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Angola’s Oil and Gas Industry Continues to Provide Huge Opportunities for Investors, Despite Energy Transition – Verner Ayukegba

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Angola oil - Investors King

Over the past three decades, Angola has proven to be a tier one destination for major oil and gas producers. It is for that reason, that the country is host to all major International Oil Companies. As the world continues to debate what energy transition means and what the implications would be, Angola, like many other major oil producers will have to reaccess their oil and gas industry and ist potential to continue being a leading destination for energy investments. Offshore exploration, especially during the boom years of 2002 to 2008, led to oil production in Angola reaching close to 2 million barrels per day, providing Angola with much needed resources for its post-conflict reconstruction.

In light of the ongoing push towards decarbonization, a commitment by many countries, especially western industrialised nations, International energy companies and organisations towards achieving net zero emissions between 2030 and 2050, many have asked if Angola will keepits place as a choice destination for international energy companies.

In order to answer the above question on Angola’s investment attractiveness postively, the government, under the leadership of HE President João Lourenço initiated the National Development Plan 2018-2022 and the revised Hydrocarbon Exploration Strategy 2020-2025 – authorised by Presidential Decree 282/20. This seeks to intensify, research and geologically evaluate concessions and free areas of sedimentary basins for exploration in Angola.

In response to the growing chorus around energy transition, and how this will affect the oil and gas industry in Angola, the Ministry of Mineral Resources and Petroleum, headed by HE Diamantino Pedro Azevedo and other major stakeholders in Angola like the National Oil, Gas and Biofuel’s Agency (ANPG) and SONANGOL are all actively exploring ways of adapting their operations to reflect the new normal. Efforts are being made to encourage more efficient operations that will lead to a reduction in the carbon footprint of operators, lead to less waste, and also increase the commercial use of associated gas. The latter, is likely to increase significantly in importance as a major transition fuel over the next 20-30 years.

Natural gas acts as a key intermediary in the energy transition, releasing fewer emissions than coal and petroleum products, while being able to reliably supply energy to enable production at scale and offset the inherent intermittence of energies. renewables. The Ministry of Mineral Resources and Petroleum is currently leading an ambitious effort to monetize gas reserves by attracting investments into downstream infrastructure and gas-fired power generation projects. The establishment of the New Gas Consortium that represents Angola’s first major natural gas partnership, brings together Eni, BP, Chevron, Total and state-owned Sonangol. Through better use of this resource, natural gas will play a pivotal role not only in supporting Angola’s effort to increase access to electricity, but also in accelerating industrialization and the transition to cleaner energy sources.

It is the government’s hope, that this is only a first step to many more partnerships and a petrochemical industry. Commercialisation of gas can also lead to the establishment of a petrochemical industry that can produce fertilizer to boost agriculture in Angola and regionally. The government has already signalled that it is ready to grant attractive special concessions to major investors in refining and petrochemicals by granting a Gemcorp-Sonaref led consortium lucrative tax concessions to build the 60,000 barrel per day Cabinda refinery. The call for other investors to follow is loud and clear.

In the upstream space, a licensing round in line with Presidential Decree 52/19, which foresees yearly bid rounds until 2025 is ongoing. Angola’s regulator, the ANPG, is intent on attracting interest far beyond the traditional players in Angola’s oil and gas sector. Special attention has been given to attract mid-sized explorers to Angola’s basins that have proven prolific in recent years and provided returns for companies far beyond industry averages in other locations. Six licenses onshore Kwanza Basin and three licenses onshore Lower Congo Basin are currently on offer for this round.

Specifically, the construction of a US$2 billion gas processing plant in Soyo, led by the NGC, will produce refined gas in liquid form that will be directed for export to foreign markets and to the combined cycle power plant of the Soyo, producing energy for the national grid. Meanwhile, Angola’s LNG plant was the first to develop domestic natural gas resources and is one of the largest single investments in the Angolan oil and gas industry. Unlike most installations that use non-associated gas, this plant uses associated gas as a primary power source, thus contributing more significantly to the elimination of gas flaring, to the reduction of greenhouse gas emissions and to the promotion of environmental management. Both installations constitute a critical step on Angola’s path towards the sustainable and efficient use of its natural resources.

Angola, like many other African countries and other stakeholders globally, continues to believe, that there is a role for hydrocarbons in the age of energy transition. It is unreasonable, for western based organisations and governments, who have benefited tremendously from hydrocarbons, to demand of Angola and the rest of Africa that they immediately end the exploration and production of Hydrocarbons for the purpose of the word achieving its emission targets. Africa, with 16.72% of the world’s population, is responsible, according to the UN accounts for less than 3% of global carbon dioxide emissions from energy and industrial sources, compared to 15% for the USA, 16% for Europe and 28% for China. Furthermore, global demand for hydrocarbons is likely to be significant for at least another half a century even as it is expected to decline, according to numerous studies. Furthermore, many African countries like Angola depend significantly on revenue from hydrocarbons for the financing of education, healthcare and job creation. It is therefore unreasonable, to demand a speedy end of such a vital industry.

