management report and consolidated · 2019. 9. 10. · derivatives, business continuity, corporate...

MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017

MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017 MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017

1 LETTER TO THE SHAREHOLDERS .......................................................................................................................................42 SONANGOL E.P. ...................................................................................................................................................................8

2.1 BUSINESS MODEL OF SONANGOL, E.P. .......................................................................................................................102.2 CORPORATE BODIES .....................................................................................................................................................14

3 PERFORMANCE SUMMARY ...............................................................................................................................................183.1 EXECUTIVE SUMMARY ..................................................................................................................................................203.2 OPERATING PERFORMANCE – EBITDA ........................................................................................................................213.3 OPERATING PERFORMANCE – NET INCOME ................................................................................................................223.4 INVESTMENTS ..............................................................................................................................................................22

4 PERFORMANCE BY BUSINESS SECTOR .............................................................................................................................244.1 CONCESSIONAIRE.........................................................................................................................................................26

4.1.1 EXPLORATION ......................................................................................................................................................274.1.2 CRUDE OIL & GAS PRODUCTION ..........................................................................................................................304.1.3 ECONOMIC MANAGEMENT OF CONCESSIONS ....................................................................................................394.1.4 CONCESSIONAIRE EXPORTS ................................................................................................................................40

4.2 PRIMARY VALUE CHAIN – UPSTREAM SEGMENT ........................................................................................................424.2.1 PRODUCTION OF CRUDE OIL OF SONANGOL INVESTIDORA................................................................................424.2.2 GAS PRODUCTION OF SONANGOL E.P. ................................................................................................................43

4.3 PRIMARY VALUE CHAIN – MIDSTREAM SEGMENT .......................................................................................................444.3.1 REFINING BUSINESS ...........................................................................................................................................444.3.2 CRUDE OIL, REFINED AND GAS TRANSPORTATION BUSINESS ..........................................................................47

4.4 PRIMARY CHAIN – DOWNSTREAM SEGMENT ..............................................................................................................484.4.1 LOGISTICS BUSINESS ..........................................................................................................................................494.4.2 DISTRIBUTION BUSINESS ....................................................................................................................................514.4.3 INTERNATIONAL SALES .......................................................................................................................................53

4.5 NON-NUCLEAR BUSINESS ...........................................................................................................................................574.5.1 AVIATION - SONAIR ..............................................................................................................................................574.5.2 TELECOMMUNICATIONS – MSTELCOM ................................................................................................................584.5.3 HEALTH – CLÍNICA GIRASSOL .............................................................................................................................594.5.4 REAL ESTATE MANAGEMENT – SONIP ................................................................................................................604.5.5 TRAINING – ACADEMIA SONANGOL .....................................................................................................................61

4.6 CORPORATE & FINANCING ...........................................................................................................................................624.6.1 FUNDING ..............................................................................................................................................................624.6.2 HUMAN RESOURCES ............................................................................................................................................624.6.3 ORGANIZATION AND CORPORATE PROCESSES ..................................................................................................64

5 COMMITMENT TO SOCIETY ................................................................................................................................................666 PROSPECTS FOR THE FUTURE ..........................................................................................................................................70

6.1NEW PRODUCTION ........................................................................................................................................................726.2 REFINERY .....................................................................................................................................................................736.3 TRANSFORMATION PROGRAM .....................................................................................................................................73

7 PROPOSAL FOR THE APPLICATION OF THE RESULTS .......................................................................................................747.1 RESULTS AND APPLICATION PROPOSAL .....................................................................................................................76

8 ACRONYMS AND ABBREVIATIONS .....................................................................................................................................78

SUMMARY OF GENERAL INDEX

00SUMMARY OF GENERAL INDEX

MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017 MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017 MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017

LETTER TO THE SHAREHOLDERS

01

MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017 MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017

6 7

LETTER TO THE SHAREHOLDERS01

2017 was very favourable to Sonangol, E.P. and its subsi-diaries, since the international market recovered from the sharp decline of previous years as a result of the improvement in the foundations of demand and supply of crude oil, alongsi-de with the economic growth in the world economy.

Crude oil production in Ango-la amounted to 595,810,124 barrels, the equivalent to a daily average of 1,632,357 barrels. Compared to the previous year, the volume of production decreased 5%. This decrease is explained by the operational constraints in the main pro-duction blocks, by the decrea-se in activity in the Angolan oil industry and by the lack of sanctioning of new development projects.

However, the increase of appro-ximately 19% in oil export prices more than offset this decrease. Net income for the year amoun-ted to AOA 27.25 billion, a 107% increase when compared to 2016, reflecting the gains from the strategy adopted by OPEC.

The appointment of a new Board of Directors in November 2017 was received with a great sense of responsibility. Its main objec-tives are to regenerate the com-pany, in order to transform it

into an integrated and efficient National Oil Company, focused on the primary value chain and initiate efforts to increase the domestic production capacity of oil derivative products.

Since then, significant steps were taken by the current Board of Directors to re-launch the image of Sonangol as the National Concessionaire and a trustworthy oil company and to re-launch exploration and production of crude oil and na-tural gas, approaching the main players in the sector.

