Following the Parliament authorization given by Laws 3/23, 4/23 and 5/23, dated 21 July 2023, the President of the Republic has enacted the package of tax incentives for Blocks 30, 44 and 45. This was done by way of Presidential Legislative Decree 2/23 (Block 30), 3/23 (Block 44) and 4/23 (Block 45), all dated 8 August 2023.

The tax incentives comprise the following:

• Petroleum Production Tax (Royalty) set at 8%
• Petroleum Income Tax (PIT) set at 25%
• 3-year depreciation (at 33.33% per year) for capex
• Allowance of an Investment Premium to be deducted against PIT

These incentives are subject to the following conditions:

• The distance between the Block and the production facility must be longer than 250km at the time the Risk Service Contract is signed;
• The water depth at which a well is drilled is greater than 2000 meters.

ANPG (the Angolan Petroleum Regulator) is responsible for informing the Ministry of Petroleum (MIREMPET) and the Ministry of Finance that the above conditions have been met.

The above tax incentives will be maintained in the event of any unitization, merger or joint development between Blocks 30, 44 and 45. In the event such unitization or joint development also involves other blocks, the tax regime of each block will apply.

Blocks 30, 44 and 45 are located deep offshore in the Namibe basin. ExxonMobil is the operator in all blocks with a 60% interest, with Sonangol P&P holding the remaining 40%. The tax incentives are intended to improve the economics of the blocks and incentivize work/investment in the largely unexplored Namibe basin.

These blocks were awarded to ExxonMobil and Sonangol P&P in 2019.

Rui Amendoeira – OneLegal Partner

By way of Order 9/23, of 3 August 2023, the Angolan Central Bank (BNA) has enacted a new Home Loan Regime. The new regime is mandatory to all “systemically important financial institutions” operating in Angola. The regime is optional for the other financial institutions.  

Below is an outline of the new Home Loan Regime:

• Commercial banks are required to adopt robust credit risk policies in providing home loans, which must include:
• Undertaking a rigorous evaluation of client’s credit worthiness before granting any loan;
• Assessing the risks related to the property, the seller, and the builder as applicable;
• Monitor the implementation of the house construction project, if applicable;
• During the term of the loan, identify any situations which may increase the risk of default and take appropriate measures to mitigate such risk.
• Annual interest rates for home loans cannot exceeded the following:

For home loans:

• 7% (seven per cent) until 31 May 2032;
• From 1 June 2032, the 30-day interbank interest rate with a maximum 1% spread.

For building/construction loans:

• 10% (ten per cent) until 31 May 2027;
• From 1 June 2027, the 30-day interbank interest rate with a maximum 1% spread.

Commissions and other costs charged by the banks are subject to the following limits:

• Initial commission for granting a loan – maximum 1% of the loan value;
• Commission for extending or restructuring the loan – maximum 0.5%;
• No commissions can be charged in case of early repayment of the loan;
• The following commissions/costs can be charged separately (in addition to the 1%/0.5% limit): property evaluation, fees of building inspector, notary and registration fees, insurance, and taxes applicable on the loan.

• Home loans cannot exceed Kz 100.000.000,00 (roughly USD 120,000) per client. Only one loan can be granted per property;
• The maximum loan term is 30 (thirty) years;
• The loan cannot exceed 100% (one hundred per cent) of the purchase price or the property value, whichever is lower;
• The banks may require guarantors for the loan as they see fit;
• Information on home loan eligibility, and terms and conditions must be clearly displayed by the banks in their websites;
• The banks must submit to BNA a list of home loans granted/restructured on a monthly basis.

The granting of home loans is further subject to existing applicable legislation, including BNA Orders 14/16, of 7 September 2016, 4/19, of 26 April 2019 and 7/20, of 20 April 2020.

Rui Amendoeira – OneLegal Partner

By way of Presidential Decree 158/23, of 28 July 2023, certain project-specific transfer pricing rules have been approved for the New Gas Consortium. Under these rules, the New Gas Consortium is excluded from the general Transfer Pricing Regime (contained in Presidential Decree 147/13, of 1 October 2013) as regards the following transactions:

• Natural gas (including condensate and natural gas liquids) sales from the New Gas Consortium to Angola LNG Limited;
• Services provided by the Angola LNG project companies to the New Gas Consortium for the handling, storage, lifting and exportation of condensate.

