Angola+Petroleum

China Highly Likely To Continue Imports Of Crude Oil From Angola In The Next Five Years Despite IMF’s Estimates Of Chinese Economic Slowdown
It is highly likely China will continue to import crude oil from Angola in the next five years despite the IMF's estimates of Chinese economic slowdown. There have been 2 major petroleum investments totaling USD 2.5 billion in Angola by the Chinese. China’s National Offshore Oil Corp. (CNOOC), Sinopec International Petroleum Exploration and Production Corp., China's Export Import Bank and China’s National Petroleum Corporation (CNPC) are involved in Angola’s offshore oil exploration and are providing development assistance as well as oil-backed loans and trade. According to the IMF’s Regional Economic Outlook for Africa, Angola and several other Sub-Saharan African countries are at risk from a slowdown in China’s economy. This is unlikely to affect Angola because their potential in offshore oil exploration, proven oil reserves, Angola’s strong ties to China and the Petroleum Minister of Angola, Jose B. de Vasconcelos, ha s pledged to increase oil production by 2015.
 * Executive Summary: **

Angola is Sub-Saharan Africa's biggest oil producer after Nigeria; according to IHS Global Insight total oil reserves are reported between 9 and 13 billion barrels. The International Monetary Fund states that Angola's oil exports accounted for approximately 98 percent of government revenues in 2011. This is a strong indicator that the economy is heavily dependent upon oil. Oil exploration and production mainly occurs in offshore blocks which are divided into 3 bands. Blocks 0-13 are shallow water (Band A); Blocks 14-30 are deep water blocks (Band B); and blocks 31-40 re ultra-deep water blocks.
 * Discussion: **

Despite the IMF's Regional Economic Outlook for Africa that China's potential economic slowdown; they still remain Africa's biggest trading partner and are a key provider of investment and aid. China started deepening its cooperation with Angola in 2004 through loan for construction and energy projects that are secured with oil. For example, in 2009 the Chinese government pledged a USD 1.2 billion loan for agricultural development to be repaid in oil exports. Other Chinese corporations include China's Sinopec and the China National Offshore Oil Corporation (CNOOC); they have provided development assistance as well as oil backed loans and trade.

Finally China has become Africa’s biggest trading partner in recent years and a key provider of investment and aid amid surging demand for commodities such as oil, copper and platinum to sustain growth in Angola. According to Angola’s petroleum minister Jose B. de Vasconcelos the government is seeking to raise oil production to 2 million barrels per day (mbpd) from around 1.75 mbpd currently, and once that target is reached the goal will be to sustain the level "for at least 10 years".



** Analytic Confidence: **
Analytic confidence is high. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, worked alone while also collaborating with a group, and did not use a structured analytic method. The subject is moderately complex and the deadline was moderately easy to meet.


 * Analyst: ** James Gibson