Cabinda Gulf Oil Company Limited – a subsidiary of energy major Chevron Corporation (CVX - Free Report) – announced the start-up of production from its first Angola LNG (liquefied natural gas) project. This $10 billion venture in is one of the biggest energy projects in Africa.
The scope of the project includes collection of natural gas from offshore Angola and transportation to an onshore liquefaction plant on the coast close to the Congo River. Chevron’s Angola LNG project will have a capacity to churn out 63,000 barrels of natural gas liquids per day for export, 5.2 million metric tons per year of LNG and 125 million cubic feet per day of natural gas for domestic utilization.
Management at Chevron believes that this LNG project in Angola will aid in exploring natural gas resources in western Africa to meet rising demand in the region and internationally. The project will also help in reducing natural gas flaring and greenhouse gas emissions from offshore producing areas, which in turn will support offshore oil field development.
Chevron holds a 36.4% stake in the project with Angola’s state-owned oil company Sonangol holding 22.8%. Subsidiaries of Total SA (TOT - Free Report) , BP plc (BP - Free Report) and Eni spA (E - Free Report) hold 13.6% each.
Chevron is keen on exploring the opportunities in Africa. In March, the company announced that it will proceed with the combined development of the Moho Bilondo "Phase 1 bis" and Moho Nord projects, offshore Republic of the Congo. The Moho Nord project will have processing capacity of 100,000 barrels of oil per day. It is the biggest oil and gas project in the Republic of the Congo and is located 46 miles offshore southwest of Pointe-Noire in water depths of about 1,500–4,000 feet. It is expected to extract oil from this project in 2016.
The development of these projects indicates that Chevron is on an expansion path in Africa. These will also help Chevron to achieve its target of 25% production growth by 2017. We believe such accomplishments will garner profits for Chevron in the upcoming quarters.
Chevron currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.