By Maureen Lorenzetti
OGJ Online
New US supermajor ChevronTexaco Corp. will keep a robust portfolio in Africa, retaining the sizeable investments made by both Chevron Corp. and Texaco, Inc. before their recent merger, said William Irwin, manager of international relations.
"Chevron's former role in Africa was huge. We were arguably the largest US investor in the African continent; we have been there 60 years," Irwin said. "Through the merger with Texaco we are only going to get bigger. So it's still important to us; in fact, it's even more important to us because it's a giant part of our portfolio. We have long and deep rooted relationships we will maintain."
The company's holdings in Africa are seen by some analysts as particularly strategic, since recent world events have left some industry executives wondering whether plans to expand in the Middle East may need to be put on hold.
Irwin said it's too soon to predict whether rising Middle East tensions cause companies to expand budgets in Africa. But he said it's no secret the area holds great exploration potential at production costs that, while not as low as in the Middle East, are still attractive even when crude prices are depressed.
"It's hard to say, and especially for us who have been there so long. But yes, people are waking up to something we've known for years. It's true, for example, that this area is much closer to US markets. There is nothing but water between the two," Irwin said. And couple that with potentially huge resources off the West African Coast means interest in Africa is growing, he said.
To leverage its assets in the region, ChevronTexaco has an active gas strategy, which involves transnational pipelines, gas to liquids technologies, and possibly liquefied natural gas plants. "The economics will define how robust and how quickly the LNG part of the business grows," he said.
Angola
ChevronTexaco is Angola's largest producer with 600,000 b/d. About half of that oil goes to the US.
Chevron's seven significant Block 14 finds since 1997 have helped make Angola one of the world's richest deepwater oil discovery regions in recent years.
Development plans for Benguela and Belize fields, both discovered in 1998, are in an advanced stage, with Lobito and Tomboco, both 2000 discoveries, to follow, the company said. As operator, ChevronTexaco is analyzing possible tie-in synergies among the four fields. The company's partners in the 1,560-sq-mile Block 14 concession are Angola's Sonangol, TotalFinaElf SA, and Agip Exploration Angola BV with 20% each, and Portugal's Petrogal with 9%.
ChevronTexaco also operates the 2,100-sq-mile Block 0 concession. Partners are Sonangol 41%, TotalFinaElf 10%, and Agip, 9.8%. Composed of 36 major fields, including Takula and Malongo, Block 0 accounts for the majority of production, 450,000 b/d in 2000. Development drilling, waterflood projects, multilateral well technology, and reservoir management are expected to boost production significantly by 2002. Some 60,000 b/d of oil are produced from shallow-water Block 2 fields near the mouth of the Congo River.
The Sanha gas condensate/Bomboco project, on Block 0's Area C, is the cornerstone of ChevronTexaco's gas initiative. The project is expected to monetize approximately 100,000 b/d of oil, condensate, and liquefied petroleum gas and eliminate the flaring of associated gas in Areas B and C of Block 0.
Earlier this year, Texaco awarded front-end engineering contracts for Angola's first LNG project. The $2 billion project will draw associated and nonassociated gas from eight offshore blocks that contain 9.5 tcf of gas. Plans call for a single-train, 4 million tonne/year plant onshore, with additional trains expected to follow.
Nigeria
In 1999, Texaco Overseas Nigeria Petroleum Co. (Topcon) confirmed the billion-barrel Agbami field, one of the largest deepwater discoveries in Nigeria's history. Eventually, Agbami is expected to add significantly to ChevronTexaco's combined production of about 517,000 b/d.
Two ChevronTexaco subsidiaries, CNL and Chevron Oil Co. Nigeria Ltd. average 477,000 b/d of liquids from 39 fields. Topcon produces 40,000 b/d from a half dozen shallow-water fields, including Pennington.
Topcon's Agbami appraisal well 70 miles off Bayelsa state exceeded expectations, the company said. The well encountered 534 ft of pay in five zones, producing light, sweet crude. In addition, the predecessor company and partners scored a discovery at Nnwa-1, some 50 miles east of Agbami, In 2000 and 2001, six exploratory wells were drilled, including three onshore probes. Seismic analysis and test drilling is continuing in several deepwater blocks.
Three ongoing major projects dominate ChevronTexaco's midstream and downstream activities in Nigeria.
The Escravos Gas Project (EGP), the first major gas project to gather and process associated gas in the nation, came on stream in 1997. The project's second phase, extending capacity to 285 MMcfd, began operations in 2000. The planned Phase 3 will process up to 400 MMcfd. The completed project will export 40,000 b/d of liquefied petroleum gas and condensate.
The 33,000 b/d Escravos gas-to-liquids plant next to EGP will use the Sasol Ltd. synfuels conversion technology to make ultra-low-sulfur diesel fuel and naphtha to be sold in Europe and the US. Engineering and technical feasibility studies are nearly complete for the project, which the company said is a key element in ChevronTexaco's initiative to reduce flaring of gas.
And ChevronTexaco leads the West African Gas Pipeline consortium, which includes the governments of Ghana and Nigeria, to develop a $400 million, 600-mile line linking Niger Delta gas supplies to power generators and industrial customers in Benin, Togo, and Ghana. The line could become operational by early 2004.
In addition, ChevronTexaco operates major storage and terminal facilities at Escravos and at Apapa, near Lagos. It also has more than 200 Texaco-branded retail service stations and supplies Texaco motor fuels to 100 third-party-owned outlets. A lubricating blending plant at Apapa is capable of producing 250,000 bbl/yr.
Social responsibility
ChevronTexaco intends to preserve a decades long, multi-million dollar commitment to social and health programs in the region.
Irwin said, "As the merger moves forward and we start becoming one unit, we won't be any less motivated or inspired when it comes to moving forward with outreach. We will continue wrking cooperatively with local governments." Irwin said.
Along with direct community assistance, Chevron and Texaco were members of the Corporate Council on Africa. ChevronTexaco will be a board member. Others are Anadarko Petroleum Corp., BP PLC, ExxonMobil Corp., and Ocean Energy Inc.
The council's recent HIV/AIDS task force report used Chevron's Nigeria operations as a case study. Chevron has said companies that want to invest in Africa should pursue local education programs to help workers protect themselves from the HIV/AIDS virus, which has reached epidemic proportions in some urban centers.
In the report, Chevron officials noted that one of the ways to ensure success is to educate senior company management and start a dialogue with labor unions.
Irwin said businesses are making important steps toward those goals. They have launched education programs that pay for themselves by reducing health costs. But he said more work needs to be done.
"My message is that we need to be comfortable talking about HIV/AIDS in all these forums; get it out on the table and be comfortable with it. I never thought when I started my career that I would use the word condom and sexual mores freely in a business discussion at the dinner table.
"But until we are able to do that we are still being a little bit too shy. Education prevention is one of the big areas we have to be comfortable, if we are going to look at people to change their behaviors we have to be comfortable talking about what those actions are," he said.
Irwin added that on the corporate level, the business community understands HIV/AIDS is simply no longer a disease impacting a small subset of society. "It crosses national lines, cultural lines, all lines," he said.
