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DMEA PiPelines DMEA
Uganda optimistic despite Tullow blow
aFriCa
A Ugandan official said last week that the country’s nascent oil industry was not doomed because of the collapse of Tullow Oil’s $900mn farm-out deal with France’s Total and China National Offshore Oil Corp. (CNOOC) for the Lake Albert project.
According to Robert Kasande, the perma- nent secretary of Uganda’s Ministry of Energy and Mineral Development, recent events are a setback but they will not derail oil development completely. For one thing, he said, the French company has not withdrawn from Uganda.
“Total has a sizeable share of the oil, so they just can’t walk away,” Kasande was quoted as say- ing by The Observer. “They have scaled down on the deployment in the field because of the col- lapse of the [deal with Tullow], but other activ- ities like the environmental and social impact assessment are continuing.”
For another, he said, Tullow is still looking for a way to accomplish the goal that it set for itself when arranging the sale of stakes to Total and CNOOC – namely, to raise additional funds. “What happened is that Tullow Oil was looking for resources to invest,” he said. “What they have done now is to go back to the market to look for these resources.”
In the meantime, he commented, Uganda’s government is looking for a way to work with the parties in the hope of ensuring that Tullow Oil makes a final investment decision (FID) by
the end of 2019, as previously agreed. “As this is happening, we are continuing to engage. We are going to have a meeting to see that we stay on course so that the FID is reached at the end of this year,” he said.
Kasande is not the first Ugandan official to voice Kampala’s hope that the FID would not be delayed. He did concede last week, though, that Tullow’s ability to launch production on sched- ule in 2022 was no longer certain. “The collapse of the agreement might have an impact on [the date of ] first oil because we had estimated that it would come three years after the final investment decision [had] been signed,” he commented.
The permanent secretary was speaking on the same day that Ugandan President Yoweri Museveni said during an industry conference in Kampala that he was in contact with all the par- ties to Tullow’s farm-out deal and expected to see a resolution soon. This statement was Museveni’s first public comment on the matter.
Meanwhile, CNOOC appears to be tak- ing a more pessimistic stance. Gao Guangcai, CNOOC’s deputy project manager for Uganda, said at the same conference that his company had few options for moving forward at this point. “We cannot handle the FID as earlier planned. It is now very difficult to negotiate with [the] gov- ernment. This is not good for the [economics] of our business,” he was quoted as saying by The Citizen.™
terminals & shiPPinG
Total comments on Nigeria LNG Train 7
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ARNAUD Breuillac, Total’s president of explo- ration and production, said last week that his company expected to make a final investment decision (FID) on the Train 7 project by the end of this year. This will allow the Nigeria LNG consortium to bring the new production train on stream in 2023, he said in New York during Total’s Investor Day.
He did not say exactly when the FID would be made. Nigeria LNG representatives have said previously that the deadline will fall on October 31, 2019.
He also highlighted the importance of the expansion scheme, noting that the construction of a seventh production train at the Bonny Island gas liquefaction plant would raise output from its current level of 22mn tonnes per year. According to previous reports, Train 7 will be able to turn out 8mn tpy of LNG.
The project will help Total achieve its goal of raising LNG’s share of its total production to 22% by 2025, Breuillac said. LNG accounted for 14% of the company’s output in 2018, he noted.
Total is one of four shareholders in Nigeria
LNG, along with Nigeria National Petroleum Corp. (NNPC), Royal Dutch Shell (UK-Nether- lands) and Eni (Italy). NNPC, with 49%, is the largest single stakeholder in the group.
Last month, the group named SCD – a con- sortium formed by Saipem (Italy), Daewoo Engineering & Construction Co. (South Korea) and Chiyoda (Japan) – as its contractor for engi- neering, procurement and construction (EPC) work on Train 7. Once the FID milestone is reached, SCD will be able to start work and wrap up construction of the new production train in four to five years.
Tony Attah, the CEO of Nigeria LNG, said recently that the consortium intended to finance the $10bn expansion project through a combi- nation of debt and equity. In an interview with Bloomberg, he said Nigeria LNG had already begun talks with commercial lenders – includ- ing major Nigerian banks such as Zenith Bank and Guaranty Trust Bank – with the intent of securing $2bn worth of loans. The group hopes to attract the remaining $8bn from foreign banks and export credit agencies, he said.™
Week 39 03•October•2019 w w w . N E W S B A S E . c o m P11