Kenya, Uganda and Rwanda are in the final stages of deciding on a consultant to oversee building a pipeline to pump the region’s new oil bonanza to the coast for export, a senior Kenyan energy ministry officials said on Thursday. In June, the three countries invited bids for a consultant to oversee a feasibility study and initial design for the construction of a 1,300-km (808-mile) oil pipeline to transport crude to the Kenyan coast.
“We are in the final stage of negotiating with the consultant who will do a feasibility study and the front end engineering design for a crude oil pipeline which should run from Hoima to coastal region of this country,” Joseph Njoroge, principal secretary at the Ministry Energy and Petroleum told an east African oil and gas conference.
“Very soon, early next month,” Martin Heya, commissioner of petroleum at the same ministry said of the award timing.
Njoroge said the consultant would be required finish the study within five months of the award.
In addition to the pipeline, the consultant would be required to supervise the construction of a fibre optic cable from Hoima in Uganda through the Lokichar basin in northwest Kenya to Lamu, and tank terminals in Hoima, Lokichar and Lamu.
The project will also involve the construction of a 9-km pipeline from the Lamu tank terminal to an offshore mooring buoys.
Kenya’s energy ministry said earlier this year the aim of having a single consultant for the whole project was to ensure consistency in the quality of the whole pipeline.
East Africa has become potentially lucrative for international oil firms after Kenya and Uganda’s commercial oil finds and discoveries of gas off the coast of Tanzania and Mozambique.
Tullow Oil and Africa Oil, which control blocks in Kenya, have estimated discoveries in the South Lokichar basin at 600 million barrels, a level experts say is enough to make a pipeline viable even without Uganda.
In neighbouring Uganda, the government estimates its crude reserves at 3.5 billion barrels.
Njoroge put the estimated crude oil recoverable reserves at about 1 billion barrels from the tertiary Rift Valley Basin, and about 1 trillion cubic standard feet of natural gas in the Anza Basin, and about 750 billion cubic feet of gas in the Lamu Basin, all in Kenya.(Edited by Reuters)
Texas-based Anadarko has cleared this portion of forest in Mozambique for a new onshore drilling site. So far, its gas-export project has cost roughly $1 billion as Anadarko tries to finalize deals to sell the gas. MUSTAFAH ABDULAZIZ FOR THE WALL STREET JOURNAL
PALMA, Mozambique—Few roads lead to this fishing village on the eastern shores of Africa. Drinking water and electricity are in short supply. Hazards include venomous snakes, malaria-bearing mosquitoes and gun-toting antigovernment rebels.
But this is where Anadarko Petroleum Corp. wants to build one of the biggest projects ever attempted by a Western energy company. It has pledged to install acres of air-conditioned housing, an airstrip and a port—and to relocate almost 3,000 villagers currently living in mud huts.
The search for oil has drawn companies to remote locations throughout the petroleum industry's history. But Anadarko isn't here for black gold. The American company is after something more abundant, albeit less lucrative: natural gas located about 30 miles offshore.
There is more than just one catch, though, with one of the largest energy discoveries in decades. The nearest viable customers are a hemisphere away. And it may cost tens of billions of dollars to tap the gas. Deep-pocketed buyers have expressed interest in the project, but some have yet to commit.
"Oil is probably easier," concedes Don MacLiver, the executive in charge of the Mozambique project's development. But like many major oil companies, Texas-based Anadarko has to go with the opportunities available. These, he says, include "large gas discoveries in remote locations."
ENLARGE
This is the challenge for many of the biggest energy companies operating around the globe: Natural gas, not oil, accounts for two-thirds of the petroleum reserves discovered over the last decade, according to data from consulting firm IHS Inc. And many of the largest finds are nowhere near homes and businesses that can burn the fuel.
