Oil tankers pass along the road towards the capital Luanda
Chinese companies are bolstering Angola’s oil sales, even at a time of uncertainty when Chinese purchases from other countries in the region, such as Nigeria, are falling, according to figures from financial news agency ThomsonReuters.
China International United Petroleum & Chemicals Co. (Unipec) has been one of the most active buyers on the spot market, absorbing most of the Angolan oil shipments marketed for November, according to the agency.
“Angola is selling quite well, with Chinese companies buying a large number of oil shipments,” a trader told ThomsonReuters. Only a third of the 55 Angolan oil shipments scheduled for November had not been auctioned by the end of September, compared with Nigerian oil shipments, the majority of which had yet to be sold.
In October, according to figures from ThomsonReuters, exports from West African countries to China are expected to have been the lowest of the last four years – about 735,000 barrels per day (bpd).
India increased its purchases from countries in the region from 475,000 barrels to 552,000 barrels, as did Taiwan. Angola is the main African oil supplier to China with exports of 806 million barrels in 2014.
Long-term supply contracts to China, which have intensified since 2002, have come to be regarded as a financial “cushion” for Angola in the current environment of falling prices, due to the way the price is set, which is favourable for Angola in times of market fluctuation.
The Africa Intelligence Monitor, citing senior officials of the Angolan regime, said the sharp drop in oil prices has to some extent been mitigated by these long-term contracts.
According to figures recently compiled by Reuters, China’s funding to Angola, including the latest loans, already amounts to US$20 billion, support that has become increasingly necessary due to the sharp decline in oil revenues over the last year.
In recent years, the Chinese state oil companies have been acquiring major stakes in Angolan oil wells. In 2005, the acquisition by China Petroleum & Chemical Corporation (Sinopec) of Block 3/80 coincided with the announcement of a new loan of US$2 billion to Angola and, in 2010, the same Chinese state oil company bought 50 percent of Block 18, while the first tranche of a loan from the China ExIm bank was paid out.
Also with Chinese capital, the China International Fund (part-owned by China Sonangol), is starting the construction of the new Soyo refinery (northern Angola), which should be operational in 2017, with a processing capacity of 110,000 barrels of fuel per day.
Angolan economic growth forecasts have been revised downwards, given the uncertainty about a recovery in oil prices, the government now pointing to 4.4 percent, which is significantly above the figure put forward by the International Monetary Fund (3.5 percent in 2015 and 2016). MDT/Macauhub
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