In a historic move, bp and Eni recently merged their respective Angolan businesses to form a new 50/50 independent joint venture. Beginning operations in August 2022, Azule Energy now represents Angola’s largest independent equity producer of oil and gas, holding two billion barrels equivalent of net resources across 16 licenses and expanding its output to about 250,000 barrels equivalent a day over the next five years.
Energy Capital & Power spoke with the company’s CEO, Adriano Mongini, about the formation of Azule, the leading projects currently underway as well as the opportunities the company is exploring across the renewable energy space.
How does the formation of Azule Energy – as a 50/50 joint venture between bp and Eni – benefit the company’s stakeholders and Angola’s oil and gas sector at-large?
Combining two world-class businesses into one stronger independent company brings operational synergies through optimization of deepwater activities, significant cost saving and operational optimizations. Azule will be not constrained by capital investment limitation of the legacy entities and will be able to ensure proper investment to develop the new discoveries, feeding the growth but also preserving a sustainable cash flow for the country and for the companies with which we partner. The shareholder will be rewarded through the dividends that Azule Energy will generate and will exercise their role of steer and control through the Board of Directors. The continuous support of the shareholders will be a key for the success of Azule Energy.
Angola is still a very attractive country for investment. For many decades, our heritage companies have contributed to the development of Angola’s energy industry, and to the building of the country’s institutions, people and communities. Our robust and diverse portfolio illustrates our commitment towards the continuous development of the country’s hydrocarbon potential and support of its energy transition.
What are the leading projects under development at Azule Energy in 2022/23?
Azule Energy is now Angola’s largest independent equity producer of oil and gas, holding two billion barrels equivalent of net resources and growing to about 250,000 barrels equivalent a day (boe/d) of equity oil and gas production over the next five years. It holds stakes in 16 licenses (of which six are exploration blocks) and a participation in Angola LNG. Azule Energy has also taken over Eni’s share in Solenova, a solar company jointly held with Sonangol, and the collaboration in the Luanda Refinery.
We have a strong pipeline of new projects that are scheduled to come on stream over the next few years, growing organically from exploration discoveries. These include the Agogo Full Field and PAJ oil projects in Blocks 15/06 and 31, respectively, the New Gas Consortium (NGC) and the Caraculo photovoltaic plant, which will produce 50 MW of energy. Last but not least, Azule Energy is supporting the Luanda Refinery and its ambition to evolve towards a green refinery.
In addition to holding a 27.2% stake in the Angola LNG plant, how is Azule Energy supporting Angola’s gas exploration and monetization drive?
Gas will be one of the main focuses of Azule Energy because of the potential in the country to be developed and the role that gas has in the global decarbonization. It is not casual that we are the operator of the NGC, the first non-associated gas project in the country with first gas planned for 2026 and expected production of 330 million standard cubic feet per day at plateau (approximately four billion cubic meters per year). Its production, in addition to meeting the demand of the Angola LNG plant, will address domestic gas needs, help the government offset the natural decline of oil production and strengthen its role as a global LNG exporter.
How would you evaluate the current working relationship among Azule Energy, the Government of Angola and Sonangol?
The relationship between Azule Energy and the Government of Angola and Sonangol are excellent and very constructive, following the path of the excellent relationship of the shareholders. Angola has a competitive but very collaborative business environment within the oil and gas industry. Back in 2018, both the IOCs and the Government worked together to implement reforms aimed at improving industry activities. Progressing with projects like PAJ and NGC are concrete examples of how those reforms brought a new enthusiasm to the sector, and for Azule Energy particularly. We are partners with Sonangol in some of our licenses, in Solenova and on the improvement of the Luanda Refinery, which is another example of a constructive relationship that supports maximizing the potential of the sector.
Is Azule Energy exploring new opportunities in renewable energy development?
Caraculo’s photovoltaic plant will contribute to the reduction of diesel consumption for the generation of electricity and will support the diversification of the energy matrix in Angola, particularly by feeding electricity to the southern territory’s grid. Located in the province of Namibe, the project consists of the phased installation of a 50 MW photovoltaic plant; the first 25 MW phase is currently under construction and is scheduled to be operational in 2022. The ambition of Azule is to grow in the renewable energy sector, and we are very happy to work in Solenova with Sonangol as a partner. After the start-up of the Caraculo plant, we and Sonangol are already planning to verify other opportunities for future expansion.
Going forward, what will be Azule Energy’s approach to Corporate Social Responsibility in Angola?
Azule is strongly committed to promote the sustainable development of communities in the country, in line with the Government’s development plans and the U.N.’s Sustainable Development Goals. We have a portfolio of several social initiatives, inherited from bp and Eni, which target key development areas across access to energy and water, health, education, economic development and environment protection. Together with our social implementing partners, we will continue to contribute to projects that help build local capability. Education and enterprise development are critical for economic growth, social development, poverty reduction and social integration, while health, safety and environment are important elements in the sustainable development of the country.
To what extent will Azule Energy contribute to technology transfer, capacity building and training within the sector?
Azule Energy is an independent energy company based in Luanda and we have a solid and aggressive nationalization plan in line with the contracto programa agreed with the authorities. We have important training programs for the upstream activities and for the Luanda Refinery to support the professional growth of the Angolan employees. Moreover, through our social investments agenda, we are supporting a global scholarships program and funding teacher training initiatives and professional internships, to mention a few.
What challenges and opportunities does the energy transition present for Azule Energy in Angola?
Azule Energy inherits the values of bp and Eni and the approach to just transition – a principle defending that a healthy economy and a clean environment can and should co-exist. Angola has an ambitious energy strategy, which among others, includes hydrocarbons, solar, hydropower and biomass – and we shall partner with the country to navigate its energy transition. Our policy in decarbonization will be developed starting from bp and Eni’s environmental values and goals, with even more aggressive targets. Our operations’ emissions will follow a sustainable trajectory through improvement of the emissions from our facilities and implementing initiatives of carbon compensation that will be developed to reduce the Azule Energy carbon footprint.