Angolan oil production set to rocket, despite OPEC
The Organization of Petroleum Exporting Countries’ newest member, Angola, is likely to stay free of the group’s output constraints so long as oil prices remain strong, giving the country scope for its plans to launch several oilfields in coming months.
Since Angola joined OPEC in December , there has been speculation about when the oil cartel will institute formal production quotas for the country. Based on its projected mineral and oil output, Angola is expected to join SA and Nigeria as an economic powerhouse over the next decade. OPEC secretary-general Abdullah al-Badri is scheduled to meet Angolan Oil Minister Desiderio Costa next week in Luanda to lay the groundwork for a possible output target. “I don’t think Angola will cut any barrels now or in the foreseeable future,” said Leo Drollas, deputy executive director for the Centre for Global Energy Studies.
Angola has been exempt from the group’s quota pledge last year to lower production 1,7-million barrels a day. Iraq is the only other member not bound to the agreement. With oil futures trading at just below $70 a barrel and OPEC facing mounting calls from consumers to increase output, Angola can remain confident that it can continue to pump at full throttle without any pressure from other members. “(OPEC and Angola) will agree to do something if and when the oil price looks like it’s cracking.
The Angola minister will say to OPEC, ‘I’ll get back to you when the oil price is $60’,” said Adam Sieminski, chief energy economist at Deutsche Bank. Analysts doubt that Angola will agree to any production quota that limits output from several new fields expected by the end of the year and next year . “Angola would have had no need to join OPEC in the first place if they thought OPEC was going to crimp their production,” said Graham Stock, executive director of emerging markets research at JPMorgan.
Angola’s decision to enter the exclusive oil club was seen by analysts as a sign of the government’s desire to exert greater political, as well as economic, influence on the international stage. “Why Angola itself should join is beyond logic. They have everything to gain by being outside (of OPEC) with these new fields coming onstream,” Drollas said. “It’s purely a political decision.”
The country’s newest oilfield, Plutonio, operated by BP, is expected to begin production in the coming weeks and push total output near 2-million barrels a day by the end of the year. The largest oil producer in sub-Saharan Africa after Nigeria is pumping about 1,8-million barrels, according to October loading programmes. ExxonMobil’s Kizomba C and Sonangol’s Gimboa fields are expected to come online next year, adding 310000 barrels to Angola’s output. “I think they will set a quota for Angola next year that is close to 3-million barrels a day,” Stock said. “On current reserves and production predictions, they are not expected to hit that level so it could be a pretty accommodative quota.” Under the most optimistic estimates, Angola could reach 3-million barrels a day by the end of 2010. (businessday.co.za)
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