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  1. 1. C O N T E N T S Published in English and in French since 1983 Every two weeks Every day AfricaIntelligence.com N°700 June 4 2013 OilP. 3-4 GasP. 5 ElectricityP. 6 Who'sWhoP. 8 Financial OperationsP. 7 Government StrategiesP. 2 GHANA Tullow lands PoD accord for TEN (p.3) John Mahama: Ghana Charles Darku: Ghana Michel Faure: North Africa Oliver John Moss: Equatorial Guinea QATAR/AFRICA Doha on shopping spree withTotal’s help Qatar appears determined to launch a more aggressive drive in African oil and gas through its state-run concern Qatar Petroleum International (QPI). It’s now a matter of sifting through opportunities and investing. Some African countries are doing their utmost to attract revenue from the rich Gulf state. Key cooperation with Total in Congo-B.The French major has decided to reduce its finan- cial exposure in Congo's enormous Moho North project (PEX) where it will have to lay out $10 billion between now and 2015 to lift production to 140,000 bpd on the block. To do that Qatar will subscribe to a 15% share capital increase in Total, a stake to be entirely owned by QPI. The two companies will thus be putting into practice a strategic accord they signed in late March, 2010 that provided for bilateral cooperation in Africa (AEI 625). This means that in addition to developing Moho North, Qatari investors are to be involved in all of Total's other future projects in the country. Congo isn't unknown territory to Qatari leader Hamad Ben Khalifa Al Thani. He travelled to Brazzaville in March, 2010 to sign a memorandum of understanding with SNPC. And ties have been maintained. Congo’s infrastructure minister, Jean-Jacques Bouya, represented president Denis Sassou N’Guesso during the Doha 13th Forum on May 20-21. Senegal bids for Qatari funding. While the visit of Senegalese president Macky Sall to Qatar between May 20-12 was ostensibly to speak at the same Doha 13th Forum several meetings were arranged on the sidelines by the Qatari authorities. According to our sources, Sall spoke with Al Thani on the feasibility of building a re-gasification terminal to import gas from Qatar and on building power stations. Other projects that would involve QPI buying into exploration blocks in Senegal’s offshore or importing gasoline from Qatar are likely to be discussed during a forthcoming visit to Doha by Senegalese energy minister Ali Ngouille Ndiaye. He will consult with project chiefs of the Qatar Investment Authority (QIA). One of the president’s advisers, Ibnou Sougoufara, who is attempting to set up the programs with QIA, appears to have persuaded Sall to underscore Sen- egal’s stability as a Sunni Moslem country in order to attract Qatar’s money. And Senegal could also act as a hub to distribute Qatari hydrocarbons in the sub-region. Lots of promises, few results. But Qatar’s pledges to invest in Africa haven’t always mate- rialized. In 2010 and 2011, South Africa began talks with Qatar on buying gas but they seem to have fallen through. And in oil, apart from Qatar Petroleum International’s stake in blocks TA-7 and TA-8 in Mauritania (operated by Total) the emirate had no operations on the continent prior to its arrival in Congo-B. The French major has been lobbying African governments to let Qatar take more stakes in its acreage. In 2010 and 2011,Total tried to bring QPI into its block B in South Sudan.The latter’s energy minister at the time, Garang Diing Akuong, was even invited toTotal’s Paris headquarters in early 2010 to talk about the possibility but it was eventually dropped. Despite the emirate’s colossal treasure chest, its investments take time to arrange because of a shortage of qualified personnel to handle them. Al Thani’s simple desire to invest money doesn’t go far if there are no experts at QIA or QPI to make headway with projects. That’s one of the reasons why Qatar’s partnership withTotal remains the only one to function up to now in the oil sphere in Africa. The French group sees to the operational side and arranges financial pack- ages while QPI acts as a sovereign fund, providing whatever cash is needed. That arrangement mobilizes its funds but doesn’t test its executives. Gabon: Ngoubou issues veiled threat Chad: Griffiths & CAC state their case State-Owned Companies Sonatrach,TPDC, ENE/Sonangol Africa: Petrobras prepares its drawdown; GEM in new high risk bet Gabon: Exxon, Chevon & Noble are wary Ivory Coast: Petroci short of cash Congo-K:Total mulls strategy on block 3 Mozambique: Beijing taps new resources Nigeria: ENI’s secret gas reserve West Africa: Abidjan wants to link up toWAGP Congo-K: Strong push for Inga 3 Ivory Coast: Abidjan sees power export boom Congo-K/Zambia: Luapula a lifeline for miners Africa: Heritage seeks $600 million Nigeria: Making a pitch for Oando Cameroon: Perenco finances its FSO Togo: Adjarala tops up loan for dam Consultants GreenbergTraurig,BillyGundelfinger, ConallPatton IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  2. 2. 2 Every day www.AfricaIntelligence.com STATE-OWNED COMPANIES GOVERNMENT STRATEGIES N°700 June 4 2013 GABON Ngoubou issues veiled threat The president of the Union Petroliere Ga- bonaise, Jacqueline Binoumba, recently received a barely veiled threat from oil min- ister Etienne Ngoubou concerning audits by the Alex Stewart International (ASI) consulting concern. In his letter Ngoubou protested over the practices of certain oil company whom he accused of “blocking the auditors’ access to information.” In the letter he warned that if some oil compa- nies took action against ASI (as some have threatened to do at private meetings) their action“would be considered an obstacle to the Gabonese Republic’s right to monitor and audit”(the industry). For the moment, Addax Petroleum, owned by Sinopec, is the only company to have launched arbitra- tion proceedings against Alex Stewart in Washington after the government confis- cated its Obangue field (AEI 698). But