Wednesday, October 30, 2013

Ghana’s Sole Oil Refinery Resumes After Third Closure This Year

By Ekow Dontoh  

Tema Oil Refinery Ltd., Ghana’s only crude-processing facility, restarted after it secured funds for Nigerian crude, General Transport, Petroleum and Chemical Workers Union Chairman Emmanuel Offoh said.

The state-owned refinery “resumed operations on Oct. 15 after management secured some letters of credit and bought a consignment of 600,000 barrels of crude from Nigeria,” Offoh said by phone today from Tema, 30 kilometers (19 miles) east of Accra, the capital. “At current production of 28,000 barrels a day, we can continue to refine for three weeks,” he said.

The 45,000 barrel-a-day facility has closed three times since reopening in April. The plant has struggled since 2009 to replace aging machinery and to get financing, tightening supplies of fuel in West Africa’s second-largest economy. Ghana imports most of its fuel.
The refinery is looking for private investors as “government alone cannot finance the refinery’s activities, Managing Director Ato Ampiah said on Oct. 3.

Ampiah and Aba Lokko, the company’s corporate and public affairs manager, didn’t immediately respond to a call and e-mail seeking comment.

To contact the reporter on this story: Ekow Dontoh in Accra at
To contact the editor responsible for this story: Antony Sguazzin at

Tuesday, October 29, 2013

Owners hoping for December rate hike

If history repeats itself, owners can expect to see a gradual increase in rates through December.
This upward movement can be attributed to charterers securing cargoes ahead of the holidays, which in several countries marks a subsiding of trading activity. Further support stems from a seasonal hike of heating fuels’ production ahead of peak winter demand, McQuilling services said.
Looking at activity last year, on Arabian Gulf to the US Gulf route, rates climbed by 23% between the start of September and December to WS 29.5. For cargoes moving from the Arabian Gulf to the East, rates climbed by a slightly more impressive 29% to WS 47. In general, rates on these routes increased by roughly 20% during this time period since 2009.
As we enter the final quarter of 2013, VLCC owners might be feeling confident that rates will follow history’s pattern. Since the start of September, rates have climbed by about 20%. Although the impact of this is unlikely to be observed on owner’s balance sheets until early 2014, the trend is a welcome change to this year’s weak activity.
Owners are doing their part to drive this momentum by monitoring terminal delays, weather conditions and the timing of voyages. Through this, they hope to nudge history in the right direction and lay the foundation for a more prosperous 2014.
This development has been supported by increasing evidence that the global economy could be finding its footing. Employment levels have been increasing in the US, as have purchasing manager indices, a gauge of manufacturing activity, in various countries.
Apart from the US putting its own house in order, further support will come from an increase in global refinery throughput rates.
According to the International Energy Agency (IEA) in Q3, global refinery throughputs are estimated to be 77.3 mill barrels per day. This is roughly 1.2 mill barrels per day higher than a year ago.
Although Q4 often represents a seasonal contraction in throughput rates, the IEA still places it at 900,000 barrels per day higher than 2012 figures.
Accordingly, JBC Energy also forecasts rising oil demand in most regions. The most significant contributions of growth will continue to stem from non-OECD countries. There also remains upward potential for European nations, as the region slowly rebalances its financial landscape.
Even as these somewhat favourable market conditions materialise, the availability of tonnage remains a tangible threat to any year-end rebound. In addition, the ‘invisible tonnage surplus’ created by sailing at slower speeds, lurks just below the surface.
Owners have attempted to reduce vessel availability in the Arabian Gulf throughout the year, by ballasting to West Africa. However, this move results in boosting competition for cargoes in West Africa, primarily with Suezmaxes and an eventual return to the Arabian Gulf in search of higher rates.
This repositioning will seemingly continue to have a limited impact providing only temporary relief, as the lasting solution, the permanent removal of larger tonnage, has been slow in 2013.
Year-to-date our data shows that only nine VLCCs have left the trading fleet, although market players seem to be moving in the right direction, as three demolitions were recorded in September. This, combined with the delivery of 24 vessels, represents a net fleet growth of 15 VLCCs year-to-date.
As 2013 starts drawing to a close, it appears that history is on track to repeat itself and VLCC rates are climbing. Global oil demand is projected to be nearly 1.7 mill barrels per day higher in the second half of this year and increase by 1 mill barrels per day next year, McQuilling concluded.

Saturday, October 26, 2013

Battle of the Billionaires Erupts Over Keystone Pipeline

By Lawrence Delevingne
Billionaire investors love fighting with each other over the markets, safely out of public view in sleek Greenwich or Manhattan offices. But a new political fight is pushing them into a high-profile debate over the future of energy consumption in the U.S. and they are literally taking to the streets of Washington to make their views heard.

The brawl is over an upcoming decision by the Obama administration about whether energy company TransCanada should be allowed to build a massive oil pipeline, called Keystone XL, that will ship oil sands from Northern Canada to refineries in the Gulf of Mexico. The State Department -- in charge because the project would cross an international border -- is still studying the issue and its environmental impact. A decision could come next year.

The two sides couldn't be more convinced of their positions. Former Vice President Al Gore recently called the controversial project an "atrocity." House Speaker John Boehner has said President Barack Obama should "stand up for middle-class jobs and energy security and approve the Keystone pipeline."

Likewise, prominent investors have planted themselves on opposite sides of the issue.

Two hedge fund managers are ardently and vocally against the pipeline. One is Jeremy Grantham, the relatively low-profile chairman of $108 billion money manager GMO.

In February, he was nearly arrested at a White House protest organized by the Sierra Club, for whom he is a lead supporter. His daughter Isabel was among 48 people arrested for handcuffing themselves to the White House fence, according to media reports.

A spokesman for Grantham declined to comment.

The other anti-pipeline hedge funder is Tom Steyer, the billionaire founder of $18 billion Farallon Capital Management. Steyer retired last year to devote himself to political causes; Keystone has been his top priority.

