Market insight to ease investment in AngolaJune 9, 2022
Alves Michael, managing director of AFC MERCY, talks to The Energy Year about how the company facilitates new investment in Angola and the key opportunities and challenges for local companies in the oil and gas sector. AFC MERCY is an Angolan company providing consulting services for oil and gas activities.
What are the main challenges preventing foreign companies from investing more in Angola and what are AFC MERCY’s solutions for overcoming them?
A key challenge is transparency. One of the most common fears among investors in Angola is whether they will be able to repatriate their earnings. When we are partnering with someone, we ensure that all the clauses will be in line with the local regulation for protecting the foreign partners’ capital repatriation and most important following the requirements by the National Bank of Angola, which has recently been playing an extraordinary role in making our kwanzas stronger and helping foreign investors to repatriate their earnings via simplified processes.
Now, Angola is sending the message to the world that we can attract strategic investments that can keep the economy propelling ahead, and, as AFC MERCY, we are here to guide and co-operate daily to ensure investors’ interests and local government expectations are both delivered to each party.
How is the Angolan upstream sector’s resilience being bolstered?
The Angolan upstream sector has made significant reforms, of which we are now experiencing the benefits. These include making the upstream sector competitive and transparent and empowering local companies. The Ministry of Mineral Resources and Petroleum created the new national concessionaire, the ANPG [National Oil, Gas and Biofuels Agency], and isolated Sonangol to its core business as an energy company. The ANPG became the national concessionaire and has been implementing strategic policies that we are now experiencing the advantages of. This was done in order to make the framework more transparent and to ensure that foreign companies can trust Angola and invest more.
Another step was taken with the general approval for the oil block concession strategy from 2019 to 2025, the release in 2021 of Decree 249/21, which gives guidance on rules and procedures for attribution of oil concessions under the permanent offer regime.
In order to promote the participation of local companies in the oil and gas sector, in line with the National Development Plan 2018-2022, the Presidential Decree 271/20 of 20th October was published. The publication of this decree seeks to guarantee and preserve the national interest by promoting the national entrepreneurship of Angolan companies and companies of Angolan rights, the protection and improvement of competitiveness in the national industry, job creation, training of national manpower and job protection for Angolan technicians and experts.
All of this has been done to make the sector more resilient and Angola even more competitive.
What kind of services do you provide?
AFC MERCY, with a solid presence in Luanda, Cabinda and Soyo, offers local content consulting services. We ensure your new investment in Angola is accompanied by our vast team of experienced professionals, which will start adding your value from the tendering phase till execution in compliance with Angolan oil and gas requirements.
AFC MERCY provides integrated crew management services for vessels and rigs. This includes recruitment, placement and associated logistics (e.g., visas, transportation, hotels and mobilisation support of crew heading offshore, etc.).
From our network of valued partners are also offered rope access services, NDT inspection from Angola and STCW Training programmes for deck officers and ratings from Cape Town.
How has AFC MERCY positioned itself as a quality company here in Angola?
AFC Mercy offers integrated solutions, efficient crew management and reliable consulting services, mostly on local content matters and customised solutions that respond to offshore services logistics needs.
The Angolan government opened the door to attract more business and to involve more players, meaning that local companies need to have a solid in-country knowledge in order to help these foreign companies coming to invest in Angola. Some investors, if they don’t understand the bureaucratic process of doing business in a country, will either not invest or not be able to decide how much to invest. AFC MERCY’s added value in such a chain is to make business simple.
Can you walk us through AFC MERCY’s objectives in terms of partnerships?
Projects in the oil industry are always done in partnership since the risk is very high. Our main objective is to strengthen our relationship for crew management and officers’ STCW training, as well as rig and vessel NDT inspections, and provide efficient shipping solutions to offshore vessels.
What are the key opportunities and challenges for local companies as they try to further penetrate Angola’s oil and gas sector?
We have plenty of opportunities because we still have a lot of oil, and many blocks still to be explored. If we invest in our refineries, and we don’t just sell oil, but also the refined products, that’s a big opportunity.
Regarding the challenges, one of the main barriers that prevents local companies from investing more in the oil and gas sector is funding. Our banking system is very strict, and many local players cannot take up such a risk because of the financial restrictions. For instance, it is very hard to go to a bank and ask for X million to support rig operations for a client.
Another important challenge is education and the need for more local know-how when dealing with the offshore industry. For this reason, we want the banking sector to be more involved. We can do a lot more for the industry, but we need money to do that. This is not only for the services, but because we need to import know-how.
What is AFC MERCY’s position in the provision of training?
Angola is not IMO whitelisted, and this is why we have all offshore and marine personnel being trained overseas, which raises production costs. AFC MERCY represents SEATRAIN (from South Africa) in Angola and SEATRAIN offers SAMSA accredited marine training to deck, engineering officers and ratings and various offshore functions.
How do you expect new developments in the downstream to impact your activities?
We believe Angola will keep up the current wave of reforms, which will impact local companies a lot, and local companies are the majority making up the downstream class. A solid finance system and proper execution of the current regulations would help the sector a lot. On the other hand, the channels to fuel the non-oil sectors need to be clearly defined by the law so that our strength in the oil industry can also systematically impact the agriculture and manufacturing sectors.
What is your strategy to ensure business continuity for your company?
Our number one strategy is always to display the doors the government has opened. If a company arrives today in Luanda, after having worked with us it will have its mind open and know what the market looks like.
Whatever it sees as difficult, we strive to make it simple by joining our efforts. Our aim is to show what is available here, and how to take advantage of it in an efficient way, compliant with all government legal requirements. The government is calling foreign investors to come to Angola with their capital, and they will find us with know-how and manpower for the local market, ready to work alongside them and make our nation stronger in Africa.