A new wave of Gulf investment is seeking out prime stakes in Africa's resources boom, underlined by the announcement that Gulf Finance House plans an economic zone for energy firms operating in Libya. In articles below, GSN examines some emerging players in the UAE, Qatar, Saudi Arabia and Oman. In the second part of this analysis, to be published in the next issue, GSN will focus on a range of other companies.
The UAE has emerged as a hub for Gulf-based investors and companies to move into the African resources boom.
This ranges from international oil companies (IOCs) based in Dubai to exploit emerging exploration and production (E&P) margins in East Africa - and, increasingly further afield - to the emergence of major new players supported by sovereign wealth and ruling families, such as Abu Dhabi's Taqa and Ras Al-Khaimah's RAK Petroleum.
New look RAK
Ras Al-Khaimah is fast emerging as an investor in Africa. RAK Petroleum is new and ambitious, established to take advantage of the current liquidity in the Gulf. It has a web of backers and shareholders who number among the UAE (and region's) most prominent business families. In July 2005, a founders' committee was formed by Crown Prince and Deputy Ruler Sheikh Saud Bin Saqr Al-Qasimi - who leads RAK's business elite for a new company described in the local press as having capital of Dh3bn.
RAK Petroleum is owned by RAK Investment Fund with 7.3%, RAK Gas Commission (100%-owned by the emirate's government) with 6.9%, the founders with 55% and the public taking 30%, after an initial public offering (IPO).
Family considerations appear to matter a great deal in its structure and dynamics. Lead managers for the IPO expected this year are Mashreqbank and Deutsche Bank. Mashreqbank is majority owned by Dubai's prominent Al-Ghurair family.
RAK Petroleum chairman is Abdelaziz Bin Abdullah Al-Ghurair, also chief executive officer (CEO) of Mashreqbank.
Abdelaziz's aunt is Sheikha Mahra,wife of RAK Ruler SheikhSaqr Bin Mohammed Al-Qasimi and mother of Sheikh Saud. According to RAK Petroleum, Emirati businessmanJuma Al-Majid owns some 6% of the company. His daughterHana is thought to be married to Sheikh Saud.
Since its establishment RAK Petroleum has worked to establish its asset base and make its name as a regional player, buying Oman-focused, London Alternative Investment Market-listed Indago Petroleum. In 2007 its potential deal to buy Algeria-focused Gulf Keystone fell through. RAK Petroleum's CEO Peter Sadler told GSN that "The lack of closure on the Conditions Precedent in the implementation agreement caused the agreement to terminate. Perhaps, at that point, both sides could have come together to renegotiate a new agreement, or some changes to the old agreement, but we didn't for many reasons."
RAK Petroleum is looking closely at opportunities in the Middle East and North Africa (MENA) region. "We have qualified for the next bid round in Angola and we have done the same for Yemen. West Africa is also interesting but for smaller scale opportunities," Sadler said. In Angola, Sadler said "the first step was to become registered. Co-operation with a local partner would be attractive and is something we are going to examine carefully. I can say that we do not see deep water as an area for RAK Petroleum."
RAK Petroleum raised some $820m of initial capital and around half has been spent on acquisitions. "Some is placed in liquid and semi-liquid assets and the rest held as cash. We have good banking relationships. That combination is enough for us to rapidly fund acquisitions," Sadler said.
RAK government's Puntland play, gas expansion
In mid-2007 Sheikh Saud signed an agreement with Puntland President Mohammed Musse Hersi to set up Puntland Hydrocarbon Development Company LLC,which will carry out exploration and development of oil and gas fields in the unrecognised autonomous region of Somalia.
The RAK government also acquired one block in Puntland. A source said RAK was invited to invest due to close historical ties - at one time the area was under Al-Qawism protection.
The emirate government is also negotiating with Canada's Africa Oil Corporation (which last year farmed into two blocks in Puntland) to farm into its blocks. One source close to the deal told GSN,"they are still at heads of agreements stage and are doing nothing but further discussions with Africa Oil at this stage... it is early days."
Another emerging player is RAK Gas Commission (RAK Gas), 100%-owned by the RAK authorities. Crown Prince Sheikh Saud is chairman and two of his brothers, SheikhsFaisal and Omar are directors.
In November 2006, RAK Gas signed a $28m exploration deal for Tanzania's East Pande block. During the first four year term RAK Gas is committed to spending at least $3m on surveys. Last May, London-based Aminex signed a farm-out agreement with RAK Gas allowing it a 25% stake inTanzania's offshore Nyuni PSA.
