Sonangol Secures Oil Exploration Rights in Five Angola Blocks

Sonangol EP, Angola’s state-owned oil company, will explore five onshore blocks and tender them for development if successful, according to a decree by President Jose Eduardo dos Santos.

The company will retain an unspecified share in the blocks, four of which are in the Kwanza basin near Luanda, the capital, and one in the Lower Congo basin in the country’s north, according to an Oct. 17 decree seen by Bloomberg at the National Press Administration, the government gazette that records all laws.

Angola is encouraging domestic companies to bid on the onshore blocks to increase local content in the industry, which only employs about 1 percent of Angolans while investing about $20 billion a year, according to London-based GlobalData Ltd. and Luanda-based Oilfield Support Angola.

Sonangol will keep a 50 percent share in four other Kwanza basin blocks out of 10 to be auctioned in early 2014, the decree shows. Of the remaining six concessions, there are three per basin.

The bidding round will include 15 blocks, Petroleum Minister Jose Maria Botelho de Vasconcelos said in a Nov. 7 interview without mentioning Sonangol’s exploration rights on a third of them, or plans to keep half the shares in four others.

The concessions in the bid round will be less expensive to operate than those offshore, where Total SA (FP), Chevron Corp, Exxon Mobil Corp. (XOM) and BP Plc pumped most of the country’s output of 1.7 million barrels per day.

Angola, Africa’s biggest oil producer after Nigeria and a member of the Organization of Petroleum Exporting Countries, will give financial support to local private companies seeking to help develop the onshore blocks, according to the decree.

Sonangol has divided the Kwanza basin around Luanda into 23 concessions of 1,000 square kilometers (386 square miles) each. According to company maps, some of the blocks fall within the 9,960 square kilometer Kissama National Park.

Access to theses blocks will follow applicable legislation, the decree shows. An environmental impact study will be conducted, Vasconcelos told lawmakers in July.

To contact the reporters on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net; Manuel Soque in Luanda at msoque@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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