I’ve recently returned from Uganda. It is a wonderful country to visit and I always enjoy my time in Kampala although I must say that my colleagues at the Virtual University always have plenty of people to meet and issues that I seem to get involved in. I read with interest the article about Dickens Kamugisha of the Africa Institute for Energy Governance in the 18th October 2019 issue of Upstream Newspaper. I believe they are doing interesting work and we need to listen to them.
The energy transition which everyone is talking about and which the Extraction Rebellion people have brought to the front page of our reading requires us who advocate responsible development to pay attention. Yes, I am an advocate of responsible development, especially of natural resources such as oil and natural gas.
Recently, Petromall expressed interest in advising a municipality in Kenya on a landfill project. Landfill development isn’t always top of mind but while in Kampala last week I noticed articles in the local paper about three landfill projects in Uganda which have been built but are not operating anywhere close to the intended way. No methane is being captured for power. Apparently no recycling is taking place. It seems as they once built no one thought about operations. These landfills were supported by the World Bank. These are important projects. As the population continues to grow and people move to where there are jobs waste management is a critical issue which can be made into a valuable resource. In the oil industry, we have spent years managing hazardous and non-hazardous waste.
In the Lake Albert oil development however, progress on actual construction is being held up pending resolution between the Government and Total/Tullow/CNOOC to get to the Final Investment Decision ( FID). Capital gains tax is the stated issue but there a number of other commercial issues such as pipeline tariff, refinery feedstock priority, local content and development in national parks such as Murchison Falls which will continue to be challenging.
Total has completed the acquisition of Anadarko’s share of the Mozambique KLN development which has passed the FID milestone. This is one of two massive developments in Mozambique both $25 billion USD plus. These projects will make it very challenging for Tanzania to progress its’ LNG development despite the 40 TCF of gas that has been discovered in the offshore.
South Sudan plans to offer 14 oil blocks to exploration companies in a licensing round by the first quarter 2020, its oil minister said on Tuesday, switching from its previous method of direct negotiations with explorers. The country gets almost all its revenue from oil and has boosted output, now at 180,000 barrels per day, as it struggles to rebuild its shattered economy after a five-year civil war. “We are inviting all our investors that wanted to invest in South Sudan to come and move onto those blocks,” Awow Daniel Chuang, told an Africa Oil and Power conference. “We are opening up the licensing rounds for everyone on a competitive basis and this is will help us to get the right partners, investors that can be easily verified because we don’t want to continue to have direct negotiations.” The government says South Sudan’s oil at present comes from blocks 3,7 and blocks 1, 2 and 4. ( Reuters, October 29)
For those that don’t follow the earnings results for the majors, BP and Total have announced their 3Q2019 results this week. Both are down compared with 2018 3Q due to lower oil prices. Total’s results look better to me than BP’s as they have largely maintained their cash from operations. Both companies are maintaining capital discipline which means they are only investing in projects that meet their investment criteria and they are divesting mature late-life assets such as Egypt and Alaska in BP’s case.
Lastly, interest in Greenhouse Gas Mitigation in East Africa is growing. The area is rich in biodiversity and international agencies seem keen to understand the impact of natural resource development, both in mining and in hydrocarbons.
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