Sonangol Sinopec International

Last updated
Sonangol Sinopec International Limited
Industry Petroleum
FoundedSeptember 2004;20 years ago (September 2004)
HeadquartersTenth floor Two Pacific Place, 88 Queensway, Admiralty,
Hong Kong
Key people
Subsidiaries
  • SSI 31 Limited
  • SSI 32 Limited

Sonangol Sinopec International Limited (SSI) is a Chinese-Angolan petroleum company created in 2004 that is part of the Hong Kong based 88 Queensway group. [1] [2] It is engaged in the oil and gas operations in Angola through the ownership of various oil blocks. [3]

Contents

History

Chart showing owning entities of Sonangol Sinopec International Ltd as of the company's founding in 2004. SSI ownership chart 2004.svg
Chart showing owning entities of Sonangol Sinopec International Ltd as of the company's founding in 2004.

Founding

SSI was created in September 2004 as a joint venture between Cayman Islands registered Sinopec Group subsidiary Sinopec Overseas Oil & Gas Limited (SOOGL) and two other 88 Queensway group companies: China Sonangol International Holding Limited (CSIH), which had been founded only a month earlier and possessed no assets of its own, [2] [4] and Dayuan (then known as Beiya until its name change later that year) International Development Limited. SOOGL owned a controlling 55% stake, with Dayuan and CSIH as minority partners with 31.5% and 13.5%, respectively. [3] [5]

Despite being pushed for primarily by Sonangol under CEO Manuel Vicente, this arrangement left Sonangol, and therefore the state of Angola, with only 4.05% ownership of SSI through its 30% stake in CSIH, with the rest split between the Chinese state and Dayuan's private owners: Wu Yang, a Chinese businessman; [6] [1] and New Bright International Development. New Bright was owned by Lo Fong Hung and by Veronica Fung Yuen Kwan, the wife of Sam Pa, a Chinese-born citizen of Angola living in Hong Kong whose connections in China and Angola are believed to have helped lubricate SSI's early deals. [4] Hung is director of SSI (and of dozens of other Queensway companies), [1] while her husband Wang Xiangfei is chief financial officer. [3] [5] Yang and Pa have apparent ties with both the Chinese intelligence apparatus and with the Angolan government, including Sonangol's executive leadership. [1] [6]

They got the loan, we paid Shell […] It was, let's say, 800-something [million dollars]. And after that, later on…we called Sinopec.

— Manuel Vicente

SSI involvement in the Lobito Refinery Construction Project

In 2006, SSI was selected by Sonangol to participate in funding the construction of an oil refinery in the port city of Lobito. The Lobito Oil Refinery was expected to have a total cost of US$ 3 billion, employ 8,000 people, and have a capacity of 240,000 barrels per day. However, an agreement was never ultimately reached between Sinopec and the Angolan government. Sinopec's plan called for 80% of the output to go to foreign markets despite Angola regularly suffering its own shortages of refined petroleum products. Manuel Vicente told Angolan media, "We cannot construct a refinery just to make products for China," while Chang Hexi, the Chinese economic counselor in Angola, stated the company was simply disinterested in the project. SSI was ultimately uninvolved in the refinery's construction, [1] which would ultimately not begin until 2015, [7] and would then be paused due to lack of funding until 2021. [8]

Francisco Gonçalves bribery scandal

SSI vice president Francisco Gonçalves was among the Angolan businessmen and government officials implicated through the Panama Papers in 2016. Leaked emails reveal him taking bribes from Monaco based consultancy firm Unaoil, described as a "corruption factory," [9] [10] totalling about US$3.5 million as part of a scheme to gain Swiss equipment supplier Sulzer favorable deals with SSI's parent company, Sonangol." [11] [12]

We need to be able to bring FG on board as he appears to be involved in a big part of the business.

