Production of oil, gas, and precious metals, including gold are “showing strength” in Angola, and the new Mining Code has encouraged multinational companies to invest, the Economist Intelligence Unit (EIU) said.
In its latest report on Angola, the EIU said that, “even with the non-oil business growing,” in the country, the authorities are trying to, “ensure that domestic oil production is as high as possible.”
“The greater rate of production is made easier in part by new projects such as the start of production of the Pazflor [well], but also following the resolution of a number of technical issues that led to production cuts over the last 18 months,” it said.
This year, oil production is expected to total 1.8 million barrels per day, as compared to 1.64 million in 2011, and the rise will continue until 2014, with projections pointing to a daily output of around 2 million barrels per day.
According to the latest projections from the IMF, the vigour of the oil sector is expected to allow the Angolan economy to grow by close to 9.7 percent in 2012, whilst the Angolan government points to growth of 12 percent.
The EIU projects the sector to grow 8 percent this year and 7 percent next year, a slowdown that is explained by a drop in prices of around 10 percent.
Non-oil sectors such as construction and retail are expected to perform strongly this year, “now that the government has paid its services debts from 2009,” the EIU said.
The intensity of construction actually raises some concerns that a “bubble” is forming in the real estate sector, and some sharp drops in price are being seen in suburbs of the capital although prices in the centre of the city remain high, “reflecting continued high demand.”
Adding to the “strength” seen in natural resources mining, this month exports of liquid natural gas from the Soyo unit are due to begin, “representing a new significant source of revenues for the government,” the EIU said.
The secretary of State for Industry, Kiala Ngone Gabriel, recently said that the oil and mining sector had posted growth of 11.8 percent in 2008 and that it would continue to see a strong rate of growth thanks to the approval of the new Mining Code last year.
According to the EIU the code’s “clarity on investment terms and conditions, as well as workers’ rights and demarcation of land have been welcomed by multinational companies.”
As well as diamonds Angola has significant reserves of precious metals, including gold, which is due to start being prospected on a large scale in Mpopo, Huíla province, next year.
According a report from Portuguese bank BPI, last year the Angolan economy grew by over 3 percent and in 2012 is expected to see, “notable acceleration of economic expansion,” to close to 10 percent, “benefitting from the start of production of new oil wells and increased exploration of natural gas.”
The trend over the following few years will be of a downturn, to 7.5 percent in 2013, and 5.4 percent in 2014.
The increase in oil revenues has also allowed Angola in the last few months to replace its international reserves to levels above US$25 billion, which in 2009 and 2010 stood at between US$10 billion and US$15 billion. (macauhub)