PCL - Pancontinental Energy

[smalltimer]

Kenya moves to create new oil and gas tax rules

By: Reuters
26th October 2012

Kenya will revamp its tax rules to benefit more from profits earned by foreign oil and gas exploration, Permanent Secretary of Energy Patrick Nyoike said on Thursday.

The east African nation has drawn petroleum exploration activity but has no capital gains tax rules and no laws that allow it to tax companies for transactions that take place outside its jurisdiction, even if they result in changes to shareholdings in Kenyan subsidiaries.

Inadequate regulations meant the country was missing out, Nyoike said.

"We don't have capital gains. That's a major, major problem for us," he told reporter on the sidelines of an oil and gas conference in Nairobi.

Nyoike said a bill the Kenyan Treasury proposed in early October that would tax mining and oil companies 10 percent to 20 percent of capital gains booked in transactions, such as mergers, was inadequate.

Licences for oil and gas blocks in Kenya have drastically increased in value in the past nine months after British explorer Tullow Oil announced it discovered the first oil in the country, which is being tested for commerciality.

Yet Nyoike said there were too many loopholes and the country could run into the same problems its neighbours have over tax matters.

To the west, Uganda - which has already established it has commercial quantities of oil - was unable to tax UK-based Heritage Oil after the company discovered oil in the country and then sold its exploration and production rights to Tullow Oil, booking $1.45-billion in profits.

The Ugandan government ultimately served Tullow a tax bill for $313-million over the matter and entered arbitration proceedings with Heritage in London.

"Take the Turkana case [where Tullow found oil] ... same as Uganda, if one of the partners in the consortium decides to exit, we would not have an arrangement of getting anything," Nyoike said.

He said Kenya needed to act fast, citing one deal he said was already slipping through the fingers of Kenyan tax collectors.

Irish firm Cove Energy announced earlier this year that Thai state oil company PTT Exploration would buy it. Cove has a licence for an exploration block offshore Kenya.

Kenya is also unable to tax the sale of a stake in an exploration licence by one company to a third party. However, Nyoike said the country would only seek to make tax rules to apply to companies that exit Kenya completely.

Kenya's petroleum rules were last updated in 1986. The tax measures are part of a broad overhaul of the rules governing the industry which the Ministry of Energy is trying to push through Parliament.

http://www.engineeringnews.co.za/article/kenya-says-to-create-new-oil-and-gas-tax-rules-2012-10-26

 

[smalltimer]

Jitters as State plans to raid mining firms

By Jevans Nyabiage

The Government is coming up with a raft of measures to position itself to reap from the lucrative natural resources industry, in the wake of increased interest from exploration firms.

Kenya is hotly tipped to succeed its neighbours as the next big oil and gas exploration target. Much of its revenue is from tourism and agriculture, and is now eyeing the recent oil and gas discoveries, to wax lyrical about the emerging potential of the energy sector.

But the amendments to the 2012 Finance Bill that has tax implications, besides claiming a stake in the exploration project has brought uneasiness among multinational mining firms. Although the Government has made no secret of its intentions to acquire greater control of the mining sector, mining companies are seeing the move as changing goalpost that could discourage new investment.

Skeptic, however, reckon that the Government’s latest move came as a kneejerk reaction to mounting local pressure for greater control of its natural resources, which also follows similar moves in other African nations such as Tanzania and Uganda which have are reviewing their mining laws.

First casualty to the changing environment is the Australian miner Base Resources whose shares slumped 31 per cent on Monday on worries that Kenya may take over part of its key project under a new law requiring the state to own at least a 35 per cent stake in mining licenses.

The company said late last week that it was trying to line up talks with the Government to understand whether the rule would apply to its $275 million Kwale mineral sands project, which would be the country’s first large-scale mine.

Clarification

It said the new regulation did not spell out whether it applied to existing mining leases, but it had legal advice the rule did not apply to the Kwale project, and if it did, it would be unconstitutional.

“Further, the Investment Agreement also provides that in the event of the Government taking action tantamount to expropriation or nationalization, Base is entitled to compensation for the full market value of all property thus taken,” the company said.

But what is not clear is whether the legislation review would impact on the renewed growing interest shown by top miners in Kenya’s undeveloped natural resource sector.

Tullow Oil, one of the industry’s most successful explorers, has already made substantial headway in the country as it looks to steal a march on its rivals. The FTSE 100 group first struck oil back in March, while further oil was discovered in early May at the half-owned Ngamia-1 well in the Lokichar Basin, in Turkana County. And what has followed since then is heightened interest from both local and multinationals seeking a piece of the sector, while those that hold licences for prospecting have used the opportunity to make a kill.

The news of the oil discovery resulted in companies listed in the New York and London stock exchanges such as Premier Oil and Apache Oil staking a claim in Kenya’s exploration business such as Cove Origin Oil, and Pan-Continental heightened their exploration work.

Negotiation

Total of France is reported to be negotiating with the Government for Production Sharing Contract for one of the new blocks 1.22 Apache Corporation. Exxon Mobil and Anadarko Petroleum Corporation of the United States, Royal Dutch Shell, Statoil of Norway and Petronas of Brazil are among firms interested in exploring the new sites.

Tullow Oil and Ophir Energy have raised billions of shillings for exploration in the region. Ophir raised about Sh20 billion mid this year, which it said would be invested in the eastern Africa region.

Anadarko Petroleum Corporation, listed on the New York Stock Exchange (NYSE), revealed in regulatory filings that it plans to spend $120 million prospecting for oil and natural gas in the Lamu basin, where it operates offshore deep-water blocks. Australian firm Base Resources launched a share offer in order to raise Sh3.41 billion to finance operations at its titanium mine in Kwale.

Simba Energy continues to evaluate its earlier-stage asset and has already uncovered two potential targets for further exploration.

New policies

With the raised profile of the country’s natural resource, the Government is worried that it might not be getting its rightful share of the bounty. It is coming up with new policies and tax measures.