A prominent Democratic fundraiser and environmentalist, Steyer has personally lobbied President Obama and created and appeared in numerous anti-Keystone ads through his group Nextgen Climate Action. Like Grantham, he also protested in Washington at an anti-Keystone rally earlier this year.

"Climate change is the defining issue of our generation. We have a choice between investing in dirty tar sands that will worsen our climate crisis or cleaner energy that reduces our dependence on foreign fuels, brings new jobs in growing industries and preserves the planet for future generations," Steyer told
More from CNBC:
T.Boone Pickens, chairman of energy hedge fund firm BP Capital, says Steyer and other supporters are misguided because Keystone would reduce American dependence on oil from unsavory regimes.

"The Keystone pipeline, of course that's foreign also, but it's friendly foreign. The stuff coming out of the Mideast, I don't consider to be friendly," Pickens told

"So I'll take friendly every time over unfriendly. But I don't have to have any Army, Navy or Marines to protect the Keystone pipeline. So you've got to be a sap not to take that oil from them. They have as much oil in Northern Alberta as the Saudis have."
Pickens dismissed environmental concerns from the pipeline itself: "It's not an environmental issue. There are pipelines all over the United States. They didn't want to cross Nebraska and there are 51 pipelines across Nebraska. So the pipeline can be laid out."

Steyer disagrees.

"Let's be clear: The oil from the Keystone XL pipeline will go through the United States, not to the United States. This is an export pipeline that will mean cheaper oil for our foreign competitors," Steyer told when asked about Picken's comments.

"Instead, we should be thinking differently about energy. By investing in clean energy, we can truly achieve energy independence, while creating jobs and addressing the climate crisis."

Another apparent proponent is Stan Druckenmiller, the retired founder of vaunted hedge fund firm Duquesne Capital Management. Druckenmiller is listed as a "major contributor" to, a political advocacy group that has run ads in support of the pipeline. was founded by Facebook Chief Executive Mark Zuckerberg and also has support from top technology investors Mary Meeker of Kleiner Perkins Caufield & Byers; Keith Rabois of Khosla Ventures; Fred Wilson of Union Square Ventures and Flatiron Partners; and Joe Lonsdale of Formation 8.

Some members, including Elon Musk of Telsa and David Sacks of Yammer, quit over the Keystone ads. Druckenmiller's support for the pipeline could not be directly confirmed. A spokesman did not immediately respond to requests for comment.

Environmental groups working against Keystone are happy to have some support from the investment community.

"It's a good thing to have iconic investors like Grantham and Steyer making the case against this boondoggle," Jamie Henn, communications director at climate change advocacy group, said. "It's increasingly clear that tar sands aren't just disastrous for the climate, they're also a bad investment. There's no place for a pipeline like Keystone XL in a carbon constrained world."
Steyer said his investment peers are finally engaging on the issue.

"Climate change is the biggest risk facing the world economy today. Extreme weather cost the U.S. economy $100 billion last year, and we can't afford to make the problem worse. Investors are becoming more engaged on this issue," Steyer said. "[That's] why I have teamed with Mayor Bloomberg and Hank Paulson to quantify the risks our economy faces from unmitigated climate change."

-By Follow CNBC's Lawrence Delevingne on Twitter @ldelevingne.

Saturday, October 19, 2013

North Dakota: Trouble in boomtown

More oil, more money, more problems.
By Dan Stewart
When did the boom begin?

About seven years ago. Geologists have known about the Bakken shale foundation, one of the largest oil and natural gas deposits in the world, since the early 1950s. But oil production in the state was slow to develop because it was too difficult and costly to get at the deposits, which are trapped between compressed layers of rock. But as oil prices rose and hydraulic fracturing technology advanced in the 2000s, tapping the ocean of crude suddenly made good economic sense. North Dakota went from being the ninth biggest oil-producing state in 2006 to the second today, with only Texas producing more. There are now more than 9,000 active wells in the state, producing 800,000 barrels of oil a day — about 11 percent of the country's overall production.
What has that brought to North Dakota?

Jobs, money, and people. The state now has the lowest unemployment rate in the country, at 3 percent. Its oil industry employs almost 41,000 people, plus 18,000 jobs in peripheral industries. For those working in the "Oil Patch'' in the western part of the state, the average annual salary is $112,462. The only requirements to find work are a government-issued ID and a clean criminal record. This modern gold rush has lured people from all over America to North Dakota, once one of the country's most sparsely populated states. Terry Ayers drove to Williston in 2011 from Spokane and got an oil job within hours of arriving, earning around three times what he had been making before. "It's a zoo," he said then. "It's crazy what's going on around here."
Has that been good for the state?

For the economy, it's been terrific. The estimated $34.4 billion North Dakota has reaped in revenue from the boom has given it the healthiest balance sheet in the country, with an enviable $1.6 billion budget surplus. But the flood of money and new residents has also caused some severe growing pains. North Dakota's population leaped 7.7 percent in six years. Some small towns have been inundated with new residents; Watford City, for example, went from 1,744 residents to 7,500, including 28 registered sex offenders. The state's infrastructure is buckling under the strain. Housing has become scarce and expensive. Heavy truck traffic has put a strain on the state's roads and bridges, which need an additional $350 million a year for upkeep. Sewage plants are running over capacity, due to new residents and a flood of fracking wastewater. The region's health-care providers are being overwhelmed by scores of workers injured while carrying out dangerous manual jobs. "My work has now been transformed from that of a small family practitioner to basically an ER doc," said Gary Ramage, a physician at McKenzie County Hospital.
Who are these new residents?

Most are single young men lured from other states by the promise of big paychecks. They've transformed once-sleepy small towns, peeling off wads of bills to spend in local bars and strip clubs — and in some cases, on methamphetamine and prostitutes. Williston's population has doubled since 2010, from 15,000 to over 30,000. Most of these workers live in temporary housing known locally as "man-camps," rows of trailers with communal cafeterias and bathrooms, not unlike a military camp. There are 17 man-camps in Williston alone. To cut down on fighting and crime, the oil companies now enforce strict rules on man-camp residents, with a zero tolerance policy for drugs, alcohol, and firearms. "I look at man-camps as being somewhat a necessary evil," said E. Ward Koeser, president of the Williston City Commission.

