Eni becomes operator of Cabinda North block in Angola

Eni’s CEO Claudio Descalzi and Sonangol’s Chairman of the Board of Directors Carlos Saturnino signed today an agreement that assigns operatorship of Cabinda North block to Eni, as well as 48% the block’s rights. The signing took place in Luanda at the presence of the President of the Republic of Angola João Gonçalves Lourenço and the Prime Minister of Italy Paolo Gentiloni.

Cabinda North, of which Eni previously controlled 15%, is an onshore block located in a little explored oil basin in the north of the country, where Eni will be able to leverage the mining knowledge acquired in activities in a neighboring area in the Republic of Congo. In case of significant discoveries, production will be facilitated by existing infrastructure.

In addition, the two companies signed a Memorandum of Understanding to define joint projects throughout the whole value chain of the energy sector. The MoU provides for the assessment of associated and non-associated gas resources in Angola’s offshore, to be traded on both domestic and international markets, and the optimization of exploration activities and identification of new opportunities for joint exploration. Also, it provides for the study of optimization measures in the refining and trading sector in Angola, and the evaluation of opportunities in the sector of renewable energy and, in particular, in photovoltaic.

These agreements expand the scope of Eni's activities in Angola and strengthen its presence in the country, while consolidating the strategic alliance with Sonangol.

Eni has been present in Angola since 1980 through its subsidiary Eni Angola. Equity production amounts to 155,000 barrels of oil equivalent per day.

ENI at a glance

Eni is a major integrated energy company, committed to growth in the activities of finding, producing, transporting, transforming and marketing oil and gas. The company operates in the oil and gas, electricity generation and sale, petrochemicals, oilfield services construction and engineering industries. Eni is active in 70 countries with a staff of about 79,000 employees.

Production and reserves
In the fourth quarter of 2016, Eni’s hydrocarbon production was 1.856 million boe/d (1.759 million boe/d in the full year), 1.5% lower compared to the fourth quarter of 2015 (unchanged y-o-y). Performance for the year was affected by the production shutdown at Val d’Agri (as compared to the full year results), while y-o-y comparison was affected by the recognition in 2015 of cost recovery for past investments made in Iran. New fields’ start-ups and production ramp-ups at fields started up in 2015 (280 kboe/d) mainly in Angola, Egypt, Kazakhstan, Norway and Venezuela as well as increased production in Iraq (as compared for the full year) were partly offset by planned facilities downtime, mainly in the United Kingdom, and mature fields declines. The share of oil and natural gas produced outside Italy was 91% in the quarter and 92% for the full year (91% and 90% in the 2015 reporting periods, respectively).

Liquids production (906 kbbl/d) decreased by 9.2% from the fourth quarter of 2015. Planned facilities downtime and mature fields declines were partly offset by the start-ups and ramp-ups in Angola, Norway and Kazakhstan.

Natural gas production in the fourth quarter (5,184 mmcf/d) increased by 6.5% from the same period a year ago. Higher production in Angola, Egypt and Venezuela was partly offset by planned facilities downtime and mature field declines.

For the FY2016, liquids production (878 kbbl/d) decreased by 30 kbbl/d, or 3.3% from the full year 2015. Natural gas production (4,807 mmcf/d) increased by 126 mmcf/d, or 2.3%.

Estimated 2016 year-end reserves were 7,490 mmboe. Net additions to proved reserves pertaining to discoveries, extensions, improved recovery, revisions of previous estimates were 1,244 mmboe. These increases compared to production of the year yielded an organic reserve replacement ratio of 193%. Reserve additions were boosted by projects advancements and the FID taken at the Zohr project. Estimated year-end reserves were 7,490 mmboe. The reserves life index was 11.6 years (10.7 years in 2015).

ANGOLA OPERATIONS

Eni’s activities in Angola are mainly concentrated in the Exploration & Production sector. The Group are engaged in technologically complex projects in deep-waters leveraging their skills, assets and experience. Eni have stakes in productive blocks and licences for areas not in production, as well as having a stake in the Angola LNG Limited (A-LNG) consortium for the construction of a gas liquefaction plant.

The company’s activities are concentrated in conventional and deep-water offshore areas over a total, developed and undeveloped, surface area of 21,296 square kilometres (4,404 km² for Eni). The main assets in the country is Block 15/06 (Eni 36.84%, operator) part of the West Hub project launched in 2014 and the East Hub development project which is underway with start-up expected in 2017.

Eni additionally has stakes in licences that are not in production, in particular, in: the Lianzi Development Area (14K/A Imi Unit Area; Eni 10%), Block 35/11 (Eni 30%, operator), Block 3/05-A (Eni 12%), Cabinda North onshore (Eni 15%) and the Open Areas of Block 2 of the Gas Project with 20%.

