Italian company Eni said on Wednesday it had made a major oil discovery in Angola that would boost its credentials as one of the most successful foreign oil producers in Africa in recent years.
The find is Angola's largest offshore discovery in years and may help Africa's second-biggest crude producer avoid a steep decline in output due to the ageing of its other fields.
Oil accounts for 95 per cent of exports and around 70 per cent of revenues, and the government has recently offered better fiscal terms and more collaboration to international energy firms in an effort to help its mostly impoverished population.
Eni said its new Agogo prospect in Angola's deep waters contained between 450 million and 650 million barrels of light oil with potential for further upside.
Data from the exploration well pointed to a production capacity of more than 20,000 barrels of oil per day, it said.
"This is a valuable find of light, sweet oil which they will be able to fast-track to meet increasing demand in 2020-2021," Santander oil analyst Jason Kenney said.
Eni, which has been in Angola since 1980, will be operator at the field with a stake of 36.8 per cent, the same as Angola's state-owned Sonangol. SSI Fifteen has 26.3 per cent.
Angola, a member of Opec, is a key location for the Italian state-controlled major. The company currently produces around 155,000 barrels of equity oil equivalent per day in the African nation.
Eni, which in 2018 produced 1.85 million barrels per day, was struggling to replace reserves a decade ago and lost credibility over its management of the huge Kashagan oilfield in Kazakhstan, according to Reuters.
But giant gas finds at Mamba in Mozambique and Zohr in Egypt have since given it the strongest discovery record in the industry.
The major, which produces more than half its oil and gas in Africa, has made a move to diversify away from the continent by clinching a series of deals in the Arabian Gulf region.
It is set to uncover its new strategy plan to 2022 on Friday.
The find comes as Angola is set to ship the least crude oil in at least 11 years in April, suggesting structural issues afflicting the nation’s production are increasingly hurting its biggest source of export revenue.
Exports will drop to 1.31 million barrels a day in April, the smallest outflow since at least March 2008, according to copies of loading programmes seen by Bloomberg.
Angola, Africa’s second-largest producer, is among Opec members participating in a global pact to trim production. Even if they’re not perfectly correlated, exports often offer clues about how much a country might be pumping. The nation pledged a curb of 47,000 barrels a day from October, but its April loadings will drop by far more than that.
The decrease in outflows from the country isn’t entirely unexpected. The International Energy Agency, an adviser to oil-producing nations, warned a year ago that a slump in output would only deepen due to ageing fields and a lack of interest from foreign investors.
“It does seem to reflect the issue of ageing fields for the Angolan oil industry,” said Warren Patterson, head of commodities strategy at ING Bank in Amsterdam. “If we cast our minds back to the previous Opec deal, Angola over-complied with the deal, and that certainly was not out of choice, but more an issue of maturing fields.”
Whether deliberate or involuntary, the decline from Angola would serve as a boost to the wider curbs by Opec and its allies as they attempt to avert a glut of crude. While Saudi Arabia has led the way with supply restrictions, conformity among some other participants in the pact has been less consistent.
Angola’s exports are down by almost 200,000 barrels a day compared with October, its starting point for curbs under the Opec+ accord.