Tag Archives: APCL

African Petroleum Corporation Limited – Updated Analysis: Moving Forward In Retrospect?

First and foremost, I take note of the chairman’s opening line. He says that the Company has returned to where it belongs – APCL has returned to drilling activities. I don’t think that we should underestimate this statement. It sends a clear message to the shareholders about what the Company’s focus is and underscore that drilling is de facto what the Company is about. Personally, I think that this message is of great importance given last year’s extreme focus on the ongoing disputes, which regrettably has continued throughout 2018. African Petroleum Corporation Limited underscores its focus on drilling activities in several parts of the report, albeit in different ways. I would say that this is the major message of the report. The Company is very clear about and underscore that they had successfully found a (major?) partner ready to step in and drill the prospects in both Senegal and the Gambia and had agreed Heads of Terms with this unnamed company. African Petroleum Corporation Limited also emphasizes that it accomplished this partnership in the context of “severe market conditions for offshore exploration activity since 2014, as well as a change of administration in both countries which resulted in uncertainty and delays.” The message that APCL wants to send is quite clear – the Company makes exploration drilling happen and are able do so even in the most extreme and severe circumstances (my interpretation). As long as the Company remains owners of its licenses, that is.
In addition, the first words under the headline “2017 results overview” are as follows.

“The Company’s focus during 2017 was to fulfil the drilling commitment of the Ayamé-1X well in Côte d’Ivoire with our partner Ophir Energy […]”.

A few more quotes from the report.

“During 2017, the Company returned to offshore drilling […]”.

“After a hiatus of five years without drilling, it was exciting for the Company to return to its essence of exploring high impact exploration targets.”

So, I would say that there is a case for arguing that the multiple mentions of “returned to drilling” is no coincidence.

To me, the reasons behind the focus on drilling are as follows and in no particular order.

  • APCL wants to send a clear message to its shareholders and potential future parners that the Company is all about exploration drilling, highly capable of fulfilling commitments. Potential partners shall have great confidence in APCL’s ability to do so. APCL wants to convey and really underpin that the company has a record of making it all the way to drilling and will continue on this path in the future. The Company makes it clear that it will drill in Sierra Leone. It was about to drill in The Gambia and Senegal and had a major oil company all partnered up when the governments in the two countries suddenly turned things around (Facing several major discoveries in the basins offshore West Africa, the political leadership of Senegal and The Gambia were courted by various oil majors expressing interest in the countries´ highly attractive licenses. Given the complex political history of these two nations, oil and gas in particular, it is not uncontroversial to believe that they likely saw an opportunity to attract large investments in their countries in exchange for (a chance to get in on) the nations’ licenses. We have seen heavy investments in The Gambia from China, to name but one example.)
  • The Gambia has been very clear and excplicit as to why they consider African Petroleum Corportion Limited to no longer be owners of oil block A1 and A4: The Company did not fulfil fulfil its commitment of drilling exploration wells, according to The Gambia.
  • In the report APCL is focusing more than what would normally be the case on the failed project in Côte d’Ivoire. In no less than 17 places, Ayamé is mentioned with the subsequent emphasis that the well was actually drilled. I would say that this is of major symbolic value to the company. It conveys a clear message to potential partners that the Company is making things happen and have the ability to acquire confidence from Goverments and States. That APCL is not about delaying or postponing commitments stipulated in contracts, but to exploration drilling.
  • It could very well also be an elegant yet simple and confident message to the international community, to ICSID and to the Governments of The Gambia and Senegal that “we know what we are doing, we have both history and contracts to prove it and the blame for not drilling is on two governments who has breached valid contracts”.

Moving Forward

Sierra Leone

African Petroleum Corporation Limited’s renewed excitement about the licences in Sierra Leone was reinforced shortly after the Company saw that extensions of its licenses were granted, after an independent assessment of resources verified the high prospectivity of the licences.

The Company is currently engaged in preliminary discussions with potentially interested parties and hopes to progress those discussions towards a commercial outcome in the coming year as it seeks a partner to share the risk and reward of these interesting licences.

