LONDON: The first vessel that will pump and store oil for Angola’s 230,000 barrels per day (bpd) Kaombo project is en route to the West African nation, operator Total said.
The Kaombo oil block will produce its first oil this summer, Total said on Thursday. Once it is fully up and running, it will add roughly 14 percent to the OPEC member’s average 2017 output of 1.632 million bpd.
The Kaombo Norte floating production, storage and offloading (FPSO) vessel left Singapore earlier this week, Total said. It can pump 115,000 bpd, half the oil block’s eventual production.
The $16 billion offshore project will add a significant amount of oil to Africa’s number two exporter at a time when it is bound by output limits under a deal orchestrated by the Organization of the Petroleum Exporting Countries.
A source close to the project said the block was expected to pump roughly 100,000 bpd by August.
Another FPSO, Kaombo Sul, is still in Singapore.
OPEC is reducing output by roughly 1.2 million bpd as part of a deal with Russia and other producers that began in January 2017 and was extended until the end of 2018.
So far, Angola has complied comfortably, pumping even less than the maximum agreed. Last month, its output of 1.6 million bpd amounted to 194 percent of compliance with promised cuts of 78,000 bpd.
Declining production at mature fields has cut into Angola’s output, but the Kaombo addition could complicate efforts to maintain compliance.
Angola’s state oil company Sonangol has said production will be roughly steady this year, and the above-target cuts earlier in the year could keep its average compliance for the year within OPEC’s limits.
Longer term, Angola is expected to struggle just to maintain output, with the International Energy Agency (IEA) warning that only Venezuela will see a bigger drop in production over the next five years.
Angola’s oil production peaked at 1.9 million bpd in 2008, the IEA said, warning in its five-year outlook that capacity will drop by some 370,000 bpd by 2023 even with the new projects.
“Angola is expected to post the biggest slide in capacity after Venezuela as aging oil fields lose steam and foreign investors, faced with relatively uncompetitive prospects, lose enthusiasm,” the IEA said.
Angola to launch big oil block under shadow of OPEC cuts
Angola to launch big oil block under shadow of OPEC cuts
G7 countries to release oil reserves as IEA agrees to largest ever market intervention
- IEA recommends release of 400 million barrels
RIYADH: Germany, Japan and Austria will release part of their oil reserves after the International Energy Agency recommended the release of 400 million barrels of oil from stockpiles, the largest such move in IEA history.
In a statement, IEA Executive Director Fatih Birol said the flow of oil, gas and other commodities through the Strait of Hormuz have all but stopped, leading global energy supply to fall by around 20 percent.
Ahead of the confirmation of the move — a larger intervention than the 182.7 million barrels that were released in 2022 by in response to Russia’s invasion of Ukraine — several countries began setting out plans to bring their reserves into play as countries grapple with soaring crude prices amid the US-Israeli war with Iran.
Birol said: “I can now announce that IEA countries have decided to launch the largest ever release of emergency oil stocks in our agency's history.
“IEA countries will be making 400 million barrels of oil available to the market to offset the supply lost through the effective closure of the strait.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets.”
Germany’s Economy Minister Katherina Reiche confirmed on Wednesday her government plans to limit petrol price increases at filling stations to once a day and to introduce more stringent antitrust regulation of the sector.
She did not give an exact timing for those measures, but added that the US and Japan would be the largest contributors to the release of the oil reserves.
The US has not confirmed it would do so, but its Interior Secretary Doug Burgum told Fox News on Wednesday that “these are the kinds of moments that these reserves are used for.”
The announcements did not stop oil prices rising, with Brent crude up 3.26 percent to $90.66 a barrel at 4:29 p.m Saudi time, and West Texas Intermediate up 3.12 percent to $86.05. Both were some way below the $119 a barrel seen earlier in the week.
“The situation regarding oil supplies is tense, as the Strait of Hormuz is currently virtually impassable,” Germany’s Reiche said.
“We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity,” Reiche said about the IEA’s request.
According to a statement by Reiche’s ministry, Germany will contribute 2.64 million tonnes of oil. This corresponds to 19.51 million barrels.
Reiche stressed there was no supply shortage in the country, which has a legally mandated reserve of oil and oil products intended to cover 90 days’ demand.
South Korea will release 22.46 million barrels of oil, which represents 5.6 percent of the total IEA ask, the country's industry ministry said.
“The government will consult with the IEA secretariat on details, such as the timing and amount, from the perspective of national interests in accordance with domestic conditions,” the ministry said in a statement.
The ministry said it would continue to coordinate closely with major countries in responding to high oil prices to minimise any domestic impact.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
Acting ahead of the IEA move, G7 member Japan announced plans to release 15 days' worth of private-sector oil reserves and one month's worth of state oil reserves.
“Rather than wait for formal IEA approval of a coordinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a broadcast statement.
Following a meeting with the IEA on Wednesday, G7 energy ministers said: “In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves.”
All IEA member countries are required to keep 90 days’ worth of their nation’s oil use in reserve in case of global disruption.
