₦airaland Forum

franel79: They were lucky.

"When preparation meets luck, success is inevitable". When unprepared mind meets opportunity, it is a recipe for disaster.

Who are these Shiite Muslims? How come they're are not protesting boko-Haram, injustice, corruption, low-level of infrastructure development, low-level of education and all other negative issues that continues to regress the north. What type of result do they expect to achieve by staging this protest? How is this suppose to benefit common man positively?

Exploring private equity activity in Nigeria, Africa .
Wednesday, 19 September 2012 00:00 PATRICK ATUANYA .

Avanz Capital, an investment firm that specialises in private equity across emerging and frontier markets in collaboration with African Venture Capital Association (AVCA), recently released a new study on the private equity market in Africa.

Private equity refers to the purchase by a private investor of a share of a company that is not listed on a stock market.

The company invested in, can then take the money from the sale and use it for expansion or other investments. In exchange, the owner gives up some control, as the new partner gets a seat on the board or, in smaller companies, plays an advisory role.

Eventually, investors make money by selling their shares or receiving dividends.

Often referred to as the ‘final frontier’ market by private equity investors, Africa is showing signs of promise due to its rapidly improving economic environment, favourable demographics and growing private sector business activities.

According to Avanz Capital, the underpenetrated private equity industry in Africa offers substantial growth potential, given that sub-Saharan Africa private equity represents only 0.09 percent of total gross domestic product (GDP) for the region.

Further, the potential of the private equity market in Africa is substantial given the estimated 400,000 private companies in South Africa compared with 388 publicly listed companies.

Public (stock) markets are often concentrated on larger companies and they lack representation of many companies and industries that will benefit from future growth of the continent.

The African continent comprises 44 countries – eight countries in North Africa and others can be divided into five sub‐regions - East, West, Southern, Central and North. Of these five sub‐regions, West Africa is divided into Anglophone and Francophone West Africa.

Each of the sub‐regions is typically dominated by one country that provides a larger market hub for many increasingly regional companies – Kenya in the East, Nigeria in the West, South Africa in the South, and Egypt in the North, offer the most developed country specific markets.

The macro-economic backdrop for Africa also serves as a boost for private equity activity on the continent.

The International Monetary Fund (IMF) estimates that GDP growth in Africa will be 6.6 percent in 2012, compared with 3.7 percent for Organisation for Economic Co-operation and Development (OECD) countries.

The economies of Africa are resilient, as demonstrated by the economic growth maintained through the heart of the financial crisis.

According to IMF data, sub-Saharan Africa’s GDP grew at a high of 7.1 percent in 2007, slowing to 2.9 percent in 2009, compared with advanced economies’ real GDP growth, which averaged 2.8 percent in2007 and 3.6 percent in 2009.

Moving forward, there are high growth expectations for Africa. More specifically, growth is forecasted to average 5.5 percent in 2017, compared with advanced economies’ expected average of 2.7 percent.

The continent holds 16 of the top 30 economies that are expected to have the fastest growth rates over the next five years (2012 - 2017).

To Avanz Capital, there are 158 private equity funds (115 fund managers) in Africa with a total of $32.9 billion in capital closed since 2002, or currently being raised (avg. fund size is $216.5m).

Of the 158 funds, 60 percent have a fund size below $200 million, 32 percent are in the middle market ($200 - $800m) and only six have fund sizes above $800 million.

The landscape of private equity funds in Africa is small compared with emerging Asia (excluding the developed countries), where there are 427 funds (286 fund managers) with a total of $184.3 billion in capital closed since 2002, or currently being raised.

Latin America has a similar number of funds to Africa at 165 and number of fund managers at 110, but the total capital closed since 2002 or being raised currently at $54.0 billion and the average fund size of $330 million are nearly double that of Africa.

The large and growing size of domestic institutional capital is a significant opportunity for private equity on the continent. For instance, in Nigeria, the Contributory Pension Scheme (CPS) has grown to $13 billion assets under management (AUM) by the end of 2011.

Of Africa‐based fund managers, 53 percent operate out of South Africa, while Egypt, Mauritius and Morocco are home to 8 percent each and Nigeria and Kenya hold 5 percent and 4 percent, respectively, according to September 2011 data from Preqin.

Some Nigerian success stories in the private equity space include the sale of Aureos Capital’s stake in Nigerian biscuit manufacturer - Deli Foods to South Africa’s Tiger Brands after three years, reaping what Aureos called “solid” Returns.

Avanz Capital concludes that Africa’s private equity industry is at an early stage of development, but is growing steadily, providing a solid case for investment. The ratio of private equity investments to GDP in sub-Saharan Africa stood at 0.09 percent compared with 0.98 percent in the US and 0.14 percent in China in 2011.

Inflow of short-term investments worries CBN
September 19, 2012 by Ifeanyi Onuba,
Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi

The Central Bank of Nigeria on Tuesday expressed worries over large inflow of “hot money” or short-term investments into the economy, saying that the development, if not monitored, could negatively affect some of the positive impact of its monetary policy.

Addressing journalists at the bank’s headquarters in Abuja shortly after the Monetary Policy Committee meeting, the Governor, CBN, Mr. Lamido Sanusi, said the “hot money” was coming into the economy as a result of further monetary easing in the United States and Europe, as well as improved yield on fixed income instruments.

An online investment dictionary, Investopedia.com, defines hot money as funds that flow regularly between financial markets as investors attempt to ensure they get the highest short-term interest rates possible.

According to it, the funds usually flow from low interest rate yielding countries into higher interest rate countries by investors looking to make the highest return.

It added that the financial transfers could affect the exchange rate if the funds were withdrawn suddenly.

Sanusi said about $1.5bn of such funds came into the economy in August alone, adding that the bank would continue to monitor such funds in order to reduce their negative impact on the economy.

He said, “The committee identified the key policy challenges to include protecting the domestic economy and building external reserves buffer; potential large inflow of ‘hot money’ resulting from further monetary easing in the US and Europe; and improved yield on fixed income instruments; as well as persisting high core inflation rates.

“We planned to keep monetary conditions very stable and tight, which means that we do not see much of very quick reversal of capital flows unless there is a major disaster in Europe and the US, and most important is to keep a tab on how much money comes in, and I think in August, we had about $1.5bn, which is twice what has been coming in July on the average.”

