Last week, Angola's state oil company, Sociedade Nacional de Combustveis de Angola Sonangol, secured a $2.65-billion financing deal with a consortium of international banks to fund the company's operating expenses and capital investments.
The financing was heavily backed by a syndicate of foreign lenders including Socit Gnrale, First Abu Dhabi Bank, Standard Bank of South Africa and Absa, while local Angolan banks, including Banco Fomento de Angola BFA, Banco Millennium Atlntico and Banco Angolano de Investimentos BAI, chipped in with $105 million.
Sonangol is still hunting for more capital, with the company currently seeking an additional $4.8 billion from Chinese and European lenders to cover a funding deficit for the planned $6.6-billion Lobito Refinery.
Unfortunately, a deeper dive into Sonangol's flurry of financing deals uncovers major weaknesses in the Angolan oil model.
While the massive capital raise from international banks appears like a big seal of approval of Sonagnol's operations, it actually underscores how a lack of core profitability, diversification into unrelated business and declining production are choking the country's energy champion.
