Angola Postindependence Exploration and Production
Figure 8. Oil Exploration and Production Areas, 1986
Source: Based on information from Tony Hodges,
Angola to the 1990s, London, 1987, 54.
Oil exploration off the coast of Cabinda
Courtesy United Nations (J.P. Laffont)
Following independence, the new government enacted
sweeping
changes in the oil industry and claimed sole rights over
all of the
petroleum deposits in the country. Under the Petroleum Law
No.
13/78, enacted on August 26, 1978, the government
established
Sonangol as the exclusive concessionaire of the state's
hydrocarbon
resources. The company was divided into several
directorates,
including one for the development of hydrocarbons and
another for
the distribution of byproducts on the domestic market. The
hydrocarbons directorate was responsible for reaching
agreements
with private companies for the development of local
resources. In
1978 it divided Angola's offshore area (except for
Cabinda) into
thirteen blocks of approximately 4,000 square kilometers
each for
development by private companies
(see
fig. 8). By 1981
exploratory
drilling had been conducted on Blocks 1 through 4, and
production
began in Blocks 2 and 3 in 1985.
Sonangol was empowered to enter into two types of
agreements
with foreign companies: joint ventures, in which Sonangol
and its
private partners shared in investments and received
petroleum
produced in the same proportion (51 percent Sonangol, 49
percent
foreign); and production-sharing agreements, in which the
foreign
company served as a contractor to Sonangol, made the
necessary
investments, and was compensated by receiving a share of
the oil
produced. Sonangol also could stipulate a price cap in the
production-sharing agreements that would allow windfall
profits to
accrue to Sonangol and not to the foreign companies. In
practice,
all of the new areas opened up for exploration and
production since
independence have been subject to production-sharing
agreements,
while the areas previously under production--primarily in
Cabinda--were joint-venture operations between Sonangol
and foreign
companies. In addition, Sonangol also participated in
joint-venture
companies that provided services and supplies to the oil
exploration and production companies.
Except for Cabinda, production in the offshore fields
started
after independence. In offshore Block 1, the first seismic
work
began in May 1982, and the first drilling commenced in
December of
that year. Activity in Block 2 began in 1980, and by 1985
two
fields were producing (Cuntala and Essungo) a total of
11,700
barrels per day (bpd--see Glossary). In addition, oil was
discovered by the end of 1985 in the West Sulele formation
in Block
2. Sonangol had started construction in Block 2 of the
Kwanda
operational base to provide support for operators in
Blocks 1, 2,
and 3. Block 3 also started exploration activity in 1980,
and by
1986 at least six wells there were considered commercial.
A major
development project was being initiated in Block 3 for the
Palanca
and Pacaca fields and for a sea-loading terminal. The
other blocks
in exploration were 4, 5, 6, 7, and 9; Blocks 8, 10, 11,
and 12 had
not been opened by the government as of the end of 1985
(see
table 8, Appendix A).
Oil was also produced in onshore fields in the Cuanza
and Congo
river basins. There were forty-six wells in the Cuanza
River Basin,
near Luanda, where production began in 1959. In 1986
Sonangol
estimated that the field had a life of another five to six
years at
then-current levels of production. Being an old field, it
had very
low production costs. The oil fields in the Congo River
Basin,
however, were far more productive, yielding nearly eight
times the
amount raised in the Cuanza River Basin. From 1981 to
1985, between
30,700 bpd and 39,900 bpd were produced in the Congo River
Basin,
but an average of only about 4,200 bpd was produced in the
Cuanza
River Basin.
In addition to its production agreements, Sonangol has
actively
invested in the development of production capabilities and
in
exploration and distribution projects. In 1979 the company
compiled
the available data on the sedimentary basins and carried
out a
seismic survey program on the continental platform, upon
which the
subsequent division of the continental shelf platform was
based.
Furthermore, the company has made major investments in
expanding
its ability to distribute petroleum at home and abroad
since it
assumed direct responsibility in 1977 for marketing
Angolan oil
(Cabgoc marketed Cabinda oil, which accounted for almost
half of
Angola's oil production). Some of Sonangol's other major
investments included gas injection facilities in Cabinda;
development of the Takula, Lumueno, Quinfuquena,
Quinguila,
Essungo, and Cuntala fields and the offshore Cabinda
fields;
construction of the Kwanda oil field service base; and
construction
of the Quinfuquena oil terminal.
New arrangements have also been made for the future
development
of several production areas. Financing totaling US$350
million has
been secured for the development of the Takula fields in
Cabinda,
owned jointly by Sonangol and Cabgoc, from an
international
consortium of banks. Cabgoc has also signed three new
joint-venture
contracts on oil research and exploration in Cabinda.
Under the
terms of these contracts, Cabgoc was to be responsible for
the
total cost of the research operations and was to be
reimbursed by
Sonangol only if commercially viable oil was discovered.
As a result of the many joint-venture and
production-sharing
agreements reached by the government in the late 1970s, by
1985
US$798 million had been invested in exploration and US$1.2
billion
in development. The largest investors were Cabgoc and
Sonangol in
Cabinda and the French firm Elf Aquitaine and its partners
in Block
3. This increased investment has led to higher production.
For
example, production in Cabinda more than doubled between
1980 and
1985.
Data as of February 1989
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