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An Oil Boom Is Underway In Ghana

Several African countries have welcomed investment in oil and gas in recent years, as parts of the continent undergo industrialization and investors look to develop new reserves. Africa provides companies with the potential for low-cost, low-carbon oil and gas in largely unexplored areas.

But governments across the region hope to be more closely involved in operations, ensuring that they get a significant proportion of the revenues to bolster their economies. One such country is Ghana, which expects an oil boom over the next decade and beyond. 

At the COP27 climate summit last year, several African state leaders presented the case for the development of the region’s oil and gas resources. Following a year of shortages and surging energy prices, several countries with oil and gas potential urged investors to develop new, low-carbon operations to meet the global demand without having to rely on aging, carbon-heavy operations. And many energy firms are now viewing regions such as Africa and the Caribbean as vital to their aims to decarbonize. 

In Ghana, there are 17 oil and gas projects in the 2023 to 2027 pipeline. This includes 3 upstream projects, nine projects in the midstream sector, and five new downstream projects.

Ghana is now one of Africa’s fastest-growing hydrocarbon producers. There are several oil operations already underway in the West African country, with Phase 1 of the Pecan Conventional Oilfield as well as the Jubilee South East field and Ntomme Far West Development. 

Pecan is expected to have a capacity of 82,500 bpd when production begins in 2025, with phase 1 costing $1.5 billion. It is operated by exploration and production company Aker Energy Ghana Ltd. (50%); petroleum corporation Lukoil (38%); Ghana’s state-owned Ghana National Petroleum Corporation (GNPC) (10%); and transport company Bulk Ship & Trade (2%). Meanwhile, the Jubilee South East field should begin producing 37,000 bpd by the end of the year. The field is operated by Tullow Oil (38.98%), deepwater exploration and production company Kosmos Energy (38.61%); the GNPC (19.69%); and South Africa’s National Oil Company (NOC) PetroSA (2.72%). Ghana hopes to discover further oil and gas deposits in the Ntomme Far West Development, with a pre-feasibility analysis having taken place and exploration drilling planned for later this year. 

Meanwhile, the country’s midstream sector will expand alongside exploration and production operations. Ghana plans to develop the Tema Floating Liquefied Natural Gas (FLNG) Plant, the Tema VI Liquids Storage Terminal, the Dixcove Oil Storage Facility, the Wa Oil Storage Facility and the Tema-Akosombo II and Tema Pipelines between 2023 to 2027. 

In March this year, the African Energy Chamber stated that Ghana hopes to double its oil output by the end of the year, from 180,000 bpd to 420,000 bpd. The CEO of the Petroleum Commission of Ghana, Egbert Faibille Jr., stated “Ghana has positioned itself to attract investments in the energy sector.

We present one of the best investment opportunities in the sub-region. Following the Jubilee discovery in 2007, 30 additional discoveries have been made and are pending appraisal and development. Ghana guarantees attractive fiscal terms. These terms have proven over the years to provide a favorable investment framework.” Faibille added, “We have several blocks open for direct negotiation and three available for farm-in opportunities.

We have some fields that are in pre-development, so if we are able to get contractors, we should see a surge in production by 2030.”

Ghana’s oil operations are already well underway, with the country expecting to open a new $1.98 billion oil refinery in Tema this month.

The Sentuo Group’s facility is expected to produce 5 million metric tonnes of petroleum products including liquified petroleum gas (LPG), jet fuel, gasoline, diesel, and fuel oil. Ghana’s Minister of Trade and Industry confirmed last month that Sentuo is in discussions with the government to acquire 500,000 barrels of crude for refining.

By 2025, Sentuo plans to expand the facility to refine 4.26 million tonnes of petroleum products. 

Meanwhile, Britain’s Tullow Oil announced the start of operations at the Jubilee South East (JSE) project in July. The company said that the first well started producing, with another two producers and a water injector expected to come online later in the year. Tullow hopes the field will produce over 100,000 bpd once operational.

The firm’s CEO stated, “Successful start-up at Jubilee South East is a significant milestone for Tullow and for Ghana.” He added, “We are well positioned for future growth with production ramping up in the second half of 2023 that will generate significant free cash flow.

This marks the start of material deleveraging as we continue our transition into a low-debt business with the financial flexibility to pursue value accretive opportunities.” 

Ghana is viewed as Africa’s rising star, thanks to its stable political system, growing economy, and the rapid development of its oil and gas sector.

There are several projects in the pipeline, with oil production expected to increase significantly by 2030. Ghana could provide oil producers with the opportunity to develop the low-cost, low-carbon oil needed to meet the high global demand en route to an eventual global energy transition.

