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The Ivory Coast looks to double its hydrocarbon production by 2020

29 July 2016 Comments (1) Africa, Business, Featured

ivory coast offshore oil

The Ivory Coast, plans to double its production of hydrocarbons by 2020.

The Ivory Coast boasts one of the region’s most reliable power grids, which allows the nation to export energy to its neighbors. However, a recent economic boom in the already thriving Ivorian markets has seen the demand for energy rocket. The ever-growing demand for more energy has meant that the Ivory Coast has set itself the ambitious goal of doubling its hydrocarbon production by 2020.

The numbers behind the headline

While doubling production could be quite achievable for a nation only just embarking upon the mining of newly discovered resources, the Ivory Coast has a well-established hydrocarbon industry, in which 70% of its resources are already used up by electricity production.

The obvious questions are whether doubled production is realistic, and just what needs to be achieved if the aim is to be met. In simple terms, it means an increase from around 100,000 BOE (barrels of oil equivalent) per year, to roughly 200,000 of annual production by 2020.

Despite this seeming a large undertaking, the Ivory Coast has every reason to be confident. The recent history of its hydrocarbon industries shows hugely impressive growth, and there are plans in place to help realize its goal. From 2012 to 2013, the Ivory Coast doubled its natural gas output, reaching 220 million cubic feet per day. By 2014, this was 250 million cubic feet per day – mainly produced by the Ivorian company, Foxtrot International.

The state oil company Petroci is also working with Foxtrot and GDF Suez to ensure that natural gas contributes even further to the Ivory Coast’s energy needs. Foxtrot committed almost $1 billion over a 5 year period, in 2013, to increase gas production annually.

Petroci itself has also made marked inroads in expanding oil production, increasing its production from around 30,000 barrels per day (bpd) in 2014 to a 2015 high of 53,000 bpd. Such increases, in both gas and oil, indicate that the nation is well on target to meet its grand scheme of doubling total production across the field.

Confidence in development

Foxtrot International worker

Foxtrot International worker

While the aforementioned figures are impressive, the government’s supervisor of hydrocarbon exploration and production, Ousmane Doukouré, reported that the first half of 2016 has seen oil extraction at around 45,000 bpd. While this is still a marked improvement on 2014 figures, it is down from last year’s figure. However, investment, foreign assistance, and as yet untapped resources all provide confidence.

Petroci’s Managing Director, Ibrahima Diaby, spoke at an energy conference in the country’s capital, Yamoussoukro, and indicated the scope for development. Diaby spoke on off-shore gas reserves in the country, saying, “Today we have around 60 blocks. We’ve awarded about 20.”

Companies such as Exxon Mobil and Total are working on exploration within the Ivory Coast, and in addition to outside support, the Ivorian government has pledged $3.3 billion to boost oil production over the next 5 years.

For many years, the Ivorian government focused its development efforts on the agricultural industry, and as such energy was somewhat ignored. With a concerted effort from both the government and private companies, the resource rich nation is likely to grow its output exponentially. Diaby said the outcome of the nations increased gas and oil production would boost electricity by 80% over the next 6 years.

Foxtrot International began digging 7 new gas wells in 2014, and installed a new platform at its Marlin gas field in 2015. With major international oil and gas companies invested in developing the nation’s energy infrastructure, Diaby was confident in saying, “With the current exploration, our ambition is to reach 200,000 BOE (barrels of oil equivalent) in 2020.”

Wisely, there are additional angles to meeting the Ivory Coast’s growing energy needs. Aside from the ramped up production of domestic hydrocarbon resources, Diaby also told journalists that the country would begin importing liquefied natural gas (LNG), to help supplement the gas needs of some its power plants. These imports are scheduled to begin in 2018, and the Texas based company, Endeavor Energy, confirmed that it was aiming to secure a $900 million gas-driven power project within the Ivory Coast.

If such developments continue, West Africa’s largest economy may soon become as known for its power production as its famous cocoa exporting.

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Nigeria signs $80 bln of oil, gas infrastructure deals with China

1 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria has signed oil and gas infrastructure agreements worth $80 billion with Chinese companies, the West African country’s state oil company said on Thursday.