These transactions are exempt from the Transfer Pricing Regime, and so their commercial terms cannot suffer any adjustments/corrections by the Angolan tax authorities under such Regime.

Other transactions or operations engaged by the New Gas Consortium which are not contemplated under (i) and (ii) above will be subject to the Transfer Pricing Regime.

However, the New Gas Consortium is under the obligation to prepare and submit to the tax authority the Transfer Pricing File and information required under the Transfer Pricing Regime, including as regards the exempt transactions described under (i) and (ii).

The New Gas Consortium is Angola’s first non-associated gas development project. In Phase 1 of the project the gas will come from the Block 2 Quiluma and Maboqueiro (Q&M) fields to supply the Angola LNG plant. First gas is expected in the second half of 2026, and plateau production is estimated to reach 300 mmscfd. Several new gas assets are planned to be developed in subsequent phases of the project in addition to the Q&M fields.

The project is operated by Azule Energy, the Eni/BP joint venture, with a 37.4% interest, and the consortium also includes Chevron (31%), Sonangol P&P (19.8%) and TotalEnergies (11.8%).

Rui Amendoeira – OneLegal Partner

Angola and the Democratic Republic of Congo (DRC) have signed a cooperation agreement for the joint exploitation and production of hydrocarbons in the area situated on the maritime border of the two countries. The agreement was formalized last week (July 13) in Kinshasa between the Petroleum Ministers of Angola and the DRC.

The area, designated as “Common Interest Zone”, lies between the north section of Angola’s Blocks 1, 15 and 31 and the south section of Block 14 as noted in the following map:

The Common Interest Zone is to be economically shared on a 50%/50% basis by the two countries. This is a high-potential offshore area that holds strong indications of hydrocarbon deposits and leads.

Following the signing of the cooperation agreement, the two countries will enter into a Production Sharing Contract with the Block 14 contractor group, led by operator Chevron. A model of such PSA was agreed last month.

The Common Interest Zone has a long and protracted history with a lot of back and forth in the negotiations between Angola and the DRC. The first Memorandum of Understanding on the subject was inked 20 years ago (on 8 June 2003), which was followed by a “Cooperation Protocol” approved in 2008. After a long period of inactivity, the two countries reengaged in 2020 and ensuing negotiations culminated in the signing of the new cooperation agreement last week.

Rui Amendoeira – OnelLegal Partner

A new legal regime for self-billing was approved in Angola through Presidential Decree 144/23, of 29 June 2023. Below is a summary of the new rules:

• Self-billing – Self-billing occurs when the buyer of a good or service issues the respective invoice in lieu of the supplier/service provider.
• Subject entities – Self-billing can be required of Angolan taxpayers that have an organized accounting system and which acquire in Angola goods or services from the Primary Sector (agriculture, forestry, aquaculture, beekeeping, poultry farming, fishery, craftmanship, and miscellaneous services). Self-billing is also applicable in case of goods and services provided by individuals who are not capable of issuing invoices. Further, self-billing is applicable to the acquisition of movable assets by individuals for own use.
• Invoices – The invoices to be issued by self-billing entities must contain the following minimum information:
• Taxpayer number or Identity Card/Passport of the supplier/service provider;
• Taxpayer number, name and address of the buyer of the good/service;
• Invoice number;
• Description of goods/services (including quantities/references where applicable);
• Price per item and total in local currency (Kwanza);
• Date of purchase of the goods/services and invoice date;
• Reference to “Self-billing”.

Invoices must be issued in three (3) copies through a certified billing software.

• Threshold – Self-billing should not account for more than 20% of the total cost of goods and services acquired by the invoicing entity. This threshold may increase to 40% in case of goods/services that are essential to the self-billing entity.
• Withholding Tax – Self-billing entities must withhold tax as required under the Corporate Income Tax (Industrial Tax) or Work-Related Income Tax, as applicable.
• Reporting – Self-billing wholesalers must report to the Tax Office whenever they sell goods to individual customers worth in excess of Kz 25.000.000,00.

