Chevron is discussing revised and more attractive tax rules for investment in Angola with the local government and state-run oil company Sonangol—talks that will determine Chevron’s future investment in the country—Chevron Vice-president Jay Johnson was quoted as saying on Wednesday.
According to Angolan state radio, Johnson—who is visiting Angola—said, as quoted by Reuters:
“Existing tax terms are not very attractive … We have been working both with Sonangol and with various departments of the government of Angola so that we can make it feasible and we can invest. Our investment will depend on what will result from these negotiations.”
Angola’s economy has been struggling with the low oil prices, and talks over amending tax regimes might be difficult because the African country needs revenues, while international oil firms are trying to maximize profits in the lower-for-longer oil world.
The Angolan economy did not grow in 2016, and GDP is expected to increase by 1.5 percent this year, while consumer prices will continue to soar, according to projections by the International Monetary Fund (IMF).
Oil production and its supporting activities account for around 45 percent of Angola’s GDP and more than 95 percent of exports, according to data supplied by OPEC.
The OPEC supply-cut deal – to which it seems Angola has been adhering – has not affected Chevron’s production in the country, according to Johnson.
Angola was one of just three OPEC members that reduced their January output to the levels they had promised.
In Angola, Chevron operates through its wholly-owned subsidiary Cabinda Gulf Oil Company Limited in exploration and production: Angola LNG, an LNG plant in which Chevron holds 36.4 percent, and the Congo River Canyon Crossing Pipeline.
According to the Angolan government’s website, Chevron’s Johnson said that the U.S. company would continue to invest in the Angola LNG project, but he said that new investment was contingent on revised fiscal terms that the oil major is discussing with Sonangol and the government.
By Tsvetana Paraskova for Oilprice.com