Eni finds oil sands deposits in Congo
By Ed Crooks in Pointe Noire, Republic of Congo
Published: May 20 2008 03:00 | Last updated: May 20 2008 03:00
Eni, the Italian oil group, has discovered a large oil sands deposit in the Republic of Congo that is expected to become Africa's first large unconventional oil development and could hold several billion barrels.
Paolo Scaroni, Eni's chief executive, said the project, due to begin production in 2011, opened "a new front" in the development of unconventional oil.
Unconventional resources, such as oil sands, which have in the past been considered too difficult or expensive to extract, are expected to provide an increasing proportion of the world's fuel supply in future as conventional reserves run down.
Canada's oil sands and Venezuela's Orinoco belt have the world's biggest known heavy oil reserves. The area to be developed by Eni is on a smaller scale, but is still likely to be very substantial.
Eni has not put a figure on the scale of the resources in its 1,790 sq km licence area, but a sample 100 sq km area that Eni has studied is estimated to hold 500m to 2.5bn barrels of recoverable oil.
That suggests the area as a whole could hold more oil than Eni's entire reserves of 7bn barrels of oil equivalent. It would put the resource base on a par with the 9bn-13bn barrels of oil equivalent at the problem-plagued Kashagan field in Kazakhstan, where Eni is one of consortium members.
The deal giving Eni the oil sands licence, which was agreed last month, is part of an energy package it signed with Brazzaville.
It also includes investment in conventional oil production, a new power plant that will supply 80 per cent of Congo's electricity and 70,000 hectares of plantations to produce palm oil for food consumption and biofuels. Eni is also investing in capturing the associated gas from its oil fields that is burnt off in flares to use in the power plant and the heavy oil processing plants or upgraders.
In total, Eni plans to invest $3bn in Congo during 2008-11, excluding the heavy oil project. It could spend several billion more on upgraders to process the heavy oil into a form that can be readily sold on world markets. Each upgrader, with a capacity of 40,000 barrels per day, is expected to cost €1bn ($1.5bn). Eni suggested it could build five.
Eni has been in Congo since 1969 but stepped up its interest last year with the $1.4bn purchase of assets from Maurel & Prom of France, and the £1.7bn ($3.3bn) takeover of London-listed oil independent Burren Energy.
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Copyright The Financial Times Limited 2008
