The Angolan government has approved additional tax incentives for several deep and ultra-deepwater blocks to enhance their economic viability and stimulate investment. These blocks feature technical complexity, high operational costs, and heavy geological risks in their exploration and development.
Below is a summary of the blocks involved and the tax incentives granted:
Block 17/25 – Lower Congo Basin, operated by Total Energies (Incentives granted by Presidential Legislative Decree 8/26, of 24 August 2026); and
Block 32/21 – Lower Congo Basin, operated by Total Energies (Incentives granted by Presidential Legislative Decree 10/26, of 24 August 2026):
- Presidential Legislative Decree 6/18, of 18 May 2018, introduced the concept of “Qualified Marginal Zones” (QMZ) and established several tax incentives to such areas. For Blocks 17/25 and 32/21, one or more deposits may be declared a QMZ if the following conditions are present:
- The deposit holds less than 300 million barrels of recoverable reserves and an after-tax Internal Rate of Return below 20% (the IRR is calculated per the terms of the block’s Risk Service Contract);
- The deposit holds more than 300 million barrels of recoverable reserves and an after-tax IRR below 15%.
- However, any annual capital expenditures (capex) exceeding the “Capex Cap” established for a QMZ do not qualify for the Investment Premium afforded by DLP 6/18.
Block 19 – Kwanza Basin, operated by BG International Limited (Shell subsidiary) (Incentives granted by Presidential Legislative Decree 9/26, of 24 August 2026); and
Block 34 – Lower Congo Basin, operated by BG International Limited (Incentives granted by Presidential Legislative Decree 12/26, of 24 August 2026); and
Block 35 – Lower Congo Basin, operated by BG International Limited (Incentives granted by Presidential Legislative Decree 13/26, of 24 August 2026):
- For these blocks, a QMZ may be declared if one or more deposits yield an after-tax IRR below 25%;
- The investments and costs incurred in connection with the development of Emissions Reduction Projects within the Concession Area of these blocks are deductible for Petroleum Income Tax purposes over a 3-year period (at 33.33% per year);
- The following Production Premium applies within a QMZ:
- An Investment Premium is established at 35% of all investments and costs incurred in connection with the development of Emissions Reduction Projects within the Concession Area, which shall be deductible for Petroleum Income Tax purposes, effective from 1 January of the year in which production commences;
- Another Investment Premium is established at 30% of all capital expenditures incurred within a QMZ (including in relation to Emissions Reduction Projects), which shall be deductible for Petroleum Income Tax purposes, effective from 1 January of the year in which production commences;
- Provided that any investments or expenditures exceeding the “Capex Cap” of a Development Area or QMZ shall not qualify for the above Investment Premiums.
Block 33/24 – Lower Congo Basin, operated by Chevron (Incentives granted by Presidential Legislative Decree 11/26, of 24 August 2026):
- For Block 33/24, one or more deposits may be declared a QMZ if the following conditions are present:
- The deposit holds less than 300 million barrels of recoverable reserves and an after-tax Internal Rate of Return below 25% (the IRR is calculated per the terms of the block’s Risk Service Contract);
- The deposit holds more than 300 million barrels of recoverable reserves and an after-tax Internal Rate of Return below 22.5% (the IRR is calculated per the terms of the block’s Risk Service Contract).
- However, any annual capital expenditures (capex) exceeding the “Capex Cap” established for a QMZ do not qualify for the Investment Premium afforded by DLP 6/18.
- The Ministry of Finance shall commission an annual independent audit to verify the IRR calculation made by the Contractor Group. If MinFin or Contractor Group disputes any audit adjustments to the IRR, the matter may be referred to an independent expert. The expert shall deliver a final and binding report to MinFin and Contractor Group for the IRR determination.
- The investments and costs incurred in connection with the development of Emissions Reduction Projects within the Block 33/24 Concession Area are deductible for Petroleum Income Tax purposes over a 3-year period (at 33.33% per year);
- Any exploration expenditures may be deducted against Petroleum Income Tax within the Concession Area (including a QMZ) regardless of where the expenditure is incurred.
Additionally, a stability mechanism is established for all blocks listed above whereby, if any future law is enacted that adversely affects these additional tax incentives, the National Concessionaire (ANPG) and the Contractor Group shall agree upon adjustments to the respective Risk Service Contract to restore the original economic equilibrium.
