January 8, 2022 [Oil Review] – In late 2019, Africa Oil Corp president and CEO Keith Hill told Petroleum Economist that, given Africa’s unproven oil and gas basins, the continent was probably ‘the greatest frontier’, with outstanding opportunities for exploration, production and development companies, including independents
Three years later, the organisation is driving oil and gas exploration in the nation. It is part of a growing trend ofindependent oil and gas companies recognising the tremendous promise of the underexplored continent, finding ways to thrive, and making a positive impact.
Independents like Africa Oil Corp and BW Energy are building on their successful track records in exploration and production, and Perenco is building Africa’s natural gas industry. Trident Energy is finding ways to bolster production in mature fields, and Eco Atlantic has been convincing investors to stay. Companies like these are exactly what Africa needs. They’re bringing private capital, experience and know-how to the continent. They are accelerating resource monetisation and maximisation for the good of Africa.
Capitalising gas resources
As David Christianson so eloquently put it in a recent blog for Trade Law Centre (tralac), a South Africa-based think tank, “Africa’s gas future is floating offshore”. Floating liquified natural gas (FLNG) units are an ideal way to capitalise on Africa’s abundant natural gas resources. They can be deployed rapidly and more affordably than onshore LNG trains, creating a practical pathway to gas monetisation. London-headquartered independent, Perenco, which has operated in Cameroon for nearly 30 years, is capitalising on these opportunities.
Not only did Perenco establish an FLNG plant in Cameroon, it made history there. The Hilli Episeyo FLNG, which began commercial operations in March 2018, is the world’s second-ever FLNG plant to enter operation and the first in the world to operate from a converted LNG tanker. The plant, moored off the coast of Kribi, is the property of Norwegian Golar. Not only does the project have global significance, but it also involves local entities. Perenco partnered with Cameroon’s Société Nationale des Hydrocarbures (National Hydrocarbons Company) to launch the project. The Hilli Episeyo is designed to produce 2.4 mn metric tonnes per annum (MMTPA) of LNG and has 125,000 cu/m of storage capacity. Natural gas for the plant is sourced from Perenco’s Sanaga and Ebome gas fields.
What’s more, Perenco is growing its upstream activity in the continent. Earlier this year, it signed a deal with oil and gas company New Age Ltd to buy its stake and take over the operatorship of the Etinde gas field, which is in shallow water in the Rio del Rey Basin, offshore Cameroon. In July, Perenco acquired Anglo-Swiss multinational Glencore’s entities in North Africa. The acquisition includes PetroChad Mangara, which operates the Mangara, Badila, and Krim oilfields in Chad’s Doba Basin. And in November, the company announced it had discovered oil in the Tchibeli North East pre-salt Vandji exploration prospect offshore Congo, describing it as a potential ‘play opener’.
Each of these activities and successes represents potential for greater energy security, economic growth, and based on Perenco’s track record, more good jobs for Africans.
Acquiring and developing maturing fields
The British independent, Trident Energy, is introducing a new era of operational efficiency and production improvements in Equatorial Guinea.
Trident’s business strategy calls for acquiring mid-life producing assets around the globe, particularly oil and gas fields lacking attention and investment, re-developing them, increasing production, and unlocking reserves. In Africa, where we’re seeing production declines occur in legacy assets throughout the continent, this approach is tremendously valuable.
In Equatorial Guinea, Trident is the operator of Block G, which includes the producing Ceiba and Okume Complex fields – made up of six oil fields in the Gulf of Guinea, in shallow and deep water in the Rio Muni basin – with a 40.375% working interest. The company also holds a 40% stake in Block S, W & EG-21.
In May, the Ministry of Mines and Hydrocarbons of Equatorial Guinea and Trident’s joint venture partners for Block G, Kosmos Energy, Panoro Energy, and GEPetrol, agreed to extend the production sharing contract (PSC) for the block through 2040, giving Trident more time to unlock the block’s full potential. The company’s upgrades at Okume Field, which have been underway this year, call for converting 15 gas lift wells to electrical submersible pumps (ESPs), which are more affordable to operate and maintain.
To prepare for the conversion, the company has been working on a US$57mn upgrade at Okume’s central processing facilities. In terms of supply chain, logistics and coordination, approximately 55% of the services (in-value) were provided by local contractors, 32% by regional contractors, and only 13% by international contractors.
