Nigeria: Deputy oil minister, Kachikwu fired as President Buhari shakes up state oil group

Mr Kachikwu is to remain on the board as chairman. The new group managing director is Maikanti Kacalla Baru, a technocrat with years of experience at the NNPC.

Muhammadu Buhari, Nigeria’s president, has removed the deputy oil minister from his joint role as the national oil company’s managing director and appointed a new board.

The decision to remove Emmanuel Ibe Kachikwu from the top job at the Nigerian National Petroleum Corporation is viewed by industry insiders as positive and long overdue.

Kachikwu had, for more than six months, been running the oil ministry, though the president is officially the minister. This was regarded by many executives and analysts in Africa’s top energy producer as a conflict of interest.

The arrangement had meant that Mr Kachikwu oversaw regulation of the industry and other policy issues while also running a key commercial player in that industry: the state-run company that sells almost half of the country’s oil output.

“This is the right thing to do,” a former executive from an international oil company operating in Nigeria said. “Never in the history of Nigeria has the same person done these two jobs,” he added, suggesting the arrangement was “not tidy”.

Mr Kachikwu is to remain on the board as chairman. The new group managing director is Maikanti Kacalla Baru, a technocrat with years of experience at the NNPC. He was most recently in charge of the company’s exploration and production division but was removed from that role by Mr Kachikwu this year and transferred to the oil ministry.

“In terms of key decision makers [at the NNPC] it is a major shift but I don’t expect any short-term, immediate impact on the direction of the oil sector,” said Rolake Akinkugbe, head of energy and natural resources at FBN Capital in Lagos.

New boss...The new group managing director is Maikanti Kacalla Baru, a technocrat with years of experience at the NNPC. He was most recently in charge of the company’s exploration and production division but was removed from that role by Mr Kachikwu this year and transferred to the oil ministry. — New boss…The new group managing director is Maikanti Kacalla Baru, a technocrat with years of experience at the NNPC. He was most recently in charge of the company’s exploration and production division but was removed from that role by Mr Kachikwu this year and transferred to the oil ministry.

Abba Kyari, the president’s chief of staff, was named as a board member.

Mr Buhari won elections last year pledging to tackle corruption, particularly in the oil sector, which generates 70 per cent of the country’s income. When he took office, he said he had inherited near-empty federal coffers, despite the fact that oil prices had been above $100 a barrel for several years before they plunged in mid-2014.

Low prices have pushed Nigeria into financial crisis. Recent militant attacks in the main oil-producing region have slashed production, another blow to federal revenues.

Cleaning up the oil industry through reform of the NNPC is critical to attracting badly needed new investment. Nigeria’s oil output is expected to decline sharply over the next decade because uncertainty over government reforms are keeping investment on hold.

Frustration is growing among oil majors operating in the country, however, because discussions intended to resolve disputes between the NNPC and its joint venture partners, including Royal Dutch Shell and Eni, have stalled. Mr Kachikwu, a former ExxonMobil executive, had pledged to reach agreement with the majors on outstanding disputes by mid-May. That deadline has passed with no agreements announced.

Culled from the Financial Times

Niger Delta Avengers unites for the worst

IN THE Niger Delta, a gun is an investment that yields excellent returns. Jamnogo Blessing, a gang member, recently turned up in Yenagoa, a turbulent city in the oil-pumping Niger Delta, to buy a stash of weapons from militants who hung up their boots seven years ago. “The only language the government listens to is violence,” he says. Once rearmed, his gang will attack oil companies operating around his home town of Idheze, he adds.

An army of unemployed young men like Mr Blessing is threatening to rise up in southern Nigeria and blow up oil pipelines. The industry, on which Nigeria depends for nearly all government revenues, could be crippled, as it was for much of the early 2000s. Production has already fallen to about 1.5m barrels a day (b/d), down from 2.2m last year, as attacks gather pace. This has helped push the global oil price back up to almost $50 a barrel. And it could spell disaster for President Muhammadu Buhari, who is trying to stave off recession. His budget assumed almost double that level of output this year.

