Singapore-Malaysian firm signs US$5.3bn deal for offshore oil project in Angola

Yinson Production, the Singapore-based unit of Malaysian energy infrastructure group Yinson, on 28 February announced that it has signed a firm contract, worth US$5.3bn, with Eni Angola to supply and operate a floating production, storage, and offloading (FPSO) vessel for the Agogo deepwater oil project in the southern African country.

An FPSO vessel is a floating production facility utilised to extract, store and discharge oil and gas from offshore fields. Yinson has secured a 15-year contract, with a five-year extension option, for the FPSO Agogo project, subject to final acceptance. Operations are set to begin in the fourth quarter of 2025.

Eni Angola is a wholly owned subsidiary of Azule Energy, Angola’s largest independent oil and gas producer. Azule is a 50-50 joint venture between British oil and gas company BP and Italian energy major Eni, with exploration and production activities in 16 licensed offshore and onshore blocks in Angola.

The Agogo Integrated West Hub Development Project aims to recover hydrocarbons from two offshore fields in Angola: Agogo and Ndungu. With an expected peak production capacity of 175,000 barrels of oil per day, the project will utilise both the existing Ngoma FPSO and Yinson's new Agogo FPSO. Azule CEO Adriano Mongini describes the project as the start of a new wave of investments in Angola’s deep water oil production. 

Angola, one of Africa’s top three oil producers, has proven crude reserves of about 8.27bn barrels and an estimated 11tr cubic feet of natural gas reserves. In January 2023, the country pumped an average of 1.106m barrels of crude per day. However, production in Angola has been declining since 2015 when it peaked at 1.7m barrels per day. In response, the government has put forward various measures and policy reforms aimed at increasing exploration and production. These include new tax incentives to boost the oil industry and prioritising refinery development, including upgrades to the country's sole operating refinery in Luanda, as well as three new projects in the works.

Yinson Production has been operating in Africa since 1995, and its CEO Flemming Grønnegaard considers the continent a crucial market for the company. Although Yinson has been involved in seven FPSO projects on the west coast of Africa, including Nigeria and Ghana, the Agogo project will mark its first offshore production venture in Angola.

 

References

‘Angola - country commercial guide’, International Trade Administration, 08 May 2022

‘The oil and gas law review: Angola’, The Law Reviews, 01 November 2022

‘Azule Energy signs main contracts for the ‘Agogo integrated west hub development project’ in Block 15/06 offshore Angola’, Azule Energy, 27 February 2023

‘Yinson production signs firm contract for Project Agogo in Angola’, Yinson Production, 28 February 2023

‘Angola's oil output soars’, Angola Press Agency, 01 March 2023