Moving Forward in Retrospect

The Gambia & Senegal

The status of African Petroleum Corporation Limited’s licences in the Gambia and Senegal has almost taken a schizophrenic nature. There have been many sudden turnarounds (and from both sides, in all honesty) and what seemed to be a ready-to-drill operation suddenly turned 180 degrees. It is truly impossible to make any certain prognosis on what the outcome will be. The reason is simple: we do not have access to all the facts since most documentation are not public, such as the PSCs. But we can make qualified assessments since there are plenty of clues, non official information and last but not least statements from the Company itself. Since I have published my analysis on the situation in one of my previous articles I recommend you to give it a read before you continue.

In addition to my previous analysis on the outcome of the ongoing dispute I would like to add the following after reading the annual report of 2017.

“Requests for arbitration in respect of the dispute over the A1 and A4 licences in The Gambia were filed during the 4th quarter 2017. In Senegal, at the time of publication of this report, we await clarity regarding the government’s position but remain ready to invoke similar legal rights in respect of our licences. Based upon the legal advice that we continue to receive regarding our position across these licences, we are confident that these steps are wholly appropriate, legally valid and will lead to a successful outcome for the Company.” (Jens Pace, p. 6).

This statement has another nuance to it than previous ones. Legally valid are the key words here. It is simply a confident and very concise message from the Company. From a judicial perspective it probably can not be any clearer. After appointing legal expertise and reviewing the contracts, the Company does not put it mildly or leaves it open for interpretation or speculation: “our cases are legally valid.” Nothing more, nothing less. The following quote from the report underpins this analysis.

“What is certain though beyond a shadow of a doubt, is that we would not be progressing with arbitration proceedings if we did not feel that we had a strong case based on the legal rights of our PSCs. Furthermore, we would not be progressing down this route if we did not feel it was necessary and in the best interest of our Company and its shareholders.” (David King, p. 5).

To summarize – given the statements quoted above there really is not room for any other interpretation (from a judicial perspective) than that the Company has a legally valid and solid case. Based on these statements, the Company is simply saying that the outcome will be in its favour.

Something new?

This paragraph in the report which made me raise my eyebrows.

“While maintaining capital discipline in order to prioritise the above activities, the Company is actively considering new venture exploration opportunities and potential portfolio transactions with third parties. We look forward to reporting on our progress in all these areas in the coming months.”

This paragraph, contrary to the statements previously quoted, leaves plenty of room for speculation. I can only guess and speculate so I won’t comment further on the matter except for saying that I find this exciting. What new venture exploration is the Company referring to? What potential Portfolio transactions with third parties is intended? Is it simply Sierra Leone or something completely new? Is it a stand-by partnership/partnerships for the licenses in A1 and A4 in The Gambia and for ROP and/or SOSP in Senegal ready to kick in when the dispute and negotiations are completed?

Final words on the financial strength of the Company

From the report we can conclude that the Company is certain that it has the financial strength to proceed with the ICSID process as well as the initial exploration activities in Sierra Leone.

“We remain well funded and can comfortably cover our legal costs associated with Senegal and The Gambia, whilst also funding the initial exploration activity in Sierra Leone.”

“We are; however, pragmatic about the complexity, length and uncertain outlook of such processes, but remain steadfast in our belief that our decision to proceed along this path is in the best interest of our shareholders. Importantly, we are well funded to maintain this course until we achieve a satisfactory outcome. We remain open to meet with the respective governments to discuss a way forward that avoids the unnecessary waste inherent in these legal processes.” (p. 6).

Analys av APCL och licenserna i Senegal

Jag har börjat ta upp bevakningen av African Petroleum Corporation Limited igen. Efter en lång tid av motgångar och negativa besked för bolaget, kan jag nu skönja en positiv framtid för bolaget igen. Om optimismen kan leda till verkliga framgångar denna gång kan bara tiden utvisa och vi får vänta och se vad som komma skall. Men vi går onekligen en spännande tid till mötes. Anledningen är vad jag funnit efter att ha gjort en del efterforskning i media i Senegal och internationellt.

