SONANGOL PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2014
Focused on business efficiency, productivity and capital discipline
Luanda, 27 February 2015: Sonangol, the state-owned Angolan energy company
that is the sole concessionaire for oil and gas exploration on the subsoil and
continental shelf of Angola, announces its preliminary results for the year ended
31 December 2014.
Highlights
Sales of $36,476 million (-11.6%)
EBITDA of $6,270 million (-12.5%)
Total assets of $51,498 million (+3.0%)
Total production of crude oil of 1,67 million barrels per day (-2.6%)
Sonangol’s share of crude oil production in Angola was 222,269 barrels per
day (+22.3%)
 Sonangol’s total share of production rose to 13% from 9% in 2013
 Total production of refined products of 2,161 million metric tonnes (+2.0%)
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Commenting on the results, Francisco de Lemos José Maria, President of
Sonangol, said:
“Whilst 2014 was a difficult year, marked by sharp falls in global oil prices in the
second half of the year, we have taken firm action to adjust to the changed
environment. Sonangol continues to benefit from its evolution into an integrated
energy company with a diverse portfolio, a strong natural gas business and
growing downstream operations.
We are implementing a comprehensive
business efficiency strategy, focused on process improvement, cost reduction and
capital discipline. However, Sonangol is also a long-term business and we will
continue to invest through the cycle to maintain our market share and deliver
against our operational, commercial and financial objectives.”
Consolidated results
(US$)
Sales
Gross margin
EBITDA
Pre-tax profit
Taxes
Net profit
2013
(m)
41,250
11,920
7,169
4,377
-1,289
3,089
2014
(m)
36,476
11,463
6,270
1,577
-867
710
Variance
(%)
-11.6
-3.8
-12.5
-64.0
-32.7
-77.0
BUSINESS REVIEW
Operating results
Sonangol’s share of Angola’s crude oil production in 2014 rose to 13.0%, up 4.0%
on the previous year. The company produced an average of 1,671,673 barrels of oil
per day, a reduction of 2.6% from 2013. There were two periods that proved critical
to this performance. In the first half of the year we saw a sustained reduction in oil
production that reached its lowest daily level of 1,474,066 barrels per day in March
2014. The effects of this production decrease were partially offset by a positive
variation in the price of petroleum. Then, from June onwards, with the entry into
production of the CLOV and POLO WEST fields, and maintenance work to fix
operational constraints on existing fields, production recovered to about 1,800,000
barrels per day by December. Over the same period, we observed a sharp
decrease in the sale price for oil, from a peak of $110.64 per barrel in June to
$57.91 per barrel in December.
Sonangol’s total production of natural gas in Angola was 864,401 metric tons,
down 28.5% on 2013. This was impacted by the shutdown of Angola LNG in April
2014 following operational difficulties in the gas-processing unit. However, the
LNG section has been run successfully and the plant is scheduled to restart full
production by the end of 2015, once all issues have been rectified.
Our downstream business, which includes the trading, refining, storage and
transportation, and the marketing of petroleum derivatives and petrochemicals,
enjoyed a strong operational performance. The production of refined products
increased to 2,161,687 metric tons, up 2.0% on 2013. Imports of refined products
increased by 7.2% compared to 2013 to 4,653,403 metric tons and exports of
refined products increased by 3.3% to 1,012,180 metric tons.
Operational production
Production of crude oil (bbl/d)
Total production in Angola (bbl/d)
Rights of concessionaires (bbl/d)
Sonangol production (bbl/d)
Production of gas (MT)
Total production in Angola (MT)
Sonangol production (MT)
LPG (MT)
Gas Condensate (MT)
LNG (MT)
Production of refined products (MT)
2013 (m)
2014 (m)
Variance
(%)
1,715,552
613,195
181,746
1,671,673
531,646
222,269
-2.6
-13.3
+22.3
1,208,809
421,924
298,002
10,744
113,178
2,118,966
864,401
300,316
213,244
17,474
69,598
2,161,687
-28.5
-28.8
-28.4
+62.6
-38.5
+2.0
2014 also saw increased sales of products into Asia particularly China, India and
Taiwan, and South America, including Brazil, Chile and Uruguay. In late October,
we signed a new deal with Pertamina, Indonesia’s state energy firm, to import
crude oil from Angola. In August, we signed an agreement with Chile to provide
crude oil to local oil company ENAP, making Angola Chile’s largest supplier. Our
five major clients for exports are now China (47%), India (13%), Spain (6%), Canada
(6%) and Taiwan (6%).