Natural Gas consumption and production in the USA has increased by close to 100% between 1990 and 2020. This has led to significant reductions in emissions in America, as many coal plants got replaced with gas. Gas has been good for America. It is also good for Africa and Angola. We must therefore support Angola in its quest to develop its gas resources, both for export and industrial use.

It is however important to note, that the Angolan government is committed to promoting renewables. As such, increasing amounts of the government’s expenditure towards expanding access to power are being committed to solar projects, in addition to incentivising public private partnerships in the sector. Italian oil company Eni, in partnership with Sonangol, is leading the construction of a 50 MW solar power plant in Namibe province, which is expected to start operations in 2022. Angola offers investors a unique opportunity to introduce capital, technology and best practices to meet the country’s growing energy demand as well as its development goals.

Angola’s vast opportunities in the development of natural gas and other energy sources will be on display during the upcoming Angola Oil & Gas 2021 Conference and Exhibition, September 9-10, in Luanda, developed in partnership with the Ministry of Mineral Resources and Petroleum. This unique event encompasses a dynamic campaign to promote the energy sector – led by the continent’s leading energy investment platform Energy Capital & Power, formerly Africa Oil & Power – which includes an investment report and documentary Africa Energy Series : Angola 2021, and a series of international representations designed to place Angola at the center of the attention of investors around the world.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Federal Government Announces Free CNG Conversion for Commercial Vehicles

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The Federal Government declared on Thursday that the conversion of petrol and diesel-powered commercial vehicles to run on Compressed Natural Gas (CNG) will be free of charge.

The announcement came after the government signed agreements with several companies specializing in the conversion of petrol and diesel vehicles to CNG.

Michael Oluwagbemi, the Programme Director/Chief Executive of the Presidential Compressed Natural Gas Initiative (P-CNGI), disclosed the details of the program to journalists in Abuja.

“Today we’ve just signed with five partners here in the FCT (Federal Capital Territory) participating in the Conversion Incentive Programme,” Oluwagbemi stated.

“The program is tackling the barrier to Nigerian commercial transport operators to convert from PMS (petrol) to gas. Most of them have said that the cost of conversion is expensive, and so what we are doing here today is basically to respond to that concern.”

Benefits for Commercial Transport Operators

The initiative primarily targets commercial transporters under various unions, including the Road Transport Employers Association of Nigeria (RTEAN), National Union of Road Transport Workers (NURTW), and the Nigerian Association of Road Transport Owners (NARTO).

According to Oluwagbemi, these unionized operators will receive conversion kits and installation services completely free of charge.

“This is going to be done through certified conversion workshops that we are beginning to identify. We’ve identified about 123 of them, and five are here with us today in Abuja. As we expand across the country, we will activate more of them,” he said.

Ride Share Operators Included

In addition to unionized commercial transporters, ride share operators such as those working with Uber, Bolt, Lag-Ride, and Move will also benefit from the program. These operators will receive a 50% discount on the conversion equipment and free installation.

Furthermore, the arrangement allows them to pay for the remaining costs in installments, eliminating the need for upfront payments.

“We hope to add more ride share operators soon. Lag-Ride has already signed up, and we are going to send the agreement next week,” Oluwagbemi added.

Impact on Transportation Costs

Through this program, the government aims to reduce transportation costs for Nigerians. Oluwagbemi highlighted that over 20,000 kits will be available in the next three months, distributed across 25 states with existing CNG capacity.

This initiative is part of a broader palliative program funded by the National Assembly, which has allocated additional resources for the acquisition of more kits later this year.

“The agreement we signed today ensures that the savings from the conversion will be passed on to ordinary Nigerians. We will begin to see some impact in terms of reduced transportation costs,” Oluwagbemi noted.

Monitoring and Enforcement

To ensure the success of the program, the government has implemented a robust monitoring mechanism.

The Nigerian gas vehicle monitoring system will oversee the conversion process and ensure compliance with agreed pricing reductions.

“We have a very strong monitoring mechanism around conversion and the enforcement of reduced pricing for Nigerians. The framework of the agreement includes significant pass-on of savings to ensure the purpose of the palliative is achieved,” Oluwagbemi emphasized.

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CNG to Save Nigerians 40% on Fuel Costs, Says NNPC

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Oil and Gas

The Nigerian National Petroleum Company Limited (NNPC) announced on Thursday that the use of Compressed Natural Gas (CNG) in automobiles will be 40% cheaper than using Premium Motor Spirit (PMS), commonly known as petrol.