Jag inleder med att återge två av artiklarna. Därefter avslutar jag med en kort analys.

Senegalesisk och internationell media om APCL och licenserna i Senegal

Upstream.com – “Senegal licensing round now losing momentum”

En artikel av Upstream-journalisten Barry Morgan från februari 2018.

With revision of Petroleum Code stalled and recovery of acreage proving complex, government will struggle to launch auction next month”

The prospect of Senegal launching a licensing round in March, as desired by President Macky Sall, are receding because little progress has been made in revising the country’s Petroleum Code.

It also remains unclear what, if any, acreage can be recovered from smaller players that are unwilling to relinquish.

An overhauled oil and gas law, replacing the 1998 Petroleum Code, will be a pre-requisite for Sall’s preferred policy of bringing in more majors and state-owned oil giants to join BP and Total in participation with national oil company Petrosen.

Senegal has no time now for small players coming in only to flip the acreage, said Energy Minister Mansour Elimane Kane, who took up the post last August, having earlier headed the World Bank’s Multilateral Investment Guarantee Agency. “The new law will allow the government to work directly with the majors who will develop and produce our resources, rather than relying on juniors who would seek to sell out immediately after exploration. From this year on, all new contracts shall signed with majors,” Kane said.

A petroleum revenue management bill is also being considered but that, too, had yet to be presented to the National Assembly because it would provide for absolute transparency and seek to establish a Sovereign Wealth Fund, said Kane.

He said gas-fuelled industrial growth and power generation lies at the heart of government policy, aiming to distribute cheap fertiliser to farmers and sell excess power to other countries in the region — a similar ambition to that professed by neighbouring Mauritania. Kane and his Head of Hydrocarbons Aminata Toure — an ex-Petrosen geologist — have been trying to ease out smaller non-performing players, while Petrosen, under the stewardship of veteran oilman Mamdou Faye, has been trying to contain the damage caused by what is claimed to have been previous administrative neglect.

Still, there is little chance of freeing up a full selection of acreage any time soon because most minnows are in talks with farm-in partners and lenders, while those whose applications for first period extensions were either rebuffed or ignored are in no mood to roll over without a fight.

Letters of revocation issued last year by former energy minister Alassane Thierno Sall, allegedly without due process, have been contested by at least two players while Petrosen’s attempt to press the reset button by cajoling operators to re-apply for their own acreage has had marginal success.

Even out in undemarcated waters beyond currently allocated acreage, Total’s deal last year to study the exploration potential of the ultra-deep — in addition to its controversial award of the Rufisque Deep against vehement objection from incumbent African Petroleum — would strongly suggest the French major has secured right of first refusal.

It is possible a final draft of a new law may fall under parliamentary scrutiny this summer, but available acreage looks less likely to emerge. No round can be launched with the threat of arbitration and trespass suits hanging over the play.


African Energy Intelligence – ”Legal imbroglio between African Petroleum, Dakar and Total”

The Rufisque Offshore Profond permit granted to Total in May 2017 has become the subject of a headed dispute that could spiral out of hand.

Despite having its permits cancelled in both Senegal and Gambia (AEI 812), British junior African Petroleum (AP), headed by Jens Pace and founded by Australian magnate Frank Timis, is not prepared to admit defeat.

From conciliation to onslaught

According to our sources, nearly two months ago the oil firm mandated Parisian law office Betto Seraglini to strike up talks with the Senegalese State over the Rufisque Offshore Profond field. The permit had been assigned to Total in May 2017 at the end of the first exploration phase when Dakar refused to allow AP to enter the second phase.

AP asserts that Senegal had no legal grounds to withdraw the permit and is ready to pounce on any misconduct it might unearth to recover its asset. Betto Seraglini, well-known within Paris’ arbitration scene, is currently handling a conciliation process with Senegal, which only has until April 18 to find a resolution. Should these talks fail, the next step would be arbitration and could prove to be very costly for the country. Arbitration would also make life difficult for Total, slowing down the exploration work at Rufisque Offshore Profond for the duration of the proceedings.

