Renewed efforts to boost production attract greater foreign investment in Cote d'Ivoire's hydrocarbons sector

With the return to stability and economic growth, foreign direct investment is again flowing into Côte d’ Ivoire’s hydrocarbons sector. Prompted by the prospects of greater oil finds and growing domestic demand for gas, companies have sought to make the most of existing production fields, while also seizing the opportunity to further investigate the country’s seabed for hydrocarbons. To facilitate investment, the authorities are offering up additional blocks for exploration through new production-sharing contracts (PSCs).

Legal Framework

Apart from an improved business environment, another factor that has rendered the sector more attractive in recent years is a revised legal framework. With the adoption of oil and gas codes in April 2012 and December 2013, the country took steps towards stronger exploration and production strategies, the application of transparency and environmental protection principles, and the rehabilitation of existing sites. In addition, the government improved the PSC model and strengthened sector governance.

New Discoveries

Côte d’Ivoire lies on an area between two tectonic plates called the West African transform margin, which has yielded significant oil discoveries for its eastern neighbour, Ghana. The authorities hope that similar finds could yet be made in Ivorian waters. Offshore discoveries in recent years give credence to this sentiment, opening the door for additional investment in the sector. Russian company Lukoil struck oil and gas in the CI-401 block in December 2011, while Irish independent Tullow Oil and US-based Anadarko Petroleum found oil in deep water as they explored CI-103 in June 2012. France’s Total discovered oil in deep water in CI-100 and CI-514 in April 2013 and April 2014, respectively. Then Lukoil, again, found oil in deep water in CI-101 in April 2014.

Recent Contracts

A continued interest in exploration has been demonstrated by the signing of a number of recent contracts. Anadarko Petroleum signed a PSC with the Ivorian government in September 2015, allowing deepwater exploration in block CI-527, holding a 90% interest and the government 10%. Anadarko Petroleum currently operates in three other blocks, including CI-529, CI-528 and CI-103. The firm foresees a minimum investment of $30m for drilling activities in CI-527 within a three-year time frame. This effort is part of a larger drilling campaign that started in December 2015 in blocks CI-527, CI-528 and CI-103.

Another PSC approved recently is the agreement with African Petroleum and Ophir Energy for block CI-513 signed in March 2016. Ophir Energy made a contribution of $16.9m towards African Petroleum’s back costs relating to the block, thus acquiring a 45% interest in the field, while African Petroleum holds 45% and the national oil company, Société Nationale d’Opérations Pétrolières de la Côte d’Ivoire, has the remaining 10%. Exploration drilling activities are set to start in 2017.

Côte d’Ivoire secured the return of US oil major ExxonMobil in December 2014. After 32 years of absence, ExxonMobil signed two PSCs for ultra-deepwater exploration, acquiring a 90% share in blocks CI-602 and CI-603. In March 2016 the company also opened a regional office in Abidjan, from where it will manage its Ivorian and Liberian operations.

By the end of 2015 the government had signed 23 new PSCs. A year earlier, more than half a dozen new ultra-deepwater blocks had been identified during a 3D seismic data survey and were reportedly open for negotiation. In total, Côte d’Ivoire has identified 61 blocks in its basin, of which 29 are already attributed, while four are currently in production, two are under evaluation and the rest are being explored.

The government’s push to improve the country’s hydrocarbons sector has resulted in a series of new investments, oil discoveries and the return of ExxonMobil. Any new finds will entice investors to join development efforts and new production in old and new offshore fields, contributing to the government’s objectives of achieving 200,000 barrels per day by 2020.

 

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The Report: Côte d'Ivoire 2017

Energy chapter from The Report: Côte d'Ivoire 2017