International Outlook: Africa

Africa is unstoppable

Upbeat exploration results in the west and north, mounting natural gas reserves in the northeast, highly prospective acreage and increased investment combine to make Africa the destination on everyone’s list

 P. Gawenda, J-M. Conne, A. Hayman, M. Marchat and D. Massaras, IHS Energy Global E&P Services, Geneva, Switzerland

 The petroleum landscape in Africa is changing rapidly, yet confidence that the continent develops into a worldwide petroleum center remains unchanged. The optimism has been substantiated again during 2002, bringing new acreage offers, substantial onshore/offshore hydrocarbon discoveries, commissioning of numerous fields, and development of much needed infrastructure. A push to divert US' oil dependence from the Middle East led to a new rush in Sub-Saharan Africa and to the marginally tapped reserves of Angola, Equatorial Guinea and Nigeria, where major discoveries receive fast-paced development programs.

 Although Africa's oil reserves are estimated to be only 8% of the world total, great potential remains. Past capital expenditures are paying off handsomely; further flow of capital is expected and there are analysts suggesting that investments in the Gulf of Guinea area will soon exceed expenditures in the US Gulf of Mexico.

 Another aspect of E&P development on the African continent is a major drive toward commercialization of the continent’s vast gas reserves. Programs to construct LNG- and LPG-related infrastructure are aggressively pursued in Algeria, Angola, Egypt, Equatorial Guinea, Libya and Nigeria. The following is a review of exploration and development activities on the African continent in two important regions: Saharan Africa, and Western Africa and Gulf of Guinea.

  SAHARAN AFRICA

 This is a growing area of hydrocarbon exploration, and the region is a proven giant in terms of gas and oil production and export.

 Algeria. Two bid rounds held during 2002 brought 16 awards covering 15,474,700 acres in seven basins. Several exploitation and risk service contracts were awarded in Berkine and Illizi basins (Agip, Anadarko, BHP), Timimoun basin (Gaz de France, Total) and Reggane basin (Repsol). Sonatrach plans to offer offshore acreage during the next bidding round scheduled for 2003.

 Twenty-seven exploratory wells were drilled/completed during 2002, resulting in nine oil and gas discoveries. The leading operators were Sonatrach, Anadarko, Agip and Petronas.

 Two giant field development projects, In Salah and In Amenas, are operated by the BP/Sonatrach/Statoil consortium. The former project, estimated to cost $2.5 billion, is scheduled to deliver first gas during late 2004 from three fields – Krechba, Reg and Teg – which are believed to contain 7 Tcf and will yield about 300 Bcf/y.

 Algeria is positioning itself as the leading LNG producer and exporter. The country is producing some 20% of global LNG (~5 Tcf), of which about 90% is exported to Europe. Export of Algeria's natural gas occurs through: Enrico Mattei (TransMed) pipeline, linking Hassi R'Mel field with mainland Italy (667 mi), exporting 847 Bcf/y; and Pedro Duran Farell (MEG) pipeline, linking Hassi R'Mel field to Cordoba, Spain (1,013 mi), exporting 300 Bcf/y. Sonatrach intends to expand the capacity of the Enrico Mattei pipeline to 1,130 Bcf/y by 2006 and, similarly, plans to expand the capacity of Pedro Duran Farell pipeline to 406 Bcf/y.

 Algeria will build a new pipeline to deliver up to 353 Bcf/y of natural gas to Italy via Sardinia and Corsica and eventually to Germany and France in 2008. Another plan foresees delivery of Algerian gas to Spain (and France) using the 280 mi-long subsea pipeline, Medgaz, with initial capacity of 282 Bcfg/y. 

 Algeria entered into an agreement with Nigeria to study a possibility of constructing the Trans-Saharan Gas Pipeline (TSGP). The grand plan is to build a 2,734-mi-long pipeline to deliver 633 Bcf of Nigerian gas annually to Europe.