Responsibility for much of the damage has been claimed by a mysterious and skilful band called the Niger Delta Avengers. Earlier this year they set off an explosion six metres under water, cutting output by 250,000b/d. Foreign oil firms are giving up on repairs, since the saboteurs just strike again. Local producers who rely on pipelines have been forced to turn off the taps. “We’ve had not a drop of oil for four and a half months,” laments Kola Karim, the boss of Shoreline Energy, one such group.

The Avengers say they want more local control of resources. This is what gunmen in the Niger Delta always say. And by “local”, they mean they’d like a taste of the money themselves. “It’s just old wine in a new jar,” says Jonjon Oyeinfe, an activist. The last set of militants more or less stopped fighting after they were bought off with an amnesty in 2009, and a monthly stipend of 60,000 naira each (about $400 at the time). That is a huge sum in a region where most people live on less than a dollar a day, and gives other men a reason to take up arms.

Many Niger Deltans sympathise with the rebels. Until last year a local man, Goodluck Jonathan, was president of Nigeria and showered goodies on his home region. Mr Buhari, who hails from the north, has cancelled a number of pipeline security contracts that had been given to southerners, including Mr Tompolo, and slashed the budget for paying off ex-fighters by 70%. Unemployed former rebels moan that it has been four months since they got their last monthly stipend. They are also furious that a proposed oil-law amendment would scrap the royalty that went to local communities. “Right now everybody in the Niger Delta is an Avenger, because everyone is angry,” says one former fighter, sitting by a swimming pool. Other rebel groups with comic-book titles such as the Niger Delta Suicide Squad seem to pop up almost every day.

Some of their complaints are fair. Nigeria’s oil business is a labyrinth of patronage and corruption, where politicians skim off profits and cartels steal hundreds of millions of barrels every year. Oil pollution kills fish and impoverishes fishermen. Yet there is no reason to think that it would be better managed if control were devolved to the Delta. For years a hefty 13% of oil revenue has been pumped back into the producing states, but governors have generally squandered it. Another war would only make matters worse. “This will not stop until they do things right,” says the retired militant. “The time will come when Nigeria is producing no oil at all.”

Niger Deltans Drag Federal Government to ECOWAS Court Over Oil Blocks Ownership

In a release signed by one Barrister Sophia Okoedion of H.S Okoedion Chambers, the Niger Deltan community has dragged Federal Government of Nigeria to the ECOWAS Court over oil blocks allocation and ownership. Below is the unabridged transcript of the release;

PRESS RELEASE

This is to inform the general public, interested parties and oil & gas stakeholders that on Thursday the 16th day of June 2016, in the Ecowas Community Court of Justice, Suit No: ECW/CCJ/APP/20/15, holden at Abuja, on the commencement of hearings after pleadings have been concluded by learned counsels on both sides of the Plaintiffs and Defendant since the suit was instituted just over a year ago. This landmark case is between the Plaintiffs, Mr. Nosa Ehanire-Osaghae, Mr. Jonah Gbemre, Mr. Aiko Obobaifo and Mr. Daniel Ikponmwosa, suing on behalf of the Niger Delta People and the Defendant, the Federal Republic of Nigeria. Our expectation is for the Defendant to take plea for the court to hear witnesses on both the Plaintiffs and Defendants sides. That we are set to go on with the matter until the determination of the case.

That the Ecowas Court is a noteworthy International Court for the common man of West Africa, and that at the end of this landmark case, the Honorable Court will grant the orders we sought in prayers. Namely:

That the Federal Republic of Nigeria has violated the fundamental human rights of Niger Deltans by depriving them of their God given oil blocks vis-à-vis natural resources which they allocated to foreign oil companies and non-indigenes from other parts of the country at their own expense and impoverishment.

That the Federal Republic of Nigeria has violated the fundamental human rights of Niger Deltans to life and a healthy environment by the hazardous flaring of gas in their host communities unabated for the last 30 years, which has resulted in many health casualties, fatalities and untimely deaths without adequate reliefs and compensations.

That the Federal Republic of Nigeria should put a stop to all acquiring, renewal, award, allocation, transfer, prospecting, buying and selling of oil blocks and their assets until the hearing and determination of substantive matter.

That the Federal Republic of Nigeria should re-allocate the ownership of all onshore and offshore oil blocs in the Niger Delta region back to the indigenous oil communities forthwith in accordance with its United Nations and African Union treaty obligations and statutory international law.

