Angola Exploration License Extensions Could Spur Oil Sector Recovery (By Grace Goodrich, Field Editor)
Several International Oil Companies (IOC)s received extensions on existing block licenses in Angola before the COVID-19 crisis
LUANDA, Angola, May 25, 2020/ -- By Grace Goodrich, Field Editor
Prior to the onset of COVID-19 and OPEC-led production cuts effective
May 1, Angola was set to see a rise in production. In February, the
country recorded a production level of 1.39 million barrels per day
(bpd), up 15,000 bpd from January. Since the middle of 2019, several
majors also extended existing block production licenses, reflecting an
initial push to ramp up production. Aligned with the effort to yield new discoveries, Maersk Drilling was awarded contracts for a three-well
exploration campaign by Total E&P in January. The project includes
two wells offshore Angola in Block 32 and Block 48 and one well offshore Namibia and boasts the deepest water depth ever drilled offshore. The
campaign carries an estimated duration of 240 days and includes two
additional one-well options, demonstrating a commitment by explorers to
tap into existing acreage and bring new discoveries into production.
However, in the midst of COVID-19, several major operators are
dramatically reducing capital expenditures. Italian multinational Eni
and French major Total, for example, have reduced investment in
exploration and production across the continent in 2020 by 25%. In
Angola, Total has suspended development of its short-cycle satellite
field projects, located near the operator’s large offshore
installations. That said, the recent license extensions might help to
alleviate time and financial pressure on the completion of drilling
programs, the status of which remains unknown for most blocks.
Block 14
In February, the Angolan National Agency for Petroleum, Gas and Biofuels (ANPG) signed a Memorandum of Understanding (MoU) with the consortium
that owns and operates Block 14 to extend its exploration period until
2028. The consortium is comprised of Chevron (31%), Sonangol (20%), Eni
(20%), Total Angola (20%) and Galp Energia (9%).
The MoU amended the terms of the agreement by targeting an increase in
crude production that will enable up to 65% of cost recovery in new
exploration areas from April 1. Block 14 currently produces
approximately 160,000 bpd of medium-light crude oil. The agreement also
provided for the readjustment of the profit-sharing contract to an 80/20 proportion, and includes the drilling of an exploration well and six
development wells. Cost recovery will increase to 72.5% following the
drilling of the wells, and profit-sharing will shift to a 90/10 split.
The agreement is directed at the areas of Tombwa-Lândana, Benguela,
Belize, Lobito, Tomboco and Kui¬to, which will be merged into a new
collective marketed area, known as Tombwa-Lândana, to serve as a new
focus of exploration for operators.
Block 17
In December 2019, Total signed an agreement with the ANPG to extend its
license in Block 17 until 2045. The French supermajor, which carries a
35% interest, operates the block in partnership with Equinor (23.33%),
ExxonMobil (20%), BP (16.67%). Under the extension contract, Sonangol
acquired a 5% stake in the block and will acquire another 5% in 2036.
Block 17 is the site of the Girassol field, the largest oil discovery
ever to be made in Angola, and holds estimated reserves of 2.9 billion
barrels, with a record of 17 discoveries made in 20 wells drilled.
According to Sonangol, only 1,611 km2 of the block’s acreage has been surveyed, which results in 67% of the acreage left unexplored.
Three short-cycle brownfield projects were initially under development
in Block 17, with the aim of adding 150 million barrels to its total
production and 100,000 barrels to its daily production. Additional
exploration campaigns were also planned to unlock further resources,
with two wells planned for drilling in 2020 yet likely to be postponed.
Block 17 remains an integral player in Total’s plans to boost its Angola production by 2023.
Block 15
In June 2019, the ExxonMobil-led consortium operating Block 15 signed a
production-sharing agreement that extended block operations through
2032. In addition, the consortium approved a multi-year drilling program that will add 40,000 barrels to the block’s current production upon
completion by operator ExxonMobil. The project is expected to generate
approximately 1,000 local jobs. New infrastructure technology is planned be deployed in the block, designed to increase the capacity of the
existing subsea flow lines and increase output.
Additional changes to the production sharing agreement include changes
in ownership. Under the agreement, ExxonMobil carries a 36% stake and
operates the block in partnership with BP (24%), ENI (18%) and Equinor
(12%). As part of the agreement, Sonangol will receive a 10% equity
interest in the block. ExxonMobil also holds stakes in three deep-water
blocks covering nearly two million acres in Angola, which hold
substantial development opportunities and a gross recoverable resource
potential of approximately 10 billion barrels of oil equivalent. Block
15 has produced more than 2.2 billion barrels of oil since 2003.
This article will be published in the Africa Energy Series: Angola 2020 Report, which will be launched soon.
Link: Africa Oil and Power
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