— Robert Bald, Unaoil employee, leaked 2011 email

2010 majority buyout by Sinopec

Seeking to expand its upstream capabilities, on March 8, 2010, Sinopec announced an agreement to purchase a 55% SSI stake for US$2.46 billion. This would be Sinopec's first direct acquisition of overseas assets, and China received some Western criticism for it, which it rebuffed as hypocritical. [13]

Operations

The primary business of SSI is in holding non-operator equity of oil concessionary zones, known as oil blocks, off the coast of Angola. Per Decree-Law No. 5/01, Sonangol E.P. is the national oil concessionary of Angola; that is to say it is the issuer of equity in all petroleum production zones in the country. [14]

SSI oil assets in Angola
Oil assetSSI stake (%)Acquisition yearOperated byReserves (million barrels)Known investment (US$ billions)Production startMajor wellDepth at drill sites (meters)
Block 18 [5] 502004 BP 1,0001.4October 2007Greater Plutonio [15] 1,200-1,500
Block 15/06 (SSI 15) [5] 25 [16] 2006 Eni S.p.A. 35%, Sonangol P & P 15%, TotalEnergies 15%, Falcon Oil 5%, Gemas 5%1,5001.1September 2021Cabaça Norte [17] 500
Block 17/06 (SSI 17) [5] 27.52006TotalEnergies 26%, Sonangol E.P. 24%, Somoil 10%, Falcon Oil 5%, ACR 5%, Partex 2.5%1,0001.1October 2009 [18] Gardenia [5] and Begonia [19] 600-1,900
Block 18/06 (SSI 18) [5] 402006 Petrobras 30%, Sonangol EP 20%, Falcon Oil 5%, Gemas 5%700November 2009Magnesium-01 [19] 750-1,750
Block 31* [20] 15**2013**BP 26.67%, Sonangol E.P. 25%, Sonangol P&P 20%, Statoil 13.33%, Sonangol Sinopec 10%, SSI 31 Ltd 5% [16] December 6, 2012Plutão, Saturno, Vênus, and Marte1,500-2,500
Block 32*** [21] 202014TotalEnergies6502019Kaombo Ultra-Deep1,400-1,950
*5% through Sonangol Sinopec International 31 Limited

**5% before 2013 ***through Sonangol Sinopec International 32 Limited

Block 18

Map of Angolan offshore oil blocks. Angola-offshore-oil-block-map-numbered.png
Map of Angolan offshore oil blocks.

In December 2004, a 50% stake in deepwater block 18 held by Royal Dutch Shell was returned to Sonangol under executive decree 148/2004. This equity had been promised to the Indian company ONGC-Videsh but, due to Sonangol's political preference for doing business with a Chinese company as well as SSI's much higher US$725 million bid, SSI received the stake instead. Angolan oil minister Desidério Costa formalized the transfer in February 2005. [5] Using Sinopec as a guarantor for loans from international and Chinese banks, SSI raised US$1.6 billion to develop production infrastructure on the oil block. [3] [5] [22]

The shallower eastern half of block 18 started producing oil in October 2007, with production reaching as high as 240,000 barrels per day. [3] [23] The success in block 18 encouraged the Sinopec group to increase its involvement in the Angolan oil industry. [5]

Blocks 15/06, 17/06, and 18/06

In May 2006, SSI acquired equity in several new oil licenses: 20% in Block 15/06, operated by Eni S.p.A. subsidiary AGIP, 27.5% in Block 17/06, operated by TotalEnergies, and 40% in Block 18/06, operated by Petrobras. The amounts paid in the 2006 bidding round were the highest per-acre bids to date anywhere in the world. [5] SSI bid over US$2 billion for two sites, outbidding both ExxonMobil and British Petroleum by hundreds of millions of dollars. The blocks were renamed SSI 15, SSI 17, and SSI 18. [24]

