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How Privatisation is Strengthening Sonangol’s Competitiveness

How Privatisation is Strengthening Sonangol’s Competitiveness

Angola plans to complete the privatisation of the country’s national oil company (NOC) Sonangol by 2026, falling in line with its strategy to modernize the economy and attract private investment.

As part of the strategy, the government will make public 11 Sonangol processes through public tenders, limited tenders and IPOs on the stock exchange. Privatization is expected to enhance the competitiveness of the company, enabling Sonangol to prioritize its activities as an operator in the market.

The success of Angola’s privatisation program will be explored during the Angola Oil & Gas (AOG) conference – taking place October 2-4 in Luanda. AOG 2024 connects global investors with Angolan companies towards a common goal of driving exploration and development in the country.

Privatization: A Catalyst for Growth

The privatisation of Sonangol comes as part of Angola’s Propriv initiative, which aims to improve economic reform towards free markets, increase competition between companies and reduce barriers into markets through the privatization of 195 state-owned companies. Sonangol’s privatization strategy is poised to position the company as an international competitive oil and gas operator by permitting access to private sector financing and small investors while bringing access to new markets.

Sonangol’s privatisation began under the oversight of Angola’s Institute for Management of State Assets and Stakes in 2021 when the country placed 30% of the company’s stake on offer. In June 2022, Sonangol divested its 10% stake in Angolan banking company Banco BAI during the country’s first IPO of shares.

Sub-Saharan Africa’s Largest Oil Producer

Boasting an asset value of $51.5 billion and an employee-base of 13,000 workers, Sonangol is one of the largest oil producers in sub-Saharan Africa. Sonangol’s business activities include the prospecting, production, development, research, marketing, storage, transportation, and refining of hydrocarbons in the country.

The company boasts over 30 subsidiaries and affiliated companies across the globe, and combines its expertise with international oil companies including TotalEnergies and Eni, having partnered with their JV Azule Energy in December 2023 to assess Blocks 46, 17 and 18/15 in Angola’s offshore Lower Congo Basin. Meanwhile, energy supermajor ExxonMobil is expected to inject as much as $15 billion into the development of hydrocarbon reserves in Angola’s offshore Namibe Basin by 2030 following the improvement of fiscal terms by Sonangol to make exploration in the area more competitive.

As the company prepares the ground for drilling and evaluation of onshore Block KON 11 in the Kwanza Basin, Sonangol is poised to improve the mapping of the block’s structures while restarting production. In August 2023, Sonangol announced that construction of its Research and Development Center is nearing completion. Expected to drive local content development, the facility will provide specialized training in key areas such as oil and gas, mineral studies, renewable energy and biofuels.

The NOC was stripped of its function as national concessionaire for oil and gas projects following the establishment of the Angola National Oil, Gas and Biofuels Agency (ANPG) in February 2019. The move came as part of President João Lourenço’s economic diversification efforts to implement wide-ranging legal reforms and other measures to reduce the country’s reliance on oil resources for revenue.

Reigniting Investor Confidence

Serving as a mainstay of Angola’s economy, the petroleum industry accounts for over a third of the country’s GDP, roughly 90% of its exports and 70% of the government’s total budget revenues. However, the country’s crude oil production levels have been trending downward due to the maturation of existing fields. As such, the privatization of Sonangol is expected to reignite investor confidence in the country and encourage foreign players to search for new resources in the untapped sections of its offshore zone.

AOG is the largest oil and gas event in Angola. Taking place with the full support of the Ministry of Mineral Resources, Oil and Gas; national oil company Sonangol; the National Oil, Gas and Biofuels Agency; the African Energy Chamber; and the Petroleum Derivatives Regulatory Institute, the event is a platform to sign deals and advance Angola’s oil and gas industry.

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