We actively participate in the task forces to discuss the fundamental issues regarding the improvement of the per-formance of the national oil sector, namely the principle of tolerance and contractual flexibility, exploratory activity within the development areas, reduction of bureaucracy in public tenders, normalization of the abandonment funds and the legal regime that will allow the monetization and development of gas resources.

Several agreements were held with the main Operators of the sector to, among others retake oil exploration activities, opti-mize production and transfer knowledge to national fra-meworks.

We held the public tender for the selection of investors for the construction of a large refi-nery in the city of Lobito and a small refinery in the province of Cabinda.

The foundations for the restruc-turing of Sonangol have been laid, through a Regeneration Program. This extensive and comprehensive program inclu-des the analysis and evalua-tion of the oil exploration and production business, the crude oil refining, the liquefied natural gas business and the liquefied petroleum gas, fuel logistics, distribution and supply of oil derivatives, business continuity, corporate finance, non-core bu-siness, investments and regula-tory framework.

This Program will last 30 months, with concrete actions that can be implemented in the short term and others in the long term. It will also include a change management program, digitalization and information systems and knowledge transfer through Academia Sonangol.

All these achievements would not have been possible without the vote of confidence granted by our shareholder and the un-selfish effort of our employees, business partners, customers

and suppliers, who have contri-buted a lot to the strengthening of the company.

We began a new cycle in which we will focus on the realign-ment of the company in its core business, achieving greater ef-ficiency and effectiveness of or-ganizational performance, with the contribution and recognition of all employees. To do this, we must be humble, dedicated and have discipline, serious-ness, protection of information, knowledge, ability, flexibility, teamwork, rigor in analysis and weighting in decision-making and firmness to understand all the players of the hydrocarbon industry.

On behalf of the Board of Direc-tors, I am grateful and reaffirm the commitment to continue to strive to ensure the stability and sustainability of Sonangol by strengthening its role as a bulwark of the country’s eco-nomy and social development.


SONANGOL E. P.02


10 11

SONANGOL E. P.

2.1 BUSINESS MODEL OF SONANGOL, E.P.

02

In 2017, Sonangol E.P. developed its activities through 18 subsidiaries, being generally responsible for defining strategic lines, providing guidance, supervision and mana-gement support, especially in the decision-making process. These companies operated on the market in a three-dimensional form, na-mely:

• Sonangol, E.P. performs the function of National Concessio-naire, having been granted by the State the mining rights for the exploration, research, develo-pment and production of liquid or gaseous hydrocarbons. As a national Concessionaire, it is au-thorized to associate with foreign or national entities to develop oil operations in the national territory, which can be perfor-med in the form of association agreements, production sharing agreements and risky service agreements.

• In addition, Sonangol E.P. acts as an integrated oil and gas com-pany, being a centralized opera-ting holding company, constituted by the following companies in its primary value chain:

» Exploration and Produc-

tion (Upstream): consists of a group of subsidiary compa-nies whose main activity is the exploration, development and production of hydrocarbons (crude oil and natural gas), namely:

- Sonangol Pesquisa e Pro-dução; - Sonangol Hidrocarbonetos

Internacional; - Sonangol Gás Natural.

» Refining and Transport (Midstream): gather refining and shipping companies for crude oil and refined products, namely:

- Sonangol Shipping Holdings Limited; - Sonangol Refinação.

» Logistics and Distribution (Downstream): comprises the subsidiary companies of Sonangol E.P. which are engaged in the procurement, storage, distribution and supply of refined crude oil and gas products, namely:

- Sonangol Logística; - Sonangol Distribuidora; - Sonangol Comercialização

Internacional.


12 13

Figure 2 Corporate Matrix of Sonangol, E.P.

ILLUSTRATIVE - COMPANIESPARTICIPATED BYSONANGOL E.P.IN THE PRIMARY CHAIN

PRIM

ARY

VALU

E CH

AIN

UPST

REAM

· M

IDST

REAM

· DO

WN

STRE

AM

EXPLORATION AND PRODUCTIONSONANGOL P&PSONANGOL HIDROCAC. INTL.SONANGÁS

REFINING AND TRANSPORTATIONSONANGOL SHIPPINGSONANGOL REFINAÇÃO

LOGISTICS AND DISTRIBUTION

SONANGOL LOGÍSTICASONANGOL DISTRIBUIDORASONANGOL COMERC. INTL.

