Angolan President Jose Santos arrived in China this week and is expected to sign economic agreements in the energy sector. Angola is hugely dependent on its oil exports and particularly demand for its crude oil from China, which is its biggest customer, ANGOP, the Angolan state-run news agency.
The Angolan oil sector is heavily dependent on China, with almost 45-50% of Angolan crude exports going there every month. “We are selling about 50% of our exports to China. We hope to keep this level,” the country’s oil minister Botelho de Vasconcelos told reporters on the sidelines of last week’s OPEC meeting in Vienna.
Almost 65% of Angolan crude exports last year went to Asia, with 49% of that volume going to China, according to data published earlier this year by the US Energy Information Administration.
Angola, Africa’s second-largest crude oil exporter, produces almost 1.7 million-1.8 million b/d of heavy, sweet crude, which is low in sulfur, but, when refined, yields a lot of fuel oil and residual fuels.
China is the biggest consumer of this heavy to medium sweet crude oil from Angola and Chinese refineries have a huge appetite for crudes of these qualities.
China likes crude oil that is heavy and sweet, as it fits the appetite of its refineries that produce a lot of fuel oil to keep its industrial and manufacturing economy marching on.
One of the reasons that Angolan crude has been selling well in the past few months, despite the oversupply in the current physical oil markets, is because Chinese demand for Angolan crude has remained largely steady.
Slow Oil Growth
But China is continuing to diversify its crude buying and its demand for Angolan crude is not growing as steadily as it was a few years ago.
China is now looking increasingly toward Latin America, and its crude imports from countries like Brazil, Venezuela, Colombia and Ecuador have jumped sharply in the past year.
Another worrying trend for Angola has been that oil output has not grown as expected in the last two years, and this has hurt the economy as it has coincided with the fall in oil prices.
