Italian firm Eni has made a new light oil discovery off the coast of Angola after exploration activities recommenced following a year of pandemic restrictions.
The discovery, made on Tuesday, is in Angola's deepwater Block 15/06. Eni believes the exploration well, drilled at 500 metres in the Cuica exploration prospect, could hold as much as 200 to 250 million barrels of oil and presents the second big oil discovery in the area.
"The well-head location, intentionally placed close to East Hub's subsea network, will allow a fast-track tie-in of the exploration well and relevant production, thus immediately creating value while extending the Armada Olombendo FPSO production plateau. It is expected that production will start within six months after discovery," Eni stated.
Eni, which has been an active part of the country's oil industry since 1980, produces around 120,000 bpd of oil in Angola. The firm has announced an anticipated $7 billion investment in Angola by 2025 in the areas of research, production, refining and solar energy, with the objective of cutting carbon emissions, job creation and diversifying the economy.
As well as being an OPEC member, Angola is the second largest oil producing country in sub-Saharan Africa, producing an estimated 1.37 million bpd of oil and around 17,904 million cubic feet of natural gas. However, production in the country has been far below its full potential due to low investment in recent years owing to the drop in oil prices.
In January, Angola received IMF approval for a disbursement of over $480 million under a $3.7 billion loan agreement due to the ongoing struggle with low oil prices as well as weak exports.
To attract greater investment, the Angolan government has launched a new strategy with the aim of increasing production, hoping to tap into 57 billion barrels in undiscovered oil reserves. The government has also amended its legal and fiscal terms to make it easier for foreign companies to invest in the oil and gas sector, attracting firms with the country's competitive production costs.
Greater investment is expected for 2021, for a country with a substantial oil potential, with 9 billion barrels of proven oil resources. There are also significant opportunities for refined petroleum products as Angola imports 80 percent of its needs in this area at present.
Related: Oil Demand Boosted By Highest Number Of Flights Since COVID Started
Last month, Angola's National Agency for Oil, Gas and Biofuels (ANPG) released its timeline for the evaluation of its 2020 oil and gas licensing round. ANGP is hoping to expand oil research and evaluation programmes in sedimentary basins, better understand the country's hydrocarbon potential and attract new investors in line with its Hydrocarbon Exploration Strategy 2020-2025.
In early April, Angola announced that is has begun initiatives to develop its marginal fields, creating opportunities in nine blocks with an expected investment of $67.4 billion over the next five years.
The country is also expected to see a return on its renewable energy investment, with solar power production expected from 2022. Major energy firms Eni and Total both have a stake in the country's solar energy sector in the provinces of Namibe and HuÃla respectively.
Angola has a significant untapped oil potential which has experienced underinvestment due to the volatility of oil prices over the last five years. However, the government is going full throttle on its oil and gas investment plan for 2021. This paired with new discoveries by oil major Eni, as well as advances in renewables, makes Angola the African oil giant to watch over the next five years.
By Felicity Bradstock for Oilprice.com
More Top Reads From Oilprice.com:
Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More