Angola attempts to ramp up oil exploration to stop output drop

Angola’s state-run oil and gas company is ramping up efforts to lure foreign investors and halt a decline in crude output.

Once Africa’s biggest oil producer, output has tumbled in recent years due to under-investment in new projects and natural declines at aging fields. Failure to halt this decline will put severe strain on an economy heavily reliant on revenue from oil exports, already dealing with a weakening kwanza and about to receive a financial bailout from the International Monetary Fund. President Joao Lourenco, who came to power last year, is attempting to revive the economy by tackling corruption, attracting foreign investment and selling assets.

State-run oil producer Sonangol is seeking investment through talks ahead of a license round next year. The company is targeting exploration in as many as 10 offshore blocks in 2019 — the first tender for exploration rights since 2011. The government also transferred the role of concessionaire from Sonangol to a new agency earlier this year and offered tax breaks to companies developing marginal fields. Oil Minister Diamantino Azevedo said in an interview that the country plans to keep production stable at around 1.4 million barrels a day through 2022.

To do that he’s going to need investment from international oil companies, willing to take potentially costly bets on unexploited reserves in deep and ultra-deep water. Sonangol has been in discussions with some of the world’s biggest oil companies over more than a dozen blocks. These companies currently include; BP, Eni, Equinor, ExxonMobil and Total.

Source: Bloomberg

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