OilPrice.com by Felicity Bradstock, August 23, 2023

Nigeria Looks To Attract Oil & Gas Investment At International Roadshow

Nigeria plans to hold an international roadshow to attract investments in its upstream sector, the petroleum regulator of OPEC’s biggest African oil producer said in a speech shared with Reuters.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to organize in the coming weeks an international roadshow to pitch upstream investments in the country, which looks to boost its oil production and significantly raise its natural gas output.     

NUPRC plans to organize in the coming weeks its first Nigerian Upstream International Investment and Financial Roadshow (NUIIFR) to allow upstream players to network and discuss financial structures to enable investment, representatives of the regulator said in a speech at a conference of the Society of Petroleum Engineers in Lagos earlier this week.

“Whereas the global imperatives for energy transition is clear and justified, the need for Africa’s energy security, economic development and prosperity cannot be overemphasised,” the Nigerian regulator said.

Nigeria aims to significantly increase its oil production to up to 1.7 million barrels per day (bpd) by November 2023, hoping to win a higher quota in the OPEC+ agreement, Gabriel Tanimu Aduda, Permanent Secretary at Nigeria’s Ministry of Petroleum Resources, told Energy Intelligence last month.

Nigeria has consistently failed to produce to its quota in the OPEC+ agreement. The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance. Oil theft and pipeline vandalism have long plagued Nigeria’s upstream oil and gas industry, driving majors out of the country and often resulting in force majeure at the key crude oil export terminals.

Nigeria’s quota was 1.742 million bpd earlier this year, but due to its underproduction of more than 400,000 bpd, the output cap for Nigeria was lowered to 1.38 million bpd at the OPEC+ meeting in early June.

Oilprice.com by Charles Kennedy, August 8, 2023

One Sector To Watch Oil As Oil Prices Rally

After remaining range-bound for much of the second quarter, oil prices have mounted a significant rally, with analysts saying oil markets are finally waking up to the fact that fundamentals have tightened significantly. After remaining in surplus for months, many experts have predicted that demand will begin to surpass supply thus improving oil prices and margins for oil refiners.

For instance, StanChart’s demand model projects a supply deficit of 2.81 million barrels per day in August; 2.43 mb/d in September and more than 2mb/d in November and December.

The analysts have also projected that global inventories will fall by 310 mb by end-2023 and another 94 mb in the first quarter of 2024 thus pushing oil prices higher.  

Although U.S. oil refinery margins have halved since the middle of 2022, they remain at historically high levels and are likely to remain elevated through the summer of 2023 thanks to high operating rates and low fuel stocks.

Gross margins for refining three barrels of crude to produce two barrels of gasoline and one barrel of distillate fuel oil have retreated to $33 per barrel from a record $60 at the start of June 2022. Still, margins are in the 95th percentile for all trading days since 2001, underpinning refinery profitability and encouraging high levels of capacity utilization. 

Revenues and profits for refining companies have declined from last year’s historical highs but remain at healthy levels. Here are three refining stocks to keep an eye on.

Marathon Petroleum Corp

Market Cap: $54.3B

Dividend Yield: 2.6%

YTD Returns: 22.5%

Marathon Petroleum Corporation (NYSE:MPC) is an integrated downstream energy company and the largest petroleum refinery operator in the United States. The company’s latest earnings revealed strong refinery demand despite general economic malaise. Marathon’s Q2 2023 revenue of $36.82B (-32.1% Y/Y) beats the Wall Street consensus by $2.94B while GAAP EPS of $5.32 beat by $0.74.

Net income fell to $2.23B, or $5.32/share, from $5.87B, or $10.95/share from a year ago while adjusted EBITDA was cut in half to $4.53B from $9.06B a year ago. Refining & Marketing segment adjusted EBITDA fell to $11.88/bbl from $27.79/bbl for the prior-year quarter while segment margin was $22.10/bbl compared with $37.54/bbl in last year’s corresponding quarter.

Crude capacity utilization clocked in at 93% with total throughput of 2.9M bbl/day.

Marathon Ol continues returning copious amounts of cash to shareholders: The company revealed that it returned ~$3.4B of capital through $3.1B of stock buybacks and $316M of dividends in the second quarter. The company’s diversification into renewables gives Marathon Oil better protection from fluctuating oil prices and refining margins.

PBF Energy Inc.

Market Cap: $6.0B

Dividend Yield: 1.3%

YTD Returns: 26.2%

PBF Energy Inc. (NYSE:PBF) engages in refining and supplying petroleum products. PBF is one of the youngest oil refiners in the United States having been created in 2008. The company released its quarterly earnings report on Thursday, with revenue of $9.16B (-34.9% Y/Y) beating by $230M while Q2 Non-GAAP EPS of $2.29 beat by $0.05.

