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| AN OFFSHORE RIG |
Angolan and Nigerian energy
industries have a lot in common. From
the inception of both industries in the 1950’s (Angola; kwanza 1955 and
Nigeria; Oloibiri 1956), they have walked a part dotted by striking
similarities and differences too. Perhaps, it’s the classical story of resource
management in a classical African environment. Their stories, however, differs
not much from the stories of many other oil producing nations in the world.
Political Economy:
Following the Angolan war of
independence (1961-1974) the nation was plunged into a civil war in 1975; a war
which lasted until 2002. During this period (despite intense violence) oil
exploration and production continued in Angola – principally in the kwanza (Cuanza)
field and Cabinda fields (offshore and onshore). The Super-Majors; Chevron, BP
(Former British Petroleum) Texaco, Total, PetroFina and Elf (later
TotalFinaElf) were actively present in the infant days of the industry (as was
the case in Nigeria). Angola emerged from the war with serious economic
devastations. The overall Infrastructure was in a very poor state, due to acts
of war and lack of maintenance in some instances.
During the late 90’s, significant finds were made offshore
and deep offshore. This time, in the regions away from the lower Cabinda areas;
that was now experiencing declining reservoirs (Chevron’s kuito fields, among
others). These finds, set Angola on a new path; towards becoming a giant oil
producer in Africa - trailing closely behind Nigeria.
In Nigeria’s case, decades of bad military regimes seemed
almost like a civil war. Infrastructural decay was also massive due to utter
negligence. Nevertheless, the Oil and Gas industry boomed, albeit providing the
funds needed for the wide scale corruption and looting that was rampant in
those years. The government of Angola with a mixed record was also accused of
using oil revenues to prosecute war against opposition UNITA (União Nacional para a Independência Total de Angola)
In 1976, many years after Nigerian National Oil Corporation (state-owned
NNPC) was formed, Angola created Sonangol (Sociedade Nacional de combustiveis
de Angola). Like NNPC, Sonangol is a mammoth corporation with 17 subsidiaries
and a shareholder in almost all the Oil and Natural Gas blocks in Angola. It is
directly controlled by the Ministry of Petroleum and thus accountable to the government,
which is a 100% owner (Similar to NNPC). While Sonangol has moved on to become a
better and more efficient organization, Nigeria’s NNPC mulls on. Audaciously,
Sonangol has ventures outside Angola, with interests in Brazil, Cuba, Iraq, Sao
Tome and Principe, Venezuela, and the Gulf of Mexico.
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| ANGOLA |
In 2004, in a sincere effort to restructure the industry and
to improve the transparency in the management of natural resources, (and also
attract foreign investment) Angola amended and passed several laws. The end of
the war in Angola in 2002 and the end of military rule in Nigerian in 1999 led
to some sobering moves by both governments. Nigeria began to restructure its
industry via the Petroleum Industry Bill (PIB), a policy document that began in
the early months of President Olusegun Obasanjo’s government. Sadly, the status
of that bill cannot be genuinely assessed today. In contrast, Luanda’s industry
restructuring efforts ultimately led to the passage of the Petroleum Law of
2004; thus standardizing agreements (Joint Venture Agreements, and Production
Sharing Agreements), clarifying roles for all stakeholders, improving
efficiency and attracting investment and technical expertise.
In spite of resource endowment, both nations are yet to
create inclusive growth. As the third largest economy in Sub-Saharan Africa in terms
of GDP, many Angolans (about 36 percent) live below the poverty line according
to the UN. The statistics is even worse for Big Sister Nigeria with 70%
equivalent and as the largest economy in Africa. Both nations are hugely
dependent on Oil and Gas revenues as a principal source of government income
(Angola: about 80% and Nigeria about 90%)
Gas Infrastructure:
One sister has made more progress in
this area and that is Nigeria. Much off the gas in Angolan fields occurs as
associated gas (together with Oil) and was flared for many years. The concession
regime supervised by Sonangol specifies that all gas resources produced by the
IOCs belong to the government (once they are not used in re-injection reservoirs)
this deterred the IOCs from creating any gas development strategy or
encouraging significant investment. Sonangol on its part had no clear gas
infrastructure development plan. Although flaring was prohibited it continued
for many years. A new law specified zero-flare for all new facilities from 2010,
as the country geared toward developing a gas plan and strategy. In 2004, plans
began towards building an LNG facility in Soyo. Angolan LNG was eventually
commissioned in 2013, the first LNG shipped on 16 June 2013. A single train
facility built by Betchel, with production capacity of 5.2 million tons per
year.
Nigeria has had a clearer strategy for gas development for
many decades. Good achievements have also been made in notable aspects of the
blueprint popularly called the Nigerian Gas Master Plan (NGMP). While flaring
is still rampart, a sizable portion of produced gas is captured, feeding the
domestic demand for gas in residents, industrial areas, power plants and
petrochemicals. Nigeria’s LNG (NLNG) project is a successful one. Incorporated
in May 1989 and Located in Bonny Island (in the previously volatile Niger Delta).
The first train came into operation in 1999. Currently it operates about 7
trains and 22 million metric tons of LNG per year (10 percent of the world’s
LNG consumption)
Bigger Sister?
In all, Nigeria currently leads
Angola in terms of total crude oil production, but this might change in the
near term. In Nigeria, the comatose
state of the proposed Petroleum Industry Bill (PIB) has been cascaded to many
other areas of the industry. Exploration activities are near zero and
investments are seriously dwindling due to uncertainties around the success or failure
of the bill. IOCs are increasingly moving offshore leaving shallow waters and
onshore fields to smaller, indigenous E & P firms that haven’t always lived
up to expectations. Productions are likely to dwindle and reserves figures have
not improved. Even in the deep offshore areas, fewer new fields are being
developed or planned. Notably the Egina field (currently behind schedule and
stalled by multiple challenges) Sinopec-owned Addax Petroleum has also made
some new finds in the Ofrima and Udele fields in OML 137. Shell’s Bonga South
West and a couple of other fields by other operators are also expected on
stream soon.
In Angola the outlook is much brighter both in exploration
and production. The coming years will see many elephant fields coming on
stream. Exxonmobil’s Kizomba satellites phase II in block 15 is scheduled to
come on-stream in 2016 and peak at 125,000bbl/day. PSVM field (Plutao, Saturno,
Venus, and Marte) operated by BP started producing from Plutao and Saturno in
2012, but Marte is expected to start soon and peak at 150,000 bbl/d. Total’s CLOV
(Cravo-Lirio-Orquidea-Voleta) located in deep water block 17 is expected to
peak at 160,000 bbl/d in 2015. Eni’s West Hub project is expected to start and
peak at 80,000 bbl/d in 2015. Chevron’s Mafumeira Sul will bring on 120, 000
bbl/d in 2015 while Lizani field in a unified offshore zone between Angola and
Congo (Brazzaville) will bring 46,000 boe/d. smaller volumes are also expected
from the onshore areas, where 10,000 and 5,000 bbl/d volumes are possible. Time
will tell, as the saying goes, which if this is a bigger sister!
*Chijoke K. MAMA is a Senior Oil and Gas
Analyst in Lagos, Nigeria. Chijioke.mama@yahoo.com | 070-6101-3333
Sources
US Energy Information
Administration (EIA) |OECD:
Angola Towards an Energy Strategy | Duncan Clark: Petroleum prospects
and political power | Advocate
Law practice: Gas Utilization in Nigeria | Dr. E. Egboga: Oil and Gas
Reforms in Nigeria: What you should know | Christina
Katsouris: Africa’s Oil and Gas Potential | Prior studies.
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