· PUMA ENERGY· SONASING SAXI-BATUQUE· SONASING KUITO· LOBINAVE· ALM - ANGOLA LNG MARKETING· SONASING XIKOMBA· SONASING SANHA· SONASING MONDO· REFINARIA DO LOBITO· JASMIN (JOINT VENTURE)· ALNG S. SERVICES· ALNG SUPPLY LTD· SONANGOL SÃO TOMÉ OFFSHORE· SONANGOL STARFISH OIL & GAS· SONANGOL HIDROCARB. INTERNACIONAL· SONANGOL ASIA. SONANGOL USA COMPANY· SONANGOL CABO VERDE· SONANGOL LIMITED· SOMG· OPCO

ILLUSTRATIVE - COMPANIESPARTICIPATED BYSONANGOL E.P.IN THE PRIMARY CHAIN· SONASURF· ANGOFLEX· SONATIDE MARINE· TECHNIP ANGOLA· ESTALEIRO NAVAL DE PORTO AMBOIM· SONADIETS· SONAID· MOTA ENGIL ANGOLA· BCGA· UNITEL· BAI· ANGOLA CABLES· BIOCOM· MILLENNIUM BCP· BANCO ECONÓMICO· GENIUS· E.I.H· PDA· BAUXITE ANGOLA· SODIMO· KWANDA· SONAMEMT INDUSTRIAL· BAYVIEW

CORPORATEAND FINANCING

SONANGOL, E.P.SONANGOL FINANCE

NON-CORE ACTIVIITES

SONAIRMS TELCOMSONANGOL HOLDINGSIINDSONIPCLINICA GIRASSOLACADEMIA SONANGOLSONANGOL VIDA

Figure 1Sonangol, E.P. as an integrated oil and gas company

Crude Oil derivate products

Plataformas Ships Ships

Terminalsand Facilities

of storage

Tank Trucks

Pipelines

Cistern Wagons

Refinery

Sonangol

OtherOperators

Aviation

Navy

B2B

Lubricants

GPLSonangol Gás Natural

Sonangol Pesquisa E Produção

Sonangol Shipping

Sonangol Refinação

Sonangol Logística

Sonangol Distribuidora

Sonangol Distribuidora

Sonangol Gás Natural



Sonangol Finance Sonangol E.P.

Sonangol Hidrocarbonetos

Internacional

Corporate and Financing

Upstream Midstream Downstream

SonangolComercialização Internacional

Distribution

Secondary Logistics P rimary LogisticsExplorationand Production

Transportation and Storage LNG / Refinery Marketing and Supply

Trading

• In addition, Sonangol ope-rates in two other business segments, namely:

» Corporate & Financing: constituted by corporate cros-s-cutting functions, support and monitoring of Subsidiary companies and by obtai-ning funds in international markets.

- Sonangol E.P. and Sonan-gol Finance;

» Non-Core activities: constituted by the group of subsidiary companies whose main activity is to support the core business of Sonangol E.P., as well as companies that conduct business of a social nature and related to the development of human resources, or which priority is the support of the country’s economic development.

- Sonair, MS Telcom, So-

nangol Holdings, Sonangol

Investimentos Industriais (SIIND), Sonangol Imobiliá-ria e Propriedades (SONIP), Clínica Girassol, Academia Sonangol and Sonangol Vida.


14 15

2.2 CORPORATE BODIES

EXECUTIVE DIRECTORS

CARLOS SATURNINO

ROSÁRIO ISAACSEBASTIÃO MARTINS BALTAZAR MIGUEL

LOPO DO NASCIMENTO MARCOLINO MOCOANDRÉ LELO JOSÉ GIME

CHAIRMAN OF THE BOARD OF DIRECTORS

CARLOS PINTOLUÍS MARIAALICE SOPAS

NON-EXECUTIVE DIRECTORS


16 17

2.3 SONANGOL, E.P. BOARD OF DIRECTORS ALLOCATION / ROLE

CHAIRMAN OF THEBOARD OF DIRECTORSCARLOS SATURNINO

DIRECTORCARLOS PINTO

DIRECÇÃO DE SERVIÇOS JURÍDICOS (DSJ)TIAGO ALEXANDRE COSTA NETO

DIRECÇÃO DE RESPONSABILIDADE SOCIALCORPORATIVA (DRSC)

LURI DANILO EDUARDO DA COSTA

DIRECÇÃO DE TECNOLOGIA DE INFORMAÇÃO (DTI)

ALBERTO RIBEIRODIRECÇÃO DE PLANEAMENTO (DPL)

KID DOS SANTOS CARVALHODIRECÇÃO DE EXPLORAÇÃO (DEX)

DOMINGOS CUNHADIRECÇÃO DE FINANÇAS (DF)

DIVALDO PALHARES

DIRECÇÃO DE GESTÃO DE RISCOS (DGR)ALBERTO CARDOSO PEREIRA

FUNDO DE PENSÕES (FP)ALBERTO CARDOSO PEREIRA

CLINICA GIRASSOLJOAQUIM VAN-DÚNEM

PETRO ATLÉTICOTOMÁS FARIA

DIRECÇÃO DE ADMINISTRAÇÃOE INFRAESTRUTURAS (DAI)

FUNDO DE ABANDONO (FA)

DIRECÇÃO DE NEGOCIAÇÕES (DNEG)SUZEL CARDOSO ALVES

DIRECÇÃO DE PRODUÇÃO (DPRO)BELARMINO CHITANGUELECA

DIRECÇÃO DE ECONOMIA DAS CONCESSÕES (DEC)

NATACHA MASSANO

DIRECÇÃO DO COMITÉ DE CONTROLODAS CONCESSÕES (DCCC)

