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Energy & Mining
Overview
GAS
PETROLEUM
Sonangol’s headquarters
According to the Oil and Gas Journal (OGJ), as of
January 2011 Angola had proven oil reserves of 9,5
billion barrels and natural gas reserves of 10,9 trillion
cubic feet (TCF). Angola briefly ranked first oil pro-
ducer in sub-Saharan Africa in 2009 when Nigeria
suffered from turmoil and attacks in the Niger Delta.
In 2010, Angola produced an estimated 1,85 million
barrel per day (bbl/d) and oil consumption averaged
74,000 bbl/d, leaving almost all production for export.
The oil sector plays an important role in the Angolan
economy, accounting for over 95% of export reve-
nues and 75% of government revenues according to
the International Monetary Fund.
Angola’s national oil company, Sociedade Nacional
de Combustiveis de Angola (Sonangol), was es-
tablished in 1976 and was made the sole conces-
sionaire for exploration and production in 1978.
Sonangol works with foreign companies through
joint ventures (JVs) and production sharing agree-
ments (PSAs), funding its share of production with
oil-backed borrowing.
Over the last years, Sonangol has developed both
upstream and downstream operations and the com-
pany has extended its operations overseas (Brazil,
Iraq and Iran). The most significant foreign oil com-
panies operating in Angola are Chevron, ExxonMo-
bil, Total and BP. Sinopec and CNOOC are the per-
fect illustration of the growing influence of China in
development aid, oil backed loans and trade.
The international investment in the sector is expect-
ed to grow substantially despite the introduction of
local content requirements.
Angola estimated natural gas reserves increased
significantly from 2,0 trillion cubic feet (TCF) in 2007
to 10,9 million TCF as of January 2011. By the end
of 2010, the majority (approximately 67%) of natural
gas produced in Angola is flared; 23% was re-inject-
ed to aid in oil recovery and only 7% was marketed
for domestic consumption.
With the considerable increases in natural gas re-
serves and government policies that end natural gas
flaring plans are underway to convert much of the
natural gas into LNG for export with some to be used
for domestic electricity production. The government
has also announced tax incentives to promote ex-
ploration to promote exploration and development of
natural gas in the country.
Chevron and Sonangol together with other share-
holders including Total, BP and Eni are building the
country first Liquefied Natural Gas (LNG) plant near
Soyo in the northern Angola. The plant is expected to
be operational by early 2012.
The natural gas will come from several offshore
fields including Total’s Block 17, BP’s Block 18, and
Exxon Mobil’s Block 15 and Chevron’s blocks Zero
and 14. According to the partners, the project will
process 1,1 billion cubic feet of associated gas per
day and will eventually produce 5,2 million tons per
year of LNG plus process up to 125 million cubic feet
per day of gas for the domestic market. Initially, the
LNG was to be directed to the Gulf LNG regasifica-
tion plant in Mississippi, USA where Sonangol holds
a 20% share. However, given the current natural gas
market conditions in the United States (surplus pro-
duction and lower prices), Angolan LNG exports will
likely be destined for Asian and European markets
where prices are higher.
Angola’s crude oil production has more than quadru-
pled over the past two decades.
Oil production is predicted to reach 2,2 million bbl/d
by early 2012, based on 220,000 bbl/d Pazflor
field (Total) in Block 17 expected later in 2011 and
150,000 bbl/d PSMV field in Block 31 – planned for
early 2012.
Prospecting for hydrocarbons in Angola began in
1910 when Canha & Formigal was granted the
oil lease of an area of 114,000 km2 in the Congo