Page 13 - AfrOil Week 14 2020

AfrOil POLICY AfrOil
 This sum will cover the manufacture of LPG- fuelled equipment for heating, cooking and other activities, automobile conversion kits and training and promotional sessions, he explained.
The country would do well to make these investments, he commented, since increased LPG consumption will help reduce greenhouse gas (GHG) emissions and combat climate change. ™
Lower oil prices lead Angola to review its 2020 budget
ANGOLA
ANGOLA’S government recently announced plans to review this year’s budget in light of changing conditions on world crude markets.
The country is heavily dependent on oil revenues, so it has been hit hard by the steep decline in prices that followed the collapse of the OPEC-plus production agreement on March 6. According to Finance Minister Vera Daves de Sousa, the budget review will take these market fluctuations and the decline in global energy demand into account.
Angolan officials drew up the budget for 2020 on the assumption that oil prices would average $55 per barrel. According to Daves de Sousa, the government is now seeking to trim that number to $35 per barrel. It is also forecast- ing that the country will produce only 1.36mn barrels per day of crude this year, down from about 1.77mn bpd in 2019.
Additionally, the finance minister said, Angola will take measures to reduce its costs. It will freeze 30% of its allocations for goods and
services and will suspend capital expenditures until the review of the annual budget is com- plete, she said.
Daves de Sousa said almost a month ago that Luanda intended to eliminate subsi- dies for motor fuels this year. She did not say exactly when existing price supports would be removed, explaining that the government had not taken this step yet because it hoped to ensure that the new policy would have an impact on consumers that “was as small as possible.”
She did assert, though, that lifting the sub- sidies would help the national oil company (NOC) Sonangol. Fuel price supports impose constraints on the company’s downstream reve- nues, she said, adding that the government also stood to benefit from the change, as it would put Sonangol in a higher tax bracket.
Angola’s government has been spending about $3.5bn per year to keep domestic fuel prices artificially low.™
Tullow Oil comments on status of African projects
REGIONAL
TULLOW Oil (UK/Ireland) has indicated that it remains optimistic about its projects in Africa despite the challenges posed by the coronavirus (COVID-19) pandemic and lower crude oil prices.
In a statement dated April 3, the company said that it was prepared to move forward with work at Simba, an oilfield located offshore Gabon.
“Tullow continues to invest in projects yield- ing good returns, and the board has agreed to progress the next phase of the Simba devel- opment in Gabon, which will pay back before the end of 2021 at $30 per barrel,” it said in its
statement.
It also noted that African projects were help-
ing to keep production costs low. “The group’s underlying operating costs remain less than $12 per barrel, with Ghana operating costs at circa $9 per barrel. With the benefit of the group’s hedging policy and production remaining on track within the group’s 70,000-80,000 bpd [barrel per day] guidance range, this results in a free cash flow breakeven oil price of circa $35 per barrel for the rest of the year,” it explained.
Tullow also pointed out that its African assets were playing a role in efforts to reduce overall capital expenditures.
PROJECTS & COMPANIES
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