It is introducing Capital Gains Tax (CGT) on the profit from the sale of property or shares of oil firms mining or mineral prospecting firms.

It also wants to increase license fees, change to bidding in the award of licenses, and also impose a requirement for firms to have a 35 per cent local ownership.

On October 4, while proposing amendments to the 2012 Finance Bill, Finance minister Njeru Githae inserted a new clause that seeks to introduce CGT to the sector.

“In my amendment, I am seeking to only restrict the Capital Gains Tax (for now) to mining companies and mineral prospecting companies because these firms recently got prospective licences on payment of a minimum of Sh3,000 or Sh10,000,” Githae said.

“When they discover oil, they sell their shares to other companies. When they do so, the Government does not get any revenue. We are also working on how we can extend the Capital Gains Tax but that study is not yet over.”

Oil findings

Energy ministry permanent Secretary Patrick Nyoike also added his voice, “Take the Turkana case where Tullow found oil, same as Uganda, if one of the partners in the consortium decides to exit, we would not have an arrangement of getting anything.”

In the past, Kenya has witnessed some licence holders exit having made millions of shillings selling the licences to third parties.

In April, media reports indicated that a firm linked to a Cabinet minister sold oil block for $10 million (Sh850 million). In 2010, Turkana Drilling Company sold Block 10BB for $10 million to Africa Oil. Acquiring blocks has been invaded by the well-connected. This opens up the debate on the manner and transparency of the system of granting exploration licences.

The Toronto Exchange-listed Centric Corporation of Canada was given a licence for Block 10BA, adjacent to Ngamia-1, where Tullow struck oil, in January 2010 and paid the Government $615,000. A year later, Centric Corporation sold its shares to another Toronto Stock Exchange company, Africa Oil Corporation, for a $60 million.

And two years ago, Platform Resources, another Toronto Stock Exchange listed company sold two licences in circumstances not too dissimilar to the case of Centric and Africa Oil. The company owned the licences for Block 12A and 13T in the Lake Turkana basin, having signed production-sharing agreements in September 2008. Despite having done no substantial work, the company sold the licence at an estimated $6 million.

Irish firm Cove Energy announced earlier this year that Thai state oil company PTT Exploration would buy it. Cove has a licence for an exploration block offshore Kenya.

The ministry has started cracking the whip on small-time explorers it blames for hoarding exploration acreages for speculative purposes.

By introducing the CGT on the sale of property or shares by oil and mineral companies, Kenya may be borrowing a leaf from Uganda where the Revenue Authority collected Sh34.5 billion following Tullow’s acquisition of Heritage’s stake in various petroleum blocks in that country.

“I guess it was inevitable that some form of CGT would be reintroduced. The fact that they have picked the natural resource industry is perhaps a learning from what has happened in Uganda,” said Nikhil Hira, Tax partner at Deloitte & Touche.

Hira says what the State is introducing is a tax that will charge gains on changes in ownership, assignment of rights, which are common in the sector.

It will also catch transactions that happen effectively outside Kenya but cover Kenyan assets.

“On the face of it, this is a good way to raise revenues but I feel the rates may be very high and could hinder development,” he added.

If the Finance Bill 2012 is passed, foreign and local investors who make gains on the sale of property or shares in respect of oil companies, mining or mineral prospecting companies will pay a final tax at the rate of 20 per cent and 10 per cent, respectively, on the gains.

But there is confusion, the minister did not define an‘oil company’ on whether he targets upstream or the requirement also includes downstream activities. The Income Tax Act only defines a “petroleum company” as corporate body that carries out, in addition to any other activities, operations under a petroleum agreement entered into under the Petroleum Act.

Eric Musau, Research Analyst at Standard Investment Bank says the decision is probably a fair one for non-listed companies, but details of implementation have not been disclosed.

“We do not know whether such a decision will also affect mid-stream to down-stream companies as the wording of the rules is a bit vague,” Musau said, “We are particularly concerned on the transfer of shares at the stock exchange which has thousands of shareholders in KenolKobil and Total Kenya. We think the intention is on upstream and prospecting companies rather than on trading entities, this should be made clear.”

Analysts and players believe the move is likely to strangle companies still in their infancy and discourage new investments.

Support

Aly Khan Satchu, Nairobi-based Investment analyst says the sector is nascent which has only recently popped its head over the radar. “We need to encourage this sector and not strangle it at birth,” said Satchu, “My sense is that policy makers are making policy on the hoof and the now rapid fire announcements are increasingly giving the impression of shifting goal posts.”

He says it is this lack of uniformity and inconsistency of announcements, which is sending alarm bells the world over.

“Regulatory risk is now flashing Red. It behoves our policy makers to consider the consequences of their announcements otherwise what has been in the ground for nearly 50 years since Independence will remain in the ground for another 50 years,” Satchu added.

“There needs to be structure and discipline. I appreciate the Government has every right to seek to impose a tax regime in this important space. I think policy makers need to appreciate that there will be nothing to tax and just a Tsunami of Law suits if they continue in this irregular and on the hoof fashion.”

The Energy ministry has also introduced a requirement that forces all mining firms to have 35 percent local shareholding.

Kenya’s mining sector is currently operating on the Mining Act of 1940 that has been revised only twice, in 1972 and in 1987 but without the inclusion of contemporary practices such as fair sharing of revenue.

The absence of comprehensive mining policy has left the country open to gross exploitation by foreign fortune hunters most of who have paid royalties at their own discretion.

The law will affect firms such as UK-listed GoldPlat, which was granted the first gold mining license in the country last year; China’s Fenxi Mining (coal); and Australia’s Base Resources, which will start extracting rutile, zircon, and ilmenite at Kenya’s first large-scale mine in Kwale next year.

