While Angola represents sub-Saharan Africa’s largest oil producer, the country’s remarkable upstream achievements have yet to be replicated in its downstream sector – which has long been impeded by insufficient capital investment – that is, until now.
Angola’s downstream market is in the midst of major transformation, owing to a state-led agenda to expand refining, storage and distribution capacity and position the country as a leading exporter of petroleum products in the region.
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The most prolific development in the sector is the planned expansion of Angola’s domestic refining capacity by 360,000 barrels per day (bpd). This includes the construction of several new refineries in Cabinda (60,000 bpd), Lobito (200,000) and Soyo (100,000 bpd), along with the recent completion of an additional gasoline production unit at the existing Luanda Refinery, which is set to reduce the gasoline deficit in the market by 20% and quadruple the refinery’s gasoline production capacity to 1,200 metric tons per day.
Many of sub-Saharan Africa’s leading oil and gas producers have, somewhat ironically, a domestic downstream sector that is not sufficient to meet local demand for gasoline, diesel, kerosene and other oil derivatives. Angola is no exception – the country currently imports 80% of its refined petroleum products. Accordingly, the government is addressing downstream inadequacies through the expansion of refining capacity, which will reduce costly fuel imports and position Angola as a secure and independent energy producer. Once production ramps up from these developments, Angola will be able to export refined petroleum products and associated petrochemicals to neighboring countries, including the Republic of the Congo, Zambia, Cameroon and the Democratic Republic of the Congo.
The Angolan Government is also spearheading development with regards to energy storage and distribution, along with expansion of the number of filling stations across the country. Key upgrades to Angola’s fuel distribution network include the inauguration of the Saurimo Fuel Storage Plant, which has a storage capacity of 900 cubic meters, and construction of the Barra do Dande Ocean Terminal, which will create floating storage of oil products and includes a mooring dock for maritime vessels. The latter will enable Angola to expand its capacity to store petroleum products and better serve the country’s various provinces around the country, particularly in the eastern region. To further improve access and availability of fuel, Angolan authorities are prioritizing the construction of fueling stations around the country, with the Regulatory Institute of Oil Derivatives completing its National Mapping of Service Stations project, of which the country currently has 876. By the end of 2022, Angola aims to have 891 fuel stations in its portfolio.
In addition to the sheer increase in refining, storage and distribution capacities, Angola has been pursuing the progressive liberalization of the downstream sector, starting with Presidential Decree 208/19 that established the legal regime governing the activities of importing, receiving, supplying, storing, transporting, distributing, marketing and exporting petroleum products. There are currently four major fuel distributors in Angola – Sonangol, Pumangol, Sonangalp and TotalEnergies – with room in the market for new players. With greater liberalization expected, the market will see increased competition and efficiency, resulting in improved access to fuels at a lower price. The implementation of fuel and lubricant onshore storage facilities and the construction of gas stations, lubricant factories, gas networks and branches remain strategic investment opportunities in Angola for the period 2022-2030.
By revamping, modernizing and liberalizing its downstream industry, the Angolan economy is set to become more lucrative and competitive– not only because of the additional source of state revenue, but also because public funds will no longer be used to subsidize fuel prices.