What do longtime North Dakotans think?

They welcome the infusion of money, but not what comes with it. The cost of living has surged; stores and restaurants have raised prices so they can pay wages of up to $20 an hour to compete with the high-paying oil jobs. High housing demand and skyrocketing rents across the state have also pushed thousands onto the streets, including many newcomers who failed to keep jobs. Homelessness in North Dakota has almost tripled since 2010. In Williston, the Salvation Army has resorted to buying homeless men one-way bus tickets. "Sometimes, they're better off going back home," said Salvation Army employee Joshua Stansbury.
Can the state adjust to the boom?

County legislatures are clamoring for the state to spend some of its budget surplus on new hospitals, infrastructure, and affordable housing. But many state lawmakers remember how quickly oil fortunes can come and go; the state's oil industry tanked after oil prices collapsed in the 1990s, leaving many western counties still paying off debts run up during the 1980s boom. If the current boom ends for some unforeseen reason, state officials fear, they'll wind up with empty medical centers, unused freeways, and empty housing developments. "When Mr. Bakken comes to town, no one can prepare," said Brad Bekkedahl, vice president of the Bismarck City Commission. "It's a good challenge to have, and there's a lot of people that wish they had it. But it's a challenge.
A state full of men

Nine out of 10 workers lured by North Dakota's boom are men. But there is one peripheral industry attracting women to the Oil Patch: exotic dancing. Strippers can bank over $2,000 a night in oil boomtowns. "It's all but guaranteed money," said Susan Shepard, a dancer who worked in Williston for six years. Prostitution is also on the rise, according to law enforcement authorities. Hospitals note that rates of chlamydia doubled between 2010 and 2011. Local women have also complained that the roving bands of unattached, restless young men have created a culture of constant sexual harassment. Williston tattoo artist Christina Knapp, 22, recalled being offered $3,000 to strip naked and serve beer to a group of men. When she refused, the men upped the offer to $7,000. "I said I make more money doing my job than degrading myself to do that," she said.

Friday, October 18, 2013

Tullow Oil Ghana awards FMC Technologies US$340 million contract.

Tullow Ghana Limited, a subsidiary of UK’s Tullow Oil, has awarded energy services equipment maker FMC Technologies a US$340mn contract to supply subsea systems for its Tweneboa-Enyenra-Ntomme Development (TEN) Project, offshore Ghana
The US$4.5bn TEN Project, approved in May 2013, is located in the deepwater Tano Contract Area, nearly 30km west of the Tullow Oil-operated Jubilee Field.
The field reportedly holds about one billion barrels of oil and Tullow Ghana Limited has estimated that when the project is fully operational, it will produce 80,000 bpd.
According to a company statement, US-based FMC Technologies will provide subsea trees, manifolds, tooling and associated control systems and systems integration for this project.
The company has been operating in Ghana since 2008 and it recently completed the assembly and testing of subsea trees at its support base in Takoradi.
FMC Technologies operates 30 production facilities across 16 countries.
FMC Technologies senior vice president for subsea technologies, Tore Halvorsen, said, “We have made significant investments in facilities and capacity to support the developments in Ghana. We will continue aiding Tullow Ghana Limited in its ongoing offshore developments.”

Thursday, October 17, 2013

China Merchants Energy Shipping scraps elderly VLCC

China Merchants Energy Shipping scraps elderly VLCCLee Hong Liang
from  Singapore        
China Merchants Energy Shipping (CMES) has sent an aged VLCC to the scrapyard for a price of RMB93.75m ($15.37m).
The 285,700-dwt VLCC named Kaixuan was delivered to CMES in March 1993 from Japanese yard Hitachi Zosen. CMES said the single-hull tanker has a remaining operational lifespan of just 4.5 years before it reaches 25 years old.
“The tanker Kaixuan is more than 20 years old, making it one of the few aged VLCC that should be retired from the market. CMES believes that the old VLCC has significantly lesser opportunities to find fixtures, and its disposal will help to streamline the company's fleet and reduce operating costs,” the Shanghai-listed shipping firm said.
CMES added that its fleet renewal programme saw the company added 10 new eco-friendly VLCCs at the start of this year. The new tankers are slated to be delivered in phases starting from October 2014.

Wednesday, October 16, 2013

North Dakota Pipeline Spill Estimates 'A Guess' At Best After 20,000 Barrels Spill Into Field.

