Is President João Lourenço’s Team Driving the Angolan Oil Rebound?

The first eleven months of 2018 saw Angola make more money from oil than in any of the previous four years, at the tune of USD$8.7 billion

NJ Ayuk is the founder and CEO of Centurion Law Group and the executive chair of the Africa Energy Chamber of Commerce. João Gaspar Marques is an energy analyst and a seasoned Africa specialist with in-the-field reporting experience from Africa’s petroleum hotspots

In December, I was accompanying OPEC Secretary General Mohammed Sanusi Barkindo and Africa Oil and Power CEO, Guillaume Doane on a working visit to Angola. This is an oil market that has been under a lot of scrutiny by many industry players and there is no question that Angola’s oil sector is at a time of transformation. It is now clear that when President João Lourenço’s promised he would clean the country’s administration and revamp its economic engine, namely the national oil company Sonangol, he meant business.

Certainly, his plans are driven by a medium to long-term vision of diversifying the economy from oil, but in a nation so dependent on the black gold for its economic lifeblood (oil accounts for as much as 90% of Angola’s exports), it is in the oil industry that the funds for developing other sectors will be found.

Since his term in office started in the Summer of 2017, the administration of nearly every national strategic asset has been changed. Particularly in Sonangol, the leadership of Africa’s richest woman and the daughter of former president José Eduardo dos Santos, Isabel dos Santos, has been replaced by an oil industry-savvy technocrat named Carlos Saturnino, which has over 30 years of oil industry experience within Sonangol’s core businesses.

This is a man much less likely to spend the company’s resources in questionable investments in healthcare, hospitality, aviation or sports clubs, than previous administrations of politically-charged leaders have been, and which has led to Sonangol’s current dire financial situation. Further, the new Minister of Oil and Mineral Resources, Diamantino Azevedo, announced, last September, that fifty-four concessionaires under the Sonangol umbrella were to be privatized in the run up to 2022, in order to shed costs, reduce operational complexity and allow the national oil company to focus on its core business.

Earlier in the year, the government announced a full revamp of the country’s legal framework for the oil and gas industry, which would include the landmark decision of striping Sonangol from its role as oil block concessionaire. That responsibility will pass to the newly created National Agency of Petroleum and Gas, a migration of duties that should be concluded during the second quarter of 2019. The decision puts an end to decades of conflict of interests between Sonangol’s role as an oil and gas operator and concessionaire of oil and gas blocks.

Further, over the last eighteen months, the government has put in place official policies that have largely simplified investment in the hydrocarbons sector, clarified and brought transparency to the rules applicable to bidding rounds and public tenders, and introduced the country’s first comprehensive antitrust law, in a row of decisions that is dramatically changing the industry’s landscape. In all, the decisions taken over the oil and gas sector sound like a housecleaning operation and will hopefully see Sonangol quickly become more efficient and focused on its core business. However, that will not be enough.

Strong but pragmatic commonsense measures

The first eleven months of 2018 saw Angola make more money from oil than in any of the previous four years, at the tune of USD$8.7 billion. While that goes some way into helping the country’s economy as a whole, those results can not be attributed to the recent reforms in the sector. The rise in oil prices witnessed in the run up to November 2018 justified most of the gains. Actually, November 2018 marked the highest price per barrel of Angolan oil (nearly USD$80) since November 2014. The average sales price in the year up to November stood at USD$70,82, while the national state budget had been built on an expected average price of USD$50 per barrel for the year. This represents welcome news for this cash-strapped economy, but it can also be misleadingly positive. While the income is rising, production is declining. 2018 marked the first time Angola’s average daily production stood below the 1.5 million barrel mark in over a decade.

The lack of investment in exploration witnessed in the wake of the oil price collapse in 2014 (which resulted in a drastic decrease in exploration wells that culminated in a zero count for 2018) means that there are no new projects and reserves to replace the declining and ageing active oil fields. João Lourenço and his cabinet needed to get to work in order to attract investment and revamp the industry.

