Nigeria and China in negotiations over an $8 billion oil refinery deal

Nigeria and China are in negotiations over an $8 billion oil refinery, which will be built locally, once the agreement is approved by the Nigerian National Petroleum Corporation (NNPC).

The two countries, agreed to $23 billion of funding to build three new oil refineries and a petrochemical complex in the West African nation, back in early May. The construction of the facilities is aimed to aid Nigeria produce the estimated 750,000 b/d needed to curb imports of refined petroleum products.

At present Nigeria's four existing refineries have a combined capacity of 445,000 b/d, however some are unable to produce maximum output due to ineffective equipment and poor maintenance, which has forced Nigeria to depend on imports to meet its refined-fuel demand.

It is expected that the new refinery could potentially raise Nigeria's refining capacity above 40ml litres of petrol compared with the current capacity of 18ml. The general manager of Greenfield Refineries, Mr Adebayo Ibirogba, said that the deal will be negotiated between NNPC and a delegation of Chinese representatives.

“Although the talks have been exploratory for now, we're positive that a deal can be signed after further discussions with the Chinese who will be in the country by Monday (5th July),” Ibirogba said in an interview.

Source: Nigeria Tribune

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

Libya set to account for 7.74 per cent of African oil demand by 2014

The latest Libya Oil & Gas Report, compiled by BMI, forecasts that the country will account for 7.74 per cent of African oil demand by 2014, and will be responsible for 15.82 per cent of overall supply. It is expected that African regional oil use will average at 3.67mn b/d in 2010 and then rise to around 4.14mn b/d by 2014.

Regional oil production, in 2009, averaged at an estimated 9.69mn b/d. It is set to rise to 11.79mn b/d by 2014. Oil exports show gradual growth, because demand growth is stalling the pace of supply expansion. In 2001, this region was exporting an average 4.86mn b/d. This total rose to an estimated 6.19mn b/d in 2009, and is expected to reach 7.66mn b/d by 2014.

Libya's demand for natural gas is expected to reach 175.9bcm by 2014, production of approximately 391.9bcm, which suggests a rise of net exports from 120bcm in 2009 to 216bcm by the end of the period. In 2009, Libya consumed an estimated 5.44 per cent of the region's gas, its market share forecast for 2014 is estimated at 4.49 per cent. It contributed 7.42 per cent to regional gas production, in 2009, and by is expected to account fore for 8.93 per cent of supply by 2014.

Libya is currently fourth place of BMI's composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It continues to occupy first place, above Gabon, with a comfortable margin over its nearest rival of three points. The country's score m benefits from its proven oil reserves and a region-topping oil reserves-to-production ratio (RPR).

Source: Companies and Markets

For more news and expert analysis about Libya, please see Libya Focus and Libya Politcs & Security.

Algeria set to account for 8.91 per cent of African oil demand by 2014

The latest Algeria Oil & Gas Report, compiled by BMI, forecasts that the country will account for 8.91 per cent of African oil demand by 2014, and will be responsible for 19.57 per cent of overall supply. It is expected that African regional oil use will average at 3.66mn b/d in the latter part of 2010, and then rise to around 4.13mn b/d by 2014.

Regional oil production, in 2009, averaged at an estimated 9.79mn b/d. It is set to rise to 12.52mn b/d by 2014. Oil exports show gradual growth, because demand growth is stalling the pace of supply expansion. In 2001, Algeria was exporting an average 4.86mn b/d. This total rose to an estimated 6.19mn b/d in 2009, and is expected to reach 8.40mn b/d by 2014.

Algeria's demand for natural gas is expected to reach 191bcm for 2014, production of approximately 385bcm, which suggests a rise of net exports from 124bcm in 2009 to 193bcm by the end of the period. In 2009, Algeria's share of regional gas supply was an estimated 40.40%, easing to 36.39% by 2014. The country's share of demand in 2009 was an estimated 21.03%, with 17.63% predicted by 2014.

Algeria is currently at the top of BMI's composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It is third, between Gabon and Nigeria, in the updated upstream Business Environment Ratings. The country's rating is boosted by healthy oil and gas reserves, a large number of non-state companies active in the upstream sector and decent licensing terms.

Source: Companies and Markets

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

Section of CPC expansion completed

As it embarks on its step-by-step plan to double its throughput capacity to 1.4 million b/d by 2014, the Caspian Pipeline Consortiumhas completed a new 130km section of its pipeline that runs from Kazakhstan's Tengiz field to the Russian Black Sea port of Novorossiysk. The new segment, in the Atyrau region near Tengiz, will replace a 116km spur that was built in 1991 and was considered unsafe.

Phase 1 of CPC's expansion, due to be implemented by 2012, will enable 500,000 b/dof Kazakh crude to flow through the pipeline; Phase 2, for completion by 2013, will raise Kazakh throughput to 700,000 b/d, while the third and final phase would enable Kazakhstan to pump up to 1 million b/d of crude. Russian producers can inject crude into the pipeline at a rail loading facility at Tikhoretsk, which is operated by Dublin-based Trumpet, a fullyowned subsidiary of state giant Rosneft.

