Tuesday, November 15, 2011

Angola 2012 budget sees oil output rising to 1.84 mbpd


LISBON (Reuters) - Angola expects to increase oil output to 1.84 million barrels per day in 2012 from 1.6 mbpd this year, helping the economy expand by 12.8 percent, according to a draft 2012 budget whose main guidelines were approved by parliament on Tuesday.

Oil output in Angola, which is Africa's second-largest crude producer after Nigeria, has come in below estimates this year due to technical problems and field maintenance, forcing the government to slash its economic growth forecast to 3.4 percent from 7.6 percent.

However, it expects oil output -- which represents over 90 percent of the country's export revenues -- to recover next year as fields come back on line and new projects begin production.

"Compared with the budgets of the last three years, this budget proposal assumes a more promising scenario for the national economy," Finance Minister Carlos Alberto Lopes told parliament during a session broadcast by state TV channel TPA.

According to the draft budget, total oil production for 2012 is forecast at 663 million barrels, up from 584 million barrels this year and reaching the highest level since 2009 when the country produced 1.8 mbpd. Oil minister Jose de Vasconcelos said the country was producing 1.75 mbpd in late October.

Still, the government said it has used a "conservative" assumption for oil prices next year, putting the mark at $77 per barrel, lower than the $95 it had estimated for this year and the current Brent crude market price of around $112.

The cautious approach is designed to ensure it can execute public spending plans, the government said.

The administration is aiming for a balanced budget in 2012 after an expected surplus this year, as it plans to step up spending on health and education.

Revenues are forecast at around 4.42 trillion kwanza, with government spending matching that value.

Oil has helped Angola pick up the pieces after a long civil war ended in 2002 but reliance on the commodity has left it vulnerable to oil price drops and global economic weakness.

Angola's economy was hit hard when crude prices began to drop in 2008 with its growth rate slowing sharply to 2.4 percent in 2009 after five years of double-digit expansion.

Finance Minister Lopes said the government's forecasts for 2012 take into account uncertainty in the world economy.

"(The positive scenario) takes into account the solid position of our foreign reserves and public finances, as well as good results in controlling inflation," Lopes said.

"But there are also provisions for risks linked to current uncertainties about the outcome of the sovereign debt crisis in Europe and the performance of the U.S. economy," he added.

The ruling MPLA party's large majority approved the main guidelines of the budget bill, with the final vote set for mid-December. The measure is likely to sail through parliament.

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