Canada’s Pacific Wildcat is involved in rare earth and niobium prospecting, while London-listed African Barrick Gold is prospecting for gold in western Kenya.


http://www.standardmedia.co.ke/?art...a-Jitters-as-State-plans-to-raid-mining-firms

 

[smalltimer]

Tullow strikes oil in second Northern Kenya operation

By Zeddy Sambu - Posted Tuesday, October 30 2012 at 21:06

British petroleum company Tullow has discovered additional oil deposits in northern Kenya, moving the country closer to having commercially exploitable reserves.

Sources with knowledge of Tullow Kenya’s operations said the Twiga 1 South well, where exploration began mid this year, has yielded more than 30 metres of net pay’ deposits, 10 metres more than the initial discovery at the pioneer Ngamia well.

Twiga well, which Tullow co-owns with Africa Oil at 50 per cent working interests each, is in Lokichar sub-basin onshore Block 13T in North Western Kenya.

Tullow Oil was expected to announce the fresh discovery before the end of this month, but was delayed by a mechanical fault on the drilling rig, according to its partner, Africa Oil.

“Africa Oil expects to announce drilling results from the Twiga South-1 well, currently being drilled in Block 13T, in early to mid-November,” the Canadian company said in a statement.

‘‘Announcement of these results has been slightly delayed due primarily to minor mechanical issues on the drilling rig, which have now been addressed,” said a statement to investors by Keith Hill, president and CEO of the firm that is listed on the Toronto Ventures Exchange.
The Business Daily has, however, learnt that the UK explorer has discovered ‘data quality oil’ at a depth of 2,337 metres against full depth of 3,600 metres.

Super well
“Ngamia 1 was a super well at 100 metres of net pay and because the wells are close by, we should expect similar results,” said our source. “This is the first time that Tullow has struck oil at this depth.”

The source described the latest discovery as encouraging news and good progress towards confirming commercial quantities of oil.

“It should also improve market share values for the investors and enable them raise more cash to develop the wells,” our source said.

Tullow expects higher quantities of oil at Twiga than it discovered at Ngamia 1, according to sources within the company and at the Ministry of Energy. The extent and the quality of the reservoir is yet to be determined.

The firm initially struck 20 metres of net pay deposits at Ngamia 1 but that gradually rose to between 104 metres and 143 metres of net pay as drilling continued in Block 10BB near Lake Turkana. The discovery was made at a depth of 2,340 meters.

Drilling at Twiga South-1 well, in Block 13T, is expected to continue to a total depth of 3,114 meters and targets the same structural layers and reservoirs as the Ngamia-1 oil well, which is located 23 kilometres to the south.

“Twiga South-1 well, represents the next step in expanding the play northward into the Lockichar basin and proving up the ‘string of pearls’ concept along the main basin bounding fault,” Africa Oil said. Discovery of additional oil deposits is being seen as positive for Kenya even as the country awaits the official announcement next month.

“Drilling is ongoing at Twiga 1 but they have not issued a formal report to us ,” the Commissioner for Petroleum Martin Heya. Analysts described the discovery of 30 metres of net pay deposits as very significant for the Tertiary Rift but cautioned that it was prudent to wait for release of a proper report.

“When time is right and they have logged the well, they will issue a proper report. Oil finds are usually reported when the well has been drilled and logged,” said one industry analyst.

“They did not handle release of the Ngamia 1 well discovery properly. Perhaps they are being careful based on the negative publicity that came with it,” said an industry analyst.

Tullow’s manager for Kenya, Martin Mbogo, declined to respond to questions on the Twiga well.

The company’s spokesperson for Kenya, Anne Kabugi, was non-commital with the details but did not refute the information.

“We have not made anything public yet,” Ms Kabugi said on telephone.

Tullow has operations on five blocks including 10A, 10BA, 10BB, 13T, 12A and 12B and is also a non-operated partner in off-shore block L8 where American oil exploration company Apache Corporation is the operator.

Tullow was on September 29 expected to start exploration at the Paipai-1 well located in Block 10A where drilling is planned to a total depth of 4,112 meters even as it tests Cretaceous and Jurassic sandstone targets.

Tullow Oil plc holds a 50 per cent working interest in the well while Africa Oil has a 30 per cent working interest in the Block.

Mr Heya said eight ultra-deep offshore blocks were gazetted by the minister for Energy in March, bringing to 23 the number of major explorers on Kenya’s 46 exploration blocks.

“We have never discovered gas off shore but we are making good progress. Apache is continuing with Mbawa,” said Mr Heya.

Another US firm, Anadarko, will in late November begin drilling for natural gas in two wells in Lamu.

Exploration activity is taking place in both on-shore and off-shore blocks located in Kenya’s four major basins – Anza, Lamu, Rift and Mandera with a view to discovering commercially viable deposits and reduce reliance on imported oil.

Kenya imports 3.6 million tonnes of refined petroleum products annually.

This is equivalent to a per capita consumption of 94.4 kilogrammes, which is still below the average for developing economies – a development that has been attributed to slow economic growth and over dependence on rain-fed agriculture

http://www.businessdailyafrica.com/...39550/1607508/-/item/0/-/ble3g2z/-/index.html

 

[smalltimer]

EA overtakes West Africa as frontier for gas exploration
Last updated on 2 Nov 02 2012 00:00

By NJIRAINI MUCHIRA
East Africa is set to become the next epicentre for global natural gas activities as discoveries indicate the region could be home to significant deposits.

A new report by Ernst & Young dubbed, ‘Natural gas in Africa – The frontiers of the Golden Age’ reveals that the future for African gas lies in the East Africa region, following massive offshore gas discoveries in countries like Tanzania and Mozambique.

Besides, the high interests by oil and gas multinationals that are jostling for exploration fields in other countries like Kenya, Uganda and South Sudan is a clear indication the region is the newest ‘new frontier’.

“The most dynamic recent developments in the African natural gas sector have been in East Africa. Ten years ago, East Africa was a “non-story” as far as oil and gas were concerned. No longer a non-story, the region is now seen as the new promised land or the next epicenter for global natural gas, the newest frontier,” says the just released report.

