INTERVIEW-Angola says to license more blocks to boost oil output

Shrikesh Laxmidas
Thursday, 7 Nov 2013 | 10:51 AM ET

* Minister says Africa's No.2 oil producer to boost exploration

* Onshore licensing to start in 2014

* Analysts say deepwater pre-salt drilling could double reserves

(Updates, adding quotes on transparency, onshore background)

LUANDA, Nov 7 (Reuters) - Angola will speed up oil exploration by licensing new blocks - up to 15 every other year - and testing new offshore wells in an area similar to where Brazil has struck new riches across the Atlantic.

Oil Minister Jose Botelho de Vasconcelos told Reuters in an interview in the capital Luanda on Thursday that Africa's No. 2 oil producer also aims to pursue operations by the state oil company in Iraq, with a view to building up expertise that can drive further output gains after Angola's decades of civil war.

Of 15 block licences to be offered to exploration companies next year, all would be onshore - still a rarity in Angola, despite efforts to remove the landmines that littered the country after the 27-year conflict ended in 2002. Of these, five licences would be reserved for state-owned Sonangol.

"Our big goal is to continue developing exploration activity as have some knowledge of our reserves but not the full real potential," Vasconcelos said, noting that because of landmines some 98 percent of Angolan oil is produced offshore.

Angola will also work with international oil majors to intensify drilling next year thousands of metres under the seabed of the Kwanza Basin through blocks known as pre-salt.

Investors say these could match huge discoveries in similar formations off Brazil, 5,000 km (3,000 miles) away on the other side of the South Atlantic but once part of the same landmass.

Angola licensed 11 pre-salt blocks to seven majors in 2011 and Vasconcelos said early discoveries by U.S. firm Cobalt and Denmark's Maersk showed positive signs, though these have to be confirmed.

He said drilling a pre-salt well can cost around $200 million and that after discoveries are made it may take between eight and 10 years for the blocks to start producing.

Local industry analysts say that if pre-salt exploration is successful, Angola could double its oil reserves and output.


Crude revenues represent over 95 percent of Angola's export revenues and around 43 percent of its economic output. They have also fuelled an economic boom since the end of the war.

But President Jose Eduardo Dos Santos, who has been in power since 1979, has also long been criticised by opposition parties and civil society groups for avoiding public scrutiny, especially when it comes to oil contracts and revenues.

With oil output not far short of that of Nigeria, and a population barely a tenth that of Africa's leading producer, Angola has considerable wealth. But over a third of its 19 million people are classed as living in poverty, while a rich elite has made Luanda one of the world's most expensive cities.

Transparency International ranks the country as one of the most corrupt. Vasconcelos rejected the accusations.

"Everywhere in the world there are confidentiality clauses, for all (oil) companies, so I don't know why sometimes the critics aim at Angola as if it were a unique country," he said.

He said his ministry and financial authorities present data regularly and have worked with international organisations to improve transparency to the public.

"We know there are some organisations, NGOs and such, that make their own observations. But we have ours and they are from the United Nations, which is independent," he said.

"There has been close cooperation with the IMF and the World Bank, so there is openness, transparency."

Both those international financial institutions have said that Angola has been improving in this regard.

The minister said the government would stick to a goal of reaching oil output of 2 million barrels per day (bpd) in 2015, despite a downward revision for next year's production in a state budget due to be discussed in parliament on Friday.

The 2014 forecast will be 1.8 million bpd, revised down from 1.93 million.

Angola, an OPEC member which will average output of 1.75 million bpd this year, sees world oil prices as "satisfactory", he said. Vasconcelos added that a 30-million bpd output level set by OPEC was providing appropriate supply to the market.

Sonangol operates the Najmah and Qayara fields in Iraq. These lie in Nineveh province around Mosul, an area where Sunni insurgents allied to al Qaeda have mounted many attacks.

Vasconcelos said Iraq was a "difficult region" but noted that other international firms were operating there. Sonangol expected work in the Iraqi fields to contribute to developing its expertise, he said, and so to building up Angola's output.

(Editing by Alastair Macdonald)