BISMARCK, N.D. (AP) — Scientists who helped calculate oil spilled from a broken BP well into the Gulf of Mexico are questioning the methodology used to estimate the amount of crude that recently leaked from a ruptured pipeline into a wheat field in northwestern North Dakota.
Tesoro Corp. said it came up with its more than 20,000-barrel spill estimate using ground analysis. But oil spill experts say a more accurate assessment likely would come from calculating how much crude went into the pipeline versus what was supposed to come out at its terminus.
Farmer Steve Jensen discovered the North Dakota oil spill the size of seven football fields while harvesting wheat Sept. 29. Tesoro Corp. first estimated the spill at its underground pipeline near Tioga at 750 barrels. About a week later, the San Antonio, Texas-based company increased the estimate to 20,600 barrels, or some 865,000 gallons, making it one of the largest spills in North Dakota history.
Tesoro said in a statement to The Associated Press that it based its calculations on "data collected during our field investigation work. This investigation included a thorough examination of the site spill characteristics including factors such as surface area and depth of soil impacted, and soil porosity." The company would not elaborate.
The company said its "site investigation was developed based on well-established and recognized American Petroleum Institute, Geologic Society of America and American Institute of Professional Geologists standards."
Jack Hess, executive director of the Geologic Society of America, and Bill Siok, executive director of the American Institute of Professional Geologists, said their groups have no such standards.
"We've never issued any guidelines over oil spills," Hess said. "That's not the kind of business we are in and something we wouldn't get into."
Siok said: "I'm stumped. I kind of suspect they made an incorrect reference."
A spokesman for the American Petroleum Institute, a Washington, D.C.-based oil and gas industry trade group, confirmed the group offers "a number of tools" that Tesoro could be using to calculate the spill figure. Spokesman Carlton Carroll said he didn't have enough information about the spill to provide any other details.
Purdue University engineering professor Steve Wereley said Tesoro's calculation of how much oil it released in the North Dakota wheat field likely is "at best, a guess."
Wereley, who along with other scientists helped estimate the amount of oil spilling into the Gulf in 2010, said he was unaware of any scientific studies that could back Tesoro's estimates. Wereley and Ian MacDonald, a Florida State University oceanographer who also worked on spill estimates in the Gulf, said detailed oil flow data from the pipeline would provide regulators with a better estimate of the amount of crude spilled in North Dakota.
MacDonald said properly estimating the size of an oil spill "is not trivial."
"Both the environmental impact and the liability of the company are directly related to the precise amount of the release," MacDonald said. "That is why it is critical to know."
Dave Glatt, chief of the state Department of Health's environmental health section, said Tuesday that the company has not provided that information to regulators, but that the state intends to request flow and pressure data.
The state's estimate is based on calculations provided by the company, Glatt said, adding that the release of oil has been stopped and the 7.3-acre spill area has been contained.
"The main thing," Glatt said, "is we know where it is and where it isn't."
Meanwhile, the federal Pipeline and Hazardous Material Safety Administration that has jurisdiction over oil pipelines remains closed because of the ongoing federal government shutdown.
The spill happened in a remote area in the northwest corner of the state. The nearest home is a half-mile away, and Tesoro and the state say no water sources were contaminated, no wildlife was hurt and no one was injured.
Tesoro has said that the hole in the 20-year-old pipeline was a quarter-inch in diameter. Tesoro officials have not speculated on what caused the hole in the 6-inch-diameter steel pipeline that runs underground about 35 miles from Tioga to a rail facility outside of Columbus, near the Canadian border. State officials have said it may have been caused by corrosion.
The company said Tuesday that it will "remove, reroute and replace" a 200-foot section of pipe and send a portion of it to an independent laboratory for testing. Tesoro said it is developing plans to restart the pipeline but the timeline is not yet known.
North Dakota sweet crude was fetching $86.50 on Tuesday. Based on Tesoro's spill estimate, the loss to the company would be about $1.78 million. The company, which has a network of some 700 miles of pipelines in North Dakota, also has estimated cleanup costs at $4 million. State officials have said the cleanup could take years.
Glatt, the state Health Department's environmental chief, said the state and company are committed to the cleanup — and ensuring that a spill doesn't happen again.
"No company has a vested interest in losing money because of the cost of oil and the cost to clean it up," he said.
Follow James MacPherson on Twitter at

Tuesday, October 15, 2013

Government To Invest $20 Billion In New Oil Discoveries

The government will invest about $20 billion in the development of new oil discoveries over the next five years, the Minister for Energy and Petroleum, Mr Emmanuel Armah Kofi Buah, has indicated.
The huge investment is expected to boost the production of oil and gas in Ghana and, consequently, the national economy in significant measure.

Currently, Ghana is producing 110,000 barrels of oil daily, and according to Tullow Oil’s projection, an additional 80,000 barrels per day is expected to be produced in the next five years.

The construction of a gas processing plant at Atuabo in the Western Region is scheduled to be completed in 2014, barring any challenges and it is expected to make enormous contribution to the country’s energy capacity.

Mr Buah pledged the government’s commitment to the development of the petroleum sector and solicited the support of all Ghanaians in that respect.

“It is, therefore, imperative that in their appraisals, development and production, Ghanaians must play key roles in all these activities,” he said in a speech read on his behalf by one of his deputies, Mr Benjamin Dagadu, in Accra last Wednesday, at the launch of The Oil and Gas Year (TOGY) Ghana 2013.

TOGY Ghana

TOGY Ghana is an exclusive, comprehensive and analytical publication on Ghana’s oil and gas industry, addressing a wide range of issues, such as investment, policy direction and regulatory framework.

The first edition of the publication was produced in 2012, and TOGY Ghana 2013 builds on the maiden edition with a deep reflection on the rapid development in the petroleum sector and developments in the Western Region.

TOGY’s publications are acclaimed as reliable sources of information on the petroleum industry in more than 30 oil-rich countries across the world.

Measures by government

Underlining the government’s commitment to the development of the petroleum sector, Mr Buah said since the discovery of oil, the government had put in place a number of measures “to ensure that the resource benefits all Ghanaians”.

The measures include the enactment of legislation, such as the Petroleum Revenue Management Act, 2011 (Act 815) and the Petroleum Commission Act, 2011 (Act 821) to provide direction and clarity on the management of revenues from the production of oil and gas and the regulation of the sector.

A local content bill that seeks to give Ghanaians a competitive edge in the oil and gas industry is currently before Parliament, while the Petroleum Exploration and Production Bill is now undergoing government scrutiny.

Furthermore, the government, realising the need for local entrepreneurs to take advantage of opportunities along the petroleum value chain, spearheaded the establishment of the Enterprise Development Centre (EDC) with the support of the Jubilee Partners to build the capacity of small-scale enterprises.

Government assurance

Mr Buah assured investors in the petroleum sector of the government’s commitment to all investment agreements “and shall operate within their terms as we entreat them to abide by these policy guidelines”.

In a speech read on his behalf, the Chief Executive Officer of the Ghana National Petroleum Corporation (GNPC), Mr Alex Mould, said TOGY Ghana 2013 was an invaluable reference point in Ghana’s oil and gas industry.