PEDRO MANUEL ALEXANDRE

DIRECÇÃO LABORATÓRIO CENTRAL (DLAB) ANTÓNIO AUGUSTO MORAIS GARCIA

GABINETE DE ARQUIVOE GESTÃO DE DADOS (GAD)

ISABEL POLICARPIO DA SILVA

SONANGOL HIDROCARBONETOINTERNACIONAL

FREDERICO FERRAZ DOMINGOS

EMPRESA DE SERVIÇOS E SONDAGENSDE ANGOLA, LDA (ESSA) FERNANDO DA FONSECA

DIRECÇÃO DE GESTÃO DE PROJECTOSESTRUTURANTES (DGPE)

JOAQUIM SOARES KITECULO

DIRECÇÃO DE PROJECTOS (DP)DANIELA MATOS

DIRECÇÃO DE SISTEMASDE INFORMAÇÃO (DSI)

ANDRÉ PITRA

DIRECÇÃO CENTRAL LOGÍSTICA (DCL)NELSON CARVALHO (INTERINO)

SONANGOL IMOBILIÁRIA E PROPRIEDADE, LDA (SONIP)

AMILTON CUNHA

SONANGOL INTEGRATED LOGISTIC SERVICE (SONILS)HELDER SOUSA

DIRECÇÃO DE QUALIDADESEGURANÇA E AMBIENTE (DQSA)

MÓNICA ROQUE

DIRECÇÃO DE SEGURANÇAEMPRESARIAL (DSE)

MANUEL DA SILVA

SONANGOL DISTRIBUIDORA, SABERNARDO VIEIRA ANTÓNIO (INTERINO)

SONANGOL LOGÍSTICALUÍS MARIA

SONANGOL GÁS NATURAL, LDA(SONAGÁS)

MAURO GRAÇA

LUXERVIZA, LDA(GERAÇÃO DE ENERGIA ELÉCTRICA)

JOÃO DA SILVA

NÚCLEO DE PETROQUÍMICA

DIRECÇÃO DE COMUNICAÇÃO E IMAGEM (DCI)MATEUS BENZA

COMITÉ DE COORDENAÇÃO DO PROJECTOSSOCIAS NO SOYO (CCPSS)

HELDER JOAQUIM DOS SANTOS

MSTelcom, Lda(MERCURY)

ROGER DOS SANTOS FERREIRA

CENTRO RECREATIVO PAZ FLORADALBERTO SENA

SONANGOL VIDAALBERTO CARDOSO PEREIRA

SONANGOL INVESTIMENTO INDUSTRIAIS (SIIND)

EUGÉNIO BRAVO DA ROSA

DIRECÇÃO DE AUDITORIA E CONTROLOINTERNO (DACI)

NELSON EFENGUE BERNARDO

GABINETE DE RELAÇÕES COM O ESTADO E FISCALIDADE (GEF)

VANESSA GODINHO

DIRECÇÃO DE ÉTICA (DE)OLÍMPIA GRAÇA MAGALHÃES

ACADEMIA SONANGOL, SABALTAZAR MIGUEL

CENTRO DE APOIO EMPRESARIAL (CAE)JOB CONTREIRAS VASCONCELOS

QUICOMBO SUPORTE LOGÍSTICO

SONANGOL SHIPPING ANGOLA(LUANDA)

GABINETE DO PRESIDENTE DO CONSELHO DE ADMINISTRAÇÃO (GPCA)

JANUÁRIO VICENTE

SONANGOL COMERCIALIZAÇÃOINTERNACIONAL (SONACI)

LUÍS PEDRO MANUEL

SONANGOL HOLDINGS, LDAJOSINA BAIÃO MAGALHÃES

SONANGOL SERVIÇO AÉREO, S.A(SonAir)

FILOMENO MERLATH (INTERINO)

SONANGOL REFINAÇÃO, SA(SONAREF)

SONANGOL FINANCE

SECRETARIADO DO CONSELHODE ADMINISTRAÇÃO (SCA)

JULIÃO BARBER

SONANGOL PESQUISA E PRODUÇÃO, SA(SNL, P&P)

RICARDO VAN-DESTE (INTERINO)

CHINA SONANGOL INTERNACIONALMAURO PIZARRO (INTERINO)

DIRECÇÃO DE RECURSOSHUMANOS (DRH)

MARIA DO ROSÁRIO VIEGAS

DIRECTORLUÍS MARIA

DIRECTORSEBASTIÃO MARTINS

DIRECTORALICE SOPAS

DIRECTORBALTAZAR MIGUEL

DIRECTORROSÁRIO ISAAC

DIRECTORMARCOLINO MOCO

DIRECTORLOPO DO NASCIMENTO

DIRECTORJOSÉ GIME

DIRECTORANDRÉ LELO

NON-EXECUTIVE DIRECTORS

MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017 MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017 MANAGEMENT REPORT AND CONSOLIDATED ACCOUNTS 2017

PERFORMANCE SUMMARY03


20 21

PERFORMANCE SUMMARY

3.1 EXECUTIVE SUMMARY

03

This report presents the per-formance of Sonangol, E.P. and its subsidiaries during 2017, highlighting the results achieved in the several planned activities.

