Page 9 - AfrOil Week 27

AfrOil PERfoRmanCE AfrOil
Arzew explosion unlikely to hit Algerian flows
alGERia
AN explosion was reported at Sonatrach’s GL1Z liquefaction unit on July 1, the Algerian state- owned company announced. e company said the Mutual Assistance Plan (MAP) had been triggered for the plant at Arzew – the country’s oldest – and it had rapidly regained control of the situation.
No one died as a result of the explosion, but two people were injured and taken to hospital in Oran. Sonatrach said the incident would not have an impact on GL1Z’s production capacity.
Images and video on social media show a major re at the GL1Z facility.
e plant was commissioned in 1978 and, according to the International Group of LNG Importers (GIIGNL), has capacity of 7.9mn tonnes per year (tpy), from six trains. It also has three tanks, with storage capacity of 300,000 cubic metres.
ere are two other liquefaction sites at Arzew, with total capacity of 12.9mn tpy, and another site at Arzew, with 4.5mn tpy. e country exported 10.1mn tpy of LNG in 2018, down from the 12.34mn tpy from the previous year – substantially below Algeria’s nameplate capacity. Production has been declining for some time, in 2009, output was 15.68mn tpy. As such, problems at GL1Z are unlikely to have an impact on exports.
In 2004, an explosion at Skikda’s LNG port killed around 30 people and injured another 70. At this point, Algeria was the second largest LNG exporter in the world.
A 2016 report for the Oxford Institute for Energy Studies (OIES), by Ali Aissaoui, called for Sonatrach to scrap the GL1Z and GL2Z plants. Operating these plants at low levels increases the unit cost of production, reducing the Algerian state’s share of revenues. ™
Victoria falls out with Foo on royalties
CamERoon
PRODUCTION in Cameroon for Victoria Oil & Gas has fallen marginally in the second quarter, while the company faces a legal dispute from a related party over revenue sharing. In a statement on July 5, production was put at 273,600 cm per day in the second quarter, down from 286,000 cm per day. Victoria holds its stake in the Logbaba elds, in Douala, via Gaz du Cameroun (GDC).
Production is up year on year, though, from 93,500 cm per day. GDC struggled in 2018 as ENEO, the Cameroon energy company, opted not to renew a gas o ake deal. ENEO had complained of business uncertainties, such as tari s for end users and payment arrears from the government.
By the end of 2018, ENEO appeared to be feeling more con dent and signed a three-year contract for supplies from Logbaba.
Victoria said it had received a payment from ENEO for its February 2019 invoice of $800,000 net, with $2.6mn net outstanding, not including the amounts for June.
e company said it expected ENEO pay- ments would be forthcoming with improved regularity. A statement in late June from Victo- ria said ENEO had been consuming 144,000- 175,600 cm per day on average over the rst half of this year. GDC has said it intends to become an “integral part of the growth” in the supply and demand of power to the network in Douala.
Alongside the update on its production,
Victoria reported that Cameroon holdings has begun legal proceedings against both it and GDC. Cameroon holdings is 65% owned by Logbaba Projects, which is 67% owned by hJ Resources – a company owned by a trust belonging to Kevin Foo, Victoria’s former chairman.
Victoria ceased payments due to Cameroon holdings in January of this year. In May, the company explained that it was reviewing the documents regarding the process under which royalties were paid. No further payments will be made until this process is completed.
Victoria’s now chairman, Roger Kennedy, included in the May statement the royalty agree- ment with Cameroon holdings – and therefore Foo – as being one of the company’s historic mis- takes. e royalty agreement dates back to July 2009, which provided a payment on production from Logbaba, averaging 6.8% of revenues over a 20-year span. In exchange, Cameroon holdings agreed to provide a drilling rig and crew, worth from $4mn to $10mn, in addition to advisory services.
Kennedy said the deal with the Foo-linked unit had paid out 15% of all revenue produced at Logbaba to third parties. In the six months to June 2018, royalties of $800,000 were paid to Cameroon holdings, of which $300,000 owed back to Victoria.™
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