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Wide-ranging reform of Angola’s power sector is making progress, but with the economy heavily dependent on oil revenues, investment plans could be significantly slowed. Angola-watchers suggest the effects on the domestic economy of sharply lower global oil prices, coupled with the continued uncertainty over veteran President José Eduardo dos Santos’ succession plans, may create a ‘perfect storm’ that could hasten the long-awaited regime change.

Angola
Issue 293 - 29 January 2015

Tanzania scandal claims new victim

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The Independent Power Tanzania Limited (IPTL) scandal has claimed another victim with the resignation of energy and minerals minister Sospeter Muhongo, the third cabinet minister to go since the latest round of allegations emerged late last year. In December, attorney-general Frederick Werema resigned and President Jakaya Kikwete sacked lands minister Anna Tibaijuka for accepting almost $1m from an IPTL shareholder.In late November, a report by the Public Accounts Committee (PAC) chaired by outspoken MP Zitto Kabwe called for Muhongo and prime minister Mizengo Pinda to resign.

Tanzania
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Shell Petroleum Development Company (SPDC) has agreed to pay out $84m to residents of the Bodo community for two of the Niger Delta’s largest oil spills, which took place in 2008 and 2009. Some $54m of the settlement will go to around 15,600 fisherman, while the remaining $30m will be left for the community. Outgoing SPDC managing director Mutiu Sunmonu said the company accepted responsibility for the spills, both of which SPDC admits were caused by operational failures of the pipelines.

Nigeria
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Mozambique has emerged from an election year with a record of improving the regulatory environment for its oil and gas sector. President Armando Guebuza’s outgoing government – to be replaced by a probably similar Frente de Libertação de Moçambique (Frelimo) administration led by Filipe Nyusi – has passed several key items of legislation, geared towards encouraging Eni and Anadarko Petroleum Corporation to reach their final investment decisions in 2016. In August, passage of a new Petroleum Law, to replace 2001 legislation, brought increased clarity and coherence to the sector, while in October, the state Instituto Nacional de Petróleo offered 15 blocks to interested investors.

Mozambique
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Swiss-based trader Trafigura has announced its support for the Extractive Industries Transparency Initiative (EITI), as part of a new policy on disclosure of payments to governments. The 18 November announcement makes Trafigura the first commodity trader to join the 90 oil, gas and mining companies already supporting the EITI. In a further step, it has published a policy on payments to governments, drawn up in consultation with the EITI International Secretariat. The policy commits the company to disclosing Trafigura’s payments to governments in EITI compliant and candidate countries beginning in 2015.

Subscriber

SNC-Lavalin Group chief executive Robert Card has warned that any move by the authorities to charge the Canadian engineering company in connection with an extensive bribery scandal would immediately threaten its future and could force it to close. Card told The Globe and Mail he would be “deeply concerned” if the company was charged because it would hurt the business severely. “If the company can’t do business, you really only have two choices. You are going to do some dismemberment and cease to exist entirely, or you are going to be owned by somebody else,” he said.

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International law firm Orrick, Herrington & Sutcliffe LLP is opening an affiliated office in Abidjan, Côte d’Ivoire, operating under the name Orrick RCI. Orrick RCI will be staffed full time by Karamoko Fadiga and Sydney Domoraud-Operi, working with the firm’s 50-lawyer Africa practice, headed by Pascal Agboyibor. This team recently added two new project finance partners: Cameroon-born Jean-Jacques Essombè, who joined from Heenan Blaikie in Paris, and Colin Graham, who joined from Hogan Lovells in London. Orrick is legal adviser to Democratic Republic of Congo for the Inga development .

Côte d'Ivoire
Issue 287 - 27 October 2014

Chad: EITI compliant

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Chad has been accepted as a full member of the Extractive Industries Transparency Initiative (EITI) at an EITI board meeting in Myanmar on 15 October. An EITI statement said the country was deemed ‘compliant’ with the global EITI transparency standard, which means Chadians have access to extensive information about how their natural resources are governed.“Thanks to the EITI, some major reforms have been engaged when it comes to follow-up of revenue collection and payments from the extractive industries. Implementing the EITI has allowed us to realise that we do not have an adequate system for tracking these revenues.