Source: Daily Graphic/Ghana

PIB and threats to Nigeria’s oil industry

As the fate of the much–anticipated Petroleum Industry Bill (PIB) continues to hang in the balance, the ranks of international oil companies (IOCs) divesting oil assets in the country has swollen as Shell is putting up for sale four onshore oil blocks in the heart of the eastern Niger Delta, an area particularly hard hit by crude oil theft this year.
Shell, which has sold a series of blocks since 2010 for more than $2bn, is also selling the Nembe Creek Trunk Line, a key oil transport artery, which the company has had to shut repeatedly this year, no thanks to oil theft.
Clearly, these are not the best of times for the nation’s oil industry whose contribution to the Gross Domestic Product (GDP) saw a decline this year. The year on year GDP contribution of the industry dropped from 15.8 percent in first quarter of 2012 to 14.75 per cent in Q1 of 2013, according to data from the National Bureau of Statistics.
Only last week, Ngozi Okonjo-Iweala, minister of finance, reiterated that Nigeria loses $1 billion revenue every month to oil theft, adding that the current oil production figure was lower than the actual production level in 2012 and lower than the projected output of 2.528 million barrel per day in the 2013 budget.
In what seems to be a realisation of the serious threats to the industry, the production estimate for 2014 budget has been put at 2.38 million, about 6 percent decrease from this year’s ambitious target.
Aside from Shell, Chevron is also in the process of selling three onshore oil blocks, while ConocoPhillips’s sale of its Nigerian operations to Oando last year is expected to be concluded soon. Not a few oil industry analysts have said that more IOCs would divest from the industry if the issue of security and the long delay in passing the PIB are not decisively addressed.
Business Monitor International (BMI), which recently released its latest findings on Nigeria’s volatile oil and gas sector from its newly published Nigerian Oil and Gas Report, stated that the adoption of the Petroleum Industry Bill (PIB), which it expects between the fourth quarter of this year and first quarter of 2014, would be a strong signal for investors that Nigeria’s hydrocarbons sector is ready to move forward.
The British agency’s expectation could well be a tall order as the PIB remains stuck in parliamentary limbo and is unlikely to be passed until after elections in 2015 as the country becomes engulfed in a political crisis.
It would be recalled that the PIB suffered another setback as legislators postponed a public hearing earlier scheduled for last week, due to hajj operations. A couple of months ago, hearing on the bill was suspended due to the death of Senator Pius Ewherido.
To be sure, the uncertainty over when the PIB will be passed, as well as the form it will take, will continue to push back investment decisions, and some projects could be cancelled until the fiscal terms have been clarified.
The jeremiad by IOCs over the fiscal terms in the current PIB, which they say is one of the harshest regimes in the world, is yet to be addressed. Other issues include the proposed ultimate powers given to the president and the petroleum minister in the awarding and revoking of licences and the proposed 10 percent host community fund for oil-producing communities, which recently polarised the National Assembly into North versus South.
We are very much concerned about the uncertainty and lethargy that the delay in the PIB passage has brought to the oil and gas industry. We therefore urge the executive and legislature to do the needful to reverse the dwindling fortunes of the industry.

Friday, October 11, 2013

Captain Phillips - Official Trailer (HD) Tom Hanks

Gulf of Guinea piracy report

In the first eight months of this year, 19 attacks took place against vessels operating in the Gulf of Guinea. There were 25 attacks reported in 2012.
Pirate networks in the area are focusing on product theft from tankers and this relatively new type of piracy has evolved into a unique and highly lucrative form of maritime crime in the region, said Danish-based Risk Intelligence.
An estimated 117,000 tonnes of product worth about $100 mill has been stolen since 2010. The human cost of the pirate attacks is also significant. Two crew members on product tankers have been killed and at least 34 have been injured in hijacking related incidents.
Risk Intelligence has launched a ‘Gulf of Guinea hijacking report.’ “The Gulf of Guinea tanker hijacking report is the first real effort to describe the perpetrators of these tanker hijackings and how companies have dealt with these incidents in order to improve existing countermeasures,” explained Risk Intelligence CEO Hans Tino Hansen. “Understanding the networks in the area that support these hijackings is crucial for planning and preparation.”
The report is based on primary sources of information from the region and interviews with shipping companies that have experienced an attempted, or actual hijacking.
“We combined all the strengths of Risk Intelligence into one systematic analysis,” explained Hansen. “We have been reporting and analysing these incidents for years, but we added in a significant level of detail from field studies in Nigeria – absolutely essential for understanding what is going on there.”
As a result, the report provides background, analysis and recommendations and is focused on practical measures that can be implemented by operators in the region, the company said.
Detailed recommendations are outlined in the report for shipping companies and crews of product and chemical tankers trading in the area. The recommendations are considered alongside existing guidelines for maritime security, such as the ISPS code and the Best Management Practices (BMP), as well as the interim guidance published by several industry stakeholders.
“The perpetrators have a working template for successful hijackings,” said Hansen. “And this is not a problem that international naval intervention can solve. Companies operating in the Gulf of Guinea need to take preventative steps at every level of their operations.”
Due to the commercial sensitivities of the companies described in the report the report is only available to Risk Intelligence clients and to selected industry members and stakeholders, the company stressed.

Thursday, October 10, 2013

Forty Years After OPEC Embargo, U.S. Is Energy Giant

U.S. and OPEC
Illustration by Tim Colmant
Forty years ago this month, the Organization of the Petroleum Exporting Countries proclaimed an embargo on oil exports to the U.S. as retaliation for its support of Israel in the Yom Kippur War. It would last only five months, but it haunts U.S. energy policy to this day.
The modern global energy market bears scant resemblance to what existed 40 years ago. Today’s market is far more diversified and resilient. Thanks to the shale gas revolution and soaring domestic oil and gas production, the U.S. has reduced the cost of its energy and become a major exporter of refined products. Add in the political and economic tumult within many OPEC member countries, and it’s clear that, by almost any measure, OPEC is far weaker and the U.S. is far stronger than in 1973.
Nevertheless, the U.S. continues to mandate the use of corn ethanol -- a farm subsidy that has been masquerading as an energy program since the 1970s. And the promoters of ethanol still hype the supposed danger of “our dependence on imported oil.” Every administration since President Richard Nixon’s has engaged in sloganeering about energy independence -- including Barack Obama’s, just this past August -- despite increasing global interdependence.

