Oil's Hot in Africa: Shell Joins Exxon and Chevron in African Deals

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Reforms in Angola's energy policy have reopened doors to international investment--and Shell plc (London, England) and Chevron Corporation (Houston, Texas) are ringing the doorbell.

The two multinational oil and gas verticals, along with Angolan state-owned Sonangol EP (Luanda, Angola), signed agreements with the National Agency of Petroleum, Gas and Biofuels (ANGP) to develop Block 33 in the Congo Basin, as reported by ANPG board member Alcides Andrade.

Andrade said the Shell agreement shows the success of reforms begun in Angola in 2019. Reforms include streamlined licensing, tax reforms and other measures geared toward attracting global oil companies. A major part of those changes involved transferring concessionaire rights from Sonangol to the ANPG, with a goal of boosting transparency and efficiency, although outside analysts see room for further improvement.

Angola is the continent's second-largest oil exporter, after Nigeria. A former member of OPEC+, it left that organization in late 2023 in a dispute over export quotas the nation thought were so low it would reduce interest in outside investment.

The nation averaged producing 1.1 million barrels per day (BBL/d) earlier this year--about half its all-time high of 2 million BBL/d in 2008--but World Oil reported that the July numbers fell to 998,757 BBL/d. Production has been declining at a rate of about 15% per year, according to José Barroso, Angola's secretary of state for oil and gas, as quoted by Reuters. The 2019 reforms were enacted in order to reverse that trend.

While production has been declining for almost 20 years, there are still plenty of reserves to be developed. According to figures from the International Trade Association, Angola has an estimated 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of proven natural gas reserves.

Industrial Info is tracking 48 floating production, storage, and offloading (FPSO) vessel-related projects in Angolan waters, worth US$4.19 billion. Of those, 28 are capital projects and 20 are maintenance. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas can click here for a list of detailed project reports.

Angola's government also signed deals with Sonangol for Block 24 in the Kwanza Basin, with company partnerships with Acrep and Red Sky Energy, according to Andrade.

Additionally, Angola Petroleum Minister Diamantino Azevedo said that the country will open bidding for five more oil blocks by the end of 2025.

This has been a good year for outside interest in Africa as a whole. Chevron and Exxon Mobil Corporation (Spring, Texas) are looking at agreements with Algeria to develop shale natural gas reserves both onshore (ExxonMobil) and offshore (Chevron). Both these would be total grassroot developments, with any significant output unlikely for many years.

Algiers also initiated energy reforms in 2019 similar to those in Angola, and for the same reason--to reverse longstanding downward trends. Both governments depend heavily on oil and gas for tax revenues--Angola for 75% and Algeria between 40% and 47%.

The U.S. isn't the only nation being courted by oil producing nations in Africa. Congo recently signed a $23 billion hydrocarbon agreement with China's Wing Wah to develop its Banga Kayo, Holmoni and Cayo permits. Hopes are that this will increase Congo's oil output to 200,000 BBL/d by 2030. Wing Wah, a subsidiary of Chinese oil and shipping company Southernpec Corporation, has already done significant development in this field, with the existing permit containing approximately 237-250 drilled wells, producing 45,000 BBL/d, with an expected peak output of 50,000-80,000 BBL/d.

And about a week earlier, Congo agreed to terms with TotalEnergies SE (Courbevoie, France) for the offshore Nzombo permit, located 100 kilometers (62 miles) off the coast of Pointe-Noire, where the company already has some operations. Industrial Info is tracking one TotalEnergies FPSO in Congo. Subscribers can click here for the project report.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).