{"id":13778,"date":"2023-07-06T07:40:32","date_gmt":"2023-07-06T07:40:32","guid":{"rendered":"https:\/\/www.oilnewskenya.com\/?p=13778"},"modified":"2023-07-06T07:41:40","modified_gmt":"2023-07-06T07:41:40","slug":"angola-sonangols-journey-towards-partial-privatization-and-shifting-mission","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/angola-sonangols-journey-towards-partial-privatization-and-shifting-mission\/","title":{"rendered":"ANGOLA: Sonangol\u2019s Journey Towards Partial Privatization and Shifting Mission"},"content":{"rendered":"\n

By NJ Ayuk, President – African Energy Chamber<\/em><\/strong><\/p>\n\n\n\n

The petroleum industry is one of the mainstays of Angola\u2019s economy, accounting for more than a third of the country\u2019s GDP and more than 90% of its exports. It also generates about 70% of the government\u2019s total budget revenues and is the biggest source of foreign direct investment (FDI).<\/p>\n\n\n\n

Moreover, its importance is not likely to diminish any time soon. Angolan crude oil production levels have been trending downward for some time due to the maturation of existing fields, but the country was still extracting more than 1.1 million barrels per day (bpd) as of May 2023, and it is encouraging foreign investors to search for new reserves in the untapped sections of its offshore zone. Additionally, Angola has been paying closer attention to its natural and associated gas resources and is working to increase production in a bid to take advantage of rising demand, especially in Europe.<\/p>\n\n\n\n

These are the kind of circumstances that make resource nationalism \u2014 a policy approach under which governments, acting in the name of their constituents, assert and retain control over natural resources rather than allowing private-sector entities to become full stakeholders \u2014 attractive. But Angola has not succumbed to this temptation. Instead, its government, under the direction of President Jo\u00e3o Louren\u00e7o, is pursuing a remarkable reform program designed to allow Sonangol, the national oil company (NOC), to represent local interests while also working cooperatively with outside investors.<\/p>\n\n\n\n

First Step: Shifting Sonangol\u2019s Mission<\/strong><\/p>\n\n\n\n

The government began laying a foundation for these reforms in 2019, during Louren\u00e7o\u2019s first term as president. In February of that year, the president signed a decree establishing the National Agency for Oil, Gas, and Biofuels (ANPG). The decree stated that ANPG would act as the country\u2019s concessionaire for oil and gas projects, thereby making the new agency solely responsible for regulating, supervising, and monitoring activities related to oil and gas exploration and production.<\/p>\n\n\n\n

In so doing, it stripped Sonangol of this function. The company had previously served as a national concessionaire while also acting as a partner or shareholder in oil and gas development projects. Once ANPG took over the role of concessionaire, though, it was no longer responsible for regulatory tasks and could focus on operational matters.<\/p>\n\n\n\n

It is true that the NOC was already taking steps in this direction anyway. It had been working since mid-2017 to divest non-core units \u2014 that is, subsidiaries focusing on other types of economic activity, such as finance, real estate, travel, and food services. But it was the creation of the new agency that truly set the stage for Sonangol to function more like an oil company and less like a government bureaucracy.<\/p>\n\n\n\n

Next Step: Partial Privatization<\/strong><\/p>\n\n\n\n

It\u2019s no wonder, then, that the Louren\u00e7o administration took things further. In September 2021, Diamantino Azevedo, Angola\u2019s Minister of Mineral Resources, Petroleum, and Gas, announced that Sonangol was preparing for an initial public offering (IPO), an event that would allow outside investors to become shareholders in the company.<\/p>\n\n\n\n

That announcement was not immediately followed by a stock exchange listing. Instead, the NOC worked to formulate a concrete plan for partial privatization, and in September 2022, shortly after Louren\u00e7o\u2019s election to a second term as president, the government began unveiling its new roadmap.<\/p>\n\n\n\n

Initially, that roadmap was incomplete. It provided for the sale of up to 30% of Sonangol\u2019s stock but did not specify exactly how that process would unfold. That is, it did not say when or on what terms the shares might be offered to potential buyers.<\/p>\n\n\n\n

Since last September, though, Angola\u2019s government has clarified its intentions. It has stated that the IPO will only move ahead once Sonangol meets a number of key milestones. In November 2022, Sebasti\u00e3o Gaspar Martins, the company\u2019s chairman and CEO, listed the following requirements:<\/p>\n\n\n\n