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With the energy minister gone and what looks like him being the main instigator in getting Chad to Nationalise its assets amongst other misdemeanours, is there a slim possibility Chad may ask Savannah to return to the negotiating table ?
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APA – Ndjamena (Chad) No reason was given for the dismissal of the energy minister.
Minister of Hydrocarbons and Energy, Djerassem Le Bemadjiel, was dismissed from Saleh Kebzabo’s government on Thursday, his sacking coming eight days after the resignation of two ministers incriminated in a sex scandal.
This led to a mild government reshuffle on 21 October 2023.
The decree sacking Le Bemadjie, published on the page of the General Secretariat of the Government, gave no details.
However, some observers believe that the inability of the ‘Societe Nationale d’electricite’ (SNE) to regularly supply the city of Ndjamena, the Savannah Energy affair and the freezing of assets are linked to his departure.
Djerassem Le Bemadjiel was Minister of Petroleum under the late President Idriss Deby Itno from 2013 to 2016.
He was the man who negotiated the billion-dollar loan with Glencore that plunged Chad into a financial crisis.
Accused of illicit enrichment, misappropriation of public funds and corruption, he was arrested in September 2020 and provisionally released in February 2021.
He returned to this position in the first transitional government set up following the death of President Deby.
He was then reappointed to the second government currently led by the opposition Saleh Kebzabo.
Under his leadership, the transitional government was engaged in a legal tug-of-war with Savannah Energy, a British firm, over the purchase of Esso Chad’s shares.
This resulted in the nationalisation of Esso’s shares and the creation of the Chad Petroleum Company.
https://apanews.net/chad-junta-fires-energy-minister/
N'DJAMENA, Oct 26 (Reuters) - Chad has dismissed Petroleum and Energy Minister Djerassem le Bemadjiel, the government said in a decree on Thursday. It did not give a reason or name a replacement.
The government also said that Daoud Hamid Dabou was named Chairman of the Board of Directors of the Société des Hydrocarbures du Tchad, the state oil company, replacing Dago Yacouba.
Chad earlier this year nationalized all the assets and rights including hydrocarbon permits and exploration and production authorisations that belonged to a subsidiary of Exxon Mobil (XOM.N), after contesting a deal to sell them to Savannah Energy (SAVES.L).
https://www.reuters.com/world/africa/chad-dismisses-oil-minister-government-decree-2023-10-26/
29 Sept - SP 2.5
‘I have been accused in this board of trying to deramp this company and being very negative. I'd let the SP speak for itself to confirm whether my comments were or weren't on point.’
The SP has spoken 😂
Https://www.businessincameroon.com/public-management/1010-13461-cameroonian-joseph-pagop-noupoue-fired-from-ernst-young-for-policy-violation#:~:text=(Business%20in%20Cameroon)%20%2D%20Cameroonian,Ernst%20%26%20Young%20(EY).
Business in Cameroon) - Cameroonian lawyer Joseph Pagop Noupoué has been removed from his position as Country Managing Partner at the international accounting firm Ernst & Young (EY). A recent internal memo co-signed by Erik Watremez, the interim Country Managing Partner for Cameroon and Gabon, and Marcel Van Loo, EY's Western Europe Region Manager, cited policy violations as the reason for Noupoué's dismissal. The memo also stated that Noupoué is no longer employed by EY and is attempting to separate the Cameroonian legal entities from the global EY network, which his former partners do not agree with.
"We would like to reaffirm that EY's management in Cameroon has been restructured with Erik Watremez, Acting Country Managing Partner of EY Cameroon, Abdoulaye Mouchili, Head of Assurance EY Cameroon, and Anselme Patipewe, Head of Tax EY Cameroon. They will continue to lead EY's activities in Cameroon, meeting clients' needs in both audit and tax", the memo reads.