During 2017, the exploration activity in Angola resulted in the completion of 8 seismic processing programs, totalling 13,766 Km2 of 3D seismic, and in the drilling of seventy-four (74) development wells, of which fifty-three (53) producers and twenty-one (21) injectors (work over pits).

During 2017, 595,810,124 bar-rels of crude oil were produced, corresponding to a daily average of 1,632,357 barrels, a 5% de-crease when compared to 2016.

From the volume reached, Sonangol received 216,825,582; 134,307,947 (62%) in the form of Concessionaire’s rights and 82,517,635 (38%), relating to Sonangol Investidora.

Angola’s gas production amoun-ted to 5,822,681 metric tons, from which 1,227,193 of LPG, 4,371,017 of LNG and 224,471 of Condensates. From this produc-tion, a total of 1,421,195 metric tons was assigned to Sonangol, a 185% increase when compa-red with the previous year, due to the good performance of the

Angola LNG plant. From January to December 2017, an average of 52,159 barrels per day of Crude Oil was processed by Refinaria de Luanda (Luanda’s refinery), corresponding to an 80% utiliza-tion rate of the installed capaci-ty. The total refined production amounted to 2,473,434 metric tons (including LPG), 3% below the production achieved in the previous year.

In the period under review, Sonangol transported a total of 14,940,021 metric tons of products, from which 9,788,210 metric tons of crude oil and 5,151,811 metric tons of refined products. The quantities trans-ported during 2017 represented a 7% increase when compared to 2016.

There were 5,106,682 metric tons of Refined Products marke-ted, from which 3,638,761 were in the domestic market and 1,467,920 in the foreign market (including butane and propane), corresponding to a 9% decrease in the total volume of marketed products when compared to 2016.

To meet domestic needs, appro-ximately 3,267,227 metric tons of refined products were pur-chased from the foreign market,

while imports decreased appro-ximately 7% when compared to 2016.

198,301,082 barrels of crude oil were sold in the foreign market, 3% less than in 2016, with the average price of Angolan oil reaching USD 54.06/Bbl.

3.2 OPERATING PERFORMANCE – EBITDA

Consolidated EBITDA amounted to AOA 625,270 million, a 19% increase mainly driven by the upstream performance, where the increase in the price of crude oil was the most relevant factor, and by downstream performance. These two segments represented, respectively, 87% and 24% of the total 2017 EBITDA.

EBITDA in the Corporate and Financing segment in the fiscal year of 2017 was negative in the amount of AOA 98,630 million, sin-ce this business segment aggre-gates several support activities of other segments.

The upstream segment (Explora-tion and Production) represents approximately 87% of the EBITDA recorded in the year and had a positive variation of 106% when compared to 2016, due to the in-crease in the average selling price of the Angolan oil.

The total production had a positive year-on-year change of 5%, resul-ting in an average daily production of 245 thousand Bbls. Regarding

0

-100.000

100.000

200.000

300.000

400.000

500.000

600.000

700.000

-98.630Corporate

& FinancingUpstream Midstream Downstream Non Core Ajustamentos

ConsolidaçãoTotal

541.11741.207

148.332

-9.834

3.078 625.270

Graphic 1EBITDA by business segment (AOA million)

gas production, Sonangol recorded a 35% increase in LPG production, which increased from 277 thou-sand metric tons to 373 thousand metric tons.

In 2017, the EBITDA attributed to the Midstream segment (Refining and Transportation) represented 7% of Sonangol’s total EBITDA. In this year, Refinaria de Luanda acquired 18,579,108 metric tons of Crude Oil, with an 80% utiliza-tion of the installed capacity and a decrease of 1.5% compared to the previous year.

With a lower availability of crude oil, an average of 52,159 barrels of Crude Oil per day was processed, representing a negative variation of 3% when compared to 2016. The production of refined products reached 2,473,434 metric tons, representing a negative variation of 3% when compared to the pre-vious year.

Regarding the transport of crude oil, there was a 17% increase in the quantities transported. Howe-ver, the transport of oil derivatives

registered an 8% decrease, due to the macroeconomic context and the economic slowdown.

EBITDA registered in the Downs-tream segment (Logistics and Distribution) amounted to AOA 148 billion, representing 24% of the total for the year and a decrease of 37% compared to the previous year, mainly due to the decrease in the consumption of oil derivatives.

Procurement and storage acti-vities decreased 10% and 22%, respectively, due to the retraction in the consumption of oil derivati-ves. At internal level, the supply of refined products also registered a decrease of 15%, which is explai-ned by the contraction of demand, as a result of the national econo-mic situation.

EBITDA attributed to Non-nuclear Business in 2017 was negative, in the amount of AOA 9.8 billion, representing a decrease in the amount of AOA 11.2 billion when compared to 2016. The indica-tor was strongly affected by the decrease in the number of flight hours by Sonair, the decrease of voice traffic in MS Telcom and the decrease in the activity of Clínica Girassol.