Blocks 3/05 and 3/05A

In 2007, SSI received equity in the highly lucrative shallow water Blocks 3/05 and 3/05A south of Soyo. These blocks had been held by Total prior to their revocation in the aftermath of the Angolagate arms dealing scandal and handed over to CSIH before their transfer to SSI to be held for only a brief period. [3] [25]

Block 31

After a purchase by parent company China Petrochemical Corporation of Marathon Oil's stake in Block 31 in 2013, Sonangol Sinopec International 31 Ltd, an SSI subsidiary, owns a total of 15% of the block. [26] [27] [28] SSI 31 Limited previously owned 5%. [20]

Block 32

SSI owns 20% of Block 32 through its subsidiary Sonangol Sinopec International 32 Limited. Block 32, in deep waters 260 kilometers from Luanda, is served by the Kaombo Ultra-Deep Offshore Project, operated by Total. [21] [29] When the project was launched in 2014, the Kaombo well was expected to produce 230,000 barrels per day. [30] Other SSI 32 holders include Esso subsidiary Esso Exploration and Production Angola (Overseas) Limited (15% stake) and Galp Energia (5%). [31]

See also

References

  1. 1 2 3 4 5 Levkowitz, Lee; Ross, Marta McLellan; Warner, J.R. (10 July 2009). The 88 Queensway Group: A Case Study in Chinese Investors' Operations in Angola and Beyond (PDF). United States–China Economic and Security Review Commission. Archived (PDF) from the original on 20 October 2020. Retrieved 7 September 2024.
  2. 1 2 Burgis, Tom (2015). The looting machine: warlords, oligarchs, corporations, smugglers, and the theft of Africa's wealth. New York: PublicAffairs. ISBN   978-1-61039-748-3.
  3. 1 2 3 4 5 6 de Carvalho, Paulo; Kopiński, Dominik; Taylor, Ian (2022). "A Marriage of Convenience on the Rocks? Revisiting the Sino–Angolan Relationship". Africa Spectrum. 57 (1): 5–29. doi:10.1177/00020397211042384. ISSN   0002-0397.
  4. 1 2 "Auditors Probe Sinopec, Savvy Broker in Angola". ChinaFile. 2015-08-11. Archived from the original on 2024-07-24. Retrieved 2024-09-12.
  5. 1 2 3 4 5 6 7 8 9 10 11 Alves, Ana Cristina (2010). The Oil Factor in Sino-Angolan Relations at the Start of the 21st Century (PDF). South African Institute of International Affairs. Archived (PDF) from the original on 2023-08-12. Retrieved 2025-08-07.
  6. 1 2 Burgis, Tom; Sevastopulo, Demetri (2014-08-08). "China in Africa: how Sam Pa became the middleman". Financial Times. Archived from the original on 2024-08-29. Retrieved 2024-09-13.
  7. ↑ "Sonaref Construction to Begin, Finally - Africa's premier report on the oil, gas and energy landscape". africaoilgasreport.com. 2014-12-23. Archived from the original on 2024-05-14. Retrieved 2024-09-12.
  8. ↑ "Project | china.aiddata.org". china.aiddata.org. Retrieved 2024-09-13.
  9. ↑ Baker, Richard; Bachelard, Michael; Quinlan, Daniel; McKenzie, Nick. "Unaoil in Africa". The Age. Archived from the original on 2024-06-24. Retrieved 2024-09-10.
  10. ↑ "The Oil Sector's Corruption Factory in the Middle East". Institute of Energy of South East Europe. Retrieved 2024-09-10.
  11. ↑ "Novo escândalo de corrupção: Cerca de 3,5 milhões de dólares implicam vice-presidente da Sonangol Sinopec". Novo Jornal (in Portuguese). 2016-04-05. Archived from the original on 2024-02-28. Retrieved 2024-09-10.
  12. ↑ Bald, Robert (15 April 2011). "Sulzer" (PDF).