The Mozambique project, which has run up about $1 billion in costs for Anadarko thus far, is among the most extreme efforts to convert such huge discoveries into marketable energy. With customers so far away, Anadarko plans to build giant freezer-like devices to chill the gas to the temperature of the ice-encrusted moon that orbits Jupiter. The process converts gas into a liquid state so that it can be loaded onto refrigerated tankers and shipped by sea, like oil.
Exporting this fuel can provide companies with a longer, steadier stream of cash flow than pumping oil, but without crude's heftier profit margin.
Other big energy outfits are working on similar projects. Italy's Eni SpA, for instance, is planning one adjacent to Anadarko's.
Companies including the U.K.'s BG Group and Norway's Statoil ASA are planning another such venture to capitalize on gas they've struck off the coast of Tanzania, Mozambique's neighbor to the north.
Many analysts estimate the global demand for liquid natural gas, or LNG, will double in 20 years, led by fast-growing economies in Asia. Europe's demand for ocean-borne gas imports may also rise as countries look for alternatives to gas piped in from Russia.
"We've never seen in the history of the industry this amount of planned capacity," says Chris Holmes, senior director of IHS, referring to liquefied-gas export projects.
"A giant liquefied natural gas plant in the fishing village of Palma, Mozambique promises to raise the quality of life for residents. But the project comes with concerns. Photo Mustafah Abdulaziz for The Wall Street Journal"
But the projects in east Africa will have to compete against many others, including some in similarly remote but less politically challenging areas, like Australia and Alaska. Mozambique's gas will also face competition from shale gas in the U.S., where existing infrastructure lowers the cost of exporting it.
Anadarko's bet on Mozambique is particularly bold. With a market capitalization of $54.9 billion, it would become the first U.S. company of its size to tap, liquefy and export gas. Such projects have previously been the domain of giants like Exxon Mobil Corp. andRoyal Dutch Shell PLC, which pull in 30 times the revenue of Anadarko.
The expected tab for drilling the wells and building the initial two plants to chill the gas in Palma—as much as $16 billion—is more than Mozambique's $15.3 billion gross domestic product in 2013. With a 26.5% stake, Anadarko's share of the costs would be roughly $4.2 billion.
The company harbors some even grander plans. Over the next few decades, it envisions building as many as 14 refrigerated plants here, says Mr. MacLiver, the Anadarko executive. Such a scale could rival the world's biggest hub for exporting liquefied gas in Qatar.
But the price tag could rise considerably. Since 2000, the cost of building LNG projects has more than tripled, according to consulting firm Merlin Advisors LLC. The LNG projects in east Africa won't have the foreign-exchange risks of plants in Australia, where costs have ballooned, and some analysts don't expect to see similar cost blowouts. But rival projects in the region could stretch the market for skilled labor and materials and push up prices.
Anadarko executives say they are confident they can control costs in Mozambique, noting that its gas is closer to shore than rival projects and the wells are more prolific.
Still, making LNG is so expensive that Anadarko and its partners won't commit to it without some guarantee they can turn a profit. They are currently trying to sign up Asian buyers for about 60% of the LNG, using contracts that extend over decades. So far, however, the consortium—including companies from Japan, Thailand and Mozambique's state-owned energy firm—has disclosed only tentative deals with buyers.
"We're engaged with the notion of getting married," Al Walker, Anadarko's chief executive, said of the agreements in May. Final contracts would leave around 40% of LNG to be sold on the open market.
Anadarko has still managed to come out ahead on its roughly $1 billion Mozambique investment. The company earlier this year sold 10% of its interest to India's ONGC Videsh Ltd. for $2.6 billion.
Anadarko had planned to make a final decision on moving forward with the project later this year, but a spokesman now says it may take until 2015. Similarly, the company's goal of selling LNG by 2018 could slip into 2019—a target that some analysts still consider too ambitious.
Meanwhile, complications on the ground remain. Palma is among the least developed regions in this former Portuguese colony. Even today, women carry buckets of water on their heads as they return from communal taps. Fishermen work from small wooden boats and dry their catch along the beach on raised nets.