This change has raised questions, with some speculating that it may be connected to Noupoué's involvement with Savannah Energy, a British junior oil company. Noupoué, who is the sole known Cameroonian shareholder in Savannah Energy, was part of a recent diplomatic dispute between Cameroon and Chad. The dispute arose after Cameroon signed an agreement with the National Hydrocarbons Company of Cameroon to transfer 10% of Cotco assets, the company managing the Cameroonian section of the Chad-Cameroon pipeline. Chad claimed that Cameroon had engaged in unfriendly actions by contracting with a "fishy" group associated with Cameroonian figures who were challenging Chad's nationalized oilfields following Exxon Mobil's departure.
Noupoué's involvement with Savannah Energy became official when he was appointed as a non-executive director on the company's board in April 2023. He was also named to succeed Steve Jenkins, Savannah Energy's current non-executive chairman, who plans to retire after serving eight years in the position. To join the company's decision-making body, Noupoué purchased 6,095,726 new shares at £1.6 million (about CFA1.2 billion). This acquisition gives him a 0.46% stake in the company's total voting rights. The source of funds for this acquisition remains undisclosed.
"I am delighted to be joining Savannah at this key time in its growth and look forward to bringing my experience to the role. I would like to thank the outgoing Chairman, Steve Jenkins, for guiding this company since 2014 and I look forward to working with him, the rest of the Board, and the management team to achieve our many and wide-ranging goals. It's very clear to me that Savannah is ambitious and fueled by a passion for doing good in the world. The benefits Savannah has brought to the African community in Nigeria and Niger, and the projects for Cameroon and South Sudan, are impressive and obvious," he commented following his appointment.
https://www.businessincameroon.com/public-manag
Part 2.
Talon has also tried to convince ECOWAS to lift its sanctions on Niger and allow the continuation of the pipeline project. He has argued that the pipeline is beneficial for both Niger and Benin, as well as for the stability and prosperity of West Africa. He has also claimed that the pipeline does not interfere with Niger’s internal affairs or affect its democratic process.
https://bnn.network/finance-nav/business/talon-seeks-to-reassure-xi-jinping-over-cnpc-agadem-pipeline/
Part 1.
The CNPC-Agadem pipeline is a strategic project that aims to export crude oil from Niger to Benin, through a 1,980km cross-border pipeline.
The project is developed and operated by China National Petroleum Corporation (CNPC), a state-owned oil and gas company of China. The pipeline is expected to have a capacity of 90,000 barrels per day (bpd) and to be commissioned in 2021.
The political and security challenges of the pipeline
However, the pipeline faces several political and security challenges that could delay its launch or jeopardize its operation. The first challenge is the recent military coup in Niger, which ousted President Mohamed Bazoum on 26 July 2021. Bazoum was a close ally of CNPC and had supported the pipeline project since its inception.
The coup leaders, who formed a junta called the National Committee for the Restoration of Democracy and the State (CNRDS), have not yet clarified their position on the pipeline or their relations with China.
The second challenge is the pressure from the Economic Community of West African States (ECOWAS), a regional bloc that condemned the coup and imposed sanctions on Niger. ECOWAS has also urged Benin, Niger’s neighbour and partner in the pipeline project, to suspend its cooperation with CNPC until the restoration of constitutional order in Niger. ECOWAS fears that the pipeline could provide financial resources to the junta and undermine the democratic transition in Niger.
The third challenge is the security threat posed by armed groups and terrorists in the region, especially in the Lake Chad basin and the Sahel. The pipeline crosses several areas that are prone to attacks by Boko Haram, Islamic State West Africa Province (ISWAP), and other militants. The pipeline also passes through some ethnic and tribal conflicts zones, where local communities may oppose or sabotage the project.
In this context, Patrice Talon, the president of Benin, plays a crucial role in determining the future of the CNPC-Agadem pipeline. Talon is facing a dilemma between complying with ECOWAS’s demands and maintaining his good relations with China.
Talon has been a staunch supporter of the pipeline project, which he sees as a source of economic development and regional integration for Benin and Niger. He has also been a loyal partner of China, which is Benin’s largest trading partner and investor.
