(Reuters) – Zambia has chosen Glencore Energy as the preferred bidder to supply 1.4 million tonnes of petroleum feedstock to the southern African country over two years, the procurement authority said on Saturday.
Zambia is the continent’s top producer of copper and uses a lot of diesel in the mining operations that are the backbone of its economy.
“The central tender committee granted authority to the Ministry of Energy and Water Development to enter into negotiations with Glencore Energy UK Limited,” Zambia Public Procurement Authority (ZPPA) spokeswoman Hazel Zulu said in a statement.
“The Ministry of Energy and Water Development is expected to report back to the central tender committee within 21 days after which a decision will be made whether to award the contract to Glencore or not,” she said.
Zulu said the issues to be agreed with the winner would include the timeframe for the supply of the first cargo through the port of Dar es Salaam in Tanzania.
Other companies that tendered for the contract are Kuwait’s Independent Petroleum Group (IPG), Lukoil International Trading and Supply Company (LITASCO) of Russia, Vitol SA, Trafigura SA, Addax Energy SA and Kenya’s Gulf Energy Ltd.
IPG’s deal for the supply of oil to Zambia expired in December.
[Reuters]
Good Morning
I’m asking myself why we cannot import from our oil producing neighbour Angola? Isn’t it a cheaper and more reasonable alternative than having it shipped from the UK? No wonder the European transnational companies keep getting rich while African countries which often provide the raw materials still remain poor.
~X(
Good observation Chale, but have you tried to analyze the costs. We need people like you to go back home and advise those guys.Angola is definitely a good route and we don`t need any middleman. We can also invest in a pipeline, thereby reducing long term transportation costs.
1 and 2 you are scared to have us oil companies run your small african economies! Angola has no OIL but rebels! wake up!!!!!!!!!!!!!!!
#1 Chale I support your views, or should I say, I hold similar views over this issue and many other issues like it.
#2 Davies How much do you think those guys would listen to individual Zambians in the diaspora? Our country is failing to sustain its own people as a result of decisions being made by our leaders who have no vision for our country, beyond their own pockets.
Uushumfwa patunono, napafingi pene teti omfwe!
Zambia asked for bidders worldwide to bid for the supply of oil,Angola didnt see the need to tender,if they had tendered,im sure ZPPA would have taken that bid on board and and it would have been mentioned as one of the bidders.then, only then we would come up with such questions as to why we cannot import from angola, 70% of angolan oil and gas is exported to the US,20% to china and 10% local consumption (google.com[angola-oil and gas])
Its neither cheap nor reasonable,coz you have to compete with US and China,more over Mopani is a subsidiary of Glencore,so it makes business sense somehow
The major reason driving investment into the capital, skills and technology-intensive offshore exploration, drilling and production in such areas as the deep waters of Angola is the need to ‘quench the thirst for oil’ in developed countries. Chevron, Exxon Mobil, BP, Total and ENI will in most cases send their crude to their countries and pay the host countries signature bonusses, exploration rights and certain taxes. Wouldn’t be surprised that the oil Zambia ends up getting may have origins in Angola, but sourced through Brent Crude in London.
i agree with smoothcriminal glencore owns 73% of mopani there relationship with government is close my only concern is that is there a link? i mean guys these guys are commodity traders but also own assests like mopani, know the might supply the oil hence no diesel shortage at mopani produce the copper and delivery the copper back to glencore.
The oil in Angola does not suit our INDENI refinery, What zambia needs to do is to build another refinery that will refine the Angolan , nigerian, and Gabonese oil. That way we will cut on transportation costs. The govt of South Africa is venturing in the same initiative soon the oil will be coming from Angola. it s a huge investment but it is worthy it.
Glencore seems like a decent company, i would say it is a good choice
The question you should asking yourself is why use traders instead of buying directly from Iraq, Kuwait or Saudi Arabia. Does it make sense that you involve a middle man in such a huge contract which you could as well negotiate for direct from the supplier. Remember Glencore is just a trader, they will buy from any of the Countries mentioned earlier on and sell to us, at a profit to them.
Zambia does not import oil from Angola because our refinery can’t refine it. That said, we will need to build a new refinery to handle such oil. the question is, can we secure a longterm supply gurantee from our neighbor? Until we have such gurantee we will waste time and resources building a whitehorse. It is easier to think that we should buy directly from the supplier, but my little knowledge of international trade tells me that most of these trading companies buy the commmodity in huge stock more than what Zambia consumes. Selling to these companies is a good deal for suppliers as they are guaranteed to sell their products even before they produce the product. Thus, they don’t have to netogiate with many buyers who just want a small supply. this is just like the manufactures and…
just like manufactures and retailers.
Those who are responsible for extracting petroleum from the earth’s crust (international petroleum giants) have the final say on where they want their petroleum sold – which in most cases has turned out to be the commodity exchanges of London and New York.
# 11 well analysed, so basically Zambia is in a dilema. we cant build a refinery to refine African oil and we cant negotiate directly with the oil producers.
Good Afternoon
Thanks to the well imformed bloggers and constructive dialogue on this thread, I am now more enlightened on this matter. Conclusively, I think the best thing would be for Zambia and Angola to become direct trade partners in future despite the existing obstacles – which both sides must work together to remove.
I think that the biggest obstacle is our inability to acknowledge that foreign companies (those owned by whites in particular) have a different agenda from ours and what they value is not always in our best interest.
A rough estimate of the capital cost of a 12,000 b/d refinery is $ 240 million. A one off windfall tax could pay for this investment and save us millions of dollars in fuel imports as well as the attendant graft.
Nbr 15 Nine Chale, just one more lesson from your comment at Nbr1. Just because Glencore is a British company does not mean that the oil will be shipped from Britain. As one blogger has indicated, these are like wholesale traders and they know the ropes of the industry (hopefully).
angola has no refinery.its crude oil is exported and then sent back. what we need is for indenii to be upgraded so we can process the oil.
we need change. not sata. but credible change