ENERGY

Angola's first oil wells were drilled more than a century ago, but the country's rich history in oil goes back far further. In the 1700s, Portuguese colonialists first discovered oil seeps and asphalt deposits just 60 kilometers north of Luanda. Today, Angola is consistently one of Africa's top-four oil-producing countries, alongside Libya, Nigeria and Algeria. Its first commercial onshore deposits were proven in 1955, followed in 1968 by its first offshore discovery, the Malongo. Eight years later, in 1976, following its independence from Portugal, Angola established Sonangol U.E.E. to manage the exploitation of the nation's hydrocarbon resources.

With the discoveries at Girassol in 1996 by Total Fina Elf (now part of TotalEnergies SE), deep-water reserves have been a major driver of Angola's increased prominence on the world stage, and of the oil industry's transformation of its national economy. Ultra-deep pre-salt reserves in blocks awarded in 2011, which reach depths of more than 5,000 meters below sea level, are today broaching new frontiers in deep-water discoveries. With crude oil production now on the rise again—increasing by more than 580,000 barrels month-on-month from December 2022 to January 2023—Angola is now aiming to stabilize its output to approximately 1.3 million barrels per day in the next three years.

Angola's economy is heavily dependent on its oil & gas industry. Oil & gas products make up more than 90 percent of its exports. Crude oil exports alone accounted for US$39.94 billion in 2022, an uplift of 44 percent from 2021. And the lion's share of that oil comes from its offshore fields. These fields produce a much sought-after light, sweet crude oil with low sulphur, used typically for processing light, refined petroleum products.

Current trends in deep-water discoveries give investors good reason to be enthusiastic about Angola's prospects. Dealmaking in Angola's oil & gas sector is even shaping the face of African M&A. In 2022, according to a study by Rystad Energy, oil & gas M&A accounted for 70 percent (US$15 billion) of all M&A transactions on the continent.

As with any heavily petroleum-dependent economy, though, market volatility in the oil & gas sector plays a significant factor in shaping Angola's investment landscape. 2021 saw Angola emerge from half a decade of persistent recession. In the past two years, though, oil production has risen, and the price of oil has surged because of the conflict in Ukraine. This mix of high oil revenues coupled with the implementation of the National Development Plan (2018 – 2022) under the coordination of an International Monetary Fund (IMF) financial support program (December 2018 – 2021) has provided a much-needed boost to Angola's economic recovery, and to investments to stimulate other industrial sectors that will reduce the country's monolithic dependence on oil.