Angola bets on largest-ever offshore oil investment

A column of flame emanates from the bow of the boat, illuminating the jet-black ocean for miles around.

For three months now the Kaombo Norte has been anchored off the northern coast of Angola and has recently begun to pump up crude oil secreted in the depths below.

The arrival of the platform ship, which belongs to French oil giant Total, has been a timely lifeline for the Angolan government.

Angola was badly hit by the oil-price plunge in 2014. But sub-Saharan Africa’s second-largest oil producer is hoping the project will mark a return to viability for the industry that has dictated Angola’s fortunes for the past decade.

The Kaombo Norte platform is an impressive feat when seen from the helicopter that shuttles the army of engineers and experts to and from the project.


More than 300-metre long, the floating production storage vessel is a converted tanker refitted with a maze of pipes and crude processing tanks.

Two-million barrels can be stored onboard and a tanker calls roughly once a week to collect the precious cargo before delivering it around the world.

Nearby sits a tower marking the top of the 2 000-metre pipe that draws the crude deposits below into the heart of the ship.

“It’s fixed to the bottom and is positioned on a very particular bearing that allows the ship to move 360 degrees depending on the wind and the current,” said Total’s project manager Cyril de Coatpont.

“It’s watchmaking on an industrial scale — and one of the technical achievements of this project.”

A 300 kilometre-long network of pipes, a world record, was built below the water’s surface to link together the six oil reservoirs.

‘An economic miracle’? 

It spreads out over 800 square kilometres — the same surface area as Paris.

Kaombo Norte will be joined in mid-2019 by its sister ship, Kaombo Sul.

Together they will pump 230,000 barrels a day — 15% of Angola’s current production level from estimated reserves of 660-million barrels.

The cost of the project, Angola’s largest ever investment in offshore, is $16-billion.

For Total, the largest foreign oil company active in Angola where it is responsible for 40 percent of output with 600 000 barrels a day, this is the price of maintaining production levels.

“There is a positive dynamic with the heightened petrol price and the desire of the Angolan government to back the industry, which is welcome,” Total chief executive Patrick Pouyanne told journalists.

The arrival of the Total investment has proved timely for Angolan President João Lourenço.

Since succeeding former president Jose Eduardo dos Santos a year ago he has promised an “economic miracle” to revive Angola’s fortunes.

In the early 2000s Angola enjoyed double-digit growth underpinned by its oil industry.

But in 2014 a global slump in the price of black gold, which accounts for 90 percent of Angola’s exports and 70 percent of government revenues, plunged the country into deep recession and weighed down the local currency.

Volume into value 

The crisis showed policymakers they could not count on oil and would have to diversify the economy.

“Production fell considerably in recent years as our zones have reached their peak output levels,” said the head of Angola’s state oil company Sonangol, Carlos Saturnino. “To stop the rot, we had to find new reserves and then exploit them.”

The government adopted a raft of measures to encourage the global oil majors to resume exploration activities which had largely been frozen since 2014.

Angola’s golden age of oil may be over but the government is committed to its goal of maintaining production at 1.5-million barrels a day.

“We are ready to invite bids for new production blocks next year,” said Oil Minister Diamantino Azevedo.

Total is contributing to the government’s drive to revive the sector having announced three new projects.

The recent rebound in oil prices has revived exploration activity across the continent, though analysts remain wary of the value of such projects.

Last month, oil prices reached their highest point in four years but have since softened slightly.

“Converting volume into value is undoubtedly sub-Saharan Africa’s Achilles heel,” said Adam Pollard, a researcher at the Wood Mackenzie consultancy.

The challenge poses problems for the industry as well as oil-producing nations.

The Kaombo Norte, located 250km northwest of the capital Luanda, has begun to draw the precious reserves of block 32 — an achievement 20 years in the making.

Despite the engineering breakthrough represented by the project, Angola’s oil bonanza will continue to wind down, say experts.

“Rising crude oil prices are good for Angola,” said Carlos Rosado de Carvalho, head of Angolan economic magazine Expansao.

“But it is estimated that 60 to 70% of revenues are already earmarked for debt repayment, and its effects will be limited.”

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Philippe Alfroy
Guest Author

Related stories

Load-shedding’s silver lining: Lower levels of sulphur dioxide air pollution

Analysis of Nasa data shows that although SO₂ emissions around the world have fallen by about 6%, the levels are high enough to harm the health of billions of people.

Controversial oil reserves sale ‘corrupt’ and ‘dishonest’ court hears

The sale of South Africa’s crude oil reserves is now facing a criminal investigation by the Hawks

In Softie, politics takes a personal toll on Boniface Mwangi – and his family

Softie is an intimate portrait of how political activism complicates family life

State of democracy in Africa: Changing leaders doesn’t change politics

The Bertelsmann Transformation Index Africa Report 2020, A Changing of the Guards or A Change of Systems?, suggests that we should be cautious about the prospects for rapid political improvements

The coronavirus and the rise of the network society

Two kinds of virus, one biological and the other digital, have spread around the world, changing society and creating social elites

Remember, corporations are adept at deflection campaigns

In this moment where those corporations are “stepping up” to the Covid-19 challenge, let’s not forget their true character and where and how they have made their money
Advertising

Subscribers only

SAA bailout raises more questions

As the government continues to grapple with the troubles facing the airline, it would do well to keep on eye on the impending Denel implosion

ANC’s rogue deployees revealed

Despite 6 300 ANC cadres working in government, the party’s integrity committee has done little to deal with its accused members

More top stories

Eastern Cape universities concerned by rising Covid cases

Fort Hare says 26 more students have tested positive while Walter Sisulu University says some of its students have been admitted to hospital.

SAA in talks to recoup R350-million in blocked funds...

The cash-strapped national carrier is in the process of recouping its blocked funds from Zimbabwe, which could go towards financing the airline’s business rescue plan

NSFAS’s woes do not help its mandate

Nehawu wants the scheme’s administrator, Randall Carolissen, to be removed

Unions cry foul over SABC dismissal costs and retrenchments

Broadcaster bodies say claims that a recent skills audit is unrelated to retrenchments are ‘irrational’
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday