Angolan Government’s Efforts Leading to its Energy Success
By Joyce Ojanji
The Government of Angola has made significant strides that have boosted the country’s energy sector including policies and investment which have improved the business environment making it attractive to investors.
Key among them is the recent Presidential decree on incremental production. It introduces better terms for all oil and gas licenses, including incentives for mature fields and cost recovery for dry exploration wells.
The Angolan government has also taken steps to enhance transparency and governance in the sector, by joining the Extractive Industries Transparency Initiative (EITI).
Moreover, with a new bid round in preparation, Angola is gearing up to attract investment to its greenfield projects, while simultaneously maximizing production from mature fields.
Angola’s energy sector is characterized by substantial proven reserves – approximately nine billion barrels of oil and 11 trillion cubic feet of gas. As part of its strategy to boost production, Angola has introduced new incentives for marginal field development and deployed a six-year licensing round strategy through 2025. Currently, there are 29 blocks on offer.
These include five marginal fields, including those in Block 4, Block 14, Block 15 and Block 18; four onshore block opportunities (as part of the 2023 round); 11 block opportunities for permanent offer; and nine offshore opportunities (as part of the 2025 round). These efforts align with the country’s goal of maximizing mature field production, while unlocking the potential untapped reserves and positioning itself as a favorable destination for upstream investment.
Securing investment for large-scale projects like TotalEnergies’ $6-billion Cameia and Golfinho field development in Block 20/11 has been pivotal to driving Angola’s offshore expansion. TotalEnergies and its partners, Malaysian multinational Petronas and Angolan national oil company Sonangol, reached FID for the project earlier this year through a combination of equity investments, strategic partnerships and long-term offtake agreements, which helped de-risk the project and ensure its viability. TotalEnergies is also rolling out its Begonia oil field development in Block 17/06, which reached FID in 2022 and is set to produce 30,000 barrels per day (bpd) by late-2024.
Meanwhile, Angola’s downstream sector is advancing rapidly, underpinned by diverse investment strategies that are fueling the development of several refining projects. The construction of the 200,000-bpd Lobito Refinery, 30,000-bpd Cabinda Refinery and 100,000-bpd Soyo Refinery – all scheduled for completion by 2025 – relies on a mix of international capital, public-private partnerships and innovative finance mechanisms. Financing for the Cabinda Refinery has been underpinned by the Fund for Export Development in Africa, an impact investment subsidiary of the African Export-Import Bank, and included a $335-million project facility secured in 2023.
The modular refinery will increase Angola’s refining capacity by a total 60,000 bpd and contribute to Angola’s self-sufficiency in petroleum products. Furthermore, Angola’s bio-refinery initiative at the Luanda Refinery Complex reflects growing demand for cleaner petroleum by-products and could stimulate green finance packages from sustainability-focused banks and lending institutions. By utilizing diverse financing tools and integrating sustainable energy practices into traditional refining projects, Angola can accelerate its downstream sector expansion.
A government that is willing to partner with energy companies to share risks as well as benefits, and to devise compliance approaches for effective social and environmental transformation is crucial to the successful, long-term development of a country’s natural energy resources, said Ane Aubert, Equinor Angola managing director.
Equinor is an international energy company headquartered in Norway. Since the company entered the Angolan market in 1991, the country has become one of the largest contributors to Equinor’s energy production outside Norway.
Despite, the recent emergence of new frontier discoveries, Aubert is confident that Angola will remain a significant energy player on the continent long into the future.
“While Namibia is gaining attention as a potential new world-class exploration frontier, Angola continues to hold a strong position in Africa thanks to its established infrastructure, skilled workforce, and still substantial reserves potential,” says Aubert. “This combination, together with the government’s proactive approach, and increased focus on compliance, provides a stable and attractive environment for investors.’’
At the African Energy Week (AEW): Invest in African Energy 2024 conference, the Energy Finance Summit will feature a dedicated session on “Financing Angolan Energies,” exploring how Angola can secure the investment it needs to expand its energy sector and leverage its vast oil and gas resources for local industry and global export.