Page 7 - FSUOGM Week 43 2019

FSUOGM COMMENTARY FSUOGM
445,000 barrels per day (bpd). Alekperov told journalists after the discussions that his com- pany had signed an MoU with NNPC on the downstream project.
Aramco alliance
Meanwhile, Lukoil appears to have even wider ambitions for Africa.
At the summit, Alekperov said that his firm might team up with Saudi Arabia’s NOC to carry out projects in Africa and elsewhere. He did not identify any specific opportunities, say- ing that discussions on the subject were still at an early phase. “We are constantly discussing joint opportunities with them [Saudi Aramco], including their interest in third countries, in Africa, but this is still at the stage of studying and talks,” he commented.
All of the schemes under scrutiny meet Lukoil’s criteria for commercial viability, he added. The company’s budget allows for the consideration of foreign projects that appear to be economic as long as world oil prices remain at $60 per barrel or below, he explained.
Alekperov also spoke in non-specific terms about the possibility of widening his firm’s foot- print in Africa in other ways. “These are, as a rule, offshore projects, plus a number of African countries [have] asked us to study and give pos- sible comments on downstream,” he was quoted as saying by S&P Global Platts.
Morocco
Separately, Russia’s state-controlled development bank, known as VEB, struck a deal with MYA Energy last week on the construction of a new oil refinery in northern Morocco on the sidelines of the summit.
According to Morocco’s state news agency MAP, this agreement lays the groundwork for the construction of a refinery in the northern part of the country for about €2bn ($2.2bn). The plant will have an initial throughput capacity of around 100,000 bpd and may be expanded later to double its design capacity to 200,000 bpd.
The new refinery would replace Morocco’s
only existing facility – the Samir plant, which has been idle since 2015. (The refinery went offline because it could not cover overdue tax bills or pay off its debts.)
MAP did not offer any specific details about the scope of MYA Energy’s involvement in the refinery construction project. The Moroccan company appears to focus primarily on solar energy and not on downstream crude oil pro- cessing, though it did sign a contract with US-based GE last year on the establishment of facilities that supported the power generation requirements of Nigeria’s Port Harcourt refinery.
Implications
The deals described above are notable for at least two reasons.
First, most of the documents signed in Sochi appear to be fairly non-specific. They are not contracts or agreements; they are memoranda that hold relatively little in the way of concrete investment commitments. As such, they do not necessarily indicate that African oil and gas producers anticipate a huge influx of Russian investment. Rather, they show that both sides are interested in co-operation and willing to discuss the matter further.
Secondly, Lukoil appears to have played the most active role with respect to pursuing African oil and gas opportunities. Since the company is, as noted above, Russia’s largest private oil oper- ator, this is probably significant. It could be an indication that the Russian government is not ready yet to throw its full weight behind African oil and gas initiatives.
At the same time, state-run Russian organ- isations were hardly prominent. VEB’s refinery deal with Morocco was an obvious exception, and Rosgeo did sign an MoU with Equatorial Guinea, while also finalising memoranda with South Sudan and Rwanda on subsurface mineral exploration. Even so, the Kremlin does not seem to be looking for client states in Africa; instead, it is taking steps towards clearing a path for private sector investments by Russian companies such as Lukoil. ™
Russian President Vladimir Putin (R) meets with a South African delegation in Sochi
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