Oil & gas firm expands its offshore portfolio in Angola

Angolan integrated energy player, Etu Energias, former Somoil, has expanded its list of assets off the coast of Angola by finalizing its deal with Galp, a Portuguese oil and gas company, for stakes in three offshore blocks operated by two oil majors, France’s TotalEnergies and the U.S.-based Chevron.

Following a purchase and sale agreement struck on February 10, 2023, with proceeds that could reach $830 million, the conclusion of the deal was confirmed a few days ago. Thanks to this, Etu Energias has wrapped up the indirect acquisition of Galp’s 5% stake in Block 32, 9% in Block 14, and 4.5% in Block 14K in Angolan waters.

Furthermore, the Angolan player explained that the financing for the deal was provided by a consortium led by the African Export-Import Bank (Afrexim Bank), which included Shell Western Supply and Trading, Banco Angolano de Investimento (BAI), and Banco de Fomento Angola (BFA).

Located approximately 260 km off the coast of Luanda, in water depths ranging from 1,400 to 2,000 meters, Block 32 came online in 2018. This asset, which is said to be one of the biggest producing blocks in Angola, is operated by TotalEnergies Exploration Production Angola (30%), which led the contractor group composed of Sonangol Pesquisa e Produção (30%), Sinopec (20%), ExxonMobil (15%), and Galp (5%) before the Portuguese firm sold its stake.

The first project on Block 32 is Kaombo with 658 million barrels of estimated oil reserves situated at depths of up to 1,950 meters and spread across 800 square kilometers. While the first FPSO, Kaombo Norte, started production in July 2018 from three of the six fields – Gengibre, Gindungo, and Caril – the second FPSO, Kaombo Sul, produced its first oil eight months later from the remaining three fields: Canela, Mostarda, and Louro.

Covering around 4,094 km2, Block 14 is situated about 100 km offshore from Cabinda, Angola, and the first oil occurred in 1999. This block, which is described as having a significant output of medium-light crude oil, is operated by Cabinda Gulf Oil Company Limited – Chevron (31%), which spearheaded a contractor group composed of Sonangol (20%), Eni Angola Exploration (20%), Etu Energias through its affiliate Angola Block 14 (20%), and Galp (9%) before the Portuguese company divested its interest.

Last but not least, Block 14K’s contractor group was composed of Chevron Overseas (operator, 15.75%), TotalEnergies Congo (26.75%), Chevron’s Cabinda Gulf Oil Company (15.50%), Azule Energy Angola (10%), Sonangol (10%), AB 14 (10%), Societé Nationale des Pétroles du Congo (7.5%), and Galp (4.5%) prior to the sale of Portugal-based firm’s stake to Etu Energias.

Edson R. Dos Santos, Etu Energias’ Chairman and CEO, commented: “The close collaboration between the different parties was fundamental to the success of this business, which represents Etu Energias’ entry into deepwater oil production. The conclusion of this transaction demonstrates the resilience of our company and represents a huge step in our strategy to build a profitable and diversified portfolio.”

According to Galp’s Filipe Silva, the sale of interests in the blocks supports the company’s decarbonization strategy and enables the Portuguese player to crystallize the value of mature upstream assets, as the contribution of these three Angolan blocks to its oil production is not as large as the resources in Brazil.

Galp has been selling off some of its assets as a way to optimize its portfolio. To this end, the firm recently sealed a deal with ADNOC to divest its upstream assets in Mozambique, including a stake in Eni’s Coral Sul floating LNG (FLNG) offshore facility.

This came after the Portuguese player embarked on the evaluation of the commerciality of its oil discoveries in the heart of Namibia’s Orange Basin within license PEL 83 off the coast of Namibia, situated close to recent discoveries made by Shell and TotalEnergies.