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Glencore puts Chadian oil fields up for sale

The sale is being jointly run by U.S. bank, Morgan Stanley and French bank Natixis.

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Glencore puts Chadian oilfields up for sale

Like its oil trading peers, Glencore expanded in the upstream sector about a decade ago in order to secure oil flows, but the value of the assets tumbled with the oil price slump in late 2014. 

News of the Chad oilfields sale coincides with the retirement of Glencore’s head of oil, Alex Beard at the end of this month and the separation of its upstream oil interests from marketing. 

The main producing fields are Mangara and Badila. 

Related: Chad Suspends Import Taxes on Food

Glencore’s net oil production from the West African country accounted for more than half its net production at 7,700 barrels per day (bpd) out of a total net 12,700 bpd. By comparison, oil majors, BP produces close to 4 million barrels of oil equivalent per day. 

According to Glencore, the assets, up for sale less than a month ago and a data room including drilling and seismic details, had recently been opened.

The sale is being jointly run by U.S. bank, Morgan Stanley and French bank Natixis. 

A spokesman for Glencore declined to comment. Morgan Stanley declined to comment and Natixis did not immediately comment. 

Glencore was started by trader, Marc Rich more than 40 years ago specializing in oil trading. 

Over the past 20 years, it expanded into coal and metals mining but oil production constituted a small part of its business. Oil trading meanwhile, grew to 5 million barrels per day, making Glencore the world’s second-largest oil trader. 

Related: Tanzania, Zambia plan $1.5 billion oil products pipeline

It entered Chad in 2012 by buying minority stakes in some licenses owned by Calgary-based Caracal Energy and in 2014, the miner acquired the Chad-focused operator for $1.6 billion. 

However, the purchase was ill-timed taking place just months before a major oil price slump and since 2015, Glencore has booked impairments of $1.9 billion on its Chad assets after it scaled back its development program and froze drilling between early 2016 and the second half of 2017. 

In its 2018 report, Glencore says the recoverable value of its Chad assets was $1.2 billion and gross production was around 10,500 barrels per day. In total, Glencore’s upstream gross production was 35,000 bpd. 

Glencore has also booked impairments at its assets in Equatorial Guinea, though partially recovered, and in Cameroon. The company also holds an interest in Russian upstream company Russneft.

Related: Comoros oil boom dream hinges on seismic survey

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Zimbabwe announces end to foreign currency use amidst spiraling inflation

President Emmerson Mnangagwa has promised to introduce a proper national currency soon

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Zimbabwe announces end to foreign currency use amidst spiraling inflation
John Mangudya, Governor of Reserve Bank of Zimbabwe, the central bank. (AFP)

Zimbabwe announced on Monday that it would abandon the use of foreign currencies which replaced the local dollar that was swiped out by hyperinflation ten years ago.

The country is facing another bout of sharply rising prices, with official inflation now at nearly 100 per cent — the highest since the hyperinflation era.

Zimbabwe’s central bank said in a statement that official legal tender would be only the two local currencies — bond notes and “RTGS” — that were introduced as US dollar banknotes dried up.

The US dollar, South African rand and other foreign currencies “shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe,” the bank said.

“Bond notes and RTGS dollars are at par with the Zimbabwe dollar.”

Bond notes were introduced in 2014, while electronic RTGS (Real Time Gross Settlement) dollars came earlier this year.

President Emmerson Mnangagwa has promised to introduce a proper national currency soon.

Related: Zimbabwe’s president, Emmerson Mnangagwa promises new currency

Bond notes and RTGS dollars have in theory been worth the same as US dollars, but have fallen sharply in value.

Zimbabwe’s economy has been in ruins since hyperinflation peaked at 500 billion per cent in 2009 under president Robert Mugabe.

Mnangagwa’s efforts to attract investment and create jobs have struggled since he came to power in 2017.

Related: Zimbabwe’s inflation soars, stocks hit record high

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Morocco’s Sole oil refinery struggles to stay afloat

A self-declared “national front” is leading the charge to salvage refining company SAMIR

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morocco's oil refinery SAMIR struggle for survival

Three years after it was liquidated for racking up billions of euros worth of debt, Morocco’s sole oil refinery and the one-time economic flagship is struggling to attract a buyer and survive. A self-declared “national front” – comprising employees, economists and union leaders – is leading the charge to salvage refining company SAMIR, while a trade court desperately seeks a new owner.

They face a tough battle, including a court deadline of July 18 to seal the refinery’s fate. The firm was liquidated in 2016 after it was unable to honour some four billion euros ($4.5 billion at current prices) in borrowing. The refinery was set up in 1959 by the Moroccan government and sold in 1997 to the Corral group, a Saudi-Swedish enterprise that holds a majority stake of more than 67 per cent.

