Angola Advised to Cut Oil-Block Size to Generate More Tax
Angola’s former Petroleum Minister Albina Faria de Assis Pereira Africano urged the nation to study cutting the size of oil blocks to generate more tax revenue.
The country should also bring in an oil supervisory body that doesn’t operate fields itself, according to Africano, who was the first chairman of state oil company Sonangol in 1991 to 1992 and now advises President Jose Eduardo dos Santos. Her recommendations were detailed in a book published yesterday.
The southwest African country is looking to boost revenue from its oil resources, which have made it the biggest crude producer on the continent behind Nigeria. Reducing block sizes would add concessions, potentially luring more explorers to the nation’s waters, where Chevron Corp. (CVX) and BP Plc (BP/) already operate.
The Ministry of Petroleum’s inspectorate should oversee oil exploration as it’s not an operator and can best supervise the implementation of technical, environmental and economic rules, Africano said. Sonangol currently monitors the concessions.
Angola has about 50 offshore oil blocks, each spanning 5,000 square kilometers (1,930 square miles), and plans to auction 15 onshore areas in 2013. By contrast, blocks in Norway, western Europe’s biggest oil producer, are a 10th of the size.
Africano also urged Angola to use its $5 billion sovereign wealth fund to diversify the $114 billion economy away from non-renewable resources such as oil and diamonds. The fund should target agriculture and livestock, manufacturing, trade and services, she said in her book, “Sustainable Management of Angolan Oil, A Comparative Study of Angola and Norway.”
The country pumps about 1.8 million barrels a day offshore and aims to produce 2 million a day by 2017. While crude makes up 97 percent of its exports and 80 percent of tax revenue, the oil industry only employs about 1 percent of the population, estimated at 21 million by the World Bank. Most people live on less than $2 a day, United Nations data show.
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