But the discovery of natural gas in 2010 has begun to visibly change life here. Men on bicycles share the road with four-wheel-drive pickups bearing the Anadarko logo.
"The gas is a promise of development," says Abdul Razak Noormahomed, Mozambique's deputy minister of mineral resources. The government, he says, wants some of the gas to stay in the country to spur industrial development.
In 2012, Anadarko began paying the country for annual rights to use about 17,000 acres inhabited by several small villages. Nearly 3,000 villagers will have to be resettled, losing their land, crops and ancestral gravesites. Anadarko is working on a plan to compensate them, including building new homes and clearing land for farming.
The resettlement, derided by local critics as a land grab, isn't going over smoothly. Local rights group Centro Terra Viva said that last year villagers in one of the most populated areas that will be affected by the resettlement refused to meet with government and Anadarko representatives who had come to speak to them about the process.
Anadarko's in-country head John Peffer says the company takes concerns about the community seriously and that it does need the community support.
Similar efforts at resettlement in Mozambique have backfired. In Tete, an inland province with rich coal deposits, thousands of people who lived near mines say they were moved by U.K.-based Rio Tinto PLC and Brazil's Vale SA to a place ill-suited for agriculture and too far from water. Protesters have demonstrated frequently outside the mines and blocked railways to disrupt coal shipments.
A spokesman for Rio Tinto says the company was working with the resettled communities and providing training to help with local crop development. At the end of July, Rio Tinto announced plans to exit the troubled mine altogether and agreed to sell the coal mine to India's International Coal Ventures Pvt. Ltd. for $50 million. A spokeswoman for Vale says the company is trying to improve infrastructure in the area.
Compounding local angst, few in Palma have the skills to land a job working on the gas project. And while the influx of workers has been good for fish prices, Ali Mequit, a 30-year-old fisherman, says he worries that gas drilling is pushing fish farther out to sea.
And then there is the question about what will happen if the project comes to a halt and the workers and companies leave. "They will move on," says Mr. Mequit, "but our lives will have been disrupted."
Five of 30 ships ordered by Ematum arrive in Mozambique
19.08.2014 - in MacauHub >
Five of the 30 ships ordered by Mozambican tuna fishing company Empresa Moçambicana de Atum (Ematum) from a shipyard in Cherbourg, France, have arrived in Mozambique, Fishing Minister Victor Borges said two days ago.
The minister also said that the ships would start operating at the end of the year. Ematum ordered 24 fishing vessels, including line fishing boats and trawlers, and six patrol boats, costing between 200 million (US%267 million) according to the French press.
Ematum took on a loan of US$850 million in the European bond market for this acquisition, which was undersigned by the Mozambican government.
According to Angolan news agency AI the difference of almost US$500 million will be spent on radar equipment, satellite communications, onshore facilities, technology transfer and training.
Ematum is a state company, which is 34-percent owned by state stake holding company Instituto de Gestão das Participações do Estado (Igepe).
Fishing company Empresa Moçambicana de Pescas (Emopescas) and investment management company Gestão de Investimentos, Participações e Serviços (GIPS) also each own 33 percent of Ematum.
In its turn, Emopescas is 80-percent owned by the Mozambican State and 20 percent by fishing fund Fundo de Fomento Pesqueiro (FFP) and GIPS is owned by state social and state security service Serviços Sociais dos Serviços de Informação e Segurança do Estado (Sersse).
Mozambique, Kenya, Libya, Uganda and Nigeria are thousands of miles removed from that swirl of European tension known as Ukraine, but as drama unfolds in Eastern Europe, their destinies could be closely aligned.
In essence, the more Russian President Vladimir Putin puts the grip on Russian gas prices, the more Western powers, from Nato to the US, feel squeezed and desperate enough to look for oil elsewhere. Africa fits a nice profile for that. Suddenly, there’s a new sense of urgency on the continent, with the US stepping up its military and economic engagement post-haste since Putin made his Crimean power grab.
