Angola's Oil Industry: Who Are The Key Players?

Angola's oil and gas sector is a major contributor to the country's economy, accounting for about 75% of its revenues. The country has an estimated 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of natural gas reserves. As a result, many oil companies operate in Angola, including international giants such as Total, Chevron, Exxon Mobil, BP, and Eni. These companies dominate the country's crude oil production, with Total E&P Angola leading the market with a 46% share of output as of 2020. Chevron and Esso followed with 19% and 14%, respectively. Angola's national oil company, Sonangol, and another local company, Somoil, produced only 2.5% of the country's crude oil during that same period.

Oil companies in Angola are involved in all stages of the petroleum industry

The petroleum industry in Angola is a key sector, accounting for almost 75% of the country's revenues. Angola holds an estimated 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of proven natural gas reserves, with a production capacity of approximately 1.16 million barrels of oil per day. The country has implemented reforms and incentives to attract investment and boost its most important economic sector.

The upstream stage of the petroleum industry involves exploration and extraction. In Angola, this includes prospecting for oil and gas fields and identifying areas with the right geological conditions for profitable extraction. Major international oil companies such as ExxonMobil, TotalEnergies, Chevron, and BP hold significant market share in Angola's upstream market. These companies engage in exploration and production activities, including developing new oil and gas fields and ultra-deep-water projects.

The midstream stage encompasses the transportation, processing, and storage of crude oil and natural gas. Angola has invested in upgrading its refining facilities and developing new refineries to reduce its dependence on imported refined petroleum. The country's only operating refinery is in Luanda, with other refinery projects in the pipeline, including upgrades and new constructions. The midstream operations are also crucial for the distribution of refined petroleum products to consumers.

The downstream stage involves refining crude oil into various end products, such as fuel oil, gasoline, jet fuel, and diesel oil. Angola's shift towards renewable energy sources may impact the growth of the downstream sector. However, the country continues to focus on developing its refining capabilities to meet domestic demand and diversify its economy.

Overall, oil companies in Angola are actively involved in all stages of the petroleum industry, from exploration and extraction to refining, transportation, and marketing. The industry faces various challenges, such as high operating costs and complex regulations, but it remains a vital sector for the country's economy.

Angola's oil sector is dominated by international companies

International oil companies dominated Angola's crude oil production as of 2020, with Total E&P Angola leading the ranking, followed by Chevron and Esso. These companies, along with other major players like ExxonMobil, BP, and Eni, have a significant presence in the country and are involved in all stages of the petroleum industry, from exploration and production to transportation and refining.

One notable joint venture in Angola is Azule Energy, formed by Eni and British Petroleum (BP). This 50/50 partnership combines exploration, liquefied natural gas, and renewable energy activities. Through this venture, Eni and BP focus on developing hydrocarbon resources, with projects like the East Hub & West Hub and the Caraculo photovoltaic power station, contributing to the country's energy diversification and job creation.

While Angola has abundant untapped oil and gas resources, estimated at 9 billion barrels of proven crude oil reserves, the sector faces challenges. High production costs, complex contract processes, and foreign exchange restrictions have hindered investments and operations for both international and local companies. These factors have led to the downsizing and withdrawal of some companies from the Angolan market.

Despite the challenges, Angola remains an attractive prospect for international oil companies due to its vast resources. The country has implemented policy changes and incentives, such as the Private Investment Law, to spur investments in the sector. With ongoing developments and improvements, Angola's oil sector continues to be a significant contributor to the global energy landscape.

The Angolan government is prioritising refinery development

Angola has the potential to be a self-sufficient energy giant, with 8.2 billion barrels of proven oil reserves and 13.5 trillion cubic feet of natural gas. However, the country's downstream infrastructure deficits have led to a reliance on oil exports, which account for 95% of Angola's total exports, while also importing the majority of its refined products. To address this imbalance, the Angolan government, through the Ministry of Mineral Resources, Oil and Gas, is prioritising refinery developments.

The government's focus is on modernising existing infrastructure and developing new projects. Upgrades are being made to the country's only operating refinery, the 65,000-barrel-per-day Luanda Refinery, which will increase its gasoline production four-fold, from 280 tons per day to approximately 1,100 tons per day. This upgrade is estimated to cost $235 million and is in its final stage of development.

