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AfricaAFRICA NEWSKenyaKenyan News

Rubis takes Sh4.7bn bond as payment for fuel subsidy

by Editor
written by Editor

Oil marketer Rubis Energy Kenya converted €30 million (Sh4.7 billion) worth of pending fuel subsidy dues into government bonds by the end of June as part of the State’s deal with oil marketers to settle the payment delays, new disclosures show.

The firm was among the oil marketers who agreed to settle Sh45 billion worth of pending bills via a swap into a three-year Treasury bond.

Read: Deported Rubis Kenya CEO returns after Ruto’s victory

Disclosures by the Ministry of Energy prior to the swap deal indicated that Rubis was owed Sh4 billion, while fellow multinationals Vivo and TotalEnergies were owed Sh13.8 billion and Sh8.2 billion respectively.

Oryx was owed Sh3.5 billion and Ola Sh2.3 billion while arrears to other oil marketers were at the time estimated at Sh14.4 billion.

“The increase in loans to third parties of €30 million (Sh4.7 billion) corresponds to the swap of receivables on the Kenyan government for three-year Kenyan treasury bills [bond] in respect of the payment of the subsidy due on petroleum products,” Rubis’ French parent Rubis Energie said in its financial report for the half year to June 2023.

The State issued a tap sale of a three-year paper in late June to allow the oil marketers to convert their debt, raising Sh18.6 billion, at a rate of 14.23 percent.

The second tranche of the swap was pushed into this fiscal year. Although the Treasury is yet to disclose the particular bond for the second swap, it did issue a reopened 10-year bond in July with a maturity of 3.2 years, raising Sh15.7 billion.

The government rolled out the fuel price stabilisation plan in April 2021 to cushion consumers against high pump prices during a period when the economy was still affected by the measures put in place to fight the Covid-19 pandemic.https://datawrapper.dwcdn.net/umqIb/2/

The subsidy was stopped by the Kenya Kwanza administration immediately after it took office in September 2022, terming it unsustainable.

After paying the oil marketers Sh124 billion under the plan, the State was left with arrears of Sh45 billion, which the bond was meant to address.

Those taking the bonds would then have the option of holding onto it until its maturity in 2026, and earning annual interest in the process.

They could also opt to sell their units in the secondary market at the Nairobi Securities Exchange (NSE), an option which would see them unlock working capital immediately.

Short-term loans

Sellers would, however, risk a haircut due to the rise in yields in the secondary market, which meant lower prices for those selling bonds.

Read: Rubis reaps from fuel supply crisis

Oil firms tend to be cash-hungry due to the high volumes of product they move every month. The delays in compensation, therefore, saw them take up short-term loans to fund their working capital needs.

Total Energies, for example, disclosed it took Sh14.5 billion in short-term loans in the year ended December as a result of the compensation delays.

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Eastern AfricaEconomyOil & Gas

Total Energies Kenya H1 Profit Declines by 55pc On High Cost Of Crude Oil and Weak Shilling

by Radarr Africa
written by Radarr Africa

 Total Energies Kenya has reported a 55 per cent drop in earnings for the half year ended June 30 attributed to the high cost of crude oil globally and a weak shilling.

The oil marketer posted a Sh795.5million net profit in the period down from Sh1.7 billion posted in the same period in 2021. The weak shrilling resulted in an increase in foreign exchange loss for the company to Sh48 million compared to Sh2.8 million in 2021.

The Kenya shilling traded at 118.53 to the dollar in June, compared to 113.58 in January 2022 and 107.82 in June last year. Crude oil prices on the other hand rose to an average of $109.68 (Sh13,151) in July from $82.03 (Sh9,844) per barrel in January and $63.35 (Sh7,602) in June last year. With the increased cost of crude, the government has been subsiding fuel prices since April last year whereby oil marketers forego their margins at the pump to keep prices low.

