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The ongoing licensing round for the Lower Congo and Kwanza onshore basins will award a total of 12 blocks under a Production Sharing Contract (PSC) model. The PSC economic terms have been designed to be internationally competitive so as to attract investors and incentivize investment. Below is an outline of the key economic parameters:
(1) Cost Recovery Crude Oil Ceiling: The cost oil ceiling is set at 65% for all blocks with the exception of CON7 and KON19 where the ceiling is increased to 75%. Full recovery is to be achieved within 4 years (25% per year) of the expense (capex) being incurred, or the start of commercial production whichever is later. In the event full recovery is not attained within 5 years of such date, then the ceiling will be increased to 75% (or 85% in the case of CON7 and KON19) until all costs are recovered.
(2) Investment Premium: The investment premium applies on capital expenditures (designated as “Development Expenditures”) and is set at 35% for all blocks.
(3) Profit Oil Sharing: The profit oil sharing between the investor/oil company and the Angolan state (National Concessionaire ANPG) is based on the oil company’s accumulated Internal Rate of Return as follows:
For Blocks CON3, CON8, KON3, KON7 and KON15
IRR | State | Oil Company |
Less than 20% | 15% | 85% |
From 20% to 30% | 25% | 75% |
More than 30% | 50% | 50% |
For Blocks CON2, KON1, KON10, KON13 and KON14
IRR | State | Oil Company |
Less than 20% | 15% | 85% |
From 20% to 30% | 20% | 80% |
More than 30% | 50% | 50% |
For Blocks CON7 and KON19
IRR | State | Oil Company |
Less than 20% | 10% | 90% |
From 20% to 30% | 20% | 80% |
More than 30% | 50% | 50% |
If you have any questions, please get in touch with Rui Amendoeira at rui.amendoeira@onelegal.pt
© 2024 All rights reserved