Diplomatist Magazine Diplomatist September 2019 | Page 55

A frica Diary
oil value chain, increase natural gas production
and strengthen technical capacity, thus creating
avenues for investments as well. The oil industry
accounts for over 90 percent of the total revenue
of Angola. In fact, this has also helped Angola
maintain an average growth rate of 8.68 percent
from 2000 until 2017. Interestingly, Trading
Economics website reveals that the country
witnessed immense variations in its growth
rate as well – rising to 23.2 percent in 2007 and
plummeting to 0.1 percent in 2016 owing to a
sharp drop in global oil prices.
Located on the Atlantic coast, Angola is
a member of the Organisation of Petroleum
Exporting Countries. India’s imports of oil and
natural gas from Angola has also witnessed a
mixed path of increase and decreased in the last
decade. For instance, as per the statistics from
International Trade Centre, Geneva, India’s
imports of petroleum oils and oils obtained from
bituminous minerals, crude (classified under
HS code 2709) from Angola increased from
USD 3.38 billion in 2009 to USD 7.95 billion
in 2012 and later dipped to USD 1.68 billion
in 2016. It is now again showing an increasing
trajectory and accounted for USD 3.43 billion
in 2018. Also, import of petroleum gas and
other gaseous hydrocarbons (classified under
HS code 2711) increased at least six-fold from
USD 109.3 million in 2016 to an estimated USD
661.2 million in 2018.
The relations between India and Angola are
largely hydrocarbon-driven. Indian companies
including Hindustan Petroleum Corporation
Limited (HPCL) and others visited Luanda to
explore the investment opportunities in the oil
and gas sector. Importantly, Angola depends on
imports for a major chunk of its requirement
for refined petroleum. So, petroleum products
provide huge export opportunities from India
to Angola. However, statistics reveal that the
export of petroleum oils and oils obtained
from bituminous minerals and preparations
etc. (classified under HS code 2710) has seen
a drastic decline from USD 293.8 million in
2009 to a mere USD 0.39 million in 2018.
India needs to give enough policy space to
leverage its competitiveness in the petroleum
product exports to Angola and also invest in
the sector, especially at a time when Angola’s
Ministry of Mineral Resources and Petroleum is
looking forward to giving licence for 55 blocks
during the period of 2019-2025. This envisages
the promotion of foreign direct investment to
enhance the competitiveness and innovation
capabilities of the oil and gas sector. Also,
Indian firms should utilise this opportunity
and enter into innovative and cost-effective
production sharing agreements to create a win-
win situation for both sides.
Technical cooperation in the energy sector
Of the 55 blocks as mentioned earlier
in this article, Angola plans to give licence
for 9 blocks this year and intends to build
new refineries. Last year also, the country
called for tripling its refinery capacity. Given
India’s refinery capabilities and its support in
constructing Mongolia’s first ever oil refinery,
for instance, there exists a huge potential for
technical collaboration between India and
Angola. India can provide technical support in
developing Angola’s refinery capacity. Also,
there is an imminent need for capacity-building
and development of human resources for the
oil and gas sector in Angola. The expertise
of Indian institutions imparting programmes
and training courses in petroleum and energy
studies can be leveraged to train students and
oil and gas professionals there. Angola is
already listed under the Indian Technical and
Economic Cooperation (ITEC) programme, and
such a capacity-building and training initiative
can be facilitated within the ITEC domain and
across all energy domains including power and
renewable energy.
Oil value chain participation
A crucial aspect in the domain of oil and gas
is the value chain participation. The oil value
chain constitutes of several value chain activities
beginning with exploration and is classified
under upstream, midstream and downstream.
If we look at the oil value chain in Angola, it is
flourishing well in the upstream sector owing to
abundant resource endowments. However, it is
lacking behind in mid-stream and downstream
sectors. Angola and Zambia have recently
signed a memorandum of understanding to
construct a 1,400 kilometer oil pipeline to
facilitate easy transportation of oil, thus creating
an avenue for improvement in the midstream
sector. On the contrary, India, which is an oil-
importing economy, has performed largely well
in downstream sectors and offers the potential
for investment cooperation in Angola.
Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 9 • September 2019, Noida • 55