The report notes that with traditional natural gas regions on the continent like North Africa and West Africa assuming the tag of ‘old guards’ on the resource, global companies are looking for opportunities in the East Africa region where exploration activities are still in the infant stages.

So far, Tanzania and Mozambique lead the pack in natural gas discoveries. In Tanzania, total natural gas reserves have more than doubled from six billion cubic this year, following the discovery of the new deposits.

The country is already targeting to become a net natural gas exporter to in the region and the government has already awarded Danish firm COWI Consulting a contract to conduct a feasibility study into a major gas pipeline to Kenya. In Mozambique the proved natural gas reserves are estimated to be 127.4 billion cubic feet.

In Kenya, Australian firm Pancontinental Oil and Gas Ltd elicited excitement two months ago after it announced it had struck natural gas at L8 block along the Lamu Basin.

Commercially viable

The excitement was however short-lived after it emerged the deposits were not commercially viable. According to the report, East Africa has become a beehive of exploration activities with global gas companies’ pitching tent in several prospective blocks.

Besides Pancontinental Oil & Gas, the regional gas boom has attracted a long list of other players including ExxonMobil, Total, Royal Dutch Shell, Anadarko, BG Group, Statoil, Petrobras and Galp Energia, Tullow Oil, Ophir Energy, Dominion, Cove Energy, Premier Oil among others.

“Natural gas development holds tremendous opportunity for Africa. It can be a primary driver of economic growth and broader social development, as well as a major spur for local employment growth and infrastructure development,” observes Elias Pungong, Ernst & Young’s Oil & Gas Leader for Africa.

http://www.standardmedia.co.ke/m/story.php?articleID=2000069748

 

[smalltimer]

Friday was the first Up day in over a week of trading.

The past week has seen another 10% decline in the share price
which is now down about 70% since that announcement

I'm thinking it may be time to buy again...at least for a short
term peak and turnaround........Hmm top-up

Date.......Last.........% Ch.........High......Low......Vol
02 Nov....0.082....+ 1.24%..0.082..........0.081...550,259
01 Nov....0.081....-3.57%....0.083..........0.081...1,715,879
31 Oct....0.084....-4.55%....0.087..........0.083....5,658,414
30 Oct....0.088.....-3.3%.....0.091..........0.088....2,086,426
29 Oct....0.091....-1.09%....0.092..........0.089....1,965,569
26 Oct....0.092.......0%.......0.093..........0.091....2,274,460

Regards : Smalltimer - Good luck all

**********************************************

Time to buy Sub-Saharan oil explorers says Ambrian
Tuesday, October 30, 2012 by Philip Whiterow

Volatile markets have made it a good time to build a portfolio of undervalued, high-risk frontier oil exploration stocks that could pay off handsomely longer term, according to broker Ambrian.

In particular, investors should be looking at sub-Saharan African explorers, where the potential for new petroleum discoveries is being underestimated by equity markets says the broker.

To back this up, the broker points out that USGS World Petroleum Assessment’s most recent estimate of Sub-Saharan Africa was 2.2 times larger (146Bln boe) than its 2000 Assessment.

It was the largest increase among the eight main assessment regions in both absolute and percentage terms.

New technologies have also boosted access to areas deemed too risky just a decade ago, while political, regulatory, corruption and security issues have all eased.

In terms of undiscovered resource potential, Sub-Saharan Africa now rivals that of the Middle East and North Africa, North America and South America, but with better access to licences.

Ambrian adds that most explorers in the region suffer from a relatively heavy concentration of regional, geologic and/or political risk, which is why a portfolio is a better bet than single selection.

By order of market value but not other, the companies it says are buys are Ophir (LON:OPHR), African Petroleum, Pancontinental, Chariot Oil (LON:CHAR), Rialto Energy, FAR, Fastnet, WHL Energy and Tangiers Petroleum.

Two companies highlighted include Fastnet Oil and Gas (LON:FAST) that is exploring and appraising African and Celtic sea basins. Its current most valuable asset is its 18.75% interest in the Foum Assaka licence, offshore Morocco.

The Moroccan fiscal regime is the most favourable of the countries covered in the Sub-Saharan region, and Ambrian believes that the market does not fully understand just how favourable it is.

It estimates that for a 400MMbbl oil field development the NAV/bbl is USS23/bbl, well above the rule-of-thumb US$10/bbl valuation that seems to be put on oil discoveries by the market.

Fastnet estimates that its work commitments to the end of 2013 are just £1.8m, excluding its share of the cost of a well in Morocco, while Kosmos (operator) and Fastnet will farm down their interests in Foum Assaka for carry on the first well.

Ambrian estimates that the current fair value of Fastnet’s share price is 33p, but on a success scenario could be worth 182p by end-2013 or just 9p if exploration is unsuccessful.

Tangiers Petroleum (LON:TPET, ASX:TPT) is also focused on Morocco with its Tarfaya licence. The main catalysts for the stock, which management has some control over, are the successful completion of its farm-in programmes this year.

The company is currently conducting farm-in programmes for both Tarfaya in Morocco and its WA-442-P & NT/P81 licences in Australia.

Ambrian estimates the current fair value of Tangiers’ shares is A$1.10, which is 3 times above the market price. On a success scenario, Tangiers shares could go as high as A$8.64 by end-2013, with the failure scenario A$0.20.

http://www.proactiveinvestors.com.a...saharan-oil-explorers-says-ambrian-35178.html

 

[smalltimer]

Great start to the new week with volume picking up and what looks like an new
up-trend in progress, let's hope the momentum keeps up for a bit of short term
buy and sell.

Good luck all.

 

[smalltimer]

Laws take a toll on oil, gas firms
By AGGREY MUTAMBO, Special Correspondent

Posted Saturday, November 10 2012 at 15:08

The lure of East Africa’s growing oil and gas industry could wane as political risks and tough taxation laws take their toll.

A report released last week in Johannesburg by consulting firm Ernst & Young warns that while there is significant natural gas potential in the region, countries where these resources are found have a poor risk rating.

