Oil in Angola

In this article we take a look at Angola, Sub-Saharan Africa’s number two oil producer.

The main engine of economic growth

The hydrocarbon sector remains Angola’s main engine of economic growth, accounting for more than 96 percent 
of exports, 80 percent of government revenue, and in excess of 60 percent of GDP. Accordingly, any volatility in oil production and global oil prices tends to have a direct influence on the performance of the economy.

Since 1978, Sonangol (the national oil company) has been
 the sole concession holder for all oil and gas exploration and output in Angola. Foreign companies involved in the energy sector are obliged to arrange joint ventures and production sharing agreements with Sonangol. In terms of future oil production, Angola’s amendments to oil legislation, which in essence ends Sonangol’s oil products monopoly, could prove to be an incentive for oil companies to up oil production.

Angolan government budget bill

In early 2013, an Angolan government budget bill showed that the country planned to increase oil production to 1.84 million BPD this year and extend the output rebound of 2012 that has helped the economy return to strong growth following three disappointing years.

The 2013 budget proposal was based on a 2013-17 National Development Plan that shows the rebound in oil production climbing to two million BPD in 2015 and peaking at 2.08 million BPD in 2016.

Massive potential

Back in 2011, Angola signed a number of ultra-deep water deals with oil majors in subsalt blocks in the Kwanza Basin, whose oil volumes are forecast to be of commercial quantities. If prospects are as favourable as projected, Angola could extend its life as a major oil exported by an additional 30 years. In addition to this, the country should be able to increase its oil production to eclipse that of Nigeria.

Angola’s hydrocarbon potential is massive. The recent coming on-stream of a number of new oil facilities, as well as the recommencement of production at existing oil fields, increased Angola’s oil output considerably.

Over and above the new oil find in the Kwanza Basin, the go ahead for exploration of the subsalt blocks has the potential to change the dynamics of the oil sector, with a number of market participants of the opinion that the region remains one of the very best unexplored areas in the world.

If the findings are as rewarding as expected, this stands to provide a significant boost to production in the medium- to long-term.

David Okwara

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