Libya's Brega Port under siege as guards prevent exports

Libya’s energy sector was dealt another blow on 11 July when a group of protesters from the Oil Facilities Guard closed down the Brega Port and prevented a cargo that was in the port from loading.

The members of the guard are demanding that they be paid their backdated salaries, just as those members of the guard who were blocking the ports of Es-Sider, Ras Lanuf have been paid. One of the guards told the Turkish media on 11 July that “we closed Brega today as they haven’t given us our financial dues for several months. We will prevent all ships from being loaded with fuel. There is a cargo [in the port] and we won’t allow it to load oil until we receive our dues in full.”

Brega, run by the NOC’s Sirte Oil Company subsidiary, is a relatively small port with a 90,000 b/d capacity that has lately been used to supply the Zawia refinery. Its closure is a challenge given the troubles with the eastern oil export terminal ports over recent months and the fact that it will still take a while before operations are back to normal in Ras-Lanuf and Es-Sider, handed over earlier this month.

Given that the protesters are making purely financial demands the situation should be resolved easily enough. Despite this, with the political scene in such chaos and with the economic situation in deep crisis, how long it will take the government to resolve this standoff has yet to be seen.

Meanwhile, workers at the 103 Oil Field 200 km from Ajdabiya and operated by the Zuetina Oil Company stopped working this week. On 9 July the workers began an open sit-in at the field in protest against the company’s board. It is not clear exactly what it is about the board that the workers are protesting about, but they are refusing to leave unless their demands are met.

The good news, however, is that the agreement between the head of the Cyrenaican Transitional Council (CTC) politburo, Ibrahim Jedhran, and the government appears to be holding despite the fragility of the situation on the ground. It was reported this week that foreign workers have returned to work in the oil fields in Jalu and that European companies are restarting their operations.

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

© 2014 Menas Associates

New branch of Central Asia-China gas pipeline comes online

China National Petroleum Corporation (CNPC) reported in early June that a third branch of the Central Asia–China gas pipeline, also known as line C, had been inaugurated on 31 May, with the first volumes of Turkmen gas now following a new export route across Uzbekistan to the Chinese autonomous region of Xinjiang.

The 1,830km pipeline runs parallel with lines A and B, starting at Gedaim at the Turkmen-Uzbek border and entering Chinese territory at Khorgos. Once in China, it interconnects with the third west-east gas pipeline, which was built by Beijing to take imported natural gas deeper into the country’s heartland and to the east coast where the bulk of its industrial production takes place. Construction of this additional line was started in September 2012 and welding was completed, as initially foreseen, at the end of last year.

CNPC expects that, on completion of all supporting facilities by early 2016, line C will reach its designed annual transit capacity of 25 billion cubic metres. This means that, if all goes to plan, the Central Asia–China gas pipeline will be able to deliver on an annual basis up to 55bcm of Turkmenistan-produced natural gas to Chinese customers. This will represent roughly 20% of China’s domestic gas consumption.

With this in mind, the authorities should proceed to a massive substitution of gas for coal. Reducing coal consumption by 73 million tons a year may allow China to cut its carbon dioxide and sulphur dioxide emissions by 78 million tons and 1.21 million tons respectively. If Turkmenistan delivers on its November 2011 promise to supply as much as 65bcm of gas a year, millions of Chinese will see clearer skies.

For Turkmenistan, the expansion of the Central Asia–China gas pipeline system means that its revenues from the lucrative energy sector will remain stable in decades to come. Unlike Kyrgyzstan and Tajikistan, whose political stability has been compromised by high levels of poverty and the lack of economic opportunities, Turkmenistan has all it needs to remain a deeply autocratic regime with enough gas money to silence domestic critics and secure obedience from ordinary Turkmens.

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

© 2014 Menas Associates

Ghana central bank eases restrictions on foreign currencies

Ghana's central bank has eased restrictions on the use of the US dollar and the euro in order to boost foreign exchange supplies and stem the continuing fall of the local currency. Companies have complained that the new rules had not had the desired effect of preventing the fall of the cedi and had, instead, harmed businesses and made dollars and euros harder to obtain.

The previous rules, imposed by the Bank of Ghana (BoG) in February in order to prevent Ghana becoming dependent on foreign currencies, required, among other things, that all companies use the cedi in local transactions; and that exporters convert takings from foreign sales into cedis within five days. They limited the use of dollars and euros to exporters and importers and set limits on who could have accounts denominated in foreign currencies.

BoG governor Henry Kofi Wampah told reporters that the relaxing of the rules means that foreign companies can pay local businesses using non-cedi currencies, and that exporters can keep 60% of proceeds in foreign-denominated accounts; the remaining 40% will have to be converted into cedis within 15 days, rather than five. It is hoped that the new rules will increase the availability of foreign currency on the market.

As a further means of ensuring a regular foreign currency supply, the BoG is recommending that the government compel firms operating in the oil and mining sectors in Ghana to keep part of their profits in the country. It is also encouraging those who do business in China to use the yuan instead of the US dollar as a means of shoring up the cedi.

Already, some of Ghana's commercial banks have established relationships with their Chinese counterparts. Zenith Bank has a representative office in China and Ecobank has a dedicated China desk in several of its branches. Ghanaian traders heading to China currently need to take dollars with them that are later converted to yuan. Doing business in the Chinese currency would ease pressure on the cedi, as well as decreasing the demand for dollars, Dr Wampah said.

Last year, the yuan surpassed the euro to become the world’s second most-used currency in global trade finance after the dollar.

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

© 2014 Menas Associates