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African deep-water makes progress

Drillers began to renew their interest in African projects that were once deemed too costly and risky

Africa's deep-water offshore sector drew increasing interest from drillers in 2018, as projects once deemed too costly and risky began to figure more prominently in corporate investment plans. This confidence was boosted by the increasing availability of relatively low-cost floating production, storage and offloading (FPSO) and floating liquefied natural gas (FLNG) facilities—as well as by the industry's successful efforts to cut operating costs during the recent downturn.

Both Nigeria and Angola, Africa's largest oil producers, registered progress in revitalising the hydrocarbons sector after several lean years. Shell announced in July 2018 that it hoped to begin talks with Nigeria on a framework to expand its Bonga deepwater oil field, preparing the way for a final investment decision (FID) on the $10bn Bonga Southwest project, which could produce up to 175,000bl/d.

France's Total was exploring options to expand the Egina deepwater project, with its FPSO facility scheduled to start operations in the fourth quarter. Egina is set to produce 200,000bl/d of oil from the Egina Main field, which has estimated reserves of 570mn barrels. But Total could also tie back its nearby Preowei discovery to the Egina FPSO—a successful third appraisal well was drilled there in late 2017.

In Nigeria, the government was focused on the overhaul of its hydrocarbons sector legislation and investment framework, hoping this would encourage further E&P investment. Angola, meanwhile, was looking to produce more oil to offset declines in its maturing fields. Relief arrived with the start-up of production on the Total-operated Kaombo development on Block 32 some 260km (161 miles) off the country's northern coast. The Kaombo Norte FPSO started producing in July 2018, while the Kaombo Sul facility is scheduled to start up in 2019. Overall production from the development is forecast to peak at around 230,000bl/d.

Confidence was boosted by the increasing availability of relatively low-cost FPSO and FLNG facilities, and by successful efforts to cut operating costs

Development was also seen in more marginal oil and gas markets. Senegal's efforts to fast-track its first major hydrocarbons developments registered progress. Final investment decisions were anticipated by year-end on the SNE and Tortue/Ahmeyhim projects, with first production expected in the early 2020s. BP confirmed that it still planned to make an FID on the Tortue/Ahmeyhim gas development, which is shared with Mauritania and straddles its maritime border, by year-end. The project moved to the front-end engineering and design (FEED) stage in April, and first gas is due in 2022.

The agreement between Senegal and Mauritania struck earlier in 2018, under which they would split early income from Tortue/Ahmeyhim, held up. The countries agreed to renegotiate in five years when a clearer picture emerges on the quantities of gas on each side.

The first phase involves the export of 2.5mn t/y of LNG via a floating LNG vessel, likely to be supplied by Golar LNG, based on reserves estimated at more than 15tr cf BP says the project could be expanded to as much as 10mn t/y, if the gas resources are there to support it. BP's partner Kosmos Energy has estimated that the wider Greater Tortue Complex could hold more than 25tr cf.

In the search for gas to export to energy-hungry Asian markets, ExxonMobil announced plans in July to build two 7.5mn-t/y trains in Mozambique to be operational around 2024. Both ExxonMobil and Anadarko are planning to build separate onshore LNG plants on the coast in Cabo Delgado province in northern Mozambique.

In West Africa, Cameroon—host to only the world's second operational facility, Golar LNG's 1.2mn-t/y Hilli Episeyo—exported its first cargo to China in May. Golar hopes the facility's modular and relatively cheap design will serve future FLNG projects in West Africa.

The withdrawal of Schlumberger from the OneLNG venture with Golar to provide an FLNG facility for Ophir Energy's Fortuna project in Equatorial Guinea put that venture into doubt. Golar was also in talks to provide an FLNG vessel for BP's planned development based on more than 20tr cf of reserves straddling the Senegal-Mauritania border.

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