Even so, the process has been marked with delays and has seen marketers have to look for alternative financing to meet daily expenses. With the absence of speedy refunds from the government, Total said it had to borrow more over the six months to fund its operations, resulting in a spike in its finance costs that rose to Sh149 million from Sh6 million in  H1 2021.

ALSO READ: Food and fuel prices surge as Inflation rate hits 8.5pc in Kenya

“During the period, international oil and gas prices, while being volatile, have continued to rise due to market disruptions linked to geopolitical conflicts. These have exacerbated the upward trend of fuel prices as well as working capital requirements of the company,” said the firm’s MD Eric Fanchini in a statement.

Despite the dip in profit, net sales grew by 34 per cent in the period to Sh46.2billion from Sh34.3billion majorly attributed to sales performance and the increased fuel prices.

Fuel prices have remained unchanged in the country for the past two months with a litre of Petrol retailing at Sh159.12, Kerosene at Sh127.9 4, and diesel at Sh140.

Owing to the regulated pricing of petroleum products, oil marketers cannot adjust prices immediately they start feeling the heat from higher global prices as they waiting for the Energy and Petroleum Regulatory Authority(EPRA) to publish maximum prices every month.

The Company’s cash flow position also remained strong given the effective management of working capital The firm’s board of directors did not recommend the payment of an interim dividend for the period.

SOURCE: Capital business

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BusinessEnergyOil & GasSouthern Africa

Total Energies expected to confirm gas output in South Africa

by Radarr Africa
written by Radarr Africa

South Africa expects Total Energies to submit a production plan within weeks to utilize a prolific offshore gas discovery that will form a key part of increasing investment in the sector.

Petroleum Agency South Africa is “very confident” that the French major will finish talks with state-owned PetroSA and complete the required output plan to retain the license, which would otherwise expire on September 6, CEO Phindile Masangane said in an interview. A Total Energies spokeswoman declined to comment.

South Africa lacks commercial oil and gas production, leaving it reliant on imports of the fuel. Its search for domestic resources has encountered unprecedented opposition in recent months by communities and activists who have successfully blocked exploration activity by companies including Shell.   

“As the Petroleum Agency, we acknowledge that South Africa’s upstream oil and gas industry has become litigious,” Masangane said. Steps are being taken to enhance the guidelines around local consultation, which have been criticized by groups in court, while the regulator looks to increase activity, she said. 

ALSO READ: Total Energies launches sale of stake in Nigerian joint venture.

Production from the newly-discovered Block 11B/12B could revive PetroSA’s 45 000-barrel-a-day Mossel Bay gas-to-liquids plant, which has run out of feedstock. South Africa also plans to use the fuel to transition away from coal, which is used to generate nearly all of the nation’s electricity. 

If Total Energies meets the requirements, obtains environmental authorization and starts the development – located in an area regarded as one of the toughest ocean environments due to the Agulhas current – output could potentially begin as early as 2026, Masangane said.  

Fracking

South Africa has also returned its attention to the Karoo, a gas-rich, semi-desert region of the country where dozens of wells were planned almost a decade ago by Shell and other explorers before environmental concerns and legal uncertainty saw activity dwindle. 

Regulations were published for public comment last month by the environment minister around hydraulic fracking, a drilling technique that raised concerns over water use in the Karoo. The government will conduct seismic activity by the end of the year to determine which blocks to license after the rules are finalized, according to Masangane. Groundwater and geological studies are also being conducted in the biodiversity-rich areas, she said.

South Africa’s next oil and gas well is expected to start in September. Eco Atlantic Oil & Gas Ltd. and its partners have hired a rig that’s scheduled to arrive offshore South Africa and start an exploration in Block 2B. Processes leading to the activity were followed properly, according to Masangane. “We’re satisfied and not anticipating a legal battle.”

