Angola - energy industry overview
Africa's second largest producer of oil
Angola is the second largest oil producer in sub-Sahara Africa and the 15th
largest producer in the world, producing, mainly from its offshore fields and
offshore in and around the Congo Basin, in the region of some 1.5 million
day (bpd), with the Ministry of Petroleum forecasting production to reach 2
million-bpd by the end of 2007, and Sonangol suggesting that it will continue
rate of production well into the 2020s.
According to Sonangol, exploration has a success rate of some 60% - a draw for
international players including BP, Chevron, Exxon-Mobil, Hydro and Total,
which, it is thought, will plough an estimated $35 billion-worth of investment
Angola by 2010, and some $100 billion by 2017.
There are currently concessions for 35 offshore oil blocks (and 4 onshore) in
Offshore blocks are located in shallow, deep and ultra deep water with
onshore blocks located in Cabinda and Soyo. At present Blocks 0, 2, 3, 14, 15
are the main producers of oil offshore. The most recent estimates suggest that
reserves now stand at 13.6 billion barrels of oil but, it is suggested, this
figure is conservative and on the cusp of being upwardly revised, with US
of Energy figures suggesting that the ultimate
figure could be closer to
billion barrels of oil. (Ultra deep water Blocks 31
However, concessions outside the Cabinda Basin
Angola has gas reserves estimated at 79.57 billion cu m the majority of which is
currently flared. This is due to change with plans to develop a LNG facility in
Soyo and projected to start production in late 2009 or 2010. It would appear
that the target end user for the LNG is the Atlantic Basin i.e. either the
States of America or Western Europe.
Angola is not a member of OPEC but has been producing oil since its first
commercial discovery in 1955. While figures vary depending on the source, in
accounted for approximately 50% of Angola's GDP, and some 90% of exports and
government tax revenues.
Established in 1976, Sonangol is the sole concessionaire for oil exploration and manages production in
Angola, and either it or one of its subsidiaries (Sonangol Pesquisa &
has a share in many of the block concessions. Controversially perhaps, Sonangol
acts as the government's business arm in the oil sector as well as helping
regulate the industry (although the Ministry of Petroleum is also a regulator.)
Sonangol markets extensively overseas, and has overseas offices in Houston,
Singapore and Hong Kong.
Who's on the block?
- Roc Oil - Cabinda Southern
- Sonangol - Block 2
- Sonangol Sinopec - Block 3
- Sonangol Pesquisa & Produção - Block 4
- BP - Blocks 18 and 31
- Chevron - Blocks 0 and 14
- Esso Exploration Angola - Block 15
- Total E&P Angola - 17 and 32
Most onshore activity in Angola has been suspended, with the exception of the
Southern Block of Onshore Cabinda. Roc Oil paid a signature bonus of $6 million in November 2004 signing a 6-year
production sharing agreement with Sonangol that will see it through the
phase. It has since raised almost $76 million through a share placement in
In 2006, the head of licensing at Angola's Ministry of Petroleum Alfredo Rafael
announced plans to launch a licensing round for the Kwanza Basin located 60
kilometres south of Luanda. 23 development blocks are to be offered each
area of about 1,000 square kilometres. Preference will be given to
Angolan companies but a variety of "mid-size" overseas companies
also expected to express interest.
Shallow water (Blocks 0, 2, 3 and 4)
Block 0 Chevron operates Block 0, which had a total production of 371,000 bpd in 2004.
In May 2004 the operator finalised a 20-year extension on its concession until
The block is split into two areas A and B. Area A is the most
prolific with 13
fields including two major fields Takula and Malongo producing
bpd of oil and 4,000 bpd of LPG. Development of the Banzala field
involving the installation of additional well and processing
Chevron drilled 5 successful
exploration wells in the block with
The Greater Takula infrastructure project involves the renewal and
de-bottlenecking of four offshore platforms and onshore treating facilities to
production and water treatment capacity. Area A's gas management project will
the remaining gas flaring by collecting and re-injecting excess natural
Samsung Heavy Industries is expected to deliver the Takula Gas Gathering
by March 2008.
Block 2 Currently producing around 45,000 bpd. Sonangol is embarking on further
developing the Morsa West field. It is understood that Sonangol is looking to
the project via a fixed platform with dry trees in about 32 metres of water. It
is also believed that a jack-up production system is being considered.
