The 2019 Africa E&P Summit opened in London yesterday with a strong focus on the emerging oil and gas markets of Senegal, Mauritania, Equatorial Guinea, Uganda, Mozambique, South Africa, Namibia, and Sao Tome and Principe - as well as a special presentation on the frontier market of Zimbabwe
From an East African perspective, the Kenyan market, as well as Uganda, featured prominently, and the established market of Ghana was hailed as an ongoing success story for the continent. The mood of the conference was optimistic with speakers pointing out that investment is recovering as per the analysis by Rystad that Africa should experience a “slow and robust recovery over the next 12 years.” This was, however, tempered by speakers citing the challenges that the industry still face across the continent, such as the need for more investors aside from the biggest players and the ongoing quest to de-risk plays so they are more attractive to investors.
Senegal and Mauritania were highlighted by multiple speakers as two of the brightest prospects for African oil and gas development. Peter Elliott, director of PVE Consulting, said that great progress has been made in phase 1 of the SNE development, where 32 API light oil and dry gas has been discovered 100km south of Dakar, the Senegalese capital. MODEC has been awarded the FEED contract for the FPSO and Diamond Offshore has the well-based contract for drill rigs Ocean Blackhawk and Ocean Rhino. Drilling is scheduled for 2020 and early 2022, and the FID target is for the second half of this year.
Cath Norman, managing director of FAR, said that “flexible and adaptive strategies” got the company through the 2016 oil price slump and their Senegal project is “headed for FID later this year”. FAR’s persistence has paid off after entering Senegal in 2006 at a time when it was difficult to find partners willing to farm in.
“Senegal had no offshore wells for nearly 40 years and no deepwater drilling... FAR [has had the] acreage since 2006 and there were numerous attempts to bring a farm-in partner that failed - Shell came in and went away,” Ms Norman told the conference. However, the company had a large permit area and high-quality 3D seismic data and Ms Norman said the company’s “small team [is] very nimble, able to make quick decisions [and] articulate to our shareholders where the opportunity lies.”
Tracey Henderson, head of exploration for Kosmos, talked about the company’s “growing portfolio” in Senegal, Mauritania and Equatorial Guinea. She described the Tortue discovery off the coast of Senegal and Mauritania as world-scale, with FID coming last year. There are plans for further drilling in the Tortue, as well as Yakaar and BirAllah discovery, which could become a south Mauritanian hub.
Ms Henderson told delegates that their Equatorial Guinea project is “basin-opening exploration, production-optimistic exploration and infrastructure-led exploration ... it has surprised a lot of people.”
Additionally, she said the Equatorial Guinea-Sao Tome and Principe discovery’s prospectivities are “quite compelling ... a high-grade inventory for drilling in 2020.”
FAR is also involved in the Gulf of Guinea with plans for exploration drilling off Guinea-Bissau's coast scheduled for next year. Ms Norman said FAR has upgraded its licensing terms in the country to a working interest and shifted its exploration focus to deepwater.
Keith Hill, president and CEO of Africa Oil Corp, discussed Kenya, as well as announcing that the company is “close to closing” a deal on a deepwater project offshore Nigeria, which he said will be “the cash engine that we need” to fund further exploration activities. Petrobras was forced to divest “a small percentage of a very good field” in a deal Mr Hill described as “a bargain.” In Kenya, meanwhile, he said that reaching FID on South Lokichar project has “taken longer than we hoped” but he is “very confident” that it will move forward soon.
Africa Oil Corp is working with the Kenyan government on contractual terms, including legal issues, taxation, transportation and regulations. Robin Sutherland, general manager, new ventures for Tullow, agreed that these negotiations remain the main stumbling block in Kenya, telling delegates that they “need to nail the final agreement with the government.”
In contrast, Mr Sutherland praised the partnership Tullow has with Kosmos and GNPC in Ghana. He said GNPC is a “very strong partner, providing a great deal of historical knowledge and flexibility” in the Jubilee and TEN projects. Part of the contract involves giving the Ghanaian government gas which is used to provide electricity. The agreement lasts until 2036 and then an abandonment and decommissioning phase will commence. In terms of a legacy, Mr Sutherland said local content is important with Tullow’s Ghana operations involving 64 per cent local employees, 63 per cent of leadership roles held by Ghanaians, including 50 per cent women - and he added that the company still needs to do better.
“We’ve spent a lot of money but it has borne fruit, it’s money well spent,” Mr Sutherland added.
Galen Treadgold, executive director of AMNI International, is also investing in Ghana with plans for Tano basin deepwater exploration in CT Block, which has geology that is analagous to Senegal’s basins.
In southern parts of Africa, speakers were cautiously hopeful about the prospects of the Brulpadda gas condensate and oil project off the coast of South Africa as well as exploration projects in Namibia, despite some disappointing drilling results. Mr Kristiansen said Galp is exploring in Namibia’s Walvis (PEL 82) and Orange (PEL 83) basins with Kosmos. They have acquired 5,000km2 of 3D seismic data for PEL 82 and 3,000km2 of 3D seismic data for PEL 83.
“We are looking for competitive, stable fiscal framework and transparency in all the processes,” said Mr Kristiansen on the countries that are of interest to Galp.
Impact is working in the Orange basin in Namibia as well as Blocks 11B and 12B in South Africa’s Outeniqua Basin. According to Phil Birch, exploration director for Impact, Venus-1 in the Orange Basin is looking promising with 3D seismic data indicating it could be contain more than 1bn barrels of oil as well as having the same source rock as Brulpadda in a secure trap. At this stage, the plan is to drill during Q4 2019 or Q1 2020.
Mozambique, where first gas is expected in 2022, was cited as an exciting market by Mr Kristiansen. He said FID on the Rovuma FNG project is expected this year and that one of the major advantages Mozambique has over the mega LNG market of Qatar is climate – “it is significantly cooler in Mozambique compared to Qatar so we make cost savings on cooling.”
Also in the south, Angola's petroleum sector has been revitalised since the change of government. Mr Kristiansen said the Kaombo project has been ramped up on Blocks 14 and 14K, while Block 32 has come onstream.
Scott McMillan, managing director of Invictus, told delegates about the company's work in Zimbabwe’s Cabora Bassa Basin, a true frontier project.Mr McMillan said that new geological and geophysical work thanks to reprocessed data gathered by Mobil during the 1990s indicates 3.9 tcf of gas and 181 bbls of gas condensdate. A three-year renewable contract was signed 18 months ago.
Invictus already has a partnership with fellow Zimbabwean company Sable Chemicals, on the condition that the basin goes into production, to supply feedstock for fertiliser. This would eliminate the need for Sable to import feedstock. Now, Invictus is seeking a farm-in partner.
The Muzarabani Prospect in the Cabora Bassa Basin has multiple targets from a single well.
“We believe it is the largest undrilled seismically defined structure in onshore Africa,” Mr McMillan told the conference.
Mr McMillan said that since the end of the Mugabe government, Zimbabwe has become more politically and economically stable. He described the new government as “poacher turned gamekeeper” with the new laws in regard to foreign ownership, designed to stimulate investment. These include allowing 100 per cent foreign ownership, availability of offshore transactions, tax holidays and 15 per cent corporation tax.
