Chevron signs deal to explore ultra-deep water blocks in Angola

Chevron, a multinational energy firm, has signed two risk service contracts (RSC) to explore two oil blocks in the ultra-deep waters of Angola’s lower Congo basin.

An RSC is an arrangement whereby a government entity engages an oil company as a contractor to infuse the entire risk capital for the exploration and production of crude oil.

While deep-water drilling entails operating in water depths greater than 4,000 feet (1,219 metres), ultra-deepwater drilling begins at depths greater than 7,000 feet (2,134 metres).

In a statement on Wednesday, the company said it was initially awarded the concessions through a presidential decree in January through its Angolan subsidiary, Cabinda Gulf Oil Company Limited.

The signing of the RSCs for blocks 49 and 50 initiates exploration and lays the foundation for the development of the blocks, Chevron said.

“Representing the company’s first operated assets outside of the existing Cabinda concessions, Block 49 and 50 are situated in close proximity to producing concessions such as Block 17 – one of the first deep-offshore blocks to be licensed in Angola,” the statement reads.

“As such, the blocks hold substantial potential for strong returns and further expand Angola’s portfolio of producing ultra-deepwater assets.”

Chevron said an agreement with Angola’s national concessionaire — the National Oil, Gas, and Biofuels Agency (ANPG) — was signed earlier in the year to conduct seismic surveys in blocks 49 and 50.

These studies, the company said, would improve the geological understanding of the concessions and advance the exploration agenda.

Speaking on the milestone, NJ Ayuk, executive chairman of the African Energy Chamber (AEC), said Chevron’s recent signing of two the 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,” he said.

“This is clearly evident in Angola where a commitment to creating an enabling environment for doing business has and continues to attract foreign companies.”

Ayuk said other countries in Africa should learn from this and adopt proactive measures to attract foreign capital.

Chevron’s Angolan subsidiary operates interest in two concessions including block 0, which is off the coast of Cabinda province, and block 14, in deep water.

The company currently has a 26 percent market share in the country, with interests in both blocks – 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 – comprises 21 fields, while block 14 contains nine fields.

The RSC deal, which will see the company invest in exploration activities, comes amid divestment deals in Nigeria’s oil and gas sector.

Angola, a major oil producer in Africa, holds abundant untapped hydrocarbons estimated at 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of natural gas reserves.

In February, the ANPG said investment in Angola’s oil sector increased by 96 percent between 2022 and 2023 — with about $50 billion recorded over the last five years.