African Development Bank President Akinwumi Adesina has reaffirmed stronger ties and increased support for Congo during a three-day visit to the Republic of Congo on 12 May 2019.
At a meeting with Congolese President Denis Sassou-Nguesso in his hometown, Oyo, some 460 km from the capital, Brazzaville, Adesina declared the Bank’s support for the country’s development plans.
“I wish to inform you that the African Development Bank will continue to support the Government of Congo and the implementation of the National Development Plan. I have great confidence in your leadership and the excellent work and efforts of the government,” Adesina said.
Congo is the fourth largest Sub-Saharan oil producer, with an output of 360,000 barrels-per-day from reserve estimates of around 1.6 billion barrels. It produces around 240 million cubic feet of gas daily from reserves estimated at 111 billion cubic feet.
While commending the country’s bold steps to deal with internal debt, Adesina said the government needed to create incentives in the non-oil sector to spur manufacturing and industry to boost private sector investments and small-to-medium businesses.
The African Development Bank delegation, led by Adesina, and accompanied by President Nguesso, visited the Port of Oyo and other projects including a High School of Technology with the capacity to enroll up to 10,000 students.
He commended the school project and suggested it should be renamed a ‘Regional Institute of Science and Technology of Congo’ to enable it to serve the region.
The Bank delegation also visited the Oyo Museum, a bio milk processing unit, a large cattle ranch and an ostrich farm. The ranch, which has close to 1,900 cattle and 245 Congolese employees, could be a major employer in the region, Adesina noted.
The Bank’s delegation also met with Congolese Premier Clement Mboumba, the Minister of Planning, the Governor for Congo, and private businessmen and development partners.
This year will be key for the advancement of new exploration and production development projects from West to East Africa
After a year of rebound and recovery, Africa’s old and new hydrocarbons markets have an opportunity to further entrench the continent’s position as the world’s hottest oil and gas frontier in 2019. However, the new year also brings a new set of dynamics and challenges set to influence the future of the industry, from presidential elections to megaprojects developments, amidst intensifying international competition.
New African frontiers opening up
Independents are leading the way in exploring and opening up new frontiers across Africa. This year will be key for the advancement of new exploration and production development projects from West to East Africa. Developments to watch notably include Senegal’s SNE field development, where FEED works are ongoing and a final investment decision (FID) is expected by Woodside Energy and Cairn Energy this year; Niger’s Amdigh oilfield development, where Savannah Petroleum’s $5m early production scheme is set to start anytime soon; and the opening up of Kenya’s South Lokichar Basin by Tullow Oil, where FID is also expected before year end amidst rising tensions with the Turkana local community.
A year to confirm Africa as a global exploration hotspot
Ongoing bidding rounds in key existing and new African hydrocarbons markets will tell if Africa further confirms its position as the world’s new exploration hotspot and manages to attract necessary investment in its oil and gas acreages.
Amongst well-established African producers, OPEC members Gabon and Congo-Brazzaville each have ongoing bidding rounds. Gabon’s 12th shallow and deep-water licensing round is set to close in April 2019 and Congo-Brazzaville’s License round phase II in June 2019. With both countries struggling to implement their new Hydrocarbons Codes, the success of these rounds will tell if investors have been convinced by policy reforms developed over the past two years.
Two bigger African producers and also OPEC members, Nigeria and Angola, are set to launch landmark and out-of-the-ordinary bidding rounds this year. Nigeria will auction its gas flare sites under the Nigerian Gas Flare Commercialisation Programme, likely to happen after the February general election, and Angola will hold its Marginal Fields Bidding Round, result of a new May 2018 policy enacted by President Lourenço, and to be launched at the Africa Oil & Power conference in Luanda in June 2019. With the Nigerian Petroleum Industry Bill yet to be signed and the ink still fresh on Angola’s new policy regime, both rounds will also be key in assessing investors’ interest for both countries’ business environments.
Also attracting interest is the newest and arguably one of the upcoming entrants – Ghana – holding its 1st formal licensing round set to close in May 2019 which has reportedly got the attention of 16 oil companies, including majors ExxonMobil, BP, Total and ENI. As a hopeful new East African offshore frontier, Madagascar is also putting 44 concessions on offer until May 2019, none of which has ever been tendered or explored before. For a country without any major oil discovery to date, the ongoing license round is a wager test.
Africa’s struggling FLNG industry
After the start of commercial operations at Golar LNG’s Hilli Episeyo FLNG vessel in Cameroon in June 2018, hopes were high that Equatorial Guinea would soon move forward with its own Fortuna FLNG project, set to be Africa’s first deep-water FLNG development. While Fortuna was to be game changing for the gas industry of Equatorial Guinea and the rest of the continent, the development of the $2bn project has stalled due to a lack of financing. And the clock has been ticking since. The lack of progress on this plan has been so slow that operator Ophir Energy has been denied the extension of its license to operate block R (as of January this year), which contains the giant Fortuna gas discovery. While Equatorial Guinea’s FLNG aspirations look more uncertain than ever, 2019 will tell if the country can find the right partners to put the project back on Africa’s FLNG map.
