British multinational Shell signs exclusive $1bn deal to explore for oil offshore Angola

British multinational oil and gas company Shell plc (LON, NYSE, Euronext Amsterdam: SHEL) and Angola’s National Agency for Oil, Gas and Biofuels (ANPG) have signed an exclusive agreement to explore new oil blocks offshore Angola, as the country seeks to boost declining crude production.

The supermajor is planning to invest about $1bn for exploration rights covering Blocks 19, 34 and 35, along with 14 additional blocks in ultra-deepwater areas, Bloomberg reported.

ANPG’s president of the board of directors, Paulino Jeronimo, told reporters at an event in Luanda on Monday (November 3) that the funds would be allocated for seismic surveys and drilling. Jeronimo noted that Angola’s priority remained to keep crude output above 1mn barrels per day (bpd) through incremental production projects and marginal field development, according to the report.

Angola’s crude output dropped below 1mn bpd in July, falling short of government production forecasts. This happened for the first time in two and a half years and for the first time since the country quit the Organization of the Petroleum Exporting Countries (OPEC) in January 2024 (effective January 1).

According to OPEC data, Angola’s crude production fell from about 1.7mn bpd in 2015 to near 1.1mn bpd in 2023, owing to ageing deepwater fields and limited new drilling. This has prompted the government to overhaul fiscal terms and expand licensing to attract fresh investment.

As recently reported by NewsBase, Angola expects to award up to 60 oil and gas concessions by the end of 2025, building on its multi-year licensing programme launched in 2019.

ANGP’s executive administrator Alcides Andrade told delegates at the African Energy Week conference in Cape Town last month that the country had already met its initial target of 50 awards, achieved through annual licensing rounds and direct negotiations.

In September, the ANPG signed a separate agreement with Shell, US energy supermajor Chevron (NYSE: CVX) and Sonangol E&P, the upstream subsidiary of Angola’s state oil company Sonangol, for Block 33 in the Lower Congo Basin offshore Angola, marking Shell’s return to the country after 20 years.

At the event on Monday, Angola’s Mineral Resources, Oil and Gas Minister Diamantino Azevedo said that the country’s target of 1mn bpd, based on annual averages, would remain in effect for the next several years, as reported by Bloomberg.