Page 9 - AfrOil Week 10 2023

AfrOil INVESTMENT AfrOil

Uncertainty in Kenya leads Africa Oil Corp.

to book $170.6mn impairment charge

KENYA- CANADIAN oil and gas company Africa Oil “Discussions with the interested parties
Corp. has booked a non-cash impairment have taken longer than expected and there is
charge of $170.6mn on its Kenyan assets fol- no guarantee that the company can successfully
lowing uncertainties over oil production in the conclude a farm out to new strategic partner(s)
country, Daily Nation reported. on favourable terms. As a result of this delay, the
An impairment charge is a process used by company has recognised an impairment to its
businesses to write off assets whose value drops carrying value for project Oil Kenya” Africa Oil
or is lost completely, rendering them worthless. Corp. said. ™
These charges can be used to determine the
financial health of a company.
“Africa Oil recognised a non-cash impair-
ment to its Kenyan intangible exploration assets
of $170.6mn (2021: nil) due to continuing delays
and uncertainties to the farm-out process and
the path to the final investment decision [FID]
for project Oil Kenya” Africa Oil Corp. said
when it released its fourth-quarter financial
results for 2022.
In 2021, the Canadian company and its part-
ners initiated a farm-out process for the Oil
Kenya project in the Lokichar basin. A farm-
out agreement is whereby a third party agrees
to acquire an interest in an upstream oil and gas
asset (licence or other forms of concession) from
one or more of the current owners in return for
performing certain work obligations, such as
the acquisition of seismic, the drilling of a well
or wells, the reimbursement for past costs or a
combination of any of these. The company’s Kenyan assets are in the Lokichar basin (Image: Africa Oil Corp.)

POLICY
Shell reports decline in volume of oil spills

in Niger River Delta region in 2022

NIGERIA THE volume of crude oil spilled in the Niger operational mishaps, theft and sabotage.
River Delta region of southern Nigeria due to “The decreased number of incidents in 2022
sabotage dropped significantly in 2022, Shell has correlates with a shutdown of production for
revealed. about six months because of an unprecedented
According to the company’s annual report, increase of crude oil theft from the Trans Niger
the volume of crude oil spilled fell significantly Pipeline (TNP),” Shell said.
from 3,300 tonnes in 2021 to 600 tonnes in 2022. Oil companies operating in Nigeria, espe-
The number of individual spill incidents also cially in the Delta region, face the significant
declined from 106 to 75. challenge of infrastructure sabotage from gangs
This reduction in spill incidents was ascribed hoping to steal oil to sell it on the black market.
to the six-month operational shutdown fol- Due to theft, infrastructure is often damaged,
lowing a series of attacks on the company’s causing leaks, which subsequently endanger the
infrastructure, which has long struggled with lives of workers and local communities.

Week 10 09•March•2023 www. NEWSBASE .com P9