Meanwhile, new entrants in Africa’s hydrocarbons stage are making remarkable advances towards the development of their own FLNG industry. On December 21st last year, BP finally announced its FID for phase 1 of the cross-border Greater Tortue Ahmeyim development between Senegal and Mauritania, which involves the installation of a 2.5MTPA FLNG facility. It became the third African FLNG project to reach FID after Cameroon’s 2.4MTPA Hilli Episeyo and Mozambique’s 3.4MTPA Coral South FLNG.
Mega projects on the move
Africa’s come back on the global oil and gas map is not only due to the vast natural resources found in its soil and waters, but also to the continent being home to mega energy projects set to transform the future of the industry.
On the upstream side, the recent inter-governmental cooperation agreement between Senegal and Mauritania, and BP’s FID on its cross-border Greater Tortue Ahmeyim development, bodes well for the future of West Africa’s hydrocarbons industry. The project aims at extracting the 15Tcf of gas estimated to be held in the Tortue gas field, located at a depth of 2,850 metres. However, the ability of both Senegal and Mauritania to work out their differences to ensure a more sustainable development of their offshore reserves and facilities around the MSGBC Basin is a factor to watch out for.
African mega gas projects are not the sole property of the continent’s West coast, with Mozambique moving forward with two landmark projects putting the Southern African nation on the global LNG map. Following the launch of the Coral South FLNG project by ENI in June 2017, a FID is now expected in the coming months for the Anardarko-led Mozambique LNG project, an onshore LNG development initially consisting of two LNG trains totaling 12.88MTPA to export the gas extracted from the offshore Area 1, estimated to contain a whooping 75Tcf.
Sub-Saharan Africa’s biggest petroleum producers, Nigeria, is also moving forward with massive oil development projects in 2019. Last year already saw the launch of Total’s $3.3bn Egina FPSO in Nigeria, where production officially started in the first days of 2019 and is set to peak at 200,000 bopd. FID is now expected on Shell’s Bonga Southwest offshore field in Nigeria early this year, a multi billion-dollars development whose production is expected to reach 180,000 bopd.
International contenders and pretenders
As Africa strengthens its position at the centre of global transformations, it is increasingly becoming the playground for international actors willing to benefit from the continent’s vast resources.
While China has asserted its position of a contender in the continent, will new continental dynamics lead the Asian giant to change its investment strategy or portfolio? With Russia’s intentions on the continent becoming clearer and clearer, will the first Russia-Africa Summit this year translate into more concrete Russian deals across the continent? At the same time, will the US’ “Prosper Africa” initiative launched in December 2018 be able to counter both rising international competition and declining US influence on the continent?
A complex energy diplomacy dilemma for OPEC in Africa
With a majority of its members made up of African nations since the joining of the Republic of Congo in June 2018, OPEC’s evolving relationship with the continent as it strives to manage the global supply glut will be requiring skillful diplomatic ingenuity.
On one side, Africa’s biggest producers and OPEC members Algeria, Libya, Nigeria, Angola and Congo-Brazzaville, are striving to boost their domestic output, which makes it harder and harder for the Organisation to negotiate its production cuts.
On the other side, the continent is also home to a flurry of upcoming petroleum producers like Senegal, Kenya or Uganda, or old players making a comeback like South Sudan, some of them part of OPEC’s Declaration of Cooperation, whose upcoming or increasing output adds another layer of complexity to the formulation of OPEC’s global oil prices management strategy.
An increasing African output from OPEC and non-OPEC member countries only complicates OPEC’s maneuver capabilities and increases its dilemma of both providing a stable pricing environment conducive to investments, while avoiding a worsening of the supply glut that would push prices further down.
Africa’s biggest petroleum producers casts their ballots
Amongst the series of elections happening in the continent this year, from Senegal to Mozambique, none will be more important for the African oil sector than that of Nigeria this February. The Nigerian presidential election is set to shape the future of the industry, not only because Nigeria is Africa’s biggest oil & gas producer, but because what happens in Nigeria impacts the rest of the subcontinent one way or the other. While both Muhammadu Buhari, seeking re-election, and his ally turned rival Atiku Abubakar have committed to the signing of the Nigerian Petroleum Industry Bill, the ability of the future President to get his office in order and get the bill passed quickly will heavily influence investments within Nigeria’s hydrocarbons sector for years to come.
North, Algeria and Libya are also entering an election year, with the 2019 Libyan general election set for the first half of the year, and Algeria’s for April. Both countries are on a transformation path. Libyan authorities plan to more than double the country’s output to 2.1 million bopd by 2021, providing politics doesn’t tamper hydrocarbons governance and the work of the National Oil Company. With Muammar Gaddafi’s son Saif al-Islam Gaddafi set to stand for election and the country still divided between West and East, maintaining the stability required by investors will prove challenging.
In Algeria, where a wave of reform is shaking the entire hydrocarbons sector, elections are expected to maintain a relative status-quo, at least politically speaking. The country’s national oil company, Sonatrach, has launched an ambitious transformation strategy that will see it investing $56bn over the next four years and internationalizing its operations across major global energy markets. 2019 could even see the state-owned giant and Africa’s biggest company further expand south of the Sahara.