 Mauritania. Discovery of the Chinguetti accumulation in 2001 resulted in vigorous exploration activity. Several E&P companies acquired licenses (e.g., IPG in onshore Block 11; Belhasa in Blocks Ta 1 and Ta 2; BMV in permits Ta 11 and Ta 12), or farmed in into existing contracts (e.g., Energy Africa in Blocks 1 and 2; Petronas in Block 6). Five new blocks (13 to 17) were designed in ultra-deepwater and are open under PSC terms.

 Exploratory drilling was led by Woodside, which conducted a four-well drilling campaign. Two appraisals of the Chinguetti discovery successfully extended the known reserves. Another oil/gas find was made on the Banda prospect. Onshore, IPG is operating the first well since 1974 – Tanit-1 in Block 11.

 Libya. An ambitious plan to lease 125 blocks in 2000 has turned into a protracted negotiation process three years later. Various E&P companies offered proposals or work programs covering 59 open blocks, and negotiations are ongoing. NOC started awards of EPSA III contracts in mid-2003, awarding three exploration packages with blocks in the Sirte, Murzuq, Cyrenaica and Kufra basins to the Reposol Group and RWE-DEA. 

 Exploration during 2002 included 24 onshore exploration wells and 2 offshore wells: 6 wells encountered oil, 3 gas; 3 wells were suspended pending testing; and 10 wells were dry. Repsol, Agoco and Sirte Oil were the leading operators. Repsol's first discovery in Block NC190, and Nimir's disappointing operation in 7th November Block, are worth mentioning.

 Development was conducted by seven operators that spudded 105 wells: 50 were oil completions and 5 were gas. Agip pre-spudded 13 wells in a subsea template on offshore Bahr Es Salam field in NC41.

 Progress on Agip's giant Elephant field in Block NC174 and Total's "B" field in Block 137N is fast. Agip has awarded several project-related contracts for: construction of a gas processing plant in Melitah near Tripoli; a production platform; two offshore gas pipelines linking the platform with Melitah; laying the 342-mi-long subsea pipeline from Libya to Sicily; and construction of twin, 323-mi-long gas pipelines from the Al Wafa gas/condensate field (Ghadames basin) to the Melitah plant, worth over $1.4 billion.

 Expanding gas production remains the country's priority, and plans are to increase gas exports to Europe starting in 2005. Libya's gas industry is in its infancy (only six fields of the Sirte basin feed the Marsa El Brega LNG plant, built by Esso in 1970), with a virtually untested potential, which is estimated at 90 – 115 Tcf.

 Egypt. A tender offering 38 blocks closed in November 2002, and a number of awards have been announced, with 21 exploration permits granted since January 2003. All blocks, except four in the Western Desert, are located in the Gulf of Suez. The 2003 Bid Round-1, with eight Gulf of Suez blocks, four in Western Desert and three in Upper Egypt, ended in July 2003.

 Exploration remained at high levels during 2002, with 82 exploratory wells drilled (56 onshore, 26 offshore). Thirty-one discoveries were reported: 17 oil, 11 gas and 3 oil/gas. Leading operators in the field were Apache, Gupco, Eni's IEOC, Khalda and Petrobel. The high exploration level continues into 2003, with 10 oil and 10 gas discoveries reported.

 Apache had noteworthy success in their West Mediterranean Block 1, where nine oil/gas discoveries were made in 2002, including the first-ever flow of oil from the Miocene section in deepwater.

 Field development activities resulted in completion of some 137 wells (108 onshore/29 offshore). Twenty-eight onshore wells were drilled within the Gulf of Suez basin, followed by the Abu Gharadiq basin (25 wells) and the Shoushan sub-basin (22 wells). Offshore wells were located in the Gulf of Suez and four in the Nile Delta. Medgas started production from Akhen field (offshore Nile Delta) in September, while Merlon commissioned South Belkas gas field (onshore Nile Delta) in December. Average oil and condensate production during the year reached 627,000 bpd and 90,000 bpd, respectively. Oil reserves are estimated at 3.5 Bbbl.