Nigeria, an OPEC member which was until recently Africa’s biggest oil producer, relies on crude sales for around 70 percent of national income, but its oil and gas infrastructure is in need of updating.

The country’s four refineries have never reached full production because of poor maintenance, causing it to rely on expensive imported fuel for 80 percent of energy needs.

These problems have been exacerbated by a series of attacks on oil and gas facilities by militants in the southern Niger Delta energy hub which pushed production down to 30-year lows in the last few weeks.

Oil minister Emmanuel Ibe Kachikwu, who also heads the Nigerian National Petroleum Corporation (NNPC), has been in China since Sunday for a roadshow aimed at raising investment.

“Memorandum of understandings (MoUs) worth over $80 billion to be spent on investments in oil and gas infrastructure, pipelines, refineries, power, facility refurbishments and upstream have been signed with Chinese companies,” said NNPC in a statement.

NNPC added the China roadshow was “the first of many investor roadshows intended for the raising of funds” to support the country’s oil and gas infrastructure development plans.

Earlier this week, NNPC said oil production had in the last few days risen by around 300,000 barrels per day (bpd) to 1.9 million bpd, due to repairs and no attacks having been carried out since June 16.

Goldman Sachs, in a report published on Wednesday, said a “normalization” in Nigerian oil production would put pressure on global oil prices and may mean prices will average less than $50 a barrel during the second half of 2016.

 

(Reporting by Alexis Akwagyiram; Editing by Mark Potter)

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Nigeria’s Dangote shifts focus from cement to oil and gas

24 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Africa’s richest man, Aliko Dangote, plans to launch Nigeria’s first private crude oil refinery by 2019 while almost doubling his cement production on the continent by adding plants in eight countries as he shrugs off a regional economic downturn.

Dangote told Reuters the $12 billion refinery would have a capacity of 650,000 barrels a day, cornering the market in Africa’s most populous country, where fuel shortages are a perennial problem.

Until recently, Nigeria was Africa’s biggest crude oil producer but it imports 80 percent of its fuel because poor maintenance means its four refineries never reach full output. Its current daily consumption is 260,000 barrels, according to the International Energy Agency.

A slump in commodity prices has hammered Nigeria’s economy – along with many others on the continent – and raised the cost of borrowing but Dangote, whose business empire stretches from cement to flour and pasta, is pushing hard into oil and gas.

“It will be ready in the first quarter of 2019,” the billionaire founder of Dangote Cement said of the refinery. “Mechanical completion will be end of 2018 but we will start producing in 2019.”

Dangote said the plant, which will include a $2 billion fertilizer unit, was being funded through “loans, export credit agencies and our own equity”.

Some $3.25 billion had come from local and foreign banks, while the central bank had also chipped in. The IFC, the private sector arm of the World Bank, has lent $150 million.

Dangote also has plans for a gas pipeline through West Africa. Nigeria has the world’s ninth largest proven gas reserves, at 187 trillion cubic feet (tcf), but loses half of it to flaring and re-injection.

Despite the new focus on oil and gas, the business magnate said he planned to build cement plants in Cameroon, Ethiopia, Kenya, Mali, Niger, Nigeria, Senegal and Zambia by 2018. Another plant will open in Congo Republic by September, he added.

A cement plant in Ivory Coast would triple output to 3 million tonnes, up from an initial target of 1 million, he said, while two new plants in Nigeria would add 6 million tonnes annually.

“As at now, what we have in operation is almost about 45 million tonnes, so we have just another 40 million tonnes to go,” he said, affirming an Africa-wide production target of 85 million tonnes a year by 2018.

 

FX CRISIS

The collapse in oil prices has hit Nigerian companies hard, with many unable to access dollars due to central bank foreign exchange restrictions imposed to prop up the naira.

The worst-affected have gone to the wall or shed large numbers of staff, but a study by Reuters of an 11-week period in March to May showed that Dangote firms managed to secure a healthy share of dollars at the cheap official rate. [nL4N19E3JX]

Dangote said the $161 million bought during that period from the central bank merely reflected the size of his business and did not represent preferential treatment.

“We have been badly affected like any other company,” he said, arguing that operational costs totalled $100 million each month due to recurring expenses such as the purchase of parts for cement production and running a fleet of 9,000 trucks.

“When you are talking about 20 billion dollars worth of projects, what is 161 million? One-hundred-and-sixty-one million dollars is my six weeks’ need,” he said.

Dangote’s sugar refinery in Nigeria had reduced capacity by 15 percent as a result of the dollar crisis. “We ended up owing a lot of dollars,” he said.

This week, the central bank removed the peg that has held the naira at the official rate of 197 for the last 16 months, leading to a 30 percent devaluation as the currency traded freely on the interbank market.

Dangote said the decline had pushed up costs. [nL8N19F31Y]

“This devaluation alone, we have lost over 50 billion naira ($176 million),” he said.

“The gas, which is our main source of power, is priced in dollars. If there is 40 percent devaluation, your price will go up by 40 percent. Every single aspect of the production will go up by that percentage,” he said.

Dangote also said he was eyeing a listing on the London stock exchange “within the next year or two”.

($1 = 284.1500 naira)

 

(By Alexis Akwagyiram. Editing by Ulf Laessing and Ed Cropley)

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Carlyle sets up $500 mln Europe, N.Africa energy vehicle

16 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Carlyle Group on Monday announced an investment in Tunisia-focused oil and gas explorer Mazarine Energy which will also receive $500 million to make bolt-on acquisitions in Europe and North Africa.

The deal is the first investment in over a year for Carlyle International Energy Partners, the private equity firm’s overseas oil and gas investment fund, which has more than $2.5 billion at its disposal, CIEP head Marcel van Poecke said.

The size of the investment in Mazarine was not disclosed.

Private equity funds including Carlyle, Riverstone and CVC Partners have built up significant firepower in recent years to invest in the oil and gas sector which has struggled following the collapse in oil prices since mid-2014.

“I think we will see more deals this year. Very slowly the M&A (merger and acquisition) space is starting to pick up,” van Poecke told Reuters.

Mazarine will seek investments in “low cost, low-risk opportunities” in onshore exploration and production assets, Chairman and founder Edward van Kersbergen told Reuters.

The company will focus on onshore fields in Romania, where CIEP acquired assets in March 2015 from Sterling Resources, as well as North Africa.

“We want resources that we can develop in a relatively short space of time at a low technical cost,” van Kersbergen said.

In Tunisia, Mazarine expects to start production of 1,500 to 2,000 barrels per day next year, according to van Kersbergen.

CIEP has in recent years created two companies to invest in assets in the North Sea and the Indian subcontinent.

Neptune, the North Sea vehicle set up by CIEP and CVC Partners a year ago which is headed by former Centrica boss Sam Laidlaw, was expected to make an investment over the next 12 months, van Poecke said.

 

 

(Reporting by Ron Bousso; editing by Jason Neely and David Evans)

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Algeria’s Sonatrach to invest $3.2 bil in pipelines

8 March 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

SIDI REZINE, Algeria (Reuters) – Algerian energy company Sonatrach will invest $3.2 billion over four years to increase pipeline capacity as natural gas output rises from new and existing fields, a top company official said on Tuesday.

OPEC member Algeria has been hurt by a 70-percent fall in oil prices since mid-2014. Its revenue from energy fell by half last year, forcing the government trim spending and freeze some infrastructure projects.

But the government, despite struggling to attract foreign oil companies in recent energy bidding rounds, is determined to increase oil and gas production to keep up exports and meet growing local demand.

“Sonatrach will invest $3.2 billion from 2016 to 2020 to boost its transport capacity, including $530 million in 2016,” Arbi Bey Slimane, Sonatrach’s vice president for pipeline transportation, told Reuters at the company’s Sidi Rezine office east of Algiers.

He said the company wanted to guarantee increased supplies to European clients. The additional transport capacity aims to deliver more volume as new fields in southeast and southwest add production soon. He did not give specifics on amounts or timing.

Algeria produces 1.1 million barrels per day of oil, and 27.44 billion cubic metres of gas, according to official figures.

Sonatrach’s CEO Amin Mazouzi has pledged a “sizeable increase in production” in 2016 as Algeria looks to end more than a decade of stagnation in energy production.

“We will build 1,650 km of pipeline, and six compression and pumping stations by 2020. Our goal is to transport output from new fields located in the south east and south west,” Slimane said.

Algeria is in talks with the European Union as the EU looks to diversify its energy sourcing away from Russia, which supplies around 30 percent of the EU’s gas.

Slimane said Algeria would remain a stable gas supplier for southern Europe.

“The volume exported in 2015 increased by 2 million tonnes equivalent oil (TEP) to reach 99 million TEP. The 2 million were delivered to southern Europe,” he said.

 

(By Lamine Chikhi. Editing by Patrick Markey and Jason Neely)

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Sasol to start drilling in new Mozambique oil and gas fields

1 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Sasol has received the green light from Mozambique to develop more oil and gas fields in the southern African state, the company said on Monday, without disclosing how much the project will cost.

Mozambique is sitting on huge gas reserves and developing liquefied natural gas export projects is expected to bring tens of billions of dollars to the impoverished state.

The petrochemicals giant, which makes 40 percent of its revenue from oil, said the project, about 600 km (372 miles) north of the capital Maputo, will be rolled out in stages. The first phase will include an oil, liquefied petroleum gas and gas project adjacent to its Pande and Temane fields.

Natural gas from Pande and Temane fields, in which Sasol holds a majority stake, is currently produced and processed at a central facility before being transported on an 865 km pipeline to gas markets in Mozambique and South Africa.

Sasol President and Chief Executive David Constable said the project was a “major milestone in further developing natural resources, which will significantly benefit Southern Africa.”

Gas projects being developed by Italy’s Eni and U.S. energy firm Anadarko will be given the final go-ahead by the end of this year, the state-run National Hydrocarbon Company (ENH) said on Sunday.

 

(Reporting by Peroshni Govender; Editing by James Macharia)

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Nigeria’s Oando plans $350 mil gas processing plant

27 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s Oando plans to build a gas plant for up to $350 million as it focuses on integrating gas production with its supply business, the head of the gas and power unit said on Thursday.

Bolaji Osunsanya, Managing Director of Oando Gas and Power said the plant, with a capacity to process 300 million standard cubit feet a day (scfd), will take 24 months to complete and cost $300 million to $350 million.

He said Nigeria had room to ramp up gas plants as current capacity was around 2 billion scfd, adding that its project was at the development stage to be launched in the first quarter.

London-listed Nigerian firm Seplat is also boosting gas capacity. It plans to increase gross output from around 120 million to 400 million scfd by 2017, as demand grows.

“We have done transport in the past, we are getting into (gas) processing right now,” Osunsanya told Reuters in an interview. “We are working ourselves up the chain.”

Oando’s gas and power unit reported a net income of $19 million for the nine months to September, down from $22 million the previous year.

Lagos-listed parent Oando, with interests in oil exploration, terminals and oil trading, has said it was seeking approvals to sell its gas and power investment to cut debt and raise up to 80 billion naira from shareholders.

Two years ago, Africa’s biggest economy broke up its monopoly on power generation and distribution by privatising the sector, hoping to attract foreign investors.

But the amount of power produced has stagnated since, failing to reach a 2012 peak of 4,500 megawatts of electricity due to gas constraints, plant outages and tripped circuits, according to Transmission Company of Nigeria.

Osunsanya estimated Nigeria will need around $55 billion over the next seven years to develop gas infrastructure to meet growing demand, which would include building new pipelines, processing plants and drilling of new wells.

He estimated demand at 5 billion scfd, of which 3.5 billion was needed for power and the rest for other uses. However, half the 7.5 billion scfd gas generated was flared or reinjected into the ground due to inadequate pipelines for distribution.

 

(By Chijioke Ohuocha. Editing by David Evans)

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Shell upbeat on Gabon Leopard Marin discovery, sees gas play

29 October 2015 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – Royal Dutch Shell’s Leopard Marin discovery offshore Gabon may be a new commercial gas field, a senior company executive said on Thursday.

“Leopard is the first potentially commercial multi-TCF (trillion cubic feet) find in a new gas play and I think that is very exciting for us and for the government of Gabon,” Alastair Milne, Shell’s vice president exploration for Sub-Saharan Africa, told an industry conference in Cape Town.

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