Source: News 24

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BusinessEnergySouth Africa

Sasol to restarts Natref refinery ramping up output

by Radarr Africa
written by Radarr Africa

Sasol, South Africa’s biggest fuel producer, restarted the Natref refinery it owns with TotalEnergies after delayed oil deliveries last month resulted in a shutdown.

The disruption caused Sasol to declare a force majeure on petroleum products, which remains in effect. The 108,000 barrel-a-day plant is now “online and production ramp-up is in progress”, the company said in response to emailed questions. 

Natref’s shutdown also meant the whole of South Africa’s oil-refinery fleet was out of action as a series of other facilities suspended production over the past two years. The plants have faced costly upgrades to meet pending cleaner-fuel regulations.

South Africa has delayed the implementation of those rules from next year to 2027.

Sasol welcomed the deadline extension by the energy department as the company continues “to evaluate options” for the Natref plant. 

Source: Fin 24

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BusinessEnergyOil & GasSouthern Africa

Sasol restarts production at Natref by end of July

by Radarr Africa
written by Radarr Africa

JSE-listed chemicals and energy giant Sasol says it expects production of petroleum products at its Natref refinery – which it owns with Total Energies SE – to resume by the end of July.

The update comes after South Africa’s largest fuel producer declared a force majeure on the supply of petroleum products from Natref on 15 July, following delivery delays of crude oil to the refinery.

“Start-up is expected towards the end of July 2022. We currently have plans in place to maintain supply to customers and minimise any potential disruptions,” the company says The assurance of a return to production at the Natref refinery will make it the only crude oil refinery in operation in SA, as the country has in the last two years seen many of its refineries either shutdown or converted for alternative use.

Sasol’s synthetic fuels refinery in Secunda has however remained in operation.

Sapref – which has been the country’s largest refiner – announced plans to halt operations at its Durban facility indefinitely from March 2022 because it had reached the end of its lifespan.

While in 2021, Engen announced its decision to shut down its Durban refinery and instead repurpose the facility into an import terminal and product storage facility come the end of 2023.

Glencore’s Astron refinery – one of the country’s smaller refineries – also saw a suspension of operations in 2021, spanning for almost two years.  However, earlier this year the group revealed plans to restore the refineries operation in the second half of 2022.

Sasol sales performance…

Also releasing a production and sales metrics update on Monday, for the year ended 30 June 2022, Sasol noted that a favourable macroeconomic environment boosted by elevated crude oil prices, refining margins and chemicals prices supported its financial performance during the period.

“This performance was further underpinned by strong cost and capital discipline as we continue to execute our Sasol 2.0 transformation programme.”

Despite the group seeing lower volumes in its mining and Secunda operations, the impact of this on its energy business was offset by the recovery in fuels demand and higher prices, according to Sasol.

Consequently, the group says this segment of its business has stabilized and seen an improvement in performance in the second half. “The combination of slightly improved productivity at our own mining operations and higher external purchases resulted in restoration of our coal stockpile to above market guidance of 1,3 – 1,5 million tons.”

“[The] Secunda operations delivered higher run rates in H2 FY22, supported by higher coal availability and natural gas allocation diverted from our Sasolburg operations.”

Slightly better placed, its chemicals business saw a 22% rise in external sales revenue, which Sasol says was boosted by higher average sales prices during the period.

In addition, higher brent crude oil and feedstock prices related to the ongoing invasion of Ukraine by Russia as well as continuing global supply chain challenges, have seen the average basket price rise by 39% in the third quarter of FY 2022 and by 13% in the fourth quarter.

Listen: Brent should trade back to $80 in time 

However, Sasol says the abovementioned positive performance was offset by the lower sales volumes reported as a result of its 2021 divestment in the US-base chemicals business as well as lower production from its South African operations and export delays of certain chemicals following the KwaZulu-Natal floods in the second half of the year.

“After adjusting for the Q3 FY22 disposal of the European Wax Business, our chemicals sales volumes for FY22 were 10% lower than FY21 and below previous market guidance of 4 – 8% lower, mainly due to the aforementioned KZN flooding impacts, lower demand and supply chain delays following the ongoing conflict in the Ukraine and Covid-19 lockdowns in China.”

