Angola's state-owned energy giant is trying to sell off some of its bizarre assets, including a convent in Portugal
of flame bursting from the Kaombo Norte oil platform lights up the sea some 260km off the coast of Angola. The processing platform, part of a $16bn project that takes oil from wells drilled under nearly 2km of water, ought to be one of the crowning achievements of an industry that has endured 27 years of civil war. Instead, it may be a swansong for sub-Saharan Africa’s second-biggest oil producer: Angola’s offshore oil fields are running dry.
Daily oil production has tumbled from its high of almost 2m barrels a day in 2008 to around 1.4m today. Since oil provided 95% of export revenues and almost two-thirds of government revenues, the fall in output—as well as a slump in the price of crude—has thrashed the economy.expects growth of just 0.3%. The fall in output is not because the country has no oil—its reserves are second only to Nigeria in the region—but because of underinvestment.
Yet no matter how much Angola might sweeten the terms of new investment, it may not be able to lure back all of the international oil companies that once flocked to the country’s oil-rich offshore basins. Firms including ExxonMobil and France’s Total spent freely, ordering hulking offshore rigs in the 2000s when oil prices approached and then exceeded $100 per barrel. Prices crashed in 2008, but were back above $100 by 2011. In 2014 they plummeted to less than half that.
By contrast production and capital costs in Angola have been stubbornly higher than the oil price . Unless high prices return, oil companies may not, either. “From the moment oil prices go down or flirt with $50, deep and ultra-deep offshore investments such as the ones that Angola has been offering become less attractive,” says Gonçalo Falcão, head of the Angola practice at Mayer Brown, a law firm.
Angola’s government has not prepared the country for this slump. Between the end of its civil war in 2002 and 2014,rose from $15bn to $146bn. José Eduardo dos Santos, president for 38 years, squandered the wealth, turning Luanda into a gleaming capital but investing in little else. João Lourenço, who took over as president in September 2017, is trying to diversify the economy, but progress is slow.agreed to lend Angola $3.7bn on condition that it implement tough economic reforms.
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