In-line with the industry trend, Q2 net income fell to $1.02B, or $7.88/share, from $1.2B, or $9.65/share, in the year-earlier quarter.  production fell slightly to 945,700 bbl/day from 958,800 bbl/day a year earlier. Refinery throughput fell to 935,800 bbl/day from 958,800 bbl/day a year ago and expects full-year production to average 915K-975K bbl/day.

And, just like its bigger peer, PBF Energy is diversifying into renewables: the company announced it had begun operations at its St. Bernard renewable fuel joint venture in New Orleans, and managed to sell the first products from the facility in July. The 50-50 joint venture with Eni S.p.A.(NYSE:E) has a processing capacity of ~1.1M tons/year of raw materials and will produce ~7.3M bbl/year of renewable diesel.

Phillips 66

Market Cap: $48.5B

Dividend Yield: 3.9%

YTD Returns:9.0%

Phillips 66 (NYSE:PSX) is one of the oldest refineries in the United States. The company operates as an energy manufacturing and logistics company, with its refining segment one of its largest. Phillips 66 reported Q2 Non-GAAP EPS of $3.87, beating the consensus by $0.31.

The company does not report revenue figures but said it generated $1.0 billion of operating cash flow ($2.0 billion excluding working capital).  Realized refining margins fell to $15.32/bbl from $28.62/bbl a year ago. Phillips 66 revealed that it plans to run its refineries in the mid-90% range of their combined crude oil throughput capacity of 1.9M bbl/day in Q3, close to second quarter’s figure at 93%.

Phillips 66 announced that its Rodeo refinery in California will be fully converted to renewable diesel production by the first quarter of 2024 when it is scheduled to begin commercial operation.

Oilprice.com by Alex Kimani, August 8, 2023

Iraq Launches Bids for Seven Oil Refinery Projects

Iraq has invited investors to build seven oil refineries in various parts of the country as part of a post-war drive to rebuild its oil and gas sector, Zawya Projects reported, citing the local press reports.

Bids for three refineries opened on Wednesday while offers for three other refineries will be submitted in April, they said, quoting Oil Minister Hayan Abdul Ghani. 

The bidding date for the seventh refinery will be set later, the Minister said, adding that the projects are intended to boost Iraq’s refining output capacity. 

“These investment opportunities constitute a shift in the government’s strategy towards encouraging foreign investment in oil refining and opening new horizons for international companies and the local private sector in this industry,” Abdul Ghani said. 

The first three projects comprise a 50,000-barrels-per-day refinery in the Southeastern Maysan Governorate, a 70,000-bpd refinery in Nineveh Governorate in North Iraq and a refining unit in the Southern Basra city with a capacity of 30,000 bpd. 

The other three projects for April include a 50,000-bpd refinery in the Southern Dhi Qar Governorate, a 100,000-bpd unit in Wasit in East Iraq and a refinery with a capacity of 70,000-bpd in Muthanna in South Iraq.

The seventh refinery has a capacity of 70,000 bpd and is located in the Western Alanbar Governorate.

Oil&Gas by Staff Writer, March 15, 2023

Kazakhstan to Start Transporting Oil to Germany via Russian Pipeline in January

In January 2023, Kazakhstan will try to transport oil to Germany through the “Dostyk” pipeline as a test. This was stated in the press release of “Kazmunaigaz” company dated December 21.

“The raw materials of KMG’s oil producing organizations are sent to domestic oil refineries to fulfill the obligations to deliver oil products to the domestic market of Kazakhstan. And the volume of KMG’s oil for export is delivered to a single system trader – KMG Trading, which first meets the needs of oil refineries of “KazMunayGas” in Romania. The rest of the oil for export will be sold under long-term contracts. In addition, “KazMunayGas” is considering the possibility of sending a test batch of oil to Germany in January 2023, according to the president’s order,” said Magzum Myrzagaliyev, head of KMG, on December 20.

According to KMG, on December 20, the leaders of “Kazmunaigaz” held an online meeting with the representative of the German Ministry of Economy and Climate Protection, and an offline meeting with the Bundestag deputy Christian Gerke in Astana. The parties discussed the export of Kazakhstani oil to an oil refinery in Schwedt, Germany. The German side has expressed interest in regular transportation of raw materials through the “Dostyk” oil pipeline.

“The head of KMG noted that it is possible to export Kazakhstan’s oil to Germany through the mentioned oil pipeline, but it is necessary to resolve contractual and technical issues,” KMG reported.