These rules are subject to a 30-day grace period, which means they are mandatory from 29 July 2023.

Rui Amendoeira – OnelLegal Partner

OneLegal is pleased to announce that two new law firms have joined the leading legal platform for the Portuguese speaking market. They are Brazilian law firm “Schmidt, Valois, Miranda, Ferreira & Agel” (“Schmidt Valois”) and Portuguese law firm “MC&A”.

Schmidt Valois (https://svmfa.com.br/) – Schmidt Valois is recognized in Brazil and internationally as a leading law firm in the area of natural resources and infrastructure, having a particular focus in the oil and gas, energy and mining industries. While Brazil is one of the world’s largest oil producers, Schmidt Valois is a trusted legal advisor to oil companies, contractors, financing entities and investors in general, along with public sector entities. Several Schmidt Valois partners and associates are recognized as leading experts in the oil and gas and energy industry in Brazil by the leading international legal directories, including Chambers & Partners, Leaders League, Latin Lawyer, LACCA, Who’s Who Legal, Legal 500, among others.

Schmidt Valois has offices in Rio de Janeiro and São Paulo. It is comprised of 18 partners and a total of 50 lawyers and other professionals.

MC&A (https://legalmca.com/pt) – MC&A has a recognized expertise in business and corporate law, with a particular focus in the lusophone markets. It was founded by its managing partner Vitor Marques da Cruz who has more than 40 years’ experience advising on complex M&A and financing transactions in infrastructure, oil and gas, energy, banking and other industries. He is recognized by the international legal directories as one of the leading Portuguese lawyers in the African market.

By joining OneLegal, Schmidt Valois significantly expands its activity in the lusophone/African markets and further reinforces its strong international credentials. The OneLegal association will allow Schmidt Valois to offer to its Brazilian and international clients best of class legal services in Angola, Mozambique, Timor-Leste, Cape Verde, São Tomé and Príncipe, as well as Portugal. Schmidt Valois can further support its clients in cross border projects and transactions in the lusophone markets and beyond.

As a OneLegal member MC&A will streghten its offering in the lusophone/African markets which is the focus of the firm and its founding partner Marques da Cruz.

OneLegal founder Rui Amendoeira stated that “By adding a Brasilian law firm to our list of partners, OneLegal now covers all lusophone countries, except for Guiné Bissau. This is a significant expansion of the OneLegal footprint and further reinforces our position as a leading source of legal services in the lusophone world.”

As advised earlier, Angola (through its petroleum regulator ANPG) is promoting a new licensing round for onshore blocks in the Lower Congo and Kwanza basis (the “2023 Licensing Round”). A total of 12 blocks will be awarded, designated as KON1, KON3, KON7, KON10, KON13, KON14, KON15, KON19, CON2, CON3, CON7 and CON8), and located as depicted below:

Yesterday (19 June 2023) ANPG made the first presentation session of the 2023 Licensing Round at a hotel in Luanda. The presentation was widely attended, both in person and online, by potential investors and other stakeholders of the Angolan oil industry.

The following schedule was announced by ANPG:

• 30 September 2023 – Terms of Reference and Tender Procedures will be announced.
• 9 November 2023 – Deadline for submission of bids.
• 10 November 2023 – Bids are opened by the Tender Committee.
• 25 December 2023 – Deadline to evaluate the bids by the Tender Committee.
• 15 January 2024 – Bid results are announced.
• 19 March 2024 – Deadline to conclude negotiation of the contracts (Production Sharing Contracts)

Additional information can be obtained in the ANPG website www.anpg.co.ao. 

For any questions, please contact Rui Amendoeira at rui.amendoeira@onelegal.pt

Rui Amendoeira – OneLegal Partner

As part of its strategy to stimulate investment in new exploration and in mature oil fields, the Angolan government has approved a package of tax incentives to oil blocks during the current year of 2023. The incentives have been extensive and applicable to multiple blocks. As it may be difficult to keep track of all incentives granted, we prepared the following table with summarizes the blocks concerned and the level of tax incentives extended to each block. We hope this is helpful!

Oil Blocks 2023 Tax Incentives:

Rui Amendoeira – OneLegal Partner

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: