Onshore production can provide opportunities for local content companies to be involved and participate in the exploration process.

Alberto MENDES President GRUPO SIMPLES

Land ahead

February 15, 2017

TOGY talks to Alberto Mendes, president of Grupo Simples, about onshore operations, Angolan companies and local content. In December 2015, Simples Oil & Gas was awarded a 30% stake in block Kwanza 6, one of the 10 onshore blocks auctioned by Sonangol. The company is currently working on the due diligence to become a full-fledged operator by 2017. The objective is to start exploration activities in Block Kwanza 6 in 2017.

• On land operations: “Onshore operations can help the Angolan economy to grow and modernise in a way that offshore operations cannot. For instance, offshore explorations are technologically more complex and local Angolan companies have always had difficulties in providing the necessary support services.”

• On local content: “Onshore production can provide opportunities for local content companies to be involved and participate in the exploration process, precisely because onshore activity requires less investment and is less technically complex. That many of these companies will be able to provide services will change the face of the Angolan oil industry.”

Besides touching on these topics, TOGY talked at length to Mendes about becoming an oil operator, competing with the majors and the benefits of onshore operations. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with the heads of Grupo Simples below.

What is the potential of Angola’s recently awarded onshore blocks?
We see a lot of potential in Angola’s onshore blocks. First, it is cheaper to produce oil from an onshore basin. Though the initial stage will require some investment in infrastructure, once this is in place the marginal cost of each barrel will be much lower than that of same barrel derived from an offshore block.
Moreover, onshore operations can help the Angolan economy to grow and modernise in a way that offshore operations cannot. For instance, offshore explorations are technologically more complex and local Angolan companies have always had difficulties in providing the necessary support services.
Onshore production can provide opportunities for local content companies to be involved and participate in the exploration process, precisely because onshore activity requires less investment and is less technically complex. That many of these companies will be able to provide services will change the face of the Angolan oil industry. We want to tap that potential.

 

What do you hope will result from Sonangol’s restructuring?
Everybody agrees that Sonangol needs to make payments more quickly and further adjust to the present market conditions. I think the restructuring is in line with these conditions and will result in better performance.

What have been the major developments for the company in 2016?

Our major development has been our expansion. We are now an oil operator. In a tender we won a position in KON 6, an onshore block awarded to Simples Oil & Gas by Sonangol. The company is now working on due diligence required to start operations in 2017.
We have also been preparing to offer services beyond Angola’s borders, as well as investing in social areas such as healthcare and education. In spite of the market’s downturn, we have managed to grow in the adverse economic climate.

How are your operations organised?
Grupo Simples is the holding company, and the Simples Oil & Gas branch deals with everything related to the industry. Right now, our objective is to strengthen our oil and gas services portfolio to be ready to compete against the majors by the end of 2017. We will be providing most of the services offered by Schlumberger, Baker Hughes and Halliburton.
From an operator’s perspective, Simples Oil & Gas will focus on the development and E&P of KON 6. We have been acquiring material in the USA to become a full-fledged production company by the beginning of March 2017.

What is the strategy for the next two years?
We are currently focusing on production. Most of our activities have been aimed at generating the right conditions for extracting oil. E&P will be the focus of our activity in 2017. Once exploration begins, we hope a cycle will be created that allows us to invest in increasing production.

For more information on Grupo Simples and the other Angolan companies beginning onshore operations, see our business intelligence platform, TOGYiN.
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