The parties “expressed hope for further continuation of mutually beneficial cooperation”.

Located in the city of Schwedt, the oil refinery with the capacity to process more than 10 million tons of crude oil per year supplies fuel to Berlin and most of East Germany.

The “Dostyk” pipeline is one of the largest channels for transporting Russian oil to the EU. It starts from Russia and one branch goes to Belarus, Poland, Germany, Latvia, Lithuania.

By The Paradise, December 28, 2022

The Vopak Pacific Canada Project Has Reached a Significant Project Milestone

The Vopak Pacific Canada project has reached a significant project milestone with the final determination of its Federal environmental effects evaluation review. Vopak Development Canada Inc., a wholly-owned subsidiary of Royal Vopak, is investigating the opportunity to construct, own and operate a bulk liquids storage facility located on Ridley Island within the lands and waters under the jurisdiction of the Prince Rupert Port Authority.

The Prince Rupert Port Authority, Environment and Climate Change Canada, and Transport Canada (together called the “Federal Authorities”) have determined, in accordance with the requirements of Section 67 of the Canadian Environmental Assessment Act, 2012 (“CEAA 2012”) and Section 82 of the Impact Assessment Act (IAA), that the Vopak Pacific Canada Project is not likely to cause significant adverse environmental effects. Throughout the environmental review process, Federal Authorities consulted with the Indigenous Nations on the project’s potential impacts to the environment, Indigenous peoples, and their Interests and Rights.

This project received its Environmental Assessment Certificate from the British Columbia Environmental Assessment Office in April 2022.

This concludes both the Federal and Provincial environmental review processes, which is a prerequisite for the Federal Authorities to consider the required authorizations for the project to proceed. Vopak continues to work toward obtaining remaining permits and making a Final Investment Decision on the project.

By Tank Storage Mag, December 6, 2022

Mauritania and BP to Explore Green Hydrogen Projects

BP (BP.L) has signed an agreement with Mauritania to explore ways to develop low-carbon hydrogen on a large scale in the West African country, the British energy company said on Tuesday.

The memorandum of understanding, which does not include a timeframe or targets for the project, aims to build on BP’s presence in a country where it is already developing a large liquefied natural gas (LNG) facility.

Under the plan, BP will initially study the feasibility of building onshore wind and solar farms that are required for production of green hydrogen, which is produced by electrolysis using renewable energy.

“This is really the first phase of what we expect to be a pretty long-term development programme in Mauritania,” BP’s head of hydrogen, Felipe Arbelaez, told Reuters.

Later phases would focus on building electrolyisis and then hydrogen export infrastructure, Arbelaez added.

The MoU was signed by Mauritania’s president Mohamed Ould Ghazouani and BP Chief Executive Bernard Looney on the sidelines of the COP27 climate talks in the Egyptian coastal resort town of Sharm el-Sheikh.

BP is aiming for a sharp increase to hydrogen production under Looney’s plan to shift the company away from oil and gas in the coming decades.

By Reuters, November 21, 2022

Saudi Aramco To Pump $7 bln Into Biggest Petchem Investment In South Korea

Saudi Aramco (2222.SE) plans a $7-billion investment at a South Korean affiliate’s factory in the port city of Ulsan to turn out more high-value petrochemical products, the company said on Thursday.

The project, named Shaheen, is the Saudi firm’s biggest investment in the Asian nation to develop one of the world’s largest refinery-integrated petrochemical steam crackers, Aramco said in a statement.

Saudi Aramco owns more than 63% of South Korean refiner S-Oil Corp (010950.KS).

Construction of the new plant will begin in 2023 and be completed by 2026. It will have production capacity of up to 3.2 million tonnes a year, along with a facility to produce high-value polymers, Aramco said.

The steam cracker is expected to process by-products from crude processing, including naphtha and off-gas, to make ethylene, and is also expected to produce propylene, butadiene and other basic chemicals.

On completion of the project, S-Oil’s chemical yield, by volume, could almost double to 25%, Aramco said.

Global petrochemical demand growth is “anticipated to accelerate, driven in part by rising consumption from Asia’s emerging economies,” Chief Executive Amin Nasser said in the statement.

The project is well positioned to meet rising demand from Asia’s industries, he added.

The news came in conjunction with Saudi Arabian Crown Prince Mohammed bin Salman’s visit to South Korea on Thursday.

Reuters by Joyce Lee, November 18, 2022

World Is In Its ‘First Truly Global Energy Crisis’ – IEA’s Birol

Tightening markets for liquefied natural gas (LNG) worldwide and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis”, the head of the International Energy Agency (IEA) said on Tuesday.

