New Wave Of Exploration Heralds Reversal Of Decline
BMI View: C ô te d ' Ivoire is hoping to reverse its falling oil output, as new investment targeting the country ' s highly pro spective West African deepwater flows in. Indeed , given its proximity to lucrative fields in Ghana and status as a proven hydrocarbon s producer, exploration could yield new discoveries necessary to support to the country's aim of lift ing production to 200,000b/d by 2018. However, attractive fiscal terms and political stability will be key above - ground determinants of the degree of success C ô te d ' Ivoire can expect to enjoy as exploration booms.
Cô te d ' Ivoire is hoping to reverse declining oil production on the back of an uptick in exploratory activity, according to Ibrahima Diaby, head of the hydrocarbons division of the country's Ministry of Mines. Diaby told Reuters on January 3 2013 that the country aim s to increase oil production to 200,000 barrels per day (b/d) by around 2018. This would be a substantial increase from current figures, with the EIA reporting the country produced an average of 40,632b/d in 2011.
While Cô te d'Ivoire has been an oil producer since the late 1 980s, output has fallen in recent year s as production has peaked from the country ' s deep and shallow water production sites. T echnical problems and chronic underinvestment during the country ' s political troubles in the last decade also impacted output .
However , with a boom in offshore oil exploration in West Africa, Cô te d ' Ivoire is emerging as a new exploration hotspot. With its waters bordering those of Ghana, a country that has quickly become a net oil exporter in the wake of significant discoveries since 2010 , and of Liberia, where international oil companies have invested in deepwater exploration, Abdijan ' s waters may be poised to yield further riches ( see our online service, August 3 2012, ' Eni Enters At Crucial Time For Recovering Country ' ) .
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Recent exploration results have been promising, with Tullow Oil reporting in June 2012 a discovery at its Paon-1X well, where it encountered 31 metres (m) of net oil pay. Tullow shares the licence with Anadarko , whose vice president Bob Daniels said the discovery ' confirms ' that the same petroleum ' system present in Ghana extends westward into Cô te d ' Ivoire. ' The government of Cô te d ' Ivoire is likely hopeful that Tullow and Anadarko can duplicate their success in Ghana, where following the 2007 Jubilee field discovery the duo (along with other partners) were able to quickly begin commercial production in 2010. In addition, Vanco reported i n December 2011 a light oil discovery at its 4 , 132m Independence 1X well alongside partners Lukoil and Petroci Holding .
Total , along with Anadarko, was among the firms which, according to Diaby , that have recently signed 14 new production sharing contracts as Cô te d'Ivoire benefitted from an improving political situation and rising prospects for West Africa ' s deepwaters. Deals for natural gas fields were also completed.
The new investment bodes well for the country . I ts status as a proven hydrocarbon s producer and proximity to existing production in Ghana ( potentially de-risking exploration ) could lead to a return of international oil companies (I OCs ) such as ExxonMobil which exited the country decades ago as production terms and fiscal agreements became unprofitable. S ustaining interesting in the country, and supporting the investment necessary to deliver commercial production, will therefore be essential for favourable licensing terms.
Similarly key will be political stability following the 2010-2011 political crisis. Although our Africa Country Risk team forecasts the country ' s economy to expand some 7.5% in 2013, political divisions remain unresolved. Indeed, the 2015 election will be a key point for investors eager to determine the extent of the country ' s stability ( see ' Reconciliation Unlikely In 2013 ' , January 3 2013 ) .