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A Nigerian oil reform two decades in the making is urgently needed to get money into its energy sector, industry executives say, as tax increases and regulatory uncertainty scupper investments. Africa's largest oil exporting nation has not carried out a full revamp of the law underpinning its oil and gas sector since the 1960s. Government officials say a sweeping overhaul is imminent and will be presented to the National Assembly next week, which for industry leaders is not a moment too soon.
Italian energy group Edison has begun drilling an exploratory well in deepwater acreage in Egypt, not far from other giant east Mediterranean gas fields, the CEO of Israel-focused gas driller Energean said on Wednesday. Energean is in the process of taking over Edison's Egyptian assets in a deal reached last year. "We're drilling right now in North Thekah, a deep water exploration ... it started a couple weeks ago," Energean CEO Mathios Rigas told reporters on the sidelines of an energy conference in Cairo.
A Milan court has rejected a prosecution request to hear testimony from a former legal adviser of Eni who has accused the company of spying on judges, offering a boost to the Italian oil firm as it fights bribery allegations over a Nigerian oil field. The ruling removes the prospect of months of testimony voicing allegations of wrongdoing by Eni and sets a timetable for finally reaching a verdict in the long-running case. The decision is the second piece of bad news in a few days for Milan prosecutors after a witness last week refused to confirm a key statement.
Russian oil pipeline monopoly Transneft faces claims of up to $1 billion related to contaminated oil, more than double its own estimates, industry sources said, setting the stage for protracted haggling with oil suppliers. Up to 5 million tonnes of tainted Russian oil was contaminated en route to central Europe via the Druzhba pipeline. State-owned Transneft, the supplier of Urals crude to Russia's Baltic port of Ust-Luga, as well as the operator of the Druzhba pipeline, has set aside 23 billion roubles ($371 million) for compensation related to tainted oil.
A witness in a graft case involving oil contracts in Nigeria refused to confirm a key statement during a court hearing on Wednesday, offering a possible boost to Italian oil major Eni, which is fighting allegations of bribery. In one of the oil industry's biggest scandals, Italian prosecutors allege Eni and Shell bought a Nigeria oilfield in 2011, knowing that most of the $1.3 billion purchase price would be siphoned off to agents and middlemen.
(Bloomberg) -- Versión en español Facing economic collapse and painful sanctions, the socialist government of Venezuelan President Nicolas Maduro has proposed giving majority shares and control of its oil industry to big international corporations, a move that would forsake decades of state monopoly.Maduro’s representatives have held talks with Russia’s Rosneft PJSC, Repsol SA of Spain and Italy’s Eni SpA. The idea is to allow them to take over government-controlled oil properties and restructure some debt of state oil company Petroleos de Venezuela SA in exchange for assets, according to people with knowledge of the matter.The proposal, which could offer a balm to the country’s disintegrating oil industry, is in early stages and faces major obstacles. Venezuelan laws would have to be changed, there is disagreement over how to finance the operations, and Washington’s sanctions bar any U.S. companies from doing business with the Maduro regime without a waiver. The sanctions have also discouraged non-U.S. firms from investing in Venezuela.Once an admired state-dominated company producing 3.5 million barrels per day, PDVSA is pumping at a record-low of 700,000, despite sitting on the world’s largest known reserves. Its finances are in tatters: The central bank’s hard-currency reserves have plunged to the lowest in three decades while the government’s cash holdings total less than $1 billion.National AssemblyFor the U.S. Treasury to change its policy would almost certainly require sign-off from opposition leader Juan Guaido, who is backed by Washington over Maduro and is the leader of the National Assembly, where laws are passed.While Guaido and the opposition favor increasing foreign participation and investment in Venezuela, they don’t want to do anything that would help Maduro survive. They are pushing for him to step down and permit new presidential elections.Earlier this month, Maduro-backed troops kept Guaido out of the legislature while pro-government lawmakers selected a new head, Luis Parra. Guaido’s supporters then voted Guaido back in at an off-site meeting, so leadership of the assembly remains in dispute. One reason Maduro sought the new legislative