AFRICANGLOBE – Norwegian multinational oil and gas company, Statoil has revealed that apart from plans to explore Russian Shale, it sees offshore Angola as the “next big gamble” and plans to start drilling next year, after securing several blocks in the region.
According to the Statoil’s Chief, Tim Dodson, Angola is attractive as its geology is similar to Brazil’s since they were part of the same basin before the two continents drifted apart.
“The big question mark and big hope is Angola… I think it will work out”, Dodson commented in a recent interview.
However, the company said its biggest constraint may be money as its exploration spending will hit a record $3.5 billion this year and its total capital expenditure has grown by 40 percent to $19 billion since 2010.
Dodson said the firm is spending so much on investments that its cash flow does not cover the outlays and needs to raise money, such as from asset sales, to cover dividends.
“Next year we have a very attractive portfolio, so we may spend $3.5 billion again. But that number is not carved in stone.”
The firm, which has expanded from its traditional North Sea base to all continents over the past decade, also expects to spend heavily on exploring in Brazil, Tanzania and the Arctic Barents Sea, possibly maintaining its record-high exploration budget.
Statoil, already a top offshore producer, said it needs new discoveries as it aims to lift production by a quarter to more than 2.5 million barrels a day this decade, and diversify its portfolio, still dominated by North Sea assets.
“I am very excited about the opportunities,” Dodson remarked, “There is a huge upside if it works.”
Statoil revamped its exploration strategy at the start of 2011, boosting spending, taking more risk, and putting Dodson in charge of a division that was struggling, even on its home turf.
The gamble paid off. The firm’s reserve replacement ratio, which indicates how much oil it finds in comparison with its production, jumped to 117 percent in 2011 and 110 percent in 2012 from 73 percent in 2009 and 87 percent in 2010.
By: Kehinde Adaramola