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rubbing shoulders with the elite

  1. 2,455 Posts.

    This news is a little old, October 2007 but well worth saving for future reference.

    Not sure if it's been posted before, anyway here goes.

    Powerful friends and big opportunities for Angola’s new generation indies

    OPEC’s newest member has seen the proliferation of a well-connected group of local juniors, all eager to participate in upcoming licensing rounds. But while the new Angolan indies’ names are becoming more familiar they remain a notably opaque bunch, writes Eleanor Gillespie.

    The brisk pace of development of Angola’s oil sector, as well as keen support for local content from powerful state oil company Sociedade Nacional de Combustiveis de Angola (Sonangol), has supported the emergence of a new class of small but ambitious indigenous players.

    The 2005/06 licensing round saw the entry on to the domestic energy scene of six mostly unknown companies: Prodoil Sarl, Force Petroleum, Angola Consulting Resources (ACR Limitada), Falcon Oil, Initial Oil and Gas and Grupo Gema.

    Another better-known local indie, Somoil – Sociedade Petrolifera de Angola Sarl, did not participate in the round but won stakes in Blocks 2/05, 3/05 and 4/05 shortly after new legislation permitting local companies to take licences was passed.

    Other players include the more obscure Nexoil Corporation, Wodege and Sociedade de Hidrocarbonetos de Angola (SHA).

    While Sonangol was keen for local players to participate, observers say it was careful to keep a close watch on the number of indigenous players taking part, mindful of the example of Nigeria’s messy 2005 round where local companies defaulted on signature bonuses. No local player was prequalified to be a block operator.

    Despite Sonangol’s vetting, some analysts remain worried that in the Angolan environment, a situation similar to Nigeria could evolve, where big men close to key officials come to dominate the scene. But expatriates knowledgeable of the Angolan scene remain sceptical of the potential damage that ties to the Futungo (presidential palace) could bring.

    The CEO of one global company currently operating in Angola told African Energy: “The same people do business in every place. I don’t consider there is anything untoward – you would find the same if you looked at oil companies in Australia or Houston where they are backed by big millionaires. Think of George Bush and his family’s ties to the oil industry.” He added: “I don’t believe it is unexpected or bad – there is a small Angolan elite, due to historical circumstances, and it’s not surprising that deals circulate.”

    Another international oil company source said, “we need the local players to ease the way… the locals bring local knowledge and access to infrastructure and people.”

    Godinho’s ambitions

    Luanda-based Prodoil is a good example of the new generation of Angolan independents, many of whose senior managers have come from Sonangol. Prodoil is headed by respected local businessman Pedro Godinho Domingos who worked for many years as an engineer with Texaco, before setting up his own business, the multi-sector Grupo Veleiro. Godinho told African Energy he decided to become involved in the oil business in the late 1990s and founded Prodoil in 2001 with the help of local partners.

    In the 2005/06 licensing round Prodoil took a 20% stake in Block 1 offshore (where partners are Tullow Oil, Sonangol P&P and Force Petroleum) as well as making a play for Blocks 15 and 17, which failed. Godinho said the company’s target was to get into the Kwanza Basin, as operating onshore is cheaper than operating offshore. According to Godinho, local company Prodiaman – originally set up as a diamond mining interest – is Prodoil’s ‘mother’ company. Godinho owns Prodiaman 100% and through it holds a 25% stake in Prodoil.

    The company remains aware of the huge funding required to get assets. Godinho said that Prodoil eventually declined to participate in Block 17 as the “bonus required was enormous… a lot of money for a five-year-old company.”

    Prodoil, like most of the local indies, is owned 100% by Angolan nationals. Some 55% belongs to company president Jose Pacavira Narciso, who is believed to be closely connected to the ruling clique.

    Prodoil’s ‘parent’ company Prodiaman is known for its partnerships with foreign players, which include a joint venture with Houston-based Amec Paragon, Paragon Angola, which provides engineering services. Prodiaman also has ties to Muttenz-based Clariant, and the Houston-based Natco Group.

    Outside the oil sector Godinho is involved with joint venture company Servicab, which is behind real estate projects on the coast.

    Angola Consulting Resources

    ACR was set up in 2003 and was originally the local subsidiary of oilfield services company Terra Energy Services. It has stakes in Blocks 4 (15%), 17/06 (5%) and, according to Sonangol, Cabinda North (15%).

    ACR head Carlos Amaral told African Energy: “the company’s mission has always been associated with E&P promotion and development, namely onshore and shallow water marginal prospects.” He added: “like other junior E&P companies, ACR is looking for other opportunities in Angola and will give due consideration to the Kwanza Basin.”

    Production from the Gimboa field in Block 4 is expected during the second half of 2008. Block 17/06’s exploration programme and budgets are due to be discussed, reviewed and approved during Q4 07. Like Prodoil, ACR will think about a listing on Luanda’s hoped-for stock exchange. Amaral noted that “the stock exchange does represent a way of funding ACR’s needed resources… but ACR [is currently] being financed by its own shareholders as well as by bank loans, some from local institutions.”

    Originally Terra Energy held 70% of ACR and Amaral had 30%, but they decided several years ago to bring in other players, and the shareholding changed to include the Lisbon-based Banco Efisa and Banco de Poupança e Credito (Angola).

    Then in June 2006, Bermuda-registered Afex Global acquired Terra’s shares in ACR. Afex entered into an agreement to transfer its shares in ACR to Amaral in Q2 2007 in exchange for cash, future payments and interests in “certain blocks”.

    The transfer of shares is expected to be completed soon.