 Recent gas reserves additions make Egypt a regional potentate in gas exports; construction of export pipelines to Jordan, Syria and Lebanon is well underway, with planned start-up expected in mid-2003 (initial delivery of 100 MMcfd). Several multibillion-dollar gas export ventures are under consideration, including a project to deliver Egyptian gas to the European market via Libya.

Transocean's Sedco Express drilled Apache's first deepwater discovery on Egypt's West Mediterranean concession in May 2002. Apache struck three more finds during second-half 2002, followed by a successful appraisal in May 2003. The firm plans another appraisal to test a deeper section before considering a development scheme. (Photo courtesy of Transocean.)

 Sudan. The protracted civil strife convinced major operators to stay away. However, recent indications that lasting peace may be on the horizon prompted some international oil companies to seize the opportunity.

 Sudan became an oil producing country in 1999. Since then, the production rate has increased to over 250,000 bpd. Plans are to increase oil production to 500,000 bpd over the next few years by developing newly discovered oil fields in the Muglad and Malut basins. Oil is transported to the Red Sea via a new 994-mi-long, 28-in. oil export pipeline. 

  WESTERN AFRICA AND GULF OF GUINEA REGION 

 Petroleum-related activities in the region are principally concentrated offshore. Acreage between Senegal and Benin is considered prospective, but results of recent exploration drilling are very erratic. In the central and southern Gulf of Guinea, E&P efforts remained at high levels with stunning success rates, especially offshore Angola, Equatorial Guinea and Nigeria.

 Nigeria. Allocation of oil-derived income between the 37 states preoccupies politicians. Indigenization of the oil industry remains an important political goal; aspirations are growing, although know-how is lagging. Relations with Sao Tome e Principe went through a rough period, and aspects of the joint treaty had to be renegotiated. The OPEC quota remains a difficult problem for government and industry, meaning that deepwater operators find it difficult to justify their multi-billion dollar investments for field developments.

 In the E&P sector, Nigeria remains the biggest explorer and producer in Africa. The Year 2000 license awards were completed in May 2002 (OPL 318 awarded to ConocoPhillips, OPL 214 awarded to ExxonMobil, OPL 320 awarded to Oranto Petroleum). The next tranches of deep-water acreage were released later in 2002, upon invitation. In this new system, OPL 245 was awarded to Shell, OPL 256 to Ocean Energy, ex-Mobil OPL 221 to TotalFinaElf, and OPL 257 to Vintage Oil and Gas, while ultra-deepwater 251 went to ECL International. Blocks OPL 471 and OPL 227 will be offered in the next bidding round. The winners in the 2001 marginal fields licensing round have been announced, but have yet to make farm-out deals with the original operators.

 Onshore, there were no changes to petroleum rights whatsoever. On the shelf, there was very little change (e.g., Solgas (OPL 226) and Amni (OML 112/117) offered farm outs). There were several conversions of OPLs to OMLs (e.g., Agip's OPL 316 to OML 125), and more is expected in 2003.

 In mid-2002, there were seven seismic surveys run simultaneously onshore – this could be a record. Shell also undertook a 4D survey in the Cawthorne Channel (OML 18). Offshore, TGS-Nopec acquired 2D speculative seismic in OPL 227 and OPL 471. PGS added to its portfolio of Nigeria data with 3D surveys in OPL 244, 245, 256/257 and 322.

 Deepwater appraisal drilling was very successful. Forty-three wells were spudded: 36 completed oil, 3 gas and 4 were dry. ExxonMobil was the leader with 12 wells (11 with oil) including Bosi-2, which proved a giant oil field. Second was Addax Petroleum, which spudded seven wells (six completed), followed by Shell, which spudded and completed six oil wells. Shell drilled a successful appraisal, Bonga SW2, proving that the field is a giant. There is now a question as to whether it will be developed with Aparo as a unitized field, or separately from Bonga. Shell is also drilling a number of HTHP wells on the shelf. JN-2 and Kalaekule-19, were oil/gas discoveries, while Koronama-3 is still underway.

