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Parliament authorizes PR to legislate on changes to the Angola LNG project

The National Assembly approved this Thursday the draft law that authorizes the President to legislate on changes to the Angola LNG Project's tax regime, which, among other objectives, aims to not apply a gas tax to the generated revenues.

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The bill, which was approved with 133 votes in favour, one against and no abstentions, aims to make the gas tax non-applicability to revenues generated from gas acquired for consideration, informed the Secretary of State for Petroleum and Gas in the presentation of the document.

José Barroso stressed that it is also an objective to reduce the gas rate adjustment factors by 30 percent, "during phase II, as defined in paragraph 5 of article 39 of the decree-law of the project, concerning Angola's revenues LNG [Liquefied Natural Gas] generated by the gas supplied at zero transfer cost".

The attribution of the right to deduct the costs incurred by Angola LNG with the purchase of gas in terms of tax on oil income is also the object of this draft law.

The Secretary of State for Oil and Gas said that this is a measure that is part of the priority actions of the oil and gas sector and essentially aims to encourage the start of production of non-associated natural gas in Angola, as well as to develop projects to be they associated.

The official stressed that the executive outlined a strategy for the development, use and monetization of natural gas not associated with oil, having approved the gas law for this purpose.

"And, as a result, the national concessionaire, the National Agency for Petroleum, Gas and Fuels, invited Sonangol and the international operating companies present in Angola to form a gas consortium that was conventionally called Novo Consórcio de Gás", he said.

According to José Barroso, the operationalization of the New Gas Consortium will bring, among other benefits, the increase in revenues for the State, in the supply of natural gas to the domestic market, being able to achieve self-sufficiency in cooking gas, develop the petrochemical and steel industry, with special attention to the fertilizer industry and promoting other sectors of the national economy, including the production of electricity using natural gas.

The New Gas Consortium will enter into a risky services contract with the national concessionaire, and for this purpose mining rights will have to be assigned to areas already identified, said José Barroso.

In this sense, the official continued, the national concessionaire negotiated with Angola LNG the waiver of the exercise of mining rights in the Kiluma, Maboqueiro, Enguia Norte, Atum and Polvo areas, which implies a change in the tax legal regime of the Angola LNG project.

Angola LNG is the only factory with facilities that allow the treatment and liquefaction of natural gas for export, the Secretary of State stressed, "so the New Gas Consortium must sell all its gas or gas for produced to this project, so that Angola LNG can process this gas and export it".

"Given that the tax regime approved by Decree-Law no. 10/07, of 3 October, provides for the payment of a gas tax and the adjustment factors of phase II of that tax prove to be adverse to the profitability and sustainability of the Angola LNG project, in a gas purchase scenario, impose change in the tax regime applicable to this project, with a view to granting tax incentives that ensure the continuity of its viability", he said.

José Barroso stressed that the incentives are based on the assumption that Angola LNG will simultaneously process associated gas free of charge and purchase non-associated gas from other operators, at this stage, in particular, from the new gas consortium.

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