    Amaral and other Angolan parties now own all the shares that once belonged to Terra, and neither Terra nor Afex is a beneficial shareholder in ACR, although Afex retains a substantial financial interest in Angola as a result of its contract for its sale of shares to Amaral.

    Terra official Pascal Lipsky – previously ACR’s chairman – told African Energy: “we decided we did not want to stay in that business any more. Terra sold its stake in ACR to Afex Global last summer.”

    Afex Global is a rapidly expanding player with permits in Equatorial Guinea, Cameroon and Mali. It is believed to be backed by Arabian Gulf players, who are taking an increasing interest in Africa’s energy resources.

    Amaral said, “ACR’s major objective is to maximise Angolan interests in the company.” He once said that he wished ACR to be a “truly local company”.

    Amaral cited several local companies as competent and potential competitors. “The new 2007 licensing round just announced by Sonangol will surely bring new players and local companies which hope to join the club.”

    Amaral worked for Petrangol, Sonangol, BP and Norsk Hydro Angola in various fields before setting up ACR.

    Force Petroleum back from the dead

    Force Petroleum was once thought to have been dissolved and observers decried it as an example of Angola’s failed experiment with junior companies in the early 2000s. In a confusing situation, Force was reported to have been forced off Cabinda South where it held 20%, by shareholders reluctant to increase funding.

    However, Roc Oil head John Doran told African Energy: “It’s true that Force did think of quitting Cabinda and we actually essentially agreed a deal to buy them out a number of years ago, but upon reflection we all decided it was better for them to stay in. We have absolutely no angst over that. In fact we think they are a definite plus in the partnership.”

    Force’s front man was Norwegian Nils Trulsvik, who was involved in Force through interests in Bridge Group. Force’s Norwegian directors resigned in mid-2005 and the company’s head is now thought to be Jose Armando Guerra, who one source involved in the Cabinda scene described as a “thorough gentleman… who bounces between Portugal and Angola.”

    Force won a 10% stake in Block 1/06 where it partners Prodoil, Tullow and Sonangol.

    Trulsvik is now back in Angola as chief executive of the Oslo Stock Exchange-listed InterOil Exploration & Production, which last year won 40% of Block 5/06 and 20% of Block 6/06. The Oslo-based company recently acquired a 31.5% stake in Ghana’s Tullow-operated Shallow Water Tano block.

    Falcon Oil: Mosquito bites

    One of the more established players is Falcon Oil, which has the most assets among the indies. It won stakes in Blocks 6/06 (10%), 15/06 (5%), 17/06 (5%) 18/06 (5%) and has a 10% stake in ultra deep Block 33, dating from 1999.

    Falcon is thought to be owned by local business group Grupo António Mosquito (GAM), headed by Luanda businessman Antonio Mosquito Mbakassi, who according to local legend came from very humble origins in Angola’s Huambo province. GAM has the Audi and Volkswagen dealerships and may list on the Angola Stock Exchange (BVA). It is thought to hold a significant stake in São Tomé e Príncipe’s Banco Equador, which was reborn in 2004 following its 2001 collapse.

    Falcon offered a signature bonus of $725m for Block 18.

    Persistent rumour connects Falcon to controversial French businessman Pierre Falcone, who remains accused of involvement in arms sales from eastern Europe to Angola in the 1990s.

    Somoil and others

    Somoil has been something of a fast mover, securing stakes in three blocks offshore. In early 2007 it announced it had won a 50% stake in Block BT REC-18 in Brazil’s Bahia state. Its partner is Brazilian junior Starfish Oil & Gas, which like Somoil is said to have good ties to key officials.

    Somoil’s chief executive Alberto Almeida de Sousa and Oil Minister Desidério da Graça Veríssimo da Costa have long been linked. Industry sources told African Energy in 2005 that Somoil’s creation was encouraged by the Futungo (AE 91/1).

    De Sousa was formerly with Sonangol, as was fellow Somoil executive Mario Caetano.

    Those with fewer assets include Initial Oil and Gas Lda, with 10% in Block 6/06, and Grupo Gema, which holds 5% in Block 18/06. Initial has been linked to long-serving, now retired Angolan diplomat and former Sonangol executive Herminio Joaquim Escorcio.

    Grupo Gema, headed by José Leitão da Costa e Silva, is a holding company with interests in banking, commerce, mining, agriculture and now oil.

    Among the juniors partnering foreign players is Nexoil Corporation, which has linked up with Perth-based CityView Corporation in an attempt to gain Kwanza basin acreage.

    CityView said in August, “no onshore Kwanza Basin licences have yet been granted, but we have been advised that this will happen before the end of the year and we are ready for it.”

    CityView head Mark Smyth told African Energy last month that “we have advised our co-venturer Nexoil as to the areas we wish to select and are waiting the outcome of their lobbying.” CityView is also attempting to increase its assets in Cameroon.

    Guinea-Bissau play

    Less well known is the Luanda-based Sociedade de Hidrocarbonetos de Angola, which in May successfully bid for Guinea-Bissau’s Block 7A, but as yet does not have anything at home. One source confirmed that SHA is still in negotiation with Guinea-Bissau’s Petroguin.


    Things have changed since this report of course with the unexpected delays on the concessions which was totally out of CityViews control and I agree with the company that the breathing space gave us more time to cement relations anyway the report gives an insite on what's happening.

    I think if CityView was trying to enter the oil game in Angola or anywhere in Africa for that matter today, they wouldn't have a ghost of a chance of making it.

    It's not what you know it's who you know and like CityView in Angola, you have to "in to win" if you get my drift.

    Hopefully we will see some of you at the AGM

    Tax deductable of course, LOL



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