Angola will hit its projected 2015 target production forecast of 2 MMb/d of oil and remain a core market focus for operators going forward, despite the country’s vulnerability to oil price fluctuations according to analyst Douglas-Westwood.
With the country holding its place as the second largest oil producer in Africa, it is heavily dependent on the oil sector, which makes it vulnerable to the fluctuating oil price. “In addition, drilling costs offshore Angola are very high, and Douglas-Westwood forecasts a resultant drop in deepwater completions in Angola in 2016,” the analyst stated in its latest weekly offering.
Despite this set-back, however, it goes on to say that Angola’s deep and ultra-deepwater projects are key to driving production during a period of reduced spending and retrenchment. It stated: “We do not expect to see projects that are past FID (Final Investment Decision) 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: Douglas-Westwood expects Angola to meet its 2015 target production of 2 MMb/d of oil.”
With ongoing spending cuts being regularly announced, operators like BP and Total are looking to core assets in Angola as a focal point for spending over the next three years, it continues. Total launched the development of its Kaombo ultra-deepwater project in April last year, which will bring online potentially up to 230,000 b/d of oil following its planned 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 MMb/d. These are all due to start producing before 2018.
Douglas-Westwood does forecast a dip of 2.3% in offshore oil production for Angola in 2016, before it is expected to recover to 2.2 MMb/d by 2021.
The analyst further pointed out that the current industry downturn offers exploration opportunities for larger oil companies, with potential for expansion in Angola as smaller companies apply for farm-in partners and with Sonangol aiming to sustain investment. “Eni have staked their claim, securing a 3-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,” stated DW. “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.”