|
ECONOMY
Angola has a fast-growing economy
largely due to a major oil boom, but it also ranks in the bottom 10% of
most socioeconomic indicators. The International Monetary Fund (IMF)
projects that Angola's real GDP will increase by 31.4% in 2007, although
the Angolan Government in July reduced its own projection for 2007 real
GDP growth to 19.8%. Aside from the oil sector and diamonds, Angola is
recovering from 27 years of nearly continuous warfare, corruption, and
economic mismanagement. Despite abundant natural resources, and rising
per capita GDP, it was ranked 161 out of 177 countries on the 2006 UN
Development Program's (UNDP) Human Development Index. Subsistence
agriculture sustains one-third of the population.
By contrast, the rapidly expanding petroleum industry--now producing
approximately 1.7 million barrels per day (bpd), behind only Nigeria in
Africa--accounts for 51.7% of GNP, 95% of exports, and 80% of government
revenues. Production is expected to reach 1.8 million barrels per day by
the end of 2007. Angola also produces 40,000 bpd of locally refined oil.
Oil production remains largely offshore and has few linkages with other
sectors of the economy, though a local content initiative promulgated by
the Angolan Government is pressuring oil companies to source from local
businesses.
Block 15, located offshore of the enclave of Cabinda, currently provides
40% of Angola's crude oil production. ExxonMobil, through its subsidiary
Esso, is the operator with a 40% share. In 2005, Block 15's second major
sub-field, Kizomba B, came online producing at about 250,000 bpd. BP,
ENI-Agip, and Statoil are partners in the concession. Chevron operates
Block 0, also in offshore Cabinda, which provides one-quarter of
Angola's crude oil production. Its partners in Block 0 are Sonangol (the
Angolan state oil company), TotalFinaElf, and ENI-Agip. In 2006, Block 0
had a total production of 400,000 bpd, and drilling activity continues
at a high level. Chevron also operates Angola's first producing
deepwater section, Block 14, which started pumping in January 2000 and
produced 105,000 bpd in 2006.
TotalFinaElf brought the first Kwanza Basin deepwater blocks on-line
with production from its Block 17 concession that began in February
2002. Inauguration of the Dalia oilfield in December 2006 combined with
the Girassol field already in operation brought Block 17's total
production to approximately 500,000 bpd as of July 2007. Exploration is
ongoing in ultra-deep water concessions and in deepwater and shallow
concessions in the Namibe Basin. BP made the first significant
ultra-deepwater find in its Block 31 concession in 2002 and had reached
nine significant discoveries by the end of 2005. BP expects to ship its
first crude from the Plutonio oilfied in Block 18 in September 2007 and
expects Plutonio to average 200,000 bpd in full production. Marathon
also drilled a successful well in its Block 32 ultra-deep water
concession. TotalFinaElf operates Angola's one refinery (in Luanda) as a
joint venture with Sonangol; plans for a second refinery in Lobito with
projected production of 200,000 bpd are moving forward. There are plans
to increase capacity of the Luanda refinery from 40,000 bpd to 100,000
bpd. Chevron, Sonangol, BP, Total, and Eni are developing a $4-5 billion
liquefied natural gas plant at Soyo.
Exports to Asian countries have grown rapidly in recent years,
particularly China. In late 2004, China's state oil company Sinopec
bought into Block 18, securing the deal by offering a $2 billion signing
bonus to Sonangol, the national oil company. Sinopec has also formed a
partnership with Sonangol to operate Block 3/05 (formerly Block 3/80),
whose operation was transferred from Total to Sonangol. Sonangol will
seek to expand its operation of onshore and shallow water blocks. This
includes the northern block of Cabinda's onshore concessions, which
since the reduction in hostilities with separatist forces is now open to
exploration. Sonangol and Sinopec will also be eyeing future concession
rounds, particularly for 23 blocks in the Kwanza Basin onshore area and
the relinquished parts of Blocks 15, 17, and 18, currently operated by
Exxon, Total, and BP. During 2006, Angola was the leading source country
in terms of dollar value for the crude oil China imported, importing
U.S. $10.928 billion, up 16.5% year on year.
Diamonds make up most of Angola's remaining exports, with yearly
production at 6 million carats. Diamond sales reached approximately $1.1
billion in 2006. Despite increased corporate ownership of diamond
fields, much production is currently in the hands of small-scale
prospectors, often operating illegally. Only eight formal sector mines
are operating out of a total of 145 concessions. In June 2005, De Beers
signed a $10 million prospecting contract with the government's diamond
parastatal, ending a 4-year investment dispute between De Beers and the
government. The government is making an increased effort to register and
license prospectors. Legal sales of rough diamonds may occur only
through the government's diamond-buying parastatal, although many
producers continue to bypass the system to obtain higher prices. The
government has established an export certification scheme consistent
with the 'Kimberley Process' to identify legitimate production and
sales. Other mineral resources, including gold, remain largely
undeveloped, though granite and marble quarrying have begun.
In the last decade of the colonial period, Angola was a major African
agricultural exporter. Because of severe wartime conditions, including
extensive laying of landmines throughout the countryside, agricultural
activities were brought to a near standstill, and the country now
imports about half of its food. Small-scale agricultural production has
increased dramatically over the last 3 years as internally displaced
persons (IDPs) are returning to the land. Some efforts at commercial
agricultural recovery have gone forward, notably in fisheries and
tropical fruits, but most of the country's vast potential remains
untapped. Coffee production, though a fraction of its pre-1975 level, is
sufficient for domestic needs and some exports. Recently passed land
reform laws will attempt to reconcile overlapping traditional land use
rights, colonial-era land claims, and recent land grants to facilitate
significant commercial agricultural development.
An economic reform effort launched in 1998 was only marginally
successful in addressing persistent fiscal mismanagement and corruption.
In April 2000, Angola started an IMF staff-monitored program (SMP). The
program lapsed in June 2001 over IMF concerns about lack of adequate
Angolan progress. Under the program, the Government of Angola did
succeed in unifying exchange rates and moving fuel, electricity, and
water prices closer to market rates. In March 2007, the government
announced it was not interested in a formally-structured IMF program,
but would continue to participate in Article IV consultations and other
technical assistance on an ad hoc basis.
In December 2002 President dos Santos named a new economic team to
oversee homegrown reform efforts. The new team succeeded in decreasing
overall government spending, rationalizing the Kwanza exchange rate,
closing regulatory loopholes allowing off-budget expenditures, and
capturing all revenues in the state budget. New procedures were
implemented to track the flow of funds between the Treasury, Banco
Nacional de Angola (the central bank), and the state-owned Banco de
Poupanca e Credito, which operates the budget. The Angolan Government
adopted a new investment code. Concerns remain about quasi-fiscal
operations by the state oil company Sonangol, continued oil-backed
commercial borrowing by the Angolan Government, and inadequate
transparency and oversight in the management of public accounts. The
Angolan commercial code, financial sector law, and telecommunications
law all require substantial revision.
Angola is the second-largest trading partner of the United States in
sub-Saharan Africa, largely because of its petroleum exports. U.S.
exports to Angola primarily consist of industrial goods and
services--such as oilfield equipment, mining equipment, chemicals,
aircraft, and food. On December 30, 2003, President Bush approved the
designation of Angola as eligible for tariff preferences under the
African Growth and Opportunity Act (AGOA). |
Algeria
