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May 28, 2017

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Angola's oil output targets remain a pipe dream

LUANDA, Angola--Despite colossal investment, Angola's goal of pumping two million barrels of oil a day and even upstaging Nigeria as Africa's largest producer remains a pipe dream.

To be sure, Angola's oil industry is going gang-busters.

State-owned oil firm Sonangol recently announced an US$8-billion investment program and began to flog ten on-shore concessions.

Total is slated to invest US$16 billion, while other global energy companies ENI, Statoil and ConocoPhillips also have plans to put more work boots on the ground.

This has led officials to predict, again, that the country will break the symbolic production level of two million barrels a day and that it could even get within striking distance of Nigeria's 2.5 million a day rate.

Angola is keen to reach that level of production because, as well as two million being a nice round number, it would represent a significant boost for Africa's third-largest economy.

The black gold lying off the coast of the capital Luanda and the Cabinda enclave accounts for 30 to 40 percent of economic output and around 80 percent of government income.

Oil wealth has made many insiders rich, but has also been used to fund reconstruction since a devastating civil war ended in 2002.

And yet, the faster Angola pumps, the further it seems from its target.

Industry insiders say a mix of technical problems, infrastructure bottlenecks and state intervention means any attempt to retake the title of Africa's largest oil producer, which Angola briefly held in 2008, is likely to end in failure.

'Difficult to overtake Nigeria'

Last year crude production fell 1.1 percent to 1.71 million barrels a day, a disappointing showing after a 4.5-percent jump the previous year.

That raised the ire of Sonangol's chief Francisco de Lemos, who demanded "explanations" from the heads of Chevron, Total, Esso and BP about a series of problems that contributed to the drop.

Maintenance work, mechanical damage and delays in delivering technical equipment have all taken their toll.

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