Angola seeks ‘sustainable’ oil & gas exploration to keep its diversification engine running

As the second largest oil-producing country in Sub-Saharan Africa and an OPEC member, Angola is determined to continue its hydrocarbon exploration and bring new oil and gas projects online while curbing its greenhouse gas (GHG) emissions footprint and enriching its energy arsenal with renewable energy sources to pave the way for a just energy transition.

With an output of around 1.55 million barrels of oil per day (bpd) and an estimated 17.904,5 million cubic feet of natural gas production, Angola is interested in augmenting its production capacity to secure further growth of its economy and expand its energy diversification efforts.

According to the National Agency for Oil, Gas, and Biofuels (ANPG), Angola has 30 investment opportunities in the oil sector, including 11 blocks in permanent offers, six onshore blocks, four opportunities in marginal fields that already have discoveries, and nine blocks for the 2025 bidding round.

Aside from these, the incremental production project, currently awaiting the publication of the presidential decree, is described as offering a considerable range of tax incentives to attract more investment in technology and increase hydrocarbon production.

João Lourenço, President of Angola, highlighted: “Those involved in oil and gas exploration and production activities have been instructed to adopt measures to mitigate and offset greenhouse gas emissions, including the elimination or reduction of gas flaring, the adoption of less polluting technology and operational equipment, the protection and conservation of flora and fauna, as well as the implementation of programs for the creation of forests or reforestation.”

Lourenço is adamant that the government is committed to the “sustainable” exploration of oil and gas and encourages the transition to renewable energy, emphasizing that the sector’s actions should promote the sustainable exploitation of fossil energy resources, using part of its profits and technical capacity to foster the emergence of an industry of renewable energy sources, such as solar, wind, green hydrogen, biomass, and others.

Diamantino Azevedo, Angola’s Minister of Mineral Resources, Oil and Gas, outlined: “The fair energy transition must safeguard the use of all existing energy sources, giving oil and gas producing countries the possibility to continue developing their resources, focusing their efforts on exploration and development activities to ensure a sustainable replenishment of reserves and the continuity of production, thus promoting their economic growth and development.”

Furthermore, Angola, which sees hydrocarbon exploration and production as essential to drive the energy transition forward, believes that ensuring efficiency in the production process is very important to achieve these goals. Angola’s upstream sector is perceived to be experiencing a wave of evolution amid efforts to revitalize production from mature fields.

Paulino Jerónimo, Chairman of Board of Directors of the National Oil, Gas and Biofuels Agency, noted: “When we compare investments from 2022 to 2023, we grew by 96%. In 2022 we had an average of 7 billion dollars in investments and in 2023 we had almost double, around 14 billion dollars. This proves that our sector is dynamic, it is active and it also proves the confidence of our investors in the political reforms of the Angolan Executive.”

Earlier in 2024, Afentra wrapped up the acquisition of 12% and 16% non-operating interests in offshore blocks 3/05 and 3/05A, respectively, from Azule Energy, working closely with Trafigura to mobilize $100 million toward the acquisition, along with leveraging existing debt facilities and cash flow from its balance sheet.

Paul McDade, CEO of Afentra, stated: “We see great opportunities to acquire mature assets in Angola, reduce emissions from those assets and further develop them. We anticipate more large companies divesting in the future, with independents stepping in to acquire mature fields. We aim to continue working alongside Angolan companies, combining efforts to secure additional assets. The challenge lies in convincing investors to finance these projects.”

Matthieu Milandri, Head of Upstream Finance at Trafigura, who worked closely with Afentra on the acquisition in Angola based on their commitment to reducing emissions and reinjecting associated gas, claims that even more “big players” will sell their mature fields with declining production to independents in the future.

Taiwo Okwor, Vice President of Investment at the Africa Finance Corporation (AFC), pointed out the role of sustainability and emissions reduction in securing funding for projects, and the importance of integrated oil and gas projects with strong infrastructure components.

“We select projects in Angola based on their commitment to reducing emissions and reinjecting associated gas. We provide capital, but closely monitor emissions and explore sustainable financing options. Connecting infrastructure makes a project more bankable and attractive to financiers,”  added Okwor.

Angola’s Minister of Mineral Resources, Oil and Gas underscored the potential for the country’s oil and gas resources to drive diversification and socio-economic development, as continues to attract new investment not only from independents for mature assets but also for new exploration from giants such as TotalEnergies, ExxonMobil, Chevron, and Azule Energy.

“When we explore natural resources, we aim to use them to transform society and contribute towards improving life in Angola,” said Azevedo stated, adding: “That’s why it’s important to speak not only in terms of how many million barrels we produce, but to speak on the impact on the living conditions of the population.”

While Angola’s oil and gas sector is focused on current developments, it is also interested in future projects to streamline its investment process, making it straightforward for potential investors, transcending traditional oil and gas, with the country’s renewable market enticing players as well.

Given its plans to support efforts to maintain production above 1 million barrels beyond 2027, the African country has been promoting investment in the upstream sector, currently projected to grow by 15% between 2022 and 2027.

The demand for drilling and oilfield services, detailed engineering, procurement, technical construction, and pre-fabrication and assembly is expected to increase the participation of local companies in Angols’s oil and gas sector.

Since up to 60% of the African energy matrix is forecast to be powered by fossil fuels by 2040, Sonangol, Angola’s national oil company (NOC), considers the expansion of downstream infrastructure a top priority. Angola’s focus on strengthening its port logistics is anticipated to be instrumental in driving regional and international exports.

TotalEnergies greenlighted in May 2024 a $6 billion deepwater project in Angola to develop the Kaminho project, covering the Cameia and Golfinho fields, located 100 km off the coast of Angola, in 1,700 m water depth. The start-up is anticipated in 2028 with an all-electric FPSO, designed to minimize greenhouse gas emissions and eliminate routine flaring, with all associated gas to be fully reinjected into the reservoirs.

Martin Deffontaines, Managing Director of TotalEnergies Angola, underlined: “The world is changing and we have to adapt. We are committed to net-zero by 2050 as a company. We are closing flaring at all our FPSOs, of which we currently operate six in Angola. We will close the Dalia FPSO flare, which will save around 50,000 KT of carbon emissions per year. It’s a permanent effort we are making.”

ExxonMobil, which embarked on an 18-well program with its partners – Azule Energy, Equinor, and Sonangol – made two discoveries, Bavuca South-1 and Likembe-01. The firm is also drilling a frontier well in the Namibe Basin. The oil major’s production has increased by 30%.

With the redevelopment program in offshore Block 15 done, the U.S. player produced 2.6 billion cumulative barrels from the asset and plans to continue growing its portfolio in Angola.