Before Putin could move to checkmate the West on the geopolitical chess map, President Barack Obama moved a few pieces to the Motherland. It’s an interesting gamble, considering Africa has less than 10 per cent of proven global oil reserves. Yet, in the search for alternative sources of energy, the potential returns of intervention in Africa are fairly fast and enormous.
Where the Middle East, cradle of oil booms, is volatile and where Shale Country USA is still in its infancy, Africa presents a quick-fix solution for petroleum hungry Western countries that don’t have time for renewable-energy cars to fully penetrate their markets.
Oil-spilling BP can tell you all about it, “project[ing] Africa will experience the world’s fastest regional energy demand growth [with] combined oil and gas production in Africa between today and 2035.”
If BP has its eyes on Africa, best believe everyone else does. Within a month of Crimea, additional US “special forces” troops ended up in Uganda to augment a hundred already there in a hunt for war-lusting Lord’s Resistance Army leader Joseph Kony. And to top that, the Pentagon sent in four freshly minted V-22 Osprey tilt-rotor hybrids to show we mean business.
“Please note that the deployment of these aircraft and personnel does not signify a change in the nature of the US military advisory role in this effort. African Union-led regional forces remain in the lead, with US forces supporting and advising their efforts,” Daniel Travis, a US Embassy spokesman in Uganda, deadpanned several days ago.
But the sudden speed between Putin’s power act and the move of well-armed US troops to Uganda and elsewhere in Africa is more than just a nice humanitarian play. Critical strategic interests in Africa are suddenly on a front burner in the race for energy.
Uganda, is part of an emerging and fast-growth East Africa Federation that includes Kenya, Tanzania, Rwanda and Burundi. As a recent Stratfor analysis noted “[n]ew oil and gas exploration projects, along with the potential establishment of a manufacturing base in East Africa, have created an interest in pipeline projects to carry natural gas and crude oil to export markets or refineries.”
Renewed strategic positioning in Africa is, of course, nothing new. The George W. Bush administration was dropping $5 billion a year into HIV/AIDS and malaria-prevention programmes, essentially softening the landscape for the eventual expansion of Africom, the US military command for Africa.
Hence, it was no surprise to find American planes blasting holes in Libya, drone bases in far-flung places like Niger, Djibouti, Burkina Faso and South Sudan, and US intelligence supporting French troops in Mali. Folks like Moammar Qadhafi needed to get out of the way, and now it’s US naval ships stopping renegade Libyan oil tankers from sending black market fuel to North Korea.
The headline fight against rising Islamic terrorist tides in Africa is a good pitch story. But the lesser known — yet more important — story is the continental energy rush gradually unfolding in Africa. Western powers, already irritated by China’s aggressive entry into African markets — highlighted by billions of dollars in investment and a $200 million “gift” to build a shiny new African Union headquarters in Addis Ababa, Ethiopia — are stepping up their game before the rising Asian power dominates the whole thing.
That’s happened quite fast between slow increases in US troops on African soil to the presence of more than 2,000 French troops patrolling the war-torn Central African Republic. And just a few weeks ago, the EU nervously announced the commitment of an additional 1,000 troops, which struck many as odd, given Europe’s current preoccupation with Russian troops on its doorstep. Folks seem awfully pressed to stabilise that region, which neighbours Uganda and isn’t all that far away from Nigeria — another African country that accounts for five per cent of US oil imports.
In essence, Africa is becoming refrontiered, the next — but already charted — neocolonial play with subtle shades of humanitarianism and economic growth to make it look good. Make no mistake about it: there are real geopolitical intentions at work. Hunting down warlords and preventing Rwanda genocide redux is, of course, needed foreign policy common sense.
But these are belt-tightening times for governments and their militaries (including ours). No one’s investing in Africa just to get good PR and a UN shout-out.
