As the second largest oil producer in Africa, Angola is heavily dependent on the oil sector, making it vulnerable to oil price fluctuations. In addition, drilling costs offshore Angola are very high, and DW forecasts a resultant drop in deepwater completions in Angola in 2016. Despite this set-back, Angola’s deep and ultra-deep projects are key to driving offshore production during a period of reduced spending and retrenchment. We do not expect to see projects that are past FID being cancelled and many projects have been under construction for a number of years and will start up in the coming three years. The recent start-up of Eni’s West Hub and Total’s CLOV projects form the basis of our positive short-term forecast: DW expects Angola to meet its 2015 target production of 2 million barrels of oil per day.
As cuts to expenditure are announced, operators like BP and Total are looking to core assets in Angola as a focal point for spending over the next three years. Importantly, Total launched the development of the Kaombo ultra-deep project in April 2014, bringing online a potential 230,000 barrels of oil per day following start-up in two years’ time. Chevron, ExxonMobil and Eni also have major deepwater oil projects in Angola, collectively adding a peak capacity of nearly 1 million barrels per day. These are all due to start production before 2018. DW forecasts a dip of 2.3% in offshore oil production in 2016, before recovering to 2.2 million barrels of oil per day in 2021.
The downturn offers exploration opportunities for larger oil companies, with potential for expansion in Angola as smaller companies apply for farm-in partners and Sonangol aims to sustain investment. Eni have staked their claim, securing a three year extension for exploration work near their Angolan assets. Repsol has also displaced an exploratory vessel from the Canary Islands for a venture offshore Angola.
A focus on core assets, and even the expansion of assets in Angola has been the message from several major oil companies at the start of 2015, safeguarding Angola through a period of oil price turbulence.
Celia Hayes, Douglas-Westwood London
+44 1795 594747 or [email protected]