Al-Ghurairs turn to Libya
In early January a powerful UAE-based consortium agreed to invest $2bn over five years in a programme to upgrade and revamp Libya's largest oil refinery. The Star Consortium formed by TransAsia Gas International and Star Petro Energyare both affiliates of the Ghurair Group, owned by Dubai's Al- Ghurair merchant family, whose leading members have become billionaires through their banking, food, construction and retail interests. TransAsia Gas International is owned by Al-Ghurair Investment Group, a holding company for the family's vast interests. TransAsia is the family's principal energy sector operating company. It has a joint venture with Calgary based Madison Energy to pursue oil E&P in MENA.
TransAsia's vice-chairman is believed to be Issa Abdullah Al-Ghurair, younger brother of Abdelaziz Ahmed Al-Ghurair, recently ranked by Forbes as the world's 77th richest billionaire. TransAsia says it is involved in cross-border pipelines, power generation, transmission and distribution in many countries, and has potential projects in Pakistan,Algeria, Sri Lanka, Iran and India.
Star Petro Energy was set up to focus on acquiring and exploiting proven but stranded reserves. It belongs to Emirates Trading Agency (ETA ASCON), which is 51% owned by the Al-Ghurair family. Abdullah Ahmed Al-Ghurair is chairman and his brother Issa is a director. Hong Kong's Amana Investments holds the rest of the shares.
Taqa flexes Abu Dhabi muscle across value chain
Abu Dhabi National Energy Company (Taqa) is another fast growing Emirati energy company and recently told GSN of its plans to increase its reserves by four times current value over the next one to two years - to 100,000b/d and 1bn proven reserves. Taqa is planning an expansion drive in North Africa in 2008. Taqa chief executive told GSN that the company was "looking at expanding our power facility in Morocco and at opportunities in Algeria, Libya, Tunisia andEgypt." Taqa already holds a strong position following its purchase of US-based CMS Energy, whose assets include the Jorf Lasfar Electricity Company (JLEC) independent power producer in Morocco.
Taqa is teaming up with Africa-focused Kuwait Energy Company for upstream ventures. The Abu Dhabi Stock Market listed Taqa is 51%-owned by the Abu Dhabi government through Abu DhabiWater and Electricity Authority (Adwea).
Another Abu Dhabi-based giant (100%-owned by the government) is Mubadala Development Company (MDC), led by Crown Prince Sheikh Mohammed Bin Zayed Al- Nahayan. Its Liwa Energy subsidiary won a share in nine Libyan exploration blocks in 2005. Reports last year said Mubadala was one of ten companies offered preferential bidding rights on 20 Nigerian exploration licences.
Based out of Dubai and Sharjah
East African Exploration (EAX) has long been Africa-focused and says it is currently exploring in Kenya, Tanzania,Mozambique and Madagascar. Dubai-based EAX has also done some work in Eritrea, and was awarded a 40% interest in Kenya's Blocks L17 and L18 last October. EAX is owned by four private shareholders and the company says none of them are sheikhs.
Strong in many African countries, Dubai-based Al-Thani Petroleum has stakes in Côte d'Ivoire's Block CI-105, Mauritania's Block 19, four blocks in Senegal, a block in Tunisia, and a stake in the Petrodar consortium which operatesSudan's Block 3. Al-Thani also has an MoU with Algeria's Sonatrach, to work together in upstream and downstream projects through a new company that Al-Thani and Sonatrach would set up. In late 2006 it signed an agreement with the Egyptian government "to conduct oil exploration operations in the western and eastern deserts."
Al-Thani Petroleum is headed by Abdullah Bin Saeed Al- Thani, a 50-something anthropology graduate, often now known as Sheikh Abdullah. He specialises in brokering deals using his high-level contacts.
Based in the UAE, he is often identified in media reports as a scion of the Qatari ruling family and a relative of the UAE's revered late president Sheikh Zayed Bin Sultan Al-Nahayan. It is more likely that he is related to Dubai's Al-Maktoum family given that several senior Al-Thanis went into exile in Dubai and married Al- Maktoum females in the 1960s and 70s.