The governor also said the committee retained the Monetary Policy Rate at 12 per cent with a corridor of +/-200 basis points.

Also retained at the current levels were the Cash Reserve Requirement and the Net Open Position for Deposit Money Banks at 12.0 per cent and one per cent respectively.

These were the highpoints of the decisions taken by members of the MPC at the meeting. The MPR is the anchor rate at which the bank, in discharging its mandate as the lender of last resort, lends to Deposit Money Banks.

Sanusi said the decisions were unanimously taken by the 10 members present at the meeting.

In arriving at the decision, he said the committee identified various key policy challenges to monetary policy.

These include how to protect the domestic economy and build up external reserves buffer as well as persisting high core inflation rates.

He also said the committee considered developments in the global and domestic economy and the financial markets, noting that weak global growth indices called for cautious optimism by policymakers.

Sanusi said the committee further noted that its decisions at the July meeting appeared to have had some positive impacts on a number of areas.

The areas are the deceleration in year-on-year inflation in August, stability of short-term interest rates around the MPR, build-up in external reserves and stability in the exchange rate.

He, however, lamented that core inflation was still high at 14.7 per cent in August, adding that the threat of increased inflow of hot money arising from the actions of the US to further stimulate the economy through its capital reversal implications would be closely monitored.

The CBN governor said, “The committee noted the rise in oil prices but cautioned against a hasty deployment of the windfall to immediate consumption as the trend could be reversed. Monetary policy could not, therefore, under the circumstance, react to what may be purely temporary developments.”

Sad story...

The earlier our leaders understand that culture is everything in this world, the better they will be at solving these fundamental challenges that continues to plow our economy into dangerous zone. Positive culture that rewards entrepreneurs, athletes, clergyman based on innovation, perseverance, hardwork, ...can/will create a better culture and make this world a better place.

But when you have thriving negative culture built on corruption, scamming, robbery, cheating, nepotism...the culture will continue to strengthen and the result is continuous lawlessness, chaos and breakdown of law and order.

It follows the logic of production accumulation. The more you scam people and the better you get, the more people want to be like you because of the reward. Same for positive culture...

Our leaders need to wake up and rise up to the task of changing this prevalent negative culture that is killing our economy and turn it into a more productive one before it is too late.

And if he fails to fulfill that promise?

Jarus: I'm from the North Central but I look at the competence of the candidates, not where he comes from. From all the names being bandied around, here is my preference

1, Fashola (Great administrator, but may not be able to solve the cankerworm that Corruption is)
2, Buhari (still believes in this man as capable of returning Nigeria to sanity but age is the issue)
3, Mark (I see this guy making headway in solving BH problem - he has this mediation and negotiation skills)

I actually believe Buhari's age is an asset in this current dispensation, considering how Nigerians put so much emphasis on respect and the role it plays in our politricks. Its going to be difficult (not impossible) for a younger person to come and dictate to the age group of Obasanjo. To solve corruption issue, you have to be able to confront the likes of Obasanjo downward without any political backlash.

How old was Ronald Reagan when he presided over the United States? He was 69 years, 349 days when people elected him for his first term and he was 73 years when he ran for his second term. Reagan today remains one of the best president USA has ever produced. Their age should be of less concern to us. Their sense of character, antecendents, competence, commitment, passion, vision and other leadership traits should be of utmost importance to us.

"I don’t know what the key to success is, but the key to failure is trying to please everyone"

...This is your life, live it the way you choose and not the way of your family.

I will institute policies that will re-orient people’s perception and make all Nigerians patriotic citizens. I am convinced that our economy will not progress; until we Nigerians believe in Nigeria, Nigerians abilities and we’re ready to tease out those abilities and turn them into results. Without that collective sense of patriotism...our ability to scale the progressive hurdle will remain a pipe dream. One step forward, 10 steps backward will continue. Below are some of the policies i will embark on;

1.Bring back War Against Indiscipline to curb corruption, indecent behaviours and others

2.Mandate Nigerian History in all primary and secondary schools across Nigeria. I believe it is only when people understand where they are coming from, that they’ll know where they’re going. Primary and secondary school students learning about their root at an early stage will further heighten their sense of patriotism. Patriotic younger generation will breathe progressive future generation.

3.Support all entertainment industry with low interest rate loan to encourage their growth, boost cultural awareness within and outside the country and use it as an avenue to boost tourism.

4.Provide grants to Nollywood corporations that are committed to producing movies that celebrates successful Nigerians in all work of life; sports, businesses, politicians and other industries. This project will be a partnership between the government and the supposed corporations. The goal is to highlight and celebrate characters, courage, hard work, perseverance, dedication, passion of these successful individuals.

5. Institute policies that foster unity among Nigerians. United we stand, divided we fall

AjanleKoko: I was referring to the 'fad', not the profession itself. Investment banking can't die, for obvious reasons.
The point is, most young people, especially young Nigerians, are drawn to the profession due to the purported high bonuses and wages, and the celebrity status most top bankers enjoyed some years back. It's the fad that I think will soon be dead.

With the current market factors, expect tighter regulations. Only the very serious and well-established players will likely remain. My view.

I would not call investment banking in Nigeria a fad, considering the dynamics that continues to play in our economy. I believe the investment banking is still at an infancy stage and will later evolve into a more complex, high growth market. This is premised on the role our population will play in attracting more markets and the dynamics of structural financing in facilitating such deals, complex funding opportunities within stock and private markets, general mergers and acquisition, Oil and gas/power project finance, impact of GDP debasing, role of regulations and others.

Influx of PE into the African market (mostly Nigerian market); announcement of $500 million PE funding from Carlyle group, about $300 million PE funding from the carl Ichahn group, about $900 million from KKR. South Africa private equity, Indians and other countries have launched their equity company in Nigeria.

I do believe that this industry has more room to grow and will not fade out. I agree that it will face cyclical shocks similar to other developing economies during turbulence times and the more established players will likely remain during that period. After that shock, the industry will rebuild again and new professionals will emerge and the cycle will continue.

omidan21: Very well said.pls I am also so very much interested in investment banking.but I am a mathematics graduate.I didn't study banking and finance.pls do u advice or think I shld go on in d pursuit of my goal.reply urgently needed.thank u.