leader was to make it easier to enact the required change in law, according to people familiar with the situation.PDVSA is asking the companies for new investments while they would, if the proposal goes forward, want to be paid from operational flow, two people said. The talks have raised the possibility of turning into equity some of PDVSA’s debt to the companies, the people said.PDVSA and Rosneft didn’t respond to a request for comment. Repsol declined to comment, as did Eni and the U.S. Treasury.Several U.S. contractors, including Chevron Corp., have temporary licenses to operate in Venezuela. It is unclear what would happen to those licenses if the Maduro government were to proceed with this proposal.Crown JewelOil has long been Venezuela’s crown jewel, a resource so precious that stringent restrictions on foreign ownership and involvement are laid out in the constitution.But the country’s crisis, a result of titanic mismanagement, plunging oil prices, corruption and foreign pressure, has caused Maduro to bend many socialist principles recently.He has quietly ended currency and import controls, permitting the growth of a limited dollarized market economy. In a separate effort, he has also engaged in secret talks with holders of some $60 billion in bonds, some of them American, offering to pair them up with a foreign drilling company that would be granted the rights to oil fields as a means of their recouping debt, according to people familiar with the matter.\--With assistance from Rodrigo Orihuela, Olga Tanas and Alex Vasquez.To contact the reporters on this story: Fabiola Zerpa in Caracas Office at email@example.com;Lucia Kassai in Houston at firstname.lastname@example.org;Ben Bartenstein in New York at email@example.comTo contact the editors responsible for this story: Daniel Cancel at firstname.lastname@example.org, Ethan Bronner, David MarinoFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Congo Republic's public debt could be more than one-third higher than the International Monetary Fund estimated when it awarded a bailout last year because of liabilities held by the state oil company, environmental and rights group Global Witness said on Monday. If confirmed, this increase could hinder the OPEC producer's economic recovery from a downturn that began in 2014 when oil prices dropped sharply, causing debt levels to balloon to 118% of GDP in 2017. The IMF plan for Congo Republic was agreed last year after Brazzaville renegotiated a portion of its Chinese debt.
Italian tax police searched the Milan offices of three managers at Eni on Thursday to widen an investigation into suspected obstruction of justice by officials at the Italian oil group, two sources said. The inquiry is still in an early phase and has been overshadowed by an ongoing corruption trial centering on the 2011 purchase of a Nigerian oilfield by Eni and oil major Royal Dutch Shell Plc. Milan prosecutors opened the obstruction case in 2018 to investigate whether in 2015 and 2016 Eni officials had sought to discredit two independent board members who later became witnesses in the Nigeria case.
Nigeria's financial crimes watchdog charged a former attorney general suspected of taking bribes to facilitate a $1.3 billion oil block sale, the agency said on Tuesday, in the latest twist in one of the industry's biggest alleged corruption scandals. An international investigation into the 2011 sale of the offshore oilfield known as OPL 245 by Malabu Oil and Gas has entangled two of the industry's biggest players, Shell and Eni, as well as an array of powerful figures from the previous Nigerian government. Mohammed Adoke, Nigeria's ex-attorney general, was charged with receiving the U.S. dollar equivalent of 300 million naira in 2013 to facilitate the OPL 245 deal and help waive taxes for Shell and Eni, according to a charge sheet filed in an Abuja high court last week.
Italian oil major Eni and France's Total were among the successful bidders for rights to develop three offshore blocks in Angola out of 10 auctioned late last year, the country's petroleum regulator said on Thursday. Eni and Total won operator rights to blocks 28 and 29 respectively in the offshore Namibe basin, while Angola's state oil company Sonangol and majors Equinor and BP won smaller stakes, regulator ANPG said in a statement. Sonangol won a 35% interest in block 27, but the remaining 65% interest is still on offer.
Angola has awarded rights to three offshore blocks, out of a total of 10 auctioned late last year, the country's petroleum regulator said on Thursday. Italian oil major Eni and France's Total won operator rights to blocks 28 and 29, respectively, in the offshore Namibe basin, while Angola's state oil company Sonangol and majors Equinor and BP won smaller stakes, regulator ANGP said in a statement.
