A new independent player in Angola’s oil and gas sector

Angola

Adriano Mongini, CEO of Azule Energy, talks to The Energy Year about the significance of having a new independent player in Angola’s oil and gas sector. Established in 2022, Azule Energy is an incorporated joint venture between BP and Eni that operates as an integrated standalone energy company.

What is the significance of a new independent player in the Angolan oil and gas sector?
The creation of Azule Energy in August 2022 represented a significant leap forward for BP and Eni because it meant that we became the largest equity producer company in Angola and, along with TotalEnergies, the most important operator in Angola.
Regarding our operations, we are now operating at more or less 220,000 bopd. We also have a very rich portfolio in exploration. We are right now doing a drilling exploration in Block 15/06, and we are planning to do the same in other blocks.
BP and Eni had different positions in the country, but they were very complementary. BP had two blocks, 31 and 18, which are still producing strongly and have room for some production investment and optimisation. Block 15/06 was ramping up its production with huge investments, namely the Agogo and Ndungu projects. These projects represent a total USD 8.2-billion development and the largest FID in 2023 in the entire world.

What are the key updates on the developments in Block 15/06?
As of June 2023, we have started the last early production phase of Agogo. We are increasing production, and we are also doing another water injection well.
We have also started the large Agogo project itself. We are readying the FPSO, which is not a new build but an older vessel transformed into an FPSO. This FPSO is now under construction in China and is expected to begin production by mid-2026.
In the meantime, we are progressing with the subsea developments by planning the number of wells and optimising everything. We have three rigs now, and one of these three rigs will be dedicated for more than two years to the development and drilling of the 30 wells of the Agogo development. We’re in the full swing of the new development while still focusing on optimising current production.
One of the challenges we are dealing with is cost increases. Agogo’s tender for the subsea system installation was done one year before in Ndungu, and we have seen the operation costs increasing dramatically. They are much more than we expected. This is a challenge we have to manage.

What are the other key development projects that Azule Energy is working on?
There are three different reservoirs in Block 31 that we are planning to develop. The plan is to develop them with a dedicated FPSO that is relatively small in size to match the size of the reservoir. We are really working hard to optimise this block because cost is critical here. An FID is expected at the end of 2024.
In Block 18, subsea structures were recently awarded to TechnipFMC, and we have projected three new wells to further improve the production of the asset.

How strategic is the Quiluma and Maboqueiro project?
It’s definitely smaller than Agogo. However, for many reasons, it is very important. It took almost 10 years since the gas consortium partners started to discuss a non-associated gas project. An FID was made in 2022. All the activity for this project is already well underway. One of the two platforms is under construction in Ambriz in Angola, and the other is under construction in Italy. The project also has a gas treatment facility onshore, the construction of which has already started. As the operators of the project, we expect to start gas production in July 2026.

What is the potential of gas production beyond the Quiluma and Maboqueiro fields?
There is great potential because the resources that are discovered could be developed pretty quickly. Then there are additional wells in which we are conducting exploration works. Beyond the blocks of the NGC [New Gas Consortium], we have something that I really want to highlight.
In 2024 we will drill the first gas exploration well outside the NGC. It’s in Block 01/14. This is really something new, and it is not far from the NGC area. All these new developments could, if successful, really improve and speed up the development of gas in Angola.
Gas can definitely play a huge role for Angola in the future. With the high price of LNG and the feedstock costing nothing, the situation is pretty uncommon. If the first exploration is successful, there will be other areas explored in the vicinity. That could lead to increasing production, not just for LNG. There is a lot of room for expansion.
However, we would like to create the full value chain for the gas rather than only use it for power generation or LNG. We want to develop it as a feedstock for chemical plants, fertilisers and blue ammonia. There is a full value chain that can be unlocked with additional volumes.

How important are investments in exploration for Azule Energy?
We have three activities that are key. One is to continue exploration in Block 15/06. Currently there is an important well on the south part of Block 15/06 that could open up a new hub.
We are also focusing on the new blocks we were awarded. There’s Block 28 in the Namibe basin. That is a very hot target right now. We are planning to drill wells there in 2024. These will be the first few wells drilled in that basin in Angola, and there are only two wells on the Namibian side.
Unfortunately, the geological scenario is completely different in Angola than it is for the huge, successful discoveries in Namibia on the south side. The Orange Basin is different. However, this block is a new play, so there’s still a lot of hope.
We also have Blocks 46 and 47. They’re deep offshore. We were awarded the blocks and are waiting for the official assignment.

How strategic are investments in renewable energies for Azule Energy?
Azule Energy has a very aggressive decarbonisation plan. We are going well beyond the solar project of Caraculo, which has been operational since early March 2023. We are starting to talk about the second phase, where another 25 MW would be added. However, we are also planning to be more active with other projects. There’s the value chain of the gas that can be developed for low-carbon energies and other initiatives that we are studying right now that could soon be put together.

What are the key successes that the National Oil, Gas and Biofuels Agency (ANPG) has enabled in the Angolan upstream sector?
The ANPG is a fantastic partner. They’re very keen to follow up with the operator. Everything is easy because we both have the same target: to maintain or increase the current level of production as much as possible. They are very flexible, and we work very well with them.
Their focus on local content is also absolutely crucial. Local content is part of the essence of Azule Energy. Angola is the soul of Azule, and we are going beyond the legal requirements for Angolanisation.
We started a recruitment process to build our independence. We are cutting off ties, which means that we have to deliver the technical services here rather than somewhere in the UK or Italy.
One of our targets is to help Angola build capacity because Angolanisation is not just about putting Angolans in companies. We have to create the conditions to make them successful. The process is long because the number of experienced people is limited. We have to develop more capable people that are suitable for managerial positions.

Where would you like to see Azule Energy in five years’ time?
Azule Energy looks to be the top energy company in the country. We are envisaging an increase in our production. Regarding gas, I’m pretty sure we will see a much higher increase than what we are planning now following the new exploration activities and discoveries.
We further want to be the partner of Angola in the decarbonisation process. It is important to understand that the decarbonisation process is not to the detriment of oil and gas production. These activities are complementary, and both add value to energy companies.

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