Angola is banking on a new licensing strategy to provide sufficient incentives for independent and international investors exploring the country’s oil blocs. The country has been highlighting its new plans in a bid to attract investment in the oil industry at a time when production has been declining.
In February 2019, Angola released a new Presidential Decree detailing the country’s oil licensing strategy for the next six years.
According to Adriano Rioja Ciprian, Associate Attorney at legal and business advisory services firm, Centurion Law Group, this is yet another landmark reform for the country’s hydrocarbons sector.
The legislation, officially known as ‘Presidential Decree No. 52/19’ is a continuation of Angolan President Joao Lourenco’s administration’s efforts to incentivize investments into exploration and arrest declining output.
The legislation is in line with the President’s implementation of a bullish reformist agenda that is drastically transforming the governance of sub-Saharan Africa’s second largest producer since the 2017 elections.
Angola’s oil production has been decreasing since its peak of almost 1.9 million bopd in 2008 to reach 1.478 million bopd last year.
With the objective of increasing the production of oil and gas and “ensuring the substitution of reserves to replace the evident decline in production in recent years,” the new decree hence defines the country’s new general strategy for the attribution of its petroleum concessions up until 2025.
Under the terms of the decree, petroleum concessions are to be awarded under three different modalities: public bidding, limited public bidding and direct negotiation.
“The public tender and bidding avenue follows the legally-established procedure for the award of oil concessions under a competitive auction, as detailed in Presidential Decree 86/18. Under such an auction, state-owned Sonangol is entitled to a 20% stake in research operations in the case where it is not operator of the block,” Centurion’s Ciprian explained.
Sonangol is a parastatal that oversees petroleum and natural gas production in Angola.
In May 2018, Angola had already released three presidential decrees related to the governance and regulation of its oil and gas sector.
Ciprian has concluded that the clarity provided by the new oil licensing strategy, and its endorsement by Presidential Decree is expected to provide “sufficient incentives to raise interest of African, independent and international majors in exploring Angolan acreages.”