Chevron eyes 'first-mover advantage' with Guinea-Bissau exploration deal

Chevron has acquired two oil exploration blocks offshore Guinea-Bissau, it said Nov. 3, boosting the African country's nascent hydrocarbons sector and supporting the US supermajor's ongoing portfolio "rebalancing."

In a statement, the company said its Guinea-Bissau subsidiary would take operatorship of blocks 5B and 6B, known respectively as the Carapau and Peixe Espada exploration licenses.

Chevron will hold a 90% stake in each license, alongside state-run Petroguin with the remaining 10%. All required regulatory approvals have already been received, Chevron said.

Guinea-Bissau forms part of the so-called MSGBC basin along with Mauritania, Senegal, Gambia, and Guinea-Conakry. The largely underexplored region has seen oil and gas discoveries in recent years, most prominently Woodside's Sangomar oil project in Senegal and the huge BP-operated Greater Tortue Ahmeyim gas development, which straddles the Senegal-Mauritania border.

In an interview with Platts -- part of S&P Global Energy -- on Nov. 3, Liz Schwarze, Chevron's vice president of exploration, said the company sees a "really good petroleum system" in Guinea-Bissau, with a number of different play types and a receptive government in Bissau.

Its deal -- which does not come with a requirement to drill a well -- reflects Chevron's strategy of undertaking both infrastructure-led exploration in existing jurisdictions, as well as entering new ones, with West Africa a "strategic" area for the company, Schwarze said.

"We're rebalancing and building out a much larger, diverse frontier exploration portfolio really targeted at finding that next suite of large assets, that next basin-opening opportunity," she added. "So when we look at Guinea-Bassau, it's a great strategic fit for the latter."

Chevron is able to leverage legacy 2D seismic data, and 3D surveys shot in 2017 and 2018, Schwarze said. "We'll do some in-house proprietary work on that data and then determine what we're thinking about in terms of testing the petroleum system."

The company could also benefit from a "first mover advantage," said Schwarze, who signed the deal at a ceremony in the country's capital, Bissau, alongside Petroguin's general director, Celedonio Vieira.

"I think their history has made it a place where you kind of look at the above ground as being riskier than other places," she said, "but we're willing to take that on and then that does create a first-mover advantage."

The country's armed forces said just days ago they had foiled a second coup attempt against President Umaro Sissoco Embalo since he took office in 2020, the first occurring in 2023. Elections are supposed to take place this month.

Guinea-Bissau is not currently an oil producer and remains largely unexplored. Two years ago, in a bid to leverage increased interest in the MSGBC region and draw upstream players into its oil sector, it began marketing 11 offshore blocks.

Apus Energy, a subsidiary of UAE-based Petromal, purchased the Sinapa and Esperanca licenses off the small country in 2023 and drilled the Atum-1 well last year, although the results are not yet known. Sinapa saw an oil discovery by Premier in 2004.

Guinea-Bissau also signed a memorandum of intent in 2023 with Italian oil giant Eni aimed at boosting exploration cooperation.

Exploration renaissance

Chevron's deal with Guinea-Bissau comes amid an uptick in African exploration activity by oil majors, marking a rebound from the doldrums of the COVID-19 pandemic and energy transition narratives, which hit financing for African oil and gas projects.

TotalEnergies, ExxonMobil, Eni and Chevron have all announced new country entries in West Africa in recent weeks.

"I don't think exploration sort of ever went out of style necessarily. We continued to do our work through the COVID years," Schwarze said. "But I would agree. I think it's a real renaissance for exploration, and you're seeing both the need and the desire to explore among the investors and you're seeing a real change for a lot of countries in how they're attracting investment."

According to the statement, Chevron has grown its exploration portfolio by nearly 40% in the past two years, entering Peru, Uruguay and Namibia.

Although it recently divested from Republic of Congo, selling its producing fields to UK-based Trident Energy in January, Africa remains an important region for the company, with key assets in Nigeria and Angola.

Schwarze flagged that there is potential for further investments in the region. "We're always looking. We're looking to increase our portfolio, again, in West Africa," she said.

She added that she was unfazed by lower oil prices this year -- which have remained stubbornly in the low-to-mid $60s/b -- because "exploration is a longer wavelength business than any price cycles".

"We see hydrocarbons being part of the energy mix for a long time to come," Schwarze said. "We see exploration being a vital part of delivering new volumes into the energy mix."