Africa’s oil exploration evaporates

21 May, 2020 12:00 AM printer

LONDON: The coronavirus pandemic has done in a handful of months what even a 27-year civil war did not: it has brought oil drilling to a halt in Angola, Africa’s second-largest oil producer.

The consequences could be grave for a poor country that relies heavily on oil revenues and is saddled with debts that exceed its economic output, report agencies.

The halt in oil exploration, which has not been previously reported, could represent a setback for one of the most ambitious economic reform drives on the continent, aimed at cleaning up corruption and attracting foreign money. It comes as Angola seeks buyers in its push to privatise state energy assets, which is central to the reform process.

An oil price crash last month to two-decade lows has prompted all international energy majors operating in Angola - Total, Chevron, ExxonMobil, BP and Eni - to idle or ditch their drilling rigs, according to company sources, Refinitiv ship-tracking data and industry experts.

France’s Total (TOTF.PA), responsible for almost half of Angola’s oil output, told Reuters it would not drill for more oil for now due to the coronavirus crisis, instead focusing on current production.

“We have suspended all our drilling activities like all other operators in Angola,” it said.

Sarah McLean, senior analyst at IHS Markit, said it was the first time since its records began in 1984 that Angola had not had a single rig drilling. The London–based information provider had expected at least 10 rigs to be operating there by the end of 2020, the highest number for any African nation this year.

The Angolan finance ministry and president’s office did not respond to Reuters requests for comment, nor did state oil giant Sonangol, which works in partnership with the foreign oil majors.

Angola’s prospects looked bright going into 2020.

Energy majors increased their exposure to Angola in the wake of reforms to investment laws by President João Lourenço, who took power after almost four decades of rule by Jose Eduardo dos Santos, and greater transparency at Sonangol.

They planned to operate more drilling ships in Angola than anywhere on the continent to tap tantalizing new offshore discoveries this year.


Top