José Maria Botelho de Vasconcelos is the Angolan Minister of Petroleum and current OPEC President. He graduated from Industrial Technology Institute of Luanda in 1974 and began his career with Cabinda Gulf Oil Company as a Maintenance Engineer.
He is a renowned Angolan politician. He was appointed Minister of Petroleum, 1999-2000 and was Chairman of the SADC Ministers of Energy, from 1999-2000. Vasconcelos was Minister of Energy and Water, 2002–2008 and re-appointed Minister of Petroleum, October 2008 till date.
Mr. José Maria Botelho de Vasconcelos, thank you for this opportunity.
Vasconcelos: You’re welcome.
Mr. José Maria Botelho de Vasconcelos , Angola is already the No. 2 oil producer after Nigeria. What are the plans to boost exploration and production to drive further output.
Vasconcelos: As part of our plans, Angola will speed up oil exploration by licensing new blocks – up to 15 every other year – and testing new offshore wells in an area similar to where Brazil has struck new riches across the Atlantic.
We also aim to pursue operations by the state oil company in Iraq, with a view to building up expertise that can drive further output gains after Angola’s decades of civil war.
In 2014, of the 15 block licences to be offered to exploration companies, all would be onshore – this is still a rarity in Angola, despite efforts to remove the landmines that littered the country after the 27-year conflict that ended in 2002. Of these, five licences would be reserved for state-owned Sonangol.
Our big goal is to continue developing exploration activity as have some knowledge of our reserves but not the full real potential. As you may be aware, because of landmines some 98 percent of Angolan oil is produced offshore.
We will also work with international oil majors to intensify drilling next year thousands of metres under the seabed of the Kwanza Basin through blocks known as pre-salt.
There have been very positive results from deepwater pre-salt drilling, what is the update?
Vasconcelos: Well, Angola licensed 11 pre-salt blocks to seven oil majors in 2011 and early discoveries by U.S. firm Cobalt and Denmark’s Maersk showed positive signs, though these have to be confirmed. However, they say these could match huge discoveries in similar formations off Brazil, 5,000 km (3,000 miles) away on the other side of the South Atlantic but once part of the same landmass.
Drilling a pre-salt well can cost around $200 million and after discoveries are made it takes between eight and 10 years for the blocks to start producing.
On a bright note, if the pre-salt exploration is successfully confirmed, these discoveries could double Angola’s oil reserves and output.
Crude revenues represent over 95 percent of Angola’s export revenues and around 43 percent of its economic output. They have also fuelled an economic boom since the end of the war. But over a third of your 19 million people are classed as living in poverty, while a rich elite has made Luanda one of the world’s most expensive cities. What is your take on this?
Vasconcelos: I beg to disagree with these assumptions. This country was ravaged by decades of a civil war and the government of President Jose Eduardo Dos Santos have been working on improving the living standards of the people through programmes that will directly impact their lives. The economy has picked up and with the current levels of investment, our people will see a massive improvement in the provision of infrastructure, employment opportunities and other initiatives of the government to better the lot of the people.
But President Jose Eduardo Dos Santos, who has been in power since 1979, has been criticised by opposition parties and civil society groups for avoiding public scrutiny, especially when it comes to oil contracts and revenues.
Vasconcelos: Again these theories are absolutely untrue. The government and my ministry as well as the financial authorities’ present data on oil contracts and revenues regularly and we have worked with international organisations to improve transparency to the public. I really do not know where these criticisms are coming from and who these opposition parties and civil society groups are.
Transparency International ranks your country Angola as one of the most corrupt in the world.
Vasconcelos: How did they arrive at such conclusions? Everywhere in the world there are confidentiality clauses, for all (oil) companies, so I don’t know why sometimes the critics aim at Angola as if it were a unique country. We know there are some organisations, NGOs and such that make their own observations. But we have ours and they are from the United Nations, which is independent. There has been close cooperation with the IMF and the World Bank, so there is openness and transparency. Both these international financial institutions have said that Angola has been improving in this regard.
What is Angola’s long-term production forecast?
Vasconcelos: We would stick to our goal of reaching oil output of 2 million barrels per day (bpd) in 2015, despite a downward revision for next year’s production in a state budget due to be discussed in parliament on Friday. However, 2014 forecast will be 1.8 million bpd, revised down from 1.93 million.
The state oil company Sonangol operates the Najmah and Qayara fields in Iraq. These lie in Nineveh province around Mosul, an area where Sunni insurgents allied to al Qaeda have mounted many attacks. So Iraq has been a “difficult region” for us but other international firms are operating there too. Sonangol expects work in the Iraqi fields to contribute to developing its expertise and building up Angola’s output.
What is your prediction of oil market fundamentals ahead of the OPEC meeting on Wednesday?
Vasconcelos: It is going to be an ‘easy’ OPEC meeting and we are happy with the oil market fundamentals. Angola has an average output of 1.75 million bpd this year and the 30-million bpd output level set by OPEC is providing appropriate supply to the market. Above all, the world oil prices are satisfactory.
Do you expect OPEC to agree to leave current crude production levels unchanged?
Vasconcelos: Yes, I think so. At the moment production is between 29 and 30 million b/d. The key issue we will analyse at this meeting is the impact on the world market of rising oil shale production volumes from the United States.
How will other OPEC countries accommodate increase in production from Iran with possible relaxed sanctions in 2014?
Vasconcelos: Its ok, it’s coming slowly.
Mr. José Maria Botelho de Vasconcelos , we thank you for this interview.
Vasconcelos: Thanks for having me.