A lack of enthusiasm in Angola's upstream prospects, coupled with a steady decline in oil output, means the country's boom days could be numbered unless it can stimulate activity in more deepwater projects.
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The new government led by President Joao Lourenco will have to take some bold and gutsy steps to reform its oil industry, on which it so heavily depends.
Angola's oil production has been on the wane in the past few years, with a plethora of fields that are mature and in decline and a lack of new upstream investments and incentives.
Technical and operational issues, especially at its offshore fields, as well as a lack of upstream investment have dragged output down by 250,000 b/d in the past two years.
Production is expected to average 1.58 million b/d in the first four months of this year, according to S&P Global Platts estimates, down from a peak of around 1.9 million b/d in 2008.
Back then, Angola was an oil prize, as the search and scramble for deepwater oil and gas pushed majors and independent explorers toward the southern African country.
But some of the pre-salt plays disappointed potential partners and due to volatile oil prices, economic hurdles and regulatory uncertainties, a number of projects were delayed.
State-owned Sonangol has been holding active discussions with international oil companies in the past few months as it makes tweaks to the fiscal terms of its upstream contracts in its efforts to revive the deep offshore sector, sources active in the Angolan oil sector told S&P Global Platts.
Angola remains a keen prospect for deepwater exploration for oil companies but without any new fiscal or regulatory changes investment isn't likely to increase, they added.
"They need to focus on getting more foreign investment in the upstream sector and get the oil companies to return to drilling," said one industry source, who added that the ministry needs to give these companies more financial incentives.
Sonangol wasn't immediately available for comment.
Integral to Angola's oil sector is its national oil company, Sonangol, which has endured five very difficult years, as the cash-strapped and debt-laden company struggles in the low oil price environment.
Sources said the company is currently focusing on maintaining production levels to deal with the threat of maturing and declining fields.
To achieve this, Angola is resting its hopes on the 230,000 b/d deepwater Kaombo field in Block 32, which is expected to start up in mid-2018.
The field is currently Angola's only real shot at reversing its output decline but, despite being a big project, the ministry has still chosen to set a modest target of only maintaining current production levels.
Angola's difficulties are illustrated by the particularly steep fall in loadings of medium-heavy crude grades Hungo and Pazflor, both of which are produced from mature fields.
"Hungo could be fading -- it's one of the older fields," said one West African crude trader.
He added that Pazflor's drop has been more sudden but said it can vary month-by-month.
"Five years ago, Pazflor was the crude of the moment, probably this is one [grade] where it's most noticed but that being said, if you fail to have an end-month cargo, ie. one cargo disappears and that could make it look smaller than it actually is," the trader added.
These concerns were recently echoed by the International Energy Agency, which said that it expects Angola to post the biggest slide in production capacity after Venezuela out of OPEC's 14 members in the coming years.
The agency added that this was occurring as "ageing oil fields lose steam and foreign investors, faced with relatively uncompetitive prospects, lose enthusiasm."
The IEA estimated that the country's production capacity will fall 370,000 b/d to 1.29 million b/d over the six years to 2023.