After a few setbacks in 2011, oil production will return to full strength next year, as fuel-sector liberalisation boosts petrol availability in the domestic markets.
After lower-than-expected production levels in 2011, Angola's oil sector will bounce back in 2012. Companies had failed to meet the forecast of 1.7m barrels per day (bpd), instead producing a more modest 1.5m bpd.
BP has been dogged by production problems on Block 18, where its equity partners include Sonangol Sinopec International, a joint venture between Chinese state-owned China Petroleum and Chemical Corporation (Sinopec) and Sonangol Exploração e Produção (EP).
Drilling on BP's major ultra-deepwater project, Block 31, also started much later than planned in 2011. Once these delays are overcome, and thanks to the start of production at Total's Pazflor development on Block 17 and ExxonMobil's satellites on Blocks 14 and 15, crude output will start to rise in the 12 months to come.
The supermajors continue to lead the industry, but mid-sized operators such as Italy's ENI and Denmark's Maersk have had several exploration successes.
Argentina's Pluspetrol, Sonangol, Force Petroleum and Cuba's state-owned Cupet plan to begin production at the onshore Castanha block in Cabinda in 2012.
Pre-salt prospects
In January 2011 concessionaire and parastatal Sonangol awarded eleven new licences, predominantly for pre-salt exploration. Among new players in the market are Spain's Repsol and Conoco Phillips from the United States, while Norway's Statoil, the UK's BP and France's Total also did well in the pre-salt auction.
Brazil's Petrobras, which surprisingly missed out despite its experience with this geological formation, has not been so lucky recently, producing a number of dry wells.
In late September, Portugal's Galp complained that Angola's fiscal framework does not encourage the taking of risks in new territories. There is a lot of interest in Angola's ultra-deepwater acreage, but companies worry about the balance between risk and rewards.
Elsewhere, the government has been working on legislation to strengthen the local banking sector's involvement in the intermediation of oil and gas payments.
During 2010 Sonangol EP recorded profits of more than $3bn, and its investment arm Sonangol Holdings continued its asset acquisition, particularly in Portugal.
Operation alarm Sonangol Pesquisa e Producao has also been busy with contracts signed for exploration and production projects in Cuba, Venezuela, Iraq and the Gulf of Mexico.
Sonangol's connections with US company Cobalt International have come into the spotlight since 2010. The two companies work together on blocks in Angola and the Gulf of Mexico.
Interest in the links follows a US Securities and Exchange Commission probe into the ownership of the Angolan equity partners, believed to be a number of senior government officials, including the president of Sonangol, Manuel Vicente.
In October 2011, US oil field services company Halliburton announced that US authorities are probing the company over an email claiming "conflict of interest" in relation to one of its Angolan partners.
Construction on the $9bn liquified natural gas plant at Soyo is nearing completion, and it is due to start exporting early in 2012, several months sooner than anticipated. Plans for the country's second refinery built by Sonangol in Lobito are, however, less advanced.
Contractors halted work during 2010 and 2011 for a restructuring of the investment plan and a rethink of the technical specifications.
This leaves the country dependent on imported crude products for 70 per cent of local consumption, as the existing refinery in Luanda can only produce 40,000 bpd.
Even further downstream, Sonangol Distribuidora has expanded its operations, vastly improving the nationwide availability of oil- related products and derivatives.
The long-awaited liberalisation of the fuel market appears to have begun with the launch of Pumangol, a joint venture between Sonangol and Trafigura that began operations in 2009.
It announced in January 2011 that it would more than double the number of stations in its country-wide network to 37.
It follows Sonangalp, a joint venture formed between Sonangol and Portugal's Galp Energia in 1997 in which Sonangol, via Amorim Energia, has an indirect share.
It now seems that sub-Saharan Africa's second-largest oil producing country is meeting demand for fuel and the overnight hundred-car queues at petrol stations are a thing of the past.
This article was first published in the November edition of The Africa Report, on sale at newsstands, via our print subscription or our digital edition.
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