World Report

With burgeoning reserves, the country has a golden opportunity to become an economic powerhouse on the African continent

ngola’s oil revenues contribute about 90 per cent of the country’s income and there is no shortage of foreign companies continuing to show great interest in developing the sector. The country is sub-Saharan Africa’s second-largest crude oil producer after Nigeria, pumping about 750,000 barrels per day (bpd).
With proven reserves of more than seven billion barrels of oil and possibly up to 12 billion, Angola has the opportunity of becoming a leading economic powerhouse on the African continent. Petroleum minister Jose Maria Botelho de Vasconcelos says: “We have a destroyed country that needs to be rebuilt. Oil is the main resource. We need to assist the people and we need financial resources to do that.”
Production will hit an estimated one billion bpd in early 2002 as operator TotalFinaElf brings the giant offshore Girassol field onstream this year. Mr Vasconcelos says some international companies are interested in more offshore blocks coming on to the concession market in the southern Kwanza and Benguela basins. “There’s no problem in getting companies interested, but there’s nothing solid yet,” he says.

TotalFinaElf is now developing several more offshore fields near Girassol. The $2.7 billion deepwater project in Block 17 aims to pump at a rate of 200,000 bpd within six months. Girassol alone will hike Angola’s daily production rate to about 950,000 bpd.
The project is at the cutting edge of deepwater oil drilling technology. The wells operate at a depth of 1,360 metres, supported by a 1,300 metres riser tower. The giant floating production, storage and offloading (FPSO) vessel above the tower is able to store two million barrels of crude.
“It is the tallest structure that has ever been installed in the world, on or offshore,” says TotalFinaElf deputy general manager Olivier de Langavant.
Two rigs have so far drilled 11 wells and are expected to remain on site until 2003 to complete a further 29.
About 1,200 workers are on board the FPSO, along with a small fleet of drilling rigs and accessory ships as the French giant prepares to tap Block 17, estimated to hold 750 million barrels of crude.

Undersea robots have been used to lay umbilical pipes carrying power and hydraulic fluid to well-heads and manifold stations. Production pipelines between the wells and riser tower were towed 150km across the seabed from a construction site in northern Angola.
Block 17 also includes partners ExxonMobil, Norway’s Statoil and Norsk Hydro. The block is the most potentially lucrative Angolan offshore zone so far, along with two other areas – the Dalia field and a group of discoveries centred on Arquidea – estimated to hold about one billion barrels each. Dalia is expected to come onstream, perhaps with an undersea link to Girassol, by 2005 and Arquidea later.
ExxonMobil is targeting production of nearly 600,000 bpd from its discoveries in Block 15 in the Kizomba field. Earlier this year the world’s largest oil company launched a $3 billion venture to develop one billion barrels of recoverable reserves – the largest deepwater development off the coast of West Africa.

Kizomba A should start producing in 2004, with a target output of 250,000 bpd. ExxonMobil plans to develop another two fields in the same block, which will bring total production up to 580,000 bpd. The firm is well under way with development plans for Kizomba B, which has similar levels of reserves and will have a production target of 250,000 bpd from 2005 onwards.
Kizomba A, built by South Korea’s Heavy Industries, will take drilling technology a stage further than Girassol. Also in Block 15, Exxon expects the smaller Xikomba field to produce 80,000 bpd.
The three fields take Block 15’s recoverable reserves to more than 3.5 billion barrels of oil equivalent. Add in Exxon’s participation in another Girassol block and the company will be involved in one million bpd of Angolan output by 2005. ExxonMobil owns some 40 per cent equity in the block, with BP, Italy’s Agip and Statoil the rest.
ExxonMobil holds interests in nine Angolan deepwater blocks with a recoverable resource potential of 7.5 billion barrels of oil equivalent from 22 discoveries. It is still in the exploratory drilling stage in several blocks.
ExxonMobil has also participated in an industry group studying the possible development of a $2 billion liquefied natural gas (LNG) project in Angola, but it has yet to decide whether to take part in a Texaco-led project. Texaco and Sonangol, Angola’s state-owned oil company, are jointly planning the country’s first LNG plant, which is expected to produce eight million tonnes a year.

Angola has pledged to eliminate natural gas flaring within the next five years, instead aiming to sell LNG to the US, South America and Europe. The LNG market is likely to be highly competitive with Nigeria recently announcing plans for a third LNG project, while Saudi Arabia – the world’s biggest oil producer – recently awarded three key gas projects to multinationals.

Natural gas flaring is to be eliminated within five years

BP plans to spend between $6 billion and $7 billion in Angola over the next 10 years. Production from the company’s Block 18 concession, where six discoveries have been made, is targeted to start in 2006. BP is drilling in depths of 2,000 metres in Block 31, one of three ultra-deepwater concessions awarded in 1999. The block adjoins Exxon’s Block 15.
Meanwhile, Sonangol is the operator in a consortium that will exploit Block 34 in the Lower Congo Basin at depths of up to 2,500 metres. Sonangol has a 20 per cent stake, Shell 15 per cent, Norsk Hydro 30 per cent, Phillips 20 per cent and Brazil’s Petrobras 15 per cent.
Sonangol already operates Block 4 and holds the concession on Block 3, while Petrobras is involved in several exploration ventures. The Brazilian company owns a 27.5 per cent stake in the shallow water Block 2, which currently produces 63,000bpd.