Page 6 - DMEA Week 26 2022
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DMEA COMMENTARY DMEA
Towards a new
gas tax regime
for Angola LNG
The National Assembly authorises Angola’s president to reduce tax rates on purchases
of natural gas, which is currently a less attractive feedstock than associated gas.
AFRICA LAST week, Angola’s government took a step plant, and in 2013, they brought the $12bn
towards authorising a new tax regime for the Angola LNG plant on stream in Soyo.
Angola LNG project. It did not do so directly, via The plant is now operated by a consortium
WHAT: the adoption of new tax legislation, but through that includes subsidiaries of Chevron (US), BP
MPs have given President the passage of a bill that gives the country’s pres- (UK), Eni (Italy), TotalEnergies (France) and
Lourenço the power to ident the power to decide the matter. Sonangol, the national oil company (NOC) of
cut tax rates for natural The bill came up for a vote in the National Angola, and it is capable of turning out 5.2mn
gas purchases. Assembly, Angola’s unicameral legislature, on tonnes per year (tpy) of LNG at its single pro-
June 23. It passed easily, with 133 MPs voting for duction train.
WHY: it and only one against, with no abstentions, and Most of Angola LNG’s feedstock is associated
Under existing is now due to go to President João Lourenço for gas from offshore fields that are being developed
arrangements, Angola endorsement. by its shareholders. However, the facility also
LNG receives associated Angola’s Secretary of State for Petroleum and processes natural gas from a number of offshore
gas for free. Gas José Barroso had said when presenting the deposits.
draft bill to the National Assembly that the meas-
WHAT NEXT: ure would give Lourenço the authority to make Different tax regimes
Luanda has incentives changes to the tax regime governing the Angola Under Angola’s current tax laws, there is a dif-
to pay attention to LNG LNG project. ference in the way these two production streams
exports in light of the He also indicated, though, that the president’s are treated.
Russia-Ukraine struggle, intent was not to gain additional power but to More specifically, Angola LNG currently
but it must also invest in make specific changes. receives associated gas for free, with no tax
domestic capacity. One of these changes will be a reduction in charged. However, it must purchase natural gas
the tax burden shouldered by the group of inter- from the producer – that is, from the company
national oil companies (IOCs) that is operating or companies that operate the field where the gas
the Angola LNG plant, Barroso explained. originated – and pay a tax on it.
He said Luanda wanted to cut the tax rate This policy puts natural gas suppliers at an
levied on purchases of natural gas to support obvious disadvantage, as it makes their feedstock
wider efforts to promote the development of the far less competitive than associated gas.
domestic natural gas sector, such as the forma- As such, it has the potential to hamper the
tion of the New Gas Consortium (NGC) and the government’s efforts to promote the develop-
passage of a gas law. ment of the country’s natural gas resources by
reducing its attractiveness to a major local con-
Associated vs. natural gas sumer of gas.
The initiative makes sense in light of the origins And for the foreseeable future, Angola LNG
of the Angola LNG project. will be central to those efforts. As Barroso noted
Angola didn’t start producing LNG because it on June 23, Luanda has made the gas liquefaction
possessed large amounts of natural gas. Rather, plant a key component of its gas development
it did so because it had large amounts of crude plan by obligating NGC to sell future production
oil, with considerable volumes of associated gas from the Kiluma, Maboqueiro, Enguia Norte,
in the mix. Atum and Polvo fields to the Angola LNG con-
In the late 1990s, several of the IOCs working sortium for processing and export.
in its offshore zone began considering the ques- Currently, there is no other facility in the
tion of what to do with this gas. They decided country capable of liquefying or otherwise treat-
that they had enough to support a liquefaction ing gas.
P6 www. NEWSBASE .com Week 26 30•June•2022