Angola - Oil and a Bid to Become a Geopolitical Powerhouse

French President Nicolas Sarkozy will visit Angola on May 23. While a number of business deals are expected to be reached during the visit, Angola is mainly interested in the capability of the French energy company Total to extract the country’s reserves contained in ultradeep fields.

French President Nicolas Sarkozy will visit Angola on May 23, where he is expected to sign several trade deals. Angola is mainly interested in French energy company Total’s ability to develop the southwestern African nation’s ultradeep oil fields.

Sarkozy’s May 23 visit will be the first by a French president to Angola in 10 years. Traveling with him are a number of businesspeople, including ranking officials from the defense electronics company Thales, from the Banque Societe Generale and from energy company Total SA. Deals regarding telecommunications, beverages and credit facilities are expected to be signed during the visit.

Most critical for Angola are deals expected with Total to develop the country’s ultradeep oil fields, at a depth of 1,500 to 3,000 meters underwater (about 4,900 to 9,800 feet). While Angola is a leading oil producer in Africa, producing some 1.9 million barrels per day (bpd) from onshore and near-shore fields, Angola’s bid to become an African geopolitical powerhouse on par with Nigeria and South Africa requires it to consolidate and expand its resource base. Nigeria has been Africa’s leading oil producer, though militancy since 2006 in its Niger Delta region has shuttered a quarter of its 2.4 million bpd output. Angola already has achieved one significant expansion of its energy sector by more than doubling output from 900,000 bpd in 2002, when the Angolan civil war ended with the defeat of the National Union for the Total Independence of Angola rebel group.

Angola could shortly enter another significant expansion stage, adding another estimated 500,000 bpd to its current output level should reserves being explored by Total in ultradeep fields off its coastline come online. Total aims to begin production at three ultradeep fields between 2009 and 2011, though its need to form a consortium with requisite technology could be an arrestor to extracting the crude on time. Though other multinationals are operating in Angola, including ExxonMobil and BP, Total’s history in the country — it has been active there since 1953 — in addition to its operator’s license for the ultradeep fields being explored — will combine to keep Luanda and Total working together.

With the price of oil surpassing $130 per barrel, both Total and Angola have a strong incentive to exploit the African country’s ultradeep crude reserves. The projected production from the ultradeep deposits would enable Luanda to finance its larger geopolitical ambitions in Africa to rival Nigeria and South Africa as a power to be reckoned with.