Total pledges to support Tanzania in oil exploration in 4 lakes

07Dec 2017
The Guardian
Total pledges to support Tanzania in oil exploration in 4 lakes
  • • The company is one of the major players and investors in the 1,445-kilometer crude oil pipeline project from Hoima in Uganda to Tanga port whose construction cost has been pegged at US$3.55 billion

Total, the French multinational integrated oil and gas company, has pledged to support Tanzania in oil exploration in four lakes, a statement said on Tuesday.

Minister for Industries, Trade and Investments, Charles Mwijage,

The statement released by the Directorate of Presidential Communication at State House said the pledge was made by Total chief executive officers during talks with President John Magufuli.

Total has decided to heavily invest in the gas and oil market, according to the statement which quoted the Minister for Energy, Medard Kalemani, and the Minister for Industries, Trade and Investments, Charles Mwijage, as saying.

The two ministers said Total has agreed to work closely with the government of Tanzania in the exploration of oil in Lakes Tanganyika, Eyasi, Wembere and Rukwa.

Momar Nguer, Total's President for Marketing and Services, said the oil company was on final stages of preparations to start implementation of the oil pipeline project. Nguer made the remarks after President Magufuli had asked the oil firm to speed up implementation of the project scheduled to be completed in 2020.

Uganda and Tanzania signed an agreement on their proposed US$3.55 billion crude export pipeline in May this year. Total is one of the major players and investors in the 1,445-kilometer crude oil pipeline project from Hoima in Uganda to Tanga port in Tanzania.

Meanwhile, analysts at Goldman Sachs have said that a stronger than anticipated OPEC-led commitment to extend production cuts will support prices through 2018.

In a research note published late Monday, Goldman lifted its Brent price forecast for next year to US$62 a barrel and its WTI projection to US$57.50 a barrel. The revisions were up from US$58 a barrel and US$55 a barrel respectively.

While the OPEC-led deal "leaves room for an earlier exit than currently scheduled, we now reflect this resolve in our supply forecast, with full compliance for longer and a more modest exit rate," Goldman analysts said in the research note.

Oil prices have lost ground in the days following OPEC's deal with global producers last week. The 14-member cartel, Russia and nine other crude producers announced plans to extend their output cuts until the end of 2018.

The move was heavily telegraphed ahead of the decision, but oil producers had earlier indicated they could exit the deal if they feel the market was overheating.

"Of course, risks remain and we see these as skewed to the upside into 2018 on the risk of an over tightening, either because of new disruptions, demand exceeding our optimistic forecast of OPEC letting the stock draw run hot," Goldman analysts said.

However, Goldman said the response of shale oil and other producers to higher prices would likely incentivize OPEC and Russia to "pare back" their now greater capacity, thus leaving risks to prices skewed towards the downside over the long term.

The price of oil collapsed from near US$120 a barrel in June 2014 due to weak demand, a strong dollar and booming US shale production. OPEC's reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil-producing nations — in late 2016.

Brent crude traded at around US$62.36 on Tuesday morning, down 0.14 per cent, while US crude was trading at US$57.29, down 0.31 per cent.

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