 Chevron drilled 4 wells (1 oil, 2 gas, 1 dry). The company's Aparo 2 (OPL 213) was successful and proved the southward extension of Shell's giant Bonga SW in OML 118. Total drilled an oil discovery Usan-1 in OPL 222 (> 250 MMbbl) and appraised it with Usan 2 and 3, continuing to define the Akpo structure. Total also drilled Kuro-1 in OPL 246, an oil/gas discovery. Statoil drilled Nnwa-2, an appraisal of a major gas discovery in OPL 218. The results will be used to plan Africa's first floating LNG plant. ConocoPhillips drilled Chota-2 on OPL 220, an appraisal on the east side of the Bolia-Chota structure. ChevronTexaco appraised the undeveloped Sonam gas/condensate field, while ExonMobil is continuing with exploratory wells in OML 67 and 68. Addax made discoveries in OPL 98 on Oron North-2 and Oron West. The company's Oberan-1 in OPL 211 is probably an oil discovery.

 Year 2002 has been characterized by a spate of FPSO and FSO completions, ready to be deployed in Nigerian fields in 2002 – 2003. Shell produced first oil from EA field, OML 79. ExxonMobil put Yoho field in OML 104 onstream by year end (early production mode), while Agip put Okono field (OML 119) onstream, working now on Okpoho field in the same block. Agip's Abo field is Nigeria's first deepwater field onstream.

 Ongoing field development projects include: ExxonMobil's Erha field on OPL 209; Shell's major deepwater Bonga on OML 118; Amni's Ima field on OML 112; and ChevronTexaco's Tubu field on OML 52. ChevronTexaco will develop Agbami on OPL 216, as will TFE its Akpo field on OPL 246. Addax submitted a plan for Okwori on OPL 90. Other major recent oil finds likely to be developed include Bonga SW on OML 118 and Bolia on OPL 219. Statoil, Shell and partners are studying an FLNG plant for the Nnwa-Doro gas field (OPL 218/219). Shell and Agip have made unitization deals for several onshore fields.

 Estimated national production was 2.02 MMbopd – well over its 1.787-MMbopd OPEC quota – the bulk of which came from the largest joint ventures with Agip, Chevron, Elf, ExxonMobil, Shell and Texaco. Shell remained the premier producer and explorer, producing 50% (700,000 to 900,000 bopd) of the country's output. ExxonMobil produced 522,000 bopd and 100,000 bcpd from its offshore fields, while ChevronTexaco produced some 455,000 bopd. Reserves have attained 32 Bbbl of oil plus 178.5 Tcfg, and the country is on track to achieve 40 Bbbl of oil reserves by 2010.

 The third LNG train came onstream, and the first cargo was shipped by late last year. The combined production capacity is 8.7 MMt/y of LNG and 1.25 MMt/y LPG, rising to 16.7 MMt/y and 2.2 MMt/y respectively, when five trains are online. Agip wants to fast-track its planned LNG plant at Brass, with announced awards for the $1.3 billion Escravos GTL plant. When operational, gas input will rise to 400 MMcfd.

 The Nigeria-Algeria Trans-Saharan Pipeline Project, road telecommunication links have already attracted interest from major operators (e.g., Shell and ChevronTexaco), offering to manage the whole $17 billion project.

 Cameroon. The ICJ ruled in favor of Cameroon in the disputed Bakassi area, but Nigeria rejected the verdict (the parties established a "Mixed Commission" to continue talks). There appears to be no known oil bonanza at stake. SNH reported increase in interest in open acreage in the Rio del Rey.

 Meanwhile, the Ngosso permit was awarded to Addax, while Fusion secured a farm out of its deepwater Ntem Block. Perenco acquired Nsepe and Kombe assets from CMS Oil & Gas, becoming a big player in the country. Drilling by Pecten and Total in the Rio del Rey was very encouraging, extending successful exploration to deeper zones (e.g., Pecten's Mokoko Nord Marine appraisals). ConocoPhillips made Cameroon's first-ever oil discovery in the Tertiary with Coco Marine-1 in Douala basin. Perenco drilled the unsuccessful BTA-A1. Onshore, in early 2002, CMS Energy drilled Bome-1, declaring it a sub-commercial oil/gas find.

