BusinessDay 22 Aug 2018

Wednesday 22 August 2018
04 BUSINESS DAY
C002D5556
WEST AFRICA
ENERGY intelligence
ANALYSIS
Angola kicks off oil reforms as Nigeria dithers
DIPO OLADEHINDE
Unlike Nigeria’s Muhammadu
Buhari,
Angola’s President
João Lourenço
have commenced
oil reforms in its state-owned
Sonangol with the aim of boosting
production in Africa’s second
biggest oil producing country.
Since João Lourenço became
president of Africa second largest
producing oil country Angola
in September last year, he
has moved to overhaul state
owned oil company, Sonangol,
which has been criticised in
time past by transparency and
rights groups for a lack of transparency
as both producer and
regulator.
In place of state-owned Sonangol,
the Angolan government
will create a National Oil
and Gas Agency which will take
on the role of the national concessionaire
which will allow the
agency to manage oil blocks,
sell oil blocks and reduce the
near total grip state energy firm
Sonangol has over the sector.
“A government that is new in
Angola is already championing
reforms in its oil sector while we
have a government in Nigeria
who has a Petroleum Industry
Governance Bill (PIGB) right in
his front but cannot sign it into
law,” Ademola Henry, Team
Leader at Facility for Oil Sector
Transformation (FOSTER) said.
On what it will mean for
investment, “certainly investors
will want to move more to
Angola’s oil and gas industry
where there are more regulatory
efficiency than a place
like Nigeria were there are still
corruption lapses,” Henry told
BusinessDay by Phone.
Diamantino Azevedo Angola’s
Oil Minister said Sonangol’s
role as national concessionaire
will be transferred to the National
Agency of Petroleum and
Gas in the first half of next year
in a re-organisation scheduled
for completion in 2020.
“The agency will be tasked
with conducting bids for new
oil concessions, managing production-sharing
agreements as
well as representing the state
in the sharing of profits from oil
concessions,” Azevedo said in
Luanda, Angola.
Sonangol, which partners
with companies including Total
and BP to pump oil in the
southwest African nation, will
focus on the exploration, production
as well as refining and
distribution of oil and gas.
The oil minister cited irregularities
and excessive bureaucracy
at oil-bloc tenders as
some of the reasons for the decline.
Sonangol will focus on its
core business, making it more
efficient and agile.
According to the statement
from the ministry, the restructuring
of Sonangol will also
involve the shedding of underperforming
assets outside the
oil sector in which the company
invested during the oil boom
as the new model is part of series
of measures taken by Lourenço
aimed at revamping the
sector, including tax breaks for
the development of marginal
fields and new legislation for
gas rights.
Based on the new model, Sonangol’s
will focus on the exploration
and production of crude
oil and natural gas, refining and
liquefaction of gas, export and
logistics and distribution of re-
fined products and petrochemicals.
“Angola and other African
countries such as Ghana, Uganda,
Tanzania and Mozambiq
are borrowing from Nigeria’s
PIB; so they are learning from
us and putting it into actions
while Nigeria continues to allow
sentiment and patronage
obstruct its own development,”
Wumi Iledare, a Professor of Petroleum
Economics and oil and
gas expert said.
The implementation of the
new model was split into three
stages, the first one, (until December
2018) involves preparation
for the transition, the
second (January-June 2019)
the transition itself and the
third (July 2019 to December
2020) focusing on optimisation
and completion of the
new model.
“If these small African countries
are efficiently utilizing
what we rejected then it is very
sad. That is why our NNPC is
struggling and cannot compete
with its peer that started at the
same time,” Iledare said.
The process of restructuring
Sonangol, called the “Regeneration
Programme” will be made
public soon as Angola hopes
the shift will help reverse a decline
in oil output in the OPEC
member by reducing bureaucracy
and speeding up the pace
at which company investments
can be approved.
“By this act alone, Angola
will soon start attracting investment
to its deep water assets
which are not as prolific as that
of Nigeria,” Iledare told BusinessDay.
Stakeholders in Nigeria
oil and gas sector have expressed
fear that the fate that
befell the PIB that was sent to
ex-President Jonathan would
not befall this PIGB awaiting
president Buhari assent as the
two were sent for assent on
the year that precedes general
elections.
“We had a PIGB that was
thoroughly debated, thoroughly
analysed, and thoroughly
scrutinised; right now nobody
knows the fate of the bill,” Iledare
lamented.
In 2014, a harmonised Petroleum
Industry Bill (PIB)
consisting of all the four areas
of governance, administration,
fiscals and host community,
was passed and sent to former
President Goodluck Jonathan
for assent a few months before
the general elections. The bill
went with the election while
the country keeps licking the
wounds that its non-approval
inflicted on the entire economy
of the Africa’s biggest crude exporter.
“If we do not reform our
oil and gas sector quickly, we
would end up like Venezuela,”
Iledare warned.