Angola’s goal is still a pipedreamComment on this story
Despite colossal investment, Angola’s goal of pumping 2 million barrels of oil a day and even upstaging Nigeria as Africa’s largest producer remains a pipedream.
To be sure, Angola’s oil industry is going gang-busters.
State-owned oil firm Sonangol recently announced an $8 billion (R84bn) investment programme and began to sell 10 on-shore concessions.
Total is expected to invest $16bn, while other global energy companies ENI, Statoil and ConocoPhillips also have plans to put more work boots on the ground.
This has led officials to predict, again, that the country will break the symbolic production level of 2 million barrels per day (bpd) and that it could even get within striking distance of Nigeria’s rate of 2.5 million.
Angola is keen to reach that level of production because it would represent a significant boost for the economy. And yet, the faster Angola pumps, the further it seems from its target.
Industry insiders say a mix of technical problems, infrastructure bottlenecks and state intervention means any attempt to retake the title of Africa’s largest oil producer, which Angola briefly held in 2008, is likely to end in failure.
Last year crude production fell 1.1 percent to 1.71 million bpd, a disappointing showing after a 4.5 percent jump the previous year.
That raised the ire of Sonangol chief Francisco de Lemos, who demanded “explanations” from the heads of Chevron, Total, Esso and BP about a series of problems that contributed to the drop.
Maintenance work, mechanical damage and delays in delivering technical equipment have all taken their toll. Foreign operators complain the delays often stem from Sonangol’s insistence that it gives final approval to any construction or technical work.
”Expanding the hydrocarbon sector has proved more challenging [than] expected,” ratings agency Fitch said.
But geology is also a factor. Angola’s expensive-to-drill ultra-deep blocks and the “maturing” shallow water concessions will limit production, according to Alex Vines of think-tank Chatham House.
Fitch estimates Angola’s output is declining every year at a rate of about 200 000bpd.