Symbolic Move

Looking back, it’s obvious that the OPEC embargo itself was largely a symbolic move. The main reason for gasoline shortages in the wake of the embargo was not a lack of crude oil, but rather federal price controls, Anas Alhajji of NGP Energy Capital Management LLC and other economists have concluded. Indeed, America’s crude-oil imports in 1973 exceeded those in 1972 by 372 million barrels, data from the Energy Information Administration show. In 1974, those imports jumped again by 85 million barrels.
Since then, although oil remains a critically important commodity, petroleum’s share of the global energy market has been in steady decline. In 1973, it accounted for 48 percent of all global energy use. Last year, its market share fell to 33 percent.
That slide has largely been caused by the increasing use of coal, natural gas and nuclear power. Over the past four decades, oil use has grown by 34 million barrels per day, or 61 percent - - on its face, a healthy increase. At the same time, coal use has soared by nearly 44 million barrels of oil equivalent per day, or 140 percent. The next biggest gainer has been natural gas, of which global consumption has increased by about 39 million barrels of oil equivalent per day, or 184 percent. During that same period, nuclear energy saw huge percentage growth, rising by 1,100 percent. In absolute terms, however, nuclear remains a relatively small player, producing about 11 million barrels of oil equivalent per day, which is less than 5 percent of global energy demand.
This diversification of the energy market, along with growing national strategic petroleum reserves, has made the global economy more resilient to sudden changes in oil prices. For its part, the U.S. has also become more efficient in using petroleum. Back in 1973, it consumed about 17.3 million barrels of oil per day, using it to generate almost 17 percent of its electricity. Today, that share is down to about 1 percent.
Americans are also getting more economic growth from each barrel of oil they consume. In 1973, the U.S. population was 212 million; its gross domestic product was $5 trillion. Today, the population is about 316 million, and GDP has grown to about $14 trillion. (Both GDP figures are in 2005 dollars.) In other words, the U.S. has increased its population by half and nearly tripled its economic output, while consuming only 7 percent more oil.
Adding to the U.S.’s enviable energy position is its shale gas boom. In 2012, the country produced an average of almost 66 billion cubic feet of natural gas per day -- more than at any other time in its history. Prices have fallen (they’re now at about $3.64 per million British thermal units) to the point where the U.S. has a price advantage over every other country, with the possible exception of Qatar. Cheap gas is fueling a resurgence in U.S. manufacturing of everything from steel to fertilizer.

Enough Hand-Wringing

The surge in natural gas production has occurred alongside a major increase in oil output. Last year, U.S. production rose by about 800,000 barrels per day, the biggest annual increase since 1859. This year, it is expected to climb by another 600,000 barrels per day. And that has helped spur a huge increase in exports. Yes, exports. In July, the U.S. exported an average of nearly 3.9 million barrels of refined products per day, up from a paltry 211,000 barrels per day in 1973.
At the same time, OPEC’s oil production has been languishing. Ongoing conflicts in Libya, Nigeria and Iraq have reduced output. Iran remains hamstrung by Western sanctions over its nuclear program. In Venezuela, where crime and inflation are soaring, oil production stands at its 1994 level, about 2.7 million barrels per day.
Considered as a whole, OPEC member countries have a combined population of some 429 million -- about 115 million more than the U.S. -- yet their combined GDP is $3.3 trillion, a fourth that of the U.S. OPEC’s per-capita GDP is $7,800, which is about 62 percent of the world average and less than one-sixth that of the U.S., which is nearly $50,000.
OPEC-bashing makes for good political sound bites. But the reality is that the U.S. does not need to achieve energy independence. It is becoming ever more interdependent in the global energy market. And that’s a good thing. Yes, we still import oil, but we then export increasing amounts of it in the form of diesel fuel and other manufactured products. We are also exporting increasing amounts of coal. And we may soon export significant volumes of natural gas and domestic crude.
Forty years of hand-wringing over the evils of OPEC is enough. The energy superpower of today is the United States.
(Robert Bryce, a senior fellow at the Manhattan Institute, is the author of “Power Hungry: The Myths of ’Green’ Energy and the Real Fuels of the Future.”)
To contact the writer of this article: Robert Bryce at
To contact the editor responsible for this article: Mary Duenwald at

Wednesday, October 9, 2013

Ghana's Oil production hits 115,000 barrels daily

Daily oil production hit 115,000 barrels per day in June 2013, significantly higher than the projected average for the year, the African Center for Energy Policy (ACEP) report on Government Compliance with the Oil Revenue Management Act in the 2013 budget has revealed.

Total oil revenue of GH¢1.15 billion also far exceeded the projected target by GH¢362.3 million.

The report urged government to initiate discussions with Sabre Oil and Gas to recover the capital gains tax from the sale of its stake in offshore blocks.

It also indicted the 2013 budget for failing to capture capital gains tax as one of the revenue streams.

It added “the Petroleum Income Tax Law should be harmonized with the Internal Revenue Act.”

Released by the Executive Director of ACEP Mohammed Amin Adam, the report also said the projected transfers to the Ghana Petroleum Holding Fund will be exceeded when the data on petroleum is released. However, it expressed concern about the expected violations of the law.

These violations have been identified in four areas. They include confusion around the Petroleum Holding Fund and allocation of petroleum revenues to the Ghana National Gas Company.

The report was an initiative of the Center for Public Interest Law.

