Sonangol report $2.4bn profit

Sonangol Profit

Angola's state oil company, Sonangol, is reporting a net profit of $2.4 billion from operations last year. The company's chair of the board of directors, Manuel Vicente, made the announcement at a press conference in Luanda on Wednesday.

"Despite the international financial and economic crisis, its impacts and effects on operational and financial activity, Sonangol maintains its financial strength based on the profits, which are more than two billion dollars," Vicente told Business Week.

Last year Angola's Sonangol overtook Congo as sub-Saharan Africa's biggest oil producer, extracting 684,000 barrels per day.

It would appear that Angola, where Brazilian oil major Petrobras recently strike oil of its coast, has been largely unaffected by the reported "exodus" of foreign and domestic oil majors from Africa in search of greater profits. Recent withdrawals from certain southern African countries leave some analysts in little doubt that, as oil multinationals assess their operations globally, they will not hesitate to pull out of low-margin markets.

Small, regional firms can emerge

Falling returns from downstream operations have lead to oil multinationals to turn their attentions to the capital-intensive upstream sector in which they see more opportunity for growth. Business Day reports that BP this week announced it was leaving five southern African countries after a "strategy review". The company plans to sell its marketing businesses in Namibia, Malawi, Tanzania, Zambia and Botswana, but said would keep its operations in SA and Mozambique.

Shell also de-invested from some southern African countries - notably Zimbabwe. Earlier this year, there were widespread rumours that Shell wanted to withdraw from more countries.

Although the withdrawal of major oil companies will impact the industry in Africa initially, eventually it is hoped that smaller, regional commodity firms can emerge as big players in the continent. For these companies the downstream market is more suitable because, although less profitable than upstream, it is pretty predictable and more stable.

Related Articles:

BP change focus in Africa | Petrobras strikem oil in Angola | What next for Shell in the Niger-Delta

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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