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Wednesday 19 June 2024

Chevron Signs Contracts for Ultra-Deepwater Exploration in Angola's Lower Congo Basin


Chevron has signed two Risk Service Contracts (RSC) for Block 49 and Block 50 in Angola’s Lower Congo Basin, marking a significant step in ultra-deepwater exploration. Awarded by Presidential Decree in January 2024, these contracts, signed through Chevron's Angolan subsidiary Cabinda Gulf Oil Company Limited, initiate the exploration and development of these promising blocks.

The African Energy Chamber (AEC) has praised Chevron's new contracts, highlighting the multinational's 70-year history of successful exploration and production in Angola. This achievement underscores Angola’s robust regulatory environment, which has been crucial in fostering Chevron's longstanding presence and ongoing expansion in the country's oil and gas sector.

Blocks 49 and 50 represent Chevron's first operated assets beyond its existing Cabinda concessions. Positioned near producing concessions like Block 17, one of Angola's pioneering deep-offshore blocks, these new blocks hold significant potential for high returns and further diversify Angola's portfolio of ultra-deepwater assets. Earlier this year, Chevron signed an agreement with Angola’s National Oil, Gas & Biofuels Agency to conduct seismic surveys in these blocks, which will enhance geological understanding and propel exploration efforts.

The RSCs add to Chevron’s strong asset portfolio in Angola. The company currently has a 26% market share in the country, with interests in Block 0 and 14 – which produce an average of 70,000 barrels of liquids per day and 259 million cubic feet of natural gas per day. Block 0 – whose concession has been extended to 2050 – is comprised of 21 fields, while Block 14 contains nine fields. An agreement signed between Chevron and the government in 2020 combined all of Block 14’s development areas, providing improved fiscal terms while extending the production sharing contract to 2028. Additionally, in 2023, Chevron signed a production sharing agreement to manage operations within the Block 14/23 concession area. The concession is situated in the Zone of Common Interest shared by Angola and the Democratic Republic of the Congo, with the agreement seeing Chevron act as operator with a 31% stake in the block.

Chevron’s operations in Angola transcend oil and gas exploration, with the company holding non-operating interests in the Angola LNG plant – Angola’s inaugural LNG facility. Angola LNG processes gas from offshore concessions, generating critical revenue for the country through LNG exports. In 2023, the facility reached a milestone of delivering its 400th LNG cargo. Going forward, the development of new concessions aims to bolster LNG production at the facility. Specifically, the Chevron-operated Sanha Lean Gas Connection Project – valued at $300 million – comprises the development of a platform that ties into the existing Sanha Condensate complex and features pipelines connecting Block 0 and 14 to the Angola LNG facility. The project reached a final investment decision in 2021 and aims to address a supply gap at Angola LNG.

Beyond exploration and production, Chevron is spearheading low-carbon solutions across Angola’s oil and gas industry. The multinational signed an agreement with the government in October 2023 to explore low-carbon business opportunities, with the goal to utilize nature-based and technological carbon offsets – alongside lower-carbon intensity fuels such as hydrogen – to enhance the country’s production. This will be undertaken in conjunction with oil and gas initiatives and showcases Chevron’s future-oriented approach to energy development in Angola.

“Chevron’s recent signing of two RSCs further underscores the value of implementing a strong regulatory and fiscal environment in Africa. When governments open up the market through attractive fiscal terms, the industry will respond positively. This is clearly evident in Angola where a commitment to creating an enabling environment for doing business has and continues to attract foreign companies. Other countries in Africa should learn from this and adopt proactive measures to attracting foreign capital,” states NJ Ayuk, Executive Chairman of the AEC.

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