Sonangol’s Billion-Dollar Headache

Evidence has reached Maka Angola that Sonangol’s debts to major oil corporations are far in excess of the US $300 million  owed to Chevron as reported last month.

Faced with a Sonangol news release that noted the Chevron monies were “under review” prior to payment, other foreign creditors have grown anxious about the multi-million sums they too are owed.

Maka Angola has been supplied with figures showing unpaid cash calls to three other oil majors operating in the Angolan oilfields. They reveal that as of October 2016, Sonangol owed its creditors at over one billion US dollars.

To date, Sonangol has only effected payments to companies owned by associates of President José Eduardo dos Santos and his daughter, Isabel dos Santos, the current Sonangol President.

President dos Santos sacked the previous Sonangol board and installed his daughter back in June, in a move that shocked the global oil industry given the clear conflict of interest. In the intervening months, the crisis at Sonangol has worsened considerably, with grave implications for the health of the entire Angolan economy which is heavily reliant on oil and gas revenues.

Clearly stung by the unwelcome publication by Maka Angola of Sonangol’s parlous financial state, Isabel dos Santos issued a news release, blaming the low global price of oil for the delay. Ingenuously, the Sonangol Board suggested that its accounting processes were somehow impeded by the “fall in the price of oil, which implies longer times for analysis and validation of the spending and invoices related to costs and investments”.

Inadvertently corroborating the Maka Angola report, the Sonangol news release stated the company was “in the phase of analysis and processing (…) close to US $300 million  referring to the payment of Cash Calls for the months of July, August, September and October 2015.”

The amount owed to Chevron alone has risen to US $380 million leading to a threat to trigger the relevant clause in their Joint Operations Agreement to allow Chevron to sell Sonangol’s 40 percent quota of Block 0 output for its own benefit instead of handing it over.

It’s likely the Sonangol statement was aimed at soothing anxieties at home, as its paper-thin excuse has only further raised eyebrows at the headquarters of companies like BP and Total, who are wondering when they may see payment of monies owed.

Sources close to BP have revealed that Sonangol owes them nearly US $135 million. Total is owed nearly US $360 million and ENI is owed some US $125 million. Added to the US $380 million owed to Chevron, that gives a total of a billion US dollars – and this staggering debt does not yet include the figures for this month, or any monies due to Sonangol’s many other creditors.

Furthermore, the October news release by Sonangol stated categorically that the financial problems, all of which it attributes to the fall in global oil prices, would not affect Sonangol’s capacity to supply fuel products. This is manifestly not the case, with reports reaching Luanda of fuel shortages in provinces such as Lunda Norte.

This makes a mockery of Sonangol’s public statements about “honoring its commitments”, “transparent communication”, “rigorous management” and “standards of excellence”, and is causing considerable concern among its partners.