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Sonangol Sinopec International

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Sonangol Sinopec International Limited
IndustryPetroleum
FoundedSeptember 2004; 21 years ago (September 2004)
HeadquartersTenth floor Two Pacific Place, 88 Queensway,
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]

History

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In 2004, Sonangol Sinopec International is owned by three groups. The first and majority shareholder with 55% is Sinopec Overseas Oil and Gas Limited, which is 100% owned by Sinopec Group. The larger minority holder of SSI is Dayuan International Development Limited with 31.5%. Dayuan, in turn, is owned 30% by Wu Yang and 70% by New Bright International Development Limited, which in turn is owned by Veronica Fung Yuen Kwan with 70% and Lo Fong Hung with 30%. The final shareholder with 13.5% of SSI is China Sonangol International Holding Limited, which is 70% owned by Dayuan and 30% by the Sonangol Group.
Chart showing owning entities of Sonangol Sinopec International Ltd as of the company's founding in 2004.

SSI was created in September 2004 as a joint venture between Cayman Islands registered Sinopec Group subsidiary Sinopec Overseas Oil & Gas Limited (SOOGL), China Sonangol International Holding Limited (CSIH), and Dayuan International Development Limited. CSIH had been founded only a month earlier and possessed no assets of its own,[2][4] while Dayuan changed its name from Beiya later that year and both CSIH and Dayuan were 88 Queensway group companies. 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; the rest was split between the Chinese state, Chinese businessman Wu Yang,[6][1] and New Bright International Development. The last of these 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

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]

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

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

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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 asset SSI stake (%) Acquisition year Operated by Reserves (million barrels) Known investment (US$ billions) Production start Major well Depth at drill sites (meters)
Block 18[5] 50 2004 BP 1,000 1.4 October 2007 Greater 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% 1,500 1.1 September 2021 Cabaça Norte[17] 500
Block 17/06 (SSI 17)[5] 27.5 2006 TotalEnergies 26%, Sonangol E.P. 24%, Somoil 10%, Falcon Oil 5%, ACR 5%, Partex 2.5% 1,000 1.1 October 2009[18] Gardenia[5] and Begonia[19] 600-1,900
Block 18/06 (SSI 18)[5] 40 2006 Petrobras 30%, Sonangol EP 20%, Falcon Oil 5%, Gemas 5% 700 November 2009 Magnesium-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, 2012 Plutão, Saturno, Vênus, and Marte 1,500-2,500
Block 32***[21] 20 2014 TotalEnergies 650 2019 Kaombo Ultra-Deep 1,400-1,950
*5% through Sonangol Sinopec International 31 Limited

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

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]

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]

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]

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]

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

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References

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  1. ^ a b c d e 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. ^ a b 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. ^ a b c d e f 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. hdl:10023/24271. ISSN 0002-0397.
  4. ^ a b "Auditors Probe Sinopec, Savvy Broker in Angola". ChinaFile. 2015-08-11. Archived from the original on 2024-07-24. Retrieved 2024-09-12.
  5. ^ a b c d e f g h i j k 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. ^ a b 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. ^ a b 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. ^ a b 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. ^ a b Tippee, Jessica (2013-12-12). "PSVM initiates deepwater development in block 31 offshore Angola". Offshore. Retrieved 2024-09-12.
  21. ^ a b "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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