest in one of the most promising frontiers for offshore oil exploration.

Exxon had discussed paying Kosmos $4 billion for its Jubilee stake, but backed out of a deal in August. The Ghanaian government had objected.

Kosmos, which is small compared with the international oil companies active in Africa, focuses on developing relatively unexplored offshore basins in West Africa. Its relations haven’t always been smooth there, however.

Ghana reacted to the company’s discussions with Exxon by accusing it of cutting GNPC, which holds a 13.75% stake in the Jubilee field, out of talks on the field’s development and sharing information about the field with potential buyers, without state permission.

The disclosure of the failed GNPC-Cnooc bid could be a strategic move to pressure Kosmos into selling. “They are putting under the sunlight that there is a credible bid that is even higher than the one Kosmos had from Exxon,” said Jefferies & Co. analyst Subash Chandra. “Everyone knows now that there is a deal on the table.”

Representatives of GNPC couldn’t be reached for comment.

Some analysts said that Kosmos may not be willing to sell because it deems the price offered by GNPC and Cnooc too low. Buckingham Research Group said in a note to clients in September that Anadarko Petroleum Corp.’s stake in Jubilee, which is the same as Kosmos’s, has an estimated value of $6.75 billion. Other recent discoveries nearby could boost the stake’s value even further.

Venture-backed companies like Kosmos that specialize in the risky oil-exploration business are usually eager to cash in on their successes before they have to put up money to develop their holdings. In the case of offshore fields, development costs can run into billions of dollars.

[KOSMOS]

But Kosmos Chief Operating Officer Brian Maxted said in September the company plans to continue developing its assets in Ghana, and is preparing for the field’s initial production later this year.

That could simply mean that Kosmos thinks its assets in Ghana are worth a lot more than has been offered, said Jefferies’s Mr. Chandra.

In addition to Kosmos, GNPC and Anadarko, partners in the Jubilee field include Tullow Oil PLC and EO Group.

Cnooc, with the Ghanaian government’s help, is likely to keep pressuring Kosmos for a deal. “It may not happen now, but I think the discussions will continue. This is not the end of the story,” said Rolake Akinola, a West Africa analyst at political-risk consulting firm Eurasia Group.

In September, China Export Import Bank lent Ghana $10.4 billion for infrastructure projects, and the China Development Bank provided a separate $3 billion loan for the development of the country’s oil-and-gas sector.

[inv]

Fadel Gheit, an analyst at Oppenheimer Research, said Kosmos is in a difficult situation because even if the company has other potential buyers willing to pay more for its assets, Ghana’s government and China, a major economic ally, will keep applying pressure to have the first option on the deal.

The majority of Cnooc’s production comes from China, but the company also owns oil fields in Nigeria, Australia, Indonesia and other countries. Recently it agreed to a $2.16 billion investment in a South Texas oil-and-gas shale field, the first major U.S. foray for a state-run Chinese oil company.

Chinese national oil companies spent $9 billion in the first half of this year acquiring international assets in a move that will sharply boost their production and reserves, according energy consulting firm Wood Mackenzie. China’s deep-pocketed hunt for resources comes as international oil companies such as Exxon and Chevron Corp. face an uphill struggle to secure enough oil reserves to replenish their waning inventory.

China should be prepared for more of this given the way it has began treating multi-national corporations back in China in an effort to build up domestic “national champions” through its “domestic innovation” programs.  What goes around, comes around.  China better get used to it.

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South Africa and China sign energy deals

Chinese Vice President Xi Jinping, touted as China's next president

South Africa and China signed a series of energy and trade deals Wednesday. Chinese Vice President Xi Jinping, on a business trip to the Rainbow Nation, signed on the dotted line with South African Deputy President Kgalema Motlanthe.

China is keen to secure mineral needed to fuel its rapidly-growing economy.

China remains South Africa’s biggest bilateral trading partner and Jinping hopes the visit would further consolidate this relationship and divert trade and investment from traditional markets in Europe and North America to world’s new economic powers.

