Luanda has to Auction its Assets to Settle Bills

Angola has accumulated around $1bn in debt to Western oil companies operating its oilfields, with the bill prompting the African country’s recently launched sale of stakes in its flagship offshore blocs. The magnitude of the debt, built up over several years, is a sign of deepening financial woes at state oil giant Sonangol, one of Africa’s largest companies, due to underinvestment in declining offshore fields that worsened during the COVID-19 pandemic. It comes as global companies rethink their presence in high-cost ventures worldwide in order to meet their climate targets more quickly, and it could make Angola – with its ageing and complex offshore fields – a less attractive prospect. An asset auction announced by Angola on June 14, the sources added, is tied to its previously unreported failure to pay so-called cash calls to which it is contractually bound in order to maintain the oilfields. Angola, Africa’s number-two oil exporter, saw offshore exploration halt briefly last year as the pandemic collapsed global demand and has been struggling to reverse a steady slump in its oil output. Planned monthly exports in July fell to the lowest in at least 13 years, when Reuters news agency tracking began.

SOURCE: AL JAZEERA