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Mauritania, Senegal seek to become oil, gas exporters

16 May 2016 Comments (0) Africa, Business, Featured

senegal gas

The two West African countries bet on a long-term recovery as global fuel prices slump.

In spite of the slumping price of oil in the past year, two West African countries are betting on a long term recovery as they race to produce enough oil and gas to become exporters by 2020.

Mauritania and Senegal both report promising off shore oil discoveries and each nation plans to proceed with multi-billion dollar extraction projects.

However, David Thomson, an analyst with Wood Mackenzie cautioned that securing financing for the projects could be challenging and take time. “These projects are massive and they’re very capital intensive,” Thomson said.

Offshore wells promising

In Senegalese waters, Cairn Energy reported that it had drilled three wells that revealed significant amounts of oil off Africa’s western extremity. Drilling was planned at a fourth, according to the Scottish energy company’s chief executive, Simon Thomson.

The United States company Kosmos Energy said it had confirmed a large pool of natural gas that straddled the Mauritanian-Senegalese border at sea and it planned to drill in the area.

The projected yield is 20 trillion cubic feet of natural gas, an encouraging threshold for further drilling, Kosmos spokesman Thomas Golembeski said.

Other African nations wait

The Senegalese and Mauritanian plans contrast with other nations such as Tanzania and Kenya, which are delaying tapping similar resources until the economic climate improves.

Nadine Kone of Oxfam International questioned the wisdom of Senegal’s and Mauritania’s plans. “Why rush with oil given where prices are now?” Kone asked.

After increasing by 20 percent in April, global oil prices fell in early May to below $45 a barrel and experts predicted weakened demand.

Senegal oil

Producers see increase in demand

Golembeski said the Kosmos thinks demand will have increased by the time the gas site is ready to deliver. He cited the ease of shipping to Europe as an advantage for exports from the region.

“Demand for oil and gas will continue to increase over time as more and more people around the world move from rural areas into the cities and want the conveniences of modern life,” he said.

Both countries have enjoyed steady economic growth in the past five years.

With a population of 3.6 million and a gross domestic product of $15.5 billion, Mauritania has seen sustained economic growth, primarily as a result of growth of the mining industry. The country is Africa’s second leading exporter of iron ore and also exports gold and copper.

According to the Heritage Foundation, the nation’s gross domestic product saw a growth rate of more than 5 percent on average during the past five years.

Senegal’s economy has grown at an average annual rate of 3.5 percent in the past five years, the foundation said, but volatility of economic growth has undermined progress in social development and fighting poverty. The nation has a population of 14.5 million and a gross domestic product totaling $33.6 billion. Senegal is primarily rural and has historically had few natural resources, relying instead on agricultural exports.

In 2015, with a growth rate of 6.5 percent, Senegal was the continent’s second fastest growing economy. Services, chemical production and construction drove growth.

Questions about oil proceeds

Kone of Oxfam questioned whether the five-year window the energy companies are projecting from exploration to sale is enough time to create a legal framework to regulate the governments’ use of proceeds from their 10 percent shares in projects within their boundaries.

Despite economic growth, both countries suffer from youth unemployment and chronic poverty and many residents do not have access to housing, health services, education or even clean water.

Kone cited Ghana, which discovered oil in 2007, as a model in the region that Mauritania and Senegal might emulate. Ghana created a dedicated fund from the proceeds that it used to invest in priority areas such as education and agriculture.

A contrasting example is Nigeria, where the state-run oil agency withheld billions of dollars funds that were designated for government services. Nigeria derives about 70 percent of its revenue and is Africa’s top producer of crude oil.

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FillApp: Saving South Africans at the pump

11 May 2016 Comments (0) Africa, Business, Featured

south africa petrol station

FillApp is the latest in apps aimed at saving consumers money by notifying them of real-time price fluctuations. This South African smartphone application lets users know the best times and locations to fill up their gas tanks based on their car size, make, model and fuel type.

The South African rand lost more than 26% of its value in the last 6 months of 2015, crushing citizens’ ability to participate in the global market. This devaluation was intensely felt across all sectors, particularly those involving global goods such as gasoline. As the rand fell (and continues to fall), South Africans are paying the price at the pump. Despite the fact that oil prices are plummeting to new lows, South Africans were not feeling the same relief as, say, Americans. This is because their currency was falling faster than the price of petroleum.

Sense Saves Cents

Recognizing the need to alleviate this financial burden, the South African tech company TouchFoundry created FillApp, an app for Android and iPhone platforms that allows users to save money at the pumps. Users simply input basic metrics about their vehicle, such as make, model, tank size, gasoline type and whether the driver is more likely to fill up at coastal or inland cities.

Based upon these metrics, the app is able to calculate an individual driver’s savings if she should fill up on a certain date. The app then sends each user a notification at the beginning of each month letting them know if they should fill their tanks sooner rather than later based upon the predicted price changes.

FillApp

FillApp calculates these fluctuations based upon publicly available information from government and agency websites. Co-founder Lance Jenkins says that “every-day people aren’t able to access this data efficiently and conveniently when they need to. So, we did the time, crunched the code and came out with an elegant product that will hopefully add a touch of convenience to everyone’s lives.” Jenkins is referring more to the intellectual accessibility of information rather than the physical availability: the information FillApp uses to make its predictions is readily available to anyone with internet access, but it is taking the time to understand what the data means and how those numbers will be applied to the real world that takes time.

The Department of Energy recalculates fuel prices to include taxes and levies at the end of each month, and the South Africa Central Energy Fund uses this information to update fuel-price predictions on a daily or weekly basis. The Department of Energy puts these new, comprehensive prices into effect on the first Wednesday of each month. As soon as FillApp learns of the new price predictions, they are able to advise users on when and where to fill up their tanks based upon the information previously provided.

These sources allow the FillApp to provide up-to-date fuel price predictions based upon national agencies’ publications. “We scan reliable sources and we then basically get an algorithm that gives us a prediction of what the fuel (price) will probably be,” said Fabio Longano, TouchFoundry’s founder.

Taking Back the Purchasing Power

It is publicly sourced apps like this that are helping consumers take back the power in a world that seems impossibly confusing and unpredictable. By empowering consumers with knowledge about when and where to fill their tanks, FillApp is giving South Africans the information they need to potentially save a great deal of money.

As OPEC (Organization of Petroleum Exporting Countries) has allowed oil prices to fall thanks to a flood in the market, South Africans (and most others) have experienced relief at the pumps. Unfortunately, gas prices seem to be particularly unreliable in South Africa: Reuters predicts that the price of gasoline will go up by 12 cents to 12.74 rand/liter, or about $3.20/gallon. The current price of gasoline in America is, for instance, between $1.99-$2.65, depending upon the state. This means there is substantially more of a burden upon South African gasoline consumers than upon American: not only is the price of gasoline about a full dollar more per gallon in South Africa than in America, but given the massive differences in average income, the high price of gasoline takes up a larger proportion of a South African’s income than it does an American’s. This is not unusual, however. The United States is known for having low taxes on gasoline and usually has much lower gas prices than developing countries.

Getting the Goods

While South Africans’ relief at the pump has not been as intensely felt as in other countries, FillApp is increasing consumers’ ability to make informed decisions about when and where to purchase gasoline. Apps like this are popping up all over the world, and give a fascinating look at the future of capitalism in a world with increasing income gaps.

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Shell says Nigerian output continuing despite reports of militant threat

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

LONDON (Reuters) – Shell said on Monday that oil output was continuing at its oil fields in Nigeria despite local media reports of a militant attack near its Bonga facilities.

Media reports said the company was evacuating workers because of threats from militants.

“Our operations at Bonga are continuing,” a spokesman for Shell Nigeria Exploration and Production Company (SNEPCo) said in a statement, adding that it will continue to monitor the security situation in its operating areas and take all possible steps to ensure the safety of staff and contractors.

 

 

(Reporting By Libby George; Editing by David Goodman)

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West Africa pirates switch to kidnapping crew as oil fetches less

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

LONDON (Reuters) – Pirate gangs in West Africa are switching to kidnapping sailors and demanding ransom rather than stealing oil cargoes as low oil prices have made crude harder to sell and less profitable, shipping officials said on Tuesday.

Attacks in the Gulf of Guinea – a significant source of oil, cocoa and metals for world markets – have become less frequent partly due to improved patrolling but also to lower oil prices, according to an annual report from the U.S. foundation Oceans Beyond Piracy (OBP), which is backed by the shipping industry.

“They have had to move towards a faster model and that faster model is kidnappings,” OBP’s Matthew Walje said, noting that ransom payouts were as high as $400,000 in one incident.

“It only takes a few hours as opposed to several days to conduct the crime itself,” he told Reuters at the report’s launch in London. “Fuel prices have fallen, which cuts into their bottom line.”

OBP said violence had also risen, including mock executions, and last year 23 people were killed by pirates there.

“A lot of people are dying from piracy – nowhere near that number died in the last few years in the Western Indian Ocean (due to Somali piracy),” Giles Noakes, of leading ship industry body BIMCO, told the briefing.

“We are particularly concerned by the issue,” said Noakes, whose association audits the OBP’s annual report.

Last month, Nigeria and Equatorial Guinea agreed to establish combined patrols to bolster security.

Analysts say the pirates have emerged from Nigerian militant groups such as the Movement for the Emancipation of the Niger Delta and OBP’s Walje said a growing problem was the splintered nature of the various gangs operating in West Africa.

“It is more fractured than it would be off Somalia where there were a few major gangs and kingpins operating,” he said.

OBP estimated costs related to piracy and armed robbery in 2015 in the Gulf of Guinea were $719.6 million, 61 percent of which was borne by the industry. The 2014 cost was $983 million, 47 percent of which was borne by the maritime sector, it said.

 

(By Jonathan Saul. Editing by Louise Ireland)

 

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Nigeria to begin exploratory oil drilling in Chad Basin by October

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

ABUJA (Reuters) – Nigeria plans to begin exploratory drilling in search of oil in the northeastern Chad Basin region by October, the head of the state oil company has said.

Emmanuel Ibe Kachikwu, who last year said Africa’s biggest crude exporter may be on the verge of a significant oil find in the Lake Chad area, said in a statement on Sunday that seismic studies were ongoing.

“Drilling activities will commence by the last quarter of 2016,” the Nigerian National Petroleum Corporation (NNPC) chief, who is also minister of state for oil, was quoted as saying in the statement issued by the state oil company.

Africa’s biggest economy has been hit hard by the sharp fall in global oil prices because it relies on crude exports for around 70 percent of government revenue.

NNPC spokesman Garba Deen Muhammad said exploration in the region was intended to “add value to the hydrocarbon potentials of the Nigerian inland basin, provide investment opportunities, boost the economy as well as create millions of new jobs”.

 

 

(Reporting by Camillus Eboh and Alexis Akwagyiram, editing by David Evans)

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South Africa’s petrol pump price to increase in May

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

JOHANNESBURG (Reuters) – The retail price of petrol in South Africa will increase by nearly 1 percent from May 4, while the price of wholesale diesel will largely remain steady, the energy department said on Monday.

The price of petrol will increase by 12 cents to 12.74 rand per litre in the commercial hub of Gauteng province, while diesel will go down by 1 cents to 10.52 rand per litre, the department said in a statement.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Alison Williams)

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South Africa’s rand weakens as oil price retreats

20 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand weakened against the dollar on Wednesday, in line with a pullback in commodity currencies as the global oil price fell one more.

The rand fell to 14.3750 versus the dollar earlier in the session, and was trading at 14.3015 by 0656 GMT, 0.2 percent lower than Tuesday’s New York close.

Commodity-linked currencies such as the rand reversed the previous day’s gains as a recovery in crude oil prices stalled after a workers’ strike which had cut output ended in Kuwait.

The rand had touched a near five-month high of 14.1900 on Tuesday in the wake of improved global risk sentiment linked to better oil prices.

“Commodities are off their highs from yesterday and trade softer so far; this has seen the rand get back above 14.3500 with more resistance at 14.4000/4100 likely to attract offers first up,” said Standard Bank trader Oliver Alwar.

Traders and analysts said the rand could take further direction from domestic CPI data due out at 0800 GMT, with analysts polled by Reuters expecting the main year-on-year number to ease to 6.3 percent from 7 percent.

Government bonds also weakened, and the yield for the benchmark instrument due in 2026 rose 4 basis points to 8.925 percent.

The stock market looked set to open slightly down, with the

Top-40 futures index down 0.5 percent by 0656 GMT.

 

(Reporting by Tanisha Heiberg; Editing by Stella Mapenzauswa)

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Shell says theft from its Nigerian oil pipeline network fell in 2015

18 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Theft of crude oil from the pipeline network of Shell’s Nigerian subsidiary fell to 25,000 barrels per day (bpd) in 2015, the company said on Monday, roughly 32 percent less than the previous year.

The number of sabotage-related spills on the SPDC network also declined to 93 in 2015, compared with 139 the previous year, Shell said in its annual sustainability report.

It attributed the decrease to divestments in the Niger Delta and increased surveillance and security by the Nigerian government, but said theft and sabotage were still responsible for around 85 percent of spills from SPDC operations.

President Muhammadu Buhari has said theft siphons as much as 250,000 bpd of crude of its roughly 2 million bpd of production and last week promised to crack down on groups responsible for pipeline attacks.

Still, the issue has continued to plague the country. Shell currently has a force majeure in place on Forcados crude oil exports following an attack on a subsea pipeline in February, while Italian oil major ENI reportedly declared force majeure on Brass River exports late last week.

 

(Reporting by Libby George and Karolin Schaps; Editing by Mark Potter)

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Oil-dependent Gabon seeks to diversify industry

14 April 2016 Comments (0) Africa, Business, Featured

gabon oil worker

The African nation looks for private investment as it creates infrastructure to grow timber and mining production.

Gabon is making progress with its ambitious strategy of industrializing its economy by 2025, but plunging oil prices may slow its advances.

Gabon’s goal of economic diversification took on new urgency in 2015, when the plunge in oil prices sent shock waves through the economy of the nation of 1.8 million people located on the Atlantic coast of equatorial Africa.

In 2010, Gabon adopted a sweeping Strategic Plan Emerging Gabon, designed to diversify its economy and make its industry more competitive. With 80 percent of its export revenues coming from oil, the country is attempting to increase timber production and mining.

The plan calls for major investments in infrastructure and services to establish the Gabon Special Economic Zone with as many as 10 economic areas around the country.

Timber processing is key

Gabon’s industrialization plan relies heavily on improving the timber industry.

Forests cover nearly 85 percent of the country and it is home to more than 400 tree species.

In 2010, the government decided to halt exports of raw logs as a way of encouraging domestic processing, which would in turn increase profits and create more jobs. By 2012, about one third of logs were being processed in Gabon.

France is the largest importer of processed wood projects from Gabon, accounting for 42 percent of sales while Asia accounts for 3 percent.

Timber revenues triple

Since the halt, timber revenues have tripled from $66 million in 2009 to $190 million in 2014.

Gabon also created a special economic zone, Nkok, in Libreville, to make it easier for foreign companies to do business in the country.

The Nkok zone attracted 62 investors in 2013, including 40 percent in the timber industry. The number of timber processing factories increased from 81 in 2009 to 114 in 2013 while the number of jobs nearly doubled to more than 7,000.

The boost in the timber sector also resulted in the startup of transportation companies to haul logs.

Timber awaiting processing in Owendo, Gabon

Timber awaiting processing in Owendo, Gabon

Growth in mining sector

Mining is another sector that Gabon is attempting to grow.

Following the creation of a metallurgical complex in Moanda, production of manganese increased to $305 million. At the same time, the country went from small-scale production of gold – about 30 kilograms in 2009 – to produce more than 1,200 kilograms in 2014.

The economy grew about 4.1 percent in 2015, and the African Economic Outlook projected similar growth in 2016.

Economic challenges persist

Nevertheless, Gabon’s economy “is facing mounting headwinds,” the International Monetary Fund (IMF) said in early 2016.

According to the IMF, falling oil prices have resulted in a slowdown in non-oil sectors including construction, transportation and services.

The slowdown has led to a government budget deficit of 2.3 percent of Gabon’s gross national product in 2015, after posting a surplus of 2.5 percent the year before. At the same time, the nation saw a trade deficit of 1.9 percent in 2015 compared to a surplus of 8.3 percent in 2014.

Slower growth forecast

The IMF predicted economic growth of only 3.2 percent in 2016, largely because of declining oil production. However, growth in the agricultural sector could help increase the growth rate to about 5 percent in 2017-18.

IMF directors noted that Gabon has made progress authorities in developing the country’s infrastructure since 2010.

They emphasized the need to continue to foster diversification so that Gabon will be less vulnerable to fluctuating oil prices.

As revenue to the government tightens, IMF directors recommended that Gabon officials focus on high-impact infrastructure projects and structural reforms that will increase productivity and improve the labor force.

Gabon improves regulatory climate

At the same time, Gabon officials have acknowledged that the regulatory environment could be better for business.

Gabon President Ali Bong Ondimba pledged to “radically improve” the business climate by streamlining the regulatory process for investment through a National Agency for Investment Promotion and with establishment of a National adjustment for Competitiveness Pact to facilitate and speed up establishment of business operations.

Ondimba said the country must encourage private investors to step up as public investment declines.

“We must ensure that everyone plays their part. The government facilitates the business environment and the private sector that invests and recruits. If everyone plays his role, we will (achieve) growth and the creation of 20,000 jobs per year,” he said.

One bright spot for investment in Gabon’s efforts came in April, when AFRICA Finance Corporation, based in Lagos, Nigeria, announced it was investing up to $140 million in the Gabon Special Economic Zone to help fund infrastructure projects including a new mineral terminal.

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Nigeria wants to boost non-oil income by 87% to offset oil slump

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria expects its non-oil revenues to nearly double this year as Africa’s top oil producer seeks to offset a slump in oil revenues, according to a presentation seen by Reuters on Monday.

President Muhammadu Buhari plans a record 6.06 trillion naira ($30.6 billion) budget to stimulate Africa’s biggest economy, which has been hammered by a fall in oil exports that had made up 70 percent of state income.

Funding of the budget with an expected deficit of 2.2 trillion naira has been so far unclear.

Detailing its plans, the government expects to generate 3.38 trillion naira ($17 billion) this year from non-oil sources, up 87 percent from 1.81 trillion naira in 2015, the presentation showed.

Corporate income tax collection is expected to exceed the 700 billion naira generated last year, while the government also aims to recover stolen Nigerian assets stashed abroad as part of efforts to crack down corruption, it said.

The biggest source of revenues this year will come from what the presentation called “independent revenue”, without providing further details.

President Muhammadu Buhari plans to squeeze informal small traders who make up almost half of GDP, this year to boost tax revenues by 33 percent.

On Saturday, Finance Minister Kemi Adeosun said Nigeria was considering the issue of Chinese Panda or Japanese Samurai bonds to help fund the budget.

The government also wants to switch its debt mix so that 40 percent of loans would be from abroad, compared to 16 percent now, the presentation showed. Loan repayments will be stretched.

Buhari has asked the United States for help in returning stolen Nigerian assets stashed in U.S. banks. In March, the U.S. said it had frozen more than $458 million of funds that the late military ruler Sani Abacha had stolen.

Nigeria has recovered about $1.3 billion of Abacha’s money from various European jurisdictions as of last year, with more than a third of that coming from Switzerland. Abacha also held assets in France, Britain and British offshore centers such as Jersey.

Nigeria has also held talks with China, the World Bank and other international institutions to get loans to fund his plans to roll out infrastructure projects.

($1 = 198.0000 naira)

 

(Reporting by Chijioke Ohuocha; Editing by Ulf Laessing and Toby Chopra)

 

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