Libya Could Facilitate Angola's Call For A Return to $60 Crude

by Ship & Bunker News Team
Thursday August 31, 2017

Although it has been called one of the world's fastest growing economies since emerging from a civil war in 2002, Angola's petroleum minister on Wednesday said $60 crude is essential for its ongoing prosperity - and that he expects the price to be achieved soon.

Jose Maria Botelho de Vasconcelos told media in the country's capital of Luanda that a price rebound "would be extremely important" and that "we've been getting signs from the market that prices could reach $60 by the end of this year."

Botelho de Vasconcelos did not elaborate on what these signs were, nor did he say whether the Organization of the Petroleum Exporting Countries (OPEC) should extend its production cuts once again beyond next March in order to help facilitate the rebound: "November will be the best time to analyze whether it's best to extend the cuts or not."

The minister conceded, however, that while the oil industry "helped relaunch the diversification of the economy, it can't continue to have so much weight in the economy."

Still, Botelho de Vasconcelos is busy preparing for a relaunch of tenders for onshore blocks after a new government is appointed in September, and his ministry is also heavily involved with oil companies to cut production costs to an average of $10-$12 per barrel from about $15-$20 three years ago.

If the minister's remarks put any pressure on OPEC to step up its game with regards to rebalancing the market, then Libya's sudden and significant drop in output last month - to the tune of 361,000 barrels per day (bpd) - presumably has the potential to mitigate that pressure.

The North African country's lost production is said to be worth $160 million since August 19, and Mustafa Sanalla, chairman of state-run National Oil Corp., stated on Wednesday that "Our production was recovering, not quite enough to balance the budget, but enough to give us hope that our financial position could stabilize.

"Now we are sliding backward" due to civil unrest that has resulted in the closure of the country's main oil fields.

Libya along with Nigeria is exempt from the OPEC production cuts because of internal strife, but its recent recovery caused speculation that it would be asked to participate.

It is unclear when a force majeure (legal protection from liability if a contract can't be fulfilled for reasons beyond control) recently placed on the Sharara, El Feel, and Hamada oil fields will be lifted.

While an overwhelming number of analysts have blamed Libya and Nigeria directly for recent crude price declines, Robin Mills, founder and CEO of Qamar Energy, earlier this month doubted whether Libya's production comeback was sustainable given its civil unrest.