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.
SOURCE
Africa Oil & Power Conference
By Grace Goodrich, Field Editor