 E&P was dominated by development drilling, mainly in the Rio del Rey area. Pecten's I-10 and I-11 wells are presumed completed for oil production, which currently is assessed to be about 100,000 to 105,000 bopd, with all gas flared.

 The FSO for the Chad-Cameroon pipeline is now in Cameroon. The Kribi terminal is in final assembly stage and the entire project is to be commissioned by mid-2003. Privatization of the Sonel utility and a mini bid round for Sanaga Sud gas field may lead to independent power projects.

 Chad. The country will become an oil exporter by the end of 2003, due to early commissioning of the new, 665-mi-long, 30-in Chad-Cameroon export pipeline The $3.5 billion investment will pump 225,000 bopd from Kome, Bolobo and Miandoum oil fields in the South Chari Block (Doba basin) to Kribi terminal, offshore Cameroon. Esso Chad made a small discovery with Badila-1. More exploratory wells are planned.

 Nigeria/Sao Tome e Principe (JDZ). The Joint Development Zone Licensing Round, in abeyance throughout 2002 for various political and contractual reasons, was formally launched in April 2003. Nine blocks are on offer covering 2,082,850 acres. Bids are expected in early October. Geologists consider the zone to be highly prospective, with toe-of-slope thrust structures and hydrocarbon accumulations similar to those found in Nigeria's OPL 246, which holds the giant Akpo field.

 Equatorial Guinea. There was no bidding round and there are no plans for one in the near future. Two PSCs were awarded in 2002, one to Fruitex and one to Petronas. Total relinquished Block E, located near the Nigeria/Sao Tome e Principe JDZ. Marathon acquired all assets of CMS Oil & Gas, which opted to withdraw. In total, 6,982,000 acres are licensed, with several open blocks in deep waters south of Bioko and in the Niger Delta (extension of Nigeria/Sao Tome JDZ). ExxonMobil completed a 200-sq-mi 3D seismic survey on the Zafiro Southern Expansion, where first oil from the $900 million development project is expected in September 2003.

 Out of 20 wells drilled, 14 encountered oil and six were dry. Amerada Hess drilled 19 wells in Rio Muni basin and ExxonMobil drilled one in Niger Delta. Amerada Hess made seven new oil discoveries in Block G (Ebano, Abang, Akom, Elon, Elon Extension, G-11 and G-13). Although sub-commercial, G-11 marked the first oil flow from the Tertiary series in the block. Three wildcats drilled in Block F were unsuccessful.

 Amerada Hess continued development operations on Ceiba field, Rio Muni basin, ExxonMobil on Zafiro field and Marathon on Alba field, both in the Niger Delta. Expansion of Alba field to boost production to more than 800 MMcfgd and 46,000 bcpd should be completed by fourth quarter 2003.

 Average crude production was 214,570 bopd, up 18% from 2001, and average gas production was about 330 MMcfd. 

 Gabon. During the year, Elf was granted the Mbinda permit, Energy Africa was awarded the Akoum Marin permit and Perenco was granted the Ogueyi permit, while Sasol was awarded a 12-month TEA covering the Phénix offshore block. 

 Out of 21 exploratory wells, 14 encountered oil, 6 were abandoned as dry and 1 was junked. Eight wells were drilled onshore and 13 offshore. Continued successes mark the revival of the previous pre-salt Gamba and Dentale plays and the post-salt Ozouri play, while deepwater drilling on Cretaceous-Tertiary turbidite prospects continued to disappoint.

 PanAfrican's wildcat Tsengui-1/1 in the Maghena permit encountered hydrocarbons in the pre-salt Gamba and Dentale formations. Shell's wildcat Toucan-1 in the Ozigo permit penetrated oil/gas zones in the same formations. Transworld suspended wildcat Bounawiri-1 in the Salsich permit, without testing, after oil was encountered. Offshore, Perenco discovered Ompoyi oil field, testing up to 6,300 bopd from the Eocene Ozouri series. Pioneer's wildcat Awena Marin-1 found oil/gas in the Olowi exploration permit, while wildcat Gnadi Marin-1 flowed 1,600 – 2,000 bopd on tests. Preliminary reserve estimates of 100 – 500 MMbbl and 1.5 – 2.5 Tcfg are cited. Shell's wildcat Pilote-1 in the Kenguerie Marin yielded sub-commercial oil.

