London — Qatar Petroleum has marked its first foray into Angola's deepwater acreage, acquiring a 30% stake in Block 48, the company said Aug. 18.
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This comes as Africa's second-largest oil producer faces an uphill battle to reverse its crude oil output decline.
Interest in Angola's upstream has been growing after Angola's oil ministry sweetened the fiscal terms of its contracts in order to revive the country's oil industry, giving international oil companies improved returns
In the past 12 months, Angola has awarded several offshore blocks to Eni, Total, BP and Norway's Equinor.
Total is the operator of Block 48, with a 40% stake, with Sonangol holding the remaining 30%.
Block 48 is located in the ultra-deep waters offshore Lower Congo Basin, approximately 400 km northwest of Luanda and 200 km west of Soyo onshore facilities. The average water depth in the block is around 2,500 meters.
Energy diplomacy
Since June 2017, Qatar has been under a diplomatic and trade embargo by its Gulf neighbors Saudi Arabia, UAE, Bahrain and Egypt.
Following this, the nation looked to boost its international presence through a number of overseas upstream and downstream deals in countries including Oman, Mexico, Mozambique, South Africa, Kenya, Guyana, the US and Brazil.
QP has brokered several new upstream deals this year, including entered into three farm-in agreements – also with Total -- to acquire about 30% of Total's participating interest in blocks 15, 33 and 34 located in the Campeche basin, offshore Mexico.
The deal brought to six the number of Mexican blocks QP holds an interest in. Additionally, QP acquired a 45% participating interest in two of Total's exploration blocks offshore of Côte d'Ivoire.
QP, the world's biggest LNG producer, has moved in past few years to expand its overseas footprint and recently stepped up its activity to grow a gas-focused worldwide upstream portfolio.
In the past 12 months, it has entered into exploration agreements in Africa in countries such as Ivory Coast, Mozambique, Kenya and Morocco.
Eyeing output revival
Angolan crude output has been on a steady decline in the past four years, due to technical and operational problems at some fields, aggravated by a lack of upstream investment and incentives.
And the decline could get more pronounced, according to sources, by the coronavirus pandemic. COVID-19 has already put brakes on some of the country's exploration and drilling programs, as many oil companies have halted upstream work and reduced capital-spending.
But the entry of QP is likely to provide a slight boost in sentiment, sources said.
Crude output has fallen from a peak of 1.9 million b/d in 2010 to 1.40 million b/d last year as production from flagship fields, such as Girassol and Pazflor, has started to flag.
Crude production -- which accounts for more than 90% of the country's export revenues -- has averaged 1.30 million b/d for the first seven months of this year, according to S&P Global Platts estimates.
Currently, producing fields have an average annual decline rate of 10-15%, according to Angolan oil ministry officials.