Years of underinvestment have resulted in a relentless fall in production that is undermining government finances. At the same time, low global oil prices, exacerbated by the coronavirus pandemic, are deterring upstream investment in the country’s remaining deepwater acreage because of the high production costs involved. President João Lourenço is counting on state oil company Sonangol to manage industry development and maximise revenue on the production that remains, yet the firm is currently barely able to generate a profit because of its overwhelming debts and is badly in need of reform. When Lourenço came to power in 2018, he made the restructuring of Sonangol one of his top priorities. The minister of mineral resources and petroleum, Diamantino Azevedo, likened Sonangol to an octopus given the extent of its investments in everything from aviation, tourism and agriculture, to insurance, telecoms and banking. These non-core assets are to be sold off to create a leaner company that focuses on developing its own upstream assets and its refining and distribution operations. The government is also planning to divest some of the many offshoots that are connected with the Sonangol brand but which are based around the world.
SOURCE: AFRICAN BUSINESS
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