I think getting an MBA with emphasis on finance, or getting MSc Finance should guide you in that direction. These routes has worked well for all your non-business people who yearns to dabble into the world of investment banking. Your mathematics background will come in handy when it comes to number crunching, statistics and others...and should be an asset.

What is wrong with opening other airports in the country to foreign airlines, absolutely nothing. If the economics of flying through these airports angur well for these airlines, they will adopt it. If it doesn't, they will back out. This is not a forced marriage and people should not view it as such. Tribalizing every progressive ideas will only lead to stagnation and regression of our economy.

Following a rigorous and transparent process which lasted almost a year, the much anticipated Sovereign Wealth Fund (SWF) has become a reality with the announcement of the Board of the institution which will provide guidance for the operations of the Nigerian Investment Authority (NSIA). The Chair of the Board is Alhaji Mahey Rasheed, a member of the Board of First Bank. Mr Uche Orji, Global Coordinator and Head of US Semiconductor Research and Co-Head of US Tech Sector Research at a prominent global investment bank, UBS has been appointed as Managing Director/Chief Executive Officer following his top performance in the contest for the position. His appointment is for a term of five years. Mr Orji had also previously served as MD at JP Morgan.

Other members of the Board include: Mr Arnold Ekpe, Mr Jide Zeitlin, Mrs Bili Awosika, Barrister Bisi Soyebo (SAN),Alhaji Hassan Usman and Mrs Stella Ojekwe-Onyejeliwho will also serve as Chief Risk Officer. However, upon completion of due diligence, the candidate for Chief Investment Officer has been dropped and the position will be re-advertised shortly. In all, 730 applications were received for three executive positions – Chief Executive Officer, Executive Director (Investments) and Executive Director, (Risk). 40 of these were long listed by KPMG which assisted in sourcing suitable candidates, 16 candidates were short listed before the final three were selected. With this development, the country is firmly on the path to reaping the benefits of this tried and tested strategy for achieving fiscal prudence and economic transformation. Implementation of the SWF will commence with an initial fund of $1 billion.
Speaking on the issue, Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala stated that “The establishment of an institutional foundation for the Sovereign Wealth Fund is a victory for all Nigerians and a credit to the President who assented to the Bill in May last year”. She added that it also demonstrates the determination of the Federal Government to improve the lives of Nigerians through far sighted policies and initiatives. “We have started putting together a quality team to ensure that we realise the objectives that inspired the establishment of the SWF. I am sure the team realises what is at stake and is ready to do the necessary work so that the country can start enjoying the benefits as soon as possible”. It will be recalled that the Act establishing the Authority received presidential assent on May 27, 2012 as an independent statutory corporation with a mandate to:
· Build a savings base for future generations of Nigerians;
· Enhance the development of Nigerian infrastructure
· Promote fiscal stability for the country in times of economic stress; and
· Carry out such other matters as may be necessary in furtherance of these objectives

The process that led to the emergence of the new team kicked off on September 8 last year when the CME set up a six-man Implementation Task Force headed by distinguished banker and philanthropist Mr Fola Adeola with a mandate to assist in determining concrete steps to be taken by the Federal Government to actualise the Nigerian Sovereign Investment Authority (NSIA). Following the recommendation of the Task Force, an Executive Nomination
Committee (ENC) composed of six Nigerians with integrity, independence, proven qualification and tested market experience from the six geo-political zones of the country was established. The Committee had the responsibility to assist with the selection of members of members of the Board, a key plank of the governance structure of the institution.

With the CME as Chair, the six ENC members are:
1. Mrs Sola David Borha- (CEO, Stanbic IBTC; South West)
2. Lady Nkoyo Toyo - (Hon. Member, House of Representatives; South South)
3. Mr Uwa Etigwe, SAN - (Partner, Streamsowers & Kohn; South East)
4. Dr Obadiah Mailafia – (Former Deputy Governor, CBN; North Central)
5. Mr Mahey Rasheed – (Board Member, First Bank; North West)*
6. Mr Hassan Usman – (CEO, Aso Savings & Loans; North East)*

The Task Force also recommended the appointment of KPMG to assist in sourcing top quality candidates for the three executive positions on the Board and the implementation of a competitive recruitment process through local and international advertisement of available positions. The vacancy adverts were subsequently published in prominent local and international newspapers and magazines. Managing Director of the NSIA will officially report for duty in October. The Board of NSIA will be inaugurated the same month. Four Ministers of Finance have worked to realise the SWF. During her first stint as Minister of Finance, Dr Ngozi Okonjo-Iweala helped achieve the Excess Crude Account upon which the SWF concept is anchored. She has also led the Ministry of Finance under the leadership of President Goodluck Jonathan to finally make SWF a reality. Dr Shamsudeen Usman and Dr Mansur Muhtar did a lot to progress the work; and finally Mr Segun Aganga pushed through the SWF bill.

KKR to invest in Africa .
Friday, 24 August 2012 13:26 Bloomberg . .

KKR & Co. (KKR), the private equity firm started by Henry Kravis and George Roberts, is hiring a dealmaker to look for investments in Africa as it tries to tap the region's growth, said two people with knowledge of the plan.

KKR's team in Europe, run by Johannes Huth, plans to add the executive in London after reviewing the region's potential, said the people, who asked not to be identified because the plans are at an early stage. The New York-based firm would use its existing funds to finance investments in Africa and isn't planning to raise a dedicated pool for the region at this point, one of the people said.

KKR follows Carlyle Group LP (CG) in turning to Africa as global buyout firms seek to diversify away from western economies to achieve higher returns. A so-called frontier market because it is perceived as riskier than more mature emerging economies such as China or Brazil, Africa is appealing to investors partly because of its steady economic growth over the past five years, its 1 billion inhabitants and growing middle class.

"That Carlyle or KKR are looking at Africa is a good sign, because it shows that investors' appetite is growing," said Mark Richards, Head of Financial Services at London-based Actis LLP, which has about $1 billion allocated for the region. "African private equity is going to deepen, the market is going to grow, and not everyone is going to succeed."

Carlyle, the world's second largest private-equity fund manager, is seeking about $500 million for its first fund targeting sub-Saharan Africa, two people with knowledge of the plans said last year. The buyout firm opened offices in South Africa and Nigeria.

