Paris — Angolan state oil company Sonangol is aiming to breathe new life into its aging oil industry by streamlining its business and focusing on its core strength of Africa, chairman and CEO Carlos Saturnino said Friday.
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"Instead of investing in Australia, United States etc., Sonangol wants to become an oil company of reference in the African continent. This is major change for us," he said at the Paris International Oil Summit.
Oil output - which accounts for 95% of exports -- has fallen by more than 300,000 b/d in the past two years. Production was 1.46 million b/d in March 2019, according to an S&P Global Platts survey, due to technical and operational problems at some of its fields.
Saturnino said there is major emphasis on getting costs down by selling off assets, cutting jobs and responding faster to approving projects in order to woo investors to Africa's second largest oil producer, with a large portion of supplies going to China.
"We are going to sell, close or put out of our group a lot companies," Saturnino said, adding there were "52 joint ventures in which we want to sell our equity."
Saturnino is seen as a safe pair of hands after being brought back by Angolan President Joao Lourenco in September 2017 to revive the flagging sector.
He decried the lack of efficiency in terms of approvals, which is hampering investment, highlighting the "backlog of around $5 billion in projects between 2015 and 2017" that have now been cleared, and he noted approvals are on the rise.
He pointed to the a strategy around regulatory reform to help investors go "deeper and deeper" into exploration in Angola's mature fields. An independent regulator has been created to manage the country's oil and gas concessions, which were previously handled by the state-owned Sonangol. The agency is the new granter and manager of concessions in a complete restructuring of the management of Angola's oil and gas industry. It is aimed at improving transparency, luring investment and boosting output.
Fiscal changes have helped revive interest, and the industry received a boost from the start of production from the Kaombo field, and also some fields operated by Eni in Block 15/06. Production from Angola's much-touted $16 billion ultra-deepwater Kaombo development is expected to double to 230,000 b/d this year, with the start of its second floating production, storage and offloading unit. The project is located in coveted Block 32, which boasts 658 billion barrels of recoverable reserves. Meanwhile, Eni's Agoga-1 discovery is estimated to contain between 450 million barrels and 650 million barrels of 31 API crude in place in addition to further upside potential.
The country plans a 2019 licensing round to include onshore and offshore blocks in the Congo, Namibe and Cunene basins but is in the middle of a transition to the new petroleum and gas agency first, he told Platts on the sidelines of the event.
-- Paul Hickin, email@example.com
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