Page 15 - AfrOil Week 13 2020

AfrOil
NEWS IN BRIEF
AfrOil
Zenith Energy signs
Letter of Intent with
Arab consortium for
$2mn investment
Zenith Energy has signed a non-binding Let- ter of Intent (LOI) with an Arab consortium of strategic institutional investors focused on African development opportunities, to provide an investment of US$2mn in Zenith’s share cap- ital at a price of GBP0.025 per Zenith common share, representing a premium of 384% over the closing mid-market price of Zenith’s common shares admitted to trading on the London Stock Exchange on March 30, 2020.
Under the terms of the LOI, the Strategic Investment would be subject to a number of conditions including the completion of the publicly announced Tunisian Acquisition, as well as the successful acquisition of two oil production licenses currently being negotiated with a national oil authority in West Africa (as announced on March 12, 2020).
The Strategic Investment will also be con- ditional on the appointment of a director to Zenith’s Board.
Upon completion of the aforementioned acquisitions, it is anticipated that Zenith will have a daily production in excess of 1,500 bar- rels per day of oil.
Andrea Cattaneo, Chief Executive Officer, commented: “It is extremely encouraging to receive such interest from a new institutional investor, especially during the unprecedented circumstances the world is currently facing.
“The strategy Zenith is pursuing of expand- ing countercyclically at a time of great oppor- tunity for portfolio enrichment by acquiring large, revenue generating oil production assets is attractive to institutional investors who see material future value for a junior oil company of our size with a clearly defined set of development objectives.”
Zenith Energy, March 31 2020
POLICY
African Energy Chamber encouraged by recent gas monetisation drive in Côte d’Ivoire
Côte d’Ivoire is establishing a new energy lead- ership in West Africa, following several initia- tives taken to monetise natural gas across power
generation and public transport. In a region rich in natural gas, such initiatives are driving Côte d’Ivoire’s energy transition and paving the way for more industrialisation and jobs creation.
Since January 2020, the country has secured key financing for its major gas-to-power projects, Azito and Atinkou. The former is a brownfield expansion of the existing Azito gas-to-power sta- tion, a 460-MW plant owned and operated by Globeleq THAT uses natural gas supplied from Côte d’Ivoire’s offshore gas fields. Azito is being expanded by 253 MW and its expansion project reached financial close in January 2020. Upon completion, the Azito plant will represent about 30% of Côte d’Ivoire’s installed power generation capacity.
The expansion project relies on a debt financing package of €264mn provided by sev- eral financial institutions such as International Finance Corp. (IFC), the African Development Bank (AfDB); the West African Development Bank (BOAD); the OPEC Fund for International Development (OFID) and a pool of European Development Finance Institutions (EDFIs). Minister of Petroleum, Energy and Renewable Energies of Côte d’Ivoire, Abdourahmane Cisse, laid the foundation stone for Phase IV on March 7, 2020 and first power is expected this year.
The latter, Atinkou or Ciprel V, is a project carried out by the Eranove Group to develop a 390-MW combined cycle gas-to-power station outside of Abidjan. A 20-year concession agree- ment was signed for the project in December 2018, and it just secured a financing package of €303mn from the International Finance Cor- poration in March 2020. The full debt financ- ing package was provided by several financial institutions such as the African Development Bank (AfDB), the Dutch entrepreneurial devel- opment bank FMO, Germany’s Deutsche Inves- titions- und Entwicklungsgesellschaft (DEG), the Emerging Africa Infrastructure Fund and the OPEC Fund for International Development (OPEC Fund).
The government is also enabling the right kind of business environment for the sector to thrive. Four decrees were signed in the Council
of Ministers on March 11th, 2020, to renew the exclusive exploitation authorisation for the oil and gas fields of Foxtrot, Mahi, Manta and Marlin in Block CI-27. The decrees extend each authorisation by 10 years, with the explicit goal of “ensuring the stable and continued supply of gas to the new power plants CIPREL 5 and AZITO 4 and guarantee national power supply sufficiency.”
The African Energy Chamber is extremely encouraged by such developments, not only because they will allow Côte d’Ivoire to gen- erate cheaper and cleaner power, but because they demonstrate financial institutions’ con- tinued appetite for Africa’s gas-to-power sec- tor. According to a 2018 study by Power Africa, sub-Saharan Africa has the potential to develop 400GW of gas-to-power capacity based on its known gas reserves.
Côte d’Ivoire is one of the market with the highest potential and Power Africa estimates that over 1.2GW of gas-to-power capacity could be developed there by 2030. The ongoing expansion of Azito and construction of the new Atinkou plants have set Côte d’Ivoire on a path to fully exploit that potential and open the way for its African neighbors to follow.
But Côte d’Ivoire is not stopping there. At the end of 2018, its transport company SOTRA (Abidjan’s Transport Company) received 50 buses that run on compressed natural gas (CNG). These buses are part of the world’s lat- est vehicles running on CNG technology, and are providing additional monetisation to the country’s offshore gas reserves. Following suc- cessful trials since 2018, up to 150 CNG buses are expected to be driving on Abidjan’s roads by 2021.
“At times when hydrocarbons are being crit- icised the world over for emitting too much car- bon emissions, we need African nations to take the lead in showcasing the benefits of natural gas for the planet and for Africa’s industrialisa- tion and jobs creation efforts,” declared Mickaël Vogel, Director of Strategy at the African Energy Chamber. “Natural gas vehicles are an effective answer to environmental concerns, and so are gas-to-power plants who emit about twice as less carbon as stations run on diesel and coal. Such developments will justify increased investment into upstream gas developments and support the development of the entire value-chain, from gas production to gas monetisation.”
Côte d’Ivoire is showing the way for other African economies to monetize their gas across industries, from power to transport, fertilizers and petrochemicals. Natural gas is a resource of the future for Africa and its utilization needs to be further encouraged as a way to create jobs and support overall industrialization in the continent.
African Energy Chamber, March 25 2020
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