Rising imports of LNG to Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for the fuel will tighten the market as only 20 billion cubic meters of new LNG capacity will come to market next year, IEA Executive Director Fatih Birol said during the Singapore International Energy Week.

At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut 2 million barrels per day (bpd) of output is a “risky” decision as the IEA sees global oil demand growth of close to 2 million bpd this year, Birol said.

“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

Soaring global prices across a number of energy sources, including oil, natural gas and coal, are hammering consumers at the same time they are already dealing with rising food and services inflation. The high prices and possibility of rationing are potentially hazardous to European consumers as they prepare to enter the Northern Hemisphere winter.

Europe may make it through this winter, though somewhat battered, if the weather remains mild, Birol said.

“Unless we will have an extremely cold and long winter, unless there will be any surprises in terms of what we have seen, for example Nordstream pipeline explosion, Europe should go through this winter with some economic and social bruises,” he added.

For oil, consumption is expected to grow by 1.7 million bpd in 2023 so the world will still need Russian oil to meet demand, Birol said.

G7 nations have proposed a mechanism that would allow emerging nations to buy Russian oil but at lower prices to cap Moscow’s revenues in the wake of the Ukraine war.

Birol said the scheme still has many details to iron out and will require the buy-in of major oil importing nations.

A U.S. Treasury official told Reuters last week that it is not unreasonable to believe that up to 80% to 90% of Russian oil will continue to flow outside the price cap mechanism if Moscow seeks to flout it.

“I think this is good because the world still needs Russian oil to flow into the market for now. An 80%-90% is good and encouraging level in order to meet the demand,” Birol said.

While there is still a huge volume of strategic oil reserves that can be tapped during a supply disruption, another release is not currently on the agenda, he added.

ENERGY SECURITY DRIVES RENEWABLES GROWTH

The energy crisis could be a turning point for accelerating clean sources and for forming a sustainable and secured energy system, Birol said.

“Energy security is the number one driver (of the energy transition),” said Birol, as countries see energy technologies and renewables as a solution.

The IEA has revised up the forecast of renewable power capacity growth in 2022 to a 20% year-on-year increase from 8% previously, with close to 400 gigawatts of renewable capacity being added this year.

Many countries in Europe and elsewhere are accelerating the installation of renewable capacity by cutting the permitting and licensing processes to replace the Russian gas, Birol said.

Reuters by FLorence Tan, October 31, 2022

Exxon to Partner With CF Industries to Capture Carbon and Make ‘Blue’ Ammonia

Houston-based Exxon Mobil and fertilizer-maker CF Industries are partnering to make “blue” ammonia, a product the companies said could play an important role in decarbonizing industrial facilities such as refineries, petrochemical plants and power generators.

CF Industries, headquartered in suburban Chicago, said it will develop a $200 million carbon capture unit at its nitrogen facility south of Baton Rouge. Exxon will then, through a deal with pipeline company EnLink, move the carbon dioxide to Exxon’s geologic storage facility in Western Louisiana. The project is expected to be operational in early 2025.

Exxon said carbon capture projects are gaining new momentum because of incentives included in the Inflation Reduction Act signed into law in August. The oil major aims to make a name for itself in the carbon capture and management space, offering the services to facilities in Texas and Louisiana that are looking to slash their emissions.

“Exxon Mobil is providing a critical and scalable solution to reduce CO2 emissions,” Exxon’s Low Carbon Solutions President Dan Ammann said, “and we’re ready to offer the same service to other large industrial customers in the state of Louisiana and around the world.”

Through its new partnership with Exxon, CF Industries will capture 2 million metric tons of carbon dioxide from its Donaldsonville, La., facility that would otherwise be released into the air around its facility, the company said. Exxon says the carbon reduction is equal to replacing 700,000 gasoline-powered cars with electric vehicles.

Capturing the carbon created in its manufacturing process will enable CF Industries to market nearly 2 million metric tons per year of “blue” ammonia, the term used for products made with carbon capture technology that catches and stashes away emissions made during manufacturing.

Carbon-neutral ammonia, in particular, could play an important role in decarbonizing industrial facilities such as refineries, petrochemical facilities and power generation plants, the companies said. It can be used both as a fuel itself or as a way to make hydrogen fuels.

“CF Industries will be first-to-market with a significant volume of blue ammonia,” said CF Industries CEO Tony Will. “This will enable us to supply this low-carbon energy source to hard-to-abate industries that increasingly view it as critical to their own decarbonization goals.”

By Houston, September 20, 2022