That the Federal Republic of Nigeria should immediately pay remedial environmental damages to the United Nations Environmental Program (UNEP) in order for them to speedily facilitate the total remediation of the oil polluted farming lands and fishing waters in Niger Delta region to the tune of $30 billion. For the excess of 9 million barrels of spilt crude oil in the Niger Delta region and for the hazardous gas flaring over the last fifty years of oil exploration and exploitation in the Niger Delta.

That the Federal Republic of Nigeria, should not impede and mitigate but rather assist and facilitate an enabling environment for the people of Niger Delta to conduct a peaceful and democratic Referendum to exercise their inalienable Right to Self Determination as enshrined in the United Nations and African Union treaties which it ratified and is signatory bound in accordance with the statutes of international law.

ANY OTHER ORDER OR FURTHER ORDERS that this Honourable Court may deem fit to make in the circumstances of this case.

SIGNED:

BARRISTER SOPHIA OKOEDION.

H.S Okoedion Chambers,

90 Akpakpava Road, Benin City.

08039514131, 08091987480, 08057816764.

Nigeria: Niger Delta Avengers Threaten Further Violence in Oil-Producing Region

The Niger Delta Avengers (NDA) has warned Nigerian authorities it may “review our earlier stance of not taking lives” if oil companies continue to operate in the country’s oil hub.

The militant group has launched a series of attacks on oil pipelines and facilities in the Niger Delta, where the majority of Nigeria’s oil reserves are concentrated. The NDA has so far rejected offers of dialogue from the Nigerian government and vowed to continue its Operation Red Economy, the purported goal of which is to reduce the West African country’s oil production to zero.

In a statement published on its website on Monday, the NDA said that the oil companies must not carry out any repair works on the affected pipelines and that buying of crude oil from the Niger Delta must be suspended “as we await the right atmosphere that will engender genuine dialogue.”

The NDA has claimed attacks on facilities belonging to several international oil companies, including Royal Dutch Shell, U.S. firm Chevron and Italian oil giant ENI. Some of their attacks have shown a high degree of sophistication and have taken down strategically-important pipelines—the first attack claimed by the group was on an underwater pipeline at Shell’s Forcados terminal and forced the company to temporarily shut down the 250,000 barrels per day (bpd) terminal.

Nigerian oil minister Emmanuel Ibe Kachikwu attempted to reach out to the militants earlier in June, saying that the Nigerian military would step back from pursuing the group in order to establish a platform for dialogue. In Monday’s statement, however, the NDA said it would only participate in dialogue with “independent mediators” appointed by the international oil companies working in the region.

Historically, the Niger Delta has been the site of previous uprisings by militant groups, who have claimed that the impoverished region does not benefit sufficiently from its oil wealth. In the mid-2000s, militants led by the Movement for the Emancipation of the Niger Delta (MEND) decimated the country’s oil production and kidnapped oil workers, with the insurgency only coming to an end in 2009 with the introduction of an amnesty program for the fighters. MEND has publicly called upon the NDA to engage in dialogue with the government, but the latter group has rejected the former and criticized its leaders for abandoning their cause.

Largely as a result of attacks by the NDA and other militants, Nigeria’s oil production has plummeted from 2.2 million bpd to a 20-year low of between 1.5 million and 1.6 million bpd.

Delta Avengers reject Nigeria talks, blow up Chevron site

ABUJA (Reuters) – The Niger Delta Avengers militant group on Wednesday rejected an offer of talks with the government to end its attacks on oil facilities and said it had blown up a Chevron pipeline site in the Niger Delta.

Attacks by militants on oil and gas pipelines in the southern delta swamps have brought Nigeria’s oil output to a 20-year low and helped push oil prices to 2016 highs.

Nigeria’s oil minister said on Tuesday the government would start talks with the Niger Delta Avengers, which has claimed responsibility for a string of attacks in the delta.

The militant group rejected the offer of talks on its Twitter account. “We’re not negotiating with any committee,” the group said. “If the Fed Govt (federal government) is discussing with any group they’re doing that on their own.”

