Angola's Sonangol to sell stakes in offshore blocks as part of restructuring

Angola's Sonangol is looking to sell partial stakes in eight offshore blocks as part of the government's plan to streamline the cash-strapped company, it said late on June 14.

The state-owned company is looking to sell part of its interests in Blocks 3/05, 4/05, 5/06, 15/06, as well as in Blocks 18, 23, 27 and 31. Bids for these can be submitted up to Aug. 6, the statement said.

Sonangol CEO Sebastiao Gaspar Martins said this was part of the company's ongoing restructuring process as it looks to reassess its investment portfolio.

This is also a key component of Sonangol's exploration and production strategy, as it aims to boost its share of operated production to 10% by 2027, the statement added.

Three of the blocks already contain existing oil developments and recent oil discoveries -- 15/06, 31 and 18 -- and are likely to be very attractive to many international oil companies.

"Established players in Angola's energy sector are likely to use Sonangol's farmdown as an opportunity to increase their equity in these prolific concessions, which could help to unlock the full-field development of Eni's Agogo field on Block 15/06 and potentially pave the way for FID on BP's Palas, Astrea and Juno project on Block 31," said Nick Branson, director of Gondwana Risk and contributor to the Angola Briefing.

Privatization

The country's minister of mineral resources and petroleum and gas, Diamantino Azevedo, recently confirmed that the government was still looking to gradually privatize some of Sonangol and float up to 30% of the state-owned company on a stock exchange.

The restructuring has already taken around three years as Sonangol had become a behemoth with a sizable share of subsidiaries outside the oil sector, spanning such fields as media, entertainment, aviation, technology and finance.

The current government, led by President Joao Lourenco, is keen to privatize most of Sonangol's non-oil businesses, as under the previous regime the company had ventured into various countries and businesses.

Sonangol's economic woes have mirrored those of Angola, with both hit by the significant fall in oil prices since mid-2014 as well as a steep decline in oil output.