Angola’s goal to rival Nigerian oil output aided by Eni

July 23, 2014 | Angola, Budget & Investment

London, United Kingdom | – Italy’s multinational energy giant Eni SpA crews in Angola, Africa’s second-largest crude oil producer, upgraded a production vessel for new pumping this year as the southwest African country targets output rivalling its bigger competitor, Nigeria.

Eni plans to start production within five months as operator of Block 15-06’s West Hub fields, estimated to hold reserves of 200 million barrels, and boost flows to 80,000 barrels a day, documents on the Rome-based company’s website show. The block’s East Hub development is due to pump about 49,000 barrels a day after starting in 2016, the documents say.

The block, 350 kilometres (217 miles) northwest of Luanda, the capital, is one of eight offshore projects Petroleum Minister Jose Maria Botelho de Vasconcelos is counting on to help raise production to 2 million barrels a day by next year from 1.66 million last month. That compares with Nigeria’s 2.15 million barrels daily.

One of the largest developments, Total SA’s Clov in Block 17, started last month and targets output of 160,000 barrels a day. Analysts such as Wood Mackenzie Ltd. said the projects will be too late to boost declining flows by 2015.

“We should think about the need to shorten the time between declaration of oil discoveries and the beginning of production,” Vasconcelos said at the inauguration of the N’Goma, a floating production, storage and offloading vessel for Eni’s West Hub project, the state-run Jornal de Angola reported July 21. Eni is on track to cut in half the eight years it usually takes for output to begin after a discovery, the newspaper said, citing the minister.

Eni Discoveries

Eni declined to comment, Domenico Spina, a spokesman based in Milan for the explorer, said in an e-mailed reply to questions.

“Eni has made 12 discoveries out of 15 exploration wells, and there is still potential remaining and drilling continuing,” David Thomsin, a Wood Mackenzie analyst in Edinburgh, said in an e-mailed response to questions July 21. “The success is certainly evidence of the continued prospectivity of the deep water Lower Congo basin.”

Aside from boosting the country’s output, the West Hub development is important for setting up infrastructure for the block’s other discoveries and showing that smaller cluster developments can work even in a high cost deep water environment such as Angola, Thomson said. The West Hub reserves are less than half of other projects such as Total’s Clov and Pazflor and BP Plc’s PSVM, he said.

Rig Refurbishment

Eni will finish the refurbishment this month of the N’Goma, known as an FPSO and owned by Sonasing, said Paula Farquharson-Blengino, a spokeswoman for SBM Offshore NV. SBM  is a Dutch company that has a stake in Sonasing along with the Angolan state oil company, Sonangol EP, and Schiedam, the Netherlands-based SBM Offshore NV.

The upgrading and 12-year lease of N’Goma costs $1.6 billion, Farquharson-Blengino said. The 100,000 barrel a day capacity FPSO, formerly named Xikomba, was used by Exxon Mobil Corporation in Block 15, she said. New sulphate removal and oil hot-pump modules, weighing as many as 541 metric tons, will be lifted into place at the Porto Amboim Paenal Fabrication Yard 262 kilometres south of Luanda, the capital, she said.

N’Goma will be operated on behalf of Eni by Luanda-based Servicos de Producao de Petroleos, Ltd., a joint venture of Sonangol and SBM, Farquharson-Blengino said. The operator, known as OPS, also runs two FPSOs for Exxon.

Eni’s share of output in Angola was about 87,000 barrels of oil per day last year from fields covering 21,489 square kilometres, according to company documents. The Block 15-06 hubs would add 42,000 barrels a day to Eni’s share, the documents show.