The group said it had blown up a Chevron site called “RMP 20” located next to the Dibbi flow station in the Warri area in the delta at 0100 local time. It has previously attacked Chevron, Shell and ENI facilities.

An RMP, or remote manifold platform, is a gathering location where small oil or natural gas pipelines converge before connecting to a larger storage hub. It is not a producing well, though the Niger Delta Avengers have conflated the two terms in posts on social media and other platforms.

“The attack on Chevron’s RMP 20 is confirmed,” said local community leader Chief Godspower Gbenekema. “The place is on fire.”

Chevron, citing long-standing policy, declined to comment.

“We do not comment on the safety and security of our personnel and operations,” Chevron spokesman Kent Robertson said.

While Chevron is the third-largest oil producer in Nigeria, its biggest production streams are offshore, which has mitigated the immediate impact on oil output from the spate of attacks on its infrastructure.

A group of former Niger Delta militant leaders issued a statement on Wednesday condemning the actions of the Avengers and urging them and other groups to “re-consider their activities.”

“We enjoin our brothers to give peace a chance, lay down their arms and accept the offer for a meaningful dialogue,” said the Leadership, Peace and Cultural Development Initiative.

(Reporting by Ulf Laessing in Abuja; Additional reporting by Tife Owolabi in Yenagoa, Anamesere Igboeroteonwu in Onitsha, Libby George in London and Ernest Scheyder in Houston; Writing by Ulf Laessing and Alexis Akwagyiram; Editing by William Hardy and Leslie Adler)

Nigeria Without Oil: Focusing on the Fundamentals

Lagos, the economic capital....Nigeria has the largest population or domestic market.3 Almost in a bid to spite the rest of the world, in addition to the above resources, providence spared Nigeria from significant natural disasters. — Lagos, the economic capital….Nigeria has the largest population or domestic market.3 Almost in a bid to spite the rest of the world, in addition to the above resources, providence spared Nigeria from significant natural disasters.

Permit me to tell you a story of a prodigal entity that squandered its wealth on frivolities and, now it appears that the music is over. It now needs to decide on how best to return to the basics and ensure its very survival. There are no easy choices. The question, therefore, is whether Nigeria has what its takes to make big, difficult, decisions.

Share the Wealth

There are a few countries in the world that are as blessed as Nigeria. Only 8 countries have more arable land than Nigeria.1 Nigeria has over 40 different types of precious minerals2 and floats on a sea of natural gas and crude oil. But for six countries, Nigeria has the largest population or domestic market.3 Almost in a bid to spite the rest of the world, in addition to the above resources, providence spared Nigeria from significant natural disasters.

But, on its own, Nigeria over time adopted a severely destructive strain of corruption. With the discovery of oil in commercial quantities, the country lost its thrift and discipline, and adopted prodigality. The World Bank estimates that over $400 billion of oil revenues has been stolen or misspent since 1960. Furthermore, Nigeria has received over $400 billion in aid. The combined amount is equivalent to twelve times what the United States pumped into reconstructing the whole of Western Europe after World War II.4

The perfect storm

But it appears the music may have stopped as Nigeria now finds itself in a perfect storm. There has been a significant decline in oil revenue, which accounts for over 80 percent of Nigeria’s budget. The Civil Services are largely unproductive and can’t think Nigeria out of its current economic malaise. The 1.2 million Nigerians who are not able to gain admission in universities every year remain semi-literate. The 0.5 million graduates who enter the labour market every year are not much better. Furthermore, Nigeria failed to invest in economic infrastructure when oil revenue gushed. It succeeded in creating a political class that spends more time scheming their way to the feeding trough and spares little thought to economic development or the improvement of the lives of its citizens.

In the face of these challenges, Nigeria’s gross domestic product dropped from a high of 7 percent over the last 10 years to negative 0.36 percent in Quarter 1 of 2016. By the end of June 2016, Nigeria will be officially in a recession. Nigeria will be in an economic recession as it prosecutes a war in the Northeast, potentially another war in the South- South, while the Biafran agitators in the Southeast continue to rattle the cage.

Petroleum sector analysts estimate that price recovery to $100 a barrel will take over two decades. This puts Nigeria’s finances in a shambles. The situation is worsened by states that are proving to be economically unviable. Most of the states in Nigeria are unable to pay their staff salaries and continue to rely on bailouts from a Federal Government that may soon need a bailout. Every thing seems to be falling apart: electricity, education, healthcare, transport infrastructure, security and the socio economic indicators.