22 23

3.3 OPERATING PERFORMANCE – NET INCOME

3.4 INVESTMENTS

Corporate & Financing

Upstream Midstream Downstream Non Core AdjustmentsConsolidation

Total

23.607

8.705

-35.130

29.335

-2.230

3.078 27.365

Graphic 2Net income by business segment (AOA million)

-10.000

-5.000

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

In 2017, consolidated net income amounted to AOA 27,365 million, a 106% increase compared to 2016. The Downstream activity and the Corporate and Financing segment (which incorporates approximately AOA 155,356 million of financial results) contributed significantly for this result.

Despite the recovery in the price of crude oil in the international market over the last months, the investment activity was very conservative. Priority was given to the exploration and production of crude oil and natural gas, aiming to increase the volume of produc-tion and compensate the sharp decrease of fields.

From the amount of USD 1,674,176,000 invested during 2017, 90.6% were in the Explora-tion and Production segment, with investments in the FPSO Kaombo North and South development projects, in Block 32, with the be-ginning of the production expected scheduled for 2018, and in the Ochigufu and Vandumbu develop-

ment projects, at the West Hub of Block 15/06, with the beginning of the production also scheduled for 2018. Sonangol Pesquisa e Produ-ção holds a 30% and 36.84% stake in these Blocks, respectively.

A share of 9.2% (AOA 154 million) of the total investment was allocated to the Refining and Transportation segment, with the completion of the manufacture of two suezmax ships, for feet repla-cement.

The remaining 0.2% correspond to smaller investments in the Non--Nuclear Business segment.

Table 12017 Investment Program of Sonangol E.P

M.U.: USD thousand

NameExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Execution

Corporate and Financing - - - - - n.aSonangol, E.P. - - - - - n.a

Exploration and Production 451.300 429.287 307.908 327.700 1.516.195 -46%Sonangol, E.P. - Bloco 0 28.414 114.849 31.154 62.973 237.390 -43%

Sonangol Pesquisa e Produção 421.175 311.989 274.231 262.848 1.270.243 -46%

Sonangol Hidrocarbonetos Interna-cionais 426 1.342 1.512 1.031 4.311 n.a

Songás - n.a

ESSA (Perfuração) 1.285 1.107 1.011 848 4.252 -68%

Exploration and Production 56.619 97.516 - - 154.135 26%Sonangol Shipping 56.619 97.516 - - 154.135 n.a

Sonangol Refinação - - - - - n.a

Sonarel - - - - - n.a

Sonaref - - - - - n.a

Logistics & Distribution - - - - - n.aSonangol Logística - - - - - n.a

Sonangol Distribuidora - - - - - n.a

Non-Nuclear Business 2.829 471 444 103 3.846 12%Sonair - - - - - n.a

Sonangol MSTelcom - - - - - n.a

Sonangol Holdings - - - - - n.a

Sonangol Investimentos Industriais (SIIND) - - - - - n.a

Sonangol Imobiliária e Propriedades (SONIP) 2.829 471 444 103 3.846 37%

Clínica Girassol - n.a

Academia Sonangol - - - - - n.a

Total 510.747 527.274 308.352 327.803 1.674.176 -43%

Graphic 3Investments execution by segment

0,0%

0,0%

0,2%

9,2%

90,6%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0% 100,0%

Corporateand Financial

Logisticsand Distribution

Businessnon-nuclear

Refining andTransportation

Exploration and production


PERFORMANCE BYBUSINESS SECTOR

04


26 27

PERFORMANCE BYBUSINESS SECTOR

4.1 CONCESSIONAIRE

04

The slowdown in exploration activity in the global oil sector was reflected in the Concessionaire’s activity during 2017. Thus, no oil block biddings were carried out, there were no seismic activity (acquisition) and no new explo-ration and appraisal wells were drilled. As a result of the lack of investment in exploration, no new resources were discovered.

In order to reverse the downward trend in production, the Conces-sionaire has developed key projec-ts – Polo Este (Block 15/06), CLOV Phase 1 (Block 17) and Kaombo (Block 32) – with the beginning of production scheduled for 2018 and with an estimated production of approximately 1,000 Mbbl.

The beginning of production of the Cabaça Sudeste Field in Block 15/06, with two wells, has atte-nuated the decrease in produc-tion. Thus, in 2017, the volume of crude oil production decreased 5% when compared to 2016, while Concessionaires’ Rights registered a decrease of 6%. Regarding the production of Associated Natural Gas, production decreased 8% compared to 2016. In turn, LPG production registered a substan-tial increase, 68% in relation to the previous year, justified by the good performance of Angola LNG factory.

As a National Concessionaire, Crude Oil exports corresponded to 89% of the collected rights, a 6%

decrease compared to the pre-vious year, contributing negatively to the total exports registered by the group (Sonangol E.P. and So-nangol Pesquisa e Produção).

