The oil industry is one of the pillars of the Angolan economy, accounting for more than a third of the country's GDP and over 90% of its exports.
It also generates around 70% of total government budget revenues and is the main source of foreign direct investment (FDI). And its importance is unlikely to diminish.
Angola's crude oil production levels have been trending downwards for some time as existing fields mature, but the country was still extracting over 1.1 million barrels per day (bpd) in May 2023, and is encouraging foreign investors to look for new reserves in untapped sections of its offshore zone.
In addition, Angola is taking a closer look at its natural gas and associated gas resources, and is striving to increase production to take advantage of rising demand, particularly in Europe.
It is in such circumstances that resource nationalism - a political approach whereby governments, acting on behalf of their constituents, assert and retain control over natural resources rather than allowing private sector entities to become full stakeholders - becomes attractive.
But Angola has not succumbed to this temptation. On the contrary, its government, under the leadership of President João Lourenço, is pursuing a remarkable reform program designed to enable Sonangol, the national oil company (NOC), to represent local interests while working in cooperation with outside investors.
The government began laying the foundations for these reforms in 2019, during Mr. Lourenço's first term in office. In February of that year, the president signed a decree establishing the National Agency for Oil, Gas and Biofuels (ANPG).
The decree stipulated that ANPG would act as the country's concessionaire for oil and gas projects, making the new agency solely responsible for the regulation, supervision and control of activities related to oil and gas exploration and production. In so doing, it stripped Sonangol of this function.
The company had previously served as a national concessionaire while acting as a partner or shareholder in oil and gas projects. However, once ANPG took over the role of concessionaire, it was no longer responsible for regulatory tasks and was able to concentrate on operational issues. It is true that the NOC was already taking steps in this direction.
Since mid-2017, it has been working to divest non-core units, i.e. subsidiaries focused on other types of business activities, such as finance, real estate, travel and food services.
But it was the creation of the new agency that really paved the way for Sonangol to operate more like an oil company and less like a government bureaucracy.
Since last September, however, the Angolan government has clarified its intentions. It stated that the IPO would only take place once Sonangol had achieved a number of key objectives. Ultimately, the aim is to make Sonagol a national oil company, focused on its core activities.