There is enough prescriptive literature on the economic sectors Nigeria should focus on. The current administration is already prioritising agriculture, solid minerals, power sector, etc. The challenge with these recommendations is that there is usually no consensus on the economic objectives and methodology for selecting the sectors. — There is enough prescriptive literature on the economic sectors Nigeria should focus on. The current administration is already prioritizing agriculture, solid minerals, power sector, etc. The challenge with these recommendations is that there is usually no consensus on the economic objectives and methodology for selecting the sectors.

Time to go home

Like the biblical prodigal son, Nigerians realise that the country cannot continue on this trajectory of sub-optimal performance. The challenge, however, is how to reach a decision on the most optimal options for Nigeria.

Most commentators propose the diversification of the economy away from an over-dependence on the petroleum sector. That is where the consensus ends.

The Nigerian economy is quite diversified with services contributing about 56 percent of the GDP, industry contributes about 24 percent, and agriculture contributes about 20 percent. The question, therefore, is how can Nigeria develop these sectors (that are already contributing to GDP) to increase their contributions to funding the budget? Petroleum revenue contributes about 85 percent.

The Options

There is enough prescriptive literature on the economic sectors Nigeria should focus on. The current administration is already prioritizing agriculture, solid minerals, power sector, etc. The challenge with these recommendations is that there is usually no consensus on the economic objectives and methodology for selecting the sectors. Late last year, principals from my firm, Nextier Advisory, were involved in an exercise to prioritize economic sectors to promote foreign direct investment. We made the assumption that government’s priority is to create jobs for the millions of young Nigerians. This goal was gleaned from the speeches and public pronouncements of the government. We used a methodology that evaluated 55 economic sub-sectors by attractiveness and feasibility. Attractiveness was measured using two parameters: size of the opportunity and impact on job creation, while feasibility was measured using Nigeria’s ability to compete against other countries in sub-Saharan Africa, and the ease of removing constraints to foreign direct investments. The result of the analysis was a bit surprising.

The top five sectors were Business Process Outsourcing, Automotive, Cassava, Renewable Energy, and Packaging. This is where the good news ends and the gory story begins. Nigeria has always been very good at producing strategy documents but not necessarily good ideas. At Nextier, we define “good ideas” as those solutions that take full account of the opportunities as well as the challenges and obstacles to their full implementation. Most of the strategy documents do not focus enough effort on the reasons why we have never been able to implement and then propose how best to\ navigate the implementation process.

How did we get here?

An Igbo adage states that one who does not know where the rain started beating him will not know where the rain stopped pelleting him. If we do not seek to understand how Nigeria got in to this mess in the first place, we will not figure out how to get out of it. So when did the wheels of

Nigeria begin to wobble?

We can go all the way back to 1914 and rest the blame at the feet of the colonial masters but after 100 years, we would be challenged to find anyone who would truly agree with that assessment. We must cast our gaze much closer to the 1960s. Nigeria had the misfortune of military intervention only 6 years into self-rule. The military, which could be excellent at what they have been trained to do, are not the greatest candidates for nation building. In the 28 years they ruled Nigeria, they appeared to wage a war against intellectualism and empowered apologists who did not understand the tenets of economic planning and nation building. These apologists became the politicians of the postmilitary era. These politicians begot other politicians of their ilk and we have continued this dive to the bottom of anti-intellectualism. Today, what we have is a public space that is dominated by people who should have nothing to do with piloting the affairs of state. A good friend of mine put it quite succinctly, “those who speak for us today, are the one who should sit with paper and pen in hand and simply take notes. Those who should speak have been chased away from the public space”. It is therefore not surprising that we are not able to marshal the intellectual power required to solve some of our most banal problems.

Nigeria Without Oil: Focusing on the Fundamentals

This lack of competence pervades Nigeria’s public service. The depth of the incompetence is staggering. Can our Civil Service deliver the policies, programmes, and implementation required to deploy the infrastructure that will support 480 million Nigerians by 2050? Can this Civil Service compete against a rising China and India? It is clear to any casual observer that we lack what it takes to pull Nigeria out of the current economic quagmire. At what point do we stop scratching with chickens and start soaring like eagles?

