Angola cuts tax rates for development of marginal oilfields

22nd May 2018 By: Reuters

Angola has halved headline tax rates for marginal oil fields as part of a series of laws to drive investment and reverse declining output in Africa's second largest crude producer.

The series of presidential decrees, published in the Official Gazette on Friday and made available by the oil ministry on Monday, outlines new legislation for the development of marginal fields, the creation of a regulator for fuel products and natural gas rights.

Angola previously did not have any specific legislation covering the exploration and production of natural gas.

Angolan oil production is set to decline 36% by 2023, according to government data. President Joao Lourenco is scrambling to rekindle investment in a sector that accounts for 95% of the country's exports.

For marginal fields, which the law defines as a discovery with reserves of less than 300 million barrels, petroleum production tax was cut to 10% from the usual 20%, while petroleum income tax was reduced to 25% from 50%.

A separate decree published at the same time called for a flexible approach to concession boundaries, with reserves that spread beyond the original limits being rolled into current blocks as long as they did not cross into an area already under contract.

New gas legislation gives oil companies a specific legislative framework to explore, develop and sell natural gas for the first time in Angola.

It outlined a tax regime on predominantly gas fields of 5% on production and 25% on income.

The series of decrees created a new body to regulate the oil derivatives market, including the import and distribution of fuels.

The body known as the Regulatory Institute for Oil Derivatives (IRDP) will be based in the capital Luanda and its head will be chosen by the minister for oil and mines.