The firm rated all countries on the continent that are either already producing natural gas or have the potential to start soon. East African states fared badly in the political, taxation, operations and security risk index.

The report ranked Kenya’s political risk as high for gas exploration or excavation companies. The government is unable to guarantee firms protection against attacks.

East Africa has transformed into a hot spot for oil, gas and mineral exploration, and has in the past three years attracted multi-million dollars in foreign investments into Uganda, Tanzania, Kenya and Mozambique.

The huge flow of foreign investments into the oil and gas sector is raising the need for the region’s governments to craft policies to keep existing explorers and also attract more.

“East Africa is now seen as the ‘new promised land’ or the ‘next epicentre’ for global natural gas, (but) governments will of course have a critical role to play,” said the report dubbed in part Natural gas in Africa: The frontiers of the Golden Age.

“There is a need to develop a meaningful and practical master gas development plan, one that addresses the upstream tax and licensing models. This is besides making sure there is sufficient infrastructure for getting the product to the market,” said the report.

Over the past one month, Kenya, Uganda and Tanzania have released new regulations as they sought to rethink policies in the oil, gas and minerals business in the wake of increased exploration and mining interest in the region.

Two weeks ago, Kenya issued a new mining law that requires foreign-owned mining companies to give up 35 per cent of their local operations to Kenyans. The law followed a set of new regulations that require a 20 per cent tax on sale of assets by prospecting firms in the oil and mining business, as the government sought to raise more funds to finance its growing expenditure needs.

Two weeks ago, Uganda suspended the issuance of new mining licences following revelations that several were given out illegally. In Tanzania, firms are grappling with new mining regulations, which have raised the amount of revenue the companies should pay the government. The firms are now required to pay at least 0.3 per cent of their annual turnover, up from the previous ceiling of $200,000.

The rest of the region

Ernst & Young rates Rwanda, Sudan, Ethiopia and Somalia in the same group as Kenya because their political risk is also high. Uganda and Tanzania’s positions keep fluctuating, but they also have a poor rating when it comes to legislating laws for managing the sector and overall security for firms seeking to invest in the mining industry. Uganda has natural gas reserves of about 14 billion cubic metres; Sudan 84 billion cubic metres; Tanzania and Somalia six cubic metres; Mozambique 126 billion cubic metres and Rwanda 56 billion cubic metres.

Italian firm ENI and US company Anadarko expect to start production in Mozambique by 2020, while BG Group hopes to start production in Tanzania in six years.

In Kenya, gas exploration continues with various multinationals still searching off the Kenyan coast. In September, British firm Tullow Oil Plc announced it had encountered about 53 metres of net gas in sandstones in Mbawa-1 it was jointly drilling with an Australian company, although the finding was later said to be commercially unviable.

http://www.theeastafrican.co.ke/bus...s+firms/-/2560/1616860/-/jrbsujz/-/index.html

 

[smalltimer]

Pancontinental Oil & Gas to discuss African hydrocarbon opportunities at “Stars in 2012”
Tuesday, November 13, 2012 by Proactive Investors

Pancontinental Oil & Gas will discuss its African oil and gas exploration, particularly its efforts offshore Kenya, with investors at "Stars in 2012" in Sydney. Also presenting is AusTex Oil, Titan Energy Services, Eastern Iron and Ezeatm.

Pancontinental Oil & Gas (ASX: PCL) will discuss its oil and gas exploration offshore Kenya and Namibia at the "Stars in 2012 Series" in Sydney on Wednesday 28th November 2012.

In Kenya, the company had participated in the Mbawa-1 gas discovery well in L8 that proved the existence of a working hydrocarbon system and is currently undergoing detailed analysis.

Volumetric parameters and commercial aspects of the discovery have yet to be ascertained and the analysis is expected to continue into 2013.

The joint venture, led Apache Corporation (NYSE:APA), is now considering the forward work program in light of the Mbawa results.

With about $39 million in cash, Pancontinental is well funded for up to 4 offshore Kenya wells directly and another 4 wells indirectly over the coming 12-18 months.

In L10A and L10B, the joint venture will carry out a 2,180 square kilometre 3 seismic survey over the western sector of the licence areas where operator BG has mapped a number of very large leads for further work and possible drilling.

Pancontinental is also carrying out detailed mapping to define the full extent of the structural and stratigraphic closures and potential oil-bearing traps at its Namibian exploration acreage.

THE EVENT

The One2One Forum brings you five exciting companies presenting.

The event is FREE, but registration IS A MUST.

DETAILS

The event will be held on Wednesday 28th November at the Radisson Blu Hotel, corner of Pitt and O'Connell Street, Sydney from 5.30pm.

The event will be followed by a wine and canapé reception where you can interact with the presenting MDs & CEOs.

LUCKY DOOR PRIZE: All attendees instantly go into the draw to win 1 of 3 lucky door prizes (including early prize) drawn on the night: a $100 Apple voucher (early bird prize), a $100 voucher for Radisson Blu Hotel, or a $100 Ticketek voucher.

FULL PRESENTER LIST

Titan Energy Services (ASX: TTN) provides a range of energy services including drilling, camp hire and remote camp management, to the coal seam gas industry. Long term contracts have being reached with three of the four major coal seam gas developers for its drilling rigs.

Ezeatm (ASX: EZA) is the largest ASX-listed ATM deployer and is continuing along a rapid growth path, following preferred supplier agreements with Metcash and the DIB Group of companies.

Eastern Iron (ASX: EFE) is targeting iron ore on the infrastructure-rich, eastern seaboard, which is home to the bulk of Australia’s industrial capacity, population, workforce and markets.

AusTex Oil (ASX:AOK) produced 500 bpod oil Net Production in the last week of September, with gross sales for the qtr US$1.4m, up 33% on June qtr. The 2012 Vertical Well development program is delivering two new wells per month. AusTex has 2P Reserves of 5.9m BOE and a 2P 10% NPV est. of $288m.

