CABGOC’s sustainable operations in AngolaAugust 4, 2021
Derek Magness, managing director of Cabinda Gulf Oil Company Limited (CABGOC), talks to The Energy Year about the resilience of Angola’s energy industry and how the company is achieving low-capex and low-carbon targets alongside greater safety and higher returns at its key projects. CABGOC is a subsidiary of Chevron, and has operated interests in blocks 0 and 14. Chevron is also the majority shareholder of Angola LNG (ALNG).
How would you describe the current state and resilience of Angola’s energy industry following the ambitious reforms passed by the government to transform oil and gas activity?
Angola has shown commitment to the process of transformation of its industry. Over the past two years we witnessed deep and ambitious reform of the legal and fiscal framework for the sector, leading to the creation of a new national concessionaire as a regulatory body (the National Oil, Gas and Biofuels Agency, or <a href='https://theenergyyear.com/companies-institutions/anpg/’>ANPG), as well as the development of legislative packages designed to attract additional investments. The many task forces created by President João Lourenço, aimed at addressing specific concerns raised by the industry, are what triggered this transformational change.
These efforts are beginning to yield results and the impact is felt throughout the sector. As an example, legislation targeting marginal fields is a concerted effort to stem production decline at a national level. Furthermore, because of these efforts, we at CABGOC are pursuing several opportunities to develop resources in our existing Block 0 and 14 concessions, relying primarily on a development concept never used in Angola, the “factory model” – a manufacturing-style process to improve efficiency, performance and costs. This will allow us to not only develop marginal fields, but to do so “in Angola, for Angola and by Angolans.”
Two significant projects are currently underway in Angola: Lifua A, which is being fabricated in Cabinda, and the Sanha Lean Gas Connection (SLGC) project, which is being fabricated in Lobito, in Benguela province. Local fabrication demonstrates our commitment to Angola, our belief in the development of competitive local content as a critical contributor to a competitive oil and gas sector, and our conviction that the local oil and gas sector is a significant catalyst for the country’s socioeconomic development.
These two investments have created more than 600 direct and indirect jobs that support families and help inject financial resources into communities, encouraging the growth of supply chains that sustain the industry and the communities in which we operate.
The Covid-19 pandemic created unprecedented challenges for many industries, and the oil and gas sector in Angola is no different. I congratulate the government of Angola for the response to the pandemic, for the efforts to keep people safe, and for the collaboration with the Association of Exploration & Producing Companies of Angola (ACEPA), which allowed us to implement preventative measures which enabled minimal disruption to our operations. This is a testament to the resilience of the industry.
The success of the Angolan oil and gas sector is rooted in a unique partnership between the industry and the government. It is this partnership, built on a foundation of mutual trust and a shared desire to achieve the sustainable development of oil and gas resources in Angola for the benefit of all stakeholders, including the people of the Republic of Angola, that creates the appropriate environment that will sustain growth and attract investment into the sector.
What measures are in place to reduce capex and increase reserves in the Mafumeira Sul Project and is there room for further developments?
At CABGOC, we are committed to achieving higher production and lower operational costs in all our projects and assets, maximising value for our stakeholders in Angola and beyond. At the core of this operational mindset is our corporate objective of achieving “Higher Returns, Lower Carbon.”
The Mafumeira Sul major capital project represents the enlarged second stage of the Mafumeira field development after the original Norte facility and wells development. The project was completed in 2019. Since then, production performance has been solid. We are optimising operational spend through targeted maintenance activities and identifying key synergies for maintenance and reliability work with other assets in the country.
Our team is also making significant progress to optimise our water injection alignment and gas lift volumes, both of which will reduce operational costs and improve recovery of resources. We export Mafumeira gas to the ALNG facility to provide additional revenue and cashflow for our stakeholders. Mafumeira contributes more than 30% of our Block 0 production and will remain a critical asset to provide stakeholder investment returns for the future.
What are the key priorities for further consolidating CABGOC’s long-term upstream presence in the region?
Our strategy to sustain our presence in the region is grounded on achieving higher returns while lowering our carbon footprint. That is our formula to continue to deliver value to the government of Angola, our joint venture partners and the communities in which we operate.
We will achieve this objective by optimising base production, managing costs, executing capital projects and rig programmes on time and on budget, while enabling long-term value via commercial opportunities.
The last few years have seen us focus on improving our cost structure through benchmarking and setting competitive performance targets. Major capital projects have shifted to shorter-cycle-time, lower-cost, repeatable projects using a staged, factory development approach. To sustain growth, we are evaluating additional regional development opportunities beyond our current blocks.
