Local Engagement Key to Oil & Gas (O&G) Contract Success in Angola, Says CLG
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Pan-African legal, tax and business advisory group CLG highlighted local engagement and mutual beneficiation as critical to ensuring smooth contract execution when entering Angola’s merger and acquisition landscape, as part of its pre-conference workshop at Angola Oil & Gas 2024.
As one of the largest oil and gas producers in Africa, Angola has made gains toward establishing itself as a business-friendly market, having instituted a complete overhaul of its regulatory environment under efforts to attract foreign investment. During a strategic workshop in Luanda on Tuesday, CLG CEO and Managing Partner Zion Adeoye examined key concepts in oil and gas contracts in Angola, exploring stakeholder objectives while creating awareness of the Angolan regulatory industry.
“Getting the deal done does not just mean signing an agreement. It means actually getting to the point to be able to operate with the agreement and – when you exit – leaving goodwill behind,” Adeoye stated, adding, “It’s important to understand the limitations of the existing legal and regulatory framework when doing business in a country or entering a country’s market.”
During his presentation, Adeoye highlighted engagement with the local private sector as key to doing successful business in a foreign oil and gas market, such as Angola’s. He noted that local content is a national priority and that making early deals with the private sector is imperative to making subsequent deals with government entities. Engagement with local communities and businesses, including local contractors and services providers, was noted as being integral to doing business in Angola’s oil and gas sector.
To remain competitive in attracting foreign capital and technology, Angola has implemented a series of measures to enhance its investment landscape. These include offering attractive fiscal terms for onshore exploration and incentivizing local Angolan companies through a strengthened local content policy.
In addition to local content legislation, Adeoye stressed the importance of local advisors when making deals within Angola’s oil and gas sector. One error that investors make, Adeoye highlighted, is assuming that one legal aspect applies to numerous different jurisdictions across the continent. It is important for international investors to make differentiations between jurisdictions and obtain local advice from the localities in which they are engaging.
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With the adoption of the Tax Benefit Code in 2022, as well as amended fiscals associated with incremental production, Angola has begun to prioritize an enabling environment for companies to enter or expand within the market. Understanding this, according to Adeoye, is set to lay the foundation for international investors to succeed in securing merger and acquisition deals across the Angolan oil and gas industry in 2024 and beyond.
In 2019, the government of Angola introduced a six-year licensing round offering regular block opportunities for companies. Shortly after this, the government introduced a risk-reducing alternative, with the reformed Petroleum Activities Law allowing the country to award risk service contracts when the public bid process is unlikely to succeed. As such, Adeoye underscored the importance of equitable contract structuring as vital for long-term success. He also indicated that aligning the objectives of stakeholders is poised to mitigate risks and ensure best negotiation practices, while maintaining clarity and enforceability of contracts.
The AOG 2024 pre-conference served as a prelude to the main event, taking place on October 2-3. Featuring a series of workshops and presentations, the pre-conference program offers strategic insight into various segments of the oil and gas value chain in Angola.
