Darius Snieckus
OGJ Online
LONDON�Capital investment in field developments off West Africa is anticipated to outpace spending in all other offshore oil and gas provinces in the next decade, leaping five-fold to roughly $10 billion per annum by 2005, according to a new report from UK analysts Douglas-Westwood Ltd. and data specialists Infield Systems Ltd.
"A significant increase in activity is expected off West Africa over the next decade, which could make it the world's most important offshore oil province," said Dominic Harbinson, who co-authored the Offshore West Africa Report with Roger Knight. "Within the foreseeable future, capital investment could eclipse that in established regions such as the North Sea and the Gulf of Mexico."
Knight said the "remarkable series" of deepwater discoveries over recent years mean that 2000-2005 will establish the region as a "world leader in terms of offshore E&P activities."
Over the 2000-2005 period, the report forecasts companies will invest the following in the offshore provinces of the 10 West African nations:
� Angola, $15.645 billion
� Benin, $39 million
� Cameroon, $982 million
� Congo, $1.859 billion
� DR Congo, $61 million
� Equatorial Guinea, $1.450 billion
� Gabon, $1.587 billion
� Ghana, $714 million
� Ivory Coast, $1.756 billion
� Nigeria, $11.208 billion
The authors expect French megamajor TotalFinaElf SA�which holds close to a third of the estimated 15.8 billion bbl of reserves slated to be brought onstream off West Africa in the next 5 years�to take up the dominant position of operatorship in the region.
Soon to-be-merged ChevronTexaco Corp., the US's ExxonMobil Corp., and Anglo-Dutch energy giant Royal/Dutch Shell Group are shaping up to be the province's other major players within this time frame. ChevronTexaco holds combined reserves calculated at 3.7 billion bbl, ExxonMobil 2.5 billion bbl, and Shell 1.6 billion bbl.
The OWA report notes that, beyond the frontrunning four operators, there remains a "diversity" of oil companies jockeying for position in the province. "In addition to the ubiquitous majors," say the report authors, "national companies such as the Ghana National Petroleum Corp., foreign independents such as Triton [Energy Ltd.] and Ranger [Oil Ltd.] and indigenous independents such as the Nigerian companies Yinka Folawiyo and Peak Petroleum" are already present off West Africa.
The report authors forecast that, set against a backdrop of declining output from the North Sea and shallow water Gulf of Mexico, West Africa could account for some 21% of all offshore reserves lifted worldwide by 2005.
Should the 176 field developments projects presently scheduled to be brought onstream over the next 5 years come to fruition, said Knight, production from the offshore West Africa region could jump by almost 3 million b/d. Nigeria and Angola are expected to be responsible for the lion's share of this output boost, producing an additional 1.2 million b/d each.
Some 192 new platforms will be installed in waters already populated by 633 installations by 2005, the report forecasts, and over 700 platform-completed wells drilled.
To the 13 floating production units and 20 storage offloading vessels presently installed in the region, another 33 floaters�mainly FPSOs though interest in spars is "increasing"�are expected to be added.
The report anticipates TotalFinaElf's $900 million Girassol FPSO to exemplify the "very large, high cost systems" that will take up operation in the region.
Because of the sheer size of many of the deepwater fields off West Africa, close to 300 new subsea well installations are likely to be installed or on order by 2005. New pipelines could total some 4,000 km in length.
Despite the attractions of offshore West Africa�including a relatively benign E&P environment and crude of "generally good quality"�reports today out of Angola that the country's oil minister, Jose Maria Botelho Vascocelos, is looking to have international oil companies negotiate new terms for future field developments may be indicative of problems ahead for the province.
John Westwood, partner at Douglas-Westwood, says that while this is the latest "manifestation" of the change in demand from individual West African nations for a "bigger share of the pie," it is nonetheless a obstacle that will not dissuade operators from making a long term capital investment in the area.
Oil companies drawn in by the potential scale of the region's reserves base and the desire among West African governments for the large slice of revenues to be generated in the coming years, he says, will together serve to "override" any new hurdles to operation here.
Recently Angola state oil company Sonangol ordered ExxonMobil to cancel a multi-billion dollar tender for engineering, procurement, commissioning, and installation work on its giant Kizoma project after the two could not agree to tax terms for the development.