Major oil find seen to boost Angolan oil output

Cobalt International Energy, an offshore oil explorer based in Houston, has successfully extracted oil from the Kwanza Basin in Angola. This major find has prompted the Luanda State to offer oil drilling rights and encourage more oil investment in the area. Sources say that Angola intends to start auctions early next year.

This move will help the West African country achieve its 2020 energy production target of 3.5 million oil barrels per day (bpd), a 94% projected growth from current production level of 1.8 million bpd. A big chunk of projected output will be exported to the U.S., already a major market for West African crude.

Cobalt projects that their recent discovery could hold more than 1 billion barrels of crude. Sources indicate that Angola’s oil basin in Kwanza is likened to that of Brazil’s oil-rich Campos and Santos basins.

Leading oil firms like Statoil, Eni, ConocoPhillips, and Total have started to invest in oil exploration in Benguela and Kwanza. In fact, they have major investments in Angola’s 11 oil blocks.

Repsol’s Regional Exploration Manager, Didier Lluch, stated that Cobalt’s oil find confirms that the Kwanza Basin could indeed be another Campos or Santos basin in the making.

Leading international oil firms recognized the oil potential of Angola’s sea beds earlier this month, and have since been drawn to invest in drilling and exploration in the area.

However, foreign firms will have to contend with some hindrances that could deter successful operations. Angola is a notoriously corrupt country. Also, a struggle for political power may heighten as President Jose Eduardo dos Santos ends his term this year, a possible risk factor for private property within the territory.

Despite these issues, a leading daily stated that oil firms are expected to keep on investing in oil exploration in Angola. The country is keen on attracting more investors and is hungry for more foreign oil investment that will further boost its oil sector.

Greed and corruption are reportedly deeply rooted in Angola’s political system, so it does not come as a surprise if Angola’s state officials allegedly enrich themselves with funds coming from hefty signature bonuses released by oil firms in exchange for drilling rights.

The Financial Times also reported that there are some Angolan state officials who discreetly obtain cuts in the state’s oil revenues and that some foreign oil firms indirectly involved may be held accountable under the laws of their homeland.

The future of Angola’s economy is very dependent on oil revenues, however, due to corrupt practices, only few of its citizens benefit from them.