On February 28, 2018, SONANGOL, the Angola Concessionaire for Oil & Gas Exploration and Production Activities, held a press conference in Luanda to describe the actions and decisions taken by the new Administration since assuming power in late 2017. They also outlined the main priorities for the future of upstream, midstream and downstream activities in Angola. Below are some of the highlights:

  1. New regulatory package

Following the publication of Dispatch 290/17, a Government/Industry joint Task Force was created to review the Angola Oil & Gas regulations with the view to (i) clarify and improve existing provisions and requirements and (ii) attract more investment so as to increase the hydrocarbons production. The areas subject to review were:

  • Simplification of oil concession managing procedures;
  • Marginal fields discoveries and special tax regime for those areas;
  • New Natural Gas Law;
  • Terms re additional exploration within development areas;
  • Rules of abandonment.

All these areas were reviewed and new laws and regulations have been submitted to the Government for approval and enactment.

  1. Increase of oil production

In recent years, Angola oil & gas production has been declining, due to: (i) lack of investment on existing concessions, (ii) mixed exploration results, and (iii) lack of new offerings of exploration acreage.

Sonangol announced the following developments in terms of existing concessions:

  • Settlement of the arbitration with Cobalt regarding Blocks 21/09 and 20/11, which will allow Sonangol to offer interests in each to investors;
  • Block 48 – Negotiation with Total towards resuming exploration activities;
  • Block 5/05 – Negotiation with Statoil towards resuming exploration activities;
  • Block Onshore Cabinda North – ENI appointed as operator;
  • Block Onshore Cabinda Centre –Ongoing negotiations to find a new operator;
  • Blocks 18/15, 46 and 47 – Ongoing negotiations with some majors for the award of interest in these blocks, most of them in the Congo basin;
  • New approach to the Congo and Kwanza basins with the aim of finding new investors.

The press release did not mention the Namibe basin. However, given that this area is already divided into blocks, it is likely that the next bidding round will include this basin.

Finally, a new gas law is being drafted and is expected to be enacted sometime over the next few months, most likely along with the new oil & gas regulatory framework mentioned above. The new gas law is intended to prioritize and facilitate the exploration and production of non-associated natural gas.

  1. Midstream/Refining

Working groups created by a presidential initiative (pursuant to Presidential Dispatch 311/17) reached the following conclusions:

  • Cabinda Refinery – A small capacity refinery should be built in order to make this province self sufficient;
  • Luanda Refinery – Gasoline production capacity should be increased through improvement of operations and maintenance;
  • Lobito Refinery – Priority midstream project – a large scale refinery should be built.

Sonangol is studying proposals some 64 proposals from interested investors.

Should you wish to know more about the above developments, please contact one of the following Mayer Brown Partners/Counsels: Alexandre Chequer, Gonçalo Falcão or Norman Nadorff.

Visit us at mayerbrown.com.