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Major oil companies withdrawing from Southern Africa

BP is no longer trading in Kenya, Tanzania, Zambia, Zimbabwe, Malawi, Namibia, Swaziland, Lesotho, Botswana or Malawi.

In some of these countries had a BP presence for almost a century. Were all these BP associate companies suddenly unprofitable or was something deeper at work?

The sub-Saharan oil industry has registered the withdrawal from the region of major oil companies.

A clue could be the recent spat between Chevron and a new oil industry entrant in Cape Town in the shape of a black economic empowerment company called Burgan. Chevron claims it threatens the viability of their refinery with its ability to import, store and sell motor fuels.

Chevron’s complaints go further. Probably speaking for the other South African crude oil refiners, it points bitterly to the refusal or delay, by the government, to allow a “cost recovery mechanism” to make it worthwhile to upgrade local refineries to produce the higher quality fuels demanded by motor manufacturers.

Chevron argues that our regulated oil industry is a strategic asset with sacred status. It believes nothing should be changed without industry approval.

A more powerful reason for a reluctance to invest in new plant without a sweetener from the Treasury may be found in what has been happening in Saudi Arabia and India. In both countries there are now new and massive crude oil refineries producing, and selling to all comers, large volumes of motor fuels and other petroleum products.

The nearest customers for production surpluses of these huge refineries are in Africa, particularly those on its eastern seaboard – South Africa being the biggest.

The economies of scale is deadly. Saudi Arabia can undercut any refinery far from crude oil sources – such as those in Durban, Cape Town, and Gauteng. It can also produce the new higher quality fuel. Local refineries cannot do so.

South Africa’s crude oil refining capacity is 553 000 barrels a day. Saudi Arabia production is huge by comparison. Estimates are 3 million barrels a day and upwards. Some analysts (The Wall Street Journal) expect Saudi Arabian refining capacity to rise to 8 million barrels a day within a decade. Others predict 12 million barrels a day within 10 years.

Not only Saudi refineries pose a severe threat to our local ones. There are large ones in India too. In particularly the one recently completed by Reliance. It alone can produce more that all six of our refineries (including Sasol) combined. It has a reported capacity of 1.2 million barrels a day. It is the world’s largest.

Source: IOL

Ukrainian army leaves fracking equipment behind

On the outskirts of the village of Shishkovo under the snow and rain rusts the expensive equipment: four residential trailers for employees, diesel substation and equipment for conducting seismic surveys. Judging by the labels this equipment was certified in the U.S., and now it is in possession of the people of Donbass.

Local residents recall that this was a temporary base of geologists from Ukrgazdobicha. The residents of the Shishkovo witnessed the beginning of the work.

“This equipment was brought at a time when in June the Ukrainian tanks came from Metallist and started shelling the city. As we suppose, Kiev authorities planned a quick capture of South-East, Donbass in particular, for further extraction of shale gas,” explains a local resident Vladimir.

“They were from Western Ukraine. Geo-research. They were saying something about gas, said there is shale gas here. First there were two vehicles, then 10 -12. There was a lot,” says a resident.

Earlier the field was divided into squares, here the expert gasman conducted seismic studies and measurements and were preparing to install a rig.

Local mechanics and welders were not hired, because many of the them spoke out against the extraction of shale gas.

The residents of Shishkovo were not notified of the purpose of the camp. The camp was staffed mainly with residents of Western Ukraine, which is revealed by the documents left behind : “Ivano-Frankovsk, Cherkassy, Poltava region, Zhitomir region.” The documents also mention both gas and oil research.

According to the paperwork for 2013 found onsite, similar bases were also located in villages Shevchenko, Raigorodka and Gerasimovka.

As the local residents say, the research continued until the Ukrainian national guard had left. Along with tanks and howitzers the Ukrainian soldiers also took part of the seismic equipment, but in the rush they did not have the time to gather everything.

This abandoned base can be observed well from the Ukrainian side of the frontline. Just over this field, a mile from the abandoned base is the town of Schastye, which is under the complete control of the Ukrainian army. Even now, in the midst of a ceasefire it is not safe to be here. Locals say that during evening hours the Ukrainian Armed forces and volunteer battalions begin to fire at each other.

Translated from Russian LifeNews

Petrodollars quit world markets for first time in 18 years

Energy-exporting countries are set to pull their “petrodollars” out of world markets this year for the first time in almost two decades, according to a study by BNP Paribas.

Driven by this year’s drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.

Brent crude futures have fallen 23 percent this year, with 2014 promising to be only the second year since 2002 that crude prices will end the year lower than they began it.

This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.

This year, however, the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to BNP Paribas calculations.

Petrodollar recycling peaked at $511 billion in 2006, BNP said.

“At its peak, about $500 billion a year was being recycled back into financial markets. This will be the first year in a long time that energy exporters will be sucking capital out,” said David Spegel, global head of emerging market sovereign and corporate Research at BNP.

In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.

Spegel acknowledged that the net withdrawal was small. But he added: “What is interesting is they are draining rather than providing capital that is moving global liquidity. If oil prices fall further in coming years, energy producers will need more capital even if just to repay bonds.”

The reversal is largely down to Russia and the rest of the ex-Soviet Union, which BNP estimates have withdrawn $57 billion from world markets.

Russian companies have been shut out of global markets since Western countries imposed sanctions because of the conflict in Ukraine. Those companies are increasingly forced to rely on their own cash reserves or central bank funding to meet external debt repayments.

SA ‘link’ in Niger boat attack

Thirteen police officers were feared dead after their boat was attacked by armed men in the oil-rich Niger Delta, local media reported on Sunday.

The officers were en route late on Friday to a funeral ceremony in which they were to provide security when their boat was attacked in a mangrove swamp in southern Bayelsa state, Nigerian newspaper Vanguard reported.

The officers are assumed to have drowned after their boat was sunk by the assailants, the paper reported.

Three policemen reportedly survived the attack.

No group has claimed responsibility. However, the focus has turned to the Emancipation of the Niger Delta (MEND), which recently threatened to launch attacks in response to the sentencing of its former leader, Henry Okah, by a South African court to 24 years in jail for a 2010 bombing.

MEND rejected the sentence on its leader, Okah, by Justice Neels Claaseen of the South Gauteng High Court.

He was found guilty of several charges of terrorism in the Independence Day bombings in Abuja in 2010 and sentenced to 24 years in jail.

In a statement signed by “Comrade Azizi,” purportedly on behalf of MEND, the group said, “Boko Haram has killed more innocent Nigerians than any other militancy groups in the country and yet their spokesperson was handed a three year sentence, this is the height of injustice to our region and people which will be resisted by all means necessary.”

The statement said that consultations were ongoing with some stakeholders and elders of the region and that its position will be made known thereafter.

“The gate of hell has just been let loss, (sic),” the statement declared. – Sapa