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Total’s South Africa gas discovery first step towards exploiting the country’s full hydrocarbons potential

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SA Energy Minister Jeff Radebe. Image: African Energy Chamber

The discovery, which will help open a new hydrocarbons province in South Africa, could prove the presence of billions of barrels of oil equivalent in South African waters

JOHANNESBURG, South Africa, February 7, 2019/ — Gas discovery in the offshore Outeniqua Basin speaks to South Africa’s hidden oil & gas potential; gives an opportunity for a meaningful dialogue on attractive legislation and local content development.

The African Energy Chamber (AEC) (EnergyChamber.org) welcomes the recent gas condensate discovery by Total in Block 11B/12B, 175km off the southern coast of South Africa. This is a great first step for the country which still relies on imports of oil and gas despite the great reserves believed to be in its soil and waters.

The discovery, which will help open a new hydrocarbons province in South Africa, could prove the presence of billions of barrels of oil equivalent in South African waters, which will undoubtedly change the course of the country’s economy and help reduce dependency on imports.

“The oil industry hopes this will be a catalyst and encouragement for all policy makers to work on an enabling business environment for exploration and drilling activities in South Africa,” declared NJ Ayuk, Executive Chairman at the Chamber.

“We believe South Africa holds the potential for many more such discoveries, and the time has come to have a meaningful conversation on local content development so the development of the industry benefits all South African workers and contractors across the value-chain and creates jobs for the communities.”

The gas discovery is a timely one as the South African government is currently working on a new legislation separating oil and gas from traditional minerals, and has released last year a new Integrated Resource Plan (IRP 2018) which ambitions to install an additional 8,100MW of gas-to-power capacity in South Africa by 2030.

It further echoes increased engagement of the South African government with the African and global oil industry. Since being appointed Energy Minister in 2018, Jeff Radebe has been leading a strong South African outreach to oil markets in Africa like Nigeria, Equatorial Guinea, Angola, South Sudan, many middle eastern producers and attending meetings of the Organization of Petroleum Exporting Countries (OPEC) in Vienna and seeking deals for state-owned South African companies such as the Central Energy Fund and PetroSA.

“Oil companies want to see leadership and sound governance wherever they invest,” added NJ Ayuk. “With South Africa demonstrating a commitment to reforms and the creation of an enabling environment for business, the oil industry is confident that the country can attract the investment needed.”

Distributed by APO Group on behalf of African Energy Chamber.

Oil and Gas

Sahara Group Canvasses Intra-Africa Solution For Petroleum Sector Challenges

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Malabo, Equatorial Guinea: April 5, 2019 – Executive Director, Sahara Group, Wale Ajibade, has said collaboration between financial institutions, development agencies, trading companies, National Oil Companies and other stakeholders in Africa would enhance the contribution of intra-Africa led solutions to addressing the sector’s trade and project finance challenges on the continent.

This was Ajibade’s submission as he gave a key note address on Challenges of Financing and Investing in the African Oil Industry at the ongoing African Petroleum Producers Organization (APPO) CAPE VII Congress and Exhibition in Malabo, Equatorial Guinea.

“Our collective mandate and deliverable should be to prioritize African solutions for African challenges. Our businesses should be given viable incentives to enable them participate specifically in this industry; our Development and Commercial Banks should have a marked incentive, or lower funding rates, for African Companies participating in this space. We must place the utmost value on capacity building and skilled knowledge transfer and training,” he told delegates at the conference.

Oil ministers, top-level executives and the continent’s opinion leaders at the conference reinforced the importance of cooperation among African countries as the most sustainable avenue to achieve shared ‘Prosperity in the African Petroleum Industry’.

Pearl Uzokwe (third from right) photographed with delegates at APPO 2019
Pearl Uzokwe, Director, Governance and Sustainability, Sahara Group (third from right) photographed with delegates at APPO 2019

“We need to see more collaboration between African Oil producers in the future as intra African trade can be as large as international trade. We must promote intra-regional trade and encourage government to government contracts underlined by the private sector. This is a cause Sahara Group is passionate about and we will continue to lead the narrative.”

