Tuesday, December 18, 2018

Cote d'Ivoire Deepwater Development Moves Forward

December 6, 2018

FPSO Baobab Ivoirien MV10 (Photo: Modec)
FPSO Baobab Ivoirien MV10 (Photo: Modec)

Independent crude oil and natural gas producer Canadian Natural Resources (CNR) and its joint venture partner in Cote d'Ivoire, Svenska Petroleum, plan to commence the fourth phase of the development of the deepwater Espoir asset in 2019, on the back of prevailing political stability and growing confidence of international oil companies in the country's hydrocarbons potential.

Last week, CNR unveiled its US$3.7 billion net capital budget for 2019, nearly US$1 billion less than its 2018 forecast saying it is eyeing a daily production of at least 1 billion barrels of oil equivalent made up of 76 percent crude and natural gas liquids (NGL) and 24 percent natural gas.

The Calgary-based independent, which also has working interests in other deepwater Cote d'Ivoire blocks of CI-100, CI-101, CI-105, CI-109 and CI-400 adjacent to the producing Espoir field in Block CI-26 and the Baobab oil field, looks forward to scaling up production levels of crude oil and NGLs to between 782,000 bbl/d and 861,000 bbl/d.

“At Espoir, the company targets to commence Phase 4 development in late 2019 with initial production targeted to come on stream in early 2020,” NSR said early this week.

Both CNR and Svenska also plan to drill an exploration well at Kossipo in the second quarter of the new year that will pave way for “development drilling with a pipeline tied-back to the floating production storage and offloading (FPSO) vessel at Baobab.”

The FPSO, Baobab Ivoirien MV10, is owned and operated by Japanese international supplier and operator Modec International Inc, which last year struck a deal with CNR and its partner in Cote d'Ivoire upstream Svenska Petroleum, to keep the vessel on station without dry docking until the expiry of its license in 2038.

The exploration well is expected at the end of the ongoing evaluation of the Kossipo North and Central prospect that Svenska says has already given strong indications of “interesting volumes for future drilling, hopefully in conjunction with the planned Baobab infill drilling in 2018/19.”

Svenska says even with the completion of the fourth phase of the Espoir development in 2019, only 25 percent of the oil in place could have been targeted, with more potential to conceptualize and implement new phases in the future.

“A conceptual scenario for phase 5 is taking shape,” said Jan Hagen, Svenska's Executive Vice President in a review of the company's 2017 performance.

But as CNR would say, progress in Cote d'Ivoire's hydrocarbons upstream projects would depend on several factors some far beyond the control of any single oil and gas producer with international oil companies' financial health relying heavily on and “highly sensitive to the prevailing prices of crude oil and natural gas.”

For example, CNR, which has a 58.7 percent operated interest in the Espoir field in water depths ranging from 100 to 700 meters, has made provision for an additional US$700 million capital expenditure in 2019 but on condition the “pricing differentials and market access improve throughout 2019”. Should the company make such investment in the new year, it hopes to bring online additional production in 2020 and beyond.

But prospects within Cote d'Ivoire look good especially with the end of the bloody civil strife that ended in seven years ago although winning the confidence of international oil companies apprehensive of political conflict in the country is taking a toll on the government's long wait for an upstream investment boom.

With Svenska now insisting it is financially “in good position” and CNR indicating it could as well scale up the already approved investment budget for international asset development, Cote d'Ivoire could be on the way to realizing its dream of ramping up production to 200,000 barrels of oil equivalent/day.

“We have a strong balance sheet and when an opportunity arises we are prepared to act,” said Fredrik Ohrn, Svenska's CEO in a previous statement

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