BusinessDay 28 Feb 2018

Wednesday 28 February 2018
02 BUSINESS DAY
C002D5556
WEST AFRICA
Outlook
Gambia:
New funding for offshore Gambia
FAR Ltd has
signed a farmout
agreement
with a subsidiary
of Petronas
for a 40 percent interest
in each of The Gambia’s
blocks A2 and A5. Following
the deal, Petronas will
fund 80 percent of the total
well costs of the Samo-
1 exploration well, up to
a maximum total cost of
$45 million. Petronas will
also fund FAR’s share of
non-well costs up to a
maximum amount of $1.5
million.
FAR will retain a 40
percent interest in each
of the A2 and A5 licenses
and will remain operator
through the exploration
phase. Samo-1 is expected
to be drilled in late
2018 and will be the first
exploration well offshore
The Gambia since 1979.
FAR Managing Director
Cath Norman said
the deal is a testament to
the emerging value of the
broader West African basin.
“Success in this well
would be of significant
value to our shareholders
and truly transformational
for the people of
The Gambia,” she said in a
statement.
An audit of geotechnical
data show the Samo
and Bambo prospects off
the coast of Gambia hold
combined best estimate
Libya:
Production may suffer on budget delays
Libya’s crude oil
output, which is
reportedly now
more than 1 million
b/d, could suffer as
state-owned National Oil
Corp. continues to wait for
its budget from the government,
the company’s CEO
said.
“The entire sector is suffering
from these problems
because of the delay of the
Ministry of Finance in disbursing
the budgets for the
corporation this year,” CEO
Mustafa Sanalla said.
NOC receives its budget
prospective reserves of
1.1 billion barrels. The
Samo prospect in particular
holds substantial
promise, with an estimated
chance of success of
more than 50 percent.
FAR stays on as the
operator through the exploration
phase offshore
Gambia, and PETRONAS
has the right to become
the operator once development
begins. Drilling
from the Central Bank of
Libya, which is authorized
by the internationally recognized
government in
Tripoli.
Sanalla’s comments
come after meetings with
NOC subsidiary Al-Jouf
Oil Technology Co. and
Spain’s Repsol, a key partner
which operates the
300,000 b/d Sharara oil
field in the southern Murzuq
basin. Al-Jouf specializes
in oil field services for
exploration, drilling and
production.
“This slowdown will
have serious consequences
for the entire sector,
which will lead to a decline
in the level of production
again in large proportions
in addition to having a
negative impact on development
projects,” Sanalla
said.
Sanalla has complained
is expected late this year
in what will be the first
exploration campaign
for Gambia in nearly 40
years.
FAR’s permit area offshore
Gambia, which covers
1,000 square miles,
is adjacent to its flagship
SNE discovery offshore
Senegal. The initial oil
discovery offshore Senegal
was made in 2014
and met the minimum
threshold for a commercial
opportunity by the
third quarter 2016.
West African countries
have been at odds over
their maritime borders,
while officials there have
been vetting their corporate
options as the potential
for oil evolves. In October,
African Petroleum
said its subsidiaries in
Gambia filed requests for
arbitration at an international
dispute chamber to
protect two of its offshore
licenses.
about the problem before,
telling a Chatham House
conference in London in
late January that NOC received
only 50 percent of
its capital spending allocation
from Tripoli last year.
He has also previously said
the lack of money caused
the loss of 90,000 b/d.
Libya produced around
980,000 b/d in January, according
to the latest S&P
Global Platts survey of
OPEC producers. This is
well below the 1.6 million
b/d output seen before
the country’s revolution in
2011.
Production has since
fluctuated due to the lack
of finances available, as
well as disruptions from
frequent protests and security
threats. The lost revenues
from exports have
further exacerbated the
country’s cash flow problems.
Brief
Kenya:
Kenya Pipeline boosts oil-storage
capacity by 22 percent with tanks
Kenya Pipeline
Co. will spend
$52 million
building four
new tanks that will increase
its storage space
by more than a fifth, Joe
Sang, Managing Director
said.
KPC is adding capacity
to meet growing demand
for fuels in East
Africa, the continent’s
fastest growing subregion,
according to the
African Development
Bank. The additional
tanks will accommodate
increased volume
from a new pipeline being
built from the port of
Mombasa to the capital,
Nairobi that will be
completed in April Sang
said.
“The project will
enhance operational
flexibility, capacity of
product receipt and
evacuation of product
in Nairobi once the new
Mombasa-Nairobi pipeline
is operational,” he
said.
The tanks will be
built in Nairobi by May
oil
and each hold 33.4 million
liters, increasing the
state-owned company’s
capacity to 745 million
liters from 612.3 million
liters. The Nairobi-Mombasa
pipeline, known as
No. 5, will have a 20-inch
diameter and replaces an
existing 14-inch conduit.
Kenya’s strategic petroleum
reserves will triple
to 90 days once the new
tanks are commissioned
and when an old refinery
in Mombasa, which is
now being used as storage,
is refurbished, Sang
said. Increased storage
capacity will also save
fuel-importers demurrage
charges they’ve been
incurring as vessels wait
at the Mombasa port to
discharge fuel into KPC’s
system, he said.
Kenya distributes fuel
to neighboring countries
including Uganda, Rwanda,
Burundi and eastern
Democratic Republic of
Congo. KPC is currently
building an oil jetty on
Lake Victoria to improve
the reliability of its supplies.