Total, displeased over the auditor’s practices, put a brief halt to the exercise. Some oil com- panies operating in Gabon are angry over additional taxes imposed after the audits, which they find excessive. Alex Stewart’s local chief is a former Ernst &Young execu- tive, JacobTsiobaThaty. CHAD Griffiths&CACstatetheircase The oil consultant of Canada’s Griffiths Energy, FTI Consulting, has contacted Africa Energy Intelligence concerning a report in our last issue (AEI 699) in which we mentioned the Extractive Industries Transparency Initiative report for 2011 on Chad. FTI Consulting disagrees with one of the findings of the report drafted by the Fair Links firm concerning a lack of transparency by Griffiths on the “bonus consulting fee” paid to a Cameroon-based company. Under section 38.5 of the pro- duction sharing contract signed between Griffiths and Chad (see document), the sum of $3.2 million per permit was to have been paid to a consortium of consultancies made up of Cameroon’s CAC International and the French-British concern Drake & Bart. It was because of the advice the two concerns were able to offer the oil ministry that they were legally paid $6.4 million for the two permits (and not $7 million as cited in Fair Links report). CAC, which also wrote to Africa Energy Intelligence, denied being the Cameroon-based company cited in Fair Links’report. Elsewhere, Griffiths made a point of specifying that the U.S. Depart- ment of Justice informed it by letter on Feb. 13 (which AEI has seen) that no legal action would be taken against the company in the United States. Last year Griffiths agreed to pay a CAD 10.35 million fine after pleading guilty before a court in Alberta in a case involving the payment of bribes to the wife of the Chadian envoy to Canada at the time. Griffiths subsequently won the Mangara and Badila permits in Chad. SOUTH SUDAN Total changes tack After nearly two years of fruitless talks, France’s Total seems to have accepted South Sudan’s position concerning the fate of its block B concession in the country. Talks are underway between Total’s local staff and officials at the oil ministryinJubaoncarvingupthegiant, 118,000 sq.km. concession into three or four blocks. Africa Energy Intelligence has reported that several companies like Exxon and Dig Oil could buy into one of the new permits if an agreement is reached between Total and South Sudanese oil minister Stephen Dhieu Dau. If the talks break down Total could backtrack to its initial strategy which consisted on basing its position on statements of South Sudanese president Salva Kiir who pledged that all contracts signed before his country’s independence in 2011 would be honoured. AFRICA Cloud over SNC Lavalin The Canadian firm SNC Lavalin could be kicked out of one of the consortiums seeking a contract to build the big Inga 3 dam in Democratic Republic of Congo (see P. 6). The South Korean groups Daewoo and Posco which SNC Lavalin joined in presenting a bid to Congo-K’s government could be forced to find another partner after the World Bank (one of Inga 3’s lend- ers) banned the Canadian firm and its 100 subsidiaries from seeking contracts for 10 years following allegations of bribery in Bangladesh and Cambodia. According to a report in the Toronto daily Globe and Mail and the CBC television channel, SNC Lavalin is suspected of corruption in operations in Nigeria, Zambia, Uganda, Ghana, India and Kazakhstan. Meanwhile, the African Development Bank is conducting an in- vestigation over a payment by an affiliate of SNC Lavalin to a company in Mozambique named Agema Consulting. SONATRACH Officials fromAlgeria’s national oil company Sonatrach say that the country’s oil and gas reserves climbed from 4,027 to 4,075 billion B/OE between 2011 and 2012. The two areas that boosted the reserves were the Berkine basin with new fields near Hassi Messaoud and the Menzel Ledjimat region, as well as fields in the Illizi basin with the extension of the Alrar, Stah and Tinhert fields. But Algeria’s satisfaction over the very small increase in reserves tends to camouflage the steady drop in oil and gas production experienced over the past five years. TPDC With a new licensing round in Tanzania scheduled for the end of October, the Tanzanian Petroleum Development Corp (TPDC) has decided to put the Tanganyika North concession back on the auction block, although it was awarded to Total in 2011. That would seem to indicate Total andTPDC didn’t manage to reach an agreement on the fine points of an exploration plan on what is a highly difficult zone (due to LakeTanganyika’s depth and lack of easy access to it). ENE/SONANGOL The Swedish firm Eltel Networks Te AB is scheduled to complete a 250 km interconnection between the central and northern grids of Angola’s Empresa Nacional d’Electricidade (ENE) in October. The $130 million project is being financed by a loan by Eltel to Luanda. The power will come from the Cambambe (180 MW) power station that Alstom Hydro finished rehabilitating in February. The other advantage of the project is that it will allow for the future Lobito refinery to be supplied with power. Work on the refinery was inaugurated in December by Angola’s vice president and former CEO of Sonangol, Manuel Vicente. The refinery, which is being built by KBR and have a capacity of 200,000 bpd, is due to start function in 2016. As for the inter-connection program, it fell two years behind schedule because 641 masts had to be installed on often- difficult terrain. There was also some fear of sabotage: on several occasions, grenades were found along the route. IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  3. 