In part, this work will take the form of the Angolan Marginal Field Bid Round of 2019, the first bid round in the country in over 8 years. As the new investment attraction policies slowly start to impact the sector and again bring the industry’s big players into the country’s least charted waters, the new legal framework created to facilitate the exploitation of the country’s marginal oil fields will go a long way in slowing down the declining oil production. At the same time, Sonangol has drafted an ambitious plan to develop its downstream sector. After securing a USD$200 million financing package to quadruple the capacity of the Luanda refinery, it is now in the last stages of contracting the construction of two new refineries, one in Lobito and another in Cabinda. These projects will help address the long-standing issue of fuel imports, which today account for 80% of Angola’s fuel consumption.

These are long-term plans to address some of the country’s most structural issues, which have prevented it from rising as a wealthy nation despite its immense natural resources. At the same time, Sonangol has been signing deals in recent months with the likes of BP and ExxonMobil to streamline development in a number of offshore oil fields. These deals have been facilitated by the renewed confidence these companies feel in the Angolan oil landscape. The words of BP CEO Bob Dudley, in December, when the two companies agreed on the joint development of block 18, are telling of this brighter vision for the sector. “I would like to thank President Lourenço, the government and Sonangol for their vision, leadership and drive to improve the industry’s competitiveness and encourage new investment”, he said in a statement.

Another factor underlying optimism for the future of the industry is the reviewed natural gas policy. Up until now, Angola’s hydrocarbon licenses referred solely to crude oil resources. Sonangol is technically the owner of all of the country’s natural gas resources, which are considerable. However, the national oil company has never really explored those assets, preferring to focus on the more profitable oil reserves. This will now also change, as a new policy will give license-holders control over the natural gas resources within their licenses, which could see a renewed expansion of the sector beyond the single standing LNG train of the Angola LNG Project, in Soyo. This intent was further reinforced by Angola’s ascension as a member of the Forum of Gas Exporting Countries in December.

Finally, after being at the brink of bankruptcy, Sonangol seems to be threading a more sustainable path, having secured the USD$1 billion loan it needed to finance its restructuring plan in December. In many more ways than one, the transformations we are witnessing in the Angolan oil sector are bound to propel the country into a level of development and sustainable economic wealth it has never seen before. If these measures are sustained in time, Angola will undergo a de facto transformation for the better and many oil leaders have already voiced their approval for these transformation. In that sense, we make ours the words uttered by His Excellency Mohammad Sanusi Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries, in his visit L to Luanda at the end of 2018: “we congratulate the government’s heroic efforts to reform the industry. These are the right reforms at the right time. We […] applaud these reforms”.

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The article is published courtesy of the APO

Independent Oil Companies Turn Attention to Angola

The Angola Oil & Gas conference will be 2019’s main promotional event for the licensing round and marginal fields

H.E. Diamantino Azevedo, Minister of Mineral Resources and Petroleum

Angola’s licensing round will include a new focus on the development of marginal fields. The Angola Oil & Gas conference ( will be 2019’s main promotional event for the licensing round and marginal fields. Licensing round and marginal field legislation indicate new strategic direction and opening of Angola’s oil and gas business.

Angola has developed a strategic plan to attract new players to its established oil and gas sector, promoting a licensing round at Angola Oil & Gas in June 2019 and opening up marginal fields based on new 2018 legislation. The measures will encourage new participation and investment from Angolan, African and international independents in the country’s oil and gas sector. 

H.E. Diamantino Azevedo, Minister of Mineral Resources and Petroleum, is keen to bring new life to Angola’s oil sector, which has seen a decline in discovered oil reserves and the maturing of producing fields. The 2019 licensing round, which will include onshore and offshore blocks in the Congo, Namibe and Cunene basins, will boost exploration potential with the ultimate aim to increase production from the country’s current levels of 1.49 million barrels of oil per day. 

“If we do not conduct the exploration works and finds new reserves, we will not be able to maintain the current levels of production,” said Azevedo on Friday. “We have to work on the perspective of finding new oilfields to sustain the desired production, based on the goals set by the government.”

In line with Angola’s decision to promote access to marginal fields, the government has established guidelines for marginal operators by presidential decree. According to the law, marginal fields are characterized by at least one of many factors. These include: recoverable resources of less than 300 million barrels; water depth exceeding 800 meters; and/or income to the state less than $10.5 per barrel. The law also provides different tax structures for marginal fields. 