  13. ↑ "Sinopec to Purchase Angolan Oil Assets for US$2.46 Billion". China Briefing News. 2010-03-30. Retrieved 2025-08-13.
  14. ↑ "Decree-Law No. 5/01 regulating Oil concessions to SONANGOL-E.P." Food and Agriculture Organization of the United Nations . Archived from the original on 2025-02-01. Retrieved 2024-09-13.
  15. ↑ "Greater Plutonio Development, Block 18, Offshore Angola". Offshore Technology. Archived from the original on 2024-09-09. Retrieved 2024-09-12.
  16. 1 2 Angola-Concessions (PDF) (Map). Sonangol USA.
  17. ↑ "Angola: Eni, ANPG announce start of oil production at Cabaça Norte". Mozambique. 27 Sep 2021. Archived from the original on 2024-12-26. Retrieved 2024-09-12.
  18. ↑ "First well on offshore Angola block 17/06 hits pay". Offshore. 2009-10-23. Retrieved 2024-09-12.
  19. 1 2 Alves, Ana (2012). "Taming the Dragon: China's oil interests in Angola". In Marcus Power; Ana Cristina Alves (eds.). China and Angola: a Marriage of Convenience?. Oxford: Pambazuka Press. pp. 105–123. Archived from the original on 2017-05-05. Retrieved 2025-08-07.
  20. 1 2 Tippee, Jessica (2013-12-12). "PSVM initiates deepwater development in block 31 offshore Angola". Offshore. Retrieved 2024-09-12.
  21. 1 2 "Kaombo Ultra-Deep Offshore Project". Offshore Technology. Archived from the original on 2024-12-04. Retrieved 2024-09-12.
  22. ↑ The Anatomy of the Resource Curse: Predatory Investment in Africa's Extractive Industries ACSS Special Report No. 3. Africa Center for Strategic Studies. 2017-02-10. ISBN   978-1-5430-3696-1.
  23. ↑ "Sinopec Enters Deepwater Angola with $2.5B Oil Deal | Rigzone". www.rigzone.com. Archived from the original on 2021-08-31. Retrieved 2024-09-12.
  24. ↑ Morrissey, Beth; Ojha, Himanshu; Murray, Laura Rena; Martin-Menard, Patrick (2011-11-09). "China-based corporate web behind troubled Africa resource deals". Center for Public Integrity. Archived from the original on 2024-03-19. Retrieved 2024-09-12.
  25. ↑ Vines, Alex; Wong, Lillian; Weimer, Markus; Campos, Indira (2009). Vines, Alex; Wong, Lillian; Weimer, Markus; Campos, Indira; Royal Institute of International Affairs; Revenue Watch Institute (eds.). Thirst for African oil: Asian national oil companies in Nigeria und Angola (PDF). A Chatham House report. London: Chatham House. ISBN   978-1-86203-220-0. Archived (PDF) from the original on 2024-09-07. Retrieved 2024-09-07.
  26. ↑ "Sinopec buys Marathon interest in deepwater Angola block". Offshore. 2013-06-24. Retrieved 2024-09-12.
  27. ↑ "Sinopec's $1.5 Bn Angolan farm-in | Hart Energy". www.hartenergy.com. 2024-10-03. Retrieved 2024-09-12.
  28. ↑ "Marathon Leaves Angola Entirely, Cashes Out With $2Billion - Africa's premier report on the oil, gas and energy landscape". africaoilgasreport.com. 2013-09-20. Archived from the original on 2024-03-01. Retrieved 2024-09-13.
  29. ↑ "Total gets go-ahead for ultra-deepwater Kaombo project offshore Angola". Offshore. 2014-04-14. Retrieved 2024-09-13.
  30. ↑ "Total approves $16bn Angolan project". Business Report. 2014-04-14. Retrieved 2025-08-07.
  31. ↑ "Defesa garante que China Sonangol pagou pelos 27 carregamentos de petróleo". OPaís (in Portuguese). 2025-06-20. Archived from the original on 2025-07-13. Retrieved 2025-08-07.
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