China Sonangol awarded stakes in four pre-salt layer oil blocks in Angola

28 March 2011

London, United Kingdom, 27 March – China Sonangol has been awarded stakes in four of the 11 pre-salt layer Angolan oil blocks recently licensed for exploration, which in total are expected to require investment of some US$1.32 billion according to the Economist Intelligence Unit (EIU), of The Economist group.

According to the EIU; Sonangol Pesquisa e Produção will have the remaining stake sin the 11 deep water blocks auctioned at the end of January, in line with government efforts to “Angolanise” the oil industry, and these will be partly shared with China Sonangol.

This partnership between the Angolan oil company and investors linked to the China International Fund (CIF) will have stakes of between 10 and 15 percent in blocks 19, 20, 36 and 38.

“The winning companies are now in talks to form consortiums to carry out test drilling, and these talks are expected to be concluded in mid 2011,” said the EIU in its latest report on Angola.

Sonangol hopes to attract investment of some US$120 million for each pre-salt layer block, totalling over US$1.32 billion.

Drilling work will be very deep, at between 1,000 and 2,000 metres.

“Angola expects pre-salt exploration in its waters to have the same success as in Brazil, where numerous discoveries in the Santos basin since 2006 – including the enormous Tupi and Guara fields – have revealed reserves estimated at 10 billion to 20 billion barrels of oil,” it said.

At the auction, BP Angola was awarded 50 percent of blocks 19 and 24 and 20 percent of blocks 20 and 25.

Total Angola was awarded 35 percent of blocks 25 and 40, whilst Statoil was given 40 percent of blocks 38 and 39.

ConocoPhillips was awarded 30 percent of blocks 36 and 37, ENI Angola 30 percent of block 35, Repsol 30 percent of block 22 and Cobalt International Energy, Sonangol’s partner in the Gulf of Mexico, was awarded 40 percent of block 20.

Most of the winning companies have been operating in Angola for some time and have experience operating in deep waters.

According to the EIU, the “surprise” was the fact that ExxonMobil was granted minority stakes in three blocks.

Although it was not awarded any block, Maersk later announced it was in talks with British company Devon Energy to buy its 15 percent stake in block 16, which would increase its stake to 65 percent.

“However, this will have to be approved by the Angolan government, which has been inconsistent in previous transfers of oil interests between foreign companies,” the EIU noted.

The government’s revenues from signing bonuses are likely to have been lower than previous records, it said, but Luanda provided no figures for this.

This was the first set of licenses granted by Angola since 2007 and was the result of private negotiations with 13 oil companies.

After pre-selecting 43 oil companies to take part in a round in 2008, the government delayed grating licenses on the blocks at a time when oil process were in freefall.

Angolan oil production is now at a high, having risen from 1.61 million barrels per day to 1.73 million barrels in March, and is expected to rise to 1.88 million this year and 1.95 million next year, according to EIU figures.

The Angolan economy has also benefitted from string oil price rises on the international markets. (macauhub)

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