Chad
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Afren has sacked chief executive officer Osman Shahenshah and chief operating officer Shahid Ullah for gross misconduct following a review into the receipt of unauthorised payments by members of management and senior employees. In a 13 October statement, Afren said it had also sacked directors Iain Wright and Galib Virani for receiving payments in breach of the company’s approved remuneration policy. The review by Willkie Farr & Gallagher (WFG) found that Shahenshah and Ullah had paid themselves $17.1m in extraordinary bonuses out of funds transferred to a British Virgin Islands special purpose vehicle.

Issue 286 - 11 October 2014

Egypt: Government pays $350m to BG Group

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The government has made a $350m payment to BG Group, reducing its outstanding debt to around $1.2bn. Egypt’s total arrears to foreign companies reached some $6.3bn in 2013, and the government has started paying off part of its debt to encourage companies to stay and continue investing in the upstream exploration and production sector. BG was obliged to declare force majeure on its liquefied natural gas agreements in January because of the quantity of gas diverted to the domestic market.

Egypt
Free

In August, a 600,000-barrel oil cargo for September lifting was awarded to China International United Petroleum & Chemicals (Unipec). But, according to an oil industry source, Unipec was invoiced to pay not the government of South Sudan, but Chinese arms manufacturer China North Industries Group Corporation (Norinco). This arrangement has not been made before, but there is precedent for a direct contract award by the Ministry of Petroleum and Mines to Norinco: in August 2013, the government sold a 600,000-barrel oil contract to the company.

South Sudan
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Oxfam America filed a new lawsuit against the Securities and Exchange Commission (SEC) on 18 September over delays to the implementation of a law requiring US-listed oil companies to disclose their payments to foreign governments. Oxfam accuses the SEC of unlawfully withholding a final rule implementing Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. When Congress enacted Section 1504 on 21 July 2010, it gave the SEC a 270-day deadline to promulgate rules. After Oxfam America sued a first time for undue delay, the SEC issued a rule in August 2012, which was challenged in court by the American Petroleum Institute and vacated on procedural grounds by the US District Court on 2 July 2013.

Issue 285 - 30 September 2014

New Eni CEO investigated over OPL 245

Free

Eni’s new chief executive, Claudio Descalzi, is under preliminary investigation by the Milan prosecutor’s office in relation to the acquisition of Nigerian block OPL 245 in 2011. Descalzi, who replaced Paolo Scaroni in May, was head of Eni’s exploration and production division at the time of the Nigerian transaction. “Eni continues to deny any illegal conduct,” the company said in a statement. “Eni is co-operating with the Milan prosecutor’s office, and is confident that the correctness of its actions will emerge during the course of the investigation.”

Subscriber

The drive to discover and exploit resources in high-risk jurisdictions such as those in most African countries has obliged international oil and oil services companies to adopt ever more sophisticated compliance systems. The cost to a company of responding to a US Department of Justice (DOJ) investigation into an alleged breach of the Foreign Corrupt Practices Act (FCPA) has recently been estimated at £275,000 per day over two to three years. Yet in spite of the harsh penalties for companies that get it wrong, the appetite for such risks remains undiminished. Meanwhile, the DOJ is responding to the increasingly globalised nature of its role by building relationships with its counterparts around the world.

Subscriber

The Somali government has turned to the United Nations International Court of Justice (ICJ) in The Hague to resolve its maritime border dispute with Kenya. In its application, posted on the ICJ’s website on 28 August, Somali minister of foreign affairs and investment promotion Abdirahman Dualeh Beileh asked the court to determine the course of the maritime boundary, saying “diplomatic negotiations, in which… respective views have been fully exchanged, have failed to resolve this disagreement”. In its application, Somalia asks the court “to determine, on the basis of international law, the complete course of the single maritime boundary dividing all the maritime areas appertaining to Somalia and to Kenya in the Indian Ocean, including the continental shelf beyond 200 [nautical miles]”.

Kenya | Somalia