Jinping is on a three-day visit to Africa’s largest economy, which is seeking to reduce a deficit in trade with China that hit $2.7 billion last year, skewed in Beijing’s favour.

“For the growth path to be a success we require the support of partners such as China,” Motlanthe told reporters. “We see the future destiny of our two countries as inextricably linked with the African continent.”

Both leaders were co-chairing the fourth China-South Africa bilateral commission and signed a number of agreements, including an energy deal. No monetary details were released.

“The Chinese government undertook to encourage more imports from South Africa, especially value added products and will urge Chinese companies to invest in infrastructure development, automotive manufacturing, energy and information and communication technology,” Motlanthe added.

Chinese Vice President Xi Jinping signed an energy deal with resource-rich South Africa on Wednesday in a visit aimed at obtaining minerals the Asian giant needs to fuel its blistering growth.

China is South Africa’s biggest bilateral trading partner and the focal point of its plan to divert more trade and investment from traditional markets in Europe and North America to the world’s fastest growing economies.

Xi, touted as China’s next president, on Tuesday began a three-day visit to Africa’s largest economy, which is seeking to reduce a deficit in trade with China that hit $2.7 billion last year, skewed in Beijing’s favour.

South African Deputy President Kgalema Motlanthe and Xi co-chaired the 4th China-South Africa bilateral commission and signed a number of agreements, including an energy deal.

No monetary details were released.

“The Chinese government undertook to encourage more imports from South Africa, especially value added products and will urge Chinese companies to invest in infrastructure development, automotive manufacturing, energy and information and communication technology,” Motlanthe said in a statement.

South Africa has also signed a deal with China’s Yingli Solar to build a $435 million manufacturing plant with a local partner, a senior government official said.

Yingli will partner with a local company and aimed to start building the plant within 12 months.

South African exports about $5.5 billion a year in minerals to the state and has been increasingly a destination of Chinese foreign direct investment.

Beijing sees South Africa, a global mining power and regional financial services leader, as a vital source of commodities and a stepping stone to access other African states.

The help of countries including China is vital for South Africa’s new economic growth path, which aims to create millions of jobs, mainly in the private sector.

For South Africa, China also serves as a model of state action in the economy, with Pretoria hoping to join it in the BRIC — Brazil, Russia, India and China — group of fast emerging economies.

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Swiss Mining Firm Xstrata, to Invest $6 Billion in Mauritania

Swiss mining giant Xstrata will invest more than $6 billion in Mauritania.

“This mining giant … has decided to invest more than 6.0 billion dollars in Mauritania, which shows the role our country is called on to play in the global mining sector,” Mohammad Abdallah Ould Oudaa said during a mining conference in Mauritania that ended Thursday.

Xstrata on Friday said it was “far too early in the process to commit to numbers but Xstrata is committed to creating a world-class iron ore business and clearly Mauritania will play a key part in that objective.

“We look forward to working with the Mauritanian government and other relevant stakeholders to achieve this.”

The company also disclosed that it now controlled 50.1 percent of the Australian group Sphere Minerals, which is part of a 50-50 joint venture with the Mauritanian national industry and mining company SNIM in three projects.

The largest project, based in Guelb El Aouj in northern Mauritania, is expected to produce 7.0 million tonnes of iron a year.

Xstrata launched its bid for Sphere in August in an operation that eventually valued the Australian company at 513.6 million Australian dollars (506 million US dollars, 370 million euros).

The Mauritanian minister also said his country planned to boost gold production thanks to investment from the Canadian company Kinross at a mine in Tasiast, north of the capital Nouakchott.

“Reserves (of gold) at the mine will reach about 20 million ounces by mid-2011, making it one of the biggest gold mines in the world,” he said Thursday.

Annual production will eventually come to one million ounces a year from 250,000 at present, he added.

The mining industry is a very important part of the global economy. Mining gives us access to the raw materials and goods that serve as the building blocks for most of the products that we create and use. Additionally, the revenue earned from the mining will contribute towards the Mauritanian economy in a big way on account of the large amount of income that it will generate.  The mining industry also will create lots of employment as there is a large human workforce requirement.

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