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Angola: Government wants action on Opec quota crunch

THE GOVERNMENT is seeking, or plans to seek, a higher oil production quota from Opec, claiming a special need for revenues, according to reports last month. If it is successful, the main producers – Chevron, Total, ExxonMobil and BP – will avoid having to make sharp output cuts. Production in the first four months of the year has run at about 1.7m barrels a day (b/d) and is set to rise, bringing the country into conflict with the producers' organisation – of which Angola is providing the president this year.

Middle East Economic Survey reported that Angola had written to Opec's secretary general, Abdullah al-Badri, to request special exemption from production quotas, arguing a great need for revenues for its civil-war reconstruction programme and a need to recover investments in high-cost new oilfields. The request was due to be considered at Opec's scheduled late-May meeting. However, Angola's Opec governor, Felix Ferreira, said subsequently that the country would not ask for an increase while its petroleum minister, José Maria Botelho de Vasconcelos, was Opec's president, but he hinted that a request would be made later.

Meanwhile, Angola says it has contacted Opec to clarify its present production quota, arguing it is higher than the figure generally cited. After Opec's December meeting, when the organisation agreed to cut its production by 4.2m b/d, reports said the country's quota would be 1.517m b/d from 1 January 2009. Using a different base, Angola says it should be 1.656m b/d.

Production last year averaged just under 1.9m b/d, which had been set as the country's quota from 1 January 2008. Output was trimmed from the beginning of this year, although engineering problems at BP's Greater Plutonio field seem to have been the main contributor to the reduction. According to the International Energy Agency, production averaged 1.76m b/d in January and 1.65m b/d in February and March. There was little change in April, but tanker-lifting schedules for May and June point to an output of 1.7m-1.8m b/d.

The country's capacity is already about 2.1m b/d. State-owned Sonangol's Gimboa field, in Block 4/05, has just come on stream, at a rate due to build up to 50,000 b/d, and step-out drilling in Chevron's Cabinda licence is more-than offsetting the decline from older fields. Towards the end of the year, Chevron's Tombua-Landana development in Block 14 is due to start flowing and should reach its 100,000 b/d plateau in 2010. In 2011, production is due to start from Total's Pazflor in Block 17 (220,000 b/d at plateau) and BP's PSVM in Block 31 (150,000 b/d at plateau).

But many other large deep-water projects have stalled since Angola was taken into Opec's quota system in January 2008 (PE 3/09 p4). Exploration has come to a halt in some deep-water blocks, where operators have a bank of undeveloped discoveries.

Opec watchers were not optimistic for a positive response to Angola's position. The organisation is already struggling to improve compliance with its production cuts and special treatment for one member could lead others to exceed their quotas.

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