Sonangol selects bidders for divestments

(PE) Angolan NOC selects preferred bidders—with exclusive acquisition rights—to buy partial stakes in six blocks, four of which are already in production

Angola’s Sonangol called last year for bids on portions of its equity shares in various blocks and has been evaluating the results since September. The NOC has now selected preferred bidders for its planned divestments.

AIM-listed independent Afentra is in pole position for 20pc of block 3/05. A consortium comprising Namibian NOC Namcor, Euronext Access-listed Sequa and private Angolan firm Petrolog has been selected for 10pc of block 15/06. And Sonangol has opted for another consortium, consisting of private Angolan company Somoil and Africa-focused developer Sirius, for 8.28pc and 10pc stakes of block 18 and block 31 respectively. All four blocks are already in production.

And Sonangol has also selected preferred bidders for two exploration blocks, 23 and 27. A consortium comprising Namcor, Sequa and Petrolog is positioned to operate block 23 with a 40pc stake, while Afentra has also been tapped to buy a 40pc non-operated stake. The same three-company consortium was also chosen to operate block 27 with 35pc, while the Somoil and Sirius combination is set to acquire a 25pc non-operated share.

But Sonangol originally offered interests in a total of eight blocks; no preferred bidders have been selected for blocks 4/05 and 5/06. It is not clear if Sonangol is still in the process of evaluating bids or even still seeking partners for those blocks.

Afentra, Somoil and Sirius

One of the successful preferred bidders, Afentra, confirms that it was negotiating the SPA for the blocks with Sonangol over the course of the first quarter.

“The next steps will involve finalising the SPA and completing the final due diligence required… There is, however, no guarantee at this stage that an agreement will be reached,” the firm says. Afentra was one of six initial bidders on block 3/05 but one of only two on exploration block 23.

Similarly, the Somoil-Sirius consortium confirms that it too “will be meeting with Sonangol in due course to finalize the SPA for the proposed acquisition”. Block 18, in which it will now be taking a minority stake, is currently operated by BP—although BP and Eni recently agreed to combine their Angolan assets into a new standalone joint venture—and includes the Greater Plutonio complex and Platina project. Similarly, block 31 is also operated by BP and is the location of the Plutao, Saturno, Venus and Marte oil fields.

These are “world-class producing assets”, Sirius CEO Bobo Kuti says, while “our partnership with Somoil has provided a strong platform for the proposed acquisition”.

Blocks 18 and 31 are both located in deep water. “Entering ultra-deep waters not only enhances our portfolio but represents a huge step towards becoming a major player in the energy industry in Angola,” says Somoil CEO Edson Dos Santos.

Upstream decline

Farming down “is part of Sonangol’s strategy of repositioning and sustainability of its investment portfolio”, the state-owned company says. Angola is attempting to reverse a long-term decline in its oil output, and this greater distribution of interests is likely intended to spur renewed investment in the upstream sector. The success of private Angolan companies and Namibia’s Namcor is this latest bidding process is notable, as many IOCs have turned away from mature oil-producing assets in favour of larger-scale, gas-producing investments with lower carbon intensity.

That said, in a separate bidding process with upstream regulator ANGP, Italy’s Eni, TotalEnergies and Norway’s Equinor submitted bids for two blocks in Angola’s Lower Congo basin. TotalEnergies has applied to be 100pc owner of block 16/21, while Eni and Equinor bid to be 50:50 partners in block 31/21.

Even before the Covid outbreak exacerbated the situation, Angola was already struggling to attract sufficient investment, exploration activity and project approvals to maintain production, which is declining at many of the country’s largest fields. Earlier this year, Angola was producing around 1.15mn bl/d, compared with an Opec+ quota of over 1.4mn bl/d, which was based on the country’s capacity as recently as 2018. Analysts have warned that Angolan output is likely to continue sliding and could even see a sharp drop in the coming years if new prospects and projects are not advanced quickly enough.

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