Pancontinental Oil & Gas (ASX: PCL) holds petroleum exploration acreage in Kenya, a growing hotspot for the oil and gas industry as well as assets in Namibia, and Western Australia.

Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.

http://www.proactiveinvestors.com.a...bon-opportunities-at-stars-in-2012-35742.html

 

[smalltimer]

Kenya seeks 25 pct stake in oil production ventures
Mon, Nov 12 2012


* Kenya making bigger demands on oil and gas explorers

* Planned changes to bring more revenue to state-run oil company

By Kelly Gilblom

NAIROBI, Nov 14 (Reuters) - Kenya aims to take a bigger slice of the profits from its natural resources exploration boom by seeking a 25 percent stake in the production activities of oil and gas companies operating in the east African nation.

The proposal announced by Kenya's energy minister is one of many the government has put forward in the past month to increase the state's take from oil and gas resources, including new capital gains tax rules, a more competitive licensing process and higher fees for petroleum explorers.

At present most of Kenya's contracts with oil explorers give state-owned National Oil Corporation of Kenya (NOCK) a 10 percent stake in the production business once commercial quantities of oil or gas are found. This means that NOCK contributes 10 percent of production costs and receives 10 percent of profit.

However, the government now wants companies to give NOCK an initial 10 percent stake, increasing to 25 percent once production has started, Energy Minister Kiraitu Murungi told reporters on the sidelines of an east African oil and gas conference organised by Global Event Partners.

Rajesh Shah, an oil and gas expert and at PricewaterhouseCoopers, said it was unclear whether the rule would scare off potential producers because contracts are based on one-on-one negotiations with companies and the Ministry of Energy.

"It depends on how it's structured and how it's sorted out," Shah said. "I think people will get wary if it's getting something for nothing. If there's a fair share of whatever somebody has spent ... I think people will be pragmatic and see it as something reasonable."

Kenya's exploration boom has been fuelled further by gas discoveries in Tanzania and Mozambique and oil discoveries in Uganda.

British explorer Tullow Oil and Africa Oil found oil in the Ngamia-1 well on Block 10BB in March and discovered more a few months later.

In October, Tullow and Africa Oil encountered oil in a wildcat well known as Twiga-1 on onshore Block 13T, about 30km west of the Ngamia-1 well. The commercial viability of both finds has yet to be ascertained.

Tullow and Australia's Pancontinental Oil & Gas announced in September that their licence consortium's operator Apache Corp had found gas in the shallow offshore well Mbawa-1.

Experts predict that it will be at least five years before any petroleum can be produced, but in the meantime the government is using its new position as an established hydrocarbon province to squeeze better terms out of explorers wanting to drill and produce in Kenya.

 

[smalltimer]

http://www.upstreamonline.com/live/article1270218.ece

Bill Lehane , News Wires
16 November 2012 16:57 GMT .

Kenya has reportedly refused to sanction Cove Energy's attempt to transfer its offshore licences to its new owner PTT Exploration & Production (PTTEP), because it wants to negotiate a cut of the deal that saw Cove sold.

Thailand's PTTEP agreed in August to buy Cove Energy and its small stakes in seven licences offshore Kenya in a $1.9 billion acquisition.

"In Kenya, we are still dealing with Cove until the transfer has been approved," Martin Heya, Commissioner for Petroleum in Kenya, which has no capital gains tax laws, told Reuters.

Energy minister Kiraitu Murungi said he hoped to negotiate a “fair amount” in taxes related to the transfer of the licences.

His refusal to approve the transfer of the stakes means PTTEP will have no legal authority to yet take Cove Energy's place as an oil and gas exploration venture partner.

PTT declined to comment to the wire service, while Cove Energy officials were not available.

Cove Energy is still operating as a small, private company in its seven blocks, and meeting its obligations as a licence stakeholder to fund exploration activities.

Heya said PTTEP has asked the government for a licence approval similar to that which the company negotiated with Mozambique when it was acquiring Cove Energy's assets in that country.

Cove Energy said before it was acquired that it would be subject to corporate income taxes in Mozambique on capital gains there at a rate of a tax rate of 12.8%.

 

[smalltimer]

Kenya starts review of its oil and gas laws
By JOSHUA MASINDE jmasinde@nationmedia.com
Posted Monday, November 19 2012 at 22:00

A review of regulations in the oil and gas sector has left the government in a precarious position in its bid to attract investors.

Speaking last week during an East Africa Energy and Gas summit in Nairobi, Energy minister Kiraitu Murungi said Kenya is moving to amend the Petroleum Exploration Production Act to align it with the present situation in the wake of oil and gas discoveries.

Some of the suggested amendments would see the National Oil Corporation (NOC) get 25 per cent interest in foreign firms operating locally.

A seasoned industry analyst who did not wish to be quoted said this will not go down well in the industry.

The analyst said the government should involve relevant stakeholders to put in place proper regulations that can support the sector through fair revenue sharing agreements and just terms of reference for operators, the government, and local communities.

Currently, there are two laws covering mining and the oil and gas sectors. The 35 per cent local shareholding is covered under the Mining Act (of minerals like gold and coal). A 25 per cent local shareholding structure is covered under the Petroleum Exploration and Production Act.

The Ministry of Energy has also had run-ins with some oil explorers over the terms of operations with proposals, say, 35 per cent stake in foreign mining companies be allocated to local investors, while 25 per cent stake in foreign oil and gas companies operating in Kenya go to Nock.

Recently, Norwegian Oil exploration company, Statoil, quit, citing unreasonable terms of operations in Kenya.
“If local shareholders match that in terms of required funds, then I see no problem with it,” Tullow Oil Kenya chief executive officer Martin Mbogo said.

He said that even if it was on a 50-50 per cent basis and the local investor has the capacity to raise the funds to equal the shareholding, there is nothing wrong with that.

Analysts have, however, questioned the capacity of local shareholders in capitalisation to acquire stakes in foreign oil and gas companies operating here.

