Africa: Angola

AFRICA

Angola

Privatization of state assets is a key element of Angola’s economic reform program, agreed to by the IMF. However, there were no near-term plans to sell any of Sonangol’s upstream assets.

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Chief among problems that the country faces is oil-field investment, with respect to reserves management. Extending reserves would keep revenues down and reduce government expenditures, but it would also create problems with multinational firms by delaying development. Conversely, rapid development would strain the government’s ability to invest.

Exploration. The exploration success rate continues to be extraordinary offshore – well above 50%. Chevron has found seven new fields on Block 14, while ExxonMobil and TotalFinaElf have made 11 and 10 discoveries on Blocks 15 and 17, respectively. BP and 50% partner Shell have a 100% success rate on Block 18 with their first six exploration wells. Together, these five blocks contain more than 10 billion boe of potential reserves.

The government is accepting informal bids on ultra-deepwater, Kwanza basin Blocks 23, 26 and 27, but has not yet started a formal bidding process. The disposition of Block 34 has been settled. Phillips, Norsk Hydro and Sonangol (operator) have 20% stakes, while Shell and Petrobrás have 15% each.

This June, ExxonMobil struck pay on its first well in deepwater Block 24. The Semba 1 wildcat encountered two oil reservoirs that tested at a combined rate of 3,039 bpd. The well was drilled in 3,800-ft water to a 12,287-ft TD.

Table: Significant African discoveries, July 2000 to July 2001

Drilling / development. Texaco and Sonangol formed a partnership to build an LNG plant near Luanda. Construction contracts will be awarded in 2002, with a planned initial output of 800 MMcfgd, starting in 2005.

On Block 17, TotalFinaElf’s $2.5-billion, Girassol deepwater development should see first oil by early 2002. However, its Dalia project has been pushed back a year to 2004 – 2005.

Production. Chevron’s deepwater Kuito field has been producing for more than a year at 50,000 to 70,000 bopd. With continued development, production should reach 100,000 bopd. Chevron subsidiary, Cabinda Gulf Oil Co., operates Block Zero (Areas A, B and C), located offshore the enclave of Cabinda. It accounts for almost 70% of Angolan crude output.

Angolan oil production averaged 785,000 bpd last year, up almost 2% from 1999’s level. The government says it intends to produce 1.5 MMbopd by 2004, and 2 MMbopd by 2010.