3. Every day www.AfricaIntelligence.fr 3 OIL N°700 June 4 2013 GHANA TullowlandsPoDaccordforTEN Ghana’s president, John Mahama Dramana, made brief mention during a meeting of the French employers associa- tion MEDEF on May 29 that his government had endorsed Tullow Oil’s Program of Development (PoD) for the offshore TEN oil and gas complex involving theTweneboa, Enyrenra and Ntome fields. He confirmed the decision during a semi- nar at the Institut Francais des Relations Internationales (IFRI) the same afternoon. According to our sources, Ghana’s energy minister, Em- manuel Koffi Buah, indeed signed an accord on the PoD in Accra on May 29 with Dal Jones, managing director of Tullow Oil Ghana. The accord had been held up for six months for political reasons linked to the proximity of the TEN fields to the disputed maritime boundary with Ivory Coast and problems concerning the price of the gas that Tullow will charge. The Ghanaian president reportedly gave a green light to the accord when he was already in France for a visit that began on May 27. Mahama possibly wished to signal his capacity to decide on major issues as he embarked on his first official trips outside of Africa since his still-disputed election last December. After visiting Paris he was due to arrive in Japan on May 30. Ghana’s foreign minister, Hanna Tetteh, who arrived in Tokyo before Mahama, could announce the positive news to Japan’s Modec which has been shortlisted for the contract to buildTEN’s FPSO.The three fields in the complex are expected to pump 80,000 bpd and large amounts of gas starting from 2015. Alert sent on 30/05 AFRICA Petrobraspreparesitsdrawdown Brazil’s national oil company is continuing to dispose of its international assets to focus on its major finds close to Rio de Janeiro. As Africa Energy Intelligence reported in early April (AEI 696), Petrobras is beginning to deploy its plan to reduce its footprint in Africa. The company is in the process of selling its 12% holding on block 6 in Tanzania’s offshore to Statoil, which already operates block 2 on which several significant discoveries were made in 2012. Petrobras has decided to limit its exposure in Tanzania prior to the drilling of a well later this year. Although the Brazilian group opened an office in Dar es Salaam in 2009 it could also reduce its stake on block 5, the other Tanzanian block on which it operates. The drawdown results from decisions made in 2012 by Petrobras’board to channel more of its financial resources into developing the gigantic pre-salt finds in Brazil’s offshore. Nigeria was the first African country in which Petrobras decided to reduce its assets on the Akopo and Agbami fields (estimated to be worth $5 billion). The disposal hasn’t yet been completed as an agreement with Nigerian companies is taking time and funding of their acquisition is complicated. The Brazilian major concern is also highly present in Angola and Namibia but could retain these concessions which have major potential because of their geological similarity to Brazil’s coast. Before it decided to reduce its footprint in Africa Petrobras made a number of acquisitions in 2011, notably in Benin’s offshore with Shell and in Gabon. It could eventually decide against drilling in Gabon, as its contract allows it to do. AFRICA GEMinnewhighriskbet Managers of the Swiss equity fund GEM who financed acquisitions by the mysterious Caprikat and Foxwhelp firms in Congo-K have invested in a new oil concern named Labat Africa. A former unit of the defunct mining group Aurora, the oil explorer Labat Africa has acquired five licenses in basins in Namibia’s Walvis Bay (blocks 1909 and 2009) and Luderitz (2414, 2411A and 2511A). The firm, headed by South Africa’s Bryan van Roonen, is currently exploring in East Africa. Labat was bought in 2010 by Aurora Empowerment Systems, a firm owned by Zondwa Gadaffi Mandela, grandson of Nelson Mandela, and by Khulubuse Zuma, nephew of current South African president Jacob Zuma. Aurora, which operated the Orkney and East Rand gold mines in South Africa, has since gone bankrupt but Labat Africa is still active thanks to financial backing from the Swiss asset management firm Global Emerging Markets (GEM). It runs several emerging market funds. Founded by Harpal Randhawa, GEM owns 10% of Labat Africa and is financing its operations. GEM has made a spe- cialty out of opening credit lines for oil companies that can’t get loans from traditional banks because of their inexperi- ence, precarious finances or questionable reputations. For example, working through Aurora, GEM bankrolled Caprikat and Foxwhelp that landed the highly prospective blocks 1 and 2 in on the Congolese side of Lake Albert in June, 2010. GEM equally opened a credit line for the Kampac group headed by Ghanaian businessman Charles Ampofo and for Britain’s Ascent, which held a stake in Gabon’s Iris and The- mis Marin fields. It has also thrown its backing behind Gasol (in which Afren owns a stake), a partner of Benin’s Bengaz headed by Edgar-Yves Monnou. GABON Exxon,Chevon&Noblearewary Gabon’s president is working flat out to attract Ameri- can oil firms to the country’s deep offshore. But with little success so far. President Ali Bongo’s clear bias towards the United States doesn’t seem to have borne fruit when it comes to the oil sec- tor. After dispatching his chief-of-staff Maixent Accrombessi and his oil minister Etienne Ngoubou to meet with execu- tives from Exxon in Washington (AEI 695), no actual negotia- tions have begun. And for good reason: the American firms targeted by Bongo, namely Exxon, Chevron and Noble, all IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  4. 4. Every day www.AfricaIntelligence.fr 4 OIL N°700 June 4 2013 of which are highly active in the Gulf of Guinea, don’t harbor positive sentiments about Gabon. Frequent strikes by the Organisation Nationale des Employes de Petrole and audits carried out by Alex Stewart International (ASI) have left the American firms particularly wary about getting into Gabon’s offshore. The lack of attractiveness combines with the geology of the very deep offshore that Bongo is touting with the Ameri- can firms, which are highly experienced in this type of frontier exploration.The investment in exploring the 42 blocks Gabon is officially offering to oil companies would be huge as water depth exceeds 2000 meters on occasion.. Before making any commitment the Americans would like to ponder the results of the first drilling campaigns cur- rently underway. Those initial results don’t look promising. On the deep offshore Diaba concession, France’s Total has run into a lot of drilling hitches and is well behind schedule, promising to increase campaign’s costs. That’s likely to scare off would-be investors. IVORY COAST Petrocishortofcash Ivory Coast’s national oil company is doing the round of banks to find the cash needed to pay its share in drill- ing offshore wells. But money is also needed to finance a re-gasification plant. After striking oil on its block CI-100 at the end of April, France’s Total is preparing to drill new exploration wells in the eastern part of the block near recent finds on the other side of the maritime boundary, in Ivory Coast. Holding 15% of CI-100, state-owned Petroci is being car- ried for only part of sum it will need to pay and the amounts in question will be considerable: water depths on CI-100 range from between 2,000 and 3,000 meters, making drilling a very expensive proposition. And several other operators in Ivory Coast’s offshore are equally planning drilling campaigns, projects that will also force Petroci to reach for its wallet. In a bid to find the money Petroci is seeking new reserve- based loans for its share in Ivory Coast’s global production. In the past, the group worked a lot with the trader Worldwide Energy run by Frederic Fatien, in conjunction with BNP Paribas, and with Glencore. Up to now, however, Petroci has failed to find a bank or trader to back it. One compelling reason for that state of affairs is that in ad- dition to paying its share in development costs Petroci wishes to raise money for the construction of a re-gasification termi- nal.The country’s gas production is not keeping pace with its electricity consumption and Abidjan fears its power plants will be faced with a shortfall in supply in five years’time. Foxtrot and Bougyues are about to put the Manta gas field on CI-27 into production and have found two other fields, Mahi and Marlin. Gas from these will go to supply the Azito electricity station in Abidjan. However, that increase in generation won’t be enough to cover the expected rise in demand. Accordingly, Petroci is very seriously considering import- ing Nigerian LNG to Abidjan and re-gasifying it in a terminal built for the purpose (while also working on being hooked up to the West African Gas Pipeline (Page 5). But several banks have cast doubt on the economic viability of such a project. CONGO-K Totalmullsstrategyonblock3 Despite environmental issues linked to the Virunga national park and security concerns, Total is continuing to press ahead with exploration in eastern Congo-K. The French major was due last week to choose a seismic concern among the three it has pre-qualified for a campaign on its block 3 in Oriental provinces and North Kivu. In the running for the award are China’s BGP, the U.S. firm Tesla Exploration and France’s CGG. Due to the difficulty of the terrain in eastern Congo there were only five bidders for the contract.The processes was put back on several occasions before resulting in a pre-selection early this year (AEI 690). Over half ofTotal’s block 3 lies in a protected area because it juts into the Virunga National Park. Under pressure from Belgian legislators like Georges Dallemagne, UNESCO and NGO’s such as WFF, Total’s chief executive, Christophe de Margerie, told a shareholder meeting on May 17 that no exploration would take place within the park. That strategy allows Total to gain time. The company has only fragmentary knowledge about the zones in question and the seismic campaign will allow it to find out where wells could be drilled. In the case of a prospect in the south, in the Virunga park, it will be up to Congo-K’s environment and hydrocarbons ministers to decide whether to authorize drilling in the area. At present, a large majority of Congolese officials whose country is constantly short of cash would like oil companies to explore everywhere, including in protected zones. Total had trouble getting its hands on documents to start exploring on block 3 with its partners, South Af- rica’sSacoilandDigOil.Becauseofthedelays,theyhavebeen granted an extension of the first phase until January, 2016. POINTERS TUNIS EnQuest plants its flag. Up to now active only in the North Sea and Asia, the British oil firm EnQuest has laid out $23 million to buy 70% of the stake of PA Resources on the Didon producer field and of an exploration block at Zarat, both of them in Tunisia. The transaction formed part of a restructuring plan at PA Resources undertaken by its new chief executive, Philippe Probst, at the behest of PA’s majority stakeholder, the Glencore trading concern. ABUJA NNPC to issue bond? Exxon and Nigerian National Petroleum Company are finding it increasingly hard to drum up the money needed to finance development of the Satellite field. As a result the joint venture between the American major and the national oil company met in Lagos on May 22 to mull proceeding with a bond issue in 2015. In 2009, Angola’s Sonangol had thought of doing likewise before changing its mind. It had been advised in the operation by the bank JP Morgan. A.E.I. IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  5. 5. Every day www.AfricaIntelligence.fr 5 GAS N°700 June 4 2013 MOZAMBIQUE Beijing taps new resources A trip by Mozambique president Armando Guebuza to Beijing in mid-May seems to have speeded up Chinese investment in infrastructure. According to our sources, Gue- buza informed his energy minister Salvador Namburete of China’s proposals in a meeting that forced the latter to cancel his attendance at a conference in Maputo at the last minute. The Chinese are said to be proposing to invest several billion dollars in return for a guaranteed supply of Mozambique’s gas over the long term. Among the infrastructure contracts that China could pledge to sign concern the high voltage line between the province of Tete and the south of the country (CESUL), the 1,500 MW Mphanda Nkuwa dam, which has been coveted for some months by the firms Electrobras, Eskom, EDF and Redes Energeticas Nacionais (REN). Informed for some time about talks with China, the latter companies have asked their local partner Electricidade de Mocambique (EDM) for clarification on whether contracts were still up for grabs. The firms reportedly asked for EDM to answer by the end of May. The State Grid of China, which will carry out the work if there’s an agreement to build infrastructure in return for a long-term gas supply deal, could point to the fact it holds a 25% stake in Portugal’s REN since 2012. With their robust international reputation, REN’s engineers could supervise construction programs in Mozambique and avoid linguistic and cultural problems. NIGERIA ENI’ssecretgasreserve A drilling campaign planned for this summer on the OPL 245 block will aim to test a huge gas prospect identi- fied early this year. Zaba Zaba is the name of the potential gas deposit that ENI and Shell discovered early this year on OPL 245, according to our sources. Discreetly acquired in April, 2011 for $1.092 billion from Malabu Oil & Gas owned by former oil minister Dan Etete, the huge field will be subject to a drilling campaign this summer (AEI 697). The wells will be particularly meant to test Zaba Zaba with its potentially very rich reserves. If the results are positive, the discovery will force ENI and Shell to officially announce the find. Two years after the ac- quisition, neither of the two groups has publicly announced their debut on OPL 245. On May 21, ENI’s spokesman finally admitted to Africa Energy Intelligence that the Italian group indeed controlled the block with Shell but that they had been awarded by acreage by the“federal government.” That, in fact, is technically true. To help the two majors to avoid dealing directly with Etete, who was convicted of mon- ey laundering in Paris in 2007, the transaction was structured in such a manner that ENI and Shell paid the government for the stake. Abuja then sent the money along to the rightful owners. Officially, Shell and ENI dealt only with the state. Two go-betweens involved in the transition have launched arbitration proceedings (still underway) to pocket commissions they were promised. ENI told Africa Energy Intel- ligence that it had not paid any third parties engaged in the operation. That, too, is technically exact. The two go-betweens, Russia’s Ednan Agaev and the Nigerian national Emeka Obi, were to have been paid by the seller, Malabu Oil & Gas, and not the buyers, ENI and Shell. However, ENI was in contact with both because they took part in numerous meetings prior to the sale, and particularly one in December, 2009 between Roberto Casula, then ENI’s representative in Nigeria, and Vivenco Amana, Africa direc- tor of the group, with Malabu’s chief executive, Etete, at the latter’s home. WEST AFRICA AbidjanwantstolinkuptoWAGP Despite the supply problems of the West African Gas pipeline from Nigeria countries in the region are keen on linking up to the facility. Ivory Coast’s political capital, Yamoussoukro, played host between May 22-24 to a meeting of West African energy ministers and experts to discuss the future of the West African Gas Pipeline (WAGP). To be sure, certain nations like Liberia, Burkina Faso, Senegal and Sierra Leone which encounter chronic power shortages hope to extend the pipeline to their respective shores. Ivory Coast appears most advanced in this endeavour. Some senior officials in the energy ministry are calling for work to start shortly (in 2013-2014) on extending the pipeline from Takoradi in Ghana to Assinie in the east of Ivory Coast. The 300 km extension would cost around CFA 317 billion (€483 million) and the PetroCI oil company would reportedly be ready to finance part of it while waiting for further money to come from donors. Indeed, the Italian concern Saipem has even been award- ed a contract from the government to build the extension and work could begin as early as this year. Since August of last year WAGP has been out of service because of damage caused to it by the anchor of a pirate ship off Lome. Ivory Coast’s mines, oil and energy minister Adama Tounguara, said to be close to the Nigerian authorities, has been picked to monitor the extension program. POINTERS TOKYO/AFRICA Japan goes whole hog in gas. The state-owned Japan Oil, Gas and Metals National Corp (JOGMEC) is to spend nearly $2 billion in the coming five years to help Japanese firms increase their footprint in Africa’s oil and gas sectors. Lacking oil and gas at home and encountering hitches with its nuclear energy program, Japan needs to import more oil and gas and sees Africa as a priority region. During the Tokyo International Conference on African Development (TICAD V) held between June 1-3, Japan’s prime minister also promised to set aside $24 billion in direct aid and development assistance for Africa. Over 40 heads of state attended TICAD V, including Armando Guebeza, president of Mozambique, who won much attention because of huge gas discoveries in his country. IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  6. 