Angola's national oil company and regulator Sonangol has started the bid round process for ten onshore blocks, situated in the Lower Congo and Kwanza Basins. Sonangol held three road shows for international oil firms and other investors in Luanda, London and Houston earlier this year, to promote the potential of the onshore areas, but implementation was delayed by Parliamentary and Presidential approval process.
Angola is now one of Africa’s biggest oil producers and extracts almost all of its crude from offshore fields, but the Angolan government has signalled that it will aim to develop its onshore potential in 2014.
Tentative Round Timetable
Whilst still subject to revision and confirmation after the public announcement due to occur this week, Sonangol has suggested the round timetable will be as follows:
- 1 April 2014 – The Angolan Government is likely to publish an announcement in the Diário da Republica (National Gazette) and the Wall Street Journal inviting participants to pre-qualify. Participants then have 30 days to present the pre-qualification information in accordance with articles 4 and 5 of Decree 48/06. See "Pre-Qualification Requirements" below.
- 30 April 2014 – All participants are to deliver the pre-qualification information.
- 30 May 2014 – Sonangol is to announce which participants pre-qualified and set the bid date. This should specify:
- the area of the concession;
- the time limit for the presentation of bids (which must not be longer than 90 days from the date of publication of the announcement in the Diário da República and/or in the largest circulation newspaper in Angola, whichever occurs first);
- the list of companies that have prequalified;
- the form of contract to be entered into between Sonangol and its associates, certain clauses may be negotiated with Sonangol;
- whether companies can bid individually or in a consortium or do so in both forms.
Pre-qualification requirements depend on whether the participant would like to bid as an operator or non-operator.
Both operators and non-operators must provide Sonangol with the: (i) company name; (ii) place of incorporation registration and the address of their head office; (iii) description of the most important activities carried on; (iv) details of the company's asset structure, in particular the values of own capital realisable assets and fixed assets and also of current liabilities; (v) references from suitable banking institutions attesting their financial capacity; (vi) annual reports on the activity carried out including the balance sheets and accounts for the last three years or since its incorporation where the investing entity has been incorporated for less than three years audited by an independent firm of auditors with proven experience; (vi) details of their experience in petroleum exploration and production including details of reserves and production; (vii) number of workers employed and the professional experience of management in the area of petroleum exploration and production; (viii) details of legal and arbitration proceedings brought against them in the last five years; (ix) details of advance plans future obligations including work programmes or risks that may affect their capacity to fulfil the work programme that is established for the Angolan concessions of which it will form part; and (x) details of business activity carried out in Angola to date.
Operators must also demonstrate that they have: (i) competence and experience in the management and execution of petroleum operations; (ii) technical and operational competence; and (iii) an efficient organisational structure.
The operator may also present other relevant experience qualifications related to safety, environmental protection, pollution prevention and the employment, integration and training of Angolan personnel.
Bids must be presented in Portuguese or with an official Portuguese translation.
Local content requirements
Local legislation as enforced by the Angola Petroleum Law obliges Sonangol and its associates to, among other actions:
- acquire materials, equipment, machinery and consumer goods of national production, of the same or approximately the same quality and that are available for sale and delivery in due time, at prices that are no more than 10% than the imported items including transportation and insurance costs and customs charges due; and
- contract local service providers, to the extent to which the services they provide are similar to those available on the international market and their prices, when subject to the same tax charges, are no more than 10% higher than the prices charged by foreign contractors for similar services.