Fabrication of the platform is to be carried out by a British company in South
first oil production from this field is expected in 2006.
Block 3 Total E&P Angola used to operate fields 3-80, 3-85 and 3-91 but by mid 2005,
had returned its interest in field 3-80 after learning it would not have
licence to operate the field renewed. The new operator Sonangol Pesquisa
Producão has re-numbered the field 3-05 and entered a new Production
Agreement (PSA) with China's Sinopec taking Total's share in the field.
produces up to 120,000 bpd.
Block 4 In late 2004 Sonangol Pesquisa & Produção announced a find in water depths
of 700 metres at well 4-41/1. This was its first find as an operator and is
expected to produce first oil in 2007. Recoverable volumes are estimated at 50
million barrels with further exploration planned.
Deep water (Blocks 14, 15, 17 and 18)
Block 14 Awarded operatorship in 1995 Chevron has made 9 commercial discoveries in water
depths ranging from 280 metres to 1444 metres with production first starting in
2000. Chevron successfully negotiated in 2004 an extension to the exploration
period and is planning an extensive 3-D seismic programme of the remaining
Development plans for the Benguela, Belize, Lobito and Tomboco fields were
approved in 2003. Phase 1 of the project was the installation of a drilling and
production platform for the Benguela - Belize fields, which began producing oil
December 2005. The Benguela-Belize, Lobito and Tomboco fields are expected
produce 200,000 bpd once they reach peak production in 2007. Phase 2 of the
will focus on the Lobito and Tomboco fields involving the installation
systems, pipelines and wells.
The Tombu and Landana fields are the next major capital project on Block 14 and
four contractors are believed to have bid to build a giant compliant tower
platform with the contract expected to be placed in July 2006. Capital
this project is expected to be more than $2 billion and daily production by
end of the decade is expected to be more than 100,000 bpd.
Block 15 Operated by Esso Exploration Angola the Xikomba project began production in late
2003 and is now producing 90,000 bpd. To date 17 discoveries have been made in
the Block with water depths ranging from 670 to 1354 metres. It is estimated
Block contains up to 4.5 billion barrels of recoverable reserves.
Kizomba A came on stream in August 2004 and is now producing 250,000 bpd.
Expected total investment will reach $3.4 billion. Marimba is a new project
studied as a possible tieback to Kizomba A.
Kizomba B, with an estimated cost of $3.4 billion started production in July
2005 (more than five months ahead of schedule) and is now achieving its daily
target output of 250,000 bpd. The project consists of the world's largest FPSO
vessel with a storage capacity of 2.2 million oil barrels and a tension-leg
Combined output of Xikomba, Kizomba A and B was expected to reach a peak
of more than 550,000 bpd by the end of 2005.
Kizomba C (estimated cost $3bn) is expected to follow by 2008 and is projected
to produce between 50,000 - 100,000 bpd. The challenge with Kizomba C is that
the fields are farther apart. SBM Offshore has announced that it has signed an
agreement for two FPSOs for the Kizomba C development.
ENI has been awarded operatorship of the relinquished areas in Block 15
following a $902 million signature bonus bid. ENI has a 35% stake with the
Sonangol joint venture receiving 20%. Other partners in relinquished area are
Sonangal P&P (15%), Total (15%), Petrobras, Statoil and a local company
Oil with 5% each.
Block 17 Since discovering its first field on the Block (Girassol) Total E&P Angola
has made at least 10 other discoveries. Production from Girassol commenced in
late 2001 and has now reached 250,000 bpd. One of its other discoveries (Rosa)
been given the go-ahead to be tied back to Girassol and is on schedule to
production in the 1st half of 2007. Also expected to be tied back to
2009 is Lirio.
The Dalia field with a major new build floater scheme is due to start producing
oil in the 4th quarter of 2006 at 240,000 bpd. Daewoo and Samsung have built
hull and deck respectively with support services from an alliance of Technip,
Saipem and Stolt. Total's investment in Dalia is expected to reach $3.9 billion
and the subsea scheme is expected to extend to 70 wells.
Production from the Cravo discovery is expected to start in 2010 and is another
possible satellite for Girassol as it holds similar quality oil.
Pazflor is the 3rd development in the Block and consists of 4 fields. Total is
considering a new build FPSO with the aim that the development comes on stream
in the 3rd quarter 2010, and concentrating on the Acacia, Perpetua, Zinia and
Total is also apparently considering a 4th development focussing on the on the
Hortensia and Violeta discoveries.