“In addition, [the] chemicals America [unit] experienced unplanned outages at the Louisiana Integrated Polyethylene JV LLC (LIP) Cracker in Q4 FY22, contributing to the lower volumes,” Sasol says.

Source: Moneyweb

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South AfricaSpotlightTechnologyTrending Today

Sasol Ltd to restart refinery by end July

by Radarr Africa
written by Radarr Africa

Sasol Ltd, South African fuel and petrochemical company Sasol Ltd said on sunday that it will restart its refinery by the end of July after the company declared force majeure at its second biggest refinery on Friday due to a lack of crude oil.

Natref refinery’s shutdown located around 100 kilometers from Johannesburg and has sparked concerns of petrol and diesel shortages in the country where 60% of fuel products are imported. Sasol, however it said it did not expect any shortages.

Sasol, the only producer of petroleum products in South Africa through its two refineries – Secunda with output of around 150,000 barrels per day (bpd) and Natref at around 108,000 bpd.

“The crude tanker arrived in Durban and cargo dispatches are underway. Natref should start-up to run at maximum production capability by end July 2022,” Sasol said in the statement.

“We do not anticipate any fuel supply shortages to fuel stations, including our own.” The company, which owns the Natref refinery with a subsidiary of France’s Total Energies (TTEF.PA) said.

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AfricaBusinessEnergyOil & GasSouthern Africa

TotalEnergies wins stake in $29bn Qatar gas project to boost exports

by Radarr Africa
written by Radarr Africa

TotalEnergies SE became the first foreign company to win a stake in a multi-billion dollar project to boost Qatar’s gas exports.

Qatar is expanding production of liquefied natural gas amid a worldwide energy crunch. Global demand for the fuel is soaring as European nations race to wean themselves off Russian gas supplies in the wake of Moscow’s attack on Ukraine.

TotalEnergies will get a 6.25% equity stake in the first phase of the plan, state producer Qatar Energy said on Sunday. Known as North Field East, it will cost almost $29 billion and include the construction of four LNG liquefaction units, or trains. It will increase Qatar’s annual capacity to 110 million tons by 2026 from 77 million. The French firm will own 25% of a joint venture with Qatar Energy, with the venture in turn holding 25% of North Field East.

Another partner will be announced later this week, Saad al Kaabi, Qatar’s energy minister and head of Qatar Energy, told reporters in Doha. Exxon Mobil Corp. and ConocoPhillips are also poised to win stakes, Bloomberg reported last week, while Shell Plc put in a bid.

Those three companies and TotalEnergies all have stakes in Qatar’s existing production facilities.

“Suddenly, because of the tragic events in Europe, everybody is rushing to get LNG,” TotalEnergies Chief Executive Officer Patrick Pouyanne said. “Appetite is strong.”

The roughly three-year negotiations went on “a little long, to be honest,” he said, without disclosing how much TotalEnergies will invest. The energy minister and his team were “very good defenders of Qatari interests in this process.”

Kaabi previously said Qatar Energy might look for investments to fund around 30% of the expansion. The country received bids for double the equity on offer, he said on Sunday. No company will get a stake larger than TotalEnergies, he said.

Pouyanne said the deal would strengthen Europe’s energy security and aid the continent’s long-term goal of using less coal and oil. While gas emits carbon when burned and methane leaks are common in the industry, it’s a cleaner fossil fuel.

“It is good news for the fight against climate change as gas and LNG are key to support the energy transition,” the CEO said.

Drilling started

Qatar Energy has started drilling development wells for the North Field East project. It chose Chiyoda Corp. of Japan and London-based TechnipFMC Plc to do the main construction work.