Talon has recently sought to reassure Xi Jinping, the president of China, over his commitment to the pipeline project. He has sent a letter to Xi, expressing his gratitude for China’s support and cooperation in various fields, including energy, infrastructure, health, and education. He has also reaffirmed his willingness to work with China to advance the Belt and Road Initiative (BRI), a global development strategy that includes the CNPC-Agadem pipeline as one of its flagship projects.
Richmond Vanadium Technology Ltd (ASX:RVT) managing director Jon Price predicts a massive global shortage of vanadium supply on the horizon. “Supply is dominated by China, South Africa, Russia and Brazil … and now China is nearly a net importer given its rate of adoption of Vanadium Redox Flow Batteries. We’re looking at demand doubling over the next 4-5 years and the question’s going to be where is that supply going to come from?” The Richmond Vanadium Project is one of the largest undeveloped oxide vanadium resources in the world with a resource of 1.8 billion tonnes at 0.36% for 6.7 million tonnes of V2O5 and an ore reserve of 459 million tonnes at 0.49% for 2.25 million tonnes.
https://www.proactiveinvestors.co.uk/companies/news/1021196/richmond-vanadium-sees-massive-global-shortage-of-vanadium-1021196.html
The mind boggles 🤔
This is indeed a very strong operational performance and the figures tell the story. Production was up 12% and Total Revenues and EBITDA up 8% were incredible in a highly competitive market. Add to that new and extended gas contracts with strong momentum carrying through to H2, note Notore, since extending their contract in July for another 12 months have already taken more than twice their daily average nominated amount of gas at 26.3 MMscfpd vs 10 MMscfpd, and up to 676 MW of renewable energy projects now in motion across three countries as SAVE moves quickly towards up to 1GW+ of projects in motion.
As ever there is much going on at Savannah, we have seen the first disclosure report for Sustainability Accounting Standards Board published today which ticks another important box. Also as previously announced the Company continues to advance the various workstreams required to complete the acquisition of PETRONAS International Corporation Limited’s energy business in South Sudan which should be another really valuable asset.
It is also worth mentioning the $1m investment in Fenikso, (formerly Lekoil) which has turned out to be spectacularly successful. The restructuring of the agreement has meant that Savannah will receive up to $16.3m over the course of the next nine years and have already fully recovered the initial investment with payment from Fenikso of $1.3m to date.
Savannah are continuing to do extremely well despite some current political tensions in Africa, such as in Niger where the recent coup has resulted in some delays to the well test programme. Despite this I think that CEO Andrew Knott and his team consistently deliver on the strategy and are building a substantial and important business on the continent.
https://www.malcysblog.com/
‘Energy voice’ article discussing the debt.
Nigerian changes
These assets offer scope for Savannah to grow, but its core operations in Nigeria have also been revalued following the devaluation of the naira, under President Bola Tinubu. Savannah took an unrealised forex loss of $54 million on its assets and liabilities.
The devaluation has also increased Savannah’s debt. At the end of June, this had reached $443.4mn, up from $404.9mn at the end of 2022. Savannah paid down $74mn of debt in the period, but the naira’s movement caused leverage to increase.
The company has been working to refinance its Accugas debt for some time and convert from US dollar to naira denominated. It described this as a priority in its 2022 annual report. Savannah reported it had reached an agreement on a transitional facility, with the aim of finalising this in the fourth quarter.
Another note raised concerns about changes to the tax regime in Nigeria. Savannah was exempted from some corporate taxes but the Nigerian authorities have challenged the exemptions. Should the company be unsuccessful, it may face an additional charge of $3.9mn plus $15.5mn in a deferred tax charge.
