The information was advanced by the Minister of Mineral Resources, Oil and Gas, Diamantino de Azevedo, in the National Assembly, during the discussion and approval of the Legislative Authorization Project that authorizes the President of the Republic, as holder of executive power, to legislate on the alteration of the Tax Regime Applicable to the Oil Concession in the Maritime Zone of Cabinda.
The law passed unanimously, with 197 votes in favour, aims to extend the concession contract for Block 0, for an additional period of 20 years, with effect from 2030, as well as the granting of tax incentives and benefits, which culminated in the approval and publication of presidential decree n.º 5/22, of 23 July.
Diamantino de Azevedo said that the previous contract, due to expire in 2030, provided for the recovery of around 600 million barrels of oil, with the State responsible for 85 percent and associated companies 15 percent.
According to the minister, the renewal of the contract until 2050 will make it possible to invest US$15 billion from 2022, which should guarantee the production of over 800 million barrels, with the State 70 percent and the associated companies 30 percent.
“However, the State will raise additional revenues in the order of 13 billion dollars, making a total of 27 billion dollars.
The Angolan official stressed that the extension of Block 0 will also make it possible to increase the supply of natural gas for the production of electricity to the Malembo Thermal Power Station and boost the reduction of fuel costs by around US$100 million per year.
“As an example, as a result of investments made in light of the extension of this concession contract, the volumes of gas supplied to the Malembo Thermal Power Station for the production of electricity increased from around 11 million cubic feet to 26 million cubic feet , allowing for the operation of three of the four turbines installed there on gas”, pointed out the minister, stressing that the objective is to reach 50 million cubic feet in the coming years.
The Minister of Mineral Resources, Oil and Gas also highlighted that the continuity of operations in Block 0 will be of great use for the Cabinda Refinery project, which has already allowed job creation for young people in that province and the country in general, as well as such as the integration of local companies in the provision of services.
“During the construction phase of the refinery, 600 jobs are expected to be created, which could rise to 2000 during the construction phase”, he underlined.
With regard to social impacts, Diamantino de Azevedo informed that, as a result of the extension of the concession contract, social contributions of two million dollars a year are foreseen, to be applied essentially in projects in the field of education and health in Cabinda.
“It should be noted that within the scope of the social responsibility actions of this concession, from 2017 to 2022, more than 20 million dollars were invested in social projects in the field of health, education and economic development of this province”, noted the minister.
Block 0 is located in the shallow waters of the Lower Congo Basin, being an oil concession where the State, represented by the oil company Sonangol, holds the largest stake, that is, it is the largest investor, with 41 percent.
Oil exploration in this block began in 1960 and in 1965 the first commercial discovery was made, with production beginning in 1968.
“Despite the degree of maturity in terms of exploration and production, Block 0 has a prospective resource potential in addition to already identified contingent resources, which, when developed, will contribute to a significant increase in production in this Block and consequently in the country, mitigating the impact of the decline in production, which is currently taking place”, stressed the minister.
According to Diamantino de Azevedo, the diploma in force does not enshrine one of the principles negotiated between the national concessionaire and the associates of Block 0, namely the principle of retroactivity of the fiscal legal effects of extending the concession on 1 January 2022; transitory rules related to the change of regime applicable to fixed assets; deductible costs; natural gas regime; way of calculating the internal rate of return and concept of resources to be developed.
