Angola Oil Profile

Overview

According to the Oil and Gas Journal (OGJ), as of January 2010 Angola has proven oil reserves of 9.5 billion barrels while statements made by the Angolan oil minister in December 2009 put total reserve numbers as high as 13.1 billion barrels. The majority of Angola’s oil reserves are located in offshore blocks, in part because onshore exploration was limited as a result of the civil war. However, there are some proven reserves onshore around the northern city of Soyo and as well, in the disputed Cabinda Province.

In 2007, Angola formally became a member of OPEC and in 2009, held the Organization’s presidency. That year, Angola produced an average of 1.82 million bbl/d of crude oil making it the major crude oil producer in Africa and placing it seventh part OPEC members according to EIA. Despite increasing oil production capacity, Angola maintained output at approximately 200,000 bbl/d below capacity as a response to OPEC’s most recent production allocation (estimated to be between 1.52 million bbl/d and 1.66 million bbl/d) without cutting production by the full required amount.

Angola’s total oil production capacity has grown considerably over the past decade averaging around 2.1 million bbl/d in 2009 (compared to 750,000 bbl/d in 1999), most of which is offshore. Oil consumption is estimated to be around 65,000 bbl/d, leaving almost amount production for export. The majority of Angolan oil is heavy to medium crude (30 degrees – 40 degrees API) with low-sulfur content (0.12 % - 0.14 %).

Exports

In the first half of 2009, Angola exported over 1.7 million bbl/d of crude oil, (additional than 90% of total production) primarily to China and the United States. The United States imported 535,000 bbl/d of crude oil from Angola (547,000 bbl/d of total oil imports) over the period making the country of the top sources for U.S. oil imports. Angola as well exported approximately 500,000 bbl/d to China and was the third major source of Chinese imports after Saudi Arabia (740,000 bbl/d) and Iran (530,000 bbl/d) for the first half of 2009 according to FACTS World Energy.

Sector Organization

In 1976, the Angolan government created a national oil company (NOC) called the Sociedade Nacional de Combustiveis de Angola (Sonangol). In 1978, Sonangol became the sole concessionaire for oil and gas exploration and production in Angola. Sonangol works with foreign companies through joint ventures (JVs) and production sharing agreements (PSAs), while funding its share of production through oil-backed borrowing. In recent years, Sonangol has become additional active in both upstream and downstream operations. Major international oil companies (IOCs) operating in Angola include BP, Chevron, Total, ExxonMobil and Eni. China’s Sinopec and CNOOC are part the newer international companies operating in Angola and are proving to be significant players in terms of development aid, oil backed loans and trade.

Exploration and Production

Oil production in Angola is concentrated in numerous offshore blocks. The offshore blocks are divided into three bands; shallow water blocks 0-13 (band A); deepwater blocks 14-30 (band B); and ultra-deepwater blocks 31-40 (band C). Additional blocks are now being designated in the ultra-deepwater offshore lower Congo Basin (click here to view Sonangol’s concession map). Despite the expense of developing the deepwater and ultra-deepwater fields, Angolan oil production has grown rapidly over the past decade and will continue to do so in the short-term. Major existing and next developments are summarized below.

Onshore

Onshore exploration and production activities have mainly focused around the Cabinda province and were halted during Angola’s civil war. The Cabinda province is home to separatist movements demanding access to oil revenues and better participation in oil policy. While the government has appointed members to political positions, and security has improved, clashes still occur between the military and rebels in the area. Some existing wells that were drilled prior to the war and the neighboring Block Zero have proven to be extremely successful (see below).

Offshore

Block Zero: Block Zero is located offshore Cabinda province and is divided into separate areas with 21 fields. Cabinda Gulf Oil Company (CABGOC), a Chevron subsidiary and operator of Block Zero since 1955, has a 39.2 % share in the JV. Other partners include Total and Eni. According to Chevron, Block Zero accounted for approximately 340,000 bbl/d of production in 2008. Additional production is expected from the Block as drilling and exploration activities continue. In July 2009, Chevron as well announced that the Mafumeira project was underway and the first field was to reach peak production of 30,000 bbl/d by 2011.

