Energy production in Angola
Energy production in Angola is largely centered around its vast petroleum resources, making it one of the most significant oil producers in Africa. The country's economy heavily relies on oil and natural gas, which constituted nearly 29% of its GDP in 2021. Angola has been a member of OPEC since 2007 and possesses substantial oil reserves, estimated at over 9 billion barrels. The state-controlled company Sonangol plays a pivotal role in managing these resources, having undergone several transformations since its establishment after nationalization in the 1970s.
Despite Angola's rich natural resources, the legacy of a prolonged civil war has contributed to widespread poverty and limited access to energy for many citizens—only about 48.5% had electricity access by 2022. International partnerships with foreign oil corporations, including Chevron, ExxonMobil, and Total, have been vital for technology transfer and economic development, although disparities in wealth and local expertise persist. In addition to oil, Angola is exploring its natural gas reserves, which could further enhance its energy landscape. The nation is also focusing on sustainable energy practices, hoping to improve accountability in resource management to better meet the needs of its population.
Subject Terms
Energy production in Angola
Official Name: Republic of Angola.
Summary: Angola is a resource-rich developing nation that has the potential to become one of Africa’s wealthiest nations if it can recover from a protracted civil war that ended in 2002 to take full advantage of its oil petroleum resources.
Angola is a resource-rich country with petroleum, diamonds, iron ore, manganese, copper, uranium, phosphates, and salt as the most prominent of her abundant mineral resources as well as gas and hydroelectric potential. Many experts believe that further geological exploration will add to the list of mineral reserves in this former Portuguese colony. This makes Angola one of Africa’s potentially wealthiest countries, one where poverty is still widespread. This paradox of “poverty amidst plenty” is traceable to a protracted civil war (1975–2002), which depleted both human and material resources. However, despite the war’s devastation, the energy sector and especially the country’s petroleum resources remain promising, given the prospect for peace and economic development that followed the cease-fire agreement signed in 2002.
Oil Production
Angola’s economy is dependent on oil and natural gas, which accounted for 28.9 percent of the national gross domestic product (GDP) in 2021. Angola has been a key player in the global oil business since 1973. The country joined the Organization of Petroleum Exporting Countries (OPEC) in 2007 and is reputed to be the third-largest oil producer in Africa, just behind Nigeria and Libya. According to a 2008 statistical energy survey conducted by British Petroleum (BP), Angola possesses about 9.035 billion barrels, or 0.72 percent of the world’s total oil reserves.
Before independence, the oil business was in the hands of the Portuguese company ANGOL Sociedade de Lubrificantes e Combustiveis Sarl, founded in 1953. In the aftermath of independence, ANGOL was nationalized in 1976, leading to the creation of two companies, Sonangol UEE and Direccao Nacional de Petroleos, through the promulgation of Decree 52 of 1976. Before long, Sonangol emerged as the sole, state-owned company, whose mission was the management of hydrocarbon resources in Angola. In order to ensure optimal efficiency and productivity, the company has undergone a number of transformations. For example, the first international unit, Sonangol Limited in London, was established in 1983; attribution of the first oil concession in deep waters on Block 16 was inaugurated in 1991; Sonangol P&P was established as an oil company in 1992; in 1999, Sonangol UEE became Sonangol E&P; and to cap it all, Sonangol started operations as a full-fledged oil company with the grant of offshore rights in 2003.
After nationalization, which paved the way for the incorporation of Sonangol, several oil firms operating in Angola prior to independence left for one reason or another, leaving behind some of their infrastructure and former workforces. Sonangol benefited tremendously from this exodus. It bought plants formerly owned by Texaco, Fina, and Shell and acquired those of Mobil. Due to a lack of Angolans qualified to work in the oil industry, Sonangol was forced to concentrate on the training and professional development of its employees. At this initial stage, especially in 1970s, students were sent to Algeria and Italy with scholarships cosponsored by the Italian oil company Eni. When this first set of sponsored students graduated and returned to Angola, they became the driving force behind a modernized Sonangol.
