Kenya to host East Africa energy conference

A major investment conference is slated for Nairobi following recent oil, gas and coal discoveries in Kenya.

The conference for East African decision makers is meant to engage international and local investors in examining the investments opportunities in the region.

Energy minister Kiraitu Murungi will host his counterparts from South Sudan, Uganda, Tanzania and Mozambique at the Ministers’ Official East Africa Oil and Gas Summit from November 13 to November 14.

With attendance by the ministers and senior oil and gas industry representatives from the region, the Summit is billed as the main annual international hub for the energy industry across East Africa.

Mr Murungi said: “The summit will unite regional and international investors and industry experts to share their knowledge and explore the current challenges and opportunities. It comes at a perfect time when the world's eyes are turning towards our region.”

Mr Murungi said these are extremely exciting times for the oil and gas sector throughout East Africa, both in terms of realisation of recent discoveries and also the huge potential that the region has to offer.

The minister said the summit is the first in what will become a pivotal annual event of great investor and stakeholder interest.

“It is open to both the regional and international oil and gas communities and we are very keen to learn from the best practices around the world to guide this nascent oil exploitation and production business,” said Mr Murungi. “We are looking at countries like Abu Dhabi, Norway and Ghana which have managed their oil resources fairly well as examples. However, we want to make Kenya a case study of the best management of oil in the world.”

Tullow oil who were behind the successful oil discovery in Turkana County early this year, lead a long list of firms which have signed up to bring in delegates to the conference.

With more than 100 companies represented by senior figures, company delegations are led by National Oil Corporation Kenya, Tullow, Petrobras, Halliburton, Shell, Exxon, Africa Oil Corp, Anadarko, Weatherford, Fugro, Total SA, Afren, Chase Bank, Camac Energy, Bertling, Ernst & Young, CCC, Imara Energy, Alpha Marine, Alba Petroleum, Simba, Nilepet, Ophir, Heritage and Yokagawa.

Ministers who have confirmed attendance are Mr Stephen Dhieu Dau (Minister for Petroleum and Mining, South Sudan); Ms Irene Muloni (Minister of Energy & Minerals, Uganda) and Mr Abdul Razak Noormahomed (Vice-Minister, Ministry for Mineral Resources Mozambique).

Sponsors for the summit include NOC Kenya, Africa Oil Corp, Simba Energy, Bertling Logistics, Newport Africa and Hybrid Solutions.

South Africa aims to cash in on East Africa energy boom

South Africa's budding energy service industry is aiming to reap the benefits of new natural gas and oil finds along Africa's east coast, where geographical proximity gives it the edge over other hubs in Europe, Singapore and Dubai.

Located at the foot of Africa along a major shipping route, South Africa is well placed to take advantage of increased exploration by global energy companies in East Africa, where large gas discoveries over the past year have excited global interest.

The US Geological Survey estimates that more than 250 trillion cubic feet of natural gas may lie off Kenya, Tanzania and Mozambique, and discoveries announced this year may hold enough gas to supply major European economies for at least one year.

South Africa, the continent's largest economy, views its ship and oil rig repair industry as a potential niche market that could, conservatively, triple its annual revenue to 3 billion rand ($363 million) by 2015 and create 3,000 jobs.

"Our real competitive advantage lies in our proximity to the action," said Warwick Blyth, chief executive at the South African Oil and Gas Alliance (SAOGA), the industry body.

"If you need a piece of kit brought down, a motor rewound or a rig sorted out without taking an extra month of towing, then it's usually brought here," he told Reuters on Friday.

Cape Town is considered a leading logistics and service hub for oil operators in Nigeria, Africa's top oil producer on the continent's west coast.

Blyth said that projected repair savings for rig operators in Africa can be massive considering the time costs associated with towing a rig to Singapore, which could take up to 100 days for a rig that rents out at $500,000 a day.

Mozambique activity

DCD Marine, which operates Cape Town harbour's dedicated rig repair berth, said that its clients include all the large drill-ship and rig operators working on Africa's east and west coasts, such as Transocean and Halliburton.

"DCD Marine expects an uptake in business as more rigs and ships are coming offshore Mozambique to exploit gas finds in the area," said Gerry Klos, the company's general manager.

Cape Town and Saldanha Bay, where MAN Ferrostaal's oil and gas shipyard was largely idle since being built in 2007, has experienced a steady increase in business over the past 18 months.

"Right now we are exceptionally busy. We've had three to four projects going simultaneously; big projects in the order of about 200 million rand each," Blyth said.

However, South Africa's government says that resolving critical customs and excise issues related to storing and moving oil and gas equipment in and out of Africa is vital for the local service industry to grow.

A lack of capacity and investment at ports is another challenge, said Blyth, adding that a proposed one billion rand Saldanha Bay quay for deep sea oil rigs would help to maintain the double-digit annual growth rates the industry needs. ($1 = 8.2612 South African rand)

The African Commission on Nuclear Energy Convenes its Second Meeting

The African Commission on Nuclear Energy (AFCONE), established within the framework of the African Nuclear Weapon?Free?Zone Treaty, also known as the Treaty of Pelindaba, held today, at the African Union (AU) Headquarters, in Addis Ababa, its second ordinary session, to finalize and adopt key documents required for its early and full operationalization. The first ordinary session of AFCONE took place in Addis Ababa, on 4 May 2011.
Today's meeting adopted the rules of procedure, structure, programme of work and budget of AFCONE. The programme of work focusses on the following areas: monitoring of compliance by the State Parties with their non?proliferation obligations; nuclear and radiation safety and security; nuclear sciences and technology; partnership and technical cooperation. Regarding the budget, the meeting agreed to an amount of approximately US $800,000 per year for the period 2012?2014. The meeting also agreed on the scale of assessment for contributions to the budget of AFCONE. The conclusions reached will be submitted to the second Conference of State Parties, scheduled to be held in Addis Ababa, in November 2012.
The meeting provided an opportunity to review and adopt the Terms of Reference of AFCONE Executive Secretary, who is in charge of the day?to?day activities of the Commission. The representatives of the Government South Africa seized the opportunity to provide an update on the steps being taken for the establishment of AFCONE Executive Secretariat, which will be based in Pretoria. The Government of South Africa will provide the required facilities in terms of office space and equipment.
The host agreement is being finalized between the AU Commission and South Africa. The Treaty of Pelindaba, which entered into force on 15 July 2009, establishes Africa as a zone free of nuclear weapons. It mandates AFCONE to monitor compliance by the State Parties with their obligations under the Treaty, as well as to promote the peaceful use of nuclear science and technology in various fields, including health, agriculture, industry and energy.
The meeting was opened by Ambassador Abdul Samad Minty of South Africa, Chairperson of AFCONE, and El?Ghassim Wane, Director of the AU Peace and Security Department. It was attended by eleven of the twelve members of AFCONE, who were elected for a three?year term at the First Conference of States Parties, held in Addis Ababa, on 4 November 2010. The AFCONE Commissioners are from the following countries: Algeria, Burkina Faso, Cameroon, Ethiopia, Kenya, Mali, Mauritius, Libya, Senegal, South Africa, Togo and Tunisia.
Before the meeting, the Chairperson of AFCONE met with the AU Commissioner for Peace and Security, Amb. Ramtane Lamamra, to exchange views on the efforts to fully operationalize AFCONE and on the overall implementation process of the Treaty of Pelindaba.

Ambitious geothermal power plant kicks off

NAIROBI, Kenya, Jul 24 – President Mwai Kibaki on Monday unveiled the construction of the world’s most ambitious power project that will help ensure adequate power supply in the country, while reducing the cost of electricity.

The Olkaria 280 MegaWatt (MW) geothermal project will raise Kenya Electricity Generating Company’s (KenGen) total electricity capacity by 25 percent which President Kibaki noted will significantly raise geothermal contribution by the country’s largest power producer to help meet the power demand.

“I am happy to note that this project begins the shift from hydro based electricity to a geothermal based power future,” he said.

“Unlike hydro generation that is at times affected by vagaries of weather forcing us to rely on expensive modes of generation, geothermal is affordable, stable, renewable and clean,” he explained.

Kenya’s power generation, largely dominated by water-powered turbines, is gradually seeking to shift the more dependable geothermal and wind powered plants due to the effects of climate change, which has sparked off ecological damage.

Once the Olkaria I and IV geothermal power development facilities are completed in 2014, Kenya will be on the global geothermal map as it will be the world’s single biggest project in terms of power output.

It will also bring the country closer to claiming one of the top positions in terms of global geothermal output, which is led by the United States at 3,000MW and Philippines at 2,000MW.

Kenya is seeking to generate at least 5,000MW from its vast geothermal resource by 2030, and KenGen revealed that it will soon start generation of 65MW from geothermal using the mobile geothermal wellhead, a new technology introduced from Iceland.