Ajibade said the prospects for large-scale projects on the continent had set the tone for increased funding requirement, most of which would be in the area of trade and project financing. “Final Investment Decisions (FIDs) in Southern/ East Africa of approximately US$ billion 70-80 are expected over the next few years. Overall, key projects in Africa are expected to contribute a further 1.1 million barrels of oil equivalent per day and around 9.4 billion cubic feet per day to global production by 2025. Planned and on-going refinery developments in Uganda and Nigeria as well as terminal storage facilities and domestic gas infrastructure will create significant financing and investment requirements for the African oil and gas sector in the near term.”

He explained that challenges for trade and project finance transactions include government subsidies on oil products, significant currency fluctuations, limited local banking capacity, letters of indemnity (LOIs), banking compliance procedures, political influence, high lending cost and uncertain government regulation. “In recent years, a number of previously active European commercial banks have either reduced their investments in Sub-Saharan Africa, or have pulled out of the region altogether and at the same time; the participation of African commercial banks in trade finance has shown signs of decreasing. It is a sad reality that less than 10% of these products are financed using local financial institutions in the various African countries.”

Ajibade said the continent can address these challenges through government-government collaboration, ensuring steady regulatory policies, boosting local banking capacity and promoting stronger partnerships between development banks and the private sector.

“We need a collective and deliberate change in mentality that will drive government policies, Industrial and Development Banks policies, Commercial Banks initiatives and most importantly, the businesses and companies operating with the African Oil and Gas space. There should be deliberate policies by the government and the Central Banks to facilitate trading across Africa through hedging tools for foreign currency, lower cost of funds, and mechanisms to issue LOIs, among others,” he added.

– Sahara Group

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Oil and Gas

Sahara Group Advocates Adoption Of Uniform Petroleum Products Standards In Africa

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Cape Town, South Africa, March 27, 2019 – The adoption of unified standards across Africa will create a bigger and more effective regional market that will enhance the continent’s competitive positioning in global energy markets, Tope Shonubi, Executive Director, Sahara Group has told stakeholders at the African Refiners Association (ARA) meeting in Cape Town.

Shonubi said the existence of a fragmented petroleum products market with different product specifications, sulphur content and emission requirements remains a huge stumbling block to accessing the benefits that can accrue from intra-regional trade in the sector.

“Adoption of similar specifications and standards has been achieved across Europe and most of North America creating a single larger market for petroleum trade. While gas-oil specifications remain fragmented across Africa, jet fuel specifications are almost completely unified across the world. This similarity has improved the ease of trading jet fuel across borders, ensured access to a wider market and enhanced competitiveness in the aviation industry,” he said.

Tope Shonubi addressing delegates at ARA Week 2019
Tope Shonubi addressing delegates at ARA Week 2019

Shonubi urged all stakeholders to embrace the AFRI-4 standards which were the outcome of a partnership between ARA and the World Bank to promote the adoption of a single standard for cleaner fuels.

According to him, “the adoption of the Afri-4 Specifications will guarantee unified product standard across the region, ease of intra-regional petroleum product trade, reduction in bulk transportation costs and optimization of regional infrastructure. This will ultimately make Africa a more influential economic block”

He added that unified standards would de-fragment African markets resulting in favourable economies of scale in intra-regional trade, regional harmonization of taxes and excise duties, reduction in smuggling and adulteration of products,  improved local refining capacity, reduced landing costs of petroleum products, joint infrastructure projects as well as export diversification and access to a larger customer base.

Shonubi said Africa must accord the prospects of intra-regional trade the urgency it deserves to ensure accelerated economic development. “In line with the vision of a harmonized Africa, Sahara Group is building an integrated energy business across Middle Africa to harness the potential of intra-regional trade. We are delighted to be one of the first African companies to carry out full cycle crude and product trade transactions using only African resources within the continent. All transactions were carried out by Africans for Africans using African resources. The future of our business depends on how well we can work together across Africa.”