Another long-term value diversification enabler is the marketing of CABGOC’s gas at the ALNG facility in Soyo, in Zaire province. This facility has significantly reduced its carbon footprint by conserving and monetising previously flared gas volumes. We continue to deliver projects to this world-class performing facility and work with our JV South of Congo partners to ensure adequate feed gas to ALNG, while securing domestic market gas delivery as part of our commitment to Angola.
Chevron also continues a non-operated partnership with TotalEnergies in the Republic of Congo by maintaining base business operations to deliver a significant portion of our production and this is an important part of our commitment to the broader region.
What’s the latest on activity in the Lianzi Unitization Zone?
The Lianzi Development Project is a cross-border subsea project located in the Lianzi Unitization Zone between the Republic of Congo and the Republic of Angola.
The project had its first oil in October 2015, with production peaking in the middle of 2016. Lianzi’s production has been lower than planned due to rock quality, water injection rates and faster-than-expected water production, but such challenges do not deter our commitment to and belief in the importance of this project within our regional portfolio.
How has CABGOC leveraged the drop in oil prices to embrace new technologies and optimise costs?
The recent downturn, further exacerbated by the challenges posed by Covid-19, has impacted us, just like any other company in the oil and gas sector. Our focus has been on improving the things we can control, and that starts with the safety of our workforce. Our people are our most precious resource, and we preserve this resource by ensuring safe, reliable operations and managing costs effectively.
New technology has allowed us to stay connected and continue to run the business during an extremely difficult period. There is an increased use of digital tools across the organisation to enhance collaboration and understanding of our business performance. Furthermore, we are doing a better job at leveraging existing technologies and best practices where we can to further optimise costs, such as optimisation tools being leveraged within our base business. Our focus on digitalisation and streamlining workflows and business processes is part of our continuous efforts to improve our productivity and optimise costs.
How has CABGOC implemented the company’s advanced process control (APC) to maximise production at Angola LNG?
Chevron, as the largest shareholder in ALNG, is committed to using advanced technologies and data analytics to optimise process interactions and reduce variability inherent in complex process facilities. Leveraging Chevron’s worldwide human resource capital and experience of various implementations, we have been able to select high-value opportunities and realise encouraging benefits.
Implementation of advanced process control (APC) in ALNG started in 2019 and has contributed to an overall stable operation resulting in reduced flaring and improved yields. The improvements made to date are very promising and we are excited about the implementation and optimal utilisation of APC. We are confident that this will position us to utilise the maximum potential of the facility when more gas from offshore blocks becomes available for processing in the future.
What is the latest progress on the SLGC project development and how will it reinforce the gas supply to Angola LNG?
The Sanha Lean Gas Connection and Booster Compression (BC) are fully integrated and will be installed in a single offshore campaign. SLGC and BC will help continue CABGOC’s legacy in Angola by delivering needed gas from the Sanha field in Block 0 to the Soyo power plant and ALNG.
This development will also act as a gas hub, supporting CABGOC’s strategy to fill the Congo River Crossing (CRX) pipeline and enable future projects in blocks 0 and 14. The projects ultimately will be boosting liquids production across blocks 0 and 14, and providing continued and reliable gas supply to ALNG.
How is CABGOC contributing to knowledge and technology transfer in the country?
Our people are our most precious resource and enabling a culture of continued growth and development lays the foundation for a prosperous future. Knowledge transfer is done in multiple ways, such as professional internship opportunities. Internships are available for outstanding recent graduates and final year university students. During these assignments, interns gain hands-on experience by participating in active projects, develop skills under the supervision and guidance of experienced professionals, and use our programme as a gateway to explore job opportunities in CABGOC or elsewhere in the industry.
Additionally, over the years CABGOC has executed secondment agreements with the national concessionaire and <a href='https://theenergyyear.com/companies-institutions/sonangol/’>Sonangol, with the purpose of integrating their employees into CABGOC’s organisation and projects in Angola and in the US to support their training, development, and knowledge transfer primarily in technical areas. Upon completion of the assignments, these employees return to their companies.
CABGOC also partners with various regulators, such as the Ministry of Mineral Resources, Petroleum and Gas (MIREMPET) and the Ministry of Public Administration, Labour and Social Security (MAPTSS), on succession planning, mentoring and development.
What are the short- and medium-term objectives for CABGOC in Angola in the post-pandemic period?
In the short term, the safety of our personnel is our number-one priority. Following the slowdown of activities in 2020 due to Covid-19, we are focused on the safe ramp-up of operations and project execution activities in 2021. We have several projects in progress, including SLGC and the Lifua A factory development project.
As we look ahead, we will continue to mature future opportunities that will add value to the JV partnership and the Republic of Angola, leveraging our lower-cost, repeatable factory development approach. We need to plan for a longer, slower and sustained economic recovery by being thoughtful with our capital programme, while preserving the long-term value for our shareholders, for Angola and for the communities in which we operate.