President Kibaki acknowledged that the government cannot single handedly raise the resources need for geothermal power exploration and development.

“We have put in place a conducive legal and fiscal framework to attract private sector participation in harnessing our robust geothermal resources,” he stated.

KenGen drills the wells and rents the steam to private companies who can bring in overhead generators to tap the steam, generate electricity and connect to the national grid.

Kenya has feed-in tariffs that encourage investors to participate in electricity generation projects.

“Our work is to offer investors a risk-free alternative by providing them with ready steam. All they need to do is to construct power plants and produce electricity,” KenGen CEO Eddy Njoroge said.

The project’s total cost will be $981 million (Sh82.6 trillion) which is financed by KenGen, the Government of Kenya, World Bank, German Development Bank KfW, European Investment Bank, French development finance institution AFD and the Japan International Cooperation Agency.

The project will pump an additional 280MW of electricity to the national grid and Njoroge said the project will be a game changer by raising the amount of electricity generated from geothermal sources from 155MW to 435MW.

He said that steam wells for the project have already been successfully drilled with well head generators expected to be installed and generate power as plant construction continues.

“Whereas upfront costs may be higher initially, running and maintenance costs of geothermal plants are low and hence the model holds real promise of affordable power in the country,” he said.

“This project will firmly put Kenya on the path to Vision 2030, since affordable, reliable and adequate power are key to the attainment of this economic blueprint,” he added.

The project has been divided into four parts to ease financing and implementation.

Steam field development will be carried out by Sinopec of China, the power plant will be built by a consortium of Toyota Tshusho of Japan and Hundyai of South Korea, transmission lines and the substation will be undertaken by Kamani Engineering Corporation of India, while Sinclair Knight Mertz of New Zealand is in charge of the project consultancy.

Kenya has an immense potential of geothermal resources and KenGen’s strategic plan has identified geothermal based electricity as the best option for the future thanks to its stability, renewable nature and affordability in the long run.

In addition to geothermal resources, the country has recently discovered commercial coal deposits and received encouraging oil exploration results, and President Kibaki expressed his disappointment by the nature of local politics taking place in areas where resources have been found.

“I would like to remind all Kenyans that natural resources in all parts of the country belong to all Kenyans and not just the residents of those particular areas,” he emphasised.

“The State is the custodian of these resources and our new constitution guarantees the equitable sharing of the accruing benefits from these activities,” he added.

The Kenyan government has so far invested $329 million (Sh27.7 trillion) in the geothermal drilling as part of efforts to increase generation to displace the expensive thermal generation.

The investment includes financing to the Geothermal Development Company (GDC) that has announced 2014 deadline for the completion of 120 wells expected to help the country produce an additional 400 MW of electricity at the current drilling site of Menengai near Nakuru Town.

The GDC was formed in 2009 by the government to accelerate the exploration and drilling of the vast geothermal resource along Kenya’s Rift Valley to enable the country to increase the pace of benefiting from cheaper renewable energy.

Studies by Maanvit Consortium of Iceland have confirmed even more untapped geothermal resources at the Olkaria complex, capable of generating an additional 560MW of electricity.

The geothermal plant is also expected to increase the role played by the clean energy in Kenya’s energy mix increasing production from geothermal to 35 percent from the current percent.

The project will complement other efforts by the geothermal development corporation which is selling steam to independent power producers and has a target of 20 drilling steam wells with a potential to generate 400MW at the Menengai block also by 2014.

Total ventures into offshore Kenya

Total has made a major play off East Africa as it snapped up a huge chunk in five Kenyan offshore blocks.

The French supermajor has hatched farm-in agreements with US stalwart Anadarko and London-listed independent Cove Enervy for the quintet of blocks in the Lamu basin, it announced on Wednesday.

The deal for a 40% cut in the blocks follows reports early last month that Total was eyeing acreage in Kenya although it was unclear if this would be on shore or offshore.

Total is taking 20% of Anadarko's share in blocks L5, L7, L11a, L11b and L12 although the latter will stay on as operator with a 50% share. The French player is also getting its hands on 5% of Cove's holding in the blocks with Cove holding on to a 10% cut.

The agreement sees Dynamic Global Advisors sell out its entire 15% stake in the blocks to Total, however.

The blocks cover a total area of 30,500 square kilometres with water depths ranging from 100 to 3000 metres. A 3D seismic survey programme is currently underway.