Business efficiency
Sonangol has implemented a comprehensive strategy to improve business
efficiency, increase productivity and deliver tighter capital discipline. Improving
the functions of our processes and systems and reducing non-essential costs has
resulted in a significant rebalancing of our capital expenditure, with investment in
2014 of $5,555 million, down 45% compared to 2013. The balance sheet remains
strong, with total assets of $51,498 million, up 3.0% on the previous year. This
gives us the flexibility we need to continue to invest for the medium and long term.
Consolidated balance sheet
Non-current assets
Current assets
Total assets
Equity
Current liabilities
Non-current liabilities
Total liabilities and equity
2013 (m)
2014 (m)
31,418
18,586
50,004
18,155
15,776
16,072
50,004
35,642
15,856
51,498
20,480
12,204
18,814
51,498
Variance
(%)
+13.4
-14.7
+3.0
+12.8
-22.6
+17.1
+3.0
Planning for the future
Improving the quality of capital expenditure on maintaining market share and
focusing on customer delivery will help us deliver our operational, commercial
and financial objectives. The most important component of the business efficiency
programme will be to continue investment in Sonangol’s core business activities.
The company’s priorities for 2015 and subsequent years are:
 Investment in human capital to prepare and train the technicians,
managers and leaders of the company to meet the challenges that the
business will face in the years ahead.
 Recruitment and selection of talent to reduce the substantial costs spent on
technical assistance, consulting and subcontracting by recruiting skilled
personnel.
 Investment in fixed capital in every segment of exploration, production,
refining, marketing, distribution and sale of crude oil, natural gas and
petroleum derivatives in order to:
o Achieve and sustain a production level of 2,000,000 barrels of oil per
day by the beginning of 2016;
o Achieve and sustain an annual Reserve-Replacement Ratio of over
100%;
o Achieve in future a Reserves to Production Ratio of at least 20 years;
o Reach a 20% share of national petroleum production by 2020;
o Maintain leadership in the market for refined crude oil and gas, with
a market share not less than 65%.
 Focused investment in the exploration and production of hydrocarbons. In
2015, Sonangol plans to:
o Complete the auctions of 10 blocks in the on-shore basins of Congo
and Kwanza, and bid for 15 new concessions in the Congo basin
(ultra-deep water) and Namibe basin;
o Develop multi-client seismic acquisition campaigns, including in the
interior basins of the country;
o Complete the ongoing projects that enable us to achieve the goal of
2,000,000 barrels of oil per day by the beginning of 2016;
o Give continuity to large-scale projects which will enable the
stabilisation of production in the period 2017-2020 (Kaombo – Block
32, Cameia – Block 21, Polo East – Block 15/06, Orca – Block 20);
o Propose executive legal measures, contracts and taxes which
promote commercial flexibility;
 Introduce marginal fields in the commercial matrix
 Develop discovered resources totalling 3,300 million barrels
of crude oil;
o Complete the pre-feasibility studies for the development of natural
gas discoveries in the Polo Cabinda, the Congo Basin Natural Gas
System, and the Cuanza Basin Natural Gas System;
o Complete feasibility studies for the construction of the new
Quinfunquena Petroleum Terminal in Soyo. At the same time,
Sonangol will evaluate the options for the construction of a new
South Luanda Petroleum Terminal, enabling the industrial
processing of natural gas on land and the creation of a diversified
industrial park for petrochemicals;
o Construction of the third logistics base to support the petroleum
operations at Quicombo – Cuanza Sul, in parallel with the expansion
and modernisation of Base do Kwanda, Soyo - Zaire.
 Investment in the integration of the Sonangol logistics chain:
o The construction of the Lobito refinery will begin in 2015;
o The construction of Terminal Oceânico da Barra do Dande, with a
capacity of 640,000m3 of fuel and butane gas, will conclude in 2016;
o Complete the fuel parks at Soyo, Lubango, and Namibe;
o Propose joint initiatives with the railway companies of Luanda,
Benguela and Moçamedes, to invest in the construction of extensions
to our facilities, as well as the acquisition of railway equipment for
the transportation of fuel, butane gas and lubricants;
o Increase Sonangol’s capacity to transport crude oil with four new
Suezmax vessels, of which two are already under construction.
