New regulations impact Angola’s legal landscape

Angola

Formosa Oliveira, managing partner of Oliveira & Associados, talks to The Energy Year about how the new oil sector regulations in Angola have affected the legal services market and the challenges companies face in implementing the local content regulatory framework. Oliveira & Associados is an Angolan law firm advising companies and institutions nationally and internationally.

How have the new petroleum industry regulations affected the legal services market?
With the petroleum regulatory reforms, including the local content law decree, the market right now is ripe for new and young law firms to gain market share, and the market is huge. There are plenty of opportunities for us with the rising Angolan oil and gas companies. They need support in several areas. We are getting many inquiries about the local content regulation because it changed a lot. The top questions being asked are: what percentage of Angolan ownership do you need to be considered a local content company, and what services and how many people do you need to hire locally to be compliant?
Generally, energy companies have long-established business with Angola’s largest and oldest law firms. This business is based on trust and relationships more than skills. Younger firms such as ours can only break into these markets when these massive energy companies seek a swift response from their law firm and don’t get it on time, as expected. This is how our firm is gaining clients. They start relatively small and with time, the services requested increase.

Do local and international companies require different types of legal services?
When clients approach us, especially foreign ones, we try to provide them with the whole legal framework and how it works in Angola, because it is different from their countries. For instance, legislation is not fully available and updated online, it constantly changes and the local institutions don’t work in a timely manner. Sometimes, people think there are huge differences between Angolan companies and foreign companies regarding the legal framework, but it is the same, except in some industries such as oil and gas, where the line is clear as to how they operate.
Within Angolan companies, there is little legal culture. Sometimes, they don’t have the proper structure and legal framework to operate. When they come to us, they’re already in trouble. We do more responsive legal actions than proactive and preventive ones, and we try to change that as soon as they become our clients.

What are the main challenges you perceive in the implementation of the local content regulatory framework?
Oil and gas is not a business that you can play wrong. The investment involved is in the millions, and you cannot risk not having the proper services provided. International companies want to be sure that the services included in the exclusivity list must be provided in Angola since they can perhaps have them done by a foreign company at a lower rate. They need to be sure beforehand of this when they make their business plans.
The true challenge is ensuring that local companies can provide services at the required level. This development will take a lot of time. We still don’t have the people to handle 100% of the Angolan content requested. For instance, we have oil engineering training at Sumbe University, but the training is in Portuguese, not English, which of course is a major disadvantage because oil and gas business is conducted in English. I think the only country that does oil and gas business in Portuguese is Brazil.
Payment terms are the most important factor not treated by the local content law. The most difficult aspect for small local companies entering the oil and gas market is surviving the payment terms imposed by IOCs. Sometimes it takes four months to get paid, provided that the service provider works according to the timelines, meets the invoicing cut-off dates and avoids invoicing mistakes.

Where does your firm stand in the energy services chain, and in which segment do you expect to grow the most?
We are a young law firm with six years of operations. Many smaller law firms are emerging because of the market demand, especially for Angolan companies. We provide services for companies operating in mining, commerce and oil and gas.
Regarding oil and gas, we support small service providers, such as marine companies, but we also have experience in working with larger oilfield service providers.
I think mining will be the next big sector, and because of everything it involves, such as dealing with local communities and the environment, I find this sector fascinating. In the legal practice, we read and we provide answers, but if you don’t understand the business itself, you don’t know how to protect it. We are developing this know-how in mining too. As a growing young firm, we are very much focused on training our staff to be good legal advisers, not just law readers.

What are the latest trends affecting the regulation of the mining sector in Angola?
With the creation of the ANPG [National Oil, Gas and Biofuels Agency] for oil and gas and the creation of the National Agency of Mineral Resources for mining, the sector is being reorganised. This new agency is independent from Endiama, which now focuses on its core business as the diamond company.
We have a legal framework already in place. It needs to be updated according to the movement of the market. To keep their licences, mining companies need to do three things. They must show that they have the financial capability, that they will protect the environment and that they will protect the communities around them.

What are the main changes in the new 2021 Private Investment Law, and how will they affect Angola’s ease of doing business?
This reform is encouraging international investors to come do business here. It helped a lot because before it was mandatory to have an Angolan shareholder with you. Now you don’t need one. It’s good for business because it’s more appealing to invest when you’re not being told who you need to partner up with.
Of course, some areas are more sensitive, such as finance. International investors like to use their financial staff from outside the country. Now it’s mandatory to have an Angolan accountant to sign the books, and most accountants right now are not willing to sign with closed eyes. This brings transparency to the business environment.
The process to pay international suppliers has also been simplified, as the need to register all contracts at the Ministry of Economy and approve payments through the BNA [the National Bank of Angola] has been removed. Now private banks can do these payments, which makes the process much faster. They upload all the information that goes to the BNA’s SINOC platform. If there is a red flag, they will immediately spot it. I think providing these tools and opening the market is good for everybody, as these investments generate employment and have a positive effect on the national economy.

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