Bob Geldof

An official at KKR in London declined to comment. Helios Investment Partners LLP, a London-based fund manager, gathered $900 million for African investments last year, the largest dedicated pool raised for the continent. Irish rock star and anti-poverty campaigner Bob Geldof is helping London-based 8 Miles LLP raise money for deals in Africa too.

Credit-default swaps on South Africa, the continent's most- developed economy, are at 145.18, while those on Morocco stand at 220.83. China's five-year CDS are at 103.37. The measure typically rises as investor confidence deteriorates and falls as it improves.

Africa's economy grew by 5 percent last year and is projected to grow at 5.5 percent this year, according to the International Monetary Fund.

'More Buoyant'

"The overall picture in sub-Saharan Africa is markedly more buoyant than the outlook for some other regions in the world, notably the advanced economies of Europe and North America," the IMF said in an April report. "Growing working- age populations, rising urbanization, and absorption of new technological advances provide strong platforms for sustained growth."

Funds of about $1.3 billion were raised for the region last year, compared with about $1.5 billion in 2010, according data compiled by the Emerging Markets Private Equity Association. That compares with $16.6 billion raised for China in 2011, $7 billion for Brazil and $2.7 billion for India.

While the number of private equity investments in China and India declined by 8 percent and 25 percent respectively in the first half of this year, they jumped by 27 percent in sub- Saharan Africa, the EMPEA said in a survey last month.

IFC’s ALAC Fund Invests USD124m in Nigerian Persianas Group


The International Finance Corporation (IFC) has announced an investment of USD124m in Nigeria’s Persianas Group. The investment will consist of equity of USD74m from the IFC and the FC’s African, Latin American and Caribbean (ALAC) Fund, and USD50m in debt, also provided by the IFC.

Persianas are the developers of the Palms Shopping Mall in Lekki, Lagos, and will use the funding to the development of additional commercial real estate as well as the growing the company into a ‘fully integrated design, property development, and asset management firm’.

Australia's LNG Skilled Labor Concerns Mount

The world is entering a "golden age of gas" with Australia set to be a key contributor to it.

With seven world-scale liquefied natural gas (LNG) projects in the country currently under construction, it is clear that Australia is positioning itself to emerge as the leading player in the global LNG market.

Four of the projects draw from gas fields in Western Australia (Gorgon, Prelude, Wheatstone and Ichthys) and three are in Queensland (Queensland Curtis LNG, Gladstone LNG and Australia Pacific LNG).

Gorgon will have three trains producing 15 million tones per annum (mtpa) of LNG from 2014. Wheatstone will produce an initial 8.9-mtpa from 2016. Prelude will produce 3.5-mtpa, starting from 2016 to 2017. Ichthys will pipe Western Australian (WA) gas to a liquefaction plant near Darwin. It will produce 8.4-mtpa of LNG and is expected to start production in late 2016.

In Queensland, the three projects – Queensland Curtis LNG, Gladstone LNG and Australia Pacific LNG - have each made final investment decision for two production trains. Queensland Curtis will produce around 8.4-mtpa of LNG with the first train to start production in 2014. Gladstone LNG will produce up to 7.8-mtpa and Australia Pacific LNG will produce up to 9-mtpa; both of these projects are targeting first production in 2015.

A report released by The Economist Intelligence Unit (EIU) last week stated that "Australia could even displace Qatar as the number one LNG exporter by 2020." The report went on to add that "at the very least, Australia will surpass major LNG exporters such as Indonesia and Malaysia in terms of total liquefaction capacity."

Despite Australia's ascendancy in the global LNG sector, concerns about the country's ability to attract and retain a skilled and capable workforce have started surfacing.
Why Retaining Talent for Australia's New LNG Projects is Difficult

While Australia is blessed with prolific LNG resources, most of these resources are located in extremely remote locations, which means that exploration and development works are both difficult and costly.

Peter Kiernan, lead analyst of the energy team in the EIU, sheds light on the labor challenges that Australia's new LNG projects have to grapple with in an exclusive interview with Rigzone.

"Many of the LNG fields, especially those sited in Western Australia (WA), are in locations so remote that accommodation and facilities for the employees have to actually be built from scratch," Kiernan said. "For the offshore LNG projects, the companies have to spend massive amounts on transporting their employees onto and off the production platforms," Kiernan remarked.

Kiernan added that the remoteness of the LNG projects also means that operators find it fairly tough to retain employees for a long stretch of time. The labor shortage is so acute that the EIU actually pointed it out as a risk factor that could delay the timing of several of these projects.
Process Operators, Engineers and Geoscientists Needed!

For the Australian LNG sector – among the deck of skilled labor required – process operators, engineers and geoscientists appear to be high priorities in hiring.

In the case of process operators, the supply lag at present appears to be at a critical level. According to a presentation made by Australian Workforce and Productivity Agency board member Keith Spence in July this year, 2012 to 2015 is the crucial period for most of the LNG projects as they are moving into the construction phase. Spence's data shows that Australia needs to beef up the number of its current 180 to 200 process operators to 1,500 by 2017 to 2018.
Australia's LNG Skilled Labor Concerns Mount

Oil Basins Director and CEO Neil Doyle, a veteran in the oil and gas industry, agrees with Spence's opinion.

"It is very difficult to find skilled process operators in WA. And for a mammoth new LNG project, having highly experienced process operators is a must," Doyle told Rigzone in a telephone interview on Thursday.

Doyle went on to explain that skilled process operators are essential as having the right people makes all the difference between having an incident-free startup, or one fraught with accidents. Doyle's opinion is based on having worked with oil majors for several decades.

Shoring up on the number of process operators required will be no easy task for the LNG projects, considering the fact that the sector will experience labor competition of the same talent pool from the mining and infrastructure sectors, which are also expanding at equally robust rates.

Meanwhile, the country is also facing a shortfall of 1,700 engineers and 3,000 geoscientists over the next five years, data from a paper presented by GE Australia and New Zealand's industry Skills Development Leader Stuart Manifold in July this year showed. Manifold's paper stated that Australia is not producing enough engineering graduates to keep pace with the expansion of its energy resources projects.

Manifold had said that Australia needs to step up on its efforts to retain its engineering graduates as the engineering skills shortage issue is a global one. This means that emerging regions, such as Africa and Southeast Asia, which are embarking on new LNG and mining projects, will also be eying Australia's engineering talent.

