Angolan President Joao Lourenco is expected to approve by June a law that will offer new incentives to expand production in offshore blocks, a top energy official said, the latest step to boost investment and stabilise output in its mainstay sector.
The law is among a slew of recent regulatory changes aimed at overhauling the oil and gas industry in Angola, which has been wooing Chinese and U.S. investors since leaving OPEC to protect its domestic production targets.
The incremental production decree is expected to benefit Angola’s offshore Block 17, described by operator TotalEnergies CEO Patrick Pouyanne as a “golden block” when production licences were extended to 2045.
The extension five years ago granted Angola’s Sonangol an initial 5% interest in the field from TotalEnergies and consortium partners Equinor, ExxonMobil and BP.
“The decree… is expected to be approved by the National Assembly and the Angolan President before the end of the second quarter of this year,” Paulino Jeronimo, CEO of Angola’s national oil and gas company ANPG, said.
Sweeping incentives include reductions in royalty and petroleum production taxes, and scope to contractually alter two key metrics affecting returns – cost oil and profit oil.
“For example, to accelerate cost recovery there is a higher cost oil limit so that all costs are recovered faster, thus reducing the investor’s financial exposure,” Jeronimo told Reuters in an emailed response to queries.
The decree also allows for the recovery of exploration costs regardless of well results, he said, adding that a new oil and gas auction round offering at least nine offshore blocks in the Kwanza and Benguela Basins will be launched next year.
Sub-Saharan Africa’s second largest oil producer, Angola will maintain production of around 1.1 million barrels per day in the foreseeable future, officials said.
Jeronimo said a letter of agreement was signed with TotalEnergies in March to develop new opportunities at Dalia field where one of four floating production platforms (FPSOs) operate in Block 17.
TotalEnergies did not respond to requests for comment.
As part of negotiations with the French energy company, Jeronimo said an investment of around $7 billion to extend the life of Dalia FPSO platform could see accumulated production of 500 million barrels of oil (mbl) by 2045, up from 110 mbl in 2030.
“This will only be possible due to the incentives granted with the incremental production decree,” he said.
(additional reporting by America Hernandez in Paris, editing by Emelia Sithole-Matarise)