“There is an antiquated perception that Angola as an oil and gas market is only for the big boys,” said Guillaume Doane, CEO of Africa Oil & Power, organizer of Angola Oil & Gas 2019. “Through marginal fields, Angola is attracting a greater diversity of exploration and production players that can operate smaller onshore and shallow water resource plays. In the next decade Angola can achieve historic developments through marginal fields similar to what Nigeria accomplished in recent years.”

Africa Oil & Gas 2019, held June 4-6 in Luanda, is officially endorsed by the Ministry of Mineral Resources and Petroleum of the Republic of Angola, and will bring together the top-level executives, government officials and experts for an elite, three-day conference on Angola’s oil and gas market. Featuring moderated panel discussions, keynote presentations and exhibitions, the conference will tackle the issues of the restructuring of Angola’s upstream sector, the introduction of marginal fields and the focus on local content development, and opportunities for downstream diversification.

The African Energy Chamber Applauds Angola’s Move To Join The Gas Exporting Countries Forum (GECF)

The African Energy Chamber congratulates Angola on becoming the sixth African country to join the Gas Exporting Countries Forum (GECF), after Nigeria and Equatorial Guinea

The GECF ( has been at the forefront of promoting the use of natural gas as an affordable and sustainable fuel of choice for sustainable development. African countries rallying around the drive of Equatorial Guinea’s Mines and Hydrocarbon Minister, Gabriel Mbaga Obiang Lima’s drive to monetize gas and engage with OPEC ( and GECF is a step in the right direction.

“Angola has vast untapped gas reserves that have not yet been monetized.” said AEC Executive Chairman NJ Ayuk. “joining the GECF is a step in the right direction and in line with H.E. President João Lourenço blueprint for transformation, growth and boosting economic diversification by the monetization gas.” 

Angola’s focus on gas is being backed by new legislation promoting the monetization of the country’s gas reserves. In May 2018, Angola passed Presidential Decree No. 7/18 (PD 7/18), indicating President Lourenço strong commitment to reform the country’s hydrocarbons sector and provide a boost to the gas industry. Presidential Decree No. 7/18 is the first law aimed at specifically regulating the prospection, research, evaluation, development, production and sale of natural gas in Angola.

“The Chamber welcomes the reforms in Angola and its commitment towards diversification and a market driven local content. This requires that government provides the necessary infrastructure and incentives that will enhance the productivity of labor and capital in the economy.” Ayuk continued.  “The private sector has a role to play and there must be a change in its mindset, from commerce to industry”

The Chamber ( welcomes these developments and salutes Angola on its efforts towards reforming its gas industry and deepening its engagement with international gas markets through Gas Exporting Countries Forum.

The Chamber and its members look forward to joining Angola’s leadership at the Angola Oil & Gas 2019 Conference & Exhibition to be held June 3-7, 2019 in Luanda under the patronage of H.E. President João Lourenço.

Debt-distressed African countries again look to International Monetary Fund (IMF)

By Akani Chauke


Debt-distressed African countries again look to International Monetary Fund

Overall, public debt rose above 50 percent of gross domestic product (GDP) in some 22 countries at the end of 2016, up from ten countries in 2013

By the International Monetary Fund (IMF’s) own admission, there are circumstances where African governments’ debt levels are so high they become unsustainable, such that the scheduled debt service exceeds the capacity of the member to service it.

This rings true for a number of countries in the Sub-Saharan African region, where the organisation, in its regional economic outlook for the year, warned debt servicing costs were becoming a burden, especially in oil-producing countries.

Among these are Angola, Gabon and Nigeria.

Overall, public debt rose above 50 percent of gross domestic product (GDP) in some 22 countries at the end of 2016, up from ten countries in 2013.

According to the Brookings Institution, Cape Verde, Gambia, Congo, Mozambique, Mauritania, Sao Tome, Togo, Zimbabwe, Ghana and Sudan, respectively, are the countries searing under the heaviest debt.

The rankings are based on public debt as a percentage of GDP. Cape Verde are the heaviest indebted, with its debt 129,7 percent of GDP. Sudan’s debt is 66,5 percent of GDP.

