bp starts awarding contracts fields in angola

BP Starts Awarding Contracts for Fields in Angola, People Say


July 4

BP Plc, Europe's second-biggest oil company, started awarding engineering contracts for offshore fields in Angola, Africa's largest oil producer, two people familiar with the matter said.

BP leads Exxon Mobil Corp., StatoilHydro ASA, Marathon Oil Corp., Total SA and Sonangol SA in the exploration of Angola's offshore Block 31, where it has discovered oil at 15 sites. Subsea 7 Inc. has already won a $460 million oil service contract, its largest in Africa, to work on the project, said one of the people, who declined to be identified because of its confidentiality.

BP plans to invest $8 billion by the end of 2010 in projects in Angola, which joined the Organization of Petroleum Exporting Countries last year, according to the London-based company's Web site. It expects to bring more than 25 projects worldwide online between 2007 and 2009 that will add about 650,000 barrels a day of oil equivalent, or 17 percent, to production.

``Angola is the key region for BP,'' Greg Smith, the managing director of investment adviser Fat Prophets U.K. Ltd. in London, said by phone today. ``Any news about drilling in Angola would be well received by the market.''

The company on Feb. 1 announced the 15th oil discovery in Block 31, which lies in water depths of between 1,500 and 2,500 meters. It hasn't published an estimate of the size of reserves in the field. BP last October started pumping crude from the Greater Plutonio fields off the Angolan coast, after investing about $5 billion there.

Output Rising

In February, BP said its output will rise 13 percent during the next five years to about 4.3 million barrels a day. The company's oil and gas production fell 3 percent to 3.82 million barrels a day last year after the company sold assets and received less crude from joint projects. It was the second annual drop after a decade of expansion.

Subsea 7 has been awarded its largest African contract to date, involving services in support of a ``major'' development program in offshore West Africa, the Aberdeen, Scotland-based company said yesterday in a statement on its Web site, without specifying the country of operation or the company which awarded the contact.

``We can't comment,'' Jackie Doyle, a spokesman for Subsea 7, said by phone from Aberdeen, Scotland. He added that an announcement would be made ``in the next two to three weeks.''

Didier Keller, who until two months ago was chief executive officer of SBM Offshore NV, the world's largest producer of floating oil production platforms, said May 15 before he stepped down that he expected a ``form of commitment'' from BP ``soon'' for the delivery of units in Angola.

Nigeria Slips

Angola pumped 1.94 million barrels of oil a day in May, versus Nigeria's 1.9 million barrels, according to Bloomberg estimates. Nigeria slipped to second place last month following militant attacks on oil fields and platforms, which have stopped more than a quarter of the nation's output.

Angolan crude production rose 21 percent last year to 1.72 million barrels a day.