Angola Is in Talks With Majors to Boost Oil Output by 2020

(Bloomberg) -- Angola is targeting an increase of about 250,000 barrels a day in oil output by 2020 and is already in discussions with oil majors Exxon Mobil Corp. and Equinor ASA to achieve this, said Sonangol’s Chairman of the Board Carlos Saturnino.

New energy legislation and more favorable investment terms have already spurred interest from international operators, including Chevron Corp. and Total SA, he said in an interview in Vienna.

Angola is working to roll back a sizable drop in its oil production this year due to technical problems at the country’s mature fields and an inability to lure international operators. The country is currently producing 1.55 million barrels a day, Saturnino said, down from an average of 1.65 million barrels a day over the past year.

The decline in the West African nation’s industry was a key part of the debate last week between the Organization of Petroleum Exporting Countries and its allies. Angola is one of those countries that’s cut deeper than required under a 2016 accord, but also has limited ability to participate in the immediate output increase the group agreed on Friday.

Saturnino said Angola’s average crude production will rise next year to no less than 1.673 million barrels a day -- around 123,000 barrels a day above current levels.

Exxon Mobil is now in discussions to enter into a memorandum of understanding for a new investment in the existing Block 15, Saturnino said. Exxon has requested to study new acreage, and has put forward a new proposal to sign an MoU for new blocks, he said.

Meanwhile, Eldar Saetre, president of the newly-named Equinor, will travel to Angola’s capital, Luanda, on July 26 to sign a memorandum to operate a block, Saturnino said -- without saying which field.

He added that Angola plans to have direct negotiations with international operators and may consider holding a new oil and gas bidding round before 2019. Sonangol is currently in the midst of a restructuring and presented a plan to Angola’s government two weeks ago to privatize some of its subsidiaries, he said.

Angola’s output fell in April to 1.5 million barrels a day, the lowest since January 2014, data compiled by Bloomberg show. The nation’s crude loadings for August will fall to the lowest in a decade, at 1.33 million barrels a day, according to data released by Sonangol.

The IEA expects Angola’s production capacity to edge up to 1.65 million barrels a day by the end of 2018 when Total’s $16 billion Kaombo project starts up. Output at the ultra-deep-water field is expected to peak at 230,000 barrels a day, the agency said.

©2018 Bloomberg L.P.