Angola Becomes Africa's New Oil Kingpin

It wasn't long ago that Nigeria was the majordomo among African oil-producing nations. But that's changed amid tribal terrorism and squabbling in the country. Now, almost in the blink of an eye, neighboring Angola has taken over kingpin status among nations producing black gold on the continent.

Just ask Chevron (NYSE: CVX), the second-largest U.S.-based oil company, which has announced a "significant" oil discovery by an affiliate in the waters off progressively more prolific Angola. While this is a single well and it's tough to gauge the amount of hydrocarbons it might represent, from the company's phraseology, I'm betting that it could be several hundred million barrels of oil equivalents.

Obviously, other wells will need to be drilled to confirm the size of the reservoir and the likely amount of reserves involved. But the initial well was drilled in nearly 400 feet of water -- hardly Brazilian Santos basin-caliber depth -- to a total depth of 13,000 feet. The net hydrocarbon pay, which translates to the rock thickness likely to contain oil and gas, was 225 feet.

Chevron owns 39% of the discovery, while the state-run oil company, Sonangol, has a 41% interest. The remainder is divided equally between Total (NYSE: TOT) and Eni (NYSE: E). Beyond this effort, Chevron is preparing to start producing from another offshore Angola project.

Coincidentally, the discovery occurred just prior to a visit to Angola by Secretary of State Hillary Clinton, who pressed local authorities to redouble their efforts to fight corruption. The country ranks 158th on Transparency International's corruption index of 180 nations. Nevertheless, with Nigeria seemingly unable to control its militant MEND group, and with Angola having upped its production capacity to about 2.1 million barrels a day -- or by about 53% -- in just three years, Angola has recently become Africa's biggest producer.

The nation's output could increase further, since the likes of ExxonMobil (NYSE: XOM), BP (NYSE: BP), and Marathon Oil (NYSE: MRO) are also conducting operations there. At the same time, a liquid natural gas project, which will utilize ConocoPhillips' (NYSE: COP) natural gas liquefaction technology, is scheduled to come online in 2012.

Overall, though, Chevron is becoming more and more worth watching. In the past quarter, its production was raised by about 5%, and given the myriad of projects in which the company is involved, that trend is unlikely to reverse itself in the near term.