But it is not just the emerging economies that are showing an interest in poaching Australia's engineers. Graying economies, such as Japan, are also on the lookout for young engineering talent, KPMG's Migration Services Partner Jason Berry said in a presented paper in July earlier this year.

Doyle was quick to caution on the tendency of industry watchers to over-emphasize the labor shortage situation plaguing Australia's LNG industry.

"When we speak of a labor shortage, we are referring to manpower with specialized skills. Generalist skills – such as commercial managers – are relatively easy to come by," Doyle said.
The Short-term Solution

In the near-term, Australia is bridging the demand and supply gap by flying in employees for the LNG projects. A paper presented by GE Oil & Gas' Regional Executive David Leslie in July showed that employer-sponsored (457) visas have leapt up from 2,260 in 2003-2004 to 7,940 in 2010-2011. The figure is set to rise, Leslie stated.

Increasing wages and poaching a small pool of experienced operations personnel is also a commonplace short-term approach that LNG project operators are taking, Spence's presented paper showed.

While neither of the solutions are sustainable in the long-term, Kiernan is of the view that these approaches are inevitable.

"The LNG projects pretty much reached the final investment decision stage in the 2009 to 2012 period, which is pretty much all at the same time. When that much capacity is scheduled to be built at the same time, labor bottlenecks are bound to happen," Kiernan said.
Government and Industry-led Initiatives

Australia has started to implement long-term solutions to address the labor crunch in its LNG industry.

The Western Australia (WA) Government has provided seed funding to Engineers Australia and the Association of Professional Engineers, Scientists and Managers Australia (APESMA) to engage in early identification of potential work packages for the local industry.

In addition, the WA Government has also started a "dollar-for-dollar" financial assistance to local companies to help improve their ability to compete for work on major resource projects. The initiative – known as the Industry Facilitation and Support Program (IFSP) – has seen 73 companies receiving a total of $1.5 million from the WA Government in 2011. The second round of IFSP applications will start in the fourth quarter of this year.

Moving beyond government-led initiatives, Spence suggested that LNG industry players should band together to address the manpower shortage issue. He noted that companies involved in similar new projects could get together and set up a kind of informal collaboration in terms of addressing their hiring needs.

Leslie's presented paper showed that GE Oil & Gas is actively looking to increase it skilled workforce through three avenues – graduates, women and Australia's indigenous population. To attract graduates to pursue a career in the LNG industry, GE Oil & Gas has started working with schools to provide summer internships. The company also provides scholarships for indigenous Australians. In terms of talent retention, GE Oil & Gas has launched a program entitled "GE ANZ Woman's Network Group" to allow women in the organization to meet and form their own support groups. Leslie also mentioned that GE Oil & Gas has started to look into flexible work practices to cater to its women employees.
The Long-Term Sustainable Solution

Australia's industry players have started partnering with technology institutes to offer practical training programs geared specifically towards training a skilled LNG workforce.

The Australian Centre for Energy and Process Training (ACEPT) is an example of a pioneer institution that was formed in 2007 through a public-private partnership with the industry to train and groom a sustainable talent pool for the LNG sector. The institution trains its students using a hands-on approach, where its students work on an actual operational process plant and methanol distillation tower on the campus. Its students are schooled in the Honeywell, Yokogawa and Emerson process operations.

"ACEPT's process plant and distillation tower designed out of transparent material, so that our students can see the actual internal process of how a plant works," ACEPT's School of Applied Engineering Greg Guppy described in a paper he presented in July this year.

Oil and gas companies that are in partnership with ACEPT include Woodside, Shell, Conoco Phillips, Honeywell, BP, Aker Solutions, Vermillion Oil & Gas, Clough AMEC and Apache.

Citing Woodside as a case study, Guppy said that the company sends around 180 of its employees each year to ACEPT to receive technical, apprentice and skills recognition training. Woodside also sends its employees on ACEPT's graduate training programs.
Australia's Road Ahead

The looming manpower concerns would likely hobble Australia's ambitions to become the global LNG powerhouse by the end of this decade. Education and training, targeted immigration and work policies, employee retention initiatives must converge in a multi-prong approach to the problem.

In a speech made by WA's Minister for Finance, Commence, Small Business Simon O'Brien in July, he summed up the country's sentiment as such, "Australia is on course to overtake Qatar as the world's top exporter by the decade and to supply one-fifth of global LNG supply by 2020. It is an amazing growth story and an exciting time for us."

Italian Eni signs MoU to develop, commercialise offshore gas in Ghana for domestic market

Italian oil company, Eni together with Swiss-based Vitol, have signed a Memorandum of Understanding (MoU) with the Government of Ghana to develop and commercialise the country’s discovered gas resources offshore.

In a statement today August 21, 2012, Eni said the pact was signed with Ghana’s Energy Minister and the Ghana National Petroleum Corporation (GNPC) for the “development and commercialization of discovered gas resources in the Offshore Cape Three Points (OCTP) Block located in the Tano Basin of Ghana.”

The MoU focuses particularly on the domestic gas market in which Eni said together with its joint venture partners “wish to play a prominent role”.

It also set out the key principles for future development of the discoveries and commercialization of the gas within the contract area.

The OCTP Block is operated by Eni with a 47.222% stake, in partnership with Vitol (37.778%) and the GNPC (15%).

Eni entered Ghana’s oil industry in 2009 and currently operates the two exploration blocks of OCTP (Offshore Cape Three Points) and Offshore Keta.

Wood Mackenzie: 100 Tcf of Gas Found in Mozambique and Tanzania to Date

Wood Mackenzie estimates that 100 trillion cubic feet (tcf) of gas has been discovered in Mozambique and Tanzania to date, ranking the Rovuma Basin as one of the most prolific conventional gas plays in the world.

However, there are significant technical and commercial challenges to be overcome in order to bring the gas to market by the end of this decade. These include: addressing issues around infrastructure, government capacity, financing and reaching a positive outcome to unitisation negotiations in Mozambique.

Recent discoveries and high profile M&A activity in Mozambique and Tanzania are attracting attention and Martin Kelly, Wood Mackenzie’s Head of Sub-Sahara Upstream Research, says the interest is justified: “100 tcf of gas has been discovered to date in East Africa and we estimate yet-to-find reserves could be as much as 80 tcf in Mozambique and 15 tcf in Tanzania. There is clearly plenty of gas to supply the likely commercialisation route of LNG – theoretically enough to support up to 16 LNG trains.

