Consultancy firm Fitch Solutions believes that oil production in Angola could fall by almost 20% by the end of the decade, to 1 million barrels per day, if no new investments are made in the oil sector.

“We anticipate that oil production in Angola will decline in the long term, with the production of oil, liquefied natural gas and other liquids contracting, on average, 2.2% per year until the end of our ten-year forecast, reaching 1.03 million barrels per day in 2030”, say the analysts.

According to an analysis of the Angolan oil sector sent to investors, reforms have slowed down and oil companies have changed following the pandemic.

In official terms, Angola’s average production during 2020 was 1.277 million barrels per day, with Fitch Solutions forecasting a production of 1.030 million barrels per day for 2030, which would represent a 19.3% drop.

“Since 2018, oil and gas reforms have slowed down and companies now need concrete signs of change to unlock substantial investments for Angola’s upstream sector,” the report said.

Despite the ten-year forecast pointing to a decline, Fitch estimates that production in 2021 and 2022 should increase by 2% and 4.2%, respectively, despite having reduced production last year.

The second-largest African oil producer, only behind Nigeria, Angola “has substantial oil reserves, but the greatest potential for exploration is in deep and ultra-deep waters, which requires the provision of high-cost, high-risk investments.”

As a result, Fitch analysts point out “the lower and more uncertain pricing environment means that projects awaiting the Final Investment Decision are at risk of being delayed or abandoned altogether if prices do not rise.”

To support the forecast of a sustained decline in oil production if there is no significant increase in new investments, Fitch Solutions analysts note that “following the collapse of oil prices in 2020 and the significant decline in demand due to the oil pandemic. covid-19, there was a change in the long-term strategies of the largest companies, evading high-risk projects with capital-intensive requirements and seeking to give priority to low-carbon projects”.

According to data by OPEC, Angola saw a reduction of 139 thousand barrels per day in 2020 compared to 2019.

Source: Furtherafrica