Independents lead new charge for Africa's oil, gas assets

Cape Town (Platts)--11Nov2005

The scramble for Africa's oil wealth over the last decade saw the world's
majors compete for the giant prizes on offer, but on the back of soaring
prices the continent is again abuzz with an oil boom as independents scout for
opportunities in existing and new petroleum provinces.
     Oil production on the continent is set to double by the end of the decade
and the US will soon be importing 25% of its petroleum from the region, home
to 9.4% of the world's reserves. Over $50-bil will be spent on African oil
fields by the end of the decade.
     And while the boom is centered on the oil-rich Atlantic waters of the
Gulf of Guinea, from Nigeria to Angola, lesser-known areas such as Madagascar,
Namibia, Uganda and Mauritania are opening up and attracting independents with
deep pockets, a four-day oil and gas conference in Cape Town heard this week.
     But while officials at the Global Pacific event dispelled the negative
myths of doing business on the continent, these independents still face
challenges, not just from aggressive national oil companies but also from a
global shortage of rigs.
     Hardman Resources senior geologist Ian Bulley told Platts that rates for
semi-submersibles had jumped from around $200,000/day to nearly $500,000/day.
     Austria's OMV, which already has a strong position in Libya and Tunisia,
is eyeing further opportunities on the continent, particularly in Algeria and
Egypt, as it plans to reduce dependence on production from Romania and Austria
and hike its overall output by nearly 50% to 500,000 boe/d by 2010.
     The company's senior vice president Mike Fischer said OMV was producing
345,000 boe/d and it was "testing substantial risked reserves" with "excellent
results" in its Libyan NC-186 block where a sixth oil find has been announced.
     Australia's Woodside plans to spend 50% of its E&P investment in Africa
this year, with just 17% invested in Australia and 30% in the Gulf of Mexico.
Woodside's general manager Peter Grant said the company, which has assets in
Mauritania and Algeria, would drill 10 wells in Africa next year, up from
three this year.

     MAURITANIAN START-UP
     Grant said Chinguetti, Mauritania's first offshore oil development, was
88% complete and would come on stream as scheduled in the first quarter of
2006. He confirmed the cost of the project had risen to $705-mil, up from a
previous estimate of $625-mil, with another $45-mil set aside to cover
unplanned contingencies that may occur during the deep water installation
program,. "We are a little over budget because we had to do some extra
drilling," Grant said.
     UK independent Tullow Oil, which earlier Friday signed a farm-in deal
with state-owned Sonangol for a 15% stake in block 10 offshore Angola, where
an exploration well is currently being drilled, also said at the conference
that it had plans to increase its exposure to oil and gas ventures in Africa.
     Brian Maxted, managing director of Kosmos Energy, a newly formed private
oil company in Dallas, said his company's focus was to "build something
strategic" with a focus offshore West Africa, where it plans to drill 10-12
wildcats over the next five to seven years. Maxted's backers have clearly got
adequate funds as the company does not intend to raise external funds for the
time being.
     UAE's Al-Thani, which is looking to double its production in Sudan with
gross output from blocks 3 and 7 expected to reach 350,000 b/d by 2008, is
also keen to boost its exploration and production portfolio on the continent.
     Al-Thani's investments senior vice president Ali M'Rabet told Platts the
company planned to strengthen its senior management in the near future.
     Many of these players and countries are now making tentative steps to
address the perils of oil production on the continent, including the need for
transparency and improving the distribution of benefits from oil-led
development.

     EASY PRIZES ALREADY TAKEN
     But company officials said things are getting tougher, more expensive,
and the easy oil is gone, so companies are going further in search of oil and
gas. Heavy oil, LNG and deepwater developments that hinge on technology are
relatively new in Africa and all part of the diversification in the industry.
     The boundary between National Oil Companies and the international oil
companies is, however, getting narrower, and "competition is stiffening up,"
Woodside's Grant said. Africa, once off the radar screen for state oil
companies, is now a place where governments keen on raising capacity are
forging relationships with NOCs, particularly companies from Asia.
     Smaller regional players have also raised their game so they do not miss
out on regional development, with fledgling minnow Afren and Ophir, backed by
majority shareholder Mvelaphanda Holdings, South Africa's black empowerment
vehicle, leading a new breed of companies on the landscape.
--Jacinta Moran, jacinta_moran@platts.com

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.