Dig deep: Players are looking to discover the potential in the country’s deepwater basins

While Côte d’Ivoire’s offshore oil basin has attracted foreign players since the early 1970s, a lack of sizeable findings and rising production costs led to a slump in activity from the late 1980s onwards. This changed at the turn of the millennium when enhanced oil recovery techniques and the prominence of the Gulf of Guinea’s sedimentary basin in other areas, such as Equatorial Guinea and Angola, attracted international players such as Vanco Energy, Canadian Natural Resources (CNR), Tullow Oil, Lukoil and the Anadarko Petroleum Corporation. Initially, these efforts paid off, and, according to the US Energy Information Administration, daily crude output increased from an average of 11,500 barrels per day (bpd) in 2001 to more than 63,200 bpd five years later in 2006. However, a combination of prolonged civil unrest and more readily accessible fields elsewhere in the region led to a slowdown in activity, with a number of oil majors opting to suspend activity altogether. Recent production levels fell almost as fast as they had risen a few years earlier.

Addressing The Problem

In a bid to curb the trend, the Ivorian government has introduced new fiscal incentives and has laboured to make its regulatory framework as competitive as possible within. As a result, upstream players are exempted from all taxes except income taxes. Moreover, national oil company Société Nationale d’Opérations Pétrolières de la Côte d’Ivoire (Petroci) claims a carried interest of 15% at maximum. The lion’s share of licences, which are readily renegotiated, operate under a production-sharing agreement (PSA), alleviating operators of the bureaucracies and delays that regular concessions often face.

Boosted by oil finds in neighbouring Ghana in late 2010 and the end of a decade of conflict in the country in 2011, foreign players are once again trying their luck in the Ivorian oil basin. Close to 18 PSAs were signed in as many months in 2012 and 2013, while 3D seismic data is being gathered over a surface area of close to 9000 km. Meanwhile, 10 wells were drilled over the course of 2013, double the figure in the decade prior to that. In the wake of these developments, the government has announced its ambitions to increase daily production levels to 200,000 bpd of crude by 2020. To achieve this, the government has called on existing and new operators to increase production at ongoing sites, as well as to step up exploration efforts. “We have about 50 oil blocks, of which half have been awarded,” Prime Minister Daniel Kablan Duncan told local media in January 2014, calling on companies worldwide to explore an entrance into his country’s oil sector.

Tackling Difficulties

While sceptical of the feasibility of a five-fold increase in output over the next five years – new findings take seven years on average to reach production stage – exploration and production companies and operators seem encouraged by the concerted government push to expand activity. According to Ministry of Petroleum and Energy figures, a total of 27 exploration, development and appraisal wells are scheduled for completion by 2016. A number of these target a hike in production from ongoing fields. These plans feature upcoming drilling campaigns on the country’s two biggest oil fields, Baobab and Espoir, both operated by CNR. As of mid-2014 the firm was on schedule to start with a 10 well-drilling campaign on Espoir by the second half of the year. The plans cater for an additional output of close to 59,000 bpd.

Meanwhile, the oil producer is preparing for a third drilling campaign on the Baobab field, which represents about a third of national production, in the first half of 2015. A total of five production wells are targeted to raise output by 11,000 bpd, according to the company’s own estimates.

Deepwater

Ramping up activity will not be enough to meet the ambitious 2020 target, however. “Given the expansion projects we have going on today, 2020 production will be closer to 115,000 bpd,” Jean Charles Loubao, head of the legal department at Société d’ Exploitation et Production Pétrolière, a local marginal fields operator, told OBG. Operators have therefore welcomed the government’s push to license more blocks, in particular in the country’s deepwater basin, which as of yet has remained largely unexplored. With geological structures similar to Ghana’s Jubilee development, currently producing over 100,000 bpd, hopes are high are striking it big in these areas.

Looking Good

There has been encouraging news in this regard. Russian oil major Lukoil, for example, finished its first exploration well on the CI-101 block in April 2014, confirming the presence of hydrocarbons. The Capitaine East-1X well reached a depth of 5200 metres in waters exceeding 2000 metres. As of late 2014 the company was evaluating the results before planning further appraisal. In addition, the Russian firm is progressing on a six-well drilling programme on its CI-401 block, located west of the Jubilee field. By January 2014 Lukoil had finished the second well, drilled in water depths of around 1600 meters, which proved the presence of oil. As with CI-101, the outcome of the analysis on the well results will dictate the company’s plans in the next few years. At the end of 2013, Lukoil also completed drilling of an appraisal well at the Independence field, located north-east of block CI-101 and adjacent to the CI-401 block.

Additionally, French oil major Total, following the roll-out of a $300m investment plan for the exploration of three ultra-deep wells, reported positive results on its very first well in April 2014. The Saphir-1XB well, situated in the CI-514 block, in which CNR and Petroci hold minority stakes, was drilled to a total depth of 4655 metres and encountered 40 metres of net pay with light crude, according to the company. Total has also announced that it will progress with plans to drill two wells in both CI-515 and CI-516, in which it holds a 45% stake, along with US-based Anadarko (45%) and Petroci (10%), before the end of 2014.

Irish independent Tullow Oil is also working in deep-water, an area where it saw significant success in neighbouring Ghana’s Jubilee Field. The firm is working on the appraisal of the deepwater CI-103 block, which it operates in partnership with Anadarko and Petroci. At the end of 2013 the appraisal well Paon-1X determined the extent of a light oil discovery made one year earlier, which it estimates at a minimum of 700 metres. However, the Paon-2A well, also completed in December 2013, encountered water and was plugged, leading to questions regarding the size of the find.

Finally, CNR has gradually paved the way for an extension of its deepwater footprint. The firm is currently developing an exploration strategy for block CI-12, situated some 35 km west of its Baobab field and in which it has a 60% working interest. It signed a PSC in July 2013 and as of November 2014 the data from a 3D seismic programme was still being processed. Commenting on the signing, Dave Bell, CNR International’s vice-president for exploration, told the press, “Securing CI-12 is part of CNR International’s strategy to build a portfolio of high impact exploration acreage in areas where we understand the geology, can identify opportunities and have local supporting infrastructure.”

New Potential

Preliminary indications of oil in unexplored parts of the Ivorian basin, particularly deepwa-ter, are attracting attention from international players looking for the Gulf of Guinea’s next big find. While assessment on the findings is ongoing, ambitious drilling campaigns will increase understanding of yet unexplored parts of the Ivorian basin and affirm whether or not it shares the prolific geological composition found next door in Ghana. The government of Côte d’Ivoire is hard pressed to secure conducive investment conditions and regulatory consistency following the 2015 general election, which is set to take place in October.