Kaabi, the energy minister, said Qatar would announce partners for a separate expansion, known as North Field South, by the end of the year. That, to build an additional two trains, will increase the Persian Gulf state’s LNG capacity to 126 million tons a year, and won’t be finished until 2027.

Most of Qatar’s gas is contained in the North Field, an offshore behemoth extending into Iranian waters. The shallow waters and plentiful reserves mean Qatar can pump gas more cheaply than just about any other country.

“It’s easy to produce,” Pouyanne said.

Qatar is considering further expansion projects due to the sheer demand for LNG in the wake of the Ukrainian conflict, Bloomberg has reported.

Still, the multi-year length of the plans mean European buyers will have to look elsewhere for alternatives to Russian gas in the meantime. Most of Qatar’s LNG is shipped to Asia under long-term contracts that Doha has said it won’t cancel to help Europe.

European officials, including Germany’s Economy Minister Robert Habeck, have visited Qatar in recent months in the hope of securing more supply commitments.

The war in Ukraine prompted Germany to push ahead with a previously shelved plan to construct two LNG import facilities at Brunsbuttel and Wilhelmshaven. Qatar is ready to invest in those terminals, Kaabi said, without giving further details.

US competition

North Field East is Qatar’s first gas project since it ended a self-imposed ban on further development, which lasted 12 years. While Qatari LNG production stayed flat, flows from the US and Australia surged as new plants started operating. The three compete to be the world’s biggest LNG exporter, though the US is likely to build a significant lead this year, according to Goldman Sachs and research firm Kpler.

Gas prices rose to record levels in Europe and Asia soon after Russia’s invasion. They’ve since fallen but remain far higher than a year ago.

“The tightness in the LNG market is now,” Kaabi said. “But with North Field East and North Field South we should have a lot of extra volumes. A lot of buyers are talking to us, whether it’s in Europe or Asia.”

ALSO READ: Total Energies launches sale of stake in Nigerian joint venture

Qatar will probably increase the proportion of its gas sales to Europe to 40%-50% once the extra gas is flowing, he said.

Pouyanne said North Field East would help offset revenue lost by TotalEnergies’ retreat from Russia, where it’s stopped funding the major Arctic LNG 2 project.

Source: Moneyweb

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BusinessEnergyINVESTMENTOil & GasSouth Africa

Karpowership queries SA government over project delays

by Radarr Africa
written by Radarr Africa

According to Karpowership, the world’s biggest supplier of floating gas-fired power plants, some South African government agencies have proved difficult to walk with, stalling its projects, creating an inconducive and unattractive investment environment making

On March last year, The Turkish company won the right to supply South Africa with 1,220 megawatts of electricity or more than 60% of a so-called emergency tender designed to ease intermittent power outages.

At the time the 20-year deal was valued at R218 billion.

it’s yet to get environmental approvals or permission to use port space, faces and indemnity demand from Eskom and is embroiled in court cases with environmental activists and a rival while some other bidders are due to conclude power-purchase agreements with Eskom and the energy department.

On Thursday, Karpowership has been told it won’t be signing at this stage.

There are “notable examples of authorities whose conduct isn’t aligned with the purpose” of the power program, Karpowership said, citing a lack of transparency and urgency.

“We expect the government to work together cohesively to unblock the few remaining bottlenecks preventing the delivery of our projects,” it said in a statement sent to Bloomberg.

ALSO READ: South Africa needs R4 trillion to transition away from coal

Its projects will entail 20 billion rand of investment and create several hundred jobs, the company said, adding it has already spent 400 million rand on applications and established an office in Johannesburg. 

