New rush for Angolan oil (Source: News24)
28/01/2007 17:18 - (SA)
Johannesburg - For more than three decades Angola's Cabinda province has been a tantalising but risky prize for oil companies who wanted to drill on its untapped shores but were put off by a bloody separatist insurrection.
Exploration in the former Portuguese protectorate has focused almost entirely on the oil-rich waters in the Baia de Cabinda until last year when Angola's government and a group of Cabindan rebels agreed to end their bloody 31-year war.
The prospect of a lasting peace in the northern province, which is separated from the rest of Angola by a small strip of the Democratic Republic of Congo, has prompted some companies to take a fresh look at onshore drilling in the region.
Australia's Roc Oil has announced that it will begin exploring for oil in Cabinda later this year, while Portuguese news reports said a group led by US-based Devon Energy Corp and including Portugal's Galp is also planning onshore exploration.
Others are expected to join the fray to stake a claim to what could become Angola's next oil frontier.
"Cabinda is considered to be prospective. It's unlikely that onshore discoveries will be as big as those offshore, but it's early days still," Standard Bank Africa analyst Anita Last said.
Cabinda's offshore oil wealth already accounts for between 50% and 65% of the 1.4 million barrels of oil produced each day in Angola, sub-Saharan Africa's second largest petroleum producer after Nigeria.
Production in the southwestern African nation is expected to rise to 2 million barrels a day by the end of this year, and Cabinda's offshore drilling is expected to account for much of that jump.
Neither the Angolan government nor foreign oil companies have a clear idea of the potential impact of onshore drilling in Cabinda.
"Nobody has drilled onshore for 34 years. It's very pioneering," John Doran, Roc's managing director, told Reuters by telephone from Australia. He said the company was considering drilling in Cabinda in the second quarter.
"Cabinda is a prospect," Doran said.
A much better prospect, say analysts, now that Luanda has a peace deal with a faction of the Liberation of the Enclave of Cabinda (Flec), which had fought for independence since 1975 when Portugal relinquished control of Angola.
Cabindans frequently complain that the province sees little from the country's growing oil wealth or its booming economy. The peace deal gives special status to the restive coastal region, a measure that could increase its share of taxes and duties from the oil sector and other parts of the local economy.
While some observers have hailed the deal as the foundation of a lasting peace, others worry that the fractured nature of Flec could prevent Luanda from putting a final lid on separatist ambitions.
A faction led by Nzita Tiago, a leading Flec figure, already has rejected the peace agreement with the government.
"I don't have confidence in the peace accord holding," said Jorge Casimiro Congo, a prominent priest and local leader in Cabinda. "There is still a lack of clarity on important issues, such as the oil revenue."Congo added that he had not seen any sign of a so-called "peace dividend" in Cabinda's economy.