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Angola has been facing some severe challenges in its effort to
maintain crude oil production since the oil price collapse in 2014.
The threat of a near-term decline is possible, President Joao
Lourenco's response comes following the first new licensing round
since 2011 together with some additional reforms that could
potentially revert the downward trend. But as many of the country's
oil producing fields are now considered mature, this won't prove to
be an easy task. After taking over in 2017, the new government has
been responsible for a plethora of oil policy changes, including
the establishment of conditions making the country much more
appealing to international oil companies, while opening up more
offshore and onshore basins. The new licensing round includes ten
oil blocks in the Namibe and Benguela basins and will close next
month.
The plan for 2020 is clear. Oil output will rise to 1.44 million
b/d, with 35,000 b/d to be added over the next couple of months.
There is no doubt that more will be needed to drastically change
the current sentiment in the country. Even the start-up of the
230,000 b/d Kaombo deep-water project more than a year ago wasn't
enough for the trend to be reverted. The drop over the last two
years is estimated to have surpassed 300,000 b/d, primarily due to
technical and operational problems. Shipments according to IHS Markit Commodities at Sea
will stand close to 1.292 million b/d this month, lower than
September's levels of 1.34 million b/d. 1.514 million b/d of
Angolan crude oil was loaded on ships in October 2017. VLCC volumes
have remained above one million b/d since August, but Suezmax
cargoes have dropped to the lowest level so far in 2019, just
230,000 b/d.
China continues to absorb most of the country's exports, with
the market share of other Asian importers (primarily India) having
declined significantly over the last couple of months. Trade flows
to European destinations (mainly Iberia and Netherlands) have
remained strong, as the local markets seem quite interested in some
of the country's crude oil grades.
Posted 23 October 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
