Delivering commercial insight to the global energy industry Wood MackenzieEnergy Angolas Oil & Gas Revenue: Past, Present & Future.

Delivering commercial insight to the global energy industrywww.woodmac.com

Wood Mackenzie Energy

Angola’s Oil & Gas Revenue:Past, Present & Future

2Petroleum Revenue Management Workshops, Luanda, May 2006

Delivering commercial insight to the global energy industry


Background to Wood Mackenzie

Setting the background - Angola’s upstream industry in context

Historical and possible future government revenues

A brief international context

Agenda




Background to Wood Mackenzie

Providing information and analysis on the upstream industry for over 30 years

Asset level information - field by field or block by block

• Started West African coverage in 1990

Research and analysis held in proprietary databases and economic models

Asset data, field profiles, contract terms etc derived from many sources

• Public information

• Government information

• Company information

• Conversations with operators, partners…

Ultimately all asset profiles and values are WM own best estimates

Data here comes from Wood Mackenzie’s Global Economic Model (GEM)




Angola has seen spectacular growth in its deepwater resource base…

Source: Wood Mackenzie’s Global Economic Model (GEM)

Offshore

CabindaUltra-Deep

Deepw ater

-3,000

-1,000

1,000

3,000

5,000

7,000

9,000

Remaining Undeveloped

Remaining Onstream or Under Development

Produced Liquids

Million barrels




…resulting in ongoing upward revision of production profiles…


0

500

1,000

1,500

2,000

2,500

3,000

1980 1985 1990 1995 2000 2005 2010 2015

WM View in 1990

WM View in 1995

WM View in 2000

WM View in 2006

kb/d




…driven by deepwater developments


0

500

1,000

1,500

2,000

2,500

3,000

1990 1995 2000 2005 2010 2015 2020

Ultra-Deepw ater

Deepw ater

Shallow Water

Cabinda

Angolan Oil Production (kb/d)




Lead times from discovery to development sanction have been increasing…


Licence Awarded Discovery Onstream Source: Wood Mackenzie

AngolaOnstream ProjectsKuito - Blk 14 (CVX)

Girassol - Blk 17 (Total)

Jasmim - Blk 17 (Total)

Xikomba - Blk 15 (XOM)

Kizomba A - Blk 15 (XOM)

Kizomba B - Blk 15 (XOM)

BBLT - Blk 14 (CVX)

Projects Under Development

Dalia/Camelia - Blk 17 (Total)

Rosa - Blk 17 (Total)

Greater Plutonio - Blk 18 (BP)

Marimba - Blk 15 (ExxonMobil)

Probable Developments

Jimbao - Blk 4 (Sonangol)Kizomba C - Blk 15 (ExxonMobil)Mavacola - Blk 15 (ExxonMobil)

Tombua Landana - Blk 14 (CVX)

Cravo Lirio - Blk 17 (Total)Negage - Blk 14 (ExxonMobil)Block 18 West - Blk 18 (BP)NE Development - Blk 31 (BP)

Acacia - Blk 17 (Total)Kizomba D - Blk 15 (ExxonMobil)Block 32 Development - Blk 32 (Total)SE Development - Blk 31 (BP)

2001

1997

1998

1999

2000

1993

1994

1995

1996

2002

2003

2004

2005

2006

2007

2008

2012

2009

2011

2010




…and need to be accelerated to stem decline from the first tranche of developments


Discovery Dev. Sanction Onstream Source: Wood Mackenzie

AngolaOnstream ProjectsKuito - Blk 14 (CVX)

Girassol - Blk 17 (Total)

Jasmim - Blk 17 (Total)

Xikomba - Blk 15 (XOM)

Kizomba A - Blk 15 (XOM)

Kizomba B - Blk 15 (XOM)

BBLT - Blk 14 (CVX)

Projects Under Development

Dalia/Camelia - Blk 17 (Total)

Rosa - Blk 17 (Total)

Greater Plutonio - Blk 18 (BP)

Marimba - Blk 15 (ExxonMobil)

Probable Developments

Jimbao - Blk 4 (Sonangol)Kizomba C - Blk 15 (ExxonMobil)Mavacola - Blk 15 (ExxonMobil)

Tombua Landana - Blk 14 (CVX)

Cravo Lirio - Blk 17 (Total)Negage - Blk 14 (ExxonMobil)Block 18 West - Blk 18 (BP)NE Development - Blk 31 (BP)

Acacia - Blk 17 (Total)Kizomba D - Blk 15 (ExxonMobil)Block 32 Development - Blk 32 (Total)SE Development - Blk 31 (BP)

Yea

r 14

Yea

r 15

Yea

r 16

Yea

r 20

Yea

r 17

Yea

r 19

Yea

r 18

Yea

r 10

Yea

r 11

Yea

r 12

Yea

r 13

Yea

r 1

Yea

r 2

Yea

r 3

Yea

r 4

Yea

r 9

Yea

r 5

Yea

r 6

Yea

r 7

Yea

r 8




Huge investment required to generate massive revenues…


0

10

20

30

40

50

60

70

80

90

1990 1995 2000 2005 2010 2015 2020

Opex

Capex

US$75/bbl

US$45/bbl

US$25/bbl

Angolan Gross Revenue & Costs ($ billion)




…which will transform the revenues received by the state…


0

10

20

30

40

50

60

1990 1995 2000 2005 2010 2015 2020

US$75/bbl

US$45/bbl

US$25/bbl

Angolan Government Revenue ($ billion)




…dominated by profit share from deepwater PSCs…


0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020

SGL equity

PSC Tax

PSC Profit Share

Concession taxes

Royalty

Bonuses

Government Revenue Split($billion; $45/bbl case)




…with total state revenue at least 50% of gross revenue and could be as high as 80%


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 1995 2000 2005 2010 2015 2020

US$25/bbl

US$45/bbl

US$75/bbl

Government Revenue % of Gross Revenue




UK comparison

0

10

20

30

40

50

60

70

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

CT

PRT

SPD/APRT

Royalty

Gross Revenues

$ billion





UK comparison

0

10

20

30

40

50

60

70

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

CT

PRT

SPD/APRT

Royalty

% Take

Gross Revenues

$ billion





Norway comparison

0

10

20

30

40

50

60

70

80

90

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

CT

ST

Royalty

Gross revenues

$ billion





Norway comparison

0

10

20

30

40

50

60

70

80

90

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

CT

ST

Royalty

% take

Gross revenues

$ billion





Conclusions

What are the upsides?

• High prices – progressive government take

• Further discoveries

• Spectacular bonuses for some deepwater licences

What are the downsides or risks?

• Low prices

• Very high cost inflation throughout industry

• Very steep production decline without further discoveries

• Disappointment in ultra-deep water

• Small number of partners




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Wood Mackenzie has been providing its unique range of consulting services and research products to the Energy and Life Sciences industries for over 30 years.Wood Mackenzie’s market proposition is based on its ability to provide forward-looking commercial insight that enables clients to make better business decisions.For more information visit: www.woodmac.com

David Morrison

Chairman, Energy

T: +44 207 877 0570

E: [email protected]

Thank you for your attentionThank you for your attention

Catriona O’Rourke

Senior Angola Analyst

T: +44 131 243 4250

E: catriona.o’[email protected]

Delivering commercial insight to the global energy industry Wood MackenzieEnergy Angolas Oil & Gas Revenue: Past, Present & Future.

Documents

commercial insight

gross revenue

total state revenue

state source

present future slide

uk comparison source

norway comparison source

deepwater developments