In 2017, Sonangol was able to recover USD 167 billion from the total of USD 223 billion of reco-verable costs in the concessions in production. Of the total costs recovered, more than 63% resul-ted from Blocks 17 and 15, respec-tively representing 38% and 25%.

4.1.1 EXPLORATION4.1.1.1 SEISMIC ACQUISITION

4.1.1.2 SEISMIC PROCESSING

During the period under review there was no seismic activity due to its postpone-ment and/or cancellation in order to assess the operational efficiency of crude oil exploration projects.

Table 2Exploration activity [Seismic Acquisition]

Table 3 Seismic Processing Completed

Seismic Acquisition2D Seismic 3D Seismic 4D Seismic

(Km) (Km2) (Km3)2017 2016 2017 2016 2017 2016

Block 15/06 (3D-15/06NW-PGS) - - - 992 -

FS/FST (CGG2016) - - - 60 -

Total - - - 1.052 -

Seismic Block Programme Beginning Conclusion Extension

3D

0 3D-0 Area A Erva/Bucomazi Study 4th Quarter/2016 1st Quarter/2017 350 Km2

02/153D OBC GAROUPA PSTM 2nd Quarter/2016 2nd Quarter/2017 600 km2

3D OBC GAROUPA PSDM 3rd Quarter/2016 2nd Quarter/2017 600 km2

15/06 3D-15/06-PSTM-NW -PGS-2016 2nd Quarter/2016 1st Quarter/2017 1.032 km2

32

3D-32B22N&B10N 4th Quarter/2013 1st Quarter/2017 1.100 km2

3D-32PSDM13SW ÁreaC22 2nd Quarter/2015 1st Quarter/2017 600 km2

3D-32 Bi-WATS CNE PSDM 3rd Quarter/2014 3rd Quarter/2017 1.484 km2

Multi-Customer 3D-MC WG99 Phase VII/VIII 2nd Quarter/2015 1st Quarter/2017 8000 km2

Total 3D 13.766 Km2

At the end of 2017, eight (8) seismic processing programs were concluded, totalling 13,766 Km² of 3D seismic.


28 29

Between January and December 2017, sixteen (16) seismic processing programs were in progress as descri-bed in the table below:

Table 4 Seismic Processing in Progress

Sísmica Bloco Programme Beginning Progress Extension

2D 32 2D-MCWGAngolaUDA PSD 4th Quarter/2016 97% 3.740 Km

Total 2D 3.740 Km

3D

0 3D-O-Area B Great 105-B Area 2nd Quarter/2017 85% 586 km2

143D-14 Greater Tomb-Land VM e well calibration 3rd Quarter/2017 95% 1660 km2

3D-14 Greater Land AVO and Pre-stack Inversion 3rd Quarter/2017 60% 471 km2

15/06

3D-15/06 PGS 16 PSDM 1st Quarter/2017 99% 1.032 km2

3D-15/06PSDM Revision Omocola North Area 1st Quarter/2017 99% 550 km2

3D-15/06 PSG16 AVO Analysis 1st Quarter/2017 45% 1.032 km2

3D-15/06 PSG16 Lower Miocene Oligocene PSDM 1st Quarter/2017 98% 1.000 km2

32

3D-32LO2007 C12SW PSDM 3rd Quarter/2015 99% 520 km2

3D-32HDGIC2006 PSDM 2nd Quarter/2016 99% 520 km2

3D-32 Colorau South dedicated imaging 4th Quarter/2016 99% 590 km2

3D-32 Louro RTM Remigration-Phase 2 1st Quarter/2017 85% 590 km2

3D-32 Louro RTM Remigration-Phase 1 4th Quarter/2017 99% 590 km2

Mostarda VMB & imaging 4th Quarter/2017 8% 826 km2

Caril 3D/4D Pre-Processing 2nd Quarter/2017 99% 211 km2

Total 3D 10.178 Km2

4D 17 4D CLOV-Baseline & Monitor 1 Full Processing 2nd Quarter/2017 67% 729 km2

Total 4D 729 Km2

4.1.1.3 SURVEY-EXPLORATION, EVALUATION AND DEVELOPMENT ACTIVITY

Table 5 Exploration Wells

Blocks / Association Research Well Evaluation Well Wells Develop. ProductWells Develop.

InjectorBlock 0 - Cabinda Association - - 13 3

Block 17 - - 5 4

Block 15/06 - - 5 1

Block 17 - - 12 6Block 31 - - - 2

Block 32 - - 11 5

Congo Onshore - - 7 -

Total - - 53 21

4.1.1.4 DEVELOPMENT PROJECTS

Table 6 Development Projects

Project Block Beginning of ProductionCurrent

Progress (%) Status as at December 2017

Polo Oeste, Ochigufu

15

1T 2018 83 The commissioning of submarine equipment is in progress.

Polo Oeste, Vandunbu 4T 2018 90 Preparing for the manufacture of UG8A and UG9A umbilicals.

Polo Oeste, SMBS 4T 2018 73 The last unit is being produced.

CLOV fase 1 17 2T 2018 93 The well jumpers manufacturing and installation campaign is ongoing.