“The Rovuma basin is the most prolific in the region, and one of the hottest conventional gas plays in the world, with 85 tcf discovered so far. Globally in 2011, it yielded the third most hydrocarbons, and we expect it to top the list in 2012 if the first half of the year is anything to go by,” Kelly continues.

In neighbouring Tanzania, the targets are the northern extension of the Rovuma Basin and the Mafia Basin. Kelly says: “Tanzania has enjoyed considerable exploration success as well, but hasn’t discovered the same scale of reserves. The average discovery size is much smaller at around 2 tcf, compared to Mozambique which is over 7 tcf. Discoveries in Tanzania are also more spread out, so developing them will be more expensive than those in Mozambique because additional infrastructure will be required.”

One of the most immediate challenges for Mozambique, is the unitisation discussions which Wood Mackenzie understands have already begun. Kelly explains; “Of the 85 tcf of gas discovered to date in Mozambique, around half of it is thought to be one enormous field which is in communication across the block. Under Mozambican law, a unitisation agreement between the operating parties will be required.”

Although there is a risk that unitisation discussions could delay Final Investment Decision (FID) – the crucial last step before commercial development – and therefore LNG production, there are other discoveries which are wholly contained in Area 1 and Area 4 and therefore gas could come from these first.

Giles Farrer, Senior LNG research analyst for Wood Mackenzie comments: “Many challenges will need to be overcome prior to LNG project sanction. The region’s remoteness and lack of development present serious technical obstacles. There is virtually no existing skilled workforce and both Mozambique and Tanzania will have to build and establish deepwater ports capable of servicing the needs of the petroleum sector. On the commercial side, there is the question of government capacity – whether there is sufficient impetus and capability within the governments and national oil companies to advance the huge legislative, bureaucratic, customs and financial challenges that such a development would bring.

“The major outstanding milestone for Mozambique is the conclusion of a commercial framework agreement, which is in the process of being negotiated. It will determine how the LNG facility or facilities will be structured for the purpose of taxation and whether the Joint Ventures (JVs) will co-operate in the construction of a single, mega LNG facility, or pursue individual developments. One crucial advantage that the Tanzanian projects enjoy is that they have already negotiated commercial terms, prior to the announcement of their projects.”

Farrer continues: “Lastly there is the question of finance, we estimate that a two train greenfield development in the region is going to cost at least US$25 billion, and for some of the players involved financing their share of this sort of development cost will certainly prove challenging and could delay development,” Farrer concludes.

The joint analysis by Wood Mackenzie’s upstream and LNG research teams stresses that these challenges are not insurmountable. “They have been encountered and overcome in several countries before. The risk is that delays could lengthen development schedules and add to costs,” Farrer says in closing

Exxon, Qatar plan to export LNG from US
21 Aug 2012 19:52 GMT

Houston, 21 August (Argus) — ExxonMobil and Qatar Petroleum are proposing to expand their Golden Pass LNG import terminal on the Texas coast to add natural gas-export capabilities.

The $10bn project will give the plant capacity to ship out 15.6mn t/yr of LNG, utilizing existing tanks, pipelines and other infrastructure at Golden Pass, the joint venture said. New facilities would treat and liquefy gas for export around the world by tankers, giving the companies the flexibility to ship or receive fuel cargoes based on market conditions.

Qatar Petroleum and ExxonMobil built the Golden Pass terminal in a 70:30 partnership to receive LNG from their giant liquefaction trains in Qatar. But the plant took five years to build, and by the time it was commissioned in 2010, the North American shale boom had created a gas glut on the continent.

The Golden Pass expansion project is among more than a dozen proposed LNG export developments in the US and Canada. Cheniere Energy is furthest along in the process, having already received government approvals to export LNG, even to nations that do not have free-trade agreements with the US. Like the Golden Pass partners, Cheniere plans to add export capabilities to an existing export terminal at Sabine Pass, on the Texas-Louisiana border.

ExxonMobil and Qatar Petroleum face a multiyear process to get regulatory approvals, as well as the long process of actually building liquefaction facilities. They at least have the cost advantage of expanding an existing terminal, rather than starting from scratch.

“It's a question of what's going to be most competitive,” ExxonMobil chief executive Rex Tillerson said after the company's annual shareholders' meeting in June. “We think there are going to be a few projects that are most competitive. Not all of them will be.”

Competitiveness will start with being one of the projects that get government approval and financing. US regulators will not likely approve all the liquefaction plants that have been proposed because they will consider energy security and price implications, and exporting too much fuel would drive up domestic gas prices.

OPEC may cut 2013 oil demand growth forecast .
Wednesday, 22 August 2012 00:00 Editor Business Services - Energy Report

THE Organisation of the Petroleum Exporting Countries (OPEC) may have to reduce its forecast for growth in world oil demand in 2013 by 20 per cent, the exporter group said, citing a vague and turbulent outlook for the global economy.

According to the latest OPEC monthly report, the cartel left its forecast unchanged from its estimate last month. However, it expected demand to expand by 810,000 barrels per day (bpd) next year, although it noted that the odds suggest oil use could undershoot that figure.

“The downward risk potential has greater probability in the forecast than the upward risk one. Therefore, the gloomy picture could reduce the world oil demand growth forecast by 20 per cent next year,” it stated.

OPEC, source of more than a third of the world’s oil, expects world economic growth to slow to 3.2 per cent next year from 3.3 per cent in 2012, hindered by a slightly slower expansion in the United States and China, the world’s two largest oil consumers, and weakness in the euro zone.

OPEC’s demand outlook is, as usual, more cautious than that of the U.S. government, which on Tuesday raised its forecast for 2013 growth in oil consumption. The last of this month’s trio of major oil reports is expected to be released by the International Energy Agency.

For this year, OPEC left its forecast for the growth in world oil use virtually unchanged at 900,000 bpd and said the outlook had flattened out.

“Demand has overcome earlier expectations of a declining momentum and moved to a more stabilised trend, supported by the summer driving season, the summer heat and the continued shutdown of most of Japan’s nuclear capacity.”

