The Chevron Ultimatum: Sonangol Has One Week to Save Itself

New management at the Angolan National Oil Company Sonangol has engineered a situation which now threatens the very survival of the company. Since June this year, when Angola’s President José Eduardo dos Santos installed his daughter Isabel dos Santos to chair the board, Sonangol has repeatedly failed to honour its promises to pay some US $300 million owed to the US multinational oil giant Chevron. The sum relates to production costs for the lucrative Block 0 in Angola’s offshore oilfields, which is 40 percent owned by Sonangol and 39.2 percent owned by Chevron. Sources in Houston have told Maka Angola that the US company has exhausted all options for finding an amicable solution, with no reciprocity from Isabel dos Santos’s board. The result is that Chevron Angola’s Director-General John Baltz has now given the Sonangol board an ultimatum: they have one week to come up with a payment plan or […]

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Angolan Oil Greases a Trio of Palms

At a time of prolonged economic crisis, Angola has an interesting way of prioritizing who gets first dibs on its dwindling supply of foreign exchange. Angola’s President José Eduardo dos Santos recently told the central committee of his ruling MPLA (People’s Movement for the Liberation of Angola) party that the government had not received any contribution from Sonangol (the national oil company) since the beginning of the year due to the sharp decline in oil price. He added: “the income Sonangol does derive is barely enough to pay its own and the State debts.” Dos Santos admitted that this was causing a foreign exchange crisis for the National Bank of Angola, the BNA, which was only able to muster approximately US $300 million per month. That comes from receivables from foreign oil companies working in Angola, who are required to exchange their national currencies into Angolan kwanzas to pay in-country […]

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China Chokes Angola Credit

Is China beginning to lose patience with the Angolan regime? Maka Angola has learned that the China Development Bank (CDB) has declined to make any further funds available to the Angolan state oil company Sonangol, under a US $15 billion line of credit granted in December 2015, citing Angola’s “lack of contractual compliance” and attempts to “use the money for indeterminate ends”. Sources at the Angolan Finance Ministry have revealed that US $5 billion of December’s loan was intended to cover oil production costs, leaving US $5 billion for debt refinancing. In exchange Angola would increase its cargoes of crude to China. The other US $ 5 billion are for the Finance Ministry’s use. Until recently over half of the 50-60 oil shipments out of Angola each month went to the Western oil majors who operate the oil fields and platforms that allow Angola to export 1.8 million barrels per […]

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Meddling With Angola’s Electoral Register is Unconstitutional

Why does Angola need a new Electoral Registration Law?   Particularly one which would transfer control of the electoral register from the independent National Electoral Commission to the Ministry of Territorial Administration under the tutelage of Bornito de Sousa, one of the President’s staunch supporters in the ruling MPLA (People’s Movement for the Liberation of Angola)? It’s a contentious move both in political and legal terms. Politically, it attributes to the party in power, the government of the day, the power to determine who can, and who can’t, vote. Legally, it violates the Angolan Constitution which explicitly attributes oversight of the electoral process to an independent body.  Article 107, Clause 1 of the Angolan Constitution states: “The electoral processes are organized by independent electoral administrative bodies whose structure, function, composition and competence are defined by law”. It is an internationally-accepted principle that the “electoral process” includes the compilation and upkeep of […]

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Sonangol’s Billion Dollar Headache

The task facing Angola’s state oil company, Sonangol, as it adjusts to lower revenues during the slump in oil prices, is complicated by a stratospheric debt burden which gives little room for manoeuvre.  And yet the new administration is unexpectedly making repayment of one private debt a top priority. In spite of multiple pressing issues (including the root-and-branch restructuring of Sonangol) repayment of this particular debt has been fast-tracked by Sonangol’s new CEO, the President’s daughter Isabel dos Santos.   A source close to the Sonangol board has told Maka Angola it’s the reason why Sonangol has been seeking a loan of US $800 million from a bank based in Egypt, offering as surety its shares in the Millenium BCP division of Portugal’s largest private bank, the Commercial Bank of Portugal (BCP). The urgent repayment?  A one billion US dollar debt owed to Trafigura. This is the joint venture between the […]

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40 Years On… The Boys are Back

