Angola: Blocks 49 & 50 – Tax Incentives

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.