6. Every day www.AfricaIntelligence.fr 6 ELECTRICITY N°700 June 4 2013 CONGO-K StrongpushforInga3 During a closed-door meeting with donors in Paris on May 19, Congo-K’s electricity minister, Bruno Kapandji Kalala, made a strong pitch for work to begin on Inga 3 in October, 2015. The Congolese said the date was vitally important for president Joseph Kabila. At that time, Kabila could already be engaged in a campaign for his re-elec- tion in 2016, if the constitution is amended to allow for the new term. Most of the lenders present at the conclave - the Af- rican Development Bank, World Bank, Development Bank of Southern Africa, Agence Francaise de Devel- oppement and the European Investment Bank - and potential developers of the 4,800 MW dam and power station remain sceptical about Kapandji’s timeline. Indeed, studies conducted by EDF in conjunction with AECOM and Nodalis Conseil, carried out on behalf of ADB, will need to be followed by others before the main con- tracts can be put out to tender, in principle in early 2014. But other contracts will also be needed to monitor work, the construction of civil engineering infrastructure, the supply of electromechanical gear, the construction of transmission lines and even the project’s overall management. And an international treaty of energy cooperation, for which a MOU was signed between South Africa and Congo-K at Lubumbashi on May 7, will need to be prom- ulgated. In addition, the transit countries, Zambia and Zimbabwe, will have to be brought in and decisions made on the size of stakes of various companies that are to be formed for different functions (generation, transmission distribution). Most of all, the $12 billion needed for the construction of the dam and the high voltage interconnection towards South Africa (which will purchase 2500 MW) will need to be found. Much will come from the private sector. At present, three consortiums of developers have been pre-qualified: China’s Sinohydro-Three Gorges Corpora- tion; the Spanish consortium consisting of Actividades de Construccion y Servicios (ACS), Eurofinsa and AEE; and a grouping formed by South Korea’s Daewoo and Posco and Canada’s SNC Lavalin. IVORY COAST Abidjanseespowerexportboom Abidjan is set on quadrupling its electricity sales in the sub region by 2020. But there’s no lack of obstacles to overcome to attain that objective. Ivory coast president Alassane Ouattara recently issued instructions to increase the country’s power exports to Mali, Burkina Faso,Togo, Benin, Ghana and Liberia. According to the energy ministry’s statistics for 2012, 645 GWH were exported in the sub-region and raked in receipts of over CFA 200 billion (€305 million). In the first half of this year Ivory Coast exported 230.82 GWH. Highly profitable as they are, the power exports evidently need to be increased if the country is to earn more from them. Amidou Traore, director of Cote d’Ivoire-Energie, a public organization that manages the electricity sector through Compagnie Ivoirienne d’Electricite (CIE) hopes to be exporting 1000 GWH by the end of this year and 2500 GWH by 2016. Even if Abidjan makes money from the exports, the country’s power sector is largely in the red because of wide- spread fraud. In the center-north and west regions formerly occupied by ex-rebels, the recovery rate on domestic and industrial electricity bills still remains under 30%. That’s due primarily to the security situation, which remains precari- ous for bill collectors. Still there’s been some improvement. The loss of money in the sector (unpaid bills and theft of electricity) amounted to CFA 44 billion (€67 million) in 2012, a considerable improvement over the CFA 107 billion (€163 million) deficit in 2011. The shortfall in domestic receipts will make it difficult for Ivory Coast to increase the power it sets aside for export. CONGO-K/ZAMBIA Luapulaalifelineforminers The hydroelectric potential of the Luapula river prom- ises to meet the power needs of mining companies in Katanga and the Copperbelt. The construction of dams on the Luapula river lying on Zambian soil alongside the border with Congo-K is under dis- cussion between the authorities in the two countries. In May, the governor of Katanga, Moise Katumbi Chapwe, received several delegations from Societe Nationale d’Electricite Congolaise (SNEL) and Copperbelt Energy Corporation (CEC) who talked of headway on the project aimed at supply- ing mining groups in the two countries in equal amounts. The situation is particularly critical for SNEL which has been reduced to hoping that Gecamines will put the Luena thermic power plant into service even as the mining group already imports power from the Zambian Electricity Supply Corporation (ZESCO). But a project to build a 240 MW dam at Busanga that China’s Sinohydro is developing won’t be sufficient to meet with the mining industry’s needs. As a result, the Katanga authorities and SNEL are increasingly in favor of jointly de- veloping the Luapula dams with their enormous potential of 1253 MW. The CEC already received a green light in 2010 to conduct feasibility studies and it has penned an MOU with SNEL. For their part, Kinshasa and Lusaka are working on an inter-government accord. CEC has also begun talks to define the terms of reference for contracts linked to the construction of dams with Zambian mines as partners. Several dams could be built on five falls on the Luapula river: Mambilima 1 (124 MW), Mambilima 2 (201 MW), Mambilima 5 (418 MW), Mombutota M (210 MW) and Mombutota CX (300 MW). The combined cost of the project has been estimated at $3.97 billion, with an additional $1.71 billion for transmission lines. Staff from CEC have already carried out a feasibility study on the transmission lines required to send power from the river’s dams to Katanga in Congo K and Luapula and the Cop- perbelt in Zambia. IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  7. 7. 