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Saturday, 17th November 2018
7:20:07pm

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French oil company Total said on Saturday it plans to drill 13 wells on block 17, offshore Angola, in order to maintain production of 400,000 barrels per day of crude until 2023 in Africa’s second largest crude producer.

In a statement, the company said the wells, which will connect marginal fields to existing floating platforms, would be divided between two projects. 

CLOV 2 will involve drilling seven additional wells to produce 40,000 barrels of oil per day. First oil is expected in 2020.

Dalia 3 will see six new wells drilled, producing 30,000 barrels per day, with oil coming onstream from 2021.

The projects, along with the previously announced Zinia 2, will enable Total to maintain production from block 17 of more than 400,000 barrels per day, the company said.

-Reuters

Nigeria’s central bank plans to meet four lenders of telecoms company MTN to discuss a dispute over a $8.1 billion fund transfer, after a court adjourned the case, a banking source said. 

The central bank emailed invitations on Thursday to the Nigeria heads of Standard Chartered, Citibank, Stanbic IBTC Bank and Diamond Bank to attend a meeting on Friday, the source said.

Nigeria’s central bank has accused South Africa-based MTN of violating currency regulations by sending $8.1 billion abroad, and in August ordered the company and its banks to repatriate the funds. MTN and the banks involved have denied any wrongdoing and the banks want the central bank to refund them money charged to their accounts in the form of fines.

The central bank and the banks declined to comment on a potential meeting on Friday. A spokeswoman for MTN said she did not know of a meeting.

The source said the meeting would start at 1600 (1500 GMT) on Friday and focus on MTN’s fund transfer.

Last week, a Lagos court adjourned a hearing on the $8.1 billion dispute between MTN and the central bank until Dec. 4.

Central bank Governor Godwin Emefiele has said he was optimistic the MTN issue could be resolved.

FINANCIAL STABILITY RISK

Nigeria is MTN’s biggest market, accounting for a third of the lender’s annual core profit, but has proved to be problematic in recent years.

In a separate case, MTN faces a $2 billion tax demand from Nigeria’s attorney general, a claim which the firm has said is without merit. The Lagos court on Thursday adjourned the case against the attorney general until Dec. 3.

Africa’s biggest telecoms firm has a market valuation of roughly $12 billion and the two disputes total $10.1 billion.

South Africa’s central bank said on Wednesday that the country’s financial stability was threatened by the demands made on MTN by Nigerian authorities. 

Nigeria’s central bank fined Standard Chartered 2.4 billion naira ($7.8 million) over the fund transfer; Stanbic IBTC Bank 1.8 billion naira, Citibank 1.2 billion naira and Diamond Bank 250 million naira.

-Reuters

Mozambique has reached an agreement with the bulk of its creditors to restructure a $726.5 million Eurobond, including extending maturities and sharing future revenues from huge offshore gas projects, the finance ministry said on Tuesday.

Mozambique has been battling to recover from a debt crisis after admitting in 2016 to $1.4 billion of previously undisclosed lending, much of which was supposed to be spent on a tuna fishing fleet.

The disclosure prompted the International Monetary Fund and foreign donors to cut off support to the southern African state, triggering a currency collapse and a default on sovereign debt.

Under the deal, Mozambique would issue a new $900 million Eurobond maturing in 2033 with a coupon of 5.875 percent - just over half what the current outstanding bond was designed to pay in interest.

Principal repayments of the bond, roughly equating to the outstanding sum plus just over $180 million in unpaid interest, would begin in 2029.

Through a separate instrument, creditors would also receive 5 percent of future fiscal revenues from the Area 1 and Area 4 natural gas projects, though payments would be capped at $500 million.

A bondholder close to the situation said the plan would provide Mozambique with cash flow relief of around 85 percent.

“It is a good deal, there are no winners or losers here. All the parties wanted to define a package that is fit for the reality in Mozambique, finding a robust structure with low probability of default in the future and that will mirror the cash flows,” the investor told Reuters.

Mozambique’s Rovuma Basin boasts natural gas resources of around 180 trillion cubic feet, enough to underpin massive liquefied gas export plants under development by global energy firms including Exxon Mobil, Anadarko and Eni.

Eurobond holders had pushed for an instrument linked to the expected gas windfall, a demand Maputo had previously rejected.

Investors welcomed the change in stance but some said it was not without risks.

“If we get lower oil prices, higher construction costs or long delays, there is a risk of significantly lower recovery than $500 million,” the bondholder said.

The existing bond rallied sharply following the proposal, rising 7 cents to just above 90 cents.

NOT THERE YET

Yet the deal is not quite over the finishing line.

Support from creditors holding 75 percent of the bond will be needed to activate the collective action clauses.

Mozambique said the four creditors who had agreed in principle to the restructuring - Farallon Capital Europe LLP, Greylock Capital Management, LLC, Mangart Capital Advisors SA and Pharo Management LLC - controlled around 60 percent of the 2023 bond.

Apart from these four, the steering committee of the Global Group of Mozambique Bondholders (GGMB) that has headed the talks includes asset manager Franklin Templeton Investment Management Limited.

“There is still some room to go to get everybody, but I think they must feel confident they can find that by making that statement,” said Stuart Culverhouse, head of sovereign & fixed income research at Exotix.

Franklin Templeton did not respond to a request for comment. 

The ministry’s statement made no mention of a $535 million loan to Mozambique Asset Management (MAM) and a $622 million facility for maritime security projects at Proindicus arranged by Russian lender VTB and Credit Suisse. Both firms were key organisers of lending to Mozambique, receiving almost $200 million in fees, according to an independent audit.

“The deal would only make a relatively small dent in Mozambique’s overall fiscal problem,” wrote William Jackson, chief emerging markets economist at Capital Economics in a note.

“Mozambique’s public debt ratio, at around 120 percent of GDP, will remain the highest in sub-Saharan Africa.”

-Reuters

The African Development Bank plans to lend South African power utility Eskom around $720 million (10 billion rand) in 2019 and 2020, the bank’s president Akinwumi Adesina said.

“We plan to lend around $620 million for the Medupi power plant, and around $100 million for Eskom’s transmission network, but that still needs to be approved by the board,” said Adesina, whose bank is holding an investment forum in Johannesburg.

Earlier this year the African Development Bank approved a separate loan of 2.9 billion rand to upgrade and expand Eskom’s transmission network.

-Reuters

South Africa’s new Finance Minister Tito Mboweni said on Thursday that struggling state-run South African Airways (SAA) should be closed down, adding that decisions over the future of the state carrier were not under his remit.

SAA, which has not generated a profit since 2011, survives on state guarantees and is regularly cited by credit ratings agencies as a drain on the government purse.

“It’s loss-making, we are unlikely to sort out the situation, so my view would be close it down,” Mboweni told an investor conference in New York televised live on South African public broadcaster SABC. 

“Why I say close it down is because it’s unlikely that you are going to find any private sector equity partner who will come join this asset,” Mboweni added.

In August, President Cyril Ramaphosa transferred oversight of SAA to the public enterprises ministry which is led by Pravin Gordhan from the finance ministry. Ramaphosa has pledged to revive struggling state firms, including SAA.

SAA CEO Vuyani Jarana has said he is mapping out a punishing austerity plan to turn the flag carrier around. He has said layoffs and other cuts were unavoidable. 

In a dramatic fall from grace over the past decade, SAA has lost its place as Africa’s biggest airline and a symbol of patriotic pride to become a source of frustration for taxpayers who have forked out more than 30 billion rand ($2 billion) since 2012 to keep it in the air.

-Reuters

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