Having been blighted by a 27-year civil war following its independence in 1975, Angola remains a relatively poor country with many of its people leading a subsistence agricultural livelihood. That said, Angola has much potential, such as diamond resources, rich agricultural land, good potential for hydroelectric generation and, most significantly, substantial oil and gas reserves.
Oil was first discovered in Angola in 1955 within the inland Kwanza basin, but it was the offshore discovery of the Cabinda reserves later in the 1960s that jumpstarted the oil industry, with oil overtaking coffee as the country’s main export by the mid-1970s.
Angola gained independence from Portugal in 1975, but this was immediately followed by a terrible civil war that was characterized by the country’s fierce internal dynamics combined with massive foreign intervention from the United States and the Soviet Union, together with Cuba and South Africa, as it became a Cold War surrogate battleground.
Despite the civil war lasting for the next 27 years, with occasional periods of fragile peace, oil production manage to steadily increase through the 1980s, and there were new major finds in deeper waters in the 1990s. When the country’s civil war finally ended in 2002, oil production was free to surge to around two million barrels a day. Angola then joined OPEC in 2007.
One challenge for the Angolan oil industry was how to use the natural gas that came with oil production. In the absence of a viable alternative, much of this was flared or vented, but the Angolan government launched initiatives to make better use of this resource by either using natural gas for internal energy needs or processing it into liquefied natural gas (LNG), liquefied petroleum gas (LPG) and condensate for export.
A number of foreign oil companies are active in Angola, such as BP, Petrobras, Chevron, Total, and ExxonMobil – the maker of high-performance circulation oils like Mobil DTE light. While the upstream industry is well established, the downstream industry remains underdeveloped in Angola, with it needing to import much of the petroleum and other refined products it requires, although a second refinery is under construction.
While the Angolan economy made great strides after 2002, mostly thanks to high oil prices, the oil price crisis that started in 2014 presented fiscal challenges for the country. The recent modest recovery following OPEC’s production cuts has given the country a reprieve and provided an opportunity to focus on a more diversified economy.