Sonangol has acknowledged the transforming financial landscape by fueling its restructuring programs and tapping on new avenues with innovative financial solutions that successfully satisfy the requirement of the modern international debt market. Today, the market is highly influenced by considerations associated with the energy transition, which is emerging as a highlighting factor for major oil and gas sector lenders.
The international community consensus regarding how to speed up the energy transition globally, major International banks, including several prominent leaders involved in the financing of oil and gas projects, have apparently replied by signing into different agreements and committing the finance projects that are likely to reach net-zero emission between 2030 to 2050. However, the United Nations back net-zero banking alliance is one such agreement that represents some of the world’s largest banks from around 27 regions with assets valuing more than $37 trillion.
However, the net banking alliance needs partners and members to cut down the landings to the oil and gas sector in the forthcoming 36 months, thereby limiting the access to finance for companies like Sonangol.
Such financing obstructions are not only unique to Sonangol as the whole industry has emerged from a covid-19 slump in 2020, which has seen historic lows in the demand and oil prices. For instance, around 107 oil and gas companies filed for bankruptcy in the US, which needed support from the court to look for debt restructuring around $98 billion in the Chapter 11 bankruptcy rules.
Meanwhile, the countries are witnessing a production spike; Sonangol is taking the initiative to develop both the midstream and upstream sectors. This initiative will help Sonangol establish itself as a lead operator across key assets. The company is making vital moves to place itself as Africa’s stop hydrocarbon producer.
“When Sonangol went through its restructuring process, the role of concessionaire was moved from Sonangol to a separate agency. This was a turning point because we could finally focus on being an operator. By transferring the regulatory side, this represented a big milestone from an industry standpoint and also for Sonangol,” stated Inácio.
Sanongol’s solar projects highlight the company’s opportunity to structure carbon-neutral financing deals. Oil companies frequently take on the structuring of deals by integrating the demand for finance for conventional oil and gas projects with the ones associated with carbon offsetting initiatives. In many cases, companies buy carbon credits under a recognized program like U.N.-sponsored CORSIA. CORSIA utilizes the outputs of sales of such credit to develop solar power farms on mass plant trees in a bid to lower greenhouse gas emissions. However, such noble structuring is expected to grow in the forthcoming years as an increasing number of banks are signing the pledges to commit themselves to net-zero targets.
