Angola’s national oil and gas agency signed an exclusive negotiation agreement with Shell on November 3 to explore and develop Blocks 19, 34, and 35, along with several ultra deep water blocks, marking what officials describe as a historic moment for the country’s struggling petroleum sector.
The agreement, formalized by the National Oil, Gas and Biofuels Agency (ANPG), consolidates Shell’s presence in Angola after a 25-year absence from the country. Shell left Angola around 1999 and is now returning alongside new partners Equinor and Sonangol E&P, who joined the project through an addendum signed in May 2025.
The deal comes as Angola desperately attempts to reverse years of declining oil production that have persisted despite the country’s exit from OPEC in January 2024. Angola’s average daily oil production reached 1.134 million barrels in the first three quarters of 2024, representing a modest 4% increase from 2023 but still far below the 1.8 million barrels per day the country produced at its 2015 peak.
Angola quit OPEC effective January 2024 after disputes over production quotas, with the country wanting to produce above the 1.11 million barrels per day limit imposed by the cartel. However, freedom from OPEC constraints hasn’t translated into the production surge Angolan officials hoped for when they abandoned the organization after 16 years of membership.
In July 2025, Angola’s crude output slipped below 1 million barrels per day for the first time in two and a half years, averaging 998,757 barrels daily, highlighting the challenge the government faces in achieving revenue projections as crude trades below the $70 per barrel benchmark used in Angola’s 2025 budget.
The reality is that Angola’s production challenges stem more from aging infrastructure and underinvestment than from OPEC quotas. Major field complexes face advanced depletion rates, with the flagship Kizomba development operated by ExxonMobil showing 85% depletion despite continued production of approximately 200,000 barrels daily.
To attract investment, Angola introduced the Incremental Production Decree in November 2024, cutting royalties from 20% to 15%, capping ANPG’s profit oil share at 25%, and raising the cost recovery ceiling to 70% of production. These reforms, rather than OPEC exit, finally shifted investor sentiment and lured Shell back after two decades.
The new activity focuses not on large frontier discoveries but on re-tapping overlooked assets and prolonging the lives of fields already deep into decline. It’s pragmatic but hardly the transformational revival Angola needs to restore production to levels that sustained government budgets and development programs a decade ago.
Angola remains Sub-Saharan Africa’s second largest crude oil producer after Nigeria, though that position looks increasingly vulnerable given production trends in both countries. The ANPG has awarded more than 50 concessions since 2019 and projects awarding up to 60 by the end of 2025 through annual licensing rounds and direct negotiations.
Angola launched a permanent offer policy in August 2021, allowing oil companies to negotiate licenses for blocks that previously received no valid bids, free areas inside existing concessions, or concessions owned by ANPG that aren’t intended for partnership. This innovative approach eliminates the need to wait for bidding periods, giving the concessionaire flexibility to permanently negotiate blocks as if they were displayed in a shopping window.
While upstream activity shows modest improvement, Angola is simultaneously addressing its downstream bottleneck. The long delayed Cabinda refinery, Angola’s first built since independence nearly five decades ago, is scheduled to begin fuel production by April 2025 after commissioning in January and February.
The $500 million to $550 million first phase, backed by Gemcorp as majority owner and Sonangol with 10% shareholding, will process 30,000 barrels per day of Angolan crude, meeting approximately 5% to 10% of national fuel demand. A second phase expected 1.5 to 2 years later will double capacity to 60,000 barrels daily and add a hydrocracking unit for diesel and jet fuel production.
Angola currently imports around 72% of domestic fuel consumption, approximately 3.3 million metric tons of refined petroleum products annually, despite being one of Africa’s largest crude producers. As project leader Atanas Bostandjiev noted, Angola exports 98% of its crude and imports almost 100% of refined products from Europe, making the system extraordinarily inefficient.
The Cabinda refinery arrives as the government gradually phases out fuel subsidies that cost as much as 4% of GDP and triggered deadly civil unrest earlier in 2025 following sharp diesel price rises. Fuel subsidies in 2024 accounted for the equivalent budget of 1,400 infrastructure and development projects, of which 500 had to be suspended due to fiscal constraints.
Analysts estimate that removing subsidies could save between 0.7% and 2.2% of GDP in the 2025 to 2026 period, crucial for a government considering approaching the International Monetary Fund for financial assistance according to reports, though no formal request has been made yet.
The exclusive negotiation agreement between Shell and ANPG marks continuation of Angola’s strategy to boost exploration, secure long term output, and enhance value creation within the sector. Whether this translates into meaningful production increases or simply prolongs the inevitable decline of aging fields remains the billion dollar question for a country whose economy depends overwhelmingly on petroleum revenues.
Angola’s oil industry accounts for 30% of the country’s GDP, more than 70% of state revenue, and more than 90% of outbound trade. Those numbers explain why every percentage point of production decline sends ripples through government budgets, social programs, and economic planning.
The transaction is subject to regulatory approvals, which typically pass as formalities when major oil companies and national agencies arrange such deals. The real test comes when drilling begins and geologists discover whether Angola’s remaining unexplored blocks contain enough commercially viable oil to justify the investments Shell and its partners are willing to make.
For now, Angola has successfully attracted one of the world’s largest oil companies back to its waters after a quarter century absence. Whether that proves to be a transformational moment for the Angolan oil sector or simply another incremental step in managing inevitable decline will become clear over the next several years as exploration progresses and production figures either rise or continue their stubborn downward trajectory despite all the reforms and incentives Luanda can muster.