Recently, the minister blocked the transfer of shares valued at Sh3 billion by an unnamed oil exploration company to a third party until issues of fair revenue sharing are ironed out.

Given fairer terms

AfricaOil Corporation chief executive officer Keith Hill, however, said that oil and gas companies that came into the market much earlier should be given fairer terms compared to those that came in afterwards.

This is because of the huge initial risks associated with earlier uncertainties of whether the country had oil or gas deposits that could be commercially viable.

On the proposed reviews of the Petroleum Exploration Production Act, the commissioner for petroleum at the Energy Ministry, Mr Martin Heya, said the government has already received money from the World Bank to enlist the services of a consultant to help in the review of the Petroleum Act. The Act, put in place in 1986, has had no reviews since then.

“We shall talk to all stakeholders to get everything right from the start,” said Mr Heya.

The reviews will cover licensing procedures, revenue sharing agreements between oil companies, central and county governments, and the local communities

http://www.nation.co.ke/Features/sm...as-laws/-/1226/1623726/-/2krilpz/-/index.html

 

[smalltimer]

The Huge Risk-Reward Scenario in East Africa
By Jen Alic | Tue, 27 November 2012

Welcome to East Africa””home of a potential 28 billion barrels of recoverable oil, 440 trillion cubic feet of gas and 14 billion barrels of natural gas liquids.

Recent success by Africa Oil (AOI-TSX; AQIFF-PINK)””the stock went from $2-$11 in just two months in the spring of 2012 on just one drill hole””has made East Africa the most exciting exploration play in the world right now.

But that excitement is tempered with some political instability, social conflict and a lack of energy infrastructure.
Still, this vastly untapped region is the fast-rising favorite for Canadian juniors. The obvious question is: Why?

The potential prize is too big to ignore:

• 5 billion in proven reserves in the Sudans and major discoveries elsewhere, with only a fraction of the potential explored
• Enough gas has been discovered in Mozambique to supply half of Western Europe for nearly a decade and a half””still, the country has barely been explored.
• Recent offshore discoveries of some 33 trillion cubic feet of gas put Tanzania on the map, and the risk here is relatively low. Tanzania has a natural gas processing plant on Songo Songo Island, with a 70 million cubic feet/day capacity. It is also planning an LNG terminal.
• Uganda discovered more than 2.5 billion barrels of oil in the last decade. This year alone, it discovered more than 1 billion barrels.

The risks fall into three categories:

1. A lack of infrastructure””pipelines, processing plants and refineries. You can make a big discovery, but how do you get it to market and monetize it?
2. Government greed.
3. Social/tribal tensions.

Sudan is a good example. Blessed with an abundant oil supplies, authorities recently announced that the country would double production in the next 2-3 years. However, it will miss its 2012 production target of 180,000 bpd due to social conflict.

Still, Canadian juniors like Calgary-based Emperor Oil (TSX-V: EM) and Statesman Resources Ltd (TSX-V:SRR) remain optimistic in Sudan.

Emperor Oil was a pioneer in Sudan, and recently signed an MOU to acquire 85% of a 50% interest in the 10,000 sq km concession Block 7 in Sudan. The other 50% is owned by the state’s National Oil Company, Sudapet.
“East Africa wants oil development,” says Emperor CEO Andrew McCarthy. “Infrastructure is an issue, though Sudan is in much better shape than most here.”

Infrastructure in this part of East Africa should improve in the coming years, with the big project being the $24.7 billion Lamu Port-South Sudan-Ethiopia Transit corridor (LAPSSET). LAPSSET includes a massive pipeline that would carry South Sudanese oil for refining in Ethiopia and Kenya and give the entire region another oil outlet.

Is it feasible? Yes, but capital is always difficult for this area, and McCarthy points out that the capacity of the Sudan-South Sudan pipeline could go to 1 million bopd at a fraction of the costs. The good news””competition creates lower costs for everyone.

McCarthy added that the new wealth being created by energy companies is a strong incentive for the different ethnic groups in East Africa to work together. He points to Sudan and South Sudan breaking apart peacefully, and any skirmishes after the fact have been stopped quickly once the oil””and hence the money””stopped flowing.
“Rather than fight over existing production they have chosen to expand their resource development so that there is a larger pie to share."

Infrastructure is also the issue farther south in East Africa. Major energy producers are eyeing 130 trillion cubic feet of gas in the Rovuma basin offshore Mozambique, discovered by Andarko (US) and Eni (Italy). The government estimates there may be another 150 trillion cubic feet left to discover. Shell, ExxonMobil and Chevron are eyeing this as well.

But for now, there is no way to bring extracted gas onshore, no facilities to liquefy it and no infrastructure for export.

We’re talking about $20 billion in investment to build the necessary infrastructure.
And ironically, the phenomenal success of the some of the pioneering juniors causes another problem: the governments start changing terms.

Several years ago East African countries were luring foreign oil companies onto their territory with desperately attractive deals. This trend is changing. Recent reserve discoveries have empowered these nations to ask for more.
There is pressure on juniors to foot the bill for ambitious infrastructure projects. East African states want the juniors to speed up their plans””drill more wells; build pipelines””get the money flowing! It can put the juniors with limited resources in a difficult spot.

But again, The Prize is big enough that several juniors have been able to attract major oil companies into their play.
For its next licensing round in oil and gas, Kenya is planning to switch to bidding for exploration blocks, rather than its usual one-on-one negotiations. While more transparent, which is good for business, this also reflects the new impatience. Kenya is also planning to rewrite its energy policy to reflect its greater negotiating power as a result of recent discoveries.

In Uganda, potential is vast and exploration just getting underway, but regulatory challenges are mounting.
Uganda wanted its oil and gas investors to pitch in for a massive refinery in the western area of Hoima. For investors, it was an unnecessary project with unnecessary expenses. Foreign oil companies would rather see Uganda’s oil refined elsewhere, more cheaply.