Angola’s steady road to reforms
Since taking office in the summer of 2017, Angolan President João Lourenço has been implementing a bullish reformist agenda which is drastically transforming the governance of the country’s oil & gas sector. Angola is reforming fast, but will market forces allow changes to happen at that pace and yield the results that the government is looking for?
While international investors seem to think so, with Total and BP signing major agreements to boost their Angolan operations over the past few months, 2019 will tell if the international oil industry is being convinced of Angola’s return as a competitive African frontier or not.
To showcase the work being done by Sonangol and the Angolan government to generate more investment in the country’s oil & gas industry, Angola is backing up an international conference being organized by Africa Oil & Power in Luanda on June 4-6, 2019, where it will be launching the Angolan Marginal Field Bidding Round. This will be the first official investment roadshow organized in Angola under the current administration, and one that is set to unveil a new set of reforms and investment commitments.
South Sudan’s march to peace
The major progression in South Sudan, and one on which the entire economy relies, is that of the peace accords. The Sudanese and South Sudanese authorities have time and again demonstrated their commitment to the peace process, which has remained peaceful for the most part. However, will peace deals translate into investment promises and money being invested into the South Sudanese economy this year? Some signals point to that direction, with South Africa’s Central Energy Fund committing $1bn to South Sudan late last year, but markets are still skeptics and observers will remain pragmatics and wait to see how the peaceful transition is managed and how oil production resumes before making any concrete moves.
A year to improve market access for East African producers
With Uganda set to join the club of African petroleum producers by the early 2020s, efforts are on the way to develop adequate infrastructure for the evacuation of oil that will be produced from the Lake Albert Basin. The project seemed to be positively moving forward when Uganda and Tanzania exchanged the inter-governmental agreement for the 1,443km East African Crude Oil Pipeline in May 2017. However, the partners in the pipeline’s construction, French major Total, China’s CNOOC and Tullow Oil, are yet to make a final investment decision on the project. Meanwhile, the Host Government Agreements are to be signed this January, but delays in concluding the pipeline’s financial deal have already pushed back Uganda’s oil production ambitions from 2020 to 2021. The pipeline is crucial for the further integration of the East African community and to set a positive record of joint planning, financing and implementation of landmark energy projects in the region.
The African Union (AU) Commission, through the Africa CDC, will procure six laboratory diagnostic (Genexpert) machines and 2,000 cartridges (testing kits) for a total of US$ 147,000 to be donated to the Government to support diagnosis of Ebola virus diseases and other outbreak diseases.
Moussa Faki Mahamat, commends the Congolese Government for its swift and effective response
This comes following official announcement by the Government of the Democratic Republic of the Congo, on 24 July 2018, of the end of the Ebola virus outbreak in the country.
The Chairperson of the Commission of the African Union, Moussa Faki Mahamat, commended the Congolese Government for its swift and effective response since the outbreak was declared on 8 May 2018 in the province of Equateur.
The last case that tested negative was 42 days ago. This, as per the World Health Organization guidelines and International Health Regulations, marks the end of the outbreak.
The Chairperson of the Commission notes that the timely declaration of the outbreak, in accordance with the International Health Regulations, as well as the leadership and pro-activeness demonstrated by the Congolese Government, allowed a coordinated and efficient intervention of all concerned partners to swiftly contain the outbreak.
“The African Union Commission, through the Africa Centers for Disease Control and Prevention (Africa CDC), has made a significant contribution to the efforts aimed at containing the outbreak, in support of the Congolese-led response. The Africa CDC deployed health personnel in the affected areas, trained more than 300 local experts, procured diagnostic equipment, and supported the DRC Ministry of Health in central coordination of the response at national level,” he noted, adding that the African Union will continue to support the efforts of the Congolese Government during the 90-day period of enhanced surveillance following the official end of the Ebola outbreak.
The Ministry of Health of the Democratic Republic of Congo (DRC) declared the end of the Ebola Virus Disease (EVD) outbreak in Equateur province on 24 July 2018, after sustained national-led efforts to contain it within the affected areas.
The outbreak spread across three health zones, namely Bikoro, Iboko and Wangata in the Equateur Province, resulting in a total of 54 confirmed cases, with 33 EVD-related deaths.
On 8 May 2018, the Ministry of Health of the DRC declared a new outbreak of the EVD in the Bikoro health zone. This was the 9th outbreak of EVD over the past four decades in the country.
Following the declaration of the outbreak, the African Union (AU) Commission, through the Africa Centre for Disease Control and Prevention (Africa CDC), took a number of steps to contribute to the Government-led response, including the activation of its Emergency Operational Centre (EOC) to monitor and coordinate the AU response from the Headquarters; deployment of an advanced team of two epidemiologists within 48 hours following the outbreak, to support the Congolese Government efforts; and deployment of 37 staff both at Headquarters and to the field, including 21 surveillance experts in the affected health zones, as part of the Government-led response.