Angola's flagging oil output gets Agogo boost

London — Italy's Eni said Friday it has started production at the Angolan offshore field Agogo, just nine months after making the initial discovery.

The Agogo field, in Block 15/06, is pumping around 10,000 b/d and set to reach 20,000 b/d during the next few weeks, the Italian company, which has had a run of West African exploration success, said.

The start was swift due to the proximity of the Ngoma floating production, storage and offloading vessel, or West Hub project, which has a 100,000 b/d processing capacity.

The Agogo crude will supplement the existing volumes of crude shipped via the FPSO and marketed as Sangos crude. Sangos loadings totaled around 65,000 b/d in 2019, according to S&P Global Platts estimates. The blend is a medium sweet grade, with an API of 32.20 and sulfur content of 0.15%,

At the time of the discovery, Eni estimated Agogo at 650 million barrels in place, with an API gravity of 31.

Prolific block 15

Agogo is just one of several Angolan discoveries by Eni recently. It said it had made five oil discoveries in Block 15/06 in the past year and a half: Afoxe, Agidigbo, Agogo, Kalimba and Ndungu.

Preliminary estimates suggest these finds total about 2 billion barrels of oil in place, double the volume of previous discoveries in the West Hub and East Hub installations in Block 15, Eni said.

"The two production hubs comprise eight fields developed through 42 underwater wells and ... total production exceeded 180 million oil barrels by the end of 2019," it said.

Eni operates Block 15/06 with a 36.84% stake, alongside state-owned Sonangol (36.84%) and SSI Fifteen (26.32%). The Italian major's net production in Angola is around 145,000 b/d.

New license

Eni also said it had bagged a new exploration and production license in the unexplored offshore Namibe basin, building on its deepwater presence in a country once seen as a leading frontier for oil development.

The company said it would operate Block 28, with a 60% stake. The license was offered as part of Angola's 2019 oil licensing round, and block 28 is located in a frontier exploration area tens of km from the coastline, in water depths of 1,000-2,500 meters.

State-owned Sonangol has a 20% share, while the remaining 20% will be assigned to a third partner during the closing of the contract.

Despite these positive signs, Africa's second-largest oil producer faces an uphill battle to reverse its crude oil output decline.

Output is falling as the bulk of Angola's key fields mature, and with production at multidecade lows, it has had no difficulty meeting production quotas agreed with OPEC and its partners. It was the only country not to have its production cut quota increased at the last meeting in December.

A drop in upstream activity since the oil price crash of 2014 has also stymied foreign investment, which was already low due to tough fiscal terms.

According to Platts estimates, production averaged around 1.40 million b/d last year, compared with 1.72 million b/d in 2016. A decade ago, output was as high as 1.90 million b/d.