Tuesday, October 8, 2013

EIA Predicts U.S to be 2013’s Largest Petroleum Producer

The political gridlock in Washington has produced some interesting shutdowns as Congressional Republicans and Democrats sling charges of responsibility.
Want to visit the Lincoln Memorial?
Want to visit the Lincoln Memorial?
The U.S. Export Import Bank website? Also closed.
But some elements of the U.S. Department of Energy are doggedly soldering on, including some bureaucrats in the Energy Information Administration, who on Friday produced an article in its “Today in Energy” column with the simple but arresting headline, “U.S. expected to be largest producer of petroleum and natural gas hydrocarbons in 2013.”
The report notes, “The U.S. Energy Information Administration estimates that the United States will be the world's top producer of petroleum and natural gas hydrocarbons in 2013, surpassing Russia and Saudi Arabia. For the United States and Russia, total petroleum and natural gas hydrocarbon production, in energy content terms, is almost evenly split between petroleum and natural gas. Saudi Arabia's production, on the other hand, heavily favors petroleum.”
“Since 2008, U.S. petroleum production has increased 7 quadrillion Btu, with dramatic growth in Texas and North Dakota. Natural gas production has increased by 3 quadrillion Btu over the same period, with much of this growth coming from the eastern United States. Russia and Saudi Arabia each increased their combined hydrocarbon output by about 1 quadrillion Btu over the past five years.”
“Comparisons of petroleum and natural gas production across countries are not always easy. Differences in energy content of crude oil, condensates, and natural gas produced throughout these countries make accurate conversions difficult. There are also questions regarding the inclusion of biofuels and refinery gain in the calculations. Total petroleum and natural gas hydrocarbon production estimates for the United States and Russia for 2011 and 2012 were roughly equivalent—within 1 quadrillion Btu of one another. In 2013, however, the production estimates widen out, with the United States expected to outproduce Russia by 5 quadrillion Btu.”
To say that the report has enormous implications for the future would be a vast understatement.

In just three years, from February 2010 to February 2013, according to the EIA's Petroleum Supply Monthly, in the U.S. lower 48 states onshore oil production, including crude oil and lease condensate, rose more than 2 million barrels per day, or 64 percent. Texas has more than doubled its production over the past three years, while North Dakota's output nearly tripled.
To put this increase in perspective, it is more than the output of Algeria or Norway, and over half that of Iran, which produces 3.5 million bpd, or more than the U.S. imports from the entire Persian Gulf region.
What was the reason for this dramatic increase? The EIA report notes, “In all of these states, increasing production was achieved by applying horizontal drilling and hydraulic fracturing to low-permeability rocks. In many fields (in basins such as the Permian, Uinta, and Powder River) enhanced oil recovery techniques such as CO2 injection are also boosting production from conventional reservoirs.”
The contentious practice of hydraulic fracturing, or ‘fracking,” is also largely responsible for the surge in U.S. natural gas production. Love it or hate it, the technique has unleashed so much natural gas that the EIA projects that U.S. natural gas inventories will reach 3,800 billion cubic feet by November.
While the overall implications of the EIA’s startling news remain unclear as yet, a few overall aspects seem fairly clear at this point.
The burgeoning recent success of the U.S. hydrocarbon industries in adding output spell trouble for both renewable energy, which will find it harder to attract funding in such a scenario, and “King Coal,” which will see its market share drop even further.
In the international scene, the growing energy independence of the U.S. will lessen the political impact of both OPEC and Middle Eastern nations in Washington’s corridors of power, and energy companies are even beginning to discuss the possibility of exporting some of their surpluses, particularly LNG, to lucrative foreign markets such as East Asia.
All in all, a win-win situation for U.S. hydrocarbon energy producers.
By. John C.K. Daly of

Monday, October 7, 2013

Government Settles More Than GH¢ 1 Billion TOR Debt

Managing Director of TOR, Ato Ampiah
Government pays more than GH¢ 1 billion of Tema TOR debt.
Government has so far paid more than GH¢ 1 billion of the Tema Oil Refinery, TOR, debt. This covers 75% of TOR’s total indebtedness.

The Acting Managing Director of TOR, Ato Ampiah, disclosed this at the launch of the 50th Anniversary of the refinery.

He said government has also released $ 30 million out of the $ 67.7 million for its plant stabilization and profit enhancement programmes.

The Acting Managing Director of TOR, Ato Ampiah expressed gratitude to government for the payment.

He however hoped that the remaining amount would be made available soon to complete the programme to enable the refinery to stand tall in the sector.

He said as part of efforts to boost electricity supply and ensure that the refinery works even when there is interruption from the national grid, the company has invested in a 6.5 megawatt liquefied petroleum gas generator which is expected to arrive in the country by the 23rd of this month.

Mr. Ampiah noted that TOR, formerly Ghanaian Italian Petroleum Company, has undergone a remarkable transformation from a simple hydro skimming plant of 28,000 barrels per stream day to 45,000 barrels per stream day.

He said an expansion programme initiated in the year 2000, for a secondary conversion processing plant was commissioned in 2002 with an added capacity of 14,000 barrels per stream day.

Mr Ampiah said projections showed that if TOR can process crude regular it can bring in revenue of about $ 2 billion annually.

He said TOR may not have achieved all of the vision of Dr Kwame Nkrumah, first president of Ghana who initiated the project as the foundation for a petrochemical venture to propel other industries due to technical, operational and financial challenges.

In spite of this, he noted that they are striving to restore TOR to its former glory.

He thanked their partners, past and present management and staff for their contributions.

The Board Chairman of TOR, Eric Okai said plans are far advanced to turn TOR into a refinery entity and a refinery business where it will trade both crude oil and finished products.

He therefore urged the management and staff of the refinery to approach every activity they undertake from a business point of view to ensure success.

The Deputy Minister for Energy and Petroleum, Benjamin Dagadu urged the management and staff of the refinery to use the celebration to take stock of their performance and double their efforts to realise the vision of the founding fathers.

The celebration was under the theme: “50 Years of Refining and Fuelling the Nation; Achievements, Challenges, Opportunities and the way forward”.


Friday, October 4, 2013

Another VLCC earmarked for conversion

Another VLCC will be converted into an FPSO shortly following the announcement that Mitsui, Marubeni and MOL have backed a long term project for a floating facility to be operated by MODEC.
The FPSO will be located in the Tweneboa, Enyenra, Ntomme (TEN) oil fields, offshore Ghana.
Mitsui, Marubeni and MOL have invested in TEN Ghana MV25 BV (MV25), a Dutch company established by MODEC, which will lease, operate and maintain the FPSO.
In August 2013, MV25 concluded the charter agreement with Tullow Ghana, the operator of TEN oil fields and a subsidiary of Tullow Oil. The charter contract initially runs for 10 years, with options for extension every year thereafter for up to 10 years additional years.
The loan agreement on a project finance basis was signed by the Japan Bank for International Cooperation (JBIC), Sumitomo Mitsui Banking Corp Co-operation (lead arranger), Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, ING Bank and ABN AMRO Bank.
West Africa has seen numerous significant discoveries of expansive offshore oil fields in recent discoveries of expansive offshore oil fields in recent years, thereby giving rise years to expectations of fresh demand for additional FPSOs in the region, the partners said.
TEN oil fields are owned by a consortium of five companies, including Tullow Ghana as operator, Anadarko Petroleum Corp and Ghana National Petroleum Co.
The VLCC conversion project is planned to be completed and the FPSO deployed in 2016. It will have an oil processing capacity of 80,000 barrels per day, gas processing capacity of 170 mill cu feet per day and an oil storage capacity of 1.7 mill barrels.  

