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Angola’s oil and gas industry bouncing back after reforms3 minutes read

In order to turn the sector around dozens of new blocs are set to be sold off in the coming months.

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A view of the flare on the Kaombo Norte, a Floating Production Storage and Offloading vessel(FPSO), about 250km off the coast of Angola in the Atlantic Ocean.

Angola is bouncing back after its fuel production slumped last year to a decade low as President Joao Lourenco steers reforms vital to the country’s economy and wins approval from oil majors.

“It is a new era. I see a growing interest from investors,” says Guido Brusco, vice-president for sub-Saharan Africa of Italian giant ENI.

“We should come back to 2012/2013 to see the same level of interest” as that now being shown by investors, Brusco said on the sidelines of a conference earlier this month in Luanda.

France’s Total, the premier operator in Africa’s second-largest oil producer after Nigeria with output of 650,000 barrels per day, confirms as much.

“There is a business environment which could lead us soon to sign several agreements,” says a Total spokesperson. “A new page of Angola’s petrol industry is clearly opening.”

The arrival of Lourenco, who succeeded Jose Eduardo dos Santos who ruled for 36 years, has marked a radical step for the OPEC-member country.

When Lourenco took office oil prices were struggling to come back from a slump going back to 2014 but he has launched a string of initiatives in order to tackle falling production.

With oil Angola’s primary resource, that was an overriding priority given that production of “black gold” last year slid just below 1.5 million bpd, its lowest level for 10 years – the consequence of low prices and a freezing of new projects.

“We were in an environment of low prices and firms found it difficult to get responses from (state producer) Sonangol to advance dossiers,” an oil sector source who requested anonymity told AFP.

Before embarking on reforms Lourenco first spent several months consulting the industry to pinpoint means of relaunching activity.

A series of policies, including tax perks, were introduced, enshrined in several presidential decrees which, Brusco says, have managed to “improve the investment climate.”

Brusco says he served on a committee to deliver proposals to that effect “and the government endorsed those proposals.” 

Tax perks

Those decrees have allowed the development of resources which had previously been unviable and to relaunch exploration programmes.

The results of the favourable legal framework soon emerged.

Within 12 months, Brusco says, ENI had discovered five fields.

“Total and other actors are reevaluating a number of dossiers they had put on hold as unviable but which today could function,” given the tax advantages, says the oil sector source.

Those include so-called satellite fields near to blocs which have already been exploited.

Britain’s BP and US rival ExxonMobil are also angling for new investments in Angola, according to Adam Pollard, senior upstream analyst for sub-Saharan Africa with Wood Mackenzie.

“We have already seen new projects sanctioned by Total (Zinia 2, CLOV Phase 2 and Dalia Phase 3) and Eni, BP and ExxonMobil are also planning new investments,” said Pollard.

Lourenco has also wielded a new broom at Sonangol, bringing changes to an influential firm which is also the biggest contributor to state coffers.

First, the president laid off COE Isabel dos Santos, daughter of the former head of state amid suspicions of financial wrongdoing — which Africa’s richest woman roundly denies.

Lourenco has also removed from Sonangol one of its key tasks — granting exploration and drilling permits, with that task now performed by new separate entity, the National Oil and Gas Agency (ANPG). 

Lourenco explains such reforms are designed to “restructure” the sector in Angola and “create the conditions for making private investment attractive.”

And that is not all.

Lourenco vowed to top industry players earlier this month that Angola is going “to intensify efforts to renew reserves and temper the large decline of oil production.”

In order to turn the sector around dozens of new blocs are set to be sold off in the coming months.

Luanda recognises an urgent need to advance. Without new projects coming on stream production could slide below a million bpd by 2023, the Ministry of Oil warns.

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Ethiopia, Sudan,Egypt inch closer to Nile water use deal

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Ethiopia, Sudan and Egypt have moved closer to formalising a water-sharing deal over the Nile after technical teams meeting in Khartoum drew up a draft agreement.

Following a consultative meeting on Thursday, the technical teams from the three countries say observations reached when the countries’ ministers met in Washington two weeks ago have been included.

There are expectations that the next round of discussions, due in Washington next week, could see a formal agreement signed on how to fill the Grand Renaissance Dam on the Blue Nile in Ethiopia, without affecting the needs of the riparian countries: Sudan and Egypt.

Muhammad Al-Sebaie, the spokesman for the Sudanese Ministry of Water Resources and Irrigation, says technical teams have pored over suggestions from all the three countries in an earlier January 13 meeting in Washington, under the auspices of the US Treasury and the World Bank. The Washington meeting is due on January 28.

Al-Sebaie says there had been some form of “convergence” such as initially filling up to a significant portion of its height (the dam is 155 metres high), to ensure electricity generation for Ethiopia. Thereafter, the subsequent filling will depend on weather conditions and there would be a joint implementation committee to oversee when to suspend filling, reducing volumes or surging the flow.

The key pillars in the agreement, he said, will be how to fill up the dam in stages, during the months of July and August, and in September based on drought or rain condition

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Tanzania, Barrick sign new implementation deal

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Tanzania and Canadian mining giant, Barrick Gold Corp have signed an agreement to kick-start a new joint venture company overseeing Barrick’s future gold mining operations in the country, as a way forward following a year long impasse.
“Being a year now, we have finally completed the long journey of negotiations and renegotiations and agreed on nine key points that will underpin the activities of Twiga Mining company, a joint company between the Tanzanian government and Barrick,” Foreign Affairs Minister Prof Paramagamba Kabudi said at the signing held in State House in Dar es Salaam, and witnessed by President John Magufuli. 

No details were immediately available of the nine points highlighted in the new agreement which will oversee implementation of the original pact between Tanzania and Barrick dating back to October 2017 when former Barrick affiliate Acacia Mining was still running the Tanzanian operation of three gold mines in the country’s lake zone.

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Nigeria to consider private power sector overhaul

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Following a national Economic Council meeting yesterday, The Nigerian government has announced that it will consider an overhaul of the private power sector.

The country’s power sector was privatized in 2013, but millions of Nigerians remain without access to power, with grids plagued by frequent blackouts, leaving businesses and consumers reliant on power generators.

Plans to build privately financed power stations have been railroaded in recent years by concerns of persistent shortfalls in payments for electricity across the sector.

Currently, the government-owned Nigerian Bulk Electricity Trading company (NBET) buys power from generators and passes it on to distributors who then receive payment from customers and reimburse NBET.

According to Nasir El-Rufai, Chairman of a committee set up by the NEC to harmonise the Power Sector Reform, the government looks to end the existing challenges and the committee’s request to begin the process of finding solutions is now approved.

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