Angola being Africa’s second largest oil producer and producing over 1.9 million barrels per day (bpd) has extensive oil and gas resources. Oil Production soared between 2000 and 2010, recently overtaking Nigeria as Africa’s largest producer. There is a lot of untapped potential in the oil and gas stream and it is notable that oil production and supporting activities contribute about 85% of GDP in Angola. The start of the $9 billion Liquefied Natural Gas (LNG) Project is expected to increase oil production to over 2 million bpd. Economic growth and fiscal sustainability are still highly dependent on the oil revenues, with the oil sector being capital-intensive and lacking linkages to the real economy, while employing less than 1% of the total labor force.
The oil reserves of Angola are being extensively tapped by China and the US; in 2010, Angola was China’s second-leading source country for crude oil by volume providing 790 million barrels. Indian companies such as Reliance, Oil and Natural Gas Corporation, Bharat Petroleum, Hindustan Petroleum, and Indian Oil Corporation are not actively tapping Angola’s oil potential and are focusing on other regions. Currently Angola has one refinery (in Luanda) operated by sole owner Sonangol, the state-owned oil company and regulator. A consortium of Chevron, Sonangol, Bharat Petroleum, Total, and Eni have developed a $5 billion liquefied natural gas plant at Soyo to take advantage of Angola’s estimated 25 trillion cubic feet of natural gas reserves.
Angola is expected to record GDP growth rates of 8.2% and 7.1% in 2012 and 2013 respectively. The main bane of Angola is poverty and despite remarkable economic growth in the past decade, Angola does not have industrial goods and services such as oilfield equipment, mining equipment, agricultural equipment, chemicals, aircraft, and food. Apart from Angola’s oil supply, LNG will provide additional economic benefits as well offering more environmentally friendly management of the natural gas. Currently, Angola is capable of supplying approximately 5 million tons of LNG for over 20 years. The primary companies involved in Angola’s natural gas exploration and production – as part of the Angola LNG project – are: Chevron (with a 36.4% stake in the market), Sonangol (22.8%), BP (13.6%), Total (13.6%), and ENI (13.6%). According to Business Monitor International, Angola will provide almost 20% of Africa’s oil by 2014, and suggests that it has the greatest production growth potential.
Mushrooming companies in the Oil and Gas sector looking for sourcing options can look at India for help. “Brickwork India” can help Angola develop long lasting relations with top suppliers from India and Asia. The main areas of interest for Angola would be the identification of suppliers of equipments for oilfields with modern technology. Heavy machinery needs to be sourced at limited pricing for use within the Oil and Gas sector and as Angola is looking to increase oil production to boost earnings, more and more foreign investors are showing interest in the country’s oil sector to lead the technology transfer.