Exxon To Keep Exploration Focus on Africa

ExxonMobil at its March 2 Analyst Day said it anticipated capital spending of $23bn in 2016, down 25% from 2015, but insisted it is on track to start up 10 major new upstream projects in 2016-17 that will add 450,000 boe/d of new production capacity net to the US supermajor. Among the 10 projects is the Chevron-operated Gorgon LNG in Australia, in which Exxon has 25% equity, where the first cargo is due to be exported this quarter.

Chief executive Rex Tillerson said Exxon’s exploration effort would be focused on West Africa (Nigeria, Equatorial Guinea, Angola) plus East Canada, Papua New Guinea, and Guyana where it made a major oil find in 2015. However he also listed Cote d’Ivoire and South Africa among other countries of interest that present “moderately higher [exploration] risk but also much higher potential.”

Exxon is present upstream in Africa, as a producer in Angola, Equatorial Guinea and Nigeria, but also with upstream assets in Cote d’Ivoire, Congo-Brazzaville, Gabon, Liberia, Mozambique, Tanzania and South Africa; last year it exited exploration offshore Madagascar.

Tillerson said Exxon would never divulge a forward annual divestment target. “We think that’s foolish,” he said, as it could destroy value. Anadarko set such a 2016 target on March 1 as have others have also in recent months.

Exxon continues to take a robust long-term view of the world LNG market despite the current glut. It forecasts that global LNG demand will triple between 2014 and 2040, with overall gas demand growing over that period on average by 1.6%/yr as coal declines by 0.2%/yr.

Mark Smedley