But after 17 years of civilian rule, we are wasting time casting the blame on the military. The blame has to rest squarely at the feet of the Peoples Democratic Party that was in power for those years. While there is much to be celebrated in the economic reforms of the Obasanjo years that resulted in almost a decade of 7 percent GDP growth, and the infrastructure development of the Jonathan years, there is much that is left to be desired. It is the public service that will develop the policies and implement the programmes. A reform of the Civil Service should have been top priority for the government.

Time to go home

For Nigeria to be able to diversify its revenue base, it must create the impetus for reform, decide on the economic goals and enablers, prioritise the sectors, develop good ideas, focus on implementation, and manage the results.

Create the impetus for reform

We can’t assume that everyone understands that the cavorting is over. For instance, the State governments can’t pay salaries but we are yet to see any commitment to fundamental restructuring of governance. Nigeria Without Oil: Focusing on the Fundamentals Remember that some state governors opposed the Sovereign Wealth Fund (in the name of opposition politics) and also of these same governors put pressure on the Federal Government to draw down from the Excess Crude Account even before the rainy day. Furthermore, it appears that the Labour Unions do not quite understand how bad things and that is the reason why they oppose efforts to right size.

Decide on the economic goal(s) and enablers

There are a number of complimentary economic goals that the government can focus on: job creation, economic growth, income equality, quality of life, etc. However, there is need to secure consensus and sequence these economic goals to agree on the optimal economic development strategies.

There are a number of enablers of a fully diversified revenue base for Nigeria. These enablers include governance structures for improved transparency and accountability; public service reforms, enabling economic infrastructure, etc. Take infrastructure, for instance, Nigeria needs $65 billion to meet the commitment for infrastructure development over the next five years. In all, Nigeria needs $2.9 trillion over the next 30 years.

Prioritise the sectors Nigeria does not have the ability to invest in all economic sectors. As a result, it must prioritise. This focus also helps with efforts to promote foreign direct investment to the sectors. This point is more apt given the steady decline in Foreign Direct Investment from 2012.

Ideas.

The failure of Nigeria is the failure of the intelligentsia. The politicians are good at what they do: the win power by any means possible. The intellectual class has not been as effective. The intelligentsia should think through the challenges of implementation and present a plan that the politician can simply approve and facilitate implementation.

While Nigeria has a library of policy documents and strategies, the fact that these plans have not yielded the desired results is indicative that the ideas may not have been well considered. These documents should have considered the evident challenges and proposed a way to side step and navigate them. Therefore, any ideas that are proposed today for diversifying Nigeria’s revenue base should be subjected to rigorous scrutiny and debate. They must be based on verifiable methodologies and data. Anything short of this is simply a work of fiction and should be considered as such.

Implementation.

The bitter nugget of truth is that Nigeria lacks the capacity to implement. Our recent history shows that our human capital is not up to par. This assessment is not to castigate; rather, it is to highlight the need for a new approach to implementation. Dubai was a country of pearl divers when they discovered oil. Knowing that they lacked the human capital to deliver their vision, they bought the required experience and got the job done. We are getting to a point where we may begin to think about such models.

Results.

It appears that what we have in Nigeria today is government by “strategic communications”. Government spends a lot of time celebrating what it plans to do and not what it has done. Government decisions should be driven by data, and not propaganda or politics.

A review of Nigeria’s Federal and State budgets shows a lot of projects that are funded without any assessment of performance or delivery. Every year, more funds are assigned to such programmes because they are already on the previous year’s budget without assessing their feasibility or measuring their impact. A nation that fails to measure and calibrate is bound to deliver sub-optimal results.

Bringing it together

The real question is not whether Nigeria is willing to diversify its revenue base because, let’s face it, Nigeria does not have a choice but to diversify or else we will be like Venezuela. This is not the time to play partisan politics with this issue. This is not the time to be PDP or APC or XYZ. This is the time to be NGR – Nigerian. Every Tomi, Dike, and Haruna must shelf his or her historical biases to realise that we are all in this Titanic together and it has already hit the iceberg. We can sit on deck and twiddle our fingers, pray, and hope that by some miracle the gaping hole with close. Or we can roll up our sleeves, forget our differences, focus on our commonalities, and fight together because we will either win together or we will all die together.

