BP has decided to relinquish its 50% stake in Block 24/11, it said on June 29, in an exploration update. The company said the decision had been taken as Katambi, a pre-salt gas discovery made on the block in 2014, was considered to not be commercial.
Tudor Pickering Holt noted that this exit came as the company in general was pivoting towards gas, with finds in Trinidad, Senegal and Egypt. The US brokerage noted that the decision to leave Angola was driven by the country’s “harsh political/fiscal environment”.
As a result of the Block 24/11 exit, and other exploration write-offs in Angola, the UK-based super-major has taken a non-cash charge of around US$750 million in the second quarter.
The production-sharing agreement (PSA) on the Benguela Basin block was signed in December 2011, in a bid round notable for its high signature bonuses – and generally poor exploration results. BP is the operator of the block, while Sonangol holds the remaining 50%.
The declaration from BP came shortly after the publication of its “payments to governments” report. Payments on Block 24/11 are low, owing to its exploration status. The company paid bonuses of US$10 million in both 2015 and 2016, with US$300,000 and US$500,000 respectively in taxes.
Payments in the country from BP were dominated by Block 18 and Block 31, coming in at US$701.6 million and US$1.29 billion respectively in 2016, although these were a decrease from the previous year. Revenues to the government decreased on the lower value of production – output volumes actually increased year-on-year.
Production from Block 18 was priced at US$41.69 per barrel in 2016, from US$50.7 in the previous year, based on the payments-in-kind figure provided by BP. Prices on Block 31 fell to US$39.24, from US$47.11. The company did not report any payments for Block 25, unlike the previous year, suggesting this block has also been relinquished.
BP’s Angolan payments were its third highest outlay, after Azerbaijan and the United Arab Emirates. Its total tax bill for resource extraction was US$12.9 billion. Angola received US$2.33 billion in 2016 from BP, down from US$2.68 billion in the previous year.
Eni, which disclosed its payment figures earlier in the year, said it had paid Angola US$764.88 million in 2016, with the largest single payment on Block 15/06 at US$515.8 million, it said. Production from the block was priced at US$39.12 per barrel.
Total, meanwhile, paid Angola US$1.57 billion in 2016, of which US$1.36 billion was paid out on Block 17, the “golden block”.