Angola’s national oil company Sonangol has responded to the changing global financial landscape by accelerating its restructuring programme and exploring new financial solutions
It will meet the requirements of today’s international debt market. Today’s market is significantly impacted by considerations about energy transition, which has become a defining factor for most major oil and gas sector lenders.
As the international community seeks consensus about how to drive energy transition globally, major international banks have responded by entering into several agreements, committing to solely finance projects that will attain net-zero emissions between 2030 and 2050. One such agreement is the United Nation’s backed Net-Zero Banking Alliance which represents some of the world’s largest banks from 27 countries with assets of more than US$37tn. The Net-Zero Banking Alliance requires its members to curtail lending to the oil and gas sector within the next 36 months, ultimately restricting access to finance for companies like Sonangol.
Financing challenges are not new to Sonangol, the entire sector emerges from a post COVID-19 slump in 2020 which saw demand and oil prices reach historic lows, including dropping below US$20/barrel in April 2020. In the USA for example, over 107 oil and gas companies filed for bankruptcy, requiring the courts to oversee debt restructuring totalling US$98bn under Chapter 11 bankruptcy rules.
Under the leadership of its chairman and CEO Sebastião Gaspar Martins, Sonangol has accelerated its divestment programme which it is hoped, will bring in billions of dollars in much needed financing through the sale of non-core assets. Revenue from the sale is expected to strengthen the balance sheet of a much leaner and focused exploration and production entity. Over 70 shareholdings held by Sonangol in companies across the world, including in real estate, oil and gas services, financial services, tourism, logistics, telecommunications, aviation and some operating blocks are up for sale.
Sonangol’s solar projects represent an opportunity for the company to structure carbon neutral financing deals. Accessing finance and refinancing existing debt at competitive market rates is a priority of the current leadership at Sonangol.
Energy transition has already led to major changes in the African oil and gas sector. The push towards decarbonisation and the rebalancing of IOC portfolios globally has led to many IOCs giving up assets in Africa. It is likely that we will see more oil and gas assets being sold by IOCs in coming years.