Projects that boost production in declining assets, like the Okume upgrades, are extremely important for both Equatorial Guinea and the continent at large.
Strategic approach
The Norwegian independent, BW Energy, has been very strategic in its approach to gas exploration and production in Namibia.
BW, which also has a strong presence in Gabon, targets proven offshore oil and gas reservoirs and minimises risk with phased developments. By operating in sites with existing production facilities, the company reduces time to first oil and keeps cash flow in check, the company website explains.
In 2017, BW acquired a 56% stake in the Kudu gas field in the northern Orange sub-basin, approximately 130 km off the southwest coast of Namibia. Several years later, the company increased its interest in the gas project to 95%.
The Kudu field is believed to hold at least 1.3 tn cu/ft of gas, but the site has remained undeveloped since ChevronTexaco first discovered gas there in 1974. The field has had a long string of operators, but as Pan-African research agency Hawilti put it, factors ranging from the inability to agree on a gas price to delays in getting governmental support projects have kept the project in limbo. The site’s isolated location, and lack of infrastructure to transport gas, have not helped matters.
But – as announced during African Energy Week in Cape Town – BW is pursuing a revised development plan for Kudu that includes using a repurposed semisubmersible drilling rig as a floating production unit (FPU), which will allow it to move gas onshore for domestic energy generation. The company purchased the rig it needs for this effort earlier this year.
BW’s efforts could have far-reaching effects on day-to-day life in Namibia. Currently, the country relies on electricity imports to meet its domestic needs. BW’s work at Kudu will help provide the gas Namibia means to reliably deliver electricity to its people, drive industrial growth, create jobs, and position Namibia as a regional energy hub.
Overcoming challenges
Another independent modeling of what can be achieved in Africa is Toronto-headquartered Eco Atlantic. It has been overcoming the challenges of raising capital in an era when companies are being pressured not to begin new oil and gas projects in Africa.
In April, Eco Atlantic raised approximately US$25.5mn to cover drilling expenses on the Gazania-1 well, on Block 2B offshore South Africa, although the company announced that its evaluation well did not show evidence of commercial hydrocarbons. That, however, is not stopping the company from moving forward. Along with its partners, Africa Energy Corp, Panoro 2B Limited (a subsidiary of Panoro Energy ASA) and Crown Energy AB, Eco Atlantic is planning additional exploration drilling, including a two-well campaign on Block 3B/4B offshore South Africa, set to begin in 2023, and at least one well on the Orinduik Block offshore Guyana.
“While it is naturally disappointing not having made a commercial discovery, the Gazania-1 well was only the first of four wells we have planned for the next 18-24 months across our wider portfolio,” Eco Atlantic co-founder and CEO Gil Holzman said.
On 19 December, the company announced its subsidiary, Azinam Limited, had acquired another 6.25% participating interest in Block 3B/4B offshore South Africa. Eco Atlantic also received regulatory approval for the acquisition. Now it will hold an increased participating interest of 26.25% in Block 3B/4B, with Africa Oil Corp, the block’s operator, and Cape Town-based upstream company, Ricocure.
Big finds
As for Africa Oil Corp, one of its strengths is the respect it has earned in the sector and among government leaders. The company has been involved in such major finds as the 2022 Venus light oil discovery made with Total Energies offshore Namibia (through subsidiary Impact Oil & Gas Limited). Since then, it has kept its focus on continued exploration operations. It has producing and development assets in deep-water offshore Nigeria, development assets in Kenya, and a portfolio of exploration assets in Guyana, Kenya, Namibia, Nigeria, South Africa and the Senegal Guinea Bissau Joint Development Zone (AGC).
The companies’ successes in East Africa are particularly exciting. Exploration in Kenya within the last decade has opened two new basins that extend into southern Somalia. Hill had recently told the media that the basins cover an area the size of the North Sea. And in Puntland, the company is confident that it found an oilfield through drilling on the Shabeel well.
“At most oil and gas conferences today the universal opinion is that East Africa now represents one of the hottest oil and gas exploration areas anywhere in the world,” Hill said. “Africa Oil Corp’s forward-thinking approach meant that it was able to get in and secure all the acreage it wanted before this region really took off.”
Yes, majors and national oil companies still have an important part to play in Africa’s energy industry, but the independent companies at work are giving us every reason to be optimistic about Africa’s future.
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