Karpowership listed the obstacles as follows: 

  • The failure by the Department of Environmental Affairs to rule on a July 13 appeal filed against its June 23 refusal to grant Karpowership environmental clearance. Karpowership said the appeal process should have legally been completed within 120 days but it has been told a decision can’t be expected before July 1.
  • The departments of transport and public enterprises have yet to make a decision on whether the company’s ships will be allowed to moor at the nation’s ports. An application was made on May 12, 2021.
  • Eskom on March 23 demanded that Karpowership sign a “wide-reaching, open-ended indemnity agreement” that “potentially renders the projects unbankable.” Karpowership hasn’t received a response to a proposal it submitted to Eskom. The other bidders weren’t asked to do the same.
  • A High Court decision allowing DNG Power Holdings Ltd. to appeal a ruling dismissing its allegations that Karpowership’s contract was tainted by corruption.
  • Separate court cases filed by the organization Undoing Tax Abuse and The Green Connection against the National Energy Regulator of South Africa, or Nersa, for granting Karpowership generation permits on the last day they were legally permitted to oppose the award.

Eskom and the departments of environmental affairs, transport and public enterprises didn’t immediately respond to requests for comment.

Stefanie Fick, head of legal affairs at Outa, and Liziwe McDaid, a board member at The Green Connection, denied coordinating their lawsuits, saying they had weighed whether it was worth the expense of filing cases.

Karpowership said it worked well with the Department of Mineral Resources and Energy, Nersa and Transnet National Ports Authority.

Activists allege that the use of natural gas, especially over 20 years, will undermine South Africa’s aim of cutting greenhouse-gas emissions. they went further to state that Karpowership’s plants will damage the environment and affect fishing.

There are a few other companies that won the emergency power supply contracts include and they include TotalEnergies SE, Electricite de France SA, Scatec ASA and Acwa Power Co.

The project TotalEnergies is backing also uses liquefied natural gas. 

Karpowership said it had won all necessary approvals and will start delivering 563 megawatts of power in Brazil in July, 10 months after winning a similar bid. it also said it received no reply from the government to its offer to have senior management, make presentations explaining its projects, which were initially supposed to begin producing power in August.

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EnergyOil & GasPress ReleasesTrending TodayWestern Africa

Total Energies launches sale of stake in Nigerian joint venture

by Radarr Africa
written by Radarr Africa

French oil major TotalEnergies has launched a sale of its minority stake in a Nigerian oil joint venture.

A document tendering for interest showed that the oil firm appointed Canada’s Scotiabank to lead the sale as the financial adviser to the transaction, Reuters reported Wednesday.

According to the paper, the French oil major will keep OMLs (oil mining licences) 23 and 28 and its interest in the associated gas pipeline network that feeds Nigeria LNG.

TotalEnergies had in April announced it will put up for sale its minority stake in a Nigerian oil joint venture.

The company said it was selling its interest in 13 onshore fields and 3 in shallow water, producing over 20,000 barrels of oil equivalent per day.

The sale includes infrastructure such as 3,500 km of pipelines connecting to 2 key crude export terminals, Bonny and Forcados.

It said it wants to focus on deep-water fields away from the difficulties of operating in close proximity with local communities.

“Disruption of local communities are sources of great concern in the country,” Patrick Pouyanne, TotalEnergies chief executive officer was quoted by Bloomberg as saying on a conference call in April.

TotalEnergies is the latest multinational to give up its onshore asset for deep-water fields.

Mele Kyari, the group managing director, Nigerian National Petroleum Company (NNPC) Limited had in February said International oil companies are leaving Nigeria and shifting their portfolios to where they can add value to the journey towards carbon net-zero commitment.

Last year, Royal Dutch Shell announced its plan to offload onshore Nigerian oil assets in a bid to move to cleaner energy.

It said it was discussing with the federal government to sell its onshore oil assets in the country.

Also, Seplat Energy in February announced it had entered into a contract with ExxonMobil, to buy Mobil Producing Nigeria Unlimited’s entire oil assets in Nigeria. That includes all of Exxon’s entire shallow water assets in the Niger Delta.

TotalEnergies is a multinational energy company operating in more than 130 countries. For over 50 years, the company has remained a leader in the downstream sector of the Nigerian oil and gas industry.

Source: Premium Times

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