The announcement was made during the inauguration of 11 new CNG stations across Abuja and Lagos, part of an ambitious plan to establish 100 such stations nationwide within the next 12 months.

The NNPC’s initiative aims to provide Nigerians with an affordable alternative to petrol, leveraging the country’s abundant natural gas reserves of approximately 209 trillion standard cubic feet.

Huub Stokman, Managing Director of NNPC Retail Limited, highlighted the significance of this development, noting that the expansion of CNG stations represents a major step in diversifying Nigeria’s energy mix and making fuel more accessible and economical for the populace.

“Adding CNG to NNPC stations provides Nigeria with an affordable alternative to existing fuel products. CNG will be about 40% cheaper than petrol in Nigeria. And with continued investments, it could become a significant part of our energy mix,” Stokman stated during the inauguration event in Abuja.

The NNPC has committed to launching over 100 CNG sites within the next year, supported by the establishment of two mechanical training centers combined with conversion centers in Abuja and Lagos.

These centers will facilitate the transition to CNG by providing necessary skills and resources for vehicle conversion and maintenance.

Mele Kyari, Group Chief Executive Officer of NNPC, underscored the company’s dedication to enhancing CNG infrastructure.

“We are constructing six CNG mother stations across the country between now and December, and we are also building three LNG (Liquefied Natural Gas) stations in Ajaokuta. This initiative aims to bring gas closer to consumers, reducing transportation costs and making fuel more affordable,” Kyari said.

The rollout of CNG stations aligns with President Muhammadu Buhari’s initiative to promote sustainable and locally sourced energy solutions.

The new CNG facilities are designed to meet global best practices, ensuring safe, reliable, and efficient service to all customers.

The Executive Vice President of Cleanergy Innovation Ltd, Shettima Imam, emphasized the importance of this collaboration in achieving significant milestones in Nigeria’s energy sector.

The deployment of CNG is expected to provide substantial financial relief to car owners, who have been benefiting from government petrol subsidies ranging between N6 million and N9 million per annum.

With the switch to CNG, an average car owner could save approximately N12 million annually.

“This initiative is not just about providing cheaper fuel; it is about utilizing Nigeria’s natural resources to create a more dynamic and inclusive energy sector,” Imam added.

“The CNG stations are a testament to what can be achieved through collaboration and innovation.”

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IKEDC Revises Tariff for Band A Customers to N209.5/kWh

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Electricity - Investors King

The Ikeja Electricity Distribution Company (IKEDC) has revised its electricity tariff for Band A customers, increasing the rate from N206.80/kWh to N209.5/kWh.

This new tariff, set to take effect on July 1, 2024, is in accordance with the service-based tariff regime.

In a statement posted on its social media platforms, IKEDC assured customers that the adjustment is necessary to sustain and further enhance the improved service delivery currently being experienced across all feeder bands within the Ikeja Electric network.

The company, which provides electricity to parts of Lagos and Ogun states, said the revision applies only to Band A customers, while tariffs for Bands B, C, D, and E will remain unchanged.

“We have undertaken this tariff review to ensure the continued improvement and sustainability of our service delivery,” IKEDC stated. “Customers can be rest assured that this development will further sustain the improved service delivery currently being experienced across all Feeder Bands within the Ikeja Electric network.”

The service-based tariff regime, under which this revision falls, is designed to reflect the quality and consistency of electricity supply provided to consumers.

Band A customers typically receive the highest quality of service with fewer disruptions, hence the adjusted rate is intended to support and maintain this level of service.

IKEDC’s announcement comes amidst ongoing efforts to improve the reliability and efficiency of electricity supply in the region.

The company has been investing in infrastructure upgrades and maintenance to reduce outages and enhance customer satisfaction. The slight increase in tariff is seen as a step towards achieving these goals.

Consumers have been urged to stay informed about the changes and to reach out to IKEDC’s customer service for any clarifications or assistance.

The company also reiterated its commitment to transparency and responsiveness in handling customer queries and concerns.

“We understand that tariff adjustments can be a concern for our customers,” the statement continued.

“However, we want to assure you that this revision is necessary for the continued improvement of our services. We are committed to ensuring that our customers receive value for their money through reliable and consistent electricity supply.”

The reaction from customers has been mixed, with some expressing concern over the increased cost, while others acknowledge the necessity for such adjustments to improve service delivery.

“As long as the electricity supply remains consistent and reliable, a slight increase in tariff is acceptable,” said a resident of Lagos.

As the new tariff takes effect, IKEDC will be closely monitoring its impact on service delivery and customer satisfaction, promising to make further adjustments as necessary to meet the needs and expectations of its customers.

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