Block 18 BP's Greater Plutonio development lies in water depths ranging from 1200-1500
metres and consists of the Plutonio, Cobalto, Galio, Cromio and Paladio fields.
Hyundai will supply the FPSO at a cost estimated at up to $ 650 million. Stolt
has been appointed for the $ 250 million URF (Umbilicals, Risers and
The $200 million subsea production system has been won by FMC. Halliburton KBR,
the incumbent FEED contractor is also going to handle the EPCM contract. First
oil from Greater Plutonio is expected 2008 reaching 250,000 bpd. A projected
investment of between $2-3 billion in Greater Plutonio has been reported.
The Platina field (in the west of the Block) was originally due to be tied back
to the Plutonio FPSO but is now believed to be developed with Cesio and Chumba
with these 3 fields holding up to 300 million barrels of recoverable oil
them. This field is due to come on stream between 2008-10 dependent on
BP's new partner is Sonangol Sinopec International Ltd, a joint venture between
the Chinese and the Angolan State oil companies, which has bought out Shell's
Ultra deep water (Blocks 31 and 32)
Block 31 BP has started pre-front end engineering and design work while continuing
exploration. In May 2006 a tenth oil discovery was announced. The Urano
lies in the north-east of the block close to the Plutao, Saturno, Marte and
discoveries. The other five discoveries are Astraea, Ceres, Palas, Juno and
and are located in the south-east of the block.
BP plans to develop the
south-east block first. It is understood BP is
considering a double FPSO scheme
expects oil to be produced late 2009 with
timings dependent on
wishes but it is not expected to be on
of Greater Plutonio in
Block 32 Mostarda was the 5th discovery in this Block following the ones at Canela, Cola,
Gengibre and Gindungo. Studies are being carried to assess the Mostarda
discovery and its development potential with the other Block discoveries. The
discovery may need another well drilled to establish commerciality. First oil
expected before 2010.
Liquefied Natural Gas
Angola is planning a 5 million tonne per year LNG project in Soyo, Northern
Angola with Sonangol hoping production could begin in late 2010 but 2011 is
likely given the challenges of the project.
The partners in the project are Chevron (36.4%), Sonangol (22.8%) BP,
ExxonMobil and Total (13.6% each). The project is likely to involve 450
pipeline taking gas from Blocks 0, 14, 15, 17 and 18, which between them
trillion cubic feet of associated gas. Sonangol owns all the gas in Angola
the Block partners will own the offshore pipelines.
At the April 2005 signing ceremony in Luanda FEED contracts were awarded to
Bechtel and a joint consortium of Kellogg Brown & Root, JGC and Technip.
programme of work, expected to last 15 months has begun and once FEED is
and a final investment decision is made one of the competing groups will be
selected to perform engineering, procurement construction and commissioning
activities. More detailed information on the LNG project is available from the
LNG Project website www.angolalng.com
Construction on the project began early in 2007. The project is expected to
require up to 7 LNG carriers between 150, 000 cbm and 210,000 cbm. The
delivery date is 2010 with Chevron reported to be acting as shipping advisor on
A new organisation, Sonangol Natural Gas, was recently established and is
working on plans to further exploit gas reserves. A second train is being
utilising 4 gas finds in Blocks 1 and 2.
Chevron's Sanha gas condensate project, offshore Cabinda, expected to cost
US$1.9 billion and is aimed at reducing the burning of gas in Blocks 0 and 14.
The downstream sector is underdeveloped with the Fina Petroleos de Angola
refinery in Luanda the only one currently operating in Angola. This refinery is
in need of an upgrade and has a capacity of only 39,000 bpd. Sonangol has
a partnership agreement with Sinopec to build a second refinery (Sonaref) in
Lobito costing $ 3.5 billion, with a capacity of 200,000 barrels per day. It is
understood that a joint venture called Sonangol Sinopec International is to be
established with Sinopec financing 70% of the project.
Originally scheduled to be inaugurated in 2006 plans have fallen behind
schedule and it is now likely to only begin operations in 2010. Recently it was
indicated that Sonaref would be built by Samsung under a deal signed back in
is anticipated that approximately half the production will be for the
market to satisfy local demand with the remainder for export.