Total to go ahead with Angolan oil project after slashing costs

 
Suzie Neuwirth
FRENCH energy giant Total yesterday said it has decided to develop an offshore project in Angola, after reducing costs to $16bn (£9.6bn).

The project had been repeatedly delayed, as oil companies cut back on investments and return cash to shareholders. But $4bn has been knocked off the cost of the oil field, which is now expected to start production in 2017. Total has raised its output capacity estimate to 230,000 barrels per day from 200,000 barrels per day.

Total operates the ultra-deep offshore Kaombo project and owns a 30 per cent stake. State-owned Sonangol owns 50 per cent, Esso owns 15 per cent and Portugal’s Galp Energia holds five per cent.

“While continuing our commitment to develop the Angolan oil industry, Total has significantly optimised the project’s design and contracting strategy in recent months,” said Yves-Louis Darricarrere, president of upstream at Total.

“Although expected, this is an important milestone that provides further visibility around Total’s longer-term volume trajectory,” said Lucas Herrmann, analyst at Deutsche Bank. “We carry the project within our Total model as an end of 2017/early 2018 start-up with capacity being reached in 2020 and as such we view this as an important step towards the company’s volume ambitions.”

Shares in Total closed at €49.06.