Life after war | Decadence and decay are sinister neighbours in this enigmatic city, once known as the Paris of Africa. Luanda, a place of relative safety during the 30-year civil war, is bursting at the seams with approximately four million inhabitants. The dramatic influx of people seeking some kind of normality and safety in the midst of the fighting has placed a burden insurmountable on this the capital of Angola, writes Linda Martindale.
The China-Angola oil factor
Recent developments, however, suggest that Angola has seized the political and economic leverage afforded it by the rising global demand for oil. In March last year, a joint venture was announced between Sonangol and Sinopec, Angola's and China's respective state-owned oil companies, to develop a refinery in Lobito. The project, named Sonaref, worth $3bn, was expected to reach a capacity of 240 000 barrels a day when on full stream, almost tripling the capacity of Angola’s current refinery. The joint venture, known as Sonangol-Sinopec Inter-national (SSI), also tendered for oil exploration contracts. In addition, Angola became a fully-fledged member of the Organisation of Petroleum Exporting countries in January this year. It is now in Angola’s interests to restrict oil output to maintain current high prices, so it would make perfect sense to short-circuit the construction of a refinery whose capacity would increase Angola’s current production levels of 1,4 million barrels a day and whose products were not aimed at Angola’s mastitis demand. That Angola might go it alone in developing domestic extractive infrastructure could mean a number of things. First, the Angolan government may have realised the need to stimulate national industrial capacities, not only in oil extraction, but other sectors well placed to benefit from oil-induced growth.
Second, Angola may be starting to realise the potential leverage afforded it by rising commodity prices. Shifting global dynamics as China and India come on stream will ensure that oil will become a more and more precious commodity, until such time as biofeul technology catches up with global demand.
Lucy Corkin is Projects Director at the Centre for Chinese Studies, Stellenbosch University. This is based on an article that first appeared in Business Day.
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