Recent statistics suggest Angola, Africa’s second largest crude oil producer after Nigeria, is not far off. It has a government debt equivalent to over 65 percent of the country’s GDP. Government debt to GDP in Angola averaged 49,75 percent from 2000 until 2017.

Statistics are based on data from the IMF’s World Economic Outlook, the World Bank’s World Development Indicators, and various countries’ national statistics offices and central banks.

IMF economists- Sean Hagan, Maurice Obstfel and Poul Thomsen- jointly blogged that one potent source of uncertainty is the role of a big debt overhang in sapping political support for reforms from the public, which could see its sacrifices as primarily benefiting creditors.

“Pretending that unpayable debts can be repaid will only sap the effectiveness of the debtor’s adjustment efforts, ultimately making all parties lose more than if they had promptly faced the facts,” the trio stated.

On the back of its warnings that servicing debts were becoming burdensome, it is thus ironic that IMF is making a comeback to the African continent.

Countries with an insatiable appetite to borrow, but struggling to repay loans, are sourcing funds from the institution.

Economists pointed out after past few years of inactivity, largely because of increased Chinese funding to Africa, the IMF was back in the fold.

This is largely attributed to falling commodity prices and rising interest rates on loans are pushing several countries into unaffordable debt like that last seen in the 1980s and 1990s.

“Despite – or is it perhaps because of – increasing volumes of Chinese financing to Africa, that oft-reviled old banker, the IMF, is making a comeback to the continent,” stated Peter Fabricius, Consultant of the Institute for Security Studies (ISS).

He noted during the 1980s and 1990s debt crisis many African countries turned to the IMF and its Bretton Woods partner institution, the World Bank, for financial bailouts but the economic formula, including African countries opening their economies to international trade, liberalizing their currencies and drastically cutting costs in exchange for loans, did not address Africa’s economic woes.

“The 21st century, though, introduced a significant new banker – China,” Fabricus stated.

According to the expert, instead of conditionalities, China prided itself on giving or lending money with “no strings attached.”

The IMF stated nonetheless, despite the different approach, the number of sub-Saharan African countries in debt distress or facing high risk of debt distress rose from seven in 2013 to 12 in 2016.

“And so, African countries are returning to the IMF to seek bailouts,” said Fabricus.

The analyst noted China’s unconditional loans for infrastructure had considered the borrowing countries’ abilities to service the loans.

Likewise, this time around, IMF is not quite so demanding about opening economies but it is still insisting that African countries who want loans cut their spending, he added.

South Africa must swiftly slash government borrowing if it is to avoid a debt trap that would force it to seek help from IMF, Finance Minister Tito Mboweni warned.

Recently, IMF downgraded the GDP expansion for Africa’s two biggest economies-Nigeria and South Africa respectively.

IMF cut growth projections for Nigeria to 1,9 percent. South’s economy is projected to grow by 0,8 percent, down from 1,5 percent.

Newly-appointed South African Finance Minister, Tito Mboweni, consequently urged government against borrowing. This, he said would force the country to seek assistance from the IMF.

“When you get into a debt trap that’s where (at IMF) you end up,” he told parliamentarians.

Angola Investor Risk 12 Page Insight – The End of a Honeymoon

Investors are becoming concerned with entrenched state corruption and the persistently weak state of the economy – Report

United Kingdom, August 23, 2018/ — EXX Africa ( published a special report on the investment risk outlook on Angola.

Download the report:


An oil offshore platform off the coast of Angola, Africa’s second largest oil producer. Photo credit, CNN

Since gaining power one year ago, Angolan President João Lourenço has enjoyed the benefits of renewed market optimism and fresh investor interest in the important oil-producing African economy. However, there are growing indications that the new government’s ‘honeymoon’ period is over as investors are becoming concerned with entrenched state corruption and the persistently weak state of the economy.

Lourenço has launched a high profile crack-down on corruption and sought to end industry monopolies. However, so far the only graft cases pursued by his administration have been politically motivated, thus allowing the new president to remove critics and to stake out his new political territory.

