Page 6 - GLNG Week 26 2022

GLNG COMMENTARY GLNG

Towards a new gas tax

regime for Angola LNG

COMMMENTARY LAST week, Angola’s government took a step working in its offshore zone began considering
towards authorising a new tax regime for the the question of what to do with this gas. They
Angola LNG project. It did not do so directly, via decided that they had enough to support a liq-
the adoption of new tax legislation, but through uefaction plant, and in 2013, they brought the
the passage of a bill that gives the country’s pres- $12bn Angola LNG plant on stream in Soyo.
ident the power to decide the matter. The plant is now operated by a consortium
The bill came up for a vote in the National that includes subsidiaries of Chevron (US), BP
Assembly, Angola’s unicameral legislature, on (UK), Eni (Italy), TotalEnergies (France) and
June 23. It passed easily, with 133 MPs voting for Sonangol, the national oil company (NOC) of
it and only one against, with no abstentions, and Angola, and it is capable of turning out 5.2mn
is now due to go to President João Lourenço for tonnes per year (tpy) of LNG at its single pro-
endorsement. duction train.
Angola’s Secretary of State for Petroleum and Most of Angola LNG’s feedstock is associated
Gas José Barroso had said when presenting the gas from offshore fields that are being developed
draft bill to the National Assembly that the meas- by its shareholders. However, the facility also
ure would give Lourenço the authority to make processes natural gas from a number of offshore
changes to the tax regime governing the Angola deposits.
LNG project. He also indicated, though, that
the president’s intent was not to gain additional Different tax regimes
power but to make specific changes. Under Angola’s current tax laws, there is a dif-
One of these changes will be a reduction in ference in the way these two production streams
the tax burden shouldered by the group of inter- are treated.
national oil companies (IOCs) that is operating More specifically, Angola LNG currently
the Angola LNG plant, Barroso explained. He receives associated gas for free, with no tax
said Luanda wanted to cut the tax rate levied on charged. However, it must purchase natural gas
purchases of natural gas to support wider efforts from the producer – that is, from the company
to promote the development of the domestic or companies that operate the field where the gas
natural gas sector, such as the formation of the originated – and pay a tax on it.
New Gas Consortium (NGC) and the passage of This policy puts natural gas suppliers at an
a gas law. obvious disadvantage, as it makes their feedstock
far less competitive than associated gas. As such,
Associated vs. natural gas it has the potential to hamper the government’s
The initiative makes sense in light of the origins efforts to promote the development of the coun-
of the Angola LNG project. try’s natural gas resources by reducing its attrac-
Angola didn’t start producing LNG because it tiveness to a major local consumer of gas.
possessed large amounts of natural gas. Rather, And for the foreseeable future, Angola LNG
it did so because it had large amounts of crude will be central to those efforts. As Barroso noted
oil, with considerable volumes of associated gas on June 23, Luanda has made the gas liquefaction
in the mix. In the late 1990s, several of the IOCs plant a key component of its gas development

P6 www. NEWSBASE .com Week 26 01•July•2022