Block 14: In addition to Block Zero, CABGOC is the operator of neighboring deepwater Block 14 (as well offshore Cabinda) with 31 % interest and is joined by partners Eni, Sonangol, Total and Petrogal. A total of 11 discoveries have been made on the block with Kuito being the first in 1997.

Production in Block 14 centers around the Benguela, Belize, Lobito, Tomboco (BBLT) project which reached its 200,000 bbl/d peak in 2008; the recently started up Tombua-Landana project which is expected to peak in late 2010 at 100,000 bbl/d; and the Kuito field which has been in decline from its 2000 peak of 80,000 bbl/d. As with Block Zero, further exploration is underway.

Block 15: ExxonMobil is operator of Block 15, the major producing deepwater block in Angola along with partners BP, Eni and StatoilHydro. Block 15 is located in the Congo Basin and has estimated recoverable hydrocarbon reserves of 4.5 billion bbl, and at peak production, Block 15 is expected to exceed 800,000 bbl/d.

In 2003, ExxonMobil brought online Xikomba field, with estimated recoverable reserves of 100 million bbl. Production from Xikomba is currently below 20,000 bbl/d. In August 2004, the first of the Kizomba developments floating, production, storage and offloading (FPSO) facilities were brought online:

• The Kizomba-A project, which includes the Chocalho and Hungo fields, was the first of the Kizomba projects started in 2004 and peaked at 250,000 bbl/d. Phase 2 of this project started up in 2007 with the Marimba North field adding a further 40,000 bbl/d.
• The Kizomba-B project, brought online in 2005 includes the Dikanza and Kissanje fields. Kizomba-B contains an estimated billion bbl of recoverable oil reserves peak production was an estimated 250,000 bbl/d.
• The Kizomba-C project, consists of the Batuque, Mondo and Saxi fields. Production at the Mondo field came onstream in January of 2008 and the other Kizomba C fields came onstream in mid- 2008 with a combined peak of 200,000 bbl/d.
• The Kizomba-D fields are expected onstream after 2011 with a peak production capacity of 120,000 bbl/d. There is potential for added production from surrounding satellite fields expected onstream after 2010 that could produce an additional 125,000 bbl/d.

Block 17: Total operates Block 17 with a 40 % share, while Sonangol is the concession holder. Other shareholders include ExxonMobil, BP, and StatoilHydro. According to BP, the block is producing around 250,000 barrels of oil equivalent per day. Field production started in December 2001 with the startup of the Girassol field and production has since been maintained by the startup of Jasimin (2003), Dalia (2006) and Rosa (2007)

Next projects on Block 17 include Pazflor and CLOV, which will produce an estimated 200,000 bbl/d and 150,000 bbl/d, respectively, starting in 2011. In 2009, Total as well announced a new discovery, Gardenia-1 that confirmed the companies plans to expand activities in the block.

Block 18: The Better Plutonio development in Block 18 (BP operated) came online in October of 2007 at 100,000 bbl/d. The development consists of fields: Plutonio, Galio, Paladio, Cromio and Cobalto and is currently producing just under 200,000 bbl/d.

Upcoming Projects

Despite limitations imposed by OPEC, companies operating in Angola are on track to significantly ramp up their offshore developments in the short- and medium-term. Major projects summarized below represent tie-ins to support existing developments and as well new developments that are underway. Industry analysts have estimated that Angolan production capacity could peak between 2.5 and 3 million bb/d by 2015 based on existing discoveries.

Angola’s Upcoming Oil Projects

Refining and Downstream

Domestic oil consumption in 2009 was approximately 65,000 bbl/d. The country’s refinery in Luanda, Fina Petroleos de Angola – a JV between Sonangol Total and private investors – has a crude oil processing capacity of 39,000 bbl/d. The remaining request is met by imports of gasoline, jet fuel, kerosene, distillate fuel oil, and other products.

Angola is developing plans for a new 200,000 bbl/d refinery, SonaRef, in the coastal city of Lobito. The project was initially to be built in partnership with Sinopec but the Chinese company withdrew as a result of disagreements regarding the market for products. Sonangol is now proceeding with the SonaRef project but the project completion date is now slated for 2014-2015. The new refinery will be able to process heavy crudes, such as those found in the Kuito and Dalia fields. In the interim, the expected request increases will continue to be met by product imports.