Angola is an important player in regional energy production.
Angola is responsible for coordinating energy policy for the Southern African Development Coordination Conference (SADCC) and SADCC’s energy secretariat is based in Luanda.
The oil industry is jointly run by foreign oil companies and the state oil firm Sonangol. In contrast to all other sectors of the economy, the oil sector expanded rapidly throughout the 1980s. Oil accounts for 42% of Angola’s GDP and 90% of Angola’s total exports. Oil production is expect to increase from the 1995 average of 637,000 bpd to 700,000 bpd in 2000 as increased exploration activity offshore and expansion plans for existing operations begin to take effect.
In the early 1990s, the government negotiated with foreign oil companies for several new onshore and offshore exploration permits to expand oil production. An oil exploration agreement was signed in December 1989 between the state company Sonangol and foreign companies, Total, Petrofina and British Petroleum, covering an offshore area south of the Cuanza river. In August 1991 Angola was negotiating a barter agreement with South Africa to allow South Africa to sell Angolan crude in exchange for foodstuffs and mining equipment. In August 1995 Sonangol entered a joint venture agreement with Global Marine Drilling Company to provide offshore drilling and other services to the oil industry in Angola. The Ministry of Energy and Oil is developing plans to use gas production in petrochemical projects.
Angola has made increasing hydroelectric power generation a priority. Several large and powerful rivers cross the country and offer enormous hydroelectric potential. The Portuguese and South Africans built dams in the north, central and southern parts of the country before 1975. Current generating capacity already exceeds local demand and output continues to increase. Electrical energy production increased by 17.6% in 1994.
Foreign oil companies and the Angolan government run Angola’s oil sector jointly. U.S. firms have significant concessions. Angola’s oil industry is an attractive investment opportunity, offering foreign companies:
- favorable geology;
- low operating costs;
- a constructive business approach from the Angolan government.