In fact, President Lourenco’s touted anti-corruption stance is more indicative of concerted attempts to dismantle his predecessor’s influences and consolidate total power over Angola’s political institutions than any meaningful attempts at reform. This remains evident in the oil sector, where his government has been reluctant to pursue much-needed reforms. Entrenched patronage and rent-seeking structures have been put in place at state oil company Sonangol, facilitating embezzlement at the highest level of the administration.

Lourenço has also appointed prominent individuals tainted by corruption and mismanagement allegations into important government positions. Charges against former vice president Manuel Vicente, who now holds sway over Angola’s central bank and Sonangol, could be reinstated as soon as a new government takes power in Portugal or political sentiment in the US swerves into a different direction.

Meanwhile, recent contract cancellations of major infrastructure projects, officially touted as part of a transparency drive, are more likely motivated by a desire to seek fresh rents from foreign investors participating in those projects. ‘White elephant’ projects, like the new Angola airport, are undermining Lourenço’s image as being reform-minded and transparent.

While the economic outlook is tentatively brighter than a year ago, the new government is seeking billions more in financing from Chinese banks to fund infrastructure expansion and to keep distressed state finances afloat. Just when concerns over Angola’s debt sustainability were calming, the government is committing to another massive Chinese debt pile-up. This bodes ominously for the repayment of arrears to foreign contractors and even Angola’s ability to service its latest Eurobonds.

Rising food prices, frequent strike action, and public sector cuts are triggering protests and increasing the risk of riots in Angola’s cities. If Lourenço’s government does not soon fully commit to broad oil sector reform and prudent fiscal management, as well as actively embrace transparency initiatives, the investment outlook for Angola is set to deteriorate sharply as investors lose faith in Lourenco’s stewardship of the economy.

IMF team says improving the business climate in Angola is critical for economic diversification and growth

An International Monetary Fund (IMF) team led by Ricardo Velloso visited Luanda from March 1-15, 2018, to conduct discussions for the 2018 Article IV consultation has advised the government that improving the business climate is critical to tackle impediments to economic diversification and growth.

  • The Angolan economy is experiencing a mild economic recovery.
  • The new administration is rightly focused on restoring macroeconomic stability and improving governance.
  • Improving the business climate is critical to tackle impediments to economic diversification and growth.

Mr. Velloso issued the following statement:

Angola“The Angolan economy is experiencing a mild economic recovery. The new administration is rightly focused on restoring macroeconomic stability and improving governance. Also, the more benign outlook for oil prices opens a window of opportunity to strengthen macroeconomic policies and give new impetus to structural reforms, allowing Angola to realize its full potential.

“In 2018, output growth is projected to accelerate to 2¼ percent, compared to 1 percent last year, driven by a more efficient foreign exchange allocation system and additional availability of foreign exchange due to higher oil prices; LNG production inching up to full capacity; and improved business sentiment. Annual inflation is projected to remain high, reaching 24¾ percent by end-year reflecting, inter alia, the effect of the kwanza depreciation. Over the medium term, the outlook is for a continued gradual recovery in economic activity, but there are risks, including a decline in oil prices and slippages in the implementation of the needed structural reforms to promote economic diversification.

“Fiscal policy was loosened last year, and the overall fiscal deficit widened to about 6 percent of GDP in 2017, while public debt, including the debt of Sonangol and TAAG, reached 64 percent of GDP. The recently-approved budget for 2018 appropriately aims at a significant fiscal retrenchment, reducing the deficit to 3½ percent of GDP under a conservative oil price assumption. Higher oil prices than envisaged in the budget would result in a revenue windfall that should be used to clear domestic payments arrears faster and/or retire public debt. Gross financing needs in 2018 are substantial, but appear manageable in the current favorable external environment. Gradual fiscal consolidation over the medium term will be needed to put public debt, as a share of GDP, on a clear downward path.

“The authorities’ objective of lowering public debt to under 60 percent of GDP over the medium term provides an adequate fiscal anchor. This objective would be consistent with a non-oil primary fiscal consolidation path averaging ¾ percent of GDP annually until 2023. This fiscal effort would be achieved by ongoing efforts to enlarge the tax base, including by introducing a VAT on January 1, 2019, as planned; and rationalizing public spending. These fiscal consolidation efforts should be complemented by containing contingent liability risks; improving the quality of public investment; adjusting domestic fuel prices to reflect changes in international fuel prices and the exchange rate; expanding well-targeted social programs to protect the most vulnerable and reduce poverty; and implementing a medium-term fiscal framework, focusing on a well-designed fiscal stabilization fund to reduce procyclicality of spending.