He concluded by urging ARA members and other stakeholders in Africa’s energy sector to work towards developing a competitive African Brand. “Africa countries cannot hope to shape globalization or even retain marginal relevance individually. It is only by working together that we have the weigh to influence the big picture.”

– Sahara Group

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Oil and Gas

Dangote, Chevron Nigeria Sign Historic Agreement on Gas Supply

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L-R: Chairman/Managing Director, Chevron Nigeria Limited (CNL), Jeffrey Ewing; Head, Gas Monitoring & Regulation Division, Department of Petroleum Resources (DPR), Sanya Bajomo; Managing Director/CEO, Gas Aggregation Company Nigeria Limited (GACN), Engr. Morgan Okwoche; and Group Executive Director, Strategy, Capital Projects & Portfolio Development, Dangote Industries Limited, Devakumar Edwin, at the signing of Gas Supply and Aggregation Agreement (GSAA) between CNL, GACN and Dangote Fertilizer Limited on Monday, February 25, 2019

The contract, under the Gas Sale and Aggregation Agreement (GSAA) is part of International Oil Company (IOC)’s gas obligation to the domestic market through the Gas Aggregation Company Limited (GACN)

LAGOS, Nigeria, March 2019/ — Dangote Fertilizer Limited has entered into a long-term agreement with Chevron Nigeria Limited (CNL) for the delivery of Natural Gas from Chevron’s supply portfolio to the fertilizer plant, which is poised to start operations soon.

The contract, under the Gas Sale and Aggregation Agreement (GSAA) is part of International Oil Company (IOC)’s gas obligation to the domestic market through the Gas Aggregation Company Limited (GACN).

The signing ceremony, held at the Department of Petroleum Resources (DPR) office in Lagos, was executed on behalf of the parties by Group Executive Director, Strategy, Capital Projects & Portfolio Development, Dangote Industries Limited, Devakumar Edwin; Chairman/Managing Director, Chevron Nigeria Limited (CNL), Jeffrey Ewing; Head, Gas Monitoring & Regulation Division, Department of Petroleum Resources (DPR), Sanya Bajomo; and Managing Director/CEO, Gas Aggregation Company Nigeria Limited (GACN), Engr. Morgan Okwoche.

Dangote Fertilizer Limited, which is ready to be commissioned before the end of this year, will produce 3.0 million metric tonnes per annum (mmtpa) of Urea.

The fertilizer plant consists of twin train, with each single train having a capacity of 1.5 million tonnes per annum of Urea and Ammonia, which makes each of them the largest train available in the world. Hence the total capacity of the plant is 3 million tonnes per annum, and it sits on an area of 500 hectares.

Speaking at the signing ceremony, Group Executive Director, Strategy, Capital Projects & Portfolio Development, DIL, Devakumar Edwin, commended the Managing Director of GACN for his role in the new business relationship between Dangote Fertilizer Limited and Chevron Nigeria Limited.

He said the company is looking forward to having a long-term relationship with Chevron Nigeria Limited as well as synergies in other upstream and wider areas of operations in the oil and gas sector.

Chairman/Managing Director, CNL, Jeffrey Ewing commended GACN, DPR for helping with the signing of the gas supply agreement. He said: “We are looking forward to working with Dangote Fertilizer and maintaining a good relationship with the company. This agreement is very important for the country and Chevron is committed to Nigeria’s economic development.”

The Managing Director/CEO, GACN, Morgan Okwoche, expressed delight to be part of the domestic gas agreement. “This is the beginning of fruitful relationship between Dangote Fertilizer Limited, Chevron Nigeria Limited and other parties. I am excited that this is happening during my term in office. You cannot imagine my satisfaction in having this contract signed at this time,” he said.

Head, Gas Monitoring & Regulation Division, DPR, Sanya Bajomo, said: “I am glad that GACN, Chevron and Dangote have signed this gas supply agreement. I want to say that this gas supply agreement is an issue of national interest and what happened today is going to be transmitted to the presidency. I believe everybody is going to benefit from this agreement when the fertilizer plant starts operation.”

– DANGOTE GROUP

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