The APPO and OPEC member country is reducing its oil exports to China. This comes after the OPEC+ production cuts agreement that went into effect in May, which has been extended until the end of July – an agreement that Angola is expected to fully comply to.
Part of the oil Angola ships to China is used to service some of its existing debt. China is the country’s biggest creditor and the top importer of Angolan crude. In exchange for funds to the Angolan government from China to build energy, transportation and agricultural infrastructure, the country ships oil cargoes to major Chinese state-owned oil firms.
It has been reported that China’s Sinochem, which typically receives seven or eight cargoes per month, is expected to receive not more than five cargoes from Angola. Also, Unipec, the trading arm of Sinopec, which usually receives two or three cargoes per month, will not be receiving any in July.
The country is also said to have implored the G20 to suspend servicing its bilateral debt under the G20 Debt Service Suspension Initiative, which will provide a debt relief assistance.
As we reported earlier this month, the country was in advanced negotiations with its lenders.
Angola is said to carry over $20 billion in bilateral debt. Aside from the Chinese debt, the International Monetary Fund granted a loan of $3.7 billion to the country, while the state-owned oil company, Sonangol, also took a loan of $2.5 billion from banks between the end of 2018 and mid-2019.
The second-largest oil-producing country in sub-Saharan Africa, like every other oil-producing nation of the African continent, has been hit by the effects of the COVID-19 pandemic and plunging oil prices. Oil accounts for the majority of its exports. The country is also rich in diamond, irons, and has vast expanses of land for agriculture.
It is hoped that after it recovers from the current pandemic and its effects, though nobody knows how long this will last, the country will diversify the economy and focus on other sectors – a decision all oil-producing nations in Africa are expected to take after these trying times.
