Page 66 - Vol 33 Issue 34 2021

Angola’s Back! Five Key Moves to Increase Oil and Gas Stakeholder
Returns
oil Analysis

By Gonçalo Falcão & Norman Nadorff

or a brief period in 2009, Angola was Africa’s largest oil producer with production reaching 2 million barrels
Fper day. Current production is around 1.37 million barrels per day. This reduction is generally attributed to
(i) naturally production profile declines in major plays, (ii) low oil price environment, (iii) disappointing drilling
results, and most recently (iv) Covid-19 pandemic effects.

Angola desperately needs to diversity its oil- (December 2019), ExxonMobil-led Block 15 (June were Block 9 and 21 where Cobalt was the
dependent economy by capitalizing on its other 2019) and BP-led Block 15 (December 2018). original Operator.
potential strengths such as mineral extraction In the authors’ separate experience, Sonangol Last October, Exxon Mobil and Sonangol
and agriculture. Even a strong diversified was, as a matter of principle, hesitant, if not P&P were awarded risk service contracts, with
economy, however, will need a solid oil and gas unwilling, to consider re-negotiating the terms participating interests of 60% and 40% re spec tive-
industry as its base for the foreseeable future. of existing E&P agreements, even when market ly, for massive Blocks 30, 44 and 45 in the lightly
As keynote speaker at the 2019 Africa Oil conditions seemed to demand contractual explored Namibe Basin. Look for similar deals to
and Gas Conference, Angolan President João flexibility. Over time, however, faced with dras ti- occur in the future in similar new frontier areas in
Lourenço said, “Africa has great unexplored cal ly declining production profiles, and with the the less explored center and south areas of the
hydrocarbon potential, and . . . Angola occupies emergence of the ANGP, that reluctance dis- country as the Government’s appetite for near
one of the top spots on the continent. The sipated. Now, renegotiation appears to be an term investment and production trumps slower
Angolan government is aware of this reality and important part of Sonangol’s commercial tool box, paced, and at time disappointing, bid rounds.
its potential, [and] considers petroleum and gas especially when it leads to increased equity par-
as catalyzers for a new dynamic, renewable and ticipation for the national oil company in strategic Sonangol Divestment and
self-sustainable dynamic economy.” concessions or, conversely, reduction or exit from Privatization
Those lofty words prefaced concrete actions concessions demanding higher-risk investments.
and results in 2020, five of which are briefly Since early 2020, Sonangol has announced
described below. Negotiation of Risk several public tenders to sell all of its holdings
Service Contracts in certain private enterprises as a major part of
Extension and Most Angolan E&P contracts are production a broader governmental privatization initiative
that is expected to include Sonangol itself. In
Renegotiation of Existing sharing contracts awarded through a competitive the words of Minister of Mineral Resources and
Blocks bidding process. Angola’s Petroleum Activities Petroleum, Diamantino Azevedo, “Sonangol is like
Law, however, allows the awarding of risk service
an octopus, it’s everywhere… there are properties
In February, the ANGP (Angola’s new petroleum contracts under certain circumstances when a everywhere, in Portugal, here, Singapore, avi-
regulator), signed an MOU with the Chevron-led public bid process has either failed or is unlikely ation, resorts, hotels . . . once we finished that
Block 14 Consortium that extends the underlying to succeed. This regulatory flexibility allows pro cess, there will be the conditions for bringing
contract until 2028 and significantly modifies its the Country to attract investors, and possibly So nangol to the stock exchange.” In addition to
provisions. This extension comes on the heels secure production, that otherwise might never rai sing much needed capital for the State, the di-
of similar extensions for Total-led Block 17 materialize. Examples of risk service agreements vest ment program should also force Sonangol

66 | AFRICAN POWER Mining & Oil Review Vol33 Issue 34 2021