Angola: An emerging oil power without the baggage

Angola: An emerging oil power without the baggage

Angola is an unmitigated success story when compared to their neighbors in Nigeria and other dysfunctional African oil producers such as Sudan and the perennially, maddeningly weird, Libya. It is also an example on how the turbulent post-colonial past, so evident practically everywhere in Africa, can be overcome and give place to a far calmer and far more productive future.

In 2009, Angola presided over OPEC which it had just joined in 2007. Interestingly, Angola also surpassed Nigeria in oil production becoming the largest producer in Africa. Not because Nigeria cannot produce any more, but because insurgency in the Niger Delta shut in quite a large part of their oil production.

Angola came a long way from rags and the ravages of war to riches. For 27 years, from their independence from Portugal to 2002, Angola was a battleground of power positioning, similar to many African countries, which became more intense because of outside interference during the Cold War. Liberation from Portugal was led by the Marxist Popular Movement for the Liberation of Angola (MPLA) and Agostinho Neto, who also became the country’s first president. Following his death in 1979 he was succeeded by Jos’e Eduardo dos Santos, who is still the president of the country. Surprisingly, the civil war had little tribal imprint unlike the vicious war in Rwanda, the regional unrest in Nigeria and the ongoing struggles in the Sudan. Leaders who were instrumental in the liberation war against colonial ruler Portugal turned on each other and found eager supporters in Russia and their proxy, Cuba, on one side, and the United States and Apartheid South Africa on the other.

The Angolan government supported by a large Cuban military presence, fought a perpetual insurgency by a guerilla group, Unitas, headed by the charismatic leader, Jonas Savimbi. For a while, Savimbi rode the Cold War adage, “the enemy of my enemy is my friend” and was pampered by western leaders including Presidents Ronald Reagan and George H.W. Bush. But by the late 1990’s, Savimbi became quite marginalized, and at the time of his death in 2002 his movement essentially petered out. Angola became a lot calmer and since then it has emerged as one of the most stable countries in Africa.

Angola has been helped by oil revenues that come at an increasingly fast pace. It’s oil production saw a meteoric rise from about 750,000 barrels per day in 2001 to over 1.8 million by 2009 Source. Four major multinationals are operating in the country, almost exclusively offshore: ExxonMobil, Chevron and Total (each producing roughly 500,000 barrels per day) and ENI at about 200,000 barrels per day. And Sonangol, the state oil company whose share in equity production is about 900,000 barrels per day, also produces, a bit less than 100,000 barrels per day, outright.

Angola is also likely to emerge as a power in natural gas and has barely scratched the surface in its production. Plans are now underway to begin large amounts of LNG production by 2012 with a 5 million metric ton per annum capacity. A lot more is possible.
But it is oil that will dominate Angolan production for decades. Just a week ago, ENI announced a “major discovery”, in Block 15, 100 kilometers off the coast in 470 meters (1,542 feet) of water and 4,221 meters (14,850 ft) below the surface of the ocean. There is evidence that several other major discoveries will be announced soon. Based on existing discoveries, Angola will produce at least 2.5 million and as much as 3 million barrels per day by 2015.

Source: EIA

Consumers have noticed, especially China. Today Angola is China’s number one provider and the business will continue to expand. In exchange Chinese investment in Angola is anywhere from billions of dollars in the oil industry, to the thousands of workers that are so apparent everywhere in Luanda participating in a China-size building boom.

© 2013 Energy Tribune

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