No purchase price was revealed but Cove said drilling operations are set to kick off in the second half of next year.

Total's senior vice president for exploration, Marc Blaizot, commented: “This transaction is part of a bold exploration strategy that consists in acquiring large stakes in high-potential frontier plays.

"Recent discoveries in offshore Mozambique and Tanzania offer a very promising outlook for these Kenyan permits.”

Last month news wire Dow Jones reported that Total had shown an early interest in one block in Kenya. The report cited Kenyan petroleum official, Martin Heya, as saying Total Kenya Limited was in contact with the government in May with regards to acreage.

Kenya represents a new frontier in oil and gas exploration as the country does not currently produce any oil.

Total has been active in East Africa recently after being awarded oil and gas exploration rights in neighbouring Tanzania last month. Total beat off competition from nine other bidders for the acreage on the northern side of Lake Tanganyika.

The Tanzania Petroleum Development Corporation has divided the Tanzanian side of Lake Tanganyika into two blocks, with the southern portion awarded to Australia's Beach Energy in 2008.

China to Lend Tanzania One Billion Dollars for Pipeline

China and Tanzania are to sign a $1.06 billion loan agreement to build a natural gas pipeline from the southern part of the east African country to its commercial capital, a Tanzanian newspaper wrote.It is hoped the project will put an end to the country's chronic energy shortage.Last month, Energy and Minerals Minister William Ngeleja said in a presentation to parliament that the government was seeking loans from China to finance construction of the pipeline from Mtwara to Dar es Salaam.

The Guardian on Sunday newspaper reported $300 million of the loan will be used to construct processing plants at Mnazi Bay, and that Finance Minister Mustafa Mkulo and Ngeleja were expected to fly to Beijing next week to sign the loan agreement.

Must project

"This is a must project for the future of this country ... we have secured financing from the Chinese and the agreement will be signed next week," Ngeleja was quoted saying.

"Some people have been misleading the public by saying the Chinese own this project, but the truth is it's government owned ... The Chinese are financiers and the project will boost gas supply as well as reducing or ending the power supply problem in the country."

Tanzania's chronic energy shortages have resulted in rolling power outages, undermining economic growth in the country.

Away from hydropower

The Tanzanian government said it plans to shift its focus to investment in thermal plants fuelled by natural gas and coal in attempts at weaning itself off weather-dependent hydropower, which accounts for 55 percent of the country's energy sources.

The paper reported the project will be carried out by the China Petroleum and Technology Development Company (CPTDC) a unit of China National Petroleum Corp (CNPC) , and state-run Tanzania Petroleum Development Corporation.

Aminex Takes over Ruvuma Basin

London-listed Aminex has taken over operatorship of Tanzania’s Ruvuma basin permit in a reshuffling of licence interests ahead of drilling of a key exploration well later this year.

Previous operator Tullow Oil has handed over the reins with immediate effect to Aminex as the partners on the Ruvuma production sharing agreement prepare to spud the Ntorya-1 well in the Mtwara block at the underexplored play in November.

Following a re-assignment of interests by Tullow to partners, Aminex will hold a 56.25% interest with Tullow on 25% and remaining stakeholder Solo on 18.75%. The stake transfers remain subject to Tanzanian government approval.

Aminex said the transfer of operatorship was “a logical and practical move” given that it is already operating a well using the Caroll Rig-6 that will be moved to the drill the Ruvuma well once its present drilling job at Nyuni-2 is completed.

Ntorya-1 is a follow-up to the Likonde-1 well drilled last year that provided strong evidence of oil and gas but was not a commercial discovery.

The new probe will be drilled south of Likonde to a depth of about 2020 metres with drilling expected to take 25 days to reach target depth.

“Both Solo and Aminex have a strong focus on Tanzania and by gaining a greater participation in the PSA will jointly be able to advance the work programme more quickly,” said Solo executive director Neil Ritson.

Aminex chairman Brian Hall said the Ntorya prospect is “in one of the last major underexplored deltaic basins in Africa”.

Aminex was originally awarded the PSA with a 100% interest in 2005 and acquired the original seismic before handing over operatorship to fellow UK independent Tullow.

The Ruvuma basin, located both onshore and offshore Tanzania, has triggered strong exploration interest, with several successful deep-water gas wells drilled by Anadarko in the Mozambique sector of the basin.

Earlier this year, BG Group and partner Ophir Energy drilled an offshore gas discovery in the Tanzanian sector in a licence adjoining the Ruvuma PSA.