Prime location

Rufisque Offshore Profond sits right next to the vast oil discoveries SNE and FAN on the Sangomar Deep Offshore operated by Cairn Energy, Woodside Energy and FAR. Several other companies also had their hearts set on Rufisque Offshore Profond, including American firms Kosmos Energy, Anadarko and ExxonMobil as well as British major Shell, Australian firm Woodside and China’s Citic. For that matter, Total’s victory directly resulted in the sacking of energy and mines minister Thierno Alassane Sall (AEI 793). Sall had preferred ExxonMobil’s bid over that of the French major.

Fisticuffs for SOSP

Senegal’s oil minister also refused AP’s request to enter the second phase of exploration on its other block Senegal Offshore Sud Profond (SOSP), located in the Casamance region. In the eyes of the oil ministry, now led by Mansour Elimane Kane, AP has not held any assets in Senegal as of December last year.

The conciliation process might see the junior recover SOSP if it decides to give up on Rufisque Offshore Profond. AP had a similar experience in Gambia where its two permits A1 and A4, located south of SNE and FAN (AEI 812), were removed last year by President Adama Barrow’s new government. It has also filed for arbitration before the ICSID to recover the blocks.



Först och främst kan jag konstatera att senegalesisk media verkar vara entydiga i sina slutsatser. Jag har läst flera artiklar utöver de två som presenteras här, bland annat dessa.






APCL har anlitat den framträdande advokaten Betto Seraglini som ombud i fallet mot Senegal. Via honom har APCL stipulerat en deadline till den 18 april för Senegal att presentera en lösning som är gynnsam för APCL. Samtidigt har APCL konstaterat att man kommer att ta fallet om licensen Rufisque Offshore Profond (ROP) till ICSID om någon lösning inte presenteras senast den 18 april.

Detta sätter stor press på Senegal. Anledningen är att ett skiljeförfarande i ICSID kommer hindra Total (som alltså ingått ”exploration and production sharing contract för oljefältet Rufisque Offshore Profond” med Senegal) från att gå vidare med oljeutvinningsprocessen i Rufisque Offshore Profond fram till att ICSID meddelar utgången i en ev kommande skiljeförfarande i ICSID. Vi kan konstatera att en ICSID-process tar lång tid och att ingen part gynnas av detta. Om APCL tar fallet till skiljeförfarande blir ROP fryst från all aktivitet.

Något som gör saken extra intressant är att en gammal nyhet återigen börjat florera i Senegal i samband med nyheten om att APCL tar upp kampen, nämligen den om att Totals vinnande bud på ROP var långt under övriga budgivares. Detta är varken folket eller media glada för. Tvärtom. Pitchen är att landets möjlighet till stora inkomster från detta oljefält riskerar skjutas upp ännu längre fram i tiden, samt att landet redan gått miste om stora summor på grund av att regeringen valde Totals bud, som alltså var mycket lägre än övriga storbolags som t.ex. Exxon.

