The fiscal terms applicable to Blocks 30, 44 and 45 in the Namibe Basin, Angola, have been amended and improved through Presidential Decrees 109/23, 110/23 and 111/23, of 3 May 2023. This follows a Memorandum of Understanding signed on 14 March 2023 between Angola’s national concessionaire and regulatory body, the National Agency for Oil, Gas and Biofuels (ANPG), national oil company Sonangol and U.S. supermajor ExxonMobil. ExxonMobil is the operator of the blocks with a 60% participating interest in the respective Risk Service Contracts (RSC), with Sonangol retaining a 40% interest.

The new, improved terms are as follows:

• Investment Premium – 40% on all amounts invested and capitalized in each fiscal year from 1 January of the year of commencement of production;
• Production Premium – A percentage on the volumes of oil and gas used to calculate gross income as follows:

South African oil company Sasol has recently announced the discovery of natural in area PT5-C, located in the southern part of Inhassoro District, Inhambane Province, Mozambique. This discovery was made following the drilling (between 25 March – 5 April) of the Bornito-1 exploration well which reached a maximum depth of 1934 meters in lower cretaceous sediments. This was the second well drilled in the area, and the first successful as the first drilled well – Dourado-1 – did not find any hydrocarbons.

The following is a brief summary of some key legal and contractual terms which support the PT5-C license:

• The license was given under “Concession Agreement for Exploration and Production” signed on 17 October 2018 following Mozambique’s 5^th Licensing Round.
• The concession holders are Sasol Mozambique PT5-C Ltd, the operator with a 70% participating interest, and Mozambique’s parastatal oil company Empresa Nacional de Hidrocarbonetos, E.P. (ENH) with a 30% free carry interest.
• The concession area has a size of about 3012 km2 and is located between the Pande and Temane fields.
• The discovery was made within the first exploration sub-period which has a maximum duration of 48 months. A second and third exploration sub-periods will follow, with a maximum duration of 24 months each, for a total exploration term of 8 years.
• The minimum work commitments for the exploration period are as follows:

First sub-period (48 months):

• Acquisition of 1.600km of 2D seismic data
• Drilling of 2 exploration wells
• Seismic studies worth a minimum of USD 5 million

Second sub-period (24 months):

• Drilling of 1 exploration well
• Seismic studies worth a minimum of USD 5 million

Third sub-period (24 months):

• Drilling of 1 exploration well
• Seismic studies worth a minimum of USD 5 million

Cost recovery is capped at 60% of Disposable Petroleum (Cost Petroleum).

• Profit Petroleum is shared between the Government and the Concessionaire in accordance with the following scale:

• Production Bonuses are due to be paid by the Concessionaire to the Government at the following events:

The Angolan government has just approved an Operational Framework for Sustainable Finance (the “Framework”) through Presidential Decree 106/23, of 2 May 2023. The Framework was developed in the context of Angola’s commitment to the United Nations Sustainable Development Goals (SDG) and closely follows international standards and best practices, including the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines of the International Capital Market Association (ICMA) and the Loan Market Association (LMA).

Below is an outline of the Framework:

1- Objective: The Framework is aimed at ensuring that Angola’s recourse to international financing is done through sustainable debt instruments which are aligned with the country’s environmental and social strategies.

2- Types of Debt Securities: Under the Framework, Angola may issue the following types of sustainable international bonds and other debt securities:
– “Green Format” – To support environmental projects;
– “Social Format” – To support social projects;
– “Sustainable Format” – To support environmental and social projects.

3- Eligible Projects: The types of eligible projects that may be financed through these instruments include the following:

Green Projects
– Renewable energy;
– Pollution prevention and control;
-Environmental protection;
– Sustainable water use;
– Sustainable oceans (blue economy)

Social Projects
– Education;
– Health;
– Basic infrastructure;
– Support of vulnerable population; 
Employment and competitiveness.

These may consist of new or existing projects. However, refinancing of existing projects should not exceed 25% of total financing raised.

4- Excluded Projects: Projects in the following areas are expressly excluded from sustainable financing under the Framework:
– Hydro plants above a set carbon intensity;
– Exploration and production of fossil fuels; 
– Railways for transportation of fossil fuels;
– Nuclear energy;
– Defense;
– Alcohol, arms, tobacco and gambling/gaming;
– Deforestation;
– Any environmentally harmful or illegal activities.

5- Project selection: Project selection is done by an “ESG Inter-ministerial Committee” (ESG Committee). All projects must be included in the government’s Annual Budget.

In order to be selected, projects must be:

• Aligned with Angola’s National Development Plan;
• Economically and environmentally viable;
• Technically sound;
• Impactful on the population;
• Assessed for their legal, financing and operational risks.

6- ESG Committee: The ESG Committee is responsible for managing the international sustainable financing program under the Framework, including selecting eligible projects, approving costs/estimates, allocating funds, producing reports etc..The ESG Committee is chaired by the State Minister for Economic Affairs, and includes the Finance Minister and the Economy and Planning Minister.

The ESG Committee will hold an annual meeting to approve eligible projects and another meeting to prepare an annual report.

7- Reporting: The government will produce annual reports to investors on the progress of financed projects, including the following information:

• Summary/description of such projects;
• Funds allocated to each project;
• Ratio new projects/refinancing of existing projects;
• Reallocation of resources, if any;
• Co-financing, if any.
• The reports will be audited by an independent external firm.

8- Compliance: Moody’s affiliate V.E. (formerly Vigeo Eiris) was appointed to assist in the Framework development, implementation and compliance.