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21 Jun 2024

5 Reasons to Invest in Angolan Oil

5 Reasons to Invest in Angolan Oil
5 Reasons to Invest in Angolan Oil
Angola aims to hold and increase oil production beyond 1.18 million barrels per day (bpd), while positioning its gas sector to account for 25% of the country’s energy needs by 2025.

With underexplored prospects including the onshore Kwanza Basin and offshore deepwater Namibe Basin, Angola represents a mature market with frontier acreage. Ranked among Africa’s top oil producers, the country is committed to creating a stable and competitive investment environment, with favorable policies and regulatory reforms poised to foster investor confidence and attract foreign investment into exploration and production activities.

Continuous Competitive Focus

Angola’s national concessionaire the National Oil, Gas and Biofuels Agency (ANPG) is set to launch its 2025 Limited Public Tender, offering up to 10 offshore blocks in the Kwanza and Benguela basins in Q1 2025. The tender and overall licensing strategy targets a domestic oil production above 1.18 million bpd through 2027.

Since 2017, Angola has been undertaking aggressive industry reforms to ensure a transparent and competitive upstream market. The country introduced a six-year licensing round in 2019, which guarantees yearly investment opportunities in exploration and licensing for local and international players. The most recent of these – a 12-block tender covering blocks in the Lower Congo and Kwanza basins – attracted 53 bids, underscoring the scale of interest in Angola’s hydrocarbon resources.

Strong Ties with IOCs

Angola’s longstanding history with leading international oil companies (IOCs) and service providers offers renewed opportunities for partnership and collaboration for potential investors. Chevron, TotalEnergies, ExxonMobil and bp and Eni through their 50 /50 venture Azule energy, among others, have made great strides in expanding the Angolan oil market through world-class discoveries and the development of upstream projects. On the acquisitions front, as IOCs divest some of their large-scale assets in favor of short-cycle tie-backs, opportunities have arisen for junior and independent players to enter the market.

Attractive Contractual Terms

Angola offers regulatory flexibility with regards to oil and gas agreements. In addition to production sharing agreements under the six-year licensing round, the country introduced a risk-reducing alternative in 2020, enabling the award of risk services contracts when the public bid process is unlikely to succeed.

A permanent offer program initiative in 2021 also enabled the ANPG to negotiate new contracts with operators without offering a bid round. Additional reforms include a Tax Benefits Code enacted in 2022, creating new incentives for oil companies. The Angolan Government has stated that it is open to discussing terms and finding a balanced agreement that provides the right returns for investors.

Immense Resource Base

Serving as one of sub-Saharan Africa’s largest oil producers – boasting confirmed reserves of 9 billion barrels of oil and 11 trillion cubic feet of natural gas – Angola’s current output is around 1.1 million bpd. The government’s updated Hydrocarbon Exploration Strategy 2020-2025 showcases the immense potential within the country’s geologically appraised concessions and sedimentary basins, with underexplored prospects such as the Kwanza Basin and Namibe Basin serving as some of the world’s leading frontiers for hydrocarbon exploration.

Supportive Oil and Gas Infrastructure

Angola has well-established infrastructure in place to support the oil industry, enabling investors and project developers to reduce costs and lead times required to develop new projects. Existing infrastructure includes the 65,000-bpd Luanda refinery – with plans underway to expand the refinery to 72,000 bpd – as well as domestic pipeline systems connecting oilfields to processing facilities.

Currently in development, the government is overseeing the construction of a $920-million refining plant in Cabinda, a 100,000-bpd facility in Soyo and a 200,000-bpd refinery in Lobito. A $5-billion pipeline deal signed with Zambia will also enable investors to tap into regional markets while facilitating intra-African exports. Moreover, Angola is strategically located on the west coast of southern Africa, providing easy access to global markets, as well as opening up new customer bases for investors across the southern African region.

Angola Oil & Gas (AOG) is the largest oil and gas event in Angola. Taking place with the full support of the Ministry of Mineral Resources, Oil and Gas; the National Oil, Gas and Biofuels Agency (ANPG); the downstream regulator IRDP; national oil company Sonangol; and the African Energy Chamber.

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