Jasper Peijs, Africa Exploration Vice President from BP at Africa E&P Summit 2019
Interview Conducted by Our Summit Journalist, Ed Reed
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ER: Are things looking better in African exploration?
JP: In every down cycle there are opportunities. Whereas four or five years ago the terms and availability of acreage were harder, there are now plenty of opportunities – at the right terms, and there is a desire to work together. Four years ago we were only in four countries in Africa: Angola, Egypt, Libya and Algeria. And in the past three or four years we’ve added six countries to that. So we’re clearly seeing this as an opportunity to grow as BP.
ER: Do you think African states are moving in the right direction?
JP: The best example I can give for that is one of our heartlands, Angola, where a lot of investment seemed to be grinding to a halt five years ago. Some of that’s natural, in the general progression of a basin’s lifecycle. The big four licences with production were reaching the end of their licence term – it was only 10 years away. This would have left new investments, which might only get into production in five years, with not enough production time to recoup the investment. In addition, the terms were quite harsh for smaller fields and the cost of operating was fairly high. The new president has changed a lot of that. He has changed the marginal field terms, given companies the right to develop gas and also bringing in new decrees on exploration and production – that all is having an effect. We’re participating in three projects that have already been sanctioned. I can see plans for a couple of wells, driving near-infrastructure exploration, and more projects being sanctioned in the next two years. That’ll turn out to be a good success story over the next five or 10 years.
ER: In Egypt, there’s been a lot of discussion about the potential for a regional gas hub. Is that a plausible solution?
JP: I think the bigger success story in Egypt is that it was relying on imports to keep up with domestic gas demand growth. There was such strong demand that it had to start importing gas from other countries and the government was paying around US$10 per mmBtu for imported gas. With the big sanctions that we’ve participated in – West Nile Delta, Atoll and the giant Zohr discovery that Eni have made – the success is that Egypt no longer needs to import. That saves the country, the government, billions of dollars every single year. And from that platform, maybe you can start to think about, if there’s more to come, going into the LNG export business. But I wouldn’t want to make the same mistakes again, which might lead to domestic demand outstripping supply.
ER: Angola and Egypt have both moved market reforms forward. Is this an essential step for these states to take?
JP: Yes. The reality is we’ve all got multiple places where we can invest our capital. Today the benchmark of competitiveness is probably set by the US onshore. This applies to gas, with supplies into Europe, and oil. That’s what we compete with. With whatever investment, whatever opportunity we see, we’re mindful of that price point.
ER: The Tortue LNG project, in Mauritania-Senegal, is an interesting bet on FLNG. How confident are you feeling about those prospects?
JP: I feel very confident about the presence of a quality gas resource in Mauritania and Senegal. The FLNG was the first phase. If you want something online quickly and efficiency, you want something that’s modular. That’s why this will be the fastest LNG development in history, if it manages to deliver first gas by 2022. I think after that, now that you’ve got part of the infrastructure in place, you can look at what makes best economic sense. And that may mean more FLNG or it may be a different development technique.
JP: Just south of Tortue we’re lucky enough to be part of the Yakaar discovery. We could see a similar resource – subject to an appraisal well later this year – showing up between Yakaar and Teranga to the south. In Mauritania, some gas has been found and we’re going to drill a big exploration well, Orca. When that comes in, there will be another resource almost the same size as Tortue. This is a serious opportunity, and it will require a serious amount of capital investment. It does provide an opportunity for a design-one, build-many strategy.