A London listing for Al-Thani Petroleum's subsidiary Arabian African Petroleum Company has been expected for a while. Al-Thani's Thani Corporation/Investments said in Q4 2007 that it planned to borrow some $500m over five years to fund expansion. In November, it was one of the first Emirati private companies to issue a sukuk (Islamic bond).Sharjah-based Dana Gas was originally set up to import gas from Iran but the deal has had difficulties, partially due to a dispute over pricing. Through its acquisition of Centurion Energy in late 2006, Dana Gas acquired several concessions in Egypt, exploration interests inTunisia and a 10% share in the São Tomé & Principe/Nigeria JDZ Block 4.
Dana Gas told GSN that delays in the Iranian gas supply to Sharjah have made Egypt its main source of income. Dana's shareholders include Crescent Petroleum, the Sharjah government,Kuwait's National Industries Group Holding, Bank of Sharjah and Saudi Arabia's Al Majdouie Group.
Elsewhere, UAE-based Kampac Oil ME, part of Jebel Ali based oil trader Kampac Group, maintains a strong focus onSenegal, with a stake in state oil company Petrosen. In November 2005 Kapac was awarded the deep-water St Louis Profond block, adjacent to Senegal's maritime boundary with Mauritania. This followed an agreement in December 2004 for Kampac to develop the Louga onshore block in northern Senegal. In September 2006, Kampac signed an agreement with the Mauritanian government to acquire three oil blocks Block 26 offshore, and Blocks Ta45 and Ta25 onshore.
Kampac says that it is presently in the final phase of negotiation for acquiring oil and gas concession in Democratic Republic of Congo and Chad.
Kampac is headed by Charles Ampofo, a UK- and USeducatedGhanaian who is active in promoting UAE/African ties.
Saudi Arabia
Men of business control range of interests with northern focus
Among the larger Saudi-controlled companies active in the African resources boom is Stockholm-based Svenska Petroleum, which belongs to Saudi/Ethiopian businessmanMohammed Hussein Al-Amoudi. He is one of a group of Saudi businessmen born into non-Saudi or marginal Saudi communities, who have emerged as very significant business players, usually by being linked to senior Saudi princes whose 'men of business' they are.
Al-Amoudi became noticed in the 1980s for his ABV Rock Group, set up in co-operation with the Bin Mahfouz family to build oil storage caves in Saudi Arabia. Through hisSwedish-registered Corral Petroleum Holdings Al-Amoudi bought some 67% of Morocco's state refiner, now calledSociété Anonyme Marocaine d'Industrie de Raffinage (Samir) in a mid-1990s privatisation sale. Samir's Mohammedia refinery is now being expanded; it is managed by a team led by Saudi national Jamal Ba Amar.
Svenska is increasingly focusing elsewhere. It already owns some 27% of Cote d'Ivoire's Block CI-40 (acquired in 1998), 10% of Guinea-Bissau Blocks 2, 4A and 5A (2006), 6.25% ofAngola's Block 3/85 (acquired in 1985) and 6.25% of Angolan Block 3/91 (acquired in 1991). Following a September 2007 deal to buy Occidental Petroleum Corporation's West Africa assets, it has increased its stake in the Guinea-Bissau blocks to 28% and has gained 30% of Angolan Blocks 8 and 23, 20% ofNigeria's OML 214 and 30% of OML 244.
Svenska president and CEO Sven-Erik Zachrisson toldGSN that although the deal was signed last autumn, the "preexemptions have taken a while to be passed." He added that "we are trying now to consolidate all efforts but we always remain on the lookout for new things." His ambition is to establish Svenska as a leading E&P company in Africa.
Al-Amoudi's Midroc Group is also said to have an exploration permit in Ethiopia's Awash basin reflecting the entrepreneur's keen interest and strong position in the country's economy but GSN has been unable to get confirmation of this operation.
Al-Aiban remains in Africa
Following the sale of Canada's Centurion Energy (which had operations in Egypt, Tunisia and the Nigeria/Sao Tome Joint Development Zone) to Sharjah's Dana Gas in late 2006,well connected Saudi businessman and deal-maker Badr Mohammed Al-Aiban who held a significant stake in Centurion has maintained his focus on Africa. HisGuernsey-incorporated Platinum Petroleum Ltd holds some 23% of emerging North Africa player Island Oil and Gas plcand has poured significant sums of money into the company.
The Dublin Stock Exchange and AIM-listed Island has won seven new exploration permits in Morocco's onshore Tarfaya basin. Island has an operating stake of 40% and the other partners, Longreach Oil & GasVentures Ltd (before February it was known as GB Oil and Gas) and San Leon (Morocco) Ltdboth hold 30% each.
