Oil & Gas Opportunities

An Expert's View about Energy in Angola

Last updated: 22 Mar 2011

Staggering growth, breathtaking development and ambitions to become an international player have combined to make Africa’s fastest growing economy an attractive proposition to the world’s biggest oil companies.

Sector briefing Oil & Gas Opportunities in Angola Why Angola? Staggering growth, breathtaking development and ambitions to become an international player have combined to make Africa?s fastest growing economy an attractive proposition to the world?s biggest oil companies. All have made massive financial investment in the oil and gas sector, signalling their commitment to OPEC?s newest member. New developments, both upstream and downstream are set to boost production and increase opportunities in the supply chain. Find general information on Angolan market conditions on UKTI?s website. The Doing Business Guide for Angola gives an overview of ?Angola?s oil and gas sector is Angola?s economy, business culture, potential a very long way from opportunities and an introduction to other saturation point. relevant issues. Opportunities exist throughout the supply chain, and on the periphery? UK Trade & Investment Sector briefing: Oil & Gas opportunities in Angola ? ExxonMobil produced its billionth barrel Overview of oil in 15 years from Block 15 in 2010. The Kizomba C developments feature Since its discovery in the 1970s, Angola?s oil 36 subsea wells and is the largest industry has been the backbone of the subsea development operated by country?s growth and development. The end of ExxonMobil worldwide. It is Angola?s a devastating three-decade civil war heralded a largest production facility, designed to new era in the industry, enabling Angola to produce 600 million barrels, and set to harness the massive potential as an engine for increase when the satellite fields come growth. onstream. Angola?s economy is heavily dependent on the Organisation of the sector oil sector, funding around 85% of the government?s annual budget, accounts for 55% The state oil company Sonangol was founded of GDP and almost 95% of exports. immediately after independence from Portugal, and is still owns exclusive rights to Angola?s Angola vies with Nigeria to be Sub-Saharan hydrocarbons. It can choose to sell these Africa?s biggest oil producer, producing on rights to International Oil Companies (IOCs), average 1.9m bpd in 2009. Between January and acts as industry regulator. All the big IOCs and November 2010 over 590m barrels were operate in Angola: BP; Chevron; Total; Eni; produced. It is clear that production could ExxonMobil. Sonangol P & P is the exploration increase, but the IOCs are constrained by and production arm of Sonangol. In total, 45 OPEC quotas. companies operate here, in all sections of the supply chain, including Halliburton, Initial discoveries were made onshore in the Schlumberger, Wood Group, Tullow, and Kwanza Basin area, but now nearly 75% of Cameron. All companies need to ensure a production comes from offshore, mostly deep- good working relationship with both Sonangol, water. This is set to increase, with more and the Ministry of Petroleum (MinPet). discoveries being made in the ultra-deep water and pre-salt fields. Angola?s oil is said to be The government is keen to ensure that the good quality and highly desirable, medium to companies involved in the industry re-invest in light crude with a very low sulphur content, Angola to help with reconstruction efforts. The making it easily refined into petrol. contract bidding process demands a significant degree of local content provision. Foreign Some of the major projects that are underway companies looking to work in the sector will include: need to demonstrate how they will fulfil that ? BP?s Block 31 - an ultra-deep water field requirement. In reality, this often means employing the FPSO model. It will have working with an Angolan company, sourcing a storage capacity of 1.8m barrels; 48 goods from a local supplier, and employing production, gas and water injection plus Angolans rather than expats. This requirement infill wells; 15 manifolds and associated is rigorously implemented, and companies are subsea equipment; 17 km of flowlines advised to address the issue early on in their and 94 km of control umbilicals. business planning. Production is scheduled to start in 2011 and plateau to around 150,000 bpd in As with all sectors in Angola, the industry is 2012. To date, 19 discoveries have tightly regulated, heavily bureaucratic and an been made in Block 31. administrative maze. In order to negotiate these labyrinthine processes we suggest that ? Block 17, operated by Total, was companies employ an advisor based in Angola considered the ?golden block? of the to supervise the early stages of their business deepwater fields. It came onstream here. with 13 discoveries out of the first 15 exploration drills. Another FPSO facility, it cost an estimated US$4bn, with a storage capacity of 240,000 bpd; 34 production wells; 30 water injection and 