Chevron is turning to Africa to refill its exploration funnel. The behemoth has signed up for blocks in Angola, Namibia and Equatorial Guinea in recent months, for a mix of frontier and infrastructure exploration and some natural gas development. The move is part of a broader trend in which international oil companies (IOCs) are expanding deep and ultra-deepwater exploration on the African side of the Atlantic basin — while divesting onshore assets laden with safety risks and potential environmental liabilities or sub- economic activities. The latest move saw Chevron land Blocks 6 and 11 offshore Equatorial Guinea — which Exxon exited earlier this year, leaving an undisclosed discovery in Block 6. The blocks are near the Zafiro field and aging pipeline infrastructure . Natural gas is the main driver for Chevron, which abandoned earlier plans to sell the Equatorial Guinean assets resulting from its 2020 acquisition of Noble Energy, including stakes in the oil and gas-rich Aseng field and the Yolanda natural gas field and the Alen gas condensate field. In Angola, where Chevron subsidiary Cabinda Gulf Oil Company signed risk services contracts for ultra-deepwater Blocks 49 and 50 in late June, Chevron is active in the western end of Angola’s lower Congo Basin, where TotalEnergies reported a dry hole in 2022. In Namibia, Chevron stuck its neck out in April when it took 80% of Namibian Petroleum Exploration License (PEL) 82, which is still unexplored by frontier Namibian standards. It adds to a similarly sized stake in PEL 90 where Chevron is acquiring seismic just north of Total’s Venus discovery.
Chevron’s African output has fallen in recent years — reflecting a general scale back of IOC investment after the oil price plunge in 2015, and frustration with oil governance and high costs in the region’s mature producer, Angola , Nigeria and the Republic of Congo (ROC ). While selling assets in Nigeria, Chevron also held off on Angola towards the end of the late President Eduardo dos Santos’ tenure in 2016, before reforms put in place by his successor, Joao Lourenco, strengthened conditions for natural gas exploration and development. gas near the field and borders. persuading Chevron to stay. US capital spending on exploration in the region remains low relative to peers such as Total. The The $700 million Chevron spent in Africa in 2023, mostly in Nigeria, Angola and the ROC, was a fraction of the $9.1 billion the company spent across all oil and gas production activities. If its African assets will compete across its broader portfolio, the company will need to reduce the unit’s production costs, which have risen steadily to $16.35 a barrel in 2024 from $12.40 a barrel in 2021 and are now the highest of any region. Chevron’s African exploration spending fell to $176 million in 2023 from $263 million in 2022. This will increase in the near future if Chevron is to explore the newly acquired acreage. Net proved reserves in Africa have shrunk by 20% since the end of 2020, to just 445 million barrels of oil and condensate — about 9.3% of total reserves. Natural gas reserves have shrunk by 20% over the period to 2,257 billion cubic feet, with Africa accounting for just under 8% of total reserves. Africa’s contribution to oil and gas production, which stood at 341,000 barrels of oil equivalent per day in 2023, represents just 11% of Chevron’s total output and has declined by a similar percentage from 2021.
Chevron’s exploration interest is welcome news for Africa, where countries rely on IOCs to fill the void left by the near-disappearance of the resilient independents that once dominated exploration. The propensity to explore manifests itself in the feeding frenzy around the Orange basin spanning Namibia and South Africa since Total discovered the giant Venus field, but there is growing interest in exploration blocks across the Atlantic coast. But while frontier countries with competitive terms like Namibia have had little trouble attracting exploration capital, mature producers like Nigeria and Equatorial Guinea have fought hard for investment even to develop existing discoveries. Angola appears to be striking a balance in efforts to revive frontier exploration and maintain investment in satellites and commitments. Total has snapped up a second block offshore Sao Tome and Principe and Nigeria’s government is trying to lure Eni and Shell to oil and gas-rich but cross-linked Block OPL 245. However, production in mature producing countries has declined significantly. Nigeria’s output, at 1.45 million bpd, is 1 million bpd below levels 12 years ago. Angolan production, which peaked at around 2 million b/d in 2008, has declined to just over 1.12 million b/d in the first quarter of 2024. Mature NOC producers have sought to take a more active role to fill the void left by IOCs and independents, but most lack cash and operational capacity.