"The country is well prepared to benefit from the recovery that is already taking place in the price of oil, and which is likely to accelerate with the global deflation," after the peak of the pandemic in several countries, say CEDESA academics, in an analysis of the effects in the oil sector of Angola of the abrupt drop in oil prices, in the context of covid-19.
The academic group underlines that the price of crude is under negative pressure, not only because of falling demand, due to covid-19, but also because of the "apparent secular tendency to decrease oil consumption by replacing it alternative sources "of energy.
For this reason, "the shock of oil in the Angolan economy has persisted since 2014" and is a problem in relation to which the Government, since 2018, "has taken several measures that focus on two strategies: modernization and opening of the oil sector and promotion of diversification of the economy ".
Regarding the first aspect, analysts highlight, among other steps taken by the executive of President João Lourenço, the creation of the regulatory agency, the privatization of secondary subsidiaries of the state oil company, Sonangol, and the signing of agreements with several foreign companies to increase the investment.
Large companies, such as Total, Exxon, Chevron, BP, Eni, "planned to operate more drilling vessels in Angola than anywhere on the [African] continent to explore new discoveries", but covid-19 brought the price of oil and “foreign companies have stopped their activity in Angola”.
Despite this, they consider that "the situation will tend to stabilize at a higher level. (...) and there will be an upward trend" in the price of the barrel, "as long as the 'wars' with Russia or Saudi Arabia do not restart".
"In addition, the low value of oil will be an incentive for its use in a phase of economic recovery in which concerns about clean but more expensive energies will, in the short term, be replaced by the need to put companies to work and people with jobs ", they defend.
Even if concerns about the climate emergency persist in Europe, "it is difficult to see that the major engines of the world economy, such as the United States, China and India, do not prefer a cheap source of energy that quickly gets plants up and running" , reinforces CEDESA's analysis.
According to the group of academics, Angola has already started to anticipate and “in the week of 25-29 May, the National Agency of Petroleum, Gas and Biofuels (ANPG) provided a data package for oil exploration in the terrestrial basins of the lower Congo and Kwanza, for national and international companies ”.
In a statement posted on May 28, on its official website, ANPG, as a national concessionaire and holder of mining rights for the prospection, research, evaluation, development and production of liquid and gaseous hydrocarbons throughout the Angolan territory, " informs all companies that the Data Package for blocks for oil exploration in the Terrestrial Basins of the Lower Congo (CON1, CON5 and CON6) and the Kwanza (KON5, KON6, KON8, KON9, KON17 and KON20) is available ".
Thus, the entities that intend to consult "the data of the abovementioned and other available basins, as well as participating in a Data Show Room to be carried out by the national concessionaire, should express their interest" through e-mail, adds the note posted on the website.
ANPG also informed that, according to the schedule of activities of the 2020 Bidding process, "all conditions were created so that by the end of May, the announcement of the intention to launch the public tender was made", in the terms of a presidential decree of 2 April.
However, due to the cyclical constraints caused by the covid-19 pandemic, the date could "undergo minor adjustments".
The same entity stressed that, despite the adverse situation, "the need to boost and continue petroleum operations in the country remains valid, with emphasis on exploration activity".
CEDESA is an international entity dedicated to the study and investigation of political and economic issues in Southern Africa, in particular Angola, which was born out of an initiative of several academics and experts who were part of the Angola Research Network (ARN).