In addition to modernising the Luanda Refinery, the Angolan government is also constructing three new facilities to exponentially increase the country's refining capacity. The first, the Lobito Refinery, located in the Benguela province, is expected to have a capacity of 200,000 barrels per day and is scheduled to begin refining in 2025. The second facility, the Cabinda Refinery, is a $920 million plant with a refining capacity of 60,000 barrels per day. The third facility, the Soyo Refinery, is a 100,000-barrel-per-day facility with a total investment of $3.5 billion, making it the third-largest refinery in the country. These new projects demonstrate the Angolan government's commitment to increasing domestic refining capacity and reducing dependence on imported refined petroleum products.

Oil companies in Luanda, Angola, are integrated companies

Angola is a country in Southern Africa with vast mineral and petroleum reserves. The country's economy is among the fastest-growing in the world, largely due to its oil and gas sector, which accounts for almost 75% of its revenue. Angola has an estimated 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of proven natural gas reserves.

The oil and gas companies in Luanda, Angola, are integrated companies as they are involved in all stages of the petroleum industry. They search for, produce, transport, refine, and market petroleum and petroleum products. Luanda, the capital of Angola, is the country's largest city and main port. It is an important export hub for the city's industries, including oil and gas, offshore services, petroleum refining, breweries, textile manufacturing, and food.

Some of the notable oil and gas companies operating in Luanda, Angola, include:

• Sonangol Group: The state-owned national oil company of Angola, which has its head office in Luanda. Sonangol has been restructuring to focus on its core upstream, midstream, and downstream businesses.
• Cabinda Gulf Oil Company Ltd (CABGOC): A subsidiary of Chevron, involved in oil, gas, and natural gas exploration and production.
• ENI: An Italian oil company that operates the single existing oil refinery in Luanda through a joint venture with Sonangol Refinarias (Sonaref). ENI is also involved in exploration and production activities in Angola.
• Total: A major international oil exploration and production company with a 41% market share in Angola. Total is pursuing ultra-deep-water projects in Block 32 and has a stake in Block 29.
• BP: A leading international player in the Angolan oil and gas sector with a 13% market share. BP is undertaking the "Pluto, Saturn, Venus, and Mars" (PSVM) project in Block 31.
• ExxonMobil: A prominent player in the Angolan oil and gas upstream market.
• Equinor: Another international oil and gas company with a presence in Angola, involved in Block 29.

The Angolan government has been implementing reforms and incentives to attract foreign investment and boost the oil and gas sector, which remains crucial to the country's economy.

The Angolan oil sector is challenging to navigate due to industry barriers and threats

• High operating costs: Angola's production costs, which average $40 per barrel, deter new entrants and limit investments.
• Restrictions on foreign exchange: Petroleum companies are required to process payments through local banks and in the local currency, and companies have faced challenges in repatriating their dividends. While the Central Bank liberalized the foreign exchange regime in 2019, allowing international oil companies to sell dollars to local banks, restrictions still exist.
• Bureaucracy in contract signing and renewal: The former state-owned concessionaire, Sonangol, has been criticized for its slow approval process, constant impediments, and frequent delays in signing and renewing contracts, which have resulted in a decline in crude production and daily outputs.
• Difficulties in securing financing: Private companies, particularly operators, need additional financial resources to maximize crude oil and natural gas extraction. However, the lack of consistency from the concessionaire has made it challenging for companies to secure guarantees for loans or equity from financial institutions.
• Macroeconomic challenges: Underdeveloped infrastructure, including roads, railways, and imports, increases operational costs. For example, the enclaved Cabinda province relies on air transportation for manpower and goods, and there is no road linking it to the Angola mainland.
• Excessive living costs: Angola's moderately high living costs require companies to pay high salaries to expatriates and provide competitive compensation packages to local employees.
• Lack of competitiveness: Angola's heavy dependence on the oil sector has led to a lack of competitiveness in other sectors, with capital and labor focused primarily on the oil industry.

To address these challenges, the Angolan government has implemented various reforms, including transferring concessionaire rights from Sonangol to the National Agency for Petroleum, Gas, and Biofuels (ANPG) and introducing new laws and incentives to attract investments and improve the business environment. However, despite these efforts, the Angolan oil sector remains challenging to navigate due to persistent industry barriers and threats.

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