BusinessDay 25 Oct 2017

Wednesday 25 October 2017
02 BUSINESS DAY
C002D5556
WEST AFRICA ENERGY
oil
Brief
Gambia:
African Petroleum seeks arbitration
over Gambia oil dispute
African Petroleum
Corp has begun
arbitration proceedings
over
Gambia’s decision to strip
the company of its rights
to explore for oil in two
offshore areas.
The Norwegian-listed
company said in a statement
that two wholly-owned subsidiaries
had requested arbitration
with the United
States-based International
Centre for the Settlement
of Investment Disputes “to
protect its interests in the A1
and A4 licences”.
Licence area blocks A1
and A4 are thought to contain
up to 3 billion barrels of
oil and lie next to licences
in neighbouring Senegal,
where big discoveries have
been made.
Gambia said in August
Algeria:
Algeria sees energy law
amendment by end of 2018
that African Petroleum’s
licences had expired and
were now open for relicensing,
accusing the
company of failing to meet
its commitments, charges
denied by African Petroleum.
“Arbitration is certainly
not our preferred route.
However, we believe arbitration
is necessary to
protect our interests in
these licences, in which
we have made significant
investment over the years,”
the company’s CEO Jens
Pace said in the statement.
Pace has held talks
with Gambian President
Adama Barrow, who replaced
long-ruling dictator
Yahya Jammeh in
January, but they have
yielded no agreement.
Pace said that the company
remained open to settling
the dispute through
dialogue.
Fafa Sanyang, Energy
Minister said that Gambian
authorities had been
notified of African Petroleum’s
move to seek
arbitration but could not
comment until the justice
ministry had a chance to
study the case.
ily on energy revenues to
balance state finances,
which have been hit significantly
by a drop in
global oil prices and stagnation
in domestic output
of oil and gas.
“Work has started. The
first draft will be ready
by May-June,” Mustapha
Guitouni, Energy Minister
said, referring to government
plans to amend
the law. “We need time to
prepare a good law. This
law will come at the right
time.”
Foreign energy firms
have mostly stayed away
in recent years, complaining
about bureaucracy
and tough contract
terms.
Rehoboth’s 60,000 bpd modular
refinery waiting on FG’s guarantees
ISAAC ANYAOGU
Within the
next 18
months
N i g e r i a
c o u l d
have 60,000 barrel per
day modular refinery in
Kolo Creek, Bayelsa State
that will help to keep the
value from crude oil in
country, if the promoters
of Rehoboth Refinery succeeds
in securing Federal
Government’s guarantees
and incentives.
As crude oil prices
struggle to leave the
floor, analysts say Nigeria
should look to increase
the value of the commodity
rather than a strategy
of drilling for more oil.
It also has the prospects
to add more value to the
economy cutting the cost
of fuel importation, reducing
subsidies, checking
militancy by creating
jobs and shoring up oil
producing states’ revenue.
Nigerian banks, of
whom loans to the oil
and gas sector constitute
about 40 percent of their
bad loan portfolio, are
unwilling to lend to proj-
Algeria aims to
amend its energy
law in 2018 as it
plans to improve
contract terms to attract
needed foreign investment,
authorities said, giving the
first timeline for a muchanticipated
move.
Algeria relies heavects
in the sector. This impedes
the ability of investors
in the sector to obtain
loans to finance projects
and the promoters of Rehoboth
Refinery are not
exempted.
Elaborating on the nature
of these guarantees
and incentives that can
help the refinery get off
the ground, Joe Attueyi
said: “If you are buying
equipment from the US,
the US Exim bank will
fund the purchase of the
project on a debt basis
provided you are buying
from a US manufacturer
but they need a local bank
guarantee. Today, there
is no local bank that can
provide this guarantee
so you are caught in rock
and a hard place.
“Our view is that only
the Federal Government,
using one of its numerous
agencies either the local
content board, Bank of
Industry or Central Bank
of Nigeria (CBN) scheme
can break that logjam.”
On October 19, the
Bayelsa State government
and Rehoboth Refinery
signed a memorandum
of understanding on the
construction of a 60,000
bpd modular refinery in
Kolo Creek, Bayelsa state,
at the cost of $120 million
within the next 18
months. The state is taking
10 percent stake for its
support which includes
partnership in securing
land and investment drive
“Our fundamental role
is to enable private sector
investors do what they do
best and the effort which
Rehoboth Refinery has
made in the last couple of
years and the milestones
they have achieved in this
modular refinery project,
we thought it fit that we
should signal our own
commitment to the project,”
said Kemela Okara,
Bayelsa State’s Commissioner
for Trade, Industry
& Investment at the official
MoU signing ceremony
in Lagos.
Rehoboth Refinery has
done the two seasons’
environmental impact
assessment and secured
approval from all the
regulatory bodies and the
state government has facilitated
their getting certificate
of occupancy for
the land.
In 2008, the Department
of Petroleum Re-
L-R: Bekuochi Nwawudu, managing partner, CBO Capital (project financial adviser);
Joe Attueyi, CEO, Rehoboth Refinery (project owner); Kemela Okara, Bayelsa State
Commissioner for Trade & Investment; Tonbofa Ashimi, partner, Edward Ekiyor & Co
(project legal adviser) & Valery Ngoufan, senior special adviser to the Governor of Bayelsa
State on Trade and Investment during the MOU signing ceremony between Bayelsa State
Government and Rehoboth Refinery Limited in Lagos recently.
Snapshot
$120m
Estimated
amount that
Rehoboth
Refinery will
to spend to
deliver its
modular
refinery in
Kolo Creek,
Bayelsa State
sources (DPR) issued Rehoboth
Refinery a 12,000
bpd License To Establish
(LTE) but the company
has ambition to scale to
60,000 bpd and the process
of acquiring final approvals
now rests upon
securing guarantees and
incentives that will give
comfort to its financiers.
“So we started with a
first phase of 12,000 bpd
which was the initial license
we have established,
that will take about
$120m, we have raised
the equity side of it, the
debt portion is about 60
percent of that value. We
have indicative offers for
that debt but it needs certain
guarantees, it needs
certain incentives from
the Federal Government,”
said Attueyi.
Analysts say the construction
of these modular
refineries will create
value for even the Federal
Government, cutting
the cost of fuel importation,
reducing subsidies,
checking militancy by
creating jobs and shoring
up oil producing states’
revenue. To check communal
unrest, the promoters
of the refinery are
offering local communities
stake in the project.