LUANDA, Angola – The National Oil Company (NOC) of Angola, Sonangol, is accelerating its restructuring programme and exploring new financial solutions that meet the requirements of today’s international debt market.
The move is in response to the changing financial landscape as “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” the company said this week.
As the international community seeks consensus about how to drive energy transition globally, major international banks – including many that are prominently involved in the financing of oil and gas projects – 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$ 37 trillion. 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 unique to Sonangol in the face of a global economic recession. In the US, for example, over 107 oil and gas companies filed for bankruptcy, requiring the courts to oversee debt restructuring totalling USD$98 billion.
And under its veteran chair and CEO, Sebastião Gaspar Martins, Sonangol is accelerating its divestment programme. It is hoped that the programme will bring in billions of dollars in much-needed financing through the sale of non-core assets.
Sanangol has over 70 shareholdings 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.
The vision for a ‘Sonangol of the future’, as set forth by the leadership of the company, is one that will refocus its efforts on running together with its international partners and current operating assets in the most efficient manner possible, while at the same time investing in new exploration projects onshore and in Angola’s traditionally prolific offshore basins, the statement said.
“Sonangol’s restructuring also includes growing investments in the production of renewable energy. Together with oil majors ENI and TotalEnergies, the Angolan NOC has embarked on solar energy projects expected to come online in 2022, with an initial output target of over 60MW. Initial studies to access the potential of Green Hydrogen production in Angola is also underway,” reads the statement.
The company’s solar projects represent an opportunity for the company to structure carbon neutral financing deals.
“More and more often, we see major oil companies embark on the structuring of such deals, by combining their demand for finance for traditional oil and gas projects with that for associated carbon offsetting initiatives. In many cases, companies simply purchase carbon credits under a recognised program such as the U.N.-sponsored CORSIA. CORSIA uses the proceeds from the sale of such credits to mass-plant trees or develop solar power farms in a bid to reduce greenhouse-gas emissions. Such novel structuring is likely to continue to grow, as more and more banks sign pledges committing themselves to net zero targets.”