“Downsizing the public corporate sector in important to reduce their burden on the Treasury and increase economic efficiency. Insolvent state-owned enterprises should be closed; and economically viable but inefficient SOEs should be restructured and/or privatized. In this connection, Sonangol’s restructuring should make it leaner, more efficient, and focused on its core businesses.

“The National Bank of Angola (BNA) has appropriately tightened monetary policy to support the new exchange rate regime and, so far, the pass-through of the depreciation to inflation appears to have been contained. The parallel-official exchange rate spread has been significantly reduced, but remains wide reflecting short-term pressures in the foreign exchange market as a backlog of foreign exchange purchase orders is gradually eliminated. Completing the transition to a fully functioning foreign exchange market will require further reforms to the foreign exchange allocation mechanism, including phasing out direct sales.

“The banks’ balance sheets need to be strengthened to help with economic recovery and foster inclusive growth. Central to this objective is raising the efficiency of the state-owned banks, by fully implementing their restructuring plans. In the case of BPC, restructuring efforts should be accelerated, and further recapitalization should be made conditional on demonstrable actions that the restructuring plan approved in early 2017 is on track.

“Implementation of structural reforms is critical to tackle impediments to economic diversification and growth. Achieving these objectives requires addressing: (i) the weak insolvency processes, protection of minority shareholders, and contract enforcement; (ii) the still limited access to finance; (iii) the large footprint of the State in the economy; and (iv) governance issues. The Law on Competition and the Private Investment Law under consideration in the National Assembly are welcome steps in the right direction of improving the business climate and fostering the private sector.

“The mission met with Minister of State for Economic and Social Development Manuel Nunes Júnior, Finance Minister Archer Mangueira, Economy and Planning Minister Pedro da Fonseca, Commerce Minister Joffre Van-Dúnem Júnior, Public Administration and Social Security Minister Jesus Faria Maiato, National Bank of Angola (BNA) Governor José Massano, and other senior officials of the executive branch. The mission also held discussions with members of the Economic and Finance Committee of the National Assembly, and representatives from the financial sector, the non-financial private sector, the state-owned oil company Sonangol, the sovereign wealth fund, the diplomatic and IFI community, and non-governmental organizations.

IMF team says Angolan economy enjoys a mild recovery this year but significant macroeconomic imbalances remain

The Angolan economy is enjoying a mild recovery this year but significant macroeconomic imbalances remain, says a visiting International Monetary Fund (IMF) team led by Ricardo Velloso.

  • The Angolan economy is enjoying a mild recovery this year but significant macroeconomic imbalances remain.
  • The new Government is fully aware of the imbalances and has approved a plan to begin addressing these challenges.


The team led by Ricardo Velloso visited Luanda during November 6-15, 2017, to prepare the groundwork for the Article IV consultation mission expected in early 2018, and to hold preliminary discussions on the new government’s economic policy and reform plans to address macroeconomic imbalances and improve economic growth prospects.

Velloso said Output is projected to grow 1.1 percent and the external current account to narrow to 5.2 percent of GDP as Angola’s terms-of-trade improved.

“However, inflation remains high. Despite increased sales of foreign exchange by the National Bank of Angola that reduced net international reserves to US$14.9 billion in October, the spread between the parallel and official market exchange rate remains wide and a backlog of foreign exchange purchase requests in commercial banks still exists.

“Macroeconomic imbalances need to be tackled decisively. The new government is fully aware of the challenges and recently approved a six-month plan ( Plano Intercalar) to guide policy actions until the National Development Plan 2018-2022 is unveiled. The mission took stock of recent economic developments, and got acquainted with the authorities’ plans to address macroeconomic imbalances. The Plano Intercalar is adequately focused on the goals of stepping up fiscal consolidation efforts, introducing greater exchange rate flexibility, and improving governance and the business climate to promote faster and inclusive growth as well as economic diversification.