Sunday, 09 September 2018

Zimbabwe's newly-inaugurated President Emmerson Mnangagwa on Friday named respected economist Mthuli Ncube as finance minister to revive the country's battered economy in the first cabinet since his election in a disputed vote.

Ncube, an Oxford University professor who is a former vice president of the African Development Bank, has the tough task of reviving an economy wrecked under Robert Mugabe, who was ousted last year.

The country is battling an economic crisis that includes cash shortages, rising prices of basic commodities, mass unemployment, lack of investment and a shattered infrastructure. 

Mnangagwa, who has vowed fixing the economy as his priority, announced sweeping changes to his cabinet after his victory in the July 30 election.

"We want to grow, modernise, mechanise our economy," he said.

"In the next five years, we should uplift quite a number of our people who are in the marginalised category, (and) uplift them into middle class."

Mnangagwa's line up has widely been welcomed by crises-weary Zimbabweans.

"Those are good choices," said John Robertson, an independent economist.

"It does seem to be a good start, (but) it depends on how much authority he (Mnangagwa) will give his ministers."

Mnangagwa dropped several faces that had dominated government over four decades of Mugabe's rule and made changes in the ministries of defence and home affairs, but left untouched the key posts of foreign affairs and lands, held by retired army chiefs.

The new defence minister is Oppah Muchinguri-Kashiri, a former liberation fighter who had held various posts, including that of environment, under Mugabe.

"He has been bold enough to discard people who were known for corruption," said Godfrey Kanyenze, of the Harare-based Labour and Economic Development Research Institute think-tank.

Former Olympic swimmer Kirsty Coventry, 34, was named sports minister. Mnangagwa, 75, said he believed the new cabinet trimmed from 33 to 20 was "ideal for our current challenges".

The Mugabe-era stalwarts dropped include former finance minister Patrick Chinamasa, former information communication technology minister Supa Mandiwanzira and former home affairs minister Obert Mpofu.


Source: AFP

Published in Economy
Sunday, 09 September 2018 09:59

Angola loosens Sonangol’s grip on oil sector

Angolan president João Lourenço's decision to create a National Oil and Gas Agency (ANPG) to manage and sell oil and gas licenses is intended to underline his commitment to make upstream investments more attractive and curtail the power of state energy leviathan Sonangol.

Details have yet to be fleshed out, but information released so far, suggests that after an interim handover period starting in January 2019, Sonangol will aim to have handed over its responsibilities for petroleum agreements, oil block sales and their management to ANPG by the end of 2020.

If it proceeds as planned, the move would mark a major step in dismantling state-owned Sonangol's stranglehold over the energy sector—something that would likely be viewed optimistically by the industry. Sonangol's handling of hydrocarbons activities during the 38-year presidency of Jose Eduardo Dos Santos was frequently attacked by transparency groups as opaque and regarded by oil companies working in offshore Angola as overly bureaucratic and inefficient.

"We don't know exactly who will be in charge of the agency yet, but It should enable more checks and balances to be introduced into the licensing process," says Adam Pollard, an upstream analyst at consultancy Wood Mackenzie. "If it promotes new exploration and hopefully results in a return to regular bid rounds, then it can only help."

Lourenço—having assumed control of the ruling MPLA after Dos Santos stepped down-became Angola's president in September 2017, following legislative elections. Given the new president is a product of the entrenched ruling establishment, doubts were raised over his ability to shake up vested interests. But he wasted little time in seeking an overhaul of the ailing oil industry, which accounts for a third of the economy and 95% of exports.

The government instigated wide-ranging reviews of the oil and gas sector in October 2017 and has tried to win the support of potential investors by encouraging international oil firms to provide input for the reform process. Topics under review have included the speed of approvals, marginal field terms, gas production terms, exploration and decommissioning liabilities.

Revisions to marginal field tax rates were announced in May. For a discovery with reserves of fewer than 300m barrels, the petroleum production tax was reduced to 10% from 20%, and petroleum income tax was cut to 25% from 50%. Terms for developing gas reserves have also been improved.

Lourenço also removed Isabel Dos Santos-the ex-president's daughter-as head of Sonangol, replacing her as chairman with Carlos Saturnino. She is being investigated by state prosecutors over possible irregularities in Sonangol's accounts, but denies any wrongdoing.

Signs of improvement
The oil sector badly needs fresh investment, both in exploiting existing discoveries and for exploration. A collapse in offshore activity during the post-2014 era of low oil prices has left Angola-once neck-and-neck with Nigeria as the continent's leading oil producer-facing output declines. Wood Mackenzie forecasts production will slip to around 1.6m barrels a day in 2018, slightly lower than the 1.63 m b/d of 2017 and well down on the 1.9m b/d seen 10 years ago.

While restrictions under Opec quotas have been partly responsible for flat production, a lack of major new developments isn't helping. The Ministry of Mineral Resources and Oil has warned that without an uptick in investment, production could fall to 1m b/d by 2023, as older fields near the end of their lives.

There are signs that a combination of the recently improved oil price and a more positive view of Angolan offshore investments by the international oil companies may help to stave off declines for a while longer.

The start of production on the Total-operated Kaombo development on Block 32, some 260km off the country's northern coast, has helped. The Kaombo Norte floating production storage and offloading facility (FPSO) facility started producing in July, while the Kaombo Sul FPSO is scheduled to start up in 2019. Overall production from the development is forecast to reach a peak of around 230,000 b/d.

In May, Total said it had taken a positive final investment decision (FID) on its Zinia 2 deep offshore development in Block 17—the country's first deepwater FID for four years. Zinia 2 will have a production capacity of 40,000 b/d and will sustain production on the existing Pazflor field. BP and Chevron are among those looking at possible FIDs on Angolan projects in 2019

There has even been some progress with exploration. In June, Eni said it had made a new oil discovery in Block 15/06 in the deepwater Kalimba prospect. The new find is estimated to contain 230m-300m barrels of light oil in place. The Italian firm is also expecting to add new production later this year from its existing development on 15/06, adding a further 30,000 b/d of oil to the block's overall production, which is expected to surpass 170,000 b/d in 2019.

Source: Petroleum Economist

Published in Engineering
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