OPEC member Angola is halving the tax rates on development of oil discoveries with less than 300 million barrels of reserves as new President Joao Lourenco is trying to incentivize oil and gas investment in the African country to stop the decline in oil production.
In a series of presidential decrees, Angola has just cut petroleum production tax on so-called marginal fields-such with less than 300 million barrels of reserves-to 10 percent from the typical 20 percent tax. The tax reforms also halved the petroleum income tax on marginal fields to 25 percent from 50 percent.
For gas reserves, Angola is introducing a new legislation for predominantly gas fields outlining the legislative and tax framework for companies to explore for, extract, and sell natural gas. Under the gas tax regime, petroleum production tax will be 5 percent and petroleum income tax 25 percent.
Angola is also introducing a more flexible regime for boundaries on blocks if reserves extend beyond the originally outlined concession block, as long as they don't lie in an area that is already under a concession contract.
Angola-whose economy has suffered from the low oil prices in recent years-has also been struggling to attract international investments in its deepwater higher-breakeven oil resources. Related: EVs Could Erase 7 Million Bpd In Demand
Angola's oil fields are maturing and are nearing depletion. Unless new investments are made in new discoveries, things will continue getting worse, the International Energy Agency (IEA) warned in its Oil 2018 report in March 2018.
Lourenco, Angola's first new president since 1979, is trying to implement a reform package that could both spur economic growth and investment in the country's oil resources.
Last month, Fitch Ratings raised its outlook on the African country to 'stable' from 'negative', saying that its prospects for economic recovery have improved significantly as a result of higher oil prices and fiscal reforms.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More