7Every day www.AfricaIntelligence.fr C O N S U L T A N T S FINANCIAL OPERATIONS N°700 June 4 2013 AFRICA Heritage seeks $600 million After buying Shell’s 45% on OML 30 in Nigeria for $850 million, Heritage Oil is seeking to refinance the acquisition. According to our sources, the group will shortly set out to seek a loan worth $600millioninaoperationledbySouth Africa’s Standard Bank. The money ought to enable Heritage to finance the workobligationsonOML30ofNigerian PetroleumDevelopmentCorporation (NPDC), the state-run company that operates the concession. To prevent NPDC from contracting its usual service supplierslikeAtlanticEnergyorSeven, Heritage lent $50 million to NPDC (AEI 687). Initially, the acquisition of the 45% stake in OML was partly bankrolled by Genel Energy, an equity fund set up last year by financier Nathaniel Rothschild and Tony Hayward, the former chief executive of BP. Genel lent $294milliontoHeritageandboughtone oftheCanadianoilcompany’slicensesin Kurdistan for $156 million. NIGERIA Making a pitch for Oando Retained by Nigeria’s Oando, the banks BNP Paribas and Standard Chartered are staging road shows in Paris and London to raise 600 million needed by the oil com- pany. The loan, combined with a flotation Oando is planning on the Toronto Stock Exchange in the hope of raising nearly $400 million, is meant to cover the price Oando paid for the Nigerian assets of ConocoPhil- lips, which it bought for $1.79 billion last December. Oando already made a down payment of nearly $400 million when the initialdealwasstruck.Therestofthemoney must come in the form of loans from local banks.The highly ambitious program is due to be completed before the summer. It’s the first time the group run by Wale Tinubu has engaged in such a major financial operation. TOGO Adjarala tops up loan for dam The WorldBank is currently putting the fin- ishing touches to a loan worth $120 million to help finance construction of the Adjarala hydro power dam on the Mono river that lies on the border between Benin andTogo. The loan will slot into a bigger financial package worth $450 million to which other multilateral institutions are to contribute. When completed the power station, which is to generate 147 MW, will form part of the WestAfricanPowerPool(WAPP),anintercon- nection between the power grids of various West African countries.TheWorld Bank has been attempting to finance Ajalara for over a decade. A first $30 million loan was put together in the early 2000s but when Faure Gnassingbe seized the presidency in early 2005 the Bank broke off relations withTogo. The Export Import Bank of China tried to get into the project, but backed away in its turn. (IOL 697). Electricity in Togo is cur- rently produced exclusively by diesel and fuel-powered generators, particularly that of U.S. firm Contour Global. CAMEROON Perenco finances its FSO Perenco has put together a $100 million loan for the acquisition of its new floating storage and offtake (FSO) tanker Massongo which now lies on the Lokele and Kole fiends in Cameroon. Late last year the new vessel, with a capacity of 270,000 tons, replaced the two aging FSOs operated in Cameroon by the group, the tankers Moudi and Kingsway. The loan was mounted by Natixis and France’s BNP Paribas, Britain’s StandardChartered and the South African establishment Standard Bank subscribed to it. The ship belongs to Cameroon Oil Terminal (COTSA), a joint venture between PerencoandSocieteNationaledesHydro- carbures Camerounaise (SNH). EQUATORIAL GUINEA The endless talks.... Tullow Oil, Hess and Equatorial Guinea are finding it hard to agree on the question of a tax on capital gains. After starting an arbi- tration proceeding against Malabo over the issue in May, 2012, the two oil companies froze the proceeding in order to start direct negotiations. The freeze on arbitrage has been extended no less than four times (in August, November, February and May) with no sign of an agreement.The next deadline has been set for Sept. 23.The long stand-off can only be explained by the complexity of the issue. For 10 years Equatorial Guinea has been demanding that Hess and Tullow cough up an additional tax on the acquisi- tion of the Ceiba offshore field in 2001. Be- hind the immediate case, there’s the overall issue of capital gains on the disposal of oil assets. At present three separate arbitration proceedings are unfolding over the issue in Africa alone. GREENBERG TRAURIG All arbitration proceedings concerning capital gains tax will henceforth be handled on Equatorial Guinea's behalf by Greenberg Traurig. The law firm has been handed the brief on Malabo’s negotiations with Hess and Tullow concerning capital gains on the sale of the Ceiba field. The arbitration was previously seen for Malabo by Derek Smith from the Foley Goag law firm. Greenberg Traurig also manages negotiations with EMS Energy. Guinea wants the latter to pay a capital gains levy on the sale of its Alba field. BILLY GUNDELFINGER The South African celebrity lawyer Billy Gundelfinger is currently handling the highly acrimonious divorce between businessman Tokyo Sexwale, also South Africa’s housing minister, and his wife Judy. The procedure, which has bounced onto the front pages of South Africa’s press over the past four months, is also being closely followed by oil and miningcircleswhereSexwaleisaheavy- hitter investor.The tug-of-war between Sexwale and his ex primarily concerns two trust companies that control most of the businessman’s resources. One of them is Mvelaphanda Resources, Sexwale’s company that holds stakes in Ophir. But the South African tycoon has also invested a lot in a private capacity in numerous oil companies including New Age headed by Steve Lowden. CONALL PATTON Lawyer for Yukos and for Dominion, Britain’s Conall Patton from the firm One Essex Court, has been representing the Guinean affiliate of the American oil firm Hyperdynamics in its fight against the Norwegian drilling company AGR before Britain’s High Court. AGR is being represented by Andrew Miller from the firm 2 Temple Gardens. Hyperdynamics filed suit against AGR late last year on grounds it had botched the drilling of the Sabu 1 well in Guinea’s offshore which identified only traces of non-commercial well and which largely overran the initial bubget. AGR, for its part, filed suit against Hyperdynamics and is calling for $22 million in unpaid bills. IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013
