Collaboration between governments and producers key to finding oil
JOHANNESBURG - Panellists discussing the future of exploration and production at the Africa Oil and Power (AOP) conference in Cape Town said collaboration between governments and producers was the key to finding oil and reverse the trend of declining oil production in Africa.
The panellists were Robin Sutherland, the General Manager of New Ventures, Tullow Oil, Kevin Vorhaben, the Africa Unit Business Manager for Noble Energy, Geraud Moussarie, Senegal Country Manager for BP and Bongani Sayidini, the CEO of PetroSA.
The producers said transparency helped in terms of getting deals done as having open books with governments meant that both parties understood what was economically feasible and what was not. Angola’s recent round of offering better fiscal terms for margin sal oil fields showed what was possible, while new technology such as horizontal drilling had also lowered the costs of bring oil to market, although Africa had lagged other regions since oil prices moved significantly lower over the past few years. The OPEC Reference Barrel (ORB) price collapsed from a record annual average of $109.45 per barrel in 2012 to only $40.76 in 2016 before a gradual recovery to $52.51 in 2017 and $69.50 in 2018.
The collaboration should also be extended to competing oil companies as it did not make sense for example for each of the seven countries that had ownership of the West African oil basin to have its own maintenance hub and other joint service centres. The panellists said collaboration would lower costs and make more oil fields commercially viable, so unlocking the wealth that could improve the lives of millions of people.
It was for this reason why several African countries had come to the AOP in Cape Town to interact with producers and secure more investment for their oil fields. Gabon for instance aims to increase its crude oil production by 50% in the next two years, so last year it launched its 12th licensing round offering up 12 shallow water blocks and 23 ultra-deepwater blocks in the country’s offshore area.
To encourage investment Gabon also enacted a revised hydrocarbon code setting out its legal and fiscal frameworks for oil and gas projects, providing better incentives for investors. As a result, Malaysia’s state-owned oil company, Petronas within a month of the new code announced its signing of an agreement for two exploration permits for blocks F12 and F13 which, once developed, will produce 200,000 barrels per day (bpd) and, VAALCO Energy announced that it would commence is 2019/2020 drilling campaign.
Gabon’s Minister of Petroleum, Gas and Hydrocarbons, Noel Mboumba, is attending the AOP to showcase the country’s licensing round which will conclude in January 2020.
South Sudan is continuing to ramp up production and drive investment into its energy sector, and launch its 2020 oil and gas licensing round at the AOP 2019. The licensing round is the first exploration licensing round since the country gained its independence in 2011.
It will also announce the tender for an environmental audit for the country’s producing oilfields at the third annual South Sudan Oil & Power conference organized by AOP.
In March this year, South Africa’s Strategic Fuel Fund signed an exploration and production sharing agreement (EPSA) for Block B2, following Pan-African explorer, Oranto Petroleum’s signing of a six year EPSA for Block B3 in 2017, speaking to the country’s continued efforts to bolster the growth of its energy sector. The licensing round is the first exploration licensing round since the country gained its independence in 2011.
Equatorial Guinea announced that it was offering up 24 offshore and two onshore blocks as part of its 2019 oil and gas licensing round inviting all exploration and production companies to enter its hydrocarbons sector.