How to reach first oil before other companies

Our exploration strategy is based on four winning factors – three operative and one financial:

• speed of time-to-market
• cost-effectiveness
• organic growth through the integration of development and exploration
• dual exploration model

The focus both now and going forward is exploration – “the centre of gravity of our growth potential” as Claudio Descalzi described it. It is precisely by following this unique and innovative model that we are able to reach first oil on average three years ahead of time compared to conventional exploration models. That’s how we achieved seven records: West and East Hub in Angola, Nooros and Zohr in Egypt, Nené Marine in the Republic of Congo, Jangkrik in Indonesia and OCTP in Ghana. Here are a few more details about dual exploration and the projects it was successfully applied to.

• Design to cost – the overlapping of exploration and development: thanks to cutting-edge analysis and drilling technologies developed at the Green Data Centre in Ferrera Erbognone, we are managing to integrate and correlate the exploration and development stages. We follow the ‘design to cost’ principle, which means engineering the entire business cycle, starting with exploration. Preparatory analyses for development are made during exploration. The information collected enables us to improve project engineering and reduce the amount of time required to reach the final investment decision (FID). For example, seismic imaging and high computing power allow for a deep understanding of the deposit, reducing the time spent in the exploration stage.
• Step by step – why development is subdivided into stages: the development process consists of setting up and preparing the mining sites. Thanks to the different stages, it is possible to use existing plants and anticipate cash flow. Here are a few examples. In 2014, only 12 months after the discovery of the deposit, the Nené Marine field in the Republic of Congo started production – a year before the forecast. Thirteen months have elapsed between discovery and start-up in Nooros, Egypt, and gas production has reached 20m cubic metres per day. In record time, less than three years after the FID, OCTP in Ghana – a project that integrates the two-stage development of oil and gas deposits – is ready to yield 500m boe and 41bn cubic metres. And at West Hub in Angola, where development (for a total of five deposits) took place in just 44 months after discovery, it is expected that the 30 operative wells will be connected to the N’Goma floating production and storage unit.
• Near field exploration – exploration next to production fields: working in synergy with existing plants, exploration has taken place next to deposits that are fully operative or where there are plans for future production. This is what happened at Nooros in Egypt, the two developments of West and East Hub in Angola, and the Jangkrik project in the Muara Bakau block in Indonesia. The latter boasts a time-to-market of just three-and-a-half years and the floating production unit will also be used for the new Merakes discovery, in the adjoining East Sepinggan block.
• Saving money by using existing assets: converting unused assets saves on time and cost. The floating units of Nené Marine, West and East Hub and OCTP were not built from scratch but on existing platforms that were converted for the occasion. In 2016, the technical expenses for our projects were reduced by approximate $10bn, also influencing development costs.