Badr Al-Aiban owns the Jeddah-based Delta group of companies and is very well connected within Saudi Arabia where brother Musaid is a trusted figure in the government.
His father Mohammed served in the senior ranks under then Crown Prince Abdullah Bin Abdelaziz; observers say that when he died the future king took a personal interest in the three sons, who have become important figures in the government, foreign relations and oil sectors.
In the 1990s Badr built a substantial portfolio of oil and gas stakes in the Caspian and claims he was central to the negotiations that created the consortium for the super giant Azeri and Chirag Fields. In early January the UK's Sunday Times newspaper reported that Al-Aiban is one of a growing number of executives of British companies to receive over £1m in pay, and said that in 2007 he received £27.1m as head of Delta Oil. Delta is now said to be one of five companies to have recently prequalified for Niger's Agadem concession.
Naftoil emerges in Mauritania
Naftoil, owned by Saudi Arabia's Suleiman Abdelaziz Kuhaimi, said in October that it had teamed up with Gulf Regal Corporation to secure drilling, exploration and development rights in two "high-prospect" blocks in Mauritania. "The first block is located on the coast and the second inland," it said, adding that the deal included building a new refinery with initial capacity of 100,000 b/d, and that the initial investment was expected to be in excess of $3bn.
However, Mauritanian oil ministry sources told GSN they knew nothing about the deal and denied that these companies had received oil exploration licences. Time will tell.
Qatar
Sphere has major potential
Doha-based Sphere Petroleum was launched in January 2007 as the first 100% foreign-owned company in Qatar. It was created out of the Perth-based Sphere Investments' oil and gas assets, which were spun off. Sphere Investments - which listed onDubai International Financial Exchange last July - is an ASXlisted company with mining interests inWest Africa.
Sphere Investments said "Qatar was selected as the preferred location for the new company due to the strong support from the Gulf region for our oil and gas strategy, oil and gas expertise and access to capital."
Sphere Petroleum holds Blocks 8 and 10 in Mali, which it won in July 2005 through its subsidiary,Mali Petroleum.Following Guinea-Bissau's third offshore licensing round in 2007 Sphere was awarded Block 1, and in the more recent low profile 4th licensing round,Block 5b. Sphere told GSN that all necessary conventions with Guinea-Bissau's Petroguin had been signed and it was waiting for the licence to begin.
The company is also hoping for acreage in Niger, where "negotiations are even slower than in Guinea-Bissau," Sphere's Africa director John Scott told GSN. "Our Mali partner has put in the proposal and we think everything is OK."
Sphere is looking for farm-in partners for its Mali blocks.
"We would like to retain 30%, but it is up for negotiation," Scott said. Canada's Centric Energy recently farmed out part of its Blocks 7 and 11 in Mali to Heritage Oil. Last year Sphere Petroleum also farmed into the London AIM and TSXVenture Exchange-listed Stratic Energy and TSX-listed TransAtlantic Petroleum's Guercif Beni Znassen licence in Morocco.Qatar Steel Company 100%-owned by Industries Qatar, in turn owned by Qatar Petroleum and the Qatari government holds around 9% of Sphere Petroleum. Sphere is thinking about a listing in Doha. "We are being encouraged by the government here, who would like their nationals to be able to invest in something other than the usual listed companies," Scott told GSN last year.
Oman
Petrogas makes a start in Egypt
Muscat-based Petrogas is one of the first private Omani companies to invest in African energy, recently taking 30% of Area A in Egypt's Eastern desert.
The 1999-established Petrogas is owned by MB Holding Company, which belongs to one of Oman's most prominent businessmen,Mohammed Ali Al-Barwani. At home, Petrogas holds 50% of Block 5 and 100% of Block 7. It also has a 50/50 joint venture company called Daleel Petroleum with China National Petroleum Corporation.
Last year Al-Barwani said MB Holding was contemplating acquiring a London-listed company to consolidate its MENA and Asia businesses, but it was put off by other companies' eagerness to pay double or triple the value of assets. MB is understood to have looked at Egypt for a while but was pipped to the post by Chinese and Indian companies willing to pay more. Al-Barwani said: "What I would look at is a company listed on the London Stock Exchange with assets in Asia and Africa,move its headquarters to the Mideast to lower costs and do a reverse takeover of our upstream business... What we are after is a name, a history and expertise." He added that he might one day take his company public, "not to raise money for the sake of it, but when we have a genuine need for funding."
Petrogas is another company that has prequalified inAngola's current upstream bid round.
© Gulf States Newsletter 2008
