The Angolan President has approved a special legal regime to maximize hydrocarbon recovery in oil concessions located in the country’s maritime zone, aiming to promote incremental production in mature fields, according to a presidential decree.
In a presidential legislative decree dated November 20, accessed today by Lusa, João Lourenço stated that this regime should enable additional investments for the redevelopment of fields in mature blocks and projects with potential to quickly increase hydrocarbon production in the country.
The new rules for boosting oil production in Angola ensure the possibility of cost recovery for investors in the event of unsuccessful well drilling, the decree specifies. It applies exclusively to exploration, development, and production activities resulting in incremental production in mature blocks.
According to the Angolan National Agency of Petroleum, Gas, and Biofuels (ANPG), “mature [oil] fields” are those that have been in operation for 25 or more years and/or have production levels equal to or exceeding 70% of proven reserves.
This special legal regime for incremental production incentives establishes exceptional measures, including fiscal advantages or relief compared to the standard taxation regime outlined in the Petroleum Activities Taxation Law.
The decree, signed by João Lourenço and published in the Official Gazette, provides for tax incentives, such as reductions in the Petroleum Production Tax and the Petroleum Income Tax, whenever the technical, economic, and contractual conditions of production justify it.
Under association contracts, the Petroleum Production Tax rate for incremental production is reduced to 15%, starting from the month following the conclusion of the first activity outlined in the General Development and Production Plan.
For production-sharing contracts, the Petroleum Income Tax rate is set at 25%, also starting from the month following the conclusion of the first activity. Requests for production incentives must be submitted to the ANPG, the national concessionaire.
The decree further guarantees that the national concessionaire will annually receive the necessary financial resources to cover expenses and costs associated with fulfilling its responsibilities in the domain of incremental production.
Angolan Minister of Mineral Resources, Petroleum, and Gas, Diamantino Azevedo, stated in August that investments in Angola’s active oil concessions, excluding newly auctioned blocks, amounted to $47 billion between 2018 and 2022. These investments are expected to increase to over $72 billion between 2023 and 2027.
Lusa, 22/11/2024
