Monday, November 3, 2003
Angola set to double oil output in four years
Reuters London, November 3
Angola's oil industry, set to launch a new crude stream in December, is expected to double output over the next four years with a series of developments that will propel the West African nation into the front rank of world oil producers.
Exxon Mobil's Xikomba field will be Angola's first new crude in two years when it comes onstream in December, to be followed by as many as four major new streams within three years, analysts and oil companies said.
Collated industry data and analysts projections indicate Angola should be pumping more than two million barrels of oil a day by 2008 -- good news for a country that hopes exploitation of its vast resources will cast off the economic shadow of its recently-ended 27-year civil war.
"Angola is about to take a quantum leap forward. Production is almost going to double in the next four years," said Wood Mackenzie research analyst Catriona Boggon in Edinburgh. "It's a huge leap in a relatively short amount of time."
Most of the new production is in deep waters and set for 2005-2007, more than doubling Angola's current production of just under 900,000 bpd of crude. But at least 330,000 bpd is due to come on stream in the next 14 months.
The new fields, such as Exxon Mobil's billion-barrel Kizomba A project due to start next year, will offset declines in existing streams, such as Palanca and Cabinda.
Xikomba, targeted to produce 80,000 bpd, two and a half cargoes a month, yields a sweet crude with a medium to light gravity from a 100-million barrel field. The offshore-loading grade has gravity of 34.8 degrees API and sulphur content of 0.39 per cent, according to data from field operator Exxon.
Sitting between the Girassol and Nemba grades that have proved popular with Asian buyers, Xikomba is due to load its first cargo in December, market sources say.
HOST OF OFFSHORE FIELDS
Xikomba is only the beginning of the new fields.
Exxon Mobil is set to open the taps on 250,000 bpd of oil from Kizomba A by late 2004, with a similarly large-scale Kizomba B project due to come on stream by early 2006 and a third, Kizomba C, to start production at some stage after that.
Total plans to open its 225,000 bpd Dalia project in 2006, from the same exploration block as the successful Girassol project, which opened late in 2001 and reached target output far quicker than forecast. Girassol will incorporate the new Jasmim stream from the end of this year to keep plateau production up at around 230,000 bpd.
BP is expected to get Angolan go-ahead soon to develop its 200,000 bpd Plutonio project, which should be ready for first oil in 2007, industry sources say.
ChevronTexaco also has 100,000 bpd from its Benguela/Belize field expected in 2006, which should expand to 200,000 bpd by 2009 by including oil from the Lobito/Tomboco stream. All four oil finds are located in the same offshore exploration block as the 80,000 bpd heavy Kuito stream. Angola's expansion comes alongside growth by its neighbours.
Equatorial Guinea recently expanded production of its Zafiro grade, while Nigeria -- already capable of 2.5 million bpd -- has a little under one million barrels a day of new production lined up to open in the next four years or so.
It remains to be seen how Nigeria will reconcile new developments with its commitment to OPEC output quotas.
With production coming in leaps and bounds oil traders are looking in all directions for potential buyers for crude that can be easily shipped into all three major consuming centres.
The United States is anxious to woo West African oil producers as it seeks to diversify away from Middle East suppliers, but analysts say Asia and Europe may exert an equal pull due to rapidly rising demand in the east and slowing production in the UK and Norway.
"The influx is going to be quite substantial," said George Beranek of PFC Energy. "It is easily more than enough to offset declines on the North Sea." Eastern buyers have lapped up West African crude in the second half of this year as refineries reopen and the region recovers from SARS.
As the region with the fastest growing demand, Asia will continue to pick up a substantial amount of Angola's crude. "There is not much chance that the Atlantic basin could absorb that much," Beranek added.
© Hindustan Times Ltd. 2003.