East African energy boom investments to take focus in budgets

Kenya, Uganda and Tanzania plan to allocate money in their annual budgets to spur investment in infrastructure to exploit oil and natural gas from deposits that companies including Tullow Oil are developing.

Ugandan and Kenyan oil discoveries, made in 2006 and 2012 respectively, and new gas finds off the coast of Tanzania that have boosted reserves to as much as 46 Tcf have seen East Africa become a frontier for petroleum exploration.

The three countries, along with Rwanda, which are all members of the East African Community, will present their budget statements for the financial year starting July 1.

The Kenyan Finance Ministry said in its 2014 budget policy statement that the government wants to “fast track” building a pipeline to export the crude.

Kenya also expects to increase its spending on infrastructure by 15% $2.9 billion in 2014-15 from a year earlier, according to the Treasury’s budget policy statement.

Tanzania is building the $1.23 billion Mtwara gas pipeline project with a loan from the Export-Import Bank of China, while Statoil and BG Group, are working on a project to build a LNG export plant. The government plans to present new natural gas rules to parliament in November aimed at helping the country get more benefit from its natural resources.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Exxon reports fire, oil spill at Nigeria terminal

Exxon Mobil Corp. said thunderstorms caused a tank fire June 27 and an oil spill today, June 29, at the Mobil Producing Nigeria Qua Iboe Terminal it operates in Akwa Ibom state.

Offshore production and loading of oil continue, the Irving, Texas-based company said in an emailed statement. No fatalities or injuries were reported. The amount of oil lost to the fire and spill hasn’t been calculated, the company said.

Lightning ignited the tank and the fire was extinguished by noon local time June 27, according to the statement.

Lightning knocked out power to the terminal again today, resulting in a spill. Emergency response systems were activated to contain it, shoreline restoration has begun and relevant authorities and community leaders notified, according to the statement.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Explorers see promise in Egypt oil, gas when subsidies eased

Explorers in Egypt expect constraints on domestic energy prices to loosen, prompting new investment in oil and natural gas fields.

Companies including Citadel Capital SAE, Circle Oil Plc and Petroceltic International Plc expect President Abdel-Fattah El-Sisi to make good on promises to reduce subsidies of more than $20 billion a year and ease demands that producers sell fuel on the domestic market well below international prices, they said at a conference in London on June 27.

The changes would allow the government to cut the budget deficit and pay suppliers money owed for fuel, said Mohamed Shoeib, a managing director at Cairo-based Citadel. It’s a necessary first step if Egypt wants to lure back investors driven from the country by recent turmoil as it tries to both increase exports and meet surging domestic energy demand.

The government “should tackle the problem and not escape it,” Shoeib, whose company has about $10 billion invested, mostly in Egyptian energy projects, said in an interview. “It should happen very soon.”

Egypt is poised to become a net fuel importer as authorities divert gas from export projects to meet local demand, sometimes failing to pay the suppliers. The practice prevented the UK’s BG Group Plc from meeting contracted LNG shipments this year. The company has been in talks with the government about guarantees for future exports, with receivables for gas still owed by Egypt doubling in a year to March 31.

Oil Minister

Egypt plans to pay at least $1.5 billion to energy suppliers before the end of the year, or about a quarter of its debt as of April, Reuters reported June 26, citing Oil Minister Sherif Ismail.

Egyptian General Petroleum Corp., the state energy company, “is doing the best it can” to pay off the debt, said Chris Green, CEO at Circle Oil. “The key thing is reducing subsidy.”

Sea Dragon Energy Inc. plans to acquire additional assets in the country, said CEO Paul Welch. “The time is great now to get involved in Egypt.”

Oil producers receive international prices for their products in Egypt, while gas suppliers are paid only a fraction of what they could earn from exports when they sell on the domestic market, Stephane Foucaud, a London-based analyst at FirstEnergy Capital Corp., said in an interview at the conference.

“The gas price simply has to increase” and that will “unlock exploration” because some fields are not economic to drill at the current tariff, said David Thomas, COO at Petroceltic. “The country is full of opportunity. My question is, when the race will start?”

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Circle Oil spuds exploration well offshore Tunisia

Circle Oil has started drilling the EMD-1 well, on the offshore Mahdia Permit, using the drillship PetroSaudi Discoverer.

The well is located within the vicinity of many producing fields, including the Tazerka, Birsa, Oudna, and Halk El Menzel oil fields, and the Maamoura gas field. The well is planned to test the play potential of the El Mediouni prospect, including the primary Birsa Sands target and the secondary fractured carbonates of the Ketatna Formation.

The Birsa Sands alone have a management pre-drill P50 estimate of 185 MMbo STOOIP. The primary target, the Birsa Sands, is expected at 1,260 m MD with the Ketatna Carbonates at 1,460 m MD. The management view on the recoverable prospective resources estimate for the El Medouini prospect is 46 MMbo for the Birsa Sands objective alone. This is substantially larger than the recoverable commercial threshold for the area which stands at approximately 10 MMbo.

Depending on progress rates the well is expected to take approximately 5-7 weeks to drill. Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.