 Investment in facilities and working conditions, which will include the
construction of the Sonangol headquarters buildings in the cities of
Cabinda, Soyo, Malange, Lobito and Huambo and Lubango.
CSR projects
Sonangol is committed to acting both as a responsible corporate citizen and a
good employer.
Sonangol’s concern for and its awareness of the needs of the local community in
which it operates is an integral part of our presence throughout Angola. As part of
the company’s extensive CSR programme, Sonangol supported and contributed to
a number of initiatives in 2014:
 Sonangol’s housing subsidiary, Sonip, is committed to providing a better
quality of life for Angolans and has been involved in a number of housing
projects throughout Luanda. These include Angola’s largest housing project
ever built, in Kilamba. The Kilamba development will eventually become
home to as many as 485,000 people and includes housing, green areas,
schools, clinics, bars and restaurants. Throughout 2014, growing numbers
of residents moved to the Sonip-supported developments, transforming
them into thriving communities;
 Paenal, a joint venture between Sonangol, SBM Offshore and DSME, which
is responsible for the development of FPSOs (floating production, storage
and offloading vessels), sponsored the construction of a local school in
Porto Amboim that will accommodate 350 local children;
 Through its healthcare subsidiary, Girassol Clinic, Sonangol held its second
Congress in Luanda in October 2014 focused on steering Angolan
healthcare towards ‘Excellence, Technology and Humanisation’;
 Sonangol’s scholarship support company, WAMS, continued to sponsor the
placement of Angolan students in US and Canadian higher educational
colleges;
 In February 2014, Sonangol officially opened its $80m Angola Maritime
Training Centre at Sumbe, 350km south of Luanda. The centre aims to
vigorously support the ‘Angolanisation’ of Sonangol and the wider maritime
industry in the region.
Health & Safety
Sonangol recognises the paramount importance of safety and the protection of the
environment in its activities and, in 2014, through it’s rigorous QHSE (Quality,
Health, Safety, Environment) policy, the company continued to design practices
and procedures aimed at reducing and eliminating risks in the workplace and their
impacts on the wider environment.
Since 2004, Sonangol has been guided by DNV of Norway, a world leader in QHSE.
Independent auditors from DNV have subsequently verified the achievement of
high standards throughout the company. More recently, DNV has also performed
HSE audits on various assets both onshore and offshore and provided Risk
Management Training as well as training in Sustainability and Corporate Social
Responsibility.
People
Sonangol invests heavily in supporting the professional development of its
employees and enhancing talent at the company. In 2014, Sonangol spent $1,100m
on staff-related costs and hopes to support 5000 employees through its
scholarship programme until 2020. In 2014, Sonangol had 8,473 full-time
employees, down 4% on 2013.
MEDIA CONTACTS:
Ian Middleton / Rob Greening / Tessa Berry
Powerscourt
+44 (0) 207 250 1446
NOTES TO EDITORS:
About Sonangol
Sonangol — Sociedade Nacional de Combustíveis de Angola, E.P. — is the sole
concessionaire for oil and gas exploration on the subsoil and continental shelf of
Angola. It is one of the largest oil producers in Africa and exports significant
amounts to countries in Europe, the Americas and Asia. With over 13,000
employees and revenues of $36.5 billion in 2014, it is pivotal in transforming
Angola's largest source of natural wealth into economic and social development
opportunities for its population.
Established in 1976 from the nationalisation of Angol, Sonangol was instituted as a
state-owned company whose mission is the management of hydrocarbon resource
exploration in Angola. Sonangol's activities include exploration, development,
marketing, production, transportation and refining of hydrocarbons and its
derivatives. These activities can be performed independently or in association with
other companies — national or international.
Sonangol’s aim is to become a major presence in both the international and
African markets. To this end, it is firmly focused on investing in technology,
outstanding customer service, strict ethical conduct, engagement with the
communities in which it operates and a clear commitment to health, safety and
the environment.
The company’s main strategic priorities are to:
 Become a fully integrated energy company with international reach and the
highest standards of corporate governance
 Promote the sustainable growth of the Angolan national oil industry
 Diversify the business to reduce dependence on oil price fluctuations
 Work closely with Angolan businesses and communities to ensure benefits
are widely shared
 Operate safely, sustainably and in a socially responsible way at all times
Communication and Image Office, in Luanda, February, 27th, 2015.