Total slashes $4 billion from Angolan Kaombo oil project

Total said it had reduced the cost of Kaombo oil project offshore Angola by $4 bil­lion to $16 billion.

Yves-Louis Darricar­rere, Total’s president for upstream, said in a statement that “Total has significantly optimized the project’s design and contracting strategy in recent months. Kaombo illustrates both the group’s capital discipline and objective to reduce capex.” Half of the cuts came from a reassessment of the project’s specifications, using a “’just good enough’ approach rather than ‘the best possible’.

The decision to invest in the ultra-deep sea project, which has been re­peatedly delayed because of its cost, is seen as important for Africa’s number two oil producer to replace older fields and hit its production targets.

The project in Block 32 is scheduled to start up in 2017, when it will have a production capacity of 230,000 barrels per day.

Total is already the top operator in Angola, with equity production of 186,000 barrels per day, mainly due to its Girassol, Dalia and Pazflor deepwater fields in the huge Block 17. The blocks it operates produce a total of 600,000 barrels per day, over a third of the country’s output.

Angola wants to increase produc­tion to 2 million barrels per day next year from 1.73 million bpd in 2013 and then maintain that level for five years.

Still, analysts say the country’s plans to ramp up production have proven more challenging than expected due to technical problems and declines at older fields.

Total and Angolan state-owned firm Sonangol each hold 30 percent stakes in Block 32, while Angolan-Chi­nese joint venture Sonangol Sinopec International has 20 percent, Exxon Mobil’s Esso unit 15 percent and Por­tugal’s Galp 5 percent.