Angola has established itself as a top destination for large oil and gas companies over the last three decades. As a result, the country is home to all of the major international oil companies. As the world debates what energy transition means and what its ramifications are, Angola, like many other big oil producers, will have to reassess its oil and gas industry and its potential to remain a top energy investment destination. Offshore exploration, especially during the boom years of 2002 to 2008, led to oil production in Angola reaching close to 2 million barrels per day, providing Angola with much needed resources for its post-conflict reconstruction.
Many have questioned whether Angola will retain its position as a preferred destination for international energy companies in light of the ongoing push towards decarbonization, which includes a commitment by many countries, particularly Western industrialised nations, international energy companies, and organisations to achieve net zero emissions between 2030 and 2050.
To positively respond to the above question about Angola’s investment attractiveness, the government, led by HE President Joo Lourenço, launched the National Development Plan 2018-2022 and the revised Hydrocarbon Exploration Strategy 2020-2025, both of which were authorised by Presidential Decree 282/20.This seeks to intensify, research and geologically evaluate concessions and free areas of sedimentary basins for exploration in Angola.
The Ministry of Mineral Resources and Petroleum, headed by HE Diamantino, has responded to the swelling chorus about energy transition and how it will effect Angola’s oil and gas business. Pedro Azevedo, as well as other important Angolan players such as the National Oil, Gas, and Biofuels Agency (ANPG) and SONANGOL, are also actively seeking methods to alter their operations to reflect the new norm. More efforts are being made to encourage more efficient operations, which will result in a reduction in operators’ carbon footprints, less waste, and increased commercial usage of associated gas. Over the next 20-30 years, the latter is anticipated to gain significant traction as a major transition fuel.
Natural gas acts as a key intermediary in the energy transition, releasing fewer emissions than coal and petroleum products, while being able to reliably supply energy to enable production at scale and offset the inherent intermittence of energies. renewables. The Ministry of Mineral Resources and Petroleum is currently leading an ambitious effort to monetize gas reserves by attracting investments into downstream infrastructure and gas-fired power generation projects. The establishment of the New Gas Consortium that represents Angola’s first major natural gas partnership, brings together Eni, BP, Chevron, Total and state-owned Sonangol. Through better use of this resource, natural gas will play a pivotal role not only in supporting Angola’s effort to increase access to electricity, but also in accelerating industrialization and the transition to cleaner energy sources. It is the government’s hope, that this is only a first step to many more partnerships and a petrochemical industry. Commercialisation of gas can also lead to the establishment of a petrochemical industry that can produce fertilizer to boost agriculture in Angola and regionally. By offering a Gemcorp-Sonaref-led consortium significant tax discounts to develop the 60,000 barrel per day Cabinda refinery, the government has already shown its willingness to offer attractive special concessions to large investors in refining and petrochemicals. The appeal for other investors to join in is resounding.
In the upstream sector, a licencing round is underway in accordance with Presidential Decree 52/19, which calls for yearly bid rounds through 2025. The ANPG, Angola’s regulator, is focused on garnering interest from sources other than the country’s conventional oil and gas firms. Special attention has been given to attract mid-sized explorers to Angola’s basins that have proven prolific in recent years and provided returns for companies far beyond industry averages in other locations. Six licenses onshore Kwanza Basin and three licenses onshore Lower Congo Basin are currently on offer for this round.
The NGC is leading the development of a US$2 billion gas processing plant at Soyo, which will produce refined gas in liquid form for export to overseas markets as well as for the Soyo combined cycle power plant, which will generate energy for the national grid. Meanwhile, Angola’s LNG plant was the first to develop domestic natural gas resources and is one of the largest single investments in the Angolan oil and gas industry. Unlike most installations that use non-associated gas, this plant uses associated gas as a primary power source, thus contributing more significantly to the elimination of gas flaring, to the reduction of greenhouse gas emissions and to the promotion of environmental management. Both installations constitute a critical step on Angola’s path towards the sustainable and efficient use of its natural resources.
Angola, like many other African countries and other stakeholders globally, continues to believe, that there is a role for hydrocarbons in the age of energy transition. It is unreasonable, for western based organisations and governments, who have benefited tremendously from hydrocarbons, to demand of Angola and the rest of Africa that they immediately end the exploration and production of Hydrocarbons for the purpose of the word achieving its emission targets. Africa, with 16.72% of the world’s population, is responsible, according to the UN accounts for less than 3% of global carbon dioxide emissions from energy and industrial sources, compared to 15% for the USA, 16% for Europe and 28% for China. According to various analyses, global demand for hydrocarbons will continue to be strong for at least another half-century, even as it is predicted to fall. Furthermore, several African countries, such as Angola, rely heavily on hydrocarbon revenues to fund education, healthcare, and employment creation.
Natural Gas consumption and production in the USA has increased by close to 100% between 1990 and 2020. This has led to significant reductions in emissions in America, as many coal plants got replaced with gas. Gas has been good for America. It is also good for Africa and Angola. We must therefore support Angola in its quest to develop its gas resources, both for export and industrial use.
It is crucial to emphasise, however, that the Angolan government is devoted to renewable energy development. As a result, solar projects are receiving a growing share of the government’s spending on expanding access to power, as well as incentives for public-private partnerships in the industry. Eni, an Italian oil corporation, is leading the development of a 50-megawatt solar power facility in Namibe province, which is set to begin operations in 2022. Angola provides investors with a once-in-a-lifetime opportunity to bring capital, technology, and best practises to the country in order to meet the country’s expanding energy demand as well as its development objectives.
The immense prospects for natural gas and other energy development in Angola will be on show at the next Angola Oil & Gas 2021 Conference and Exhibition, which will be held September 9-10 in Luanda and organised in collaboration with the Ministry of Mineral Resources and Petroleum. This unique event encompasses a dynamic campaign to promote the energy sector – led by the continent’s leading energy investment platform Energy Capital & Power, formerly Africa Oil & Power – which includes an investment report and documentary Africa Energy Series : Angola 2021, and a series of international representations designed to place Angola at the center of the attention of investors around the world.