In 2015 Eni and the State company Sonangol signed certain agreements aimed at strengthening strategic and operational partnership, which include: (i) the commitment to upgrade the current development plans for the Lobito refinery, owned by the Angolan national company, with Eni’s expertise and know-how in the downstream sector including the potential synergies deriving from existing refineries; and (ii) the commitment to progress the ongoing evaluation of the gas resources in the Lower Congo Basin, in the framework of a strategy aimed at guaranteeing accessible energy in the Country. Once these are developed, they will allow energy supply to the internal market, sustaining local economy and the agricultural projects, which ease the diversification of the Country’s economy.

Block 0
Block 0 is divided into Areas A and B. In 2015, production from this block amounted to approximately 289 kbbl/d (approximately 28 kbbl/d net to Eni). Oil production from Area A, deriving mainly from the Takula, Malongo and Mafumeira fields amounted to approximately 17 kbbl/d net to Eni. Production in Area B derives mainly from the Bomboco, Kokongo, Lomba, N’Dola, Nemba and Sanha fields, and amounted to approximately 11 kbbl/d net to Eni.

In March 2017, Chevron subsidiary, Cabinda Gulf Oil Company (CABGOC) Limited, commenced oil and gas production from the main production facility of the Mafumeira Sul project offshore Angola.

Located 15 miles (24 km) offshore Cabinda province in 200 feet (60 m) of water, Mafumeira Sul is the second stage of development of the Mafumeira Field in Block 0. It has a design capacity of 150,000 barrels of liquids and 350 million cubic feet of natural gas per day. Early production from the project commenced in October 2016 through a temporary production system. Ramp-up to full production is expected to continue through 2018.

CABGOC is the operator and holds a 39.2 percent interest in Mafumeira Sul. Chevron's partners are Sonangol E.P. (41 percent), Total (10 percent) and ENI (9.8 percent).

Block 3
Block 3 is divided into three production offshore areas. Oil production is treated at the Palanca terminal and delivered to a storage vessel unit and then exported. In 2015, production from this area amounted to approximately 49 kbbl/d (approximately 4 kbbl/d net to Eni).

Production start-up was achieved at the Gazela field with an initial output of approximately 3 kbbl/d.

Block 14
In 2015, Development Areas in Block 14 produced approximately 114 kbbl/d (approximately 16 kbbl/d net to Eni), accounting for approximately 14% of Eni’s production in the Country. It is one of the most fruitful areas in the West African offshore, recording 9 commercial discoveries to date. Its main fields are Kuito, Landana and Tombua as well as Benguela-Belize/Lobito-Tomboco. Associated gas of the area will be re-injected in the Nemba reservoir and later it will be delivered via a transport facility to the A-LNG liquefaction plant.

Production start-up was achieved at the Lianzi project (Eni’s interest 10%), with the start-up of the first two wells which yielded approximately 25 kbbl/d by the end of the year. The start-up of an additional well in 2016 will allow to reach a production peak of approximately 35 kbbl/d.

Block 15
The block produced approximately 326 kbbl/d (approximately 37 kbbl/d net to Eni) in 2015. Production derives mainly from the Kizomba discovery.

Block 15/06
The activities concerned to put in production approximately 450 mmbbl of reserves by means of the development of West Hub projects, sanctioned in 2010, and East Hub project, sanctioned in September 2013.

The West Hub Project, with start-up at the end of 2014, represents the first Eni-operated producing project in the Country. The development program plans to hook up the Block’s discoveries to the N’Goma FPSO in order to support production plateau. In April 2015, production start-up was achieved at the Cinguvu field, following the first oil of the Sangos field, and in January 2016, Eni started production from the M’Pungi field, with an overall production of approximately 25 kbbl/d net to Eni.

Eni and Sonangol agreed a revision of certain contractual terms to support investments in the Block 15/06, where in January 2015, Eni obtained a three-year extension of the exploration period.

In February 2017, Eni started-up the Cabaça South East field of the East Hub Development Project, in Block 15/06 of the Angolan deep offshore, five months ahead of development plan estimates and with a time-to-market among the best in the sector. Block 15/06 reached a peak of 150,000 barrels of oil per day in 2017.

Cabinda North block
In November 2017, Eni and Sonangol signed an agreement that assigns operatorship of Cabinda North block to Eni, as well as 48% the block’s rights.

Cabinda North, of which Eni previously controlled 15%, is an onshore block located in a little explored oil basin in the north of the country, where Eni will be able to leverage the mining knowledge acquired in activities in a neighboring area in the Republic of Congo. In case of significant discoveries, production will be facilitated by existing infrastructure.

LNG business in Angola
Eni holds a 13.6% interest of the Angola LNG consortium that manages a LNG plant, located in Soyo, with a processing capacity of approximately 1.1 bcf/d of natural gas, producing 5.2 mmtonnes/y of LNG and over 50 kbbl/d of condensates and LPG. The plant envisages the development of 10,594 bcf of gas in 30 years.

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