AOG 2022 Positions NOCs as Key Drivers of Hydrocarbon Market Growth

Hydrocarbon. AOG 2022

NOCs not only contribute the lion’s share of government revenue for most hydrocarbon producers, but also hold the key to ensuring sovereignty and maintaining ownership over domestic natural resources. Yet the role of NOCs in Africa in managing hydrocarbon resources has been largely underwhelming and is instead characterized by limited upstream and downstream production capacity, high operating costs, overstaffing and continued reliance on International Oil Companies (IOCs) and private sector players.

As a result, several African oil producers – including Angola – have implemented aggressive reforms marked primarily by privatization and sector liberalization to enhance the competitiveness of their national oil firms. Panelists will deliberate on strategies for NOCs to achieve operational efficiencies, establish good governance, build internal capabilities and replicate the degree of autonomy and free-market discipline held by most IOCs.

Emphasizing targets for increased competitiveness and profitability, Angola’s national oil company Sonangol implemented its Regeneration Program in November 2018, refocusing its activities within the primary exploration and production value chain and divesting its non-core assets through a four-year privatization program. The state-driven program also established a separate mandate for Angola’s National Agency of Oil, Gas and Biofuels (ANPG) as independent concessionaire and repositioned the Regulatory Institute for Oil Derivatives (IRDP) as the official downstream regulator. Representing one of the most comprehensive state reforms in African oil and gas history, panelists will discuss the impact of the program which concluded its final phase in June 2021 – on Angola’s energy sector and how Sonangol can serve as a reference for NOCs across the African continent.

In addition to transforming state-owned entities into more competitive, agile companies, privatization has the potential to generate significant capital through IPO and alleviate the obligation of the government to single-handedly finance the country’s most capital-intensive sector. Sonangol, for its part, is intending to move forward with an IPO in the coming years as part of its long-term strategy for regeneration. Once privatized, African NOCs will be better positioned to compete in a liberalized or semi-liberalized sector that promotes free-market competition. The panel will discuss how African NOCs can better compete with privately held or foreign operators for concessions and develop their operational and technical capabilities.

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Onur Yilmaz

Onur Yilmaz

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