In it for the long haul

Chevron has been in Angola for over 60 years and operates two blocks in the country. Chevron Managing Director, Southern Africa Strategic Business Unit, Derek Magness, talks to Africa Energy Series – Angola, about the company’s operations in the country.

Chevron operates blocks 0 and 14 off the Angolan coast. What are the main challenges in operating those blocks?

Chevron has been in existence in Angola for more than 60 years. So, as you can imagine, our infrastructure varies in age. The majority of it is over 50 years old. Asset integrity and continuing to maintain the assets in a fashion that allows us to safely produce while protecting the environment is one of our main challenges. Continuing to do that year after year with the infrastructure continuing to age is probably our main challenge, in addition to ensuring that we can continue to move forward with our investment profile. There is an opportunity and challenge to work with the government and our partners and to continue defining what our next set of projects will look like.

Can you tell us about Mafumeira and other projects in the blocks that Chevron operates?

Mafumeira, in particular Mafumeira Sul, which was our most recent project, was a further extension of the Malongo south field. We had identified that we had reserves there. Several years back, we placed a structure called Mafumeira. From production details and analysis, we determined there were additional reserves that were potentially recoverable. We were then able to go in, do an assessment, and agree with our partners to come out with the Mafumeira Sul project. The project was completed in 2018 and consisted of two additional wellhead platforms to access the reservoir, a production processing platform – where we bring all of the fluids into and do all of our processing – and a living quarters platform. From that, we are able to produce oil, gas and liquefied petroleum gas. In particular, we are able to take the associated gas from that field and put it into the Congo River Crossing pipeline, which feeds directly to the ALNG plant as part of supporting that investment and that portfolio with the government of Angola and our partners.

Does Chevron have plans to bid on the offshore blocks that will be available for licensing in 2019?

Chevron has been around for more than 60 years in Angola. Over that time, we have enjoyed a very good partnership with the government as well as our partners. For us, it is important to make sure that we can go back to our shareholders and show them that we are driven to enhance the value of what they give us. As the blocks become available and if we find something of interest, then we will certainly do additional data analytics. Based on that set of data and those analytics, it will drive us toward what we would or would not do.

Chevron was a part of the task force to discuss the key areas of the oil industry and changes. As an IOC, was Chevron able to get what it wanted out of it?

I think it is important, first, to congratulate the government of Angola, in particular under the leadership of President Lourenço, for putting together a unique task force. This was a very uncommon thing from a historical perspective that brought the industry and the government together to collaborate. Under Minister Azevedo, there was very solid leadership. The team was able to work together and attack five key areas inside of the industry and the government, from expediting approvals all the way through to abandonment. When we look at that and we look at the laws that were eventually published by the President, there were some very good and beneficial things that happened relative to both government, and industry, in clarity and ability to move forward. Therefore, we are very appreciative for the opportunity to have worked with the government. We want to thank the government for their leadership in working with the industry to make that happen. The laws have been passed and we continue to work, utilizing those laws to continue driving investment forward. We have been able to discuss opportunities with the government; we’ve been able to expedite obtaining approvals made; we’ve been able to define the abandonment framework. In gas and marginal fields laws, there were many benefits captured for the industry and I believe several of these will move forward.

Speaking of marginal fields, is Chevron interested in applying for marginal fields status for any of its current developments?

What is a successful outcome from the marginal fields’ task force is the fact that we have now defined what a marginal field is. The industry can then use that definition in looking at their portfolios to see whether any fields meet the criteria. That allows us and affords us the opportunity to speak to the government about how we might utilize the law in order to advance a development that otherwise potentially wouldn’t move forward based on economic challenges. Chevron is absolutely interested in that. We are continually looking at our portfolio to understand what might qualify, and that allows us to have this dialogue with the government. We have not applied these particular terms at this point in time, however.