Ivory Coast is expected to finalize the licensing procedures for six oil blocks this month with the outcome likely to boost the West African country’s drive to attract increased investment in its upstream activities and enable it double output by 2020 in line with the National Development Plan.
The six blocks are part of the 22 new ones that Ivory Coast had offered for sale in 2017 but had no fixed time for their disposal but left them open for negotiation except those that attracted more suitors to necessitate an auction.
Speaking in March in South Africa, Ivory Coast’s new Minister for Petroleum, Energy and Renewable Energy Abdourahmane Cisse was quoted saying: “If we get an expression of interest from one party for a block, we will negotiate with them directly. If several express interest, then there will be a bidding process for that block.”
Cisse, who was appointed to the position in January, said the government is keen on increasing production and had launched negotiations with European supermajors but which he did not name.
Already UK’s Tullow Oil, Italy’s ENI and France’s Total SA are involved in exploration ventures in Ivory Coast even as the government of President Alassane Ouattara intensifies campaigns to woo more local companies and independents to take up the lucrative deep and ultra-deep water oil and gas opportunities.
“We have six contracts that we are negotiating right now with (oil) majors,” said Cisse.
“It is a sign that they (majors) actually believe in the country. Otherwise they won’t be looking at it. We won’t have a remake of 2010,” he said in Cape Town in reference to the political crisis in the West African country sparked off by the declaration of Laurent Gbagbo, the President of Ivory Coast since 2000, as the winner of the 2010 Presidential election, the first poll in the country in 10 years.
With the expected conclusion of the six contracts this month, Ivory Coast is optimistic the country’s portrayal of itself as a preferred investment destination for gas and oil in West Africa would attract exploration and production companies with the necessary wherewithal to dive deep into its ultra-deep space in search of crude oil and natural gas.
An analysis of Ivory Coast’s oil sector by USAID says the country growth of the sector “has been supported by steady increases in regional electricity demand, but production had been declining due to a lack of investment.”
“Despite some early favorable discoveries, oil offshore production has yet to take off unlike in Ghana,” USAID said.
Apart from the petroleum code that has been lauded by many as investor-friendly, USAID says some of the US companies investing in Ivory Coast have found “Ivoirian authorities are very cooperative and in general the environment for exploration is good.”
“Companies interested in exporting oil and gas production equipment to Côte d’Ivoire should work with the Ivoirian authorities to understand the related tax breaks available under the Ivoirian investment code.”
Of more interest to keen upstream investors eyeing the Ivory Coast offshore market is the decision by the government to offer investment credits “for exploration in deep and ultra-deep waters” with the US agency saying several blocks are now delineated and open for negotiation.
Furthermore, Ivory Coast’s booming economic performance, having grown 9.2% between 2012 and 2016 and a resilient rate of 8.5% for 2017, appear to have enticed previously reluctant supermajors to return and re-launch their search for more oil and natural gas.
For example, Italy’s Eni, which says it is perfecting it is new strategy of acquisition of wide majority stakes in exploration blocks with a high hydrocarbon potential, and allowing for the early monetization of resources through the sale of minority stakes, returned to Ivory Coast in 2015 after acquiring, through its subsidiary Eni Côte d’Ivoire Limited, a 30% stake in offshore exploration block CI-100.
In 2017 Eni strengthened its position in Ivory Coast’s upstream operations when it acquired majority share in deep offshore blocks CI-101 and CI-205 in water depths ranging between 200m and 2700m.
Separately, a partnership of global integrated company BP and Kosmos Energy was at the end of 2017 awarded five new offshore oil blocks located in the centre of the Gulf of Guinea under a deal with Ivory Coast’s national oil company Petroci.
Apart from improving the chances of BP achieving its production target of 800,000 bpd, the blocks of CI-526, CI-602, CI-603, CI-707and CI-708 are expected to boost Ivory Coast’s drive for increased oil output in the short term.
With an estimated oil production of 34,000bpd and gas output of 216 million cubic feet/day, there is still huge room for growth when one considers the country’s immense and yet to be harnessed resources.
In fact, USAID says for foreign companies eyeing a share of Ivory Coast’s oil and gas industry, “the largest opportunities are in exploration, supply and production.”
This position is expected to be cemented by this month’s conclusion of the licensing of six oil blocks.