The African state of Angola, emerging from 27 years of civil war, is attracting increasing quantities of foreign investment in its oil industry and is on the path to becoming one of the world’s biggest crude exporters.
Already the second-biggest producer in sub-Saharan Africa behind Nigeria, Angola is set to double its production of oil in the next three years to reach two million barrels per day in 2008, according to the Britain-based oil consultancy Wood MacKenzie.
”If you think back, 20 years ago, there was virtually no production,” says Catriona Boggon, an analyst at the consultancy. ”All this growth is coming from deep-water discoveries from the mid-1990s onwards.”
The expansion is set to move Angola ahead of fellow Organisation of Petroleum Exporting Countries (Opec) oil producers Algeria, Libya, Indonesia, Qatar and even Iraq in terms of barrels produced per day.
It will rank just behind the three medium-sized producers of Kuwait, Nigeria and the United Arab Emirates, which produce about 2,5-million barrels per day.
The expansion has been costly, however, with Angola’s deposits only accessible from offshore rigs. Worse still, many of the discoveries have been in areas where the sea can be up to 1 500m deep.
Extraction is expensive, technical and risky, but the quantities involved have drawn the world’s biggest oil companies.
The Angolan national energy group, Sonal, has estimated that the industry will invest $20-billion to develop oil fields discovered recently.
British Petroleum (BP) plans to invest $7-billion in the country, and United States oil giant ExxonMobil has slated $10-billion to expand its footprint in the south-west African state.
California-based Chevron, the second-biggest US oil and gas group, has announced plans to invest more than a billion dollars in the next few years to build up its offshore activities.
Chevron has stolen a march on its competitors and is already the biggest oil-producing company in the country, responsible for about half the country’s daily production of oil, the equivalent of 450 000 barrels per day.
It controls the resource-rich region of Cabinda, where deposits have been found beneath relatively shallow waters.
Last Thursday, BP announced it had discovered the eighth deposit in an area known as Bloc 31, a deep-water shelf where BP manages a consortium of extraction companies.
According to one of BP’s partners, the US group Marathon, the facility should start producing oil towards 2010.
In total, Angola is estimated to have total oil reserves of 12-billion barrels. Each of the Bloc 31 deposits is forecast to yield 150-million barrels by the Wood MacKenzie consultancy.
BP is set to start producing from another bloc — Bloc 18 — in 2007, which has a capacity of 500 000 barrels per day. Each ”bloc” is an area measuring up to 5 000 square kilometres.
A spokesperson for ExxonMobil explained the upbeat assessment of the industry by citing Angola’s prospects and the inflow of investment since the end of the civil war in 2002.
”We’re very optimistic regarding Angola and do have extensive operations that we began in the country in 2003,” the spokesperson said. ”There’s lot of oil there. Angola has very prolific resources.”
French group Total, the biggest producer on the African continent, is also present in Angola and produced 170 000 barrels per day in 2004, largely from the vast Girassol area in Bloc 17.
Total has invested $2,8-billion over the past three years.
A separate field, known as Dalia, is expected to start producing 200 000 barrels per day from mid-2006 after $3-billion of investment.
But it is not just oil that has attracted foreign investment.
The end of the war in 2002 has also led to onshore investment in exploring Angola’s vast gas resources.
However, the benefits from the oil boom have yet to reach much of the country, where the devastation of the brutal 27-year civil war that claimed half a million lives is still evident.
Africa as a whole is forecast to produce six million barrels per day by 2020, about 6% of global production. — Sapa-AFP