Five Things We Learned From Africa Oil And Gas Sector This Week

It's been a slow week in the African oil & gas sector news update but this week gives valid proof of countries in the continent working around the clock to achieve energy security

Chevron Signs Product Sharing Contracts (PSCs) for Two Blocks Offshore Equatorial Guinea

Chevron Corp. and Equatorial Guinea’s state-owned GEPetrol have signed production sharing contracts (PSCs) for offshore blocks EG06 and EG11.

Exxon Mobil Corp., the former owner of the licenses before exiting the Central African country, already made a discovery in Block EG06 last 2017 through the Acestruz 1 well.

Equatorial Guinea has proven petroleum reserves of 1.1 billion barrels and proven natural gas reserves of 39 billion cubic meters (1.4 trillion cubic feet), according to data from the 2023 Annual Statistical Bulletin of the Organization of the Petroleum Exporting Countries (OPEC).

Chevron is also investing in the country’s Gas Mega Hub (GMH) project through a joint venture with fellow Unites States company Marathon Oil Corp. (MRO).

In 2023 Marathon announced it had penned a heads of agreement with the government and Chevron’s Noble Energy EG Ltd. to progress with the second and third phases of the production project.

Phase One achieved maiden production February 2021 with the tieback of the Alen field to the Punta Europa processing and liquefaction facility.

Egypt Allots $1.2 Billion for Energy Imports to End Power Cuts

Egypt has allocated $1.18 billion for extra energy imports, seeking to eliminate scheduled power cuts before the end of July and tackle an issue that’s causing misery for millions as temperatures soar.

The funds will be used to import 300,000 tons of heavy fuel oil and other energy needs, more may be required depending on the severity of the summer heat.

That marks a turnaround for a country that previously exported LNG to Europe. Egypt, a mostly desert country that’s heating up at one of the world’s fastest rates, saw temperatures in Cairo recently surpass 40C (104F) on some days.

Soaring demand for cooling is piling pressure on the power grid, and authorities?—?who recently agreed a $57 billion bailout?—?are being forced into their highest imports of liquefied natural gas since 2018.

Electricity cuts, which began last year and were officially increased in some parts of Egypt this week to three hours a day from two, will start to be reduced from July 1. The aim is for them to be eliminated entirely by the third week of the month

Gunvor Funded Gabon's Acquisition of Assala

Commodity trader Gunvor Group helped finance Gabon’s acquisition of Carlyle Group’s Assala Energy.

The deal for the 45,000 barrel a day crude producer has been some time in the making. In January, Gabon’s national oil company exercised what it?said?was a preemptive right to the assets after France’s Etablissements Maurel &?Prom SA struck a deal to buy the company.

Assala “will enable the Republic of Gabon, reinforce its control and sovereignty over its oil and gas reserves and significantly increases its oil revenues,” Gabon Oil Company’s chief executive officer Marcellin Simba Ngabi said in press statement on Tuesday.

Gabon is one of OPEC’s smallest members, pumping about 220,000 barrels of oil a day. Assala’s operations account for a fifth of that production. The terms of the deal were not disclosed, but Gunvor provided around $800 million in financing for the transaction, according to a source

Mostly owned by its billionaire co-founder Torbj?rn T?rnqvist, Gunvor is one of the world’s biggest independent traders of oil and gas. It made a?net profit?of $1.25 billion in 2023.

Volatile energy prices and a crippling rise in the US dollar has seen oil companies in those nations lean on the cash-rich traders for finance in a series of high-profile deals recently.

Last November, Gunvor?stepped in?with a supply deal to assist Namibia’s state oil company after it had suffered an “unprecedented” loss. Vitol Group signed an agreement to became the sole supplier of oil products to Uganda’s National Oil Co.

Rex to Create New JV for Porto Novo Resources

Rex International Holding Limited’s indirect wholly-owned subsidiary, Rex International Investments Pte. Ltd. (RII) has entered into a joint venture with Monarch Marine Holding Ltd (MMH) and Peter M. Steimler to hold Lime Petroleum AS and Porto Novo Resources Ltd under a new joint venture company incorporated under the laws of Norway.

Porto Novo is 67.9 percent held by Rex International Holding Ltd., 29.1 percent held by MMH and three percent held by PS. Porto Novo was incorporated in December 2023 in the British Virgin Islands to own and operate offshore oil and gas assets in Africa, including 100% in Akrake Petroleum Benin AS

Rex decision was made “against the backdrop of more and more banks shying away from financing fossil fuel companies”.

The new joint venture allows Rex to amalgamate the Lime Petroleum and Porto Novo assets in Norway and Africa under a single entity, in order to leverage Lime Petroleum’s access to the Norwegian bond market to raise funds in U.S. dollars at the subsidiary level, for refinancing Lime Petroleum’s existing bond, as well as for exploration, development and production activities and general working capital in Norway and Africa

Rex’s effective interest in Lime Petroleum will be reduced to 76.75 percent and its interest in Porto Novo will increase to 83.74 percent within 90 days of the date of the agreement or on a date as determined by Rex.

Uganda locks out Kenyan firms in oil transport deal

Uganda will on July 2, 2024 end decades of relying on Kenya for her fuel needs, after Uganda National Oil Company (Unoc) signed a five-year deal to directly import fuel from Vitol Bahrain.

Uganda will use Kipevu Oil Terminal 2 and the Kenya Pipeline Corporation infrastructure to ferry petroleum products from Mombasa to Kampala.

According to the Uganda National Oil Corporation (Unoc), no Kenyan oil marketing company will be involved in the Unoc-Vitol Bahrain deal that target to lower pump prices below the current rates offered by dealers in Kenya.

Next week, Uganda will receive the first two vessels at the port of Mombasa; Navig8 Matines on 2nd July 2024, carrying 58,000 metric tonnes (MT) of petrol and MT Sinbad will dock on 3rd July 2024, carrying 65,000MT of diesel.

Uganda has been seeking alternative ways of importing petroleum products, including through a Tanzanian port, because its oil retailers have for decades received their cargo through affiliated firms in Kenya.

Unoc, Kenya Ports Authority, Kenya Revenue Authority and other stakeholders held a final meeting in Mombasa ahead of the arrival of the two vessels.

But while Unoc’s entry into Kenya as a direct importer will hurt local oil firms, KPC will not suffer any revenue losses, given that the Ugandan company will continue using its storage facilities and transport network to ship the fuel to the neighboring country.