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ExxonMobil‘s arrival in Angola’s Namibe Basin is the latest step in the American major’s bold decision to take increasingly risky bets in offshore African projects. With no plans to let go of its Nigerian and Angolan assets, the supermajor is on the move.Echoes of Latin America in the Gulf of Guinea – A year into President Joao Lourenço‘s mandate, during which time the head of state has been calling for renewed exploration, ExxonMobil has signed a memorandum of understanding (MoU) to explore blocks 30, 44 and 45 in the very little known Namibe Basin that sits on the border with Namibia. Before the separation of the continents this section of Africa was connected to Brazil, where several giant discoveries have been made since 2006.
ExxonMobil is also sitting on more than five billion barrels of oil in Guyana, to the north of Suriname, which has only strengthened its conviction that there are some more offshore discoveries to be made in the Gulf of Guinea. This is also what convinced the major to take a 30% stake in Namibian block PEL 44 in August 2018 alongside Azinam and Maurel & Prom (AEI 823). It was this geological symmetry between Latin America and Africa that previously prompted the American major to invest in South African offshore blocks Tugela South, Transkei & Algoa with Impact Oil & Gas in 2012.Venture into unknown waters – After three years of negotiations, ExxonMobilsigned deals with the Mozambican government for offshore blocks Z5-C, Z5-D and A5-B in September 2018. Mozambique boasts vast gas discoveries, all of which are all located in the far north of the country, the likes of block 4 of which ExxonMobil holds a 25% stake alongside ENI. Yet, the American major’s three new permits sit further south in a very little +explored areas near to the mouth of the Zambezi River and to the town of Angoche in the province of Nampula. The firm has however tried to keep a lid on its financial exposure by operating these blocks alongside Rosneft and Qatar Petroleum (AEI 830). The major has also taken an interest in a new zone: Senegal and Mauritania. While it was happy to fork out a $70 million signing bonus to pick up three blocks in southern Mauritania in December 2017, the firm has shown a more wait-and-see approach in Senegal. It hopes to purchase deep offshore blocks there once Total completes its survey of the basin (AEI 830).Dwindling long-standing assets – ExxonMobil‘s two Nigerian subsidiaries are some of the largest operations in the country. Mobil Producing Nigeria alongside NNPC produces nearly 550,000 barrels of oil equivalent per day. It also controls Esso Exploration and Production Nigeria (EEPNL), operator of OML 133 on which sits the Erha deposit that produces around 90,000 to 100,000 bpd. EEPNL also holds 20% of OML 118, which contains the Bonga deposit, in production since 2004. However, OML 118’s operator Shell has postponed the development of Bonga South West, which could produce 200,000 bpd, on several occasions due to tax disputes over OML 133 with NNPC (AEI 827). Meanwhile, the three other countries where the major is in production are in decline. In Angola, production at its block 15 has been in freefall for years. While output once stood at 600,000 bp in the early 2010s, it struggles to reach 250,000 bpd today. In Equatorial Guinea, output at Zafiro is also in sharp decline and the major is considering selling its 71% stake to the Trident Energy/Kosmos Energy duo (AEI 829). And lastly, ExxonMobil‘s fields in Chad’s Doba basin are proving to be highly costly to maintain at their current levels. When compared to the other assets in the major’s African portfolio, Chad is somewhat of an anomaly, only bringing 20,000 bpd for ExxonMobil.