Earlier this year, Houston-based Cobalt International Energy discovered a deepwater reservoir believed to hold approximately 1.5 billion bbls of oil, off the coast of Angola. Since then, international interest in the potential that the country holds in regards to oil reserves has intensified, and oil majors such as BP, Statoil, Total, Repsol, Eni and ConocoPhillips have obtained rights to operate in the region. Sudan is another African country that has recently signed oil exploration and production deals with foreign oil majors on nine blocks, securing investments of US$ 1 billion in the country. Production in Sudan will take several years, as seismic surveys and the drilling of exploratory wells are carried out in the blocks. The government intends to meet domestic demand with the new oil production, and export the excess. By the end of this year, the country aims to achieve a 50% increase in its current production figure of 115 000 bpd, to 180 000 bpd. Disputes with a now independent South Sudan earlier this year impacted the Heglig oilfield; a strategic part of Sudan’s economy. Production is now, however, growing to previous operational levels.
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Last month, I attended the World National Oil Companies Congress in London. At the conference there was much discussion about the ever-growing importance of investment into exploration. There was a sentiment among speakers whose companies operated in regions affected by the Arab Spring, that governments have done relatively little to disrupt oil operations within their respective countries, realising how important the industry is. There was a received wisdom that to invest in African projects, one needs to be prepared to go in for the long run. Iraq is also increasingly seen as a country in which production will ramp up dramatically in the next few years, despite continuing safety concerns for any workforce operating there. But how severe are the safety risks? Risk analysts AKE recently noted that although oil and gas infrastructure in Iraq was not targeted nearly as often as the Iraqi army or political targets, “With at least 12 separate attacks between April and June the energy sector will have to continue prioritising security and risk mitigation if it is to benefit from the massive hydrocarbon reserves in the country.”
But it seems that even if you’re operating in one of the most stable, politically non-corrupt regions of the world, maintaining constant reliable production isn’t guaranteed. At the time of writing, Norway’s Statoil has threatened to lock out workers and shut down production on the Norwegian continental shelf. It hopes that the move will put a stop to a fortnight long strike that has already put increasing pressure on oil prices. It is thought that the government will be forced to step in, as its US$ 600 billion sovereign wealth fund depends completely on oil revenue. Oil companies and offshore personnel have been clashing over employee pension conditions. The proposed lockout would end all oil and natural gas production in Norway; Western Europe’s principal oil exporter and the world’s second-largest gas exporter.
International deepwater focus is increasing and industry capabilities are improving, but operational challenges will persist. The blocks offshore Angola are around 5 km (3 miles) deep; pushing technical capabilities to the very edge of what is possible. But the quest for a stable political operating environment and securing good levels of personal safety for a foreign and domestic workforce will continue to challenge IOCs. The industry needs to continually focus on the ‘people issue’: keeping workers safe, and keeping workers happy.