The COVID-19 pandemic and subsequent country-wide lockdowns have caused unprecedented impacts on Africa’s oil and gas industry. Project delays, tightening investment channels and re-directed national budgets have led to a global slowdown in oil and gas developments. However, Angola has emerged as a champion in ensuring energy sector developments continue, despite the challenging socio-economic context, with several small- and large-scale project developments coming online in 2021.
Developments Across the Oil Value Chain Make Headway
National objectives to increase production in the face of declining levels have led to renewed interest in Angolan exploration. Throughout 2021, the country has seen several upstream achievements including Eni’s discovery of light oil at the Cuica exploration projects in Block 15,16; the Angola National Oil, Gas and Biofuels Agency launch of the 2020/2021 onshore bidding round; and the awarding of risk service agreements for Blocs 30, 44 and 45 to ExxonMobil and Sonangol.
Regarding the midstream sector, Angola celebrated the start of production at TotalEnergies-operated Clov 2 project in Block 17 offshore Angola, with a capacity of 40,000 barrels per day (bpd); and Zinia Phase 2 short-cycle project, with a production capacity of 40,000 bpd. Correspondingly, in November, BP announced the start of production at its Platina field in Block 18. These developments have sparked a resurgence in domestic production, positioning the country as one of the continent’s top oil producers.
On the downstream front, Angola has taken an aggressive approach to develop and enhance domestic refining capacity. With the aim of reducing refined product imports and establishing a sustainable oil sector, the country has focused efforts on refinery developments with the launch of several large-scale refineries in 2021. Notably, in September 2021, the Quantem consortium announced that it will invest $3.5 million dollars for the development of the 100,000 bpd Soyo refinery. Additionally, the Angolan government launched a public tendering process for the investment and development of a 200,000-bpd refinery in Benguela – the Lobito refinery. As more refineries come online, Angola is well positioned to become a net exporter of refined products.
Meanwhile, on the 21st of September 2021, H.E. Diamantino Azevedo, Minister of Mineral Resources, Oil and Gas, Angola, officially inaugurated the construction of the Oceanic Terminal – a facility to store petroleum derivatives. With a 580,000 cubic meter storage capacity, the terminal will improve fuel distribution in Angola.
Angola Pursues Accelerated Gas Developments
Notwithstanding the significant progress made regarding oil, Angola is focused on exploiting its significant gas reserves. In 2021, the country saw the re-launch of the gas manufacturing facility in Cabinda by the national oil company Sonangol; as well as the signing of a Memorandum of Understanding (MoU) between the Ministry of Mineral Resources and Petroleum, the Ministry of Energy and Water, the Minister of Finance and New Fortress Energy for the development of a Liquefied Natural Gas terminal. As gas becomes an increasingly attractive energy source for African nations, Angola is focused on driving progress within 2022 and beyond.
Renewable Developments Drive the Energy Transition
Despite relying heavily on oil and gas, Angola is actively pursuing energy sector diversification through investment and development within the renewable energy sector. Blessed with abundant clean energy resources, project launches and agreements throughout 2021 have driven the transition to a clean energy future in Angola.
Notably, speaking at the 16th United Nations Climate Change Conference in Glasgow, Angolan President, H.E. João Lourenço, pledged to increase Angola’s renewable energy capacity to 70% of the country’s energy matrix by 2025. The commitment serves as a critical starting point for accelerated renewable energy developments in the country. Preceding the pledge, Angola saw several clean energy projects launched during the year.
In September, the country signed an MoU with Sun Africa and Africa Global Schaffer for the development of a $1.5 billion mini-grid solar project. The project is expected to significantly enhance clean power generation. Additionally, Sonangol, Eni and the ANGP signed a MoU for the production of sustainable renewable energy in Angola. The agreement stipulates that Eni will invest $150 million over 150 acres of land throughout the country. What’s more, the Angolan government implemented a set of regulations that aim to incentivize renewable energy investment, stimulate development, and ensure a competitive and attractive business environment for clean energy operators. Notable regulations include the Regulation of Activities of Production, Transmission, Distribution and Commercialization of Electricity as well as the Independent Generation of Electricity Regulation – which in turn, established a Special independent Generation Regime that includes a renewable energy component.
Across the oil, gas and renewable energy space, Angola has not only managed to remain on track regarding national objectives, but has seen accelerated growth within projects. Accordingly, the country has demonstrated that political will, modernized regulations, and sectoral integration represent critical components to energy sector growth in the face of global challenges.