Insight
Bridging the gap: Angola's new incremental production incentives
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Angola has introduced new fiscal incentives for incremental offshore oil projects to boost investment and production. The improved terms include lower tax rates, higher cost recovery ceilings, and reduced government profit share for qualifying projects. To assess the implications, we analysed four model fields representing potential infill or tieback projects. Our analysis shows the incentives significantly enhance project economics, increasing contractor NPV by US$2-5 per barrel. Different value drivers emerge for each project type. The incentives aim to unlock smaller infill and tieback opportunities at mature assets. They demonstrate Angola's proactive approach to maintaining its upstream sector.
Table of contents
- Executive summary
- Why is Angola revising its fiscal terms?
-
The Incremental Production incentives
- Concession terms
- Production sharing contract (PSC) terms
- Higher cost recovery ceiling:
- More generous profit sharing:
- Corporate income tax reduction:
- Exploration incentive
- Key eligibility criteria
- How has the industry reacted so far?
-
Analysis of the new terms
- All model projects become more attractive under the incremental terms
- Different value enablers for different project types
- What’s in it for the government?
- How do the incremental terms compare to the marginal field terms?
- Negotiable and variable elements
- Conclusions
Tables and charts
This report includes the following images and tables:
- Fiscal comparison
- Model incremental projects
- Cost recovery ceiling for incremental projects in Shelf PSCs
- Cost recovery ceiling for incremental projects in Deepwater PSCs
- Valuations summary
- Contractor remaining NPV10 – Project 1
- Contractor remaining NPV10 – Project 2
- Contractor remaining NPV10 – Project 3
- Contractor remaining NPV10 – Project 4
- Incremental terms vs marginal terms - Project 2
What's included
This report contains:
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