angola smashes oil deal with exxon
The next area where Lee Raymond of ExxonMobil said “Well, we will go and produce more oil from” was Angola. Not a good week for Lee Raymond. Because Angola came out and said we’re not going to nationalize the fields that ExxonMobil and BP and Total are actually producing from, but we’re going to take away their exploration licenses which cover a big part of the ocean and where the seismic work has been done and it looks highly prospective. And this was an area that Big Oil was counting on to protect its sagging reserve life index.
And when Angola then rubs salt in the wounds of Big Oil by saying China will be picking up some of these exploration leases, it illustrates that not only does Big Oil have trouble in its relationship to OPEC, but we’ve now got this hungry new force, which is the second biggest oil importer in the world, with enormous cash flows, that is pursuing opportunities around the globe and trying to drive Big Oil out of its position in them.
The Angola story is particularly amusing because as the Angolan government noted, the deal that they got with Angola was done at the time there was a civil war and they backed the right side in the civil war. This is the kind of thing that oil companies have been doing for ninety years. They’re good at it. Sometimes they get it wrong, but in general it’s something that goes with the territory. You can’t be a CEO of Big Oil without looking at some rather dubious governments around the world and doing deals with those that you think are going to win out.
Well, they did this deal, but it was a separated deal, which was actual producing fields from exploration leases. So what the Angolan government, now that the civil war is long over is saying, okay, it was a deal that worked out well for you on that but we’re not going to let you have a right to at your own pace develop everything that we have in the ocean out here. We’re going to let other people in. In other words, we believe in a free market for our resources.