Work at the refinery, which had a capacity of more than 150,000 barrels a day, had already wound down a year before it was dissolved. But nearly 800 employees remain on the payroll, albeit on slashed salaries scratched together from company coffers and creditors.

The workers’ fate now hangs in the balance, according to staff representative Houcine El Yamani, who has spearheaded efforts by the “national front” to salvage the facility. “We have made tremendous efforts” to pressure the state into reviving SAMIR since work stopped in 2015 at the plant in Mohammedia, between Rabat and the economic hub Casablanca, El Yamani said.

Such efforts include sit-ins and press conferences.  “We still have hope of finding a solution,” he added. A “national front” report submitted last year to Moroccan authorities denounced the 1997 privatisation of the refinery as a “big sham” and the sale to Corral as “totally lacking in transparency”.

“The Corral group did not respect any of the terms of the contract (including pledges to invest funds to develop the refinery), dragging the sole national refinery into an infernal spiral,” said the report. The drop in global oil prices in 2014 affected SAMIR, but the “national front” says bad management was the main factor behind the firm’s woes, as debts mounted and attempts to satisfy creditors failed.

Sold to scrap

After its liquidation in March 2016 by a Casablanca court, a committee of trustees was set up to find a buyer and safeguard jobs for employees. “Around 30 international groups showed an interest,” but nothing materialised, El Yamani said.

The “national front” also said the government could have been more pro-active. “In the absence of any government action, the refinery’s assets risk being sold to scrap by the kilogramme,” the coalition of employees, economists and union leaders said in its report.

Minister of Energy and Mines, Aziz Rebbah, dismissed claims that the government has no interest in salvaging the oil refinery. “We have nothing against it,” he said. “If a buyer comes forth we will examine the proposal,” he added. Morocco is totally dependent on oil imports and the winding up of SAMIR’s operations has left the North African country more reliant than ever on imports of refined oil products.

A report earlier this year by the International Energy Agency noted that “the closure of the country’s only refinery… has clear implications for the security of oil supply” in Morocco. The court that liquidated SAMIR three years ago has extended a deadline to keep the refinery open a dozen times.

The last extension expires on July 18, when SAMIR will know if it has a buyer or if it will be sold “in bits and pieces”, according to Moroccan media reports. As the battle for SAMIR’s survival plays out, another legal fight is underway between the refinery’s main shareholder, Saudi-Ethiopian billionaire Mohammed Al Amoudi, and the government.

Al Amoudi – who was arrested in Saudi Arabia in 2017 as part of a vast anti-corruption campaign – is demanding $1.5 billion in compensation from Morocco over SAMIR’s demise, according to Moroccan news website Media24.

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National Oil Company warns that any attempt to disrupt the sector would escalate unrest

“Any deliberate disruption of oil sector operations will severely impact national revenue streams, potentially render NOC in contravention of contractual obligations

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Libya's National Oil Company in the capital Tripoli. The Oil company warns against shutdown as it it will escalate conflict

Libya’s National Oil Company has warned that any bid to tamper with the sector could escalate unrest in the country after the parliamentary speaker called for a halt to production. In a statement issued late Saturday, NOC said it “is concerned by recent calls for the shutdown of national oil production”.

“Any deliberate disruption of oil sector operations will severely impact national revenue streams, potentially render NOC in contravention of contractual obligations, and create further division in the country.” Libya has been in conflict since the 2011 uprising that ousted and killed dictator Moamer Kadhafi, with rival administrations vying for power and to control its oil wealth.

The conflict has been exacerbated since April when commander Khalifa Haftar, who is based in the east of the country where most oil fields are located, launched an offensive against the capital Tripoli. The city is the seat of the internationally recognised Government of National Accord (GNA), while the elected parliament which supports Haftar is based in eastern Libya.

Last week parliamentary speaker Aguila Saleh Issa said oil production must cease, accusing the GNA of using oil revenues to finance the militias fighting Haftar, in an interview with an Egyptian news channel.

The country’s oil company, which is headquartered in Tripoli, has repeatedly insisted on its neutral status and refused to be drawn into the conflict. “This crucial source of income to the state, vital to all Libyans, must remain de-politicised and uninterrupted,” NOC said on Saturday.

But it also called for “economic transparency – including the equitable distribution of oil revenues nationally – to be embraced by all parties as an integral element of Libya’s future stability, and any lasting political settlement”. Libya’s oil revenues are managed by the country’s central bank, which is also based in Tripoli.

Both Haftar and the eastern parliament have repeatedly said that oil revenues are not evenly distributed and accuse the GNA of using the funds to finance its militias. Last month UN envoy Ghassan Salame said that Libya – which produces more than a million barrels of oil a day – was “committing suicide” and plundering its oil wealth to pay for the war.

On Saturday he met Haftar to discuss the Tripoli offensive and ways to “accelerate the transition towards reaching a political solution” in the country, the United Nations said.

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