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Angola calls for onshore licence bids

In its first licensing round since 2011, the nation is calling for bids on 10 blocks by 18 September

Angola is calling for bids by 18 September for 10 onshore blocks, offered in its first licensing round since 2011. State company Sonangol says the blocks, in the Lower Congo and Kwanza basins, have been shown to hold working petroleum systems and have pre-salt potential.

Sonangol said 37 companies have been pre-qualified to apply in the round as operators, although many are little-known entities with no operating experience – apparently in contradiction of Angola’s requirements, which call for operators to have “competence and experience in the management and performance of petroleum operations.” Sonangol has also pre-qualified 48 companies as licence participants, most of them little-known.

The list of approved operators includes big-name companies Chevron, Eni, OMV and Tullow, together with the Angolan-Chinese venture Sonangol Sinopec International; Azeri state producer Socar; the trading company Glencore; Portugal's Galp and Partex; Canada’s Pacific Rubiales; Argentina’s Pluspetrol; Colombia’s Ecopetrol; and Canada’s Sterling Resources. Angolan entities approved as operators include Acrep, Alper and Somoil.

Sonangol is expected to take 30% in each production-sharing contract while 20% will go to the Angolan private-sector participant, leaving 50% for the operator. When the round was announced, an official said the local company would expect to form an alliance with the operator to secure funding.

Three of the blocks, CON 1, CON 5 and CON 6, lie in the north of the country near Soyo, in the Lower Congo basin, while the others — KON 3, KON 5, KON 6, KON 7, KON 8, KON 9 and KON 17 — lie to the east and south of Luanda, in the Kwanza basin. Oil discoveries have been made onshore in both basins in the past but the country's civil war, lasting from 1975 to 2002, put a stop to onshore exploration and the search moved offshore.

Accordingly, the blocks on offer have seen no drilling based on surveys using the latest seismic techniques, yet large fields have been discovered in the offshore parts of both basins. ExxonMobil’s Block 15, holding the Kizomba A, B and C production hubs, lies off Soyo, while Cobalt has its Cameia field – due on stream in 2018 – and other pre-salt discoveries in Blocks 21 and 20, southwest of Luanda.

Angola has a target of holding a licensing round every two years, although rounds since the turn of the century have been extensively delayed. International interest has been cooled by the high costs and risks of drilling the country’s pre-salt prospects, together with onerous licence requirements covering local partners and local content. Meanwhile, the authorities have set out to attract smaller companies into the country’s offshore.

But an exploration push is needed to check the decline in Angola’s production – the result of the older, deep-water fields watering out faster than new production is being ramped up. Production peaked in 2008 at 1.85m b/d, according to International Energy Agency figures, and declined to only 1.65mn b/d last year. There was an upturn to an average of 1.77m b/d over the first six months of this year.

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