This week, worldwide offshore rig utilization held steady at 83.5% as an even number of rigs came off and started contracts.
The last 2 weeks have seen a flurry of interest around the offshore fields of Angola, which recently closed its most recent licensing round and began awarding blocks.
Angola is sub-Saharan Africa's second largest oil producer, behind Nigeria. Angola's oil production was just under 1 million bpd in 2004, and it has been forecast to reach 2 million bpd by the end of 2007. Angola's economy is very dependent on oil exports, with between 80 and 90% of government revenue coming from the oil industry, which accounts for more than 40% of the country's entire GDP.
Oil was first discovered in Angola in 1955, but production did not really start to climb until the discovery of oil offshore Cabinda in the 1960s. Block Zero, the main oil-producing block offshore Cabinda, still accounts for more than half of Angola's oil production, producing about 550,000 bpd. In recent years, focus has begun to shift to the deeper waters offshore Angola, which promise considerable reserves. For instance, Block 15 is estimated to contain about 4.5 billion boe of recoverable hydrocarbons. Similarly, the more recent exploration in Blocks 17 and 18 point to a possible combined total of 2 to 4 billion boe between the two blocks.
In the most recent offshore concession round, which began in December 2005, a total of seven offshore blocks were on offer. And a total of fifty companies were pre-qualified to bid. Bids for those seven blocks were due by March 31, but Sonangol, Angola's state oil company extended the bidding deadline for 2 of the blocks, Block 17 and Block 18. The exploration rights to these two deepwater blocks were originally tied to the construction of a refinery, but Sonangol decided to change the bidding and separate the refinery construction, thus allowing smaller, non-integrated players the chance to participate.
Over the past week, announcements of bid winners have been released for the five blocks that closed in March. And the bidding round for Blocks 17 and 18 closed May 8, with the announcement of winners expected to come in June. Thus far, the following awards have been announced:
Currently, there is a great deal of offshore exploration activity progressing in Angola. There are a total of 17 offshore rigs in Angolan waters, 16 of which are under contract. Of those rigs, there are 4 drillships, 4 semis, 7 jackups, and 2 tenders. That is a 78% increase in the overall number of rigs working offshore Angola from just 5 years ago when only 9 rigs were under contract there, and it represents the greatest number of offshore rigs that have ever been contracted for work in Angolan waters.
Pride is the leading drilling contractor in the area with 2 drillships, 2 semis, 1 jackup and 1 tender in Angola earning a combined total of nearly $600k per day. GlobalSantaFe owns the largest number of jackups in Angolan waters with a fleet of three 300'+ ILC jackups, all of which are under contract to Chevron.
Chevron is the leading operator offshore Angola, in terms of rigs contracted, with a total of 8 offshore rigs currently under contract there. Chevron has been working in the waters offshore Angola via its Cabinda Gulf Oil Company since the earliest days of oil exploration in the country. It is the operator of Block Zero, the country's most prolific offshore producing region. With its contract on Block Zero extended through 2030, and $4 billion in investments planned between now and 2008, Chevron will remain the leading foreign oil company in Angola for some time.
Looking forward, with the assignment of new concessions, major new projects set to come online in the next few years, and major investments by companies such as Chevron, Angolan offshore oil exploration and production is poised to continue to grow over the next several years.
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