*This interview will be published in the upcoming AES: Angola COVID-19 Impact Report
Nina Koch, Managing Director of Norwegian energy multinational Equinor, spoke to Africa Oil & Power about how Equinor aims to access more Angolan exploration acreage and mature new prospects.
What is the current status of work programs for Block 17, 15 and 31, in which Equinor is a non-operating partner?
Equinor experienced positive development in Angola the last year, especially regarding the license extensions for Blocks 15 and 17 operated by Exxon- Mobil and Total, respectively. However, COVID-19, followed by the financial crisis, represents a major concern. That said, we are impressed by the close collaboration between the government and International
Oil Companies (IOCs) to ensure business continuity in this demanding time period. No safety incidents have occurred and production remains unaffected by COVID-19 due to excellent work from all parties, except for the planned curtailments to comply with OPEC quotas. The license extensions have critical importance to ensure future project development of the blocks, and we are happy to see that there are many profitable projects being matured. In addition, important work to extend the lifetime of our facilities is being prepared by operators.
Unfortunately, drilling has been suspended due to COVID-19-related risk, but we hope to continue as soon as possible. Drilling wells is key to maximize the value of the assets going forward. While work programs have been adjusted to reflect the challenging situation, there are many robust business opportunities that remain competitive in a low oil price environment. There is also a prioritized focus on short-term cash flow.
Equinor has a strong balance sheet and has taken measures on a corporate level to handle the situation. We have performed comprehensive work to improve our business in the last years, which means that we are better prepared to deal with a financial crisis of this dimension. That said, we always need to improve, and several initiatives are being developed, one of which is capturing lessons from working from home and utilizing digital solutions.
How are current market conditions affecting exploration prospects?
Exploration in new blocks is necessary for the long-term development of the Angolan offshore opportunities, and we are pleased with the presented plan for regular concession rounds in the coming years.
At Equinor, exploration is the main driver to create organic value for the company and represents one of our core competencies. We have a long-term perspective in Angola and have been present in the market for almost 30 years. Still there is a high potential, and we are engaged in processes that can lead to new exploration opportunities.
Exploration has a long future horizon and usually we continue to drill exploration wells, even when oil and gas prices are low. Our long-term price assumptions are the basis for prospect evaluations. At the same time, the requirements for robustness and break-even prices are quite demanding for all new business opportunities.
However, this time period is special, and drilling is hugely affected by the COVID-19 risk and the fact that the number of people offshore needs to be limited to a minimum.
Does Equinor have plans to shift investment toward renewables development in Angola?
Equinor is developing as a global broad energy company. Our goal is to build a profitable renewable energy business and low-carbon solutions. Our focus has been offshore wind, but we are also involved in solar projects. In addition, CO2 capturing and storage is central in our strategy to transform the company into a broad energy company in the future. We are in a major transitional process, utilizing offshore core competencies in new business areas like renewables.
The climate challenge is real, and we want to be part of the solution. In Angola, we do not participate in any renewable projects for the time being, but we cannot rule out that this can be included in a future portfolio if the opportunities are competitive compared to other countries we are involved in.
What is Equinor’s long-term outlook in Angola?
Equinor is here to stay with a long-term perspective on our business. Extended field life for Block 17 is now 2045, and we hope that exploration close to infrastructure will generate new, profitable opportunities. In addition, we would like to access more exploration acreage and mature new prospects in the future.
Angola has shown endurance and effectiveness in dealing with the pandemic. In the future, we believe that high standards within compliance and reduced CO2 emissions are important elements to be competitive on a global scale. Low carbon is a central part of Equinor’s corporate strategy. We hope to see collaboration between the authorities and the IOCs to reduce emissions, both for producing fields and for new field developments.
In addition, we would like to see faster progress in the commercial processes to secure new opportunities with positive impact for all parties. Angola has been an important country for Equinor for almost three decades. There is much to be done in the industry to fight the decline and develop new resources with smart technical concepts and a low carbon footprint.