• Wednesday, February 21, 2024
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Angola on track to offer onshore blocks

Angola has taken a step further towards the much-anticipated licensing round, which is aimed at promoting the potential of the onshore areas, as the government has given the go-ahead to Sonangol, the state-owned oil and gas firm.

The country had last year said it was launching a bid round for 10 onshore blocks, situated in the Lower Congo and Kwanza Basins. Originally 15 onshore blocks were to be on offer, but in November 2013, Angola’s oil minister reported that 5 of these would be reserved for Sonangol.

Angola is Africa’s second biggest oil producer after Nigeria and extracts almost all of its crude from offshore fields, but aims to develop its onshore potential.

The 10 blocks may hold, on average, reserves of 700,000 barrels of oil each, according to Sonangol.

Onshore areas have been of interest for a long time, with the first exploration well, Dande-1, being drilled in 1915. Over 180 wells have been drilled in the onshore Kwanza Basin since and over 300 in the onshore Lower Congo Basin.

“The concession included prospecting, exploration, development and production of liquid and gaseous hydrocarbons in the KON2, KON4, KON11, and KON12 blocks and allows the national concessionaire to carry out a preliminary assessment of existing resources and determine their potential,” said Aníbal da Silva Aníbal Silva, the country’s vice minister of petroleum.

The round was planned to take place by the end of 2013, however Sonangol announced in October 2013 that the round would be delayed and relaunched in the first quarter of 2014.

Hopes to achieve 2 million bpd of oil

Angola is making spir¬ited efforts to ramp up exploration and production in the country.

Sonangol is targeting a crude oil production rate of 2 million barrels per day (bpd) in 2015 as new deepwater oil fields are scheduled to come online. Exploration activity in pre-salt formations is expected to ramp up this year, following the most recent auction of pre-salt blocks announced in January 2011.

In 2013, Angola produced 1.8 million bpd of petroleum and other liquids, of which more than 1.7 million bpd was crude oil, according to Energy Information Administration (EIA), the statistical arm of US Energy Department.

Angola’s oil production grew by an annual average of more than 15 percent from 2002 to 2008 as production started from multiple deepwater fields that were discovered in the 1990s. The first deepwater field to come online was the Chevron-operated Kuito field (block 14) in 1999. Since then, international oil companies (IOCs), led by Total, Chevron, ExxonMobil, and BP have brought on additional deepwater fields and are in the process of developing new ones.

In April, Total and its joint ven¬ture partners made the final invest¬ment decision to develop the ultra-deep offshore Kaombo project in Angola. With a production capacity of 230,000 bpd, Kaombo will devel¬op estimated reserves of 650 million barrels.

Located offshore Luanda, the Kaombo project will develop six of the 12 discoveries already made on Block 32. The project’s capi¬tal expenditure to reach full capacity was reduced by 4 billion dollars to 16 billion dollars, with an expected start-up in 2017.

In June, Total started up CLOV, a major deepwater offshore development, with a production capacity of 160,000 bpd of oil. The $10 billion CLOV project is esti-mated to hold 505 million barrels of crude oil and comprises 34 wells.

“Angola could potentially regain the top oil producer spot by the end of 2014 with oil production expected to start from Total’s CLOV field proj¬ect,” Ecobank Research had said in its recent Energy, Oil and Gas update. “The field is expected to achieve a peak production level of 200,000 bpd and could increase Angola’s oil production to 2 million bpd.”

Bid round to boost bid to surpass Nigeria

The imminent licensing bid round is expected to contribute to the country’s bid to overtake Nigeria in terms of production.

In 2009, Angola displaced Nigeria as the top African crude oil producer after years of militancy significantly reduced capacity. But the Southern Africa country’s grip on the title was short-lived as Nigeria regained it in 2010 as production hit 2.4 million bpd.

Eni plans to start production this year as operator of Block 15-06’s West Hub fields, estimated to hold reserves of 200 million barrels, and boost flows to 80,000 bpd. The block’s East Hub development is due to pump about 49,000 bpd after starting in 2016, according to the company.

  The block is one of eight offshore projects being counted on to help raise production to 2 million bpd by next year from 1.66 million last month. That compares with Nigeria’s 2.15 million barrels daily.

  Nigeria’ production ‎climbed 380,000 bpd to 2.3 million in August, the most since January 2006. It was the biggest one-month gain in data going back to 1989. Output is often disrupted by unrest in the Niger River delta, the country’s main oil-producing region, leading companies to declare force majeure.

On August 5, Shell Nigeria Exploration and Production Company Ltd (SNEPCo) started oil production from the first well at the Bonga North West deep-water development off the Nigerian coast.

The Bonga FPSO has been upgraded to handle the additional oil flow from Bonga North West which, at peak production, is expected to contribute 40,000 barrels of oil equivalent per day, helping to maintain the facility’s overall output. 

Rising security problems related to oil theft, pipeline sabotage and piracy in the Gulf of Guinea affecting produc¬tion and curtailing oil exploration projects have continued to dwarf Nigeria’s oil production. Last year, the country did not come near its production target of 2.53 million bpd. Reserves base has declined from 37 billion barrels to 35 billion barrels.

The long-delayed Petroleum In¬dustry Bill (PIB), which is expected to overhaul the industry and expand investment, is still stuck in the legis¬lative pipeline.

According to BMI, the largest risk faced by Nigeria will come in the form of delayed offshore projects and investments as a result of the uncer¬tainty surrounding the adoption and content of the PIB.

Should the current situation in the Nigerian oil industry endure, project investments and cancella¬tions could see Nigerian production stagnate in the longer term, the agen¬cy said, adding that “A substantial in¬crease in production is unlikely until the PIB is passed.”

“Adoption of the Petroleum In¬dustry Bill (PIB), which we do not expect before the Nigerian 2015 election, would be a strong signal for investors that Nigeria’s hydrocar¬bons sector, is ready to move forward. Without the adoption of the PIB, further offshore project delays could occur, resulting in a stagnation of Ni¬gerian production,” said BMI.

FEMI ASU