A project-specific Value Added Tax (VAT) regime for the New Gas Consortium was created by way of Presidential Legislative Decree 6/24, of 22 May 2024. Below is an outline of the new VAT regime:

• The regime is applicable to the Petroleum Companies (Azule Energy, Chevron, Sonangol P&P and TotalEnergies) that carry out exploration, production, transport and sale of natural gas in the Concession Area of the New Gas Consortium under the respective Risk Service Contract concluded with the National Concessionaire (ANPG);
• The Petroleum Companies are subject to the section of the VAT Code specifically applicable to the petroleum industry;
• The following operations are exempt from VAT:

                       1- The importation of equipment, raw materials and other products used in the petroleum
                             operations;

                       2- The acquisition in the Angolan market of equipment exclusively and directly used in the
                             petroleum operations.

• The sale of natural gas in the Angolan market made by the Petroleum Companies is equivalent to the exportation of gas for purposes of the right of VAT deduction;
• VAT refunds may be requested by the Petroleum Company 1 month after a situation of overpayment. If refund is not processed within 1 month of request, the tax office must issue a Certificate of Tax Credit within 5 business days;
• A Certificate of Tax Credit may be used against any owed tax (including customs duties, Industrial Tax withholding and Surface Fee), with the exception of the following: (i) Petroleum Income Tax, (ii) Petroleum Production Tax, (iii) Petroleum Transaction Tax, and (iv) Workers Compensation Tax;
• The Petroleum Companies must withhold (and pay to the tax office) the VAT amount included in the invoices for the acquisition of goods and services (captive VAT) in accordance with the VAT Code;
• The captive VAT must be paid in full to the tax office (including VAT relating to operations that grant right to deduct) except in relation to the aforementioned exemptions;
• If deductible VAT is included in the exploration, development, production and abandonment costs of the Petroleum Company, same VAT shall not be deducted against Petroleum Income Tax.

Each Petroleum Company described above must create a separate entity exclusively dedicated to the New Gas Consortium activities.

The New Gas Consortium is Angola’s first non-associated gas development project. It is operated by Azule Energy with a 37.4% interest, and also includes Chevron (31%), Sonangol P&P (19.8%) and TotalEnergies (11.8%).

Rui Amendoeira, OneLegal Partner.

Presidential Legislative Decree 4/24, of 22 May 2024, and Presidential Legislative Decree 5/24, of 22 May 2024 enacted the tax incentives for the concession areas of Blocks 49 and 50, respectively. The list of incentives is as follows:

• “Qualified Marginal Zones” declared in the areas will enjoy the tax incentives set forth in Presidential Legislative Decree 6/18, of 18 May 2018. A “Qualified Marginal Zone” is defined as a deposit that:
                           1) Has recoverable reserves equal to or less than 300 million barrels and a after tax Internal Rate of Return (IRR) of less than 25%; or
                           2) Has recoverable reserves greater than 300 million barrels and a after tax IRR of less than 20%.

• The IRR is to be confirmed by the Ministry of Finance through an annual independent audit. In the event of a dispute on the IRR calculation, the National Concessionaire and/or the Joint Venture may submit the matter to an independent expert;
• The investments and costs incurred in projects aimed at reducing greenhouse gas emissions will be depreciated for tax purposes at the rate of 33.33% per year;
• Any exploration costs incurred may be deducted against revenues generated in any part of the concession area, including in the Qualified Marginal Zones;
• An Investment Premium is given as follows:
• In the amount of 30% for any capital expenditures incurred in the concession area, except in a Qualified Marginal Zone, to be deducted against Petroleum Income Tax;
• In the amount of 20% for any capital expenditures incurred in a Qualified Marginal Zone to be deducted against Petroleum Transaction Tax;
• In the amount of 30% for any capital expenditures incurred in a project aimed at reducing greenhouse gas emissions (except in a Qualified Marginal Zone) to be deducted against Petroleum Income Tax;
• In the amount of 20% for any capital expenditures incurred in a project aimed at reducing greenhouse gas emissions and located in a Qualified Marginal Zone to be deducted against Petroleum Transaction Tax.

In the event a change of law occurs after the signing of the Risk Service Contract for Blocks 49 & 50 which negatively affects the above set of incentives, the National Concessionaire and the Joint Venture must amend the said contract as necessary to restore the initial economic balance.

Blocks 49 & 50 were awarded last January and will be operated by Cabinda Gulf Oil Company Limited – Chevron’s Angolan subsidiary – under a Risk Service Contract to be signed with ANPG (National Concessionaire). The blocks are located in the ultra-deep waters of the Lower Congo Basin.

Rui Amendoeira, OneLegal Partner.