With new exploration technology (FTG, 3D seismic) being used on relatively virgin reservoirs, there’s a lot of potential for big new discoveries. But there are definitely challenges for energy producers looking to move into this are.

However, the Size of The Prize trumps all””the huge capital gains enjoyed by shareholders of Africa Oil, and before them Heritage Oil (HOC-TSX), attest to that.

Investors should be watching this area to see who’s next.
By. Jen Alic of Oilprice.com

http://oilprice.com/Geopolitics/Africa/The-Huge-Risk-Reward-Scenario-In-East-Africa.html

 

[smalltimer]

African heads reconsider regulatory framework to encourage localisation

By Samantha Moolman
30th November 2012

A power shift in Africa’s oil and gas indus- tries is foreseen over the next 25 years and, currently, most African governments are encouraging investment in local refining capacity to increase the manufacture of oil and gas products, says pan-African advisory firm africapractice strategic advisory services head Tom Wilson.

“There is obviously a demand for petroleum products in Africa but, proportionately, a limited amount of petroleum has been refined in country,” he points out, adding that pressure is also mounting on international oil companies to increase the number of local nationals within their staff.

Wilson highlights that oil-dominated Gabon, which has taken a clear, aggressive stance on localisation, has proposed legislation that demands an adjustment to the policy on executive recruitment in Gabon to favour Gabonese nationals, stipulating a 10% cap on foreign oil-sector workers.

This happened within a year of the inception of the Gabonese National Oil Company, or SNPG, which also implemented a new petroleum industry code last year to increase the transparency of industry regulations and product-sharing laws.

“These types of reforms have also been about investing in local refining capacity to ensure that a certain amount of crude oil is sold on site to the African market,” says Wilson.

He believes that countries like Gabon want to prevent a situation like the one in Nigeria, where local refining capacity is limited. Until this year, the Nigerian government had to pay out large subsidies to lower the price of imported petroleum products, despite the country’s role as the largest petroleum producer in Africa.

Wilson says Uganda’s project strategy for Lake Albert is another example of developing local refining capacity with the intent to supply oil to the East African community.

He mentions, however, that Uganda’s strategy was undermined by independent oil and gas company Tullow Oil’s discovery of Kenya’s first oilfield early this year.

Wilson explains that Uganda had been bank- ing on the prospect of selling petroleum products to the large Kenyan market.

“Early signals from Tullow Oil’s discovery indicate that Kenya’s oil might be of a better quality than the crude oil in Lake Albert, which makes it a more attractive commercial proposition given its closer proximity to the Indian Ocean coast.”

Wilson explains that, with the successful discovery of oil in Lake Albert in 2008, Uganda was hopeful and optimistic that it could learn from the mistakes of more traditional African oil producers, like Nigeria and Angola.

“It was hoped that Uganda would implement a regulatory framework that would oversee the equitable, successful and ultimately sustainable development of its oil finds. However, as a result of political interference and bureaucratic blockage, Ugandan oil regulation has not been imple- mented quickly enough. Consequently, the projects have not advanced as swiftly as was hoped,” he says.

Currently, with initial signs of successful oil finds in northern Kenya and gas finds in Tanzania and Mozambique, Uganda’s oil industry is no longer the unique industry it was four years ago.

Meanwhile, Kenya Permanent Secretary of Energy Patrick Nyoike announced last month that the country would review its tax rules so that Kenya might benefit from profits earned by foreign gas-exploration companies, having realised the inadequacy of existing regulations.

Uganda was unable to tax UK-based Heritage Oil after the company discovered oil in the Lake Albert basin in 1997, only to sell its exploration rights to Tullow Oil in 2010, booking $1.45-billion in profits.

The Ugandan government then issued Tullow Oil with a tax bill for $313-million as recoverable security payable to the Ugandan Revenue Authority.

As a result, Tullow Oil is attempting to recover this sum from Heritage Oil under the terms of the two companies’ strategic partnership agreement. The case should be heard in London early next year.

Nyoike told the press last month that this was why Kenya needed to act fast in terms of implementing adequate legislation required to protect its assets.

Despite Kenya’s proactive attitude, however, Wilson says the East African country may struggle to fast-track production, and has not yet stipulated a projected timeline for development.

Meanwhile, Lake Albert oil is still commercially viable, as a result of oil prices that have risen exponentially over the last ten years.

“Smaller and poorer-quality products that were previously not seen as commercially viable are now suddenly showing great potential,” says Wilson.

“People have recognised that, while the deposits in the gulf are still lucrative and the grade of oil incredibly high, single-market dependency is quite fragile, hence the drive into Africa.”

Wilson adds, however, that international companies look at Africa as a source of hydro- carbons to meet fuel demand elsewhere in the world owing to a lack of sufficient demand in Africa.

Edited by: Tracy Hancock

http://www.miningweekly.com/article...ramework-to-encourage-localisation-2012-11-30

 

[wilto]

For the savy investor.
[video=youtube_share;x3OaYAG2g1c]http://youtu.be/x3OaYAG2g1c[/video]

 

[tech/a]

Two things
What is and how can you identify a savvy investor.

What makes this stock recognizable as one for a savvy investor?

 

[wilto]

DYOR

 

[tech/a]

As I thought --- rhetoric.

I find the savvy label is often used to
To soften the not so savvy into a sence
Of well---- opportunity when little exists.

Take the RED capital raising at $2.12
Described by one pundit as for the savvy
Investor.

Now .96c --- savvy eh.
PCL may well become an opportunity and
When it does you won't have to be savvy to
Recognize it.

 

[wilto]

I posted it for any body who might be interested in reading it, Not some smart **** comment.

 

[tech/a]

I didn't think " savvy " was that smart ****---

DYOR to a perfectly normal question
Yeh that's smart ****.

 

[Boggo]

DYOR

I posted it for any body who might be interested in reading it, Not some smart **** comment.

Are you commenting on your own comment, is that the smart ar$e comment you are referring to ?