Former Sonangol director says local content initiatives are having little effect

Angola’s government has made a number of efforts to increase local content in oil and gas projects involving international oil companies (IOCs), but its approach has had only limited effects, according to a former director of the national oil company (NOC) Sonangol.

Arnaldo Lago de Carvalho, a businessman who previously served on Sonangol’s board of directors, said on the sidelines of the Luanda Oil & Gas and Renewables conference in Luanda last week that he saw the NOC itself as the biggest obstacle to increasing local content in oil and gas projects. “The area of local content is very weak in the country precisely because it was blocked by Sonangol,” he was quoted as saying by Ver Angola. “The biggest enemy of local content has been Sonangol during all these years.”

Sonangol has a long-standing practice of directing service contracts to its own subsidiaries, to other government-run entities or to its political allies, de Carvalho noted. He said the state-owned company had “manipulated” many of its agreements with IOCs “for the benefit of public companies such as Sonangol or companies of people connected to power.” This practice “completed blocked the possibility for independent private individuals to carry out such activities,” he remarked.

The former director acknowledged that the Angolan government had introduced checks on Sonangol by barring the company from serving as concessionaire for the country’s oil and gas assets and transferring that function to the newly created National Agency of Petroleum, Gas and Biofuels (ANPG) in 2019. This move was designed to prevent the NOC from intervening in the selection of service contractors, he explained.

He also asserted, though, that the transfer of concessionary authority from Sonangol to ANPG had not led to an increase in local content. Additionally, he said he did not expect many changes, since IOCs have been signing fewer agreements in Angola and the country’s oil production has declined. Securing jobs for local private-sector contractors is likely to become “much more difficult because the volume of activity has also dropped,” he commented.

De Carvalho was speaking shortly after ANPG published a list of goods and services that IOCs working in Angola will be required to secure from local contractors. Currently, 95% of the goods and services used by IOCs at their Angolan installations are imported, Ver Angola noted.