(Bloomberg Opinion) -- Broad new horizons in key markets are opening for the world’s energy companies. Don’t expect to see a land rush any time soon. China will allow all large domestic and foreign companies to apply for oil and gas exploration licenses that were previously only open to state-owned enterprises, the country’s resources ministry said at a briefing Thursday. In India, regulators will also let private and international companies bid for a group of coal blocks it’s putting up for auction starting this month, the country’s coal and mines minister Pralhad Joshi said this week, chipping away at a near-monopoly enjoyed by state-controlled Coal India Ltd.A decade or so ago, such announcements might have caused international energy companies to salivate with excitement. All the fear back then was that state-owned giants like Saudi Arabian Oil Co. and Petroleos de Venezuela SA controlled all the viable assets to fuel a coming era of ever-increasing fossil fuel demand, leaving listed businesses running out of reserves. How things have changed.For one thing, it’s national governments rather than independent companies that are now worried about supply shortages. China’s domestic oil production has fallen about 10% since peaking five years ago. India’s coal output is still edging up, but not fast enough to meet demand: Net imports have accounted for about a quarter of consumption in recent years, up from 10% a decade ago.Meanwhile, energy companies are awash with supply. The revolution in fracking means that America’s shale patch would count as one of the world’s top three oil producers if considered on its own. It briefly overtook Saudi Arabia for the number two spot behind Russia after an attack on the Gulf country’s oil facilities in September.Conventional oil and gas discoveries are booming, too, hitting a four-year high of 12.2 billion barrels of oil equivalent last year, according to consultancy Rystad Energy AS. Storied oil majors Exxon Mobil Corp., Total SA, BP Plc and Eni SpA chalked up some of the year’s best discoveries. On the demand side, consumption of petroleum may peak as soon as a decade from now, well within the lifetime of most conventional oilfields.As a result, the interests of fossil fuel producers and the energy-hungry governments seeking to attract them are fundamentally opposed. Beijing and New Delhi ultimately want to boost domestic output at all costs, and hope that foreign businesses can sprinkle some innovative magic that local giants can’t muster. International oil companies, on the other hand, are ruing a decade when they chased barrels to the exclusion of all else. They’re now much more focused on developing only the most profitable fields, wherever they’re to be found.It’s probably unfair to characterize the state-owned Chinese and Indian companies as lazy behemoths, too. PetroChina Co.’s capital spending is bigger than that of Exxon Mobil and BP put together, and about half the wells it drills each year are in the Changqing field, where most new development is in difficult formations similar to those in the U.S. shale patch. Coal India, likewise, is hampered by the fact that most of the country’s coal is high in ash and low in energy, and dependent on a creaky rail network to make it to power stations.The problem, instead, is that the remorseless facts of poor geology make it nearly impossible to develop domestic reserves profitably, especially when government targets are driving state-owned companies to increase output with little regard for cost.Take the Qingcheng field, a corner of the Changqing deposit that counts as PetroChina’s largest single shale find. Even after recent efforts to drive down costs, the internal rate of return for Qingcheng wells is now only 8% to 9%, Cathy Chan, an analyst at CCB International Holdings Ltd., wrote in an October note.It’s fanciful to think this would tempt foreign investors. Such returns barely cover PetroChina’s own cost of capital. In Texas’s Permian basin, comparably low returns were last seen in early 2016, when the local fracking industry was on the brink of collapse. IRRs of 20% to 40% are typical for unconventional petroleum in the U.S. Given the substantial political risks that come from operating in China these days, it’s very hard to see the attraction here for international energy businesses.The best path to energy security for China and India is to encourage their own renewable energy and electrified transport industries — an approach that will improve the health of their populations, reduce climate risks, and leave them far less dependent on imported fuels. That’s a much better idea than wasting money trying to get blood from a stone, or hoping that clever foreigners will be able to find hidden deposits where local talent has failed.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
This article is written for those who want to get better at using price to earnings ratios (P/E ratios). We'll apply a...