Saturday, July 8, 2017

African Petroleum reaches deal with Gambia's Yaya Jammeh - a republication

A November 21, 2014 blog post about the bromance between
African petroleum and the former dictator : A republication .
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The regime of Yaya Jammeh, the Gambian dictator announced in January this year that it has terminated the exploration contracts of African Petroleum (Gambia) Ltd for Blocks A1 and A4.

Soon thereafter, African Petroleum Corporation announced that it is going to international arbitration with the Government of The Gambia, a request lodged with the World Bank's International Center for the Settlement of Investment Disputes (ICSID) based in Washington DC.

The Ministry of Petroleum officials were in London a couple of weeks ago to negotiate a deal with African Petroleum where the arbitration request with ICSID will be dropped in exchange for the restoration of the contracts for Block A1 and A4.

The Senegalese oil discovery announced recently may have been an influencing factor in getting the dictatorship in Banjul to temper their belligerent and unpredictable attitude towards foreign companies they have been dealing with in the last decade most of which ended in arbitration.

The details of the deal between AP and Government of The Gambia are unknown, as are other similar contracts with other petroleum companies designed and intended to keep Gambians in the dark.  It is expected that a joint announcement will be made shortly.


Gambia's petroleum sector is opaque for a reason

This is a republication of a blog post that is relevant as
African Petroleum Company is in the news again.
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The announcement by ERIN Energy (formerly CAMAC) that it has reached an agreement with FAR Ltd. to farm-out Blocks 2 and 5 kick starts a petroleum exploration concession awarded to the Texas-based, Nigerian controlled company by Yaya Jammeh in May of 2012.

FAR is an Australian oil exploration company that is currently operating in Senegal.  In fact the two Blocks (2 and 5) are next to FAR's 2014 SNE-1 oil field one discovery considered the largest offshore oil discovery of the industry that year.

The Agreement between Erin and FAR, FAR will pay a purchase price of $ 5.18 and take over $ 8 million of the company's shares in exploration costs of a well that is expected go be drilled in 2018, according to industry sources.  By contrast, $ 400 million was paid in the case of the adjacent blocks in Senegal, making these figures appear minuscule, even when the size of the blocks in the adjacent areas in Senegal cover larger areas.

According to FAR's own estimates, Blocks 2 and 5 have the potential of producing in excess of one billion barrels of oil.  Block 2 as indicated earlier, is adjacent to Senegal offshore block in which FAR already has an interest as junior partner of the Scottish Cairn Energy that operates the SNE world class oil and gas field,

Since the Erin-FAR deal is subject to government approval, the Barrow government must revisit this particular contract Agreement i.e. between Erin (formally CAMAC) and Yaya Jammeh.  Pertinent issues must be raised with Erin ( for Blocks 2 and 5) and African Petroleum Corporation (for Blocks 1 and 4) including the amount paid for the two licenses and to whom the monies were paid.

The circumstances that led African Petroleum Corporation's (APC) withdrawal of its arbitration request with the World Bank's International Center for Settlement of Investment Disputes after its license for Blocks 1 and 4 were terminated by Jammeh only to be reinstated without explanation must also be explained. Were the terms and conditions maintained as previously or were they varied? Obviously, more questions must be raised by the Barrow administration about all of these contracts and satisfactory answers provided by both APC and Erin.  

Gambia's energy/petroleum sector is opaque for a reason.  It allowed Jammeh to negotiate these deals personally with a select number of civil servants being privy to the details of the Agreement when these concessions should have been publicly tendered for transparency.

We need not remind readers that the Jammeh style of governance is unsustainable because it is inefficient and corrupt, depriving the public treasury much needed financial resources at the expense of Gambians who, on average, are living in abject poverty. The new government must reverse the trend by adopting best public procurement practices in the petroleum, energy and other public sectors.
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CORRECTION :  The $ 400 M referenced in this blog was paid by Kosmos to Petrotim for the Deep Sea - St. Louis Block and not the adjacent blocks as initially reported.