  8. 8. All issues since 1992 are available on the web: www.AfricaIntelligence.com AFRICA ENERGY INTELLIGENCE is published every two weeks in English and in French since 1983 by Indigo Publications Group Publisher: Maurice BOTBOL Deputy Managing Editor: Francis SOLER Editor in Chief: Benjamin Augé Section Editor: Philippe Vasset Contact: AEI@indigo-net.com Tel : +33 1 44 88 26 09 Fax: +33 1 44 88 26 15 Copyright Indigo Publications - Reproduction in any form prohibited ISSN: 1635-2742 Commission paritaire: 0116 I 80282 Imprimerie: Pérolle, 93400 Saint-Ouen - France. Other publications : The Indian Ocean Newsletter, Maghreb Confidential, Africa Mining Intelligence, Intelligence Online, West Africa Newsletter, La Lettre A, PresseNews. Web Pack €930/US$ 1305 One Year Subscription PDF €820/US$ 1150 23 issues (by e-mail) + Web access + Archives + Special reports 142, rue Montmartre - 75002 Paris Tel : + 33 1 44 88 26 10 Fax : + 33 1 44 88 57 33 i n f o @ i n d i g o - n e t . c o m P U B L I C A T I O N S INDIGO P o w e r e d b y I n t e l l i g e n c e WHO'S WHO N°700 June 4 2013 TRAVEL LOGBOOK Oliver John Moss EQUATORIAL GUINEA The American oil company Vaalco has named a new managing director with an untypical background to run its business in Equatorial Guinea. A former pilot in the US Air Force (from 1974-2001), Ol- iver John Moss served in the 2000s as a political adviser in the American embassy in Malabo after exercising the same func- tions at the embassy in Baghdad. Despite his rather security and politically-focussed background, Moss began working for oil companies in Equatorial Guinea when he was hired by Wood Group. He then went over to the U.S. firm Noble Energy and became one of its executives in charge of relations with the Malabo government. Vaalco can be counted upon to use Moss’ numerous contacts with Equatorial Guin- ea’s government and civil servants in its quest for a green light to operate block P which is now operated by the Equatorial Guinea concern GEPetrol. Michel Faure NORTH AFRICA Britain's Gulfsands Petroleum plc which operates in Tunisia and Morocco has ap- pointed France’s Michel Maurice Jacques Faure to its board. The 61-year-old Faure spent the bulk of his career with Shell which he recently quit on going into retirement. His profile could be seen as ideal for Gulf- sands Petroleum since he was previously in charge of Shell’s operations in Tunisia and Morocco. Gulfsands also has exploration acreage in Syria but its operations there have been badly hit by the civil conflict. John Mahama GHANA During an official visit to France between May 27-30, Ghanaian president John Ma- hama Dramani met with officials from two big French oil and petroleum services concerns in Paris. He lunched on May 28 with the managing director of Technip, Thierry Pilenko, and then consulted with the head of Total E&P for Africa, Jacques Marraud des Grottes. Total isn’t involved in explora- tion in Ghana, but is active in distribution in thecountry.Techniphasalreadyworkedwith Tullow Oil on the Jubilee field and hopes to win further contracts in developing theTEN complex (see p. 3). As for France’s electricity industry, Mahama also made contact with officials from companies in the sector dur- ing a breakfast thrown on May 28 by the French employers federation MEDEF. The deputy director of EDF in charge of Africa, Emmanuel Sillier, and a vice president of Alstom in charge of Africa and the Middle East, Paul Moneyron, attended the get-to- gether. Up to now the two companies have had few operations in Ghana. Charles Darku GHANA Tullow Oil is expected in August to name a Ghanaian to run its local subsidiary for the first time. Since 2009, Charles Darku has acted as managing director of GRIDco, a firm that manages power transmission throughout all of Ghana. An electrical en- gineer by training, Darku spent much of his career working for the national utility Volta River Authority (VRA) before it spun off its transmission business in 2008 to GRIDco. In addition to operations involving Jubilee, Darku is expected to be highly concerned by development of theTEN complex consisting of theTweneboa, Enyanra and Ntome fields (see P. 3) over the coming two years. In 2015, Tullow could be pumping around 200,000 bpd from the fields along with major amounts of gas to supply power stations on the coast. In reaching beyond the oil busi- ness to find an executive to run its activities, Tullow appears to be betting that its future challenges in Ghana will primarily involve the company’s relations with the govern- ment and its departments It clearly feels that Darku has a good head start on that because of his background and knowledge of the ins-and-outs of local politics. BARCELONA Elizabeth Dipuo Peters, South Africa’s energy minister, will be one of the guests of honor at the Africa Energy Forum to be staged by Energynet at the Barcelona International Convention Center between June 18-20.Other ministers will also attend the gathering such as Taleb Ould Abdival (Mauritania), Salif Kabore (Burkina Faso) and Emma Francois Isumbingabo (Rwanda). The chiefs of national companies are to attend, including Augusto de Sousa Fernando (EDM, Mozambique), Joseph Njoroge (Kengen, Kenya) and Paulinus Shilamba (Nampower, Namibia) NAIROBI Serge Matesco, the vice president of Total E&P for Africa, will take the floor during the 4th Eastern Africa Oil, Gas & Energy conference at the Intercontinental Hotel in Nairobi between June 18-20. Organized by Global Pacific & Partners, the gathering will also be attended by Ernst Rubando (commissioner of E&P at Uganda’s energy ministry), Fouad Mohadji (vice president of Comoros), Galib Virani (Afren), Hassan Hassan (Simba Energy) and Tewodros Ashenafi (Southwest Energy). ROME Abdelhamid Zerguine, the chief executive of Sonatrach, will attend the North Africa Gas conference organized by CWC at the Grand Palaza Hotel in Rome on June 25-26. Oil executives from all of the North African nations will be in attendance, including Khaled Bettine (ETAP) and Nordine Ait Laoussine (Algeria’s former energy minister). IssueexclusivelyforBrianMAXTED|SubscriptionN°:AA012925|Subscriptionends:16/09/2013