The International Energy Agency (IEA) has predicted Angola’s oil production will fall by 370,000 bpd during the next five years, marking the second largest drop globally over the five-year period.
In its latest Oil 2018 report, released on March 5, the Paris-based IEA said it expected the West African country to pump 1.65 million bpd this year, equalling its 2017 average, before the figure falls back to 1.6 million bpd in 2019. By 2023, Angolan production will have plummeted to 1.29 million bpd, a 21.8% fall from current levels, the IEA report said. OPEC has cited Angola’s 2016 crude production at 1.72 million bpd.
The IEA attributed the forecast drop in oil output to “ageing oil wells that are losing strength and foreign investors, who are losing enthusiasm given the uncompetitive perspectives”. Angola “is almost completely dependent on oil to feed its economy”, it continued.
The IEA analysts nonetheless project that Angolan production capacity should get “a small boost in 2018” from Total’s Kaombo, project, which was the last Angolan oil development to be approved before the collapse in oil prices in mid-2014. Kaombo should start pumping oil at some stage this year.
Angola badly needs to encourage a revival of its oil sector activity if it is to replace its reserves and maintain production and revenues. In a strong sign of confidence for the sector, in November and December, Total and Eni’s CEOs met Lourenço and the new Sonangol chairman, Carlos Saturnino.
The foreign companies signed new agreements on upstream and downstream activities and renewable energy. Total announced plans to sanction Zinia Phase 2 on Block 17, while Eni increased its stake in the onshore Cabinda North Block.
In November 2017, Angolan President Joao Lourenco appointed a new board of directors at Sonangol “as part of his wager to reanimate foreign investment”, the IEA report said. Lourenco committed to economic reforms and ordered a review of the country’s oil industry after he took office last September.
Saturnino and his predecessor, Isabel dos Santos, daughter of the former president, José Eduardo dos Santos, have crossed swords recently over allegations of corruption. The new Sonangol head has said US$38 million had been paid to a Dubai-based company by Isabel dos Santos after she had been removed from her position.
The ex-president’s daughter has maintained that this sum was for consultancy services and was legitimate. Isabel dos Santos described Saturnino’s comments as slanderous.
Angola’s prosecutor general was reported to have opened an investigation into the matters set out by Saturnino.
Reuters has also reported that diamond concessions held by Isabel dos Santos had been offered to investors, on the basis that these licences had expired.
Lourenco came to power with the promise of overhauling the state and efforts made to tackle the dos Santos family interests appear to show he means to follow this through. However, while the new president has focused much of his efforts on removing the dos Santos children from positions of influence, little else has changed in Angola thus far.