Angola’s state energy company Sonangol signed a 10-year agreement with Sinochem Group seeking to increase its funds to withstand low oil price and US shale competition, reported Reuters.
Sinochem did not reveal any financial or volume details, but trading sources said it would take five cargoes per month. The deal will make the Chinese firm one of the largest contract buyers of the Angolan oil.
“This should be a pre-financing deal under which the producer uses its oil as collateral, and China is poised to win construction or engineering contracts there in return,” a senior Beijing-based crude oil trader told Reuters.
According to Oil and Gas Investor, China had previously lent Sonangol $2b to expand its oil and gas projects. The Angolan President, Jose Eduardo dos Santos later sought a two-year moratorium on debt repayments, and additional financing of up to $4.5b for other projects including a hydropower scheme.