French Total, the world's fourth-ranked international oil and gas company has suspended several operations and projects in Africa due to the negative effects of Covid-19 on the economy and global energy markets.
Covid-19 the effects of which were felt from December 2019 has stalled Total's operations and substantially reduced its net income. The disagreement on March 6 between OPEC and Russia on oil production cuts, which caused a sharp drop in oil prices, also hampered the company’s operations, according to Total's Annual Financial Report released in March 2020.
Following the oil price plunge, the company reviewed its projects, assets and reserves, made the biggest decrease in its capital expenditures, and reduced its investments in exploration and production projects by 25% in 2020.
"A decrease in the average sales price of liquids of 10 dollars per barrel results in over a quarter decrease of an adjusted net operating income of approximately $725 million and a decrease in cash flow from operating activities of approximately $825 million," the company explained.
In addition to the effects of Covid-19 in Africa, large market fluctuations and ongoing conflicts in certain regions also negatively affected the company's activities.
Total announced that many projects were either suspended or postponed this year because of the poor global economic outlook. One of these postponed projects is the Tilenga project in Uganda, which was due for completion in 2019 to produce 230 thousand barrels of oil per day but is now scheduled for start-up in 2022.
Total also reported that it has shelved its projects in the largest offshore production areas in Angola.
Furthermore, the company announced in April that it sold $400 million worth of assets in Brunei, Sierra Leone and Liberia. It has also put the Preowei and the Giant Egina field projects in Nigeria on ice despite France having already carried out seismic hydrocarbon explorations there.
- Role of Africa in France's energy mix strategy
Africa, when it comes to oil, gas and uranium has been essential both to France's energy mix strategy over the past 20 years and the continent’s energy independence through resource diversification, Emmanuel Dupuy, president of European Prospective and Security Institute (IPSE), told Anadolu Agency.
Dupuy explained that France is highly dependent on uranium from Niger, the third-biggest uranium producer after Australia and Canada. France extracts 115 thousand tons of uranium per annum, which contributes to fueling 58 nuclear reactors in 18 French nuclear plants, representing an accumulative power capacity of 63 gigawatts.
Uranium from Niger, which supplies 30% of France’s needs, is responsible for powering one-third of France’s light bulbs, according to Dupuy.
France has set its sights on the El Sharara oil field in the Muzuq desert in Libya with estimated reserves of 3 billion barrels, and which produces 300 thousand barrels of oil per day.
“The recent major oil and gas discoveries in the Mediterranean Sea around the coasts of Egypt and Libya, with estimated reserves of 50 billion cubic meters and 1.5 billion barrels, as well as the construction of the Trans Mediterranean EastMed Gas Pipeline from Egypt to Greece, tends to prove that France is considering this area with great interest," he said.
According to Dupuy, France's energy policy in Africa is largely born out of its relationship with its 18 former African colonies since the start of many African countries’ independence.
Total, established during the French colonial period, and Elf Aquitaine, which was formed in 1966 and absorbed by Total in 2000, have active roles in this energy policy in Africa.
Total committed to increasing international and European competition, seeking new markets and bringing more projects to Angola, Nigeria, Equatorial Guinea and Mozambique covering the Mozambique Canal - as well as offshore capacities in the Gulf of Guinea, in and around Ghana, Togo and the Ivory Coast, he concluded.
- Total's presence in Africa
The French company has assets in 42 African countries and carries out oil and gas exploration and production in 14 of them. Total is a shareholder in the national refineries of six African states and the LNG facilities of four states, as well as having solar projects in nine countries.
Producing 670 thousand barrels of oil daily throughout Africa except for North Africa, Total has four refineries and 4,449 oil stations in the region.
Through its relationships with former colonies, France wields a lot of power in Africa and is given priority to purchase its natural resources. France through Total restricts African countries from making any agreements with other partners other than through it, thereby forcing any foreign energy company to partner up with Total for African resources.
An example of this can be seen with the gold mine in Burkina Faso operated by Canada-based IAMGOLD company, which is dependent on the energy from France's largest hybrid solar panel installed in the country.
By Busranur Begcecanli