Identifier
Created
Classification
Origin
06LUANDA336
2006-04-06 12:06:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Luanda
Cable title:  

ANGOLA:NEWEST OIL CONCESSIONS:LANDMARK

Tags:  EPET ENRG ETRD EINV KCOR CH AO 
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VZCZCXRO4338
RR RUEHDE RUEHDU RUEHJO RUEHMR
DE RUEHLU #0336 0961206
ZNR UUUUU ZZH
R 061206Z APR 06
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 2687
INFO RUEHHH/OPEC COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS LUANDA 000336 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EPET ENRG ETRD EINV KCOR CH AO
SUBJECT: ANGOLA:NEWEST OIL CONCESSIONS:LANDMARK
TRANSPARENCY AND PRICES OFFERED

REF: A. LUANDA 00176

B. 05 LUANDA 01332

UNCLAS LUANDA 000336

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EPET ENRG ETRD EINV KCOR CH AO
SUBJECT: ANGOLA:NEWEST OIL CONCESSIONS:LANDMARK
TRANSPARENCY AND PRICES OFFERED

REF: A. LUANDA 00176

B. 05 LUANDA 01332


1. (U) Summary: In a formal ceremony to open and announce
bids for the current licensing round of oil concessions in
Angola, Sonangol entered a new era of transparency, reading
aloud details on each bid, including the signature bonus. In
an afternoon of firsts, Italian petroleum producer ENI
offered a whopping USD 902 million as a signature bonus for
the relinquished areas of Block 15. End Summary.


2. (U) Sonangol, the Angolan oil parastatal, on Monday, April
3, 2006, held a Ceremony for the Opening of the Proposals for
the Licensing Rounds of blocks 1, 5, 6, and 26 and the
relinquished areas of Block 15. The meeting was open to
representatives of those companies submitting bids, although
not to the general public or the press. In a level of
transparency not before seen in Angola ) or in many
oil-producing countries ) sealed envelopes containing the
bids were opened in front of the group and bids were read
aloud, including the signature bonus offers. Sonangol will
convoke a jury during the next thirty days to examine the
bids, work programs, and social programs to determine the
operators for each block. Note: Blocks 17 and 18, which were
previously linked to the construction of the planned oil
refinery, have been delinked and thus bidders were given more
time to submit bids. The Ceremony for the Opening of
Proposals for these blocks will occur on May 8, 2006.


3. (U) The stunning news of the afternoon was the signing
bonus offered by Italian oil company ENI for the relinquished
parts of Block 15 ) a whopping USD 902 million. This marks
a world record for a signature bonus offer; the average
previously hovered at USD 350-400 million. The second
largest signature bonus offer was made by SSI for USD 750
million. This information was divulged to the press by
Chevron,s legal representative and confirmed by our contacts
present during the ceremony. Experts believe that ENI has
based its calculations on expectations of production of 1
billion barrels and oil prices above USD 50 per barrel.


4. (SBU) US based Exxon-Mobil is the original operator for
Block 15. Its current production through the Kizomba A and B
wells total approximately 585,000 bpd. Exxon-Mobil
relinquished parts of Block 15 not in production as the time
limit had expired on its exploration contract. We understand
that Exxon-Mobil submitted a signature bonus bid of USD 150
million on the relinquished parts of Block 15. Multinational
oil company reps also told us that SSI, the joint venture
between Sonangol and Sinopec, submitted high bids for a
number of the blocks. Many of the western oil companies
expressed astonishment at the elevated signing bonuses
offered, and expressed concern that they may walk away with
little to show from the current round.

EFIRD