Page 11 - AfrOil Week 23

AfrOil PoliCy AfrOil
law itself and the separation of regulatory super- vision from Sonangol is a good idea. As to how long it will take to be put into e ective practice, I’m not sure ... I anticipate some resistance in the migration of functions to the new agency.”
Corruption
Angola has struggled for some time with cor- ruption, which has drained its co ers and le its citizens with few bene ts from the oil rush. e International Monetary Fund (IMF) has been critical of the country’s account keeping and, in 2010, it famously raised concerns about a miss- ing US$32 billion from the Angolan budget.
Much has been made of Lourenco’s e orts to tackle corruption in the country, which was seen as a major drag on investment. e president has made some progress on this account, although his protection of Manuel Vicente – former head of Sonangol, wanted in Portugal in relation to alleged bribery of judicial gures – continues.
“It looks like Angola is moving in the right direction – in order [for Lourenco] to convince foreign investors of his intent, demonstrating progress is just as important as actually tackling the issues. ere’s a question, however, of how much rigour there is in the anti-corruption cam- paign,” assistant professor in the Department of Political Science at the University of Windsor, Jesse Ovadia, told AfrOil.
ere is a sense that progress has been made by Lourenco, commented Bovcon, “but there’s a long way to go. Corruption is so engrained among top o cials that all are considered to be involved in some way. For instance, public ten- ders are not entirely transparent.”
One of the problems in tackling such a prob- lem is a lack of transparency. e IMF has said Angola’s hydrocarbon earnings in 2016 and 2017 were US$7.9 billion and US$11.24 billion. According to data from Natural Resource Gov- ernance Institute (NRGI), based on company reporting, Angola earned US$10.56 billion and
US$11.24 billion in these respective years.
sonangol
Angola’s national champion faces a number of challenges. Sonangol’s debts escalated to such an extent that the government had to bail it out, injecting around US$10 billion into the company in a rescue bid. e company is being slimmed down – losing regulatory powers to ANPG – and is said to be considering the sale of its interests in various blocks.
Verisk Maplecroft’s Bovcon noted reports that Sonangol was working on the sale of its interest in Block 32. “Partners in the project are planning more investments and Sonangol owes around US$5 billion for its share of spending. e sale of these assets might net the company US$2-3 billion. Also Blocks 20 and 21 are up for sale.”
ere may be a concern that such sales would raise corruption risks, but Bovcon was largely positive. “Oil assets up for sale are likely to go to those with the deepest pockets, so more foreign oil companies, rather than domestic o cials.”
In addition to the sale of stakes in blocks, the company is also selling o various businesses it is involved in that have little – or nothing – to do with oil. ese include Sonangol Imobiliaria e Propriedades (SONIP), Sonangol Investimen- tos Industriais (SIIND) and Clinica Girassol, which handle property, business development and healthcare respectively.
The company’s new focus has been wel- comed. In mid-December, Sonangol Finance signed up a US$1 billion five-year financing agreement, backed by African Export-Import Bank, Natixis, Societe Generale Corporate & Investment Banking and Standard Chartered Bank. is loan was intended to cover Sonan- gol EP’s spending, in line with the regeneration programme.
Re ning ambition
During the Africa Oil and Gas conference in Luanda, Lourenco spoke of plans to “ensure self-su ciency in re ned products by building new refineries and [to] increase production capacity” at existing facilities.
Sonangol then promptly announced it had signed a partners’ agreement with the United Shine consortium for the construction of a high-conversion refinery in the exclave of Cabinda. e little known group was chosen for the job in late 2018 a er a Sonangol tender that ran through 2017, taking a 90% stake in the facil- ity with Sonangol Re ning (Sonaref) retaining the remainder.
e green eld facility will have a nameplate throughput capacity of 60,000 bpd and will pro- duce gasoline, diesel, fuel oil and Jet A1.
The 2017 tendering process focused on modernising and expanding Angola’s re ning capacity, which is currently limited to the ageing Luanda re nery near the capital. e largest part
turning tides
Chinese demand for Angolan crudes has suf- fered as increased competition from US oil has taken its place. Given the owering trade war between the US and China, with Beijing announcing tari s on American crude exports, this is likely to fall off somewhat. As such, the ow of Angolan crudes to China should increase as tari s start to bite.
Statistics from the Banco Nacional de Angola report that, in 2017, China took US$19.16 bil- lion worth of crude from Angola, making up 62% of the total, of US$31.06 billion. In 2012, when Angola earned US$68.87 billion, China was responsible for US$34.16 billion, just under 50%.
Over the same period, the US went from spending US$6.02 billion on Angolan crude to US$912 million, from an 8.7% share to 3%.
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