 Infield drilling activity increased to 17 wells (four offshore), bringing 16 oil producers and one dry well. Perenco brought the Niungo onshore field onstream, producing an average 4,400 bopd. The company also began production from the offshore Ompoyi field, pumping some 1,600 bopd. In September 2002, Vaalco put Etame Marine onstream, Gabon's first offshore field to produce from the pre-salt Gamba sands, now about 14,500 bpd of 36° API oil.

 Nationally, crude production continued its downward trend, with an average 251,200 bopd. 

 Congo. Onshore, the M'Boundi exploitation permit was awarded to Maurel & Prom, while offshore, the Haute Mer exploration permit (Total) expired year end. CMS Oil & Gas sold its assets to Perenco.

 Out of 11 exploratory wells, 7 encountered oil, 1 struck gas and 3 were abandoned as dry holes. All but two wells were drilled offshore. Agip's Awa Marine-1 and Paloukou Sud Marine-1 provided negative results, but the Djambala Marine-6d well struck oil. Total was disappointed appraising the Andromède discovery, but was successful with two appraisals of the Haute Mer permit: N'Kossa Marine 5/5G and Bilondo Marine-2.

 Seven oil producers and one water injector (plus one junked well) were drilled offshore. Agip developed the Djambala Marine, Foukanda Marine, Loango and Zatchi Marine fields. Maurel & Prom put M'Boundi field onstream in July 2002 at a rate of 3,875 bopd; oil reserves are estimated at 100 MMbbl.

 Angola. An agreement defining the Angola/Congo joint exploration/development zone (171,985 acres) was ratified in early 2002, and a Participation Agreement was signed in April 2003. In 2002, two PSAs were awarded to CNR (Block 16) and to Ocean Energy (Block 10) plus a development area carved out from Block 18 awarded to BP. The year was marked by relinquishments in the Kwanza basin, with five PSAs previously held by BHP (Block 21), ChevronTexaco (Block 9, Block 22), Sonangol (Block 5) and Total (Block 19). 

 In total, 28 exploratory wells were drilled during 2002: 16 encountered oil, 8 were abandoned as dry and 4 were abandoned/suspended with unreported results. Activity was distributed between the deep/ultra-deep waters on the Congo Fan (15 wells), the Kwanza basin (5 wells) and the shelf in the Lower Congo basin (8 wells). Oil discoveries were made by: BP (1), ChevronTexaco (2), ExxonMobil (1) and Total (12). Results were particularly disappointing in Kwanza basin, where all five wells were dry.

 Development drilling concentrated exclusively offshore. Excluding ExxonMobil's Block 15 wells, 37 wells were drilled. ChevronTexaco was the most active in its offshore Cabinda acreage. The remainder was drilled by Total on Girassol field (Block 17), Oombo field (Block 3) and Sonangol's Caama fields. ExxonMobil's development drilling campaign commenced on the giant Kizomba A field complex.

Pride Angola is one of two Pride International drillships that have remained busy on multi-year, drilling contracts offshore Angola, in Total's deepwater Block 17. In addition to giant Girassol field, Total has begun development of Dalia field nearby. (Photo by Kurt Abraham, Managing/International Editor.)

 Angolan production averaged 900,000 bopd in 2002, posting a 21% increase over 2001. Girassol field is mainly responsible for the performance. Output was curtailed the first half of the year by 22,500 bopd, in solidarity with OPEC.  

 Note: Mr. Gawenda is the Assistant Editor for Africa. He can be reached at: +41 22 721 1847 or piotr.gawenda@ihsenergy.com Messrs. Conne and Hayman are Editors, Sub-Saharan Africa; and Messrs. Marchat and Massaras are Editors, Saharan Africa.