Shrugging off the legal challenges to her appointment as President of the Board of Director of Sonangol, the President’s daughter, Isabel dos Santos, has lost no time in showing how she means to restructure the state oil company.  Her first task has been to recruit 120 Portuguese staff to senior positions. The new recruits will join a further 50 consultants – also mostly Portuguese nationals – currently working as consultants and advisers to Isabel on behalf of the Boston Consulting Group and the Portuguese law firm Vieira de Almeida, who in effect are jointly running the Angolan state firm at this point. The arrival of the Portuguese contingent to take over at the Angolan state oil company raises some interesting points:  firstly, the total absence of any national or international recruitment campaign and the lack of any attempt at dialogue between the managers and workers at Sonangol points to the same lack […]

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Sonangol’s Debt Woes

Angola’s state oil giant, Sonangol, is running out of time to prove it has a credible plan to repay US $13 billion in loans it obtained from a syndicate of European banks. The loans’ agreements came with a contractual obligation to produce annual balance sheets showing a healthy ratio of debt to capital and it appears Sonangol has been unable to honour this. Last month the London-based Standard Chartered Bank set a 45 day deadline for Sonangol to explain its failure to comply with the debt ratio obligation stipulated as part of the loan agreement, and to provide documentary evidence that is has the capacity to honour the terms of the loan. Sources close to the Board of Directors of Sonangol have indicated to Maka Angola that the company may not be in a position to make the repayments on time. It is alleged that Sonangol’s long-term auditor EY raised objections to some […]

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Chevron’s Misplaced Endorsement of Nepotism in Angola

What must Chevron’s CEO John Watson be thinking as he sits in his office in San Ramon, California and ponders the future of his Angolan subsidiary, the Cabinda Gulf Oil Company Ltd (Cabgoc)? How much longer does he estimate that he needs to keep on the good side of José Eduardo dos Santos’s corrupt and kleptocratic MPLA government to ensure Cabgoc can continue to operate?  Is he hedging his bets?  Or is he staking Chevron’s African corporate future on the faint chance that the Dos Santos family and their acolytes will not be brought to justice for their crimes? While oil industry analysts around the globe were divided about the merit of the President’s nepotistic appointment of his daughter Isabel to head the restructured Angolan state oil company, Sonangol,  Watson’s man in Angola, the Cabgoc director John Baltz, was telling a US-Angola Chamber of Commerce conference that he was “optimistic” […]

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Machete Torture: More Human Rights Abuses in Diamond-Rich Region

“I am Angolan!”, the informal diamond digger keeps screaming in pain and in vain, while the guard repeatedly beats him on the palm of his hands with a machete. His citizen’s rights are ignored. As the guard becomes more violent, the victim screams for his mother repeatedly, but his humanity is ignored as well. “Shit! Pardon does not exist”, the guard who is commanding the beatings of up to ten miners, laughs louder. He is known as Bonifácio. Video evidence has emerged of vicious and sadistic beatings recently meted out to informal miners known as ‘garimpeiros’ by private security guards. The assaults took place just weeks ago in the diamond-rich area of north-eastern Angola. The video, which contains harrowing scenes, was filmed on April 21, 2016 in the Dambi area of Cafunfo in the northeastern province of Lunda-Norte.  In unsparing detail, it shows the guards using machetes to intimidate, beat […]

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Supersonic Nepotism: Illegalities at the Speed of Light

Angola’s President, José Eduardo dos Santos, has just appointed his daughter Isabel dos Santos as Chairman of the Board of Directors of the state oil giant, Sonangol.  He had already appointed her half-brother, José Filomeno dos Santos, back in 2012 as Chairman of the Board of the Angolan Sovereign Wealth Fund.  This means that the country’s sovereign fund and the state’s main source of income are now both in the hands of children of the President. In plain English, this is the very dictionary definition of nepotism: ‘the practice among those with power or influence of favouring relatives or friends, especially by giving them top jobs’.  No doubt there will be many analyses and critiques of Angola’s particular brand of nepotism but from the strictly legal point of view there is one indisputable conclusion to be drawn:  President dos Santos’s actions are unconstitutional and illegal. Unconstitutional and illegal The Angolan […]

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