3 gas injection wells. Average output of is 850,000 bpd, with reserves of over 1 billion. UK Trade & Investment Sector briefing: Oil & Gas opportunities in Angola Opportunities for transferable recognised qualification standards Angola?s oil and gas sector is a very long way ? Manufacturing. Angola has a very small from saturation point. Opportunities exist manufacturing base, hence around 85% throughout the supply chain, and on the of all products are imported. Valves, periphery. consumables and steel are all in particular demand. The government Upstream has committed to supporting this sector, and there are increasing calls for the New licenses for exploration of the pre-salt introduction of tax incentives to attract fields have been announced, but yet to be investment. confirmed. Given that the geology is similar to Brazil, where there have been significant Future discoveries, Sonangol?s production division is confident of early success. The biggest According to Business Monitor International, challenge is to identify the most appropriate Angola will provide almost 20% of Africa?s oil technology and methods, and sourcing by 2014, and suggests that it has the greatest overseas investment to optimise exploration. production growth potential. Sonangol?s director of exploration states that only 10% of Downstream oil resources have been discovered. Angola?s vice minister of petroleum, Anibal da Silva, Angola has only one refinery, which is running states that oil output is to rise by 16% in 2011. a full capacity. This has resulted in a These are bold claims, but there is significant staggering 70% of oil needing to be imported. evidence to back them up. A new refinery is being planned in Lobito, south of Luanda. Sonangol is investing $8bn in Wood Mackenzie quote that Angola?s building the plant, which will initially produce recoverable oil and gas reserves are 150,000 bpd of refined products, rising to considerable: 21bn barrels and 8 trillion cubic 200,000. The plant is due to come onstream in feet (tcf) respectively. Probable undiscovered late 2011, with the final phase completed in reserves of each are anything up to three times 2013. that quantity. In addition, over 30 new discoveries are under development, and a Angola Liquid Natural Gas (Angola LNG) number of new deepwater projects will be onstream in the coming months. Combined Sonangol, in partnership with Chevron, BP, Eni with imminent pre-salt licensing awards, the and Total, are making more profitable use of industry?s breathtaking development is set to the currently flared gas, by liquefying and continue. selling on to international markets. Initially, the project will transport gathered gas from If you have any questions on the opportunities Chevron?s Block 15 by 124 km sub-sea above, contact the UKTI contacts named in this pipelines to the LNG plant in Soyo (northern report. Angola). Other blocks to supply will be 0, 1, 2, 14, 17 and 18. The plant will cost $9bn, and Business opportunities aimed specifically at UK have an initial capacity of 5.2m tonnes per companies are added daily to UKTI?s website. year. Construction is expected to be These leads are sourced by our staff overseas completed by 2012. in British Embassies, High Commissions and Consulates, across all sectors and in over 100 Periphery markets. Other areas which are severely underdeveloped You can be alerted to business opportunities on include: a regular basis by registering on the UKTI ? Training ? there is very little provision website. Find out more on UKTI?s business of vocational and competence training opportunities service on the UKTI website. throughout the sector. The labour pool has a very low skill set, and companies need to invest heavily in training to meet Angolanisation and local content requirements. The sector is also calling UK Trade & Investment Sector briefing: Oil & Gas opportunities in Angola Major events and activities UKTI contacts All Energy Aberdeen Karen Neal www.all-energy.co.uk Head, UKTI Email: allenergy@uktienergyevents.com British Embassy Angola Time: 18-19 May 2011 Tel: (244) 222 334 582 Email: karen.neal@fco.gov.uk FILDA International Trade Fair www.ukti.gov.uk Luanda Contact: Contact here David Anca Email: feiras@fil-angola.co.ao Deputy Head Time: July 19-24 2011 British Embassy Angola Tel: (244) 222 334 582 Offshore Europe Email: David.anca@fco.gov.uk http://www.offshore-europe.co.uk www.ukti.gov.uk Time: 6-8 September 2011 Location: Aberdeen, UK Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Oil & Gas opportunities in Angola Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Angolan market are advised to you to meet contacts and promote your undertake as much market research and company in the Angolan market planning as possible in the UK. UKTI?s team in Angola, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Angolan market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Oil & Gas opportunities in Angola
Posted: 22 March 2011, last updated 22 March 2011

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