Practical discussions address future of oil and gas sector in securing Africa’s energy needs

Angola Oil and Gas 2023

ANGOLA: Last week’s Angola Oil and Gas (AOG 2023) Conference emphasised the pressing topics currently at the heart of international developments within the oil and gas sectors and unpacked viable solutions for continued exploration and production within the Angolan as well as African context.

Held over two days, AOG 2023 – under the theme: Energy Security, Decarbonisation and Sustainable Development - also saw a number of deals signed between industry, government and academic institutes.

Acknowledging Africa’s critical need for energy security, ministers from a number of countries used the opportunity to call on international oil and gas companies to respond to investment opportunities on the continent.

In his address, Angola’s Minister of State for Economic Coordination, José De Lima Massano, highlighted the importance of including the oil and gas sector in the country’s economic development. “The impact of the oil and gas sector on society is fundamental and reaches beyond financial value; it is a catalyst for societal transformation,” he said stressing the importance of harmonising oil and gas activities with other sectors contributing to the economy to tackle climate change and preserve the environment.

The need to confront environmental pressures was not lost on speakers at the conference and OPEC Secretary General al Ghais made a case for international oil and gas companies to participate in the African energy market while striving to address the continent’s environmental challenges. “The reality is that the oil and gas industry should be part of the solution to environmental challenges,” he said at the opening ceremony.

Decarbonisation flares the discussion

The challenge for the oil and gas industries to pivot towards cleaner technology within the context of decarbonisation was at the heart of many of the panel discussions during last week’s event.

International energy company, Azule Energy, and Angola’s National Oil Company, Sonangol, signed a deal to collaborate on decarbonisation initiatives in Angola. Ambitious intentions include the commitment to combine environmental targets with efforts to create more efficiency operations while increasing investment, job creation, and growth in Angola.

Participating in a discussion on decarbonisation, CEO of Azule Energy, Adriano Mongini noted the need to reduce flaring and confirmed that a new Floating, Production, Storage and Offloading (FPSO) unit was due to arrive in 2026 that implemented new technology aimed at minimising emissions while maximising efficiencies.

For Edson dos Santos, CEO, Etu Energias, it is a three phase approach. “Firstly, we look at flare reduction. Secondly, we look at leak detection. Third, we have made a big effort in planting trees to remove carbon from the atmosphere. And if I have to bring a fourth point, it will be how to use carbon dioxide to improve oil recovery efforts,” he said.

Discussing the role of National Oil Company (NOC), Sonangol, CEO Ricardo Van Deste addressed the need to embrace technology in order to meet sustainability goals. Also highlighting the need to reduce gas flaring, he noted that additional measures should be employed to mitigate the discharge of oil into the sea as well as the fuel that their fleet consumes. “Improvement in these aspects are just some examples of initiatives that we can do to contribute to the overall decarbonization efforts in the country,” Van Deste stated. “We need to continue to innovate so that we can produce cleaner and cheaper barrels of oil and gas in the future. If we address flaring, fugitive methane and drilling, then we address nearly 80% of the problem. If we know that oil and gas will continue to be a source of energy that we need, then we need to address the challenge of controlling the level of emissions in the atmosphere so that we stay within the carbon budget, which is a maximum of 1.5 ºC above the global average temperature of the pre-industrial level,” stated Miguel Baptista, Managing Director: Central, East and Southern Africa for SLB, in his opening keynote presentation. The challenge for Angola will be centred around decarbonising mature fields through the retrofit of new technology as well as the need to include local content in future development agendas.

Sub-Saharan Africa is ripe with opportunity for the application of specialized technologies to traditional oil and gas projects, as well as the establishment of new clean energy infrastructure related to carbon capture and storage, hydrogen production and renewable energy storage. That said, challenges remain in making the economic case for upgrading brownfield assets.

Tying in local content to the discussion, Bráulio de Brito, President of the Association of Angolan Petroleum Service Companies (AECIPA), added: “We also need to take into account people – without people, technology doesn’t work. We need to make sure development goes hand in hand with technology. This will also bring cost efficiency into our operations, which is our bottom line. Operators need to lead technology advancements and use this as an incentive to bring along and empower local companies.”

Though major operators may lead technology innovation and deployment, the panel stated that local companies can still play a meaningful role in decarbonisation efforts by participating in the circular economy.

Attracting investment

While Angola’s oil and gas industry has already successfully attracted the attention of many global oil majors, discussions on continued investment within both the upstream and downstream sectors as well as more wide-spread investment on the continent as a whole.

Calling on global investors to participate in the country’s and the region’s energy sectors, Angola’s Minister of Mineral Resources, Petroleum and Gas, Diamantino Azevedo, emphasised the role energy will play in meeting Angola’s development goals while addressing the importance of regional partnerships in spurring investment and promoting exploration and new discoveries.

Companies such as TotalEnergies already have a long history and commenting on the company’s 70th anniversary in Angola, Mike Sangster noted that their “commitment to Angola is demonstrated by our four deepwater rigs in operation, more than we have anywhere else on the globe”.

Executive Chairman of the African Energy Chamber’s (AEC), NJ Ayuk declared that “this is an exciting time for Angolan oil and natural gas.”

Ayuk highlighted how strategic measures have grown the Angolan oil and gas sector. In 2023, the country represents one of the biggest oil producers on the continent, with a rapidly developing natural gas industry and an evolving renewable energy market. While output has been gradually declining due to ageing oilfields, Ayuk stated that, “the country is taking steps to boost production, with a goal of scaling up to 1.3 million barrels per day and stabilising [output] at that level.”

This is being achieved through policies to attract international investment and the opening of licensing rounds. However, Angola’s hydrocarbon market is also being driven through advancements across the gas industry. According to Ayuk, “Angola is also pursuing ambitious initiatives to develop its natural gas sector. Angola holds 27 trillion cubic feet of natural gas, a largely untapped wealth of resources that offers a path towards employment opportunities and a bridge to a just energy transition and a route out of energy poverty.”

Amidst the significant economic potential that gas brings, a slew of impactful projects have been initiated. One of the most notable is the formation of the New Gas Consortium, which Ayuk described as "an exciting new partnership." This consortium leverages the expertise of esteemed partners such as Chevron, Eni, Sonangol, bp, TotalEnergies, and more, and it oversees a robust portfolio of projects. These include the development of the Quiluma and Maboqueiro gas fields, along with other ongoing initiatives like the Angola Liquefied Natural Gas project, the 750MW Soyo II combined-cycle power plant, the Falcão Natural Gas Project, and numerous additional ventures.

Jacob Flewelling, Africa Investment Advisor, US International Development Finance Corporation spoke of Angola’s noteworthy oil and gas industry and the country’s potential to mobilise capital for infrastructure development in its off- and onshore projects. He noted Angola’s favourable business environment and the potential for international service companies to participate in the country’s energy space.

In addition to revenue, oil and gas will unlock new opportunities for skills and technology transfer; improve access to high-quality fuels; reduce energy poverty and, according to Ayuk, “eventually achieve a just and sustainable energy transition that makes renewable and low-carbon forms of energy both abundant and easily accessible to all Angolans.”

He further underscored that this transition builds upon a consistently robust oil and gas sector. By maximizing revenue generation from offshore oil reserves, Angola aims to amass significant resources for bolstering its economy and further investing in renewable energy initiatives.