Rosneft, meanwhile, could increase its stake in CPC by buying part of the 12.5% stake held by Lukarco, a 100%-owned vehicle for Lukoil. Both companies have confirmed that discussions are being held, but no decision has been reached. Rosneft holds a 7.5% stake in CPC jointly with Shell. On top of this the Russian government holds a 31% stake – 24% held directly and 7% via Caspian Pipeline Company, which handles the equity purchased from Oman more than two years ago. The government's share is managed by state pipeline monopoly Transneft.

CPC is now effectively a Russian-controlled company, which is exactly how Moscow wants it to be. On 1 May, a new Russian chief executive took the helm: Alexander Tarakanov, previously a senior manager at state-owned Zarubezhneft. Tarakanov took over from another ex- Zarubezhneft man, Vladimir Razdukhov.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2010 Menas Associates

Jonathan picks Jega for Inec

President Goodluck Jonathan has finally chosen a new chair for the Independent National Electoral Commission (INEC). Attahiru Jega, the vice-chancellor of the Bayero University of Kano (BUK), was named INEC chair on 8 June 2010.

The Senate, which resumed plenary on 22 June after a two-week recess, screened Jega in a gruelling four-hour session and ratified the president's selection.

Jega is described as a radical activist, owing to his six-year stint as president of the Academic Staff Union of Universities (ASUU). Jega made ASUU the vibrant union that it is now, well known for its uncompromising stance when negotiating with the government, which has resulted in countless face-offs and strikes that have crippled the tertiary education system.

Jega served as ASUU president from 1988 to 1994 and is said to have fought several valiant battles against the administration of then military president General Ibrahim Badamosi Babangida for increased salaries for lecturers and improved funding for universities. He had a two-week stint in jail as a result of his unionism and activism.

Associates of Jega have described him as the best person for the job of INEC chair because he is principled, fair, and firm and will not tolerate corruption or other underhand practices in the conduct of elections. Jega was a member of the Justice Mohammed Lawal Uwais Electoral Reform Committee and is expected to bring the experience garnered in that committee to bear in the execution of his new duties.

The consensus is that the task before Jega is almost Herculean. A lot is expected of him, especially with all the cries for electoral reform and free and fair elections. The Goodluck Jonathan-led administration has promised that it will do all within its power to ensure that the 2011 elections (at least) are free and fair.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

OXG discovers crude oil off Brazil's coastline

OGX has announced that it has discovered signs of crude oil off Brazil's coastline, and that it intends to start producing in 2011 at a rate of about 20,000 b/d.

The discovery was made in the BM-S-29 block in shallow waters of the Santos Basin, about 130km off the coast of Sao Paulo. Brazilian billionaire, Eike Batista,who owns 62 per cent of OGX, has said that he will put in $4 billion into the operation, and expects to see first output toward the end of 2011.

Talking about OGX's plans, chief executive, Paulo Mendonca, said that the company is actively "studying the whole of Brazil for new acquisitions," and that even though OGX is "a long way off pre-salt," it awaits the right opportunity to "re-enter the pre-salt" sector.

The new discovery promises to be a success, with projected output expected to grow to 730,000 b/d in 2015, and subsequently to 1.4 million. According to Batista large international oil companies, including several from China, have approached OGX about the possibility of partnering up for oil drilling.

"The Chinese are interested in investing in the offshore subsalt oil area in Brazil. They've already taken a look at it," Batista told reporters at an event in Rio de Janeiro.

Source: Bloomberg

For more news and expert analysis about Brazil, please see Brazil Focus.

President Mills assures effective running of oil and gas industry

President John Atta Mills has made an official statement assuring the nation that the Government will ensure effective running of the oil and gas industry for the benefit of all Ghanaians. He emphasised accountability and transparency in the operations of the industry, and gave a pledge that his administration will work to make sure that the oil and gas sector is run fairly and responsibly.

The pledge was prompted by a delegation of Tullow Ghana Limited representatives, led by Dr Idan Heavey, chief executive officer of Tullow Ghana; Pat Pluukett, board chairman; Dai Jones, president and general manager; and Kofi Esson, chief of staff. President Mills said that the government would ensure that the collaboration with Tullow would work to the benefit of the nation and its economy, and applauded Tullow for their expertise and guaranteed full government cooperation.

Dr Heavey said that there was great potential in the oil and gas sector, with prospects for development of ancillary industries. With the arrival of the Kwame Nkrumah Floating, Production, Storage and Offloading, (FPSO) facility at the Jubilee Fields in Takoradi in the Western Region last week, all is set for the production of oil for the last quarter of 2010.

Source: Ghana Web

For more news and expert analysis about Ghana, please see Ghana Politics & Security.