Thursday, October 3, 2013

Ghana: Oil Tank Farm Under Construction Without Permit at Kpone

The Kpone Traditional Council (KTC) has called on the Tema Development Corporation (TDC) to, with immediate effect, withdraw or suspend the processing of documents for Oasis Lubricant Ghana Limited to build an oil tank farm at Kpone-Kokompe.
The reason for the request stems from the fact that the proposal submitted to TDC and the Kpone-Katamanso District Assembly (KKDA) was to build offices for the company, and not an oil tank farm.
Even though not a single permit has been obtained from any of the institutions responsible for the issuance of permits for such purposes, which includes the KKDA, KTC, TDC, Environmental Protection Agency (EPA) and the Ghana National Fire Service (GNFS) among others, three tanks have already been built on the proposed site.
Another reason, for which the traditional authority is calling for the withdrawal of the permit, is that the land on which the oil tank farm is set up is within a residential area, an indication of the fact that in the event of any disaster, the environment, human lives, and properties would be in serious danger.
This was contained in a two-page letter, dated September 24 and addressed to the Managing Director of the TDC, and signed by the Registrar of the Traditional Council, which was intercepted by The Chronicle.
According to the KTC, several attempts to get the company to discontinue with its construction of the oil tank farm have proved futile, as management of the company is bent on continuing with the project.
When contacted on phone, Madam Evelyn Acquah, project manager for Oasis Lubricant Ghana Limited, explained that as far as she was concerned, the KKDA, which is the authorised body in charge of issuing permits for the construction of companies offices among others, had already given a permit to her outfit to operate.
She alleged that her company paid an amount of GH¢23,000 through the Acting Engineer of the KKDA, Mr. Vincent Yeboah, to the Assembly for the permit, an issue the District Engineer has denied completely.
She, however, admitted: "We are yet to get [a] permit from the Environmental Protection Agency (EPA) and the Ghana National Fire Service (GNFS), which is still in the pipeline."
Denying the allegation, Mr. Vincent Yeboah noted that it was never true that any permit had been granted to the company to operate for such an amount of money.
"We have two kinds of permits we give out, one from the government acquired area, and the other from the non-acquisition area.
"As an Assembly, we work on the government acquired areas, and permits are approved by the Statistical Planning Committee of the Assembly, which is chaired by the District Chief Executive, therefore, an individual, town planner or the engineer does not have that right single-handedly to give out [a] permit," he explained.
Mr. Yeboah continued that the final approval would be jointly granted by the EPA, KTC, KKDA and the GNFS, until then, whoever is found working on that parcel of land would be arrested by the police.

TOR, 50 years and suffering

In March 1957, when Ghana obtained its independence from British colonial rule, our first president, Osagyefo Dr Kwame Nkrumah, and the Convention People’s Party government sought to create a society that would offer a much better life and happiness for all its citizens.

Dr Nkrumah set up many state institutions that he envisaged would boost Ghana’s quest to achieve agricultural and industrial development. In pursuit of this objective the government set out to build a number of social services like hospitals, schools, housing and a good road network.

In the area of housing, the new Tema town serves as a testimony to the efforts made to house the working people of Ghana while the construction of the Tema harbour and the Akosombo Dam were clear indications that the first post-independence government of Ghana envisaged an industrialised country within a few years of independence.

Having awarded the construction of the Akosombo Dam on contract in recognition of the role energy played in the industrialisation of a nation, Dr Nkrumah inaugurated Ghana’s first and only crude oil refinery on September 28, 1963, exactly 50 years ago today. Then known as the Ghanaian Italian Petroleum Limited (GHAIP), it was later to be known as the Tema Oil Refinery (TOR).

In the words of Dr Nkrumah, the refinery was to serve as a “vital foundation for the establishment of other industries in Ghana”. Sad to say, however, 50 years on, TOR is a pale shadow of itself at a time that Ghana has joined the league of oil-producing countries and many expect that it would be operating at its peak.

The DAILY GRAPHIC is aware that the once vibrant oil refinery has gone through a lot of challenges which have led to frequent shutdowns. Among the myriad of challenges faced by the refinery are its debts, resulting from the resolve of successive governments to subsidise the price of fuel. This has led to the famous “TOR Debt”, which appears not to go away.

Another challenge is the refinery’s inability to have a working capital to be able to keep abreast of technological advancements in the sector.

One challenge facing TOR, and which is seldom talked about during discussions on the fortunes of the refinery, is the interest of big and influential oil business moguls in the success of the company. We are aware that these business people go to great lengths to ensure that the refinery is reduced to a storage facility for finished oil products to enable them to carry out their profitable business of importing finished products.

For as long as their importation businesses prosper, these moguls make sure, through obvious means, to keep TOR where it has been reduced to. We are inclined to believe that successive governments have been unable to look at the activities of these business people because all of them have members who are engaged in the importation of finished products and for whom the success of TOR would mean a collapse of their lucrative businesses.

This situation needs to change. The state must support TOR to be more relevant.

While inaugurating the plant in 1963, Dr Nkrumah charged GHAIP to, in the event of Ghana finding crude oil, purchase and refine the crude oil. Ghana has found crude oil now and is in business. Let no one tell us that is not possible. To the ordinary man in the street, it makes no sense for Ghana to be an oil producer and still import finished petroleum products. We await that time when Ghana will have an ‘integrated’ oil industry.