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Wednesday 01 May 2019
BUSINESS DAY
oil
WEST AFRICA
Outlook
Nambia: ExxonMobil acquires more exploration acreage offshore Namibia
Brief
Africa: Tullow Oil cuts output guidance
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xxonMobil has grown its footprint in the deep waters offshore Namibia, adding approximately 28,000 square kilometers of exploration acreage in in the frontier region, the supermajor said in a statement. ExxonMobil said it signed an agreement with the government of Namibia and the National Petroleum Corporation of Namibia (NAMCOR) for blocks 1710 and 1810, and farm-in agreements with NAMCOR for blocks 1711 and 1811A. The blocks extend from the shoreline to about 215 kilometers offshore Namibia in water depths up to 4,000 meters. Exploration activities, including acquisition of seismic data and analysis, are slated to begin in 2019, ExxonMobil said. ExxonMobil will operate blocks 1710 and 1810 and hold a 90 percent interest; NAMCOR will hold a 10 percent interest. ExxonMobil will assign 5 percent of its interest to a local Namibian company. ExxonMobil will be operator of blocks 1711 and 1811A, and will hold an 85 percent interest. NAMCOR will retain a 15 percent interest. “These agreements provide ExxonMobil with an opportunity to explore for hydrocarbons using advanced technology in the frontier Namibe basin,” said Mike Cousins, senior vice president of exploration and new ventures at ExxonMobil. “We will employ our significant upstream experience and technological expertise and work in close collabora-
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tion with NAMCOR in exploring these blocks.” ExxonMobil already holds a 40 per-
cent interest in the PEL 82 license offshore Namibia, comprising about 11,500 square kilometers.
ullow Oil downgraded its 2019 output guidance to 90,000-98,000 barrels of oil per day (bpd) due to problems at its Ghana fields and sees final go-aheads for its Uganda in the second half while its Kenya project timeline was “ambitious”. “Ghana’s performance was below expectations due to gas compression constraints on Jubilee during February and a delay in completing the Enyenra-10 production well at the TEN field. Both issues have now been resolved,” Tullow said. It had previously expected to produce between 93,000 and 101,000 bpd. “The ~3 percent reduction in 2019 net production guidance provides a headline, but should not concern investors in our view,” Barclays said in a note. With much focus on Tullow’s threewell drilling programme offshore Guyana, this year is also crunch time for Tullow’s East African projects. Final investment decisions for its Ugandan project had been planned around mid-year and Kenya by the end of the year, which Tullow called “an ambitious target”. The shipment of a first cargo of Kenyan oil to test the market, which was originally planned in the first half as well, is expected to sail in the third quarter, Tullow said. In Uganda, a $208 million payment after selling a stake in its onshore fields to Total in a so-called farm-down deal was delayed last year because the country asked for more tax on the deal than expected. “These discussions are expected to conclude shortly and will enable completion of the farm-down,” Tullow said.
Algeria: Sonatrach will not extend crude-for-products deal with Vitol
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lgerian state energy company Sonatrach has decided not to extend its crude-for-oil products deal with trading house Vitol that ends this month, sources said. The move comes as Sonatrach’s 175,000 barrel per day (bpd) Italian oil refinery, which it acquired from US major Exxon Mobil last year, returns from maintenance. The maintenance began on February 21 and is scheduled to last for 45 days. The refinery will cut OPEC member Algeria’s fuel import bill, giving it more access to petroleum products such as gasoline and gasoil. The Vitol deal, which started in February 2018 and was due to end in December, was extended until the end of April. Under the agreement, Vitol takes up
to 2 million barrels of crude per month from Sonatrach and provides refined products to the Algerian firm. Sonatrach has made a big downstream push in recent months to achieve self-sufficiency as its growing population drives demand for petroleum. The Augusta refinery acquisition was such a move.
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But the company’s future strategy could face changes due to the political upheaval in the country. Mass protests which forced out longtime president Abdelaziz Bouteflika continue, with calls for the removal of the elite that has governed Algeria for decades.
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Algeria’s interim president sacked Abdelmoumene Ould Kaddour as Sonatrach chief executive, replacing him with its head of production and exploration, Rachid Hachichi. The move has created uncertainty for foreign investors who had started to return to the oil and gas producer in recent months, and it remains unclear whether Sonatrach will go ahead with a trading joint venture with a foreign partner. Vitol was one of the four companies that Sonatrach had shortlisted for the project. Swiss trader Gunvor, France’s Total and Italy’s ENI were also in the running. Sonatrach also held talks with Gunvor about buying a stake in the trading house. Algeria’s produces around 1 million barrels per day of crude and around 135 billion cubic metres of gas per year, according to Sonatrach’s figures.
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