Angola, Africa’s second-largest crude oil exporter, is finding it hard to make ends meet with oil prices at their current levels, according to Petroleum Minister Jose Maria Botelho de Vasconcelos. In an interview with Bloomberg, the official said Angola needs crude to rise to US$60 a barrel—and the sooner the better.
Botelho de Vasconcelos added that “We’ve been getting signs from the market that prices could reach $60 by the end of the year,” although he did not elaborate on where these signs were coming from.
Angola is heavily dependent on oil revenues for the livelihood of its economy, like most other OPEC members. In fact, Fitch Ratings in April estimated that Angola needs oil at US$82 a barrel if it is to balance its 2017 budget. It also needs a diversification of the economy – an idea that Botelho de Vasconcelos has pledged to push forward, after his party, the ruling Popular Movement for the Liberation of Angola, won the elections earlier in August.
Prior to the civil war that began in 1975 after Angola gained its independence from Portugal, the country was a large exporter of agricultural goods such as coffee, bananas, and sugarcane. However, Bloomberg notes, the war forced a lot of farmers to the cities and cost Angola its standing as an agricultural producer and exporter, making it exclusively dependent on its oil wealth.
Angola has proven crude oil reserves of 9.52 billion barrels, with daily production at 1.65 million bps last month, according to IEA figures. The country is taking part in the OPEC production cut agreement from last November and the July daily production rates suggest it had cut deeper than agreed, Bloomberg notes.
Angolan crude oil exports last month hit 1.66 million bpd, data from Kpler showed, down from 1.757 million bpd in June, while other OPEC producers upped their exports during the same month.
Yet, compliance is not everything and Angola needs new investments, Botelho de Vasconcelos said. Oil and gas block tenders that were suspended earlier in the year will be carried out after the formation of a new government in September. Around 10 blocks in total will be put up for bidding.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.