WEST AFRICA

Fred Akanni
Lagos

Chevron protecting Africa programs, despite recession

Chevron's plan to achieve operating and other expense reductions in selected operating companies and all corporate departments, totaling about $500 million in 1999 will not affect the upstream expenditure, especially in Africa, according to the corporation's chairman Ken Derr.

The American giant churns out 40% of its worldwide production of 857,000 b/d of liquid hydrocarbon production from Angola and Nigeria. Derr said that the company's 1999 budget of $5.1 billion is a testimony that the company has faith, even in these lean times, and is willing to grow (the budget is 10% less than 1998 budget). At least 20% of the money will be spent on projects in Africa. "We want to preserve upstream growth projects," he said.

One such growth project is the development of the Kuito Field, located in 350 meters of water, in deep offshore Angola. Chevron has awarded contracts worth $400 million for the first phase of development of the field, which is expected to start production of 75,000 b/d in early 2000. Another project is the development of four fields offshore and in swamp locations off Nigeria. Elsewhere, apart from the Tengiz Field in the Caspian, where 200,000 b/d of oil is being produced, the company is cutting costs.

In other events related to Africa production, Chevron's Chairman Ken Derr said a 1 million b/d decrease in global demand for oil, partly as a result of the meltdown of several Southeast Asian economies, is a key reason for the crash in crude oil prices. The other problems are a warm winter in Europe and America and the lack of commitment by OPEC countries to curtail production. He spoke to Chevron employees in a company-wide televised message. Derr added that he couldn't tell when the crisis would abate, but he was sure that prices would rebound to $16-$20/bbl range in the near future. He said that the company's 1999 budget was based on $10-$14/bbl range.

Petronas charges into Africa

Malaysia's state owned oil company Petronas is investing in the oil industry in Africa despite the country's economic crisis. Petronas wants to pick up deepwater leases in Nigeria and has been talking to high-ranking officials within the military government. The Malaysian government is also putting in a word for the company. But, Nigeria has not granted any deepwater lease awards since the indigenous operator, Star Atlantic Petroleum, picked up OPL 246 in the ultra-deepwater zone in mid 1998, and even that was an off chance.

Petronas officials have visited Lagos, the commercial hub of Nigeria as well as Abuja, the political capital, several times in the last six months, discussing possible equity spit with some of the majors already operating in the country in the event that they get a lease.

Petronas earth scientists speak excitedly about the 15% the company has in the recently awarded Exxon-operated lease Block 24 in deepwater Angola, but the major investment so far made in Africa is the 80% ownership of Engen, South Africa's refining, marketing, and now upstream oil company. "Let me put it like this," says a top Petronas official, "we haven't been told to stop spending."

Ivory Coast: Ranger banks on CI-26

Of all its five leases in Cote d'Ivoire, Ranger seems satisfied with CI 26, where it has 24% interest even as operator. The partners in the block include Tallow (24%), Addax (42%), and state-owned Petroci (10%). The company is keen on farming out part of its 35% interest in CI 40, CI 101, and CI 103. But, in CI 26, there are activities which distract the company from worrying about selling out acreage interest.