Patrick O. Okigbo III is the Principal Partner at Nextier Advisory – a multi-competency public sector advisory firm with expertise in research, strategy, finance, monitoring and evaluation, and strategic communications.

Angola Leader Secures Economic Grip Naming Daughter as Oil Boss

Isabel dos Santos, 43,is Africa’s wealthiest woman who’s worth $3.2 billion, according to the Bloomberg Billionaires index.

Angolan President Jose Eduardo dos Santos tightened his family’s grip on sub-Saharan Africa’s third-biggest economy two years before he has indicated he’ll leave office by naming his billionaire daughter Isabel as chairwoman of the state oil company.

The appointment “shows that President dos Santos doesn’t trust anyone else and moreover that he’s looking to have a dynastic succession,” Markus Weimer, an analyst for Horizon Client Access Inc., an energy investment advisory group, said Friday by phone from London. “It’s a very strong indication that Isabel will also be considered a possible leader when he retires in 2018.”

The Russian-educated dos Santos, Africa’s second-longest serving president, has said he will quit “active politics” in 2018 after leading the country since 1979. His son Jose Filomeno dos Santos already runs Angola’s $5 billion sovereign wealth fund. — The Russian-educated dos Santos, Africa’s second-longest serving president, has said he will quit “active politics” in 2018 after leading the country since 1979.

Angola ranked 163 out of 167 countries in Transparency International’s 2015 Corruption Perceptions Index and had the world’s highest rate of child mortality under the age of 5, the United Nations Children’s Fund said last year.

The decision to fire Sonangol’s entire board is part of a restructuring plan that will create two new entities — one that will award concessions and serve as a regulator, and another, under the president’s direct authority, that will run its business interests. The company now owns dozens of stakes in oil blocks in Angola as well as an airline, real estate, multi-billion dollar housing projects, industrial zones, and shares in a bank in Portugal.

Isabel dos Santos, 43, is one of her father’s most trusted advisers and has been leading talks about a shakeup at Sonangol, according to David Thomson, an analyst for Edinburgh-based Wood Mackenzie Ltd. Africa’s wealthiest woman who’s worth $3.2 billion, according to the Bloomberg Billionaires index, she controls Angola’s largest mobile-phone operator, Unitel, and owns stakes in a range of companies in Angola and Portugal.

‘Intimate Knowledge’

“She has been at the helm of the efforts to restructure Sonangol over the past year or so and as such will have an intimate knowledge of the company,” Thomson said in e-mailed comments. “She has good business experience and is respected within the oil industry.”

The new team aims to make Sonangol more competitive internationally by reducing costs, Isabel dos Santos said in an e-mailed statement. The company will seek to improve profitability and the dividends it pays to the state, she said. Angola vies with Nigeria as Africa’s biggest oil producer.

Isabel dos Santos started her career with the opening of a club called Miami Beach in the capital, Luanda, after obtaining an engineering degree at King’s College London in the early 1990s, said Filipe Fernandes, author of a book entitled Isabel dos Santos — Secrets and The Power of Money.

“She has used her strong business position in Angola, where many Portuguese companies are present, as a springboard for bigger deals,” he said.

Political Implications

The reforms at Sonangol will have considerable political implications, according to Stratfor, an Austin, Texas-based intelligence consultancy.

“The proposed overhaul is intended to break down the potential blocks of power forming within Sonangol and place the company squarely under dos Santos’s control,” Stratfor said in a June 1 report. “By splitting up the company, the president hopes to safeguard the interests of his family.”

Foreign advisers including the World Bank recommended for more than a decade that Angola reduce the size and scope of the company.

“Isabel’s appointment demonstrates the strategic importance of these reforms for the presidency and that the president wanted someone he fully trusted to lead the reforms,” Alex Vines, head of the Africa Program at the Chatham House research group in London, said in e-mailed comments.