Savannah's Nigerian business continues to deliver strong and consistent operating performance; however, the interims were heavily impacted by the Naira harmonisation since mid-June. The Petronas South Sudan TO is progressing, although publication of the Admission Document and the resumption of trading has slipped into Q4. Our forecasts remain under review ahead of this publication. This is a very substantial transaction for Savannah, especially at US$90+/bbl oil prices, which will be transformational for the company, providing a platform to build a material business through further regional consolidation opportunities while extracting synergies with Savannah's existing operations.
- Solid operational performance offset by sharp currency swing. Savannah's interims to end-June
saw robust operational results from its Nigerian business tarnished by the Nara harmonisatior that has seen the currency tall 40% against the dollar since mid-June. Average gross daily production increased by 12% to 25.3 kboepd. Total Revenues and Adjusted EBITDA both increased by 8% to US$139m and US$108m, respectively. However, a US$54m unrealised FX translation loss due to the devaluation of the Naira saw the net loss from continuing operations widen to US$45m. The Naira devaluation also caused a US$66m dent in cash flow and was responsible for a 9% increase in net debt to US$443m, despite debt repayments of US$74m during the period. The one positive is increased liquidity in Naira FX markets should aid Savannah's refinancing.
- Guidance reiterated. Total Revenue and opex guidance for the year were reiterated at "greater than US$235m" and "up to US$75m", respectively, although capex guidance has been cut from
"up to US$60m" to "up to US$30m" due to capex rephasing, unsurprisingly in Niger following the recent coup which has resulted in logistical challenges importing the necessary equipment
for its planned well test programme. A further update in relation to timing will be provided in 04
2023. A USS12m impairment was taken for the Chad assets that were nationalised - a pity, as these generated a US$60m pre-tax profit in the period.
- Renewables growing rapidly. The expansion into Renewable Energy is moving at pace with several new projects added to the development portfolio, which now totals 676 MW of projects across three countries, with the company pursuing a target of 1 GW+ of projects by mid-2024.
- Petronas acquisition. The TO of Petronas's oil assets in South Sudan is progressing, although the expected publication of an Admission Document (and the subsequent resumption of trading) has slipped to "on or before 15 December 2023". So far, these assets have not been impacted by the civil war in neighbouring Sudan, through which all of the oil is exported.
Savannah has released interim results for the six months to June 2023, reporting total revenues and adjusted EBITDA of c.US$139m and c. US$108m, respectively - representing a healthy 8% year-on-year increase on both measures. In our initial trading comment, we erroneously stated that these represented c.47% of our FY23F forecast - the percentage is in fact somewhat lower, although (in the circumstances) we see little reason to revisit numbers at this juncture. Adj. EBITDA margins were ahead of our expectations at 78%, with the only change to prevailing guidance being reduced capex to reflect the rephasing of certain planned projects in Niger and Nigeria.
Supported by robust customer demand and a number of new and extended gas contracts in Nigeria, average gross daily production increased by 12% to 25.3mboepd - comparing very favourably against our forecasts. Net debt at the period end admittedly increased to c.US$443m (compared to c.US$405m at the end of last year), although this appears to reflect in particular unrealised foreign exchange losses associated with Naira devaluation, which we would agree are likely to be of assistance to Savannah's previously-announced refinancing initiatives
Overall, we consider Savannah's operational performance in the first half of this year to be strong, with the company also confirming continued successful expansion of its renewables division.
However, a key takeaway from this morning's results statement is clearly the fact that publication of the AIM admission document relating to the major South Sudanese reverse takeover transaction is now expected to occur on or before 15 December 2023, with the shares to remain suspended in the meantime. We will obviously continue to look forward to admission document publication, forecasting material organic revenues, profits and cash flow in the meantime. Our last-published Risked NAV estimate stands at 45p/share.
Disappointed there isn’t any meat on the bone in relation the SS acquisition in view of the recent shenanigans from the Govt. I appreciate AK’s hands are tied in relation to what he can or can’t say but there’s been radio silence, not even an RNS to explain the current situation when reports of Govt interference first appeared in the press
It just feels like AK is hiding behind the 3 month extension and kicking the can further down the road.