Industry

The acquisition was a direct result of the NOC's pre-emptive rights. (Image source: Adobe Stock)

The Gabon National Oil Company has acquired exploration and production company Assala Energy from Carlyle 

This was the direct result of the NOC's pre-emptive rights, which the company excercised in November last year to initiate a sale and purchase agreement with Carlyle in February. Previously, Maurel & Prom was running for the Assala acquisition. 

Strategic acquisition 

The NOC tied up with Switzerland-based global energy commodities trading company, Gunvor Group, which offered financial support for the acquisition. 

“Gunvor is proud to have been selected as Gabon’s partner for this strategic acquisition,” said Stephane Degenne, member of Gunvor Group’s executive committee. “As a leading global oil trading company, Gunvor brings its strengths – global market expertise and financing – to support GOC’s energy agenda.”

Assala's daily production count remains around 45,000 barrels. Marcellin Simba Ngabi, Gabon Oil Company’s CEO, considers this acquisition a means for reinforcing control and sovereignty over its oil and gas reserves to increase revenues. Gabon continues to experience rich discoveries, with BW Energy-operated Hibiscus field being one of the latest instances. The northern flank of the field received sustantial oil with good reservoir quality. 

The AEB is a joint project by APPO and Afreximbank. (Image source: APPO)

In the true spirit of self-sufficiency, the establishment agreement and charter of the Africa Energy Bank (AEB) was signed this month in Cairo by Benedict Okey Oramah, president of African Export-Import Bank (Afreximbank) and Omar Farouk Ibrahim, secretary general, African Petroleum Producers' Organisation (APPO) 

The founding documents now await ratification from the Member Countries of APPO. 

A selection committee will be appointed to choose the host country for AEB's headquarters. Countries in the running include Algeria, Benin, Côte d’Ivoire, Ghana, Nigeria and South Africa.

A joint project by the APPO Member Countries and Afreximbank, the initial resolution for the establishment of the AEB was passed in the APPO Ministerial Council in 2022 to build financial support for the continent's rich oil and gas industry.

The primary objective of this development bank would be to support the domestic market, while prioritising the states that have given ratification as benefitiaries. 

APPO has always been enthusiastic in promoting local content in the oil and gas industy, and its recent memorandum of understanding with African Energy Chamber endeavours to empower local companies to become world-class operators capable of delivering major projects. 

Supporting domestic market

National companies in the hydrocarbon and energy sectors, as well as any private or public entity, having an impact on the development of the industry in the Member Countries will also have access to AEB's services. 

During the OPEC-Africa Energy Dialogue 2024 held in Cairo, the Africa Refineries and Distributors' Association (ARDA) expressed interest on providing prospective downstream projects for the AEB initiative.

A working group was brought together to develop the essential technical aspects of AEB's establishment. 

The bank is counting on an initial capital of US$5bn, and anticipating robust growth due to huge sector demands. Nigeria, Angola and Ghana have begun contributing their shares of a minimum amount of US$83.33mn that is expected of each Member Country to advance the project's capitalisation. 

The partners will also initate key staff recruitment for the AEB’s development.

Strong demand is still expected from the booming petrochemicals sector. (Image source: Adobe Stock)

Oil 2024, the latest edition of the IEA’s annual medium-term market report, forecasts that growth in global demand for oil will slow in the coming years as energy transitions advance, with a major supply surplus emerging this decade

The report forecasts that global oil demand, which including biofuels averaged just over 102mn bpd in 2023, will level off near 106mn bpd per day towards the end of this decade, with growth in demand peaking before 2030.

Speaking at a press briefing, Dr Fatih Birol, IEA executive director, highlighted three major drivers of the slowdown:

1. – Transportation – The increasing penetration of electrical vehicles (EV)s. in China, Europe, USA and increasingly the emerging markets, currently accounting for more than one in five car sales. Dr Birol noted the increasing cost competitiveness of electrical cars in China, the driver of EV car penetration. Ongoing fuel efficiency improvements are also a factor;
2. – Electricity generation – Many of the oil producers in the Middle East and North Africa, who currently use a significant proportion of oil to generate electricity, are shifting to renewables or natural gas for electricity generation;
3. – China – Most importantly, the expected slowdown in China’s economic growth to around 4% from just over 6% a year, given the country has accounted for around 60% of demand growth in the last 10 years.