The 54 percent decline in the price of Brent crude in the past two years has put Angola under pressure to reduce its dependence on oil, which accounts for more than 90 percent of its exports. Economic growth will probably slow to 2.5 percent this year from an estimated 3 percent last year and 6.8 percent in 2013, according to the International Monetary Fund, which is in talks with Angola to provide financial assistance.

“It’s just how the Angolan government tends to operate when it comes to base issues like strategic oil and the sovereign wealth fund,” Gary van Staden, an analyst at NKC African Economics in Paarl, near Cape Town, said by phone. “President dos Santos tends to make sure that the people in charge of those are very close to him.”

OPEC is finished: Oppenheimer’s Fadel Gheit

OPEC is a dysfunctional organization that has outlived its usefulness, Oppenheimer senior energy analyst Fadel Gheit said Thursday.

“OPEC is finished. OPEC is over,” he said in an interview with CNBC’s “ Power Lunch .”

“Shale production has completely changed the way we look at energy and it’s not going to change. The fact of the matter is that OPEC and Saudi Arabia are no longer the swing producers they were only two years ago.”

In its meeting Thursday in Vienna , the Organization of the Petroleum Exporting Countries failed to agree on a new production ceiling and therefore did not change its oil output policy. The cartel has been pumping oil at record levels despite the drop in global crude prices that began in 2014.

While prices have rallied in recent months, they remain well below the $100 level crude had enjoyed before the rout.

Now, “the market will dictate where oil prices will be,” said Gheit. He thinks the “new normal” for crude will be $60-$65 per barrel. He predicts that will happen in the next six to 12 months.

Those who think it will get to $80, $90 or $100 are barrel are “delusional,” he added.

Gheit believes U.S. exploration and production companies will be the best-performing stocks going forward. That’s because when oil prices crashed, they got creative in cutting costs and improving operating efficiency. Therefore, the break-even point for those companies has gone down.

“Higher oil prices will create [a] profitable environment at $60-$65 oil,” he said. “Only two years ago, you needed $80, $85 to $90 oil.”

A US oil company just filed for bankruptcy — for the second time this year

Offshore oil platform is seen in Huntington Beach

For the second time in less than a year, oil services provider Hercules Offshore is heading for Chapter 11 bankruptcy protection by entering a restructuring support agreement (RSA).

The Wall Street Journal writes that ”In a prepackaged bankruptcy, companies line up creditor support for their debt-payment plans before seeking chapter 11 protection, allowing them a speedier—and cheaper—trip through bankruptcy.

Last August, Hercules filed for Chapter 11 protection—the first time. At the time, the company showed US$13 billion in debt and just over US$546 million in assets, trying to restructure with a new US$450-million credit line.

It resurfaced from this bankruptcy only in November, but the perpetual low oil price environment led to a slump in exploration investment and project cancellations.

Under the new Chapter 11 filing, Hercules is selling assets to pay off investors. The company has reportedly agreed to transfer the right to buy the Hercules Highlander jack-up rig to a subsidiary of Maersk Drilling for US$196 million.

The company said that its international units will not be included in the Chapter 11 filing, but will be part of the sale process.

In just the first four months of 2016 there were double the the number of energy company bankruptcies than in all of 2015. The total secured and unsecured defaults rose to $34 billion, double the $17 billion total for all of 2015. In 2015, 42 oil companies filed for bankruptcy.

In April this year, 27 North American oil and gas companies filed for bankruptcy—11 of them filing under Chapter 11, according to a Haynes and Boone report. Some 69 North American oil and gas producers have filed for various forces of bankruptcy.

Thomson ReutersFile photo of pump jacks at Lukoil company owned Imilorskoye oil field outside West Siberian city of Kogalym

More than one-third of public oil companies globally face bankruptcy, according to a new Deloitte report that paints a fairly gloomy picture of the US shale patch as it struggles to survive under mountains of debt.

The Deloitte report—the first high-profile report on the current financial situation of global oil and gas companies—surveyed 500 companies and found that 175 are facing “a combination of high leverage and low debt service coverage ratios”.

Shale producers amassed huge debts that they are now struggling to service in the oil price downturn. These debts totaled $353 billion for US and Canadian energy companies at end-2015. To compare, Deloitte puts the combined debt of those 175 bankruptcy-threatened companies at more than $150 billion, nearly half of the total for U..S and Canada.

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