Angola Energy Profile: Second-Largest Oil Producer In Sub-Saharan Africa Behind Nigeria
From Eurasia Review
Angola’s rapid rise as an energy producer over the past two decades came despite a civil war that lasted until 2002 and without many of the advantages found in other energy-rich regions. In particular, Angola lacked the appropriate infrastructure and the regulatory oversight necessary to operate a modern energy sector. With the end of the Angolan civil war in 2002, and steady investment in the country’s energy infrastructure, the future of Angolan production is bright. Challenges remain—notably the tensions in the Cabinda province—but as the demand for oil continues to rebound from the global recession, Angolan crude will be an important resource for China, the United States, and other major energy importers.
Since becoming a member of the Organization of the Petroleum Exporting Countries (OPEC) in 1997, Angola’s production levels have been subject to oversight by the group. However, Angola has not always acceded to the group’s demands, and Angola’s leadership plans to continue boosting production of oil and natural gas over the coming decade to help increase government revenue. In particular, Angola’s offshore pre-salt formations and the construction of natural gas-processing facilities are viewed as potentially lucrative sources of future revenues.
Angola’s economy is almost entirely dependent on oil production, as oil exports accounted for approximately 98 percent of government revenues in 2011 according to the International Monetary Fund. High international oil prices will be important for the future prospects of exploration, production, and exports of oil and natural gas, and will directly affect Angola’s government spending. In recent years, roughly three-quarters of Angola’s total government revenues came from the energy sector.
With a gross domestic product (GDP) of over $104 billion in 2011 on the strength of its oil exports, Angola has the third-largest economy in Africa. The International Monetary Fund estimates Angola’s GDP per capita in 2011 was approximately $5,900 in current international dollars; however, much of the oil wealth in the country does not find its way to the average citizen, which is one of the reasons why nearly 60 percent of primary energy consumption consists of solid biomass.
The August 2012 presidential election again brought the country’s energy sector into the public discourse, as the management of profits from the export of crude oil became an issue of some importance. Over the past decade, Angola made progress towards better capturing and distributing the profits associated with its hydrocarbon industries—notably through its Oil Investment Fund—but opposition voices disagree on the level of success the country has made. A policy of “Angolanization” intends to help the Angolan populace become more integrated into the country’s energy sector, and to obtain a greater share of the wealth being generated by the country’s oil exports. Additionally, in October of 2012 plans for a $5 billion sovereign wealth fund were announced. While such programs have not yet achieved great success, Angolans remain optimistic that the government’s efforts will succeed.