OPEC trimmed the forecast of demand for its own oil this year and in 2013 by 80,000 bpd and 100,000 bpd, respectively, due to higher supply from producers outside the 12-member group.

The United States, Canada and South Sudan are among the non-OPEC producers expected to provide more oil than previously expected this year. South Sudan said this week it hoped to resume production in September after ending a dispute with Sudan.

OPEC now expects demand for its crude to average 29.9 million bpd in 2012 - significantly less than it is pumping at present even after a drop in output last month due to sanctions on Iran and a cutback by Saudi Arabia.

Citing secondary sources, OPEC said its production fell by 160,000 bpd to 31.19 million bpd in July, led by Iran, whose oil became subject to a European Union embargo from July 1 over its disputed nuclear program.

Output also declined in OPEC’s top producer, Saudi Arabia, which told OPEC it had trimmed supply by 300,000 bpd to 9.8 million bpd in July. Industry sources told Reuters last month Riyadh reduced supply because of lower demand from some customers.

Analysts at Barclays Capital pointed out that the drop in Saudi output, as reported by Saudi Arabia itself, was larger than estimated by other assessors.

“The Saudi output that was brought on to help compensate for the constriction of Iranian exports is being scaled back,” Barclays Capital oil analyst Miswin Mahesh said in a report.

U.S. and European sanctions have pushed Iran from its traditional position as OPEC’s second-largest producer to rank third behind Iraq, which has pushed output above 3 million bpd in July, ahead of Iran at 2.82 million bpd.

East Africa: UBA to Finance Energy, Infrastructure in East Africa

United Bank for Africa Plc (UBA) is planning to invest in Energy and infrastructure in East Africa, the bank said in a statement yesterday.

The Group Managing Director/CEO, Mr. Phillips Oduoza said this in Nairobi, Kenya, while addressing leaders of the organised private and public sector as part of his business visit to Zambia, Tanzania and Kenya at the weekend, the statement said.

UBA would explore areas of collaboration with key players in private and public sectors as part of efforts to engineer growth and development of the economies of these countries where it presently operates, the statement said.

The bank would be providing financial advisory services, infrastructure financing particularly in the emerging energy sector and efficiency in revenue collection in the region.

Oduoza said: "Energy is one of the strengths of UBA and we hope to build capacity by bringing in people who have expertise in energy transactions. We have knowledge in structuring oil and gas transactions and we shall train our people here in the region on financing oil and gas deals, no matter the volume and magnitude of the transactions."

He listed tourism, agriculture, infrastructure, inter-African trade and utilities as some of the bank's target business areas in the region.

Legacies of Awo lives on...

Tanzania looks to learn from Abu Dhabi with wealth fund

Tanzania plans to establish a sovereign wealth fund to invest future energy windfalls.

TanzaniaThe east African country is benefiting from a steady increase in its natural gas reserves and the government is studying states with significant hydrocarbon revenues. It is focusing on those that - like Abu Dhabi - have established sovereign wealth funds, said Jakaya Kikwete, Tanzania's president.

"We want to learn from them by setting up our own fund to ensure we similarly benefit," he said in a televised address.

New gas finds tripled Tanzania's proven reserves in June and the World Bank has estimated the country could earn US$3 billion (Dh11.01bn) a year from exporting gas. Other African countries such as Nigeria and Ghana are also working towards establishing sovereign wealth funds.

The oil and gas companies active in Tanzania are yet to shift from exploration to production, however, and a significant flow of gas is not imminent.

"It will be a few more years before we see substantial gas revenues in Tanzania," said Marne Beukes, an analyst at IHS Global Insight.

Somali piracy, and disputes over contracts signed with international oil and gas companies could become stumbling blocks to eventual exports. But growing gas finds have attracted some of the industry's big players to the country.

Yesterday, a joint venture comprising the BG Group and Ophir Energy announced its latest gas discovery, adding to its proven reserves of about 6 trillion cubic feet.

The US oil supermajor ExxonMobil and Norway's Statoil last month struck gas for a seventh time in the offshore Rovuma basin, which has already provided Mozambique with a wealth of proven reserves.

The discoveries take the joint venture's proven reserves there to 9 trillion cubic feet. The country's total recoverable reserves stand at 28.9 trillion cubic feet, Mr Kikwete said.

While Tanzania's discoveries are substantial, they are dwarfed by those in Mozambique, where Italy's Eni and a consortium including Anadarko, based in the United States, have found reservoirs holding up to 112 trillion cubic feet.

Nevertheless, Statoil's finds alone are considered sufficient to justify building a liquefied natural gas export terminal, which would allow Tanzania to monetise its gas production. "The results so far mark an important step towards a possible natural gas development in Tanzania," said Tim Dodson, Statoil's vice president for exploration.

One of the sovereign wealth funds Mr Kikwete hopes to learn from is already active in his country's gas sector.

Mubadala Oil and Gas, a subsidiary of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, last November invested $23 million into acquiring and exploring a stake in an offshore block.

BP Sells Texas Midstream Gas Assets, USA

BP America Production Company said that it has agreed to sell its Sunray and Hemphill gas processing plants in Texas, together with their associated gas gathering system, to Eagle Rock Energy Partners for $227.5 million in cash.

The Sunray plant, in Moore County, and the Hemphill plant, in Hemphill County, have combined processing capacity of approximately 220 million cubic feet of gas a day (mmcf/d) and an associated gathering system of around 2,500 miles of pipelines.

BP said it believes these assets, which serve BP’s natural gas production in the Texas Panhandle region, will be more strategically valuable to a company that specializes in midstream oil and gas operations. The agreement does not include BP’s natural gas producing assets in the area.

The transaction is expected to close in the fourth quarter of 2012, subject to regulatory approvals and customary closing conditions.

BP’s North America Gas business has a high quality portfolio of assets with a presence in seven of the leading gas basins in the US Lower 48 states. In 2011, BP produced over 1,800 mmcf/d natural gas in the US. BP’s US onshore upstream operations are an integral part of its business, and the company continues to look at opportunities for growth over the long-term.

Statoil, ExxonMobil make big gas find off Tanzania

Norwegian oil firm Statoil and ExxonMobil have discovered a large natural gas deposit off the coast of Tanzania and added further resources to another nearby find, Statoil said in a statement on Thursday.

The discovery, Statoil’s seventh major find in just over a year, confirmed 3 trillion cubic feet (Tcf) of gas in the Lavani well, 2,400 meters under the sea.

In addition, the firms also added 1 Tcf of gas to an earlier 5 Tcf discovery in the Zafarani sidetrack in the same block just 16 kilometres away, Statoil, the block’s operator said.

“We estimate a value of the discovery plus the upgrade on the Zafarani discovery of NOK 1.3 per share,” Swedbank First Securities said in a note. “We assume a fair share price reaction would be NOK 0.8-1.0 per share,” it added.

The discovery confirms Statoil’s recent track record for solid upstream success after it has made big finds in the mature areas of the North Sea, the Arctic Barents sea, in Brazil and Tanzania.

The block further bolsters east Africa’s hydrocarbon potential following a string of discoveries by oil majors off Mozambique and Tanzania.

Statoil operates the licence on 5,500-square-kilometre Block 2 on behalf of Tanzania Petroleum Development Corporation and holds a 65 percent stake while ExxonMobil Exploration has 35 percent

BP Sells Refinery, Arco Retail to Tesoro for $2.5 Billion

Oil company BP says it has agreed to sell its refinery in Carson, Calif., and other West Coast assets to Tesoro Corp.

BP [BP 42.15 -0.25 (-0.59%)] said Monday that Tesoro is paying $2.5 billion cash for the refinery, pipelines, storage terminals, and Arco-branded retail outlets in southern California, Arizona, and Nevada. BP is also selling the Arco brand rights for northern California, Oregon, and Washington, and will lease them back from Tesoro [TSO 38.83 3.33 (+9.38%)].

Earlier Monday, BP announced it was selling two gas processing plants in Texas to Eagle Rock Energy Partners [EROC 8.69 -0.27 (-3.01%)] for $227.5 million in cash for the Sunray and Hemphill gas processing plants in Texas.

BP says it has now sold or agreed to sell assets worth $26.5 billion since 2010. The company has a target of $38 billion in disposals by the end of next year to help pay the costs of the Macondo well blowout in the Gulf of Mexico.

Ghana takes delivery of pipes for national gas project

GHANA Gas Company, GGA, has taken delivery of about 3,271 pipes from China for the country’s National Gas Project at the Takoradi Port.

Dr Joe Obeng-Adjei, Minister of Energy; Dr Kwesi Botchwey, Chairman of the board of the Ghana Gas Company; Dr George Adjah Spia-Yankey, Chief Executive Officer of the company and the Western Regional Minister, Mr Paul Evans Aidoo, inspected the consignment on MV Amber Halo that brought in the equipment.

Another consignment of about 3,271 is due to arrive soon, Ghana News Agency reports.

The team later inspected a camp for the storage of about 1,268 of the pipes at Mampong near Takoradi.

Speaking to the media, Dr Obeng-Adjei said most of the equipment for the project have arrived and the laying of the pipes would soon begin.

He urged the contractors, Sinopec International Petroleum of China, to execute quality work within the stipulated budget and on schedule, adding that work done must meet international standards.

He also urged that quality be not overlooked in the quest to meet the deadline.

The minister appealed to communities in areas where the pipelines would be laid to be cooperative and not to create tensions and fan conflicts with people working on the project.

Dr Botchway said the local content of the project would be upheld whether or not there is a Local Content Law.

He said impression has been created that locals would be sidelined in the labour force for the project but this is not the case.

Dr Botchway said local people have been engaged for the project and expertise would only be brought from outside when it is lacking in the country.

Dr Spia-Yankey said it was the wish of the President that the project became a reality and the Ghana Gas Company was doing everything to make it happen.

He said government would pay adequate compensation to those whose crops and properties would destroyed by the project.

Oben Gas Plant shut for expansion work

13 August 2012, Sweetcrude, LAGOS - THE Oben gas plant has been shut down by owners, Seplat Petroleum Development Company Limited, for a scheduled upgrade operation.

Seplat Petroleum, operator of the Nigeria Petroleum Development Company/Seplat Joint Venture (JV) Oil Mining Licenses, OMLs, 4, 38 and 41, said the plant would be shut down for two weeks.

The company said the scheduled shutdown of the Oben gas plant is part of plans to upgrade the plant to extend its lifespan by another 20 years and also achieve specification of the West African Gas Pipeline, WAGP.

Mr. Emmanuel Otokhine, the company’s head of corporate communications, said in a statement that the shutdown is the concluding part of the plant upgrade which the NPDC/SEPLAT JV has invested significant amount of money to undertake.

The statement quoted Mr. Austin Avuru, managing director of Seplat, as saying the upgrade is another testimony of the joint venture’s unwavering commitment to ensuring a long-term supply of abundant, clean, relatively cheaper fuel to end-users in Nigeria, Ghana, Togo and Benin.

World oil demand to reach 90.5mb/d in 2013 – IEA

11 August 2012, Sweetcrude, VIENNA – THE International Energy Agency, IEA, has said that world oil demand will reach 90.5 million barrels per day next year, up from its predicted 89.6 million barrels per day for this year.

The agency said a slowdown in economic activity will put the brakes on global oil demand growth in 2013.

According to the IEA, annual demand growth will be restricted to 900,000 barrels per day this year, giving an average of 89.6 million bpd, with the rate sinking to 800,000 bpd in 2013, when it predicted 90.5 million bpd demand.

It said oil prices, which have rebound to above $110 per barrel after earlier falling below $90, are likely to be given support in the next few months by geopolitical tensions as well as sanctions on Iran crude exports over its nuclear programme.

“The geopolitical dimension is likely to continue to provide something of a floor for prices. The issue of Iran will likely continue to weigh heavy on the market through the second half of 2012,” the IEA stated in its report.

“Moreover, there is a risk that recent progress in restoring output from Libya, Iraq and Nigeria could be jeopardised if recent political and civil tensions worsen.”

The IEA attributes the lower demand growth forecast to “sluggish economic growth”with an expected slowdown in major economies China and the US contributing to the “weaker backdrop” for the crude market.

Its prediction echoes similarly pessimistic forecasts issued this week by Opec and the US government.

Meanwhile, global oil supply increased 300,000 bpd to 90.7 million bpd in July compared with the previous month, the IEA said.