While strong demand growth is expected from fast-growing economies in Asia, as well as from the aviation and booming petrochemicals sectors, this will not be enough to offset the above factors.

Surge in production capacity

At the same time, a surge in non-OPEC global oil production capacity, led by the USA and other producers in the Americas, such as Argentina, Brazil, Canada and Guyana, is expected to outstrip demand growth between now and 2030, with non-OPEC producers expected to account for three quarters of the expected increase to 2030, or 4.6mn bpd. Saudi Arabia, the United Arab Emirates (UAE) and Iraq are expected to lead a 1.4 mn bpd rise in OPEC+ oil capacity.

Total supply capacity is forecast to rise by 6mn bpd to nearly 114mn bpd by 2030 – a staggering 8mn bpd above projected global demand, the report finds. There is also the prospect of OPEC+ rewinding production cuts from later this year. This would result in unprecedented levels of spare capacity over the forecast period, with major implications for oil markets – including for producer economies in OPEC and beyond, as well as for the US shale industry.

“Some producers are already making adjustments, with Saudi Arabia putting on hold planned oil capacity expansion to focus on gas, which is where we see the main demand this coming decade,” commented Toril Bosoni, the head of the IEA’s Oil Industry and Markets Division. at the press briefing.

“This report’s projections, based on the latest data, show a major supply surplus emerging this decade,” said Dr Birol, noting the consequences of an oversupply would be downward pressure on prices, with implications both for producers and consumers. “Oil companies may want to look at these supply and demand trends and make sure their business strategies and plans are in line with market realities,” he added.

According to the report, global refining capacity is on track to expand by 3.3mn bpd between 2023 and 2030, well below historical trends. However, this should be sufficient to meet demand for refined oil products during this period, given a concurrent surge in the supply of non-refined fuels such as biofuels and natural gas liquids (NGLs). This raises the prospect of refinery closures towards the end of the outlook period, as well as a slowdown in capacity growth in Asia after 2027.

The new engine power plant can run on natural gas and 25 vol% hydrogen blends. (Image source: Wartsila)

Addressing the just transition ideology of Africa, technology group Wärtsilä has introduced a purely hydrogen-ready engine power plant

Guided by the IEA World Energy Outlook 2023 that predicts hydrogen consumption to reach 51 mt by 2050, Wärtsilä's launch establishes the importance of an energy mix. Sustainable fuels like hydrogen and natural gas are significant to balance the fluctuating renewable energy sources. 

Wartsila has been working towards ensuring energy mix since the last few years, when it announced the conversion of the heavy fuel-operated Bel-Air power plant in Dakar to LNG. 

The new engine power plant can run on natural gas and 25 vol% hydrogen blends.

Addressing energy security

Anders Lindberg, president, Wärtsilä Energy, said, “We will not meet global climate goals or fully decarbonise our power systems without flexible, zero-carbon power generation, which can quickly ramp up and down to support intermittent wind and solar.

“We must be realistic that natural gas will play a part in our power systems for years to come. Our fuel flexible engines can use natural gas today to provide flexibility and balancing, enabling renewable power to thrive. They can then be converted to run on hydrogen when it becomes readily available: future-proofing the journey to net zero.

“This is a major milestone for us as a company, and the energy transition more generally, as our hydrogen-ready engines will enable the 100% renewable power systems of tomorrow.”

The Wärtsilä 31 engine platform that is the driving force behind the hydrogen-ready power plant is designed for instant operation, synchronising with the grid within 30 seconds from start command.

Having completed more than 1 million running hours, with over 1,000 MW installed capacity globally, the platform offers unparalleled load following capabilities and high part load efficiency. Its fuel flexibility is hence capable of meeting present challenges of energy security. 

With hydrogen catching up at a rapid pace in Africa, the Wärtsilä 31 engine is all set to hit the markets next year, followed by delivery services from 2026.