CHOOSING TO adhere to a more liberal free-market philosophy, Angola decided early on that it wanted its oil industry to be free of the constraints of the Organization of Petroleum Exporting Countries (OPEC) cartel and of the group's penchant for controlling world oil prices through output restrictions. As a result, Angola has traditionally attracted considerable international investment attention in the oil sector.

Last year, the national oil company Sonangol announced that it had lined up nearly US$20 billion in foreign oil investment through the year 2004. One of the country's major concerns is making sure that the pace of production is maintained at a rate that will guarantee long-term benefits for the developing nation. Foreign oil companies predict that output of Angolan oil should reach some 2.5 million barrels per day by 2015, thanks to the recent discoveries of rich deep-water fields off the northern coast. As for the government, it wants time to further develop its budding downstream operations so as to make the most of resources before they are all exhausted by rapid drilling.

While the main foreign companies taking part in the deep-water projects, mostly Exxon Mobil, Chevron, British Petroleum,Total Fina Elf and Texaco agree that the government's strategy is sound, they are also eager to see quicker approval to exploit their recent discoveries. There are more than 30 foreign companies operating within the Angolan oil industry. Multinationals seeking the right to operate one of the country's oil exploration blocks are expected to make an initial non-recoverable payment referred to as a signature bonus that last year totaled some US$900 million for blocks 31-33, a small price to pay for the windfall the companies expect to earn from the rich fields.

And with the national oil company Sonangol, a major player in both upstream and downstream operations, new oil explorations and discoveries mean an added bonus to the government's budget and increases the nation's ability to boost output and investment. Government and Sonangol officials are well aware that increased output and the development of downstream industries will provide the country with the means to satisfy domestic needs and diversify into other markets. "Currently, I would say that nearly 70% of our exports go to the United States," which accounts for 7% of U.S. oil imports-or three times U.S. imports from Kuwait in the early 1990s, says Sonangol chairman and CEO Manuel Vicente.

"I would say that this year we will go to countries in the Southern African Development Community, of which Angola is a member, since our current trading strategy is to diversify this market," Mr. Vicente says. He adds that market studies are also being carried out in Asia. "Asia is a big consumer as well, and we know from our surveys that they have been consuming a lot of our grades, so it is a market with importance.

In the medium term, it is our intention to be present in that market." But before Angola's oil industry can make a larger mark at the international level, some of the domestic glitches have to be worked out. Especially pressing are infrastructure upgrades and the development of industries that will increase the local market and attract further foreign investment into downstream operations. Currently, three companies, Sonangol, Total Fina Elf and Sonangalp-a joint venture between Sonangol and Petrogal-provide product distribution and marketing in Angola.