Angola challenges for Africa’s top oil spot

ZOE EISENSTEIN LUANDA – Angola’s entry into Opec this year may have surprised some, but industry sources say it could challenge Nigeria as sub-Saharan Africa’s largest oil producer.

Angola is pumping more than one million barrels per day (bpd) and production is projected to reach at least two million bpd by 2008 as new fields come onstream. Gulf of Guinea producers Nigeria, Angola, Gabon, and Equatorial Guinea and promising newcomer Sao Tome & Principe already supply 16 per cent of US energy needs and this is projected to rise to 25 per cent by 2015.But giant Nigeria, which pumped 2,15 million bpd in January according to Reuters data, is grappling with internal unrest over the distribution of oil wealth.Industry sources say this could pave the way for Angola to become the region’s leading producer.”Community problems mean that a lot of oil in the Niger Delta is shut in which is holding back Nigeria’s production,” said one.”That’s not happening here, so Angola could soon become number one,” the source added.The rebel Movement for the Emancipation of the Niger Delta (MEND) has bombed oil export terminals, blown up pipelines, planted car bombs in oil company compounds and abducted foreign workers since it appeared in late 2005.Output from Nigeria, the world’s eighth largest oil exporter, is down by a fifth.The MEND has also triggered dozens of copycat kidnappings, armed robberies and oilfield invasions, mostly by militias seeking ransoms or benefits for their villages from oil firms.Some say companies are reassessing their whole position towards Nigeria and delaying investments because of uncertainty.Many predict the crisis will worsen ahead of elections in April and what happens after the polls will be critical.On the other hand, Angola, which was engulfed in civil war for many years, is enjoying relative peace and joined Opec, the group that pumps over a third of the world’s oil, in January.Analysts said the decision came as surprise to some.”Angola’s Opec move, and particularly its timing, surprised many people, and even some inside (state oil firm) Sonangol, although signals about this have been emerging since early last year,” Nicholas Shaxson, an Africa expert at the Royal Institute of International Affairs in London, told Reuters.”Angola has long rejected the idea of joining foreign clubs that would constrain its ability to act independently, and it is in the middle of a rapid phase of output expansion, and output cuts go strongly against the internal culture of Sonangol.”CREDIBILITY The exact reasons for Angola’s entry – Opec’s first new member since the 1970s – have not been made public.However industry sources and analysts agree the deal is likely to be favourable to Angola, an Opec observer for many years.”I am sure (President Eduardo) dos Santos was smart enough to negotiate some sort of threshold beyond which quotas may apply, like two million bpd, but not before,” Ricardo Soares de Oliveira, research fellow at the University of Cambridge, said.”That said, I have no idea what the mood (at Opec headquarters) in Vienna is – they may have made an offer to Angola that is even more appealing,” he added.While Angola’s entry surprised some, others said it was logical.”It’s not about oil.Now we have a VIP card to a very VIP institution,” one senior state official told Reuters, requesting anonymity.”It gives credibility to Angola as a producer, in terms of reputation and transparency.It also gives us negotiation powers where important decisions will take place,” he added.However, Angola’s membership in the group was unlikely to please foreign firms doing business in the southwest African country, industry sources said.Among the oil majors investing heavily in Angola are ExxonMobil and Total .It has become China’s biggest supplier of crude and Sinopec Corp secured stakes blocks 17 and 18 during a bidding round in May.Nampa-ReutersGulf of Guinea producers Nigeria, Angola, Gabon, and Equatorial Guinea and promising newcomer Sao Tome & Principe already supply 16 per cent of US energy needs and this is projected to rise to 25 per cent by 2015.But giant Nigeria, which pumped 2,15 million bpd in January according to Reuters data, is grappling with internal unrest over the distribution of oil wealth.Industry sources say this could pave the way for Angola to become the region’s leading producer.”Community problems mean that a lot of oil in the Niger Delta is shut in which is holding back Nigeria’s production,” said one.”That’s not happening here, so Angola could soon become number one,” the source added.The rebel Movement for the Emancipation of the Niger Delta (MEND) has bombed oil export terminals, blown up pipelines, planted car bombs in oil company compounds and abducted foreign workers since it appeared in late 2005.Output from Nigeria, the world’s eighth largest oil exporter, is down by a fifth.The MEND has also triggered dozens of copycat kidnappings, armed robberies and oilfield invasions, mostly by militias seeking ransoms or benefits for their villages from oil firms.Some say companies are reassessing their whole position towards Nigeria and delaying investments because of uncertainty.Many predict the crisis will worsen ahead of elections in April and what happens after the polls will be critical.On the other hand, Angola, which was engulfed in civil war for many years, is enjoying relative peace and joined Opec, the group that pumps over a third of the world’s oil, in January.Analysts said the decision came as surprise to some.”Angola’s Opec move, and particularly its timing, surprised many people, and even some inside (state oil firm) Sonangol, although signals about this have been emerging since early last year,” Nicholas Shaxson, an Africa expert at the Royal Institute of International Affairs in London, told Reuters.”Angola has long rejected the idea of joining foreign clubs that would constrain its ability to act independently, and it is in the middle of a rapid phase of output expansion, and output cuts go strongly against the internal culture of Sonangol.”CREDIBILITY The exact reasons for Angola’s entry – Opec’s first new member since the 1970s – have not been made public.However industry sources and analysts agree the deal is likely to be favourable to Angola, an Opec observer for many years.”I am sure (President Eduardo) dos Santos was smart enough to negotiate some sort of threshold beyond which quotas may apply, like two million bpd, but not before,” Ricardo Soares de Oliveira, research fellow at the University of Cambridge, said.”That said, I have no idea what the mood (at Opec headquarters) in Vienna is – they may have made an offer to Angola that is even more appealing,” he added.While Angola’s entry surprised some, others said it was logical.”It’s not about oil.Now we have a VIP card to a very VIP institution,” one senior state official told Reuters, requesting anonymity.”It gives credibility to Angola as a producer, in terms of reputation and transparency.It also gives us negotiation powers where important decisions will take place,” he added.However, Angola’s membership in the group was unlikely to please foreign firms doing business in the southwest African country, industry sources said.Among the oil majors investing heavily in Angola are ExxonMobil and Total .It has become China’s biggest supplier of crude and Sinopec Corp secured stakes blocks 17 and 18 during a bidding round in May.Nampa-Reuters