Min slutsats av ovan nämnda är att Senegals president Macky Sall och hans regering är under press. Att få både media och folket emot sig i en fråga som rör landets oljeintäkter är inte vad man önskar. Att den gamla konflikten och missnöjet med avtalet med Total nu får nytt ljus kastat på sig är inte vad regeringen önskar. Det skrevs väldigt mycket om oegentligheter och mutor då Total vann budgivningen och vi har sett att dåvarande oljeminister avskedades när detta uppdagades av media. Om detta råder det delade meningar, men en uppfattning är avskedandet av energiministern Thierno Allasane Sall samma dag som Total tilldelades ROP beror på att han motsatte sig Aliou Salls ( bror till president Macky Sall) inflytande över energipolitiken och som påstås ligga bakom uppgörelsen med Total, samt för att han motsatte sig att regeringen skulle acceptera Totals låga bud och uttalade sig om detta i media. I detta framförs också på vissa håll att Frank Timis (grundare till APCL, som numera enbart är en av ägarna av bolaget) hade ett finger med i spelet genom sitt nära samröre med just presidentens bror och att APCL och Senegal gjorde en inofficiell deal om att APCL skulle få licensen för det andra oljefältet SOSP förlängt som ”plåster på såren”. Frank Timis sägs också ha erhållit en summa pengar för detta. Dealen ska ha varit att APCL inte skulle sätta sig emot att bli av med ROP eftersom man skulle få SOSP förlängt, och att APCL skulle avsäga sig rätten till ROP när Senegal officiellt meddelade att APCL fått rättigheterna till SOSP förlängt. Som vi alla vet blev så inte fallet, vilket skulle kunna förklara varför APCL hela tiden konstaterat att man fortfarande äger licensen till ROP. Redan samma dag som Total meddelade att man erhållit ROP släppte APCL en pressrelease om att man vidhåller sin legala rätt till ROP. Att allt detta nu kommer upp till ytan igen, i samband med APCLs nyligen offentliggörande av att man tar ärendet till ICSID om en lösning inte presenteras senast den 18 april, är förmodligen ingen tillfällighet.

Denna artikel tar upp vad jag nyss beskrivit.


Sammanfattningsvis kan jag konstatera att jag återigen är hoppfull att APCLs agerande gentemot Senegal kommer generera en lösning som är fördelaktig för bolaget.


Tänkvärt inför avgörandet

Tiden är snart inne då aktieägarna får klarhet i huruvida det blir en snabb lösning till APCLs fördel (enda möjligheten till en snabb lösning är ju att Gambia och APCL kommer överens om en förlängning eller att APCL går in i nästa fas av licenserna) eller om den juridiska processen initieras.

Även om APCL initierar en juridisk process betyder inte det att vi står inför en uttdragen process. Detta är inte min egen tolkning utan det baseras på fakta, bland annat med referens till den förra liknande juridiska dispyten gällande samma licenser i just Gambia (https://www.clydeco.com/firm/news/view/clyde-co-advises-african-petroleum-in-successful-outcome-to-icsid-proceedin)

Vi vet också att en eventuell juridisk process kommer att hanteras av the International Centre for Settlement of Investment Disputes (ICSID). Gambia har ratificerat den bindande konventionen. Således kommer rättsprocessen att hanteras av ICSID och följa the ICSID arbitral rules. Gambia har tidigare varit involverade i ett flertal dispyter gällande bland annat oljeutvinning och inom mining, varav en dispyt alltså var mot just APCL och samma licenser som är föremål för eventuell dispyt just nu. Utgången av den förra dispyten med APCL refererar jag till ovan.


Jag avslutar med att återge African Petroleums pressrelease från den 21 augusti 2017.

The Company confirms that it is yet to receive any formal feedback from the Gambian authorities regarding the status of its A1 and A4 licences.

The management notes the rhetoric in recent local press articles that state the licences have expired and are open acreage. As such, the management feels it appropriate to firmly reiterate, once again, that this is misleading and incorrect in both law and fact. African Petroleum has not received formal notification initiating the termination process as detailed in the licences, and therefore retains it’s rights under the A1 and A4 licences.

Whilst the management continues to seek a positive dialogue in the coming weeks, it is currently undertaking the necessary legal preparations to utilise the dispute resolution provisions of the licences in order to protect African Petroleum’s legal rights in relation to the licences and will formally initiate this process in early September unless formal positive feedback is forthcoming by the end of August.

Commenting on the update, CEO Jens Pace said: “It is clearly frustrating to be in a position where we feel it necessary to issue updates to the market on account of unconfirmed local media reports. We were given guidance by the President of The Gambia that formal feedback would be provided to the Company following cabinet level discussions and so we remain hopeful that this will be forthcoming. I reassure our shareholders that we, after taking external legal advice, are very confident of our legal position in terms of these licences. We are therefore taking the appropriate measures to ensure we move swiftly to protect our rights on these licences should we not receive formal feedback by the end of the month, or should that feedback not be in line with our expectations.”