As a reflection of its focus on diversification, Sonangol has developed joint ventures and has set up companies to promote the social development of Angola and the expansion of the Sonangol Group. More than 30 units and joint venture companies are now an integral part of the Sonangol Group. Sonangol is headquartered in Luanda and has expanded into other activities, increasing its efficiency in many areas. The company not only has a national presence but also overseas offices in Hong Kong, China, Singapore, London, Brazzaville, and Houston. By 2006, when it marked its 30th anniversary, Sonangol had gained a significant reputation in the global as well as African oil business. With the apparent lack of local expertise in the energy sector and desire for foreign exchange earnings, Angola (like most of the oil-rich developing countries) heavily depends on foreign oil corporations.
Foreigners and Angolan Energy
Angola exports much of its oil worldwide. In 2022, the largest importer of Angolan oil was China, which took in $21.5 billion of crude Angolan petroleum. Other major importers of Angolan oil were France ($2.37 billion) and India ($3.59 billion).
Apart from this, several foreign oil companies have been involved in the energy sector in Angola and are still exerting enormous influence on the country’s oil and gas industry. The most notable of these companies are Chevron/Texaco (with a local subsidiary, Cabinda Gulf Oil Company), ExxonMobil, Citizen Energy, BP, Shell, Agip/Eni (Italy), Total (France), Statoil/Saga (Norway), and Energy Africa (South Africa). By 2009, Angola’s production capacity had risen to 491,000 barrels of oil per day, primarily from Blocks 1, 7, 0, and 14. By 2021, that capacity had risen to 1.55 million barrels per day.
Although foreign oil companies in Angola—like their counterparts operating in most Third World countries—have made huge profits, they also have made remarkable contributions to the development of the war-ravaged nation. For example, since 1987 Citizens Energy has been investing in development as part of its business initiatives involving Angola’s oil sector. As part of its contribution to Angola’s recovery from the civil war, in 1992 Citizens initiated the idea of an Angolan university. In collaboration with other oil companies, such as ExxonMobil, Saga, and Energy Africa, Citizens created the Angola Educational Assistance Fund, with almost $1.6 million to seed the fund.
As of 2010, Norway appeared to be making the most significant contribution to Angola’s economic development partnership with the energy sector. Angola is Norway’s main economic partner in Africa; Statoil (Norway’s main oil company) is responsible for 11 percent of the country’s petroleum production. According to a report by the Norwegian Agency for Development Cooperation (NORAD), Norway has been involved with petroleum-related development in Angola since 1987. This cooperation aims to strengthen management of Angola’s oil resources and promote sustainable economic development. Improved management of petroleum data, a stronger regulatory role, and improved competence at the Ministry of Petroleum (MINPET) are important elements of this partnership. The first phase of program cooperation began in September 2006 and comprised institutional cooperation and capacity building at MINPET, with a budget of 27 million Norwegian kroner. A new program was agreed upon by MINPET and the Norwegian Petroleum Directorate in May 2008. Norway has also provided technical support for the establishment of a national petroleum museum in Angola. The relationship between Angola and Norway goes beyond petroleum to fisheries, the environment, and higher education research, especially interuniversity cooperation. China is also making inroads into Angola’s energy industry, with the promise to provide the nation (and the rest of Africa) with unique opportunities by offering sustainable energy deals now and in the future.
Angola is also exploring its natural gas resources as a complement to its oil wealth. Angola’s natural gas reserves are estimated at 1.6 trillion cubic feet, with a potential increase to 9.5 trillion cubic feet. Even greater potential could be realized by converting flared gas to liquefied natural gas (LNG), natural gas liquids (NGL), and liquefied petroleum gas (LPG). Companies such as Sonangol, Total, Chevron/Texaco, BP, ExxonMobil, Norck, and Hydro are taking the lead in exploring this opportunity for Angola. Angola is also researching the use of water, conservation of energy, and preservation of the natural environment in its bid to create a sustainable energy future for the country.
As a result of all these developments, the future looks bright for the Angola energy industry. In the process of developing its abundant energy resources, however, it is hoped that the Angolan government will become more accountable to the people in the way that those resources are deployed—particularly to tackle poverty, which remains endemic and widespread in this otherwise wealthy nation. Despite the nation's production of oil and natural gas, only about 30 percent of Angolans had access to energy in 2013, while the rest of the population relied on traditional solid biomass, including wood, charcoal, manure, and crop residues, for heating and cooking needs. By 2022, 48.5 percent of citizens had access to electricity.
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