Kaombo 32 4T 2018 91 Delays in FPSO delivery were recorded. Production expected to start in July 2018.

In 2017, seventy-four (74) deve-lopment wells were concluded: fifty-three (53) producing wells and twenty-one (21) injecting wells – Service Wells.

The development drilling opera-tions were concentrated in Block 17, where twelve (12) producing wells and six (6) injecting wells were concluded in Block 0, where thirteen (13) producing wells and three (3) injecting wells were con-cluded; in Block 32, where eleven (11) producing wells and five (5) injecting wells were concluded; in Block 15, where five (5) produ-cing wells and four (4) injecting wells were concluded; in Onshore Congo, where seven (7) producing wells were finalized; in Block

15/06, where five (5) producing wells and one (1) injecting well were concluded; and, finally, in Block 31, where two (2) injecting wells were concluded.

On the other hand, workover operations were concentrated in Cabinda Concession; in Block O, with twenty-six (26) wells; in Blo-ck 14, with twenty-one (21) wells; in Soyo Onshore, with nineteen (19) wells; in Blocks 15 and 17, with two (2) wells each; and in Block 32, with one (1) well.

In order to support the crude oil production targets, the projects listed above have been developed. For each project, we provide the status as at 31 December 2017.


30 31

4.1.2 CRUDE OIL & GAS PRODUCTION 4.1.2.1 CRUDE OIL PRODUCTION

During 2017, 595,810,124 barrels of crude oil were produced in An-gola, equivalent to a daily average of 1,632,357 barrels. Compared to the same period of the previous year, production volume decrea-sed by 5%.

This situation is mainly explained by the operational constraints on the blocks in production, the decrease in activity due to the lack of approval of hiring probes and other contracts, as well as

Table 7 Crude oil production in Angola

U.M.: Bbls

Concessions & BlocksExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Production

Offshore 146.712.028 148.015.480 152.872.144 145.394.172 592.993.824 -5%Block 0 19.373.790 23.261.392 23.832.727 23.054.616 89.522.525 4%

Area A 12.818.976 16.047.557 17.032.180 16.349.597 62.248.310 13%

Area B 6.554.814 7.213.835 6.800.547 6.705.019 27.274.215 -11%

Block 2/05 78.427 75.707 75.017 100.006 329.157 -1%

Block 3/05 2.905.193 2.746.958 2.738.442 2.346.391 10.736.985 -21%

Block 3/05A 220.068 201.799 105.240 - 527.107 -47%

Block 4/05 586.508 609.385 554.246 484.084 2.234.223 -19%

Block 14 7.674.740 7.266.309 7.116.016 6.652.523 28.709.588 -18%

Block 14k 948.379 861.416 811.000 739.251 3.360.046 -27%

Block 15 26.247.570 25.857.392 25.969.527 24.287.327 102.361.816 -11%

Block 15/06 7.460.696 10.609.310 13.124.094 12.456.409 43.650.509 54%

Block 17 55.818.234 53.636.652 55.276.528 53.759.304 218.490.718 -5%

Block 18 10.744.995 10.838.328 10.299.179 9.308.454 41.190.956 -19%

Block 31 14.653.428 12.050.832 12.970.127 12.205.807 51.880.194 -13%

Onshore 724.494 697.456 696.834 679.516 2.816.300 -14%Cabinda Sul 85.161 95.884 116.232 126.584 423.861 -23%

Associação FS 20.482 18.501 21.647 20.760 81.390 -15%

Associação FST 618.851 583.071 558.955 550.172 2.311.049 -12%

Total 147.436.522 148.712.936 153.568.978 146.091.688 595.810.124 -5%Daily Average 1.638.184 1.634.208 1.669.228 1.587.953 1.632.357 -5%

the lack of sanctioning of new projects.

During this period, the Olomben-do Field started operations at Block 15/06, on 8 February, with a production of 12,868 barrels of oil. Girassol M14 project and FPSO Girassol from Block 17, also started operations on 5 June 2017, with a production of 1,800 barrels of oil from one single producing well.

By origin, Block 17 was the one that contributed most to produc-tion, followed by Blocks 15, 0, 31 and 18, representing an aggre-gate share of 84.7% of Angola’s crude oil production.

Table 8 Rights of crude oil production by companies

U.M.: Bbls

CompaniesExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 3rd Quarter Production

Total 25.989.296 25.406.345 26.079.287 25.287.538 102.762.467 -5%BP 25.585.693 24.470.517 24.749.392 23.348.622 98.154.225 -11%

ESSO 21.662.675 21.070.287 21.443.116 20.466.792 84.642.870 -8%

Statiol 18.474.497 17.566.597 18.086.670 17.406.580 71.534.344 -7%

ENI 11.996.321 13.338.960 14.291.074 13.465.681 53.092.036 3%

Sonangol P&P 11.234.109 11.078.615 12.156.101 11.344.575 45.813.400 2%

Sonangol 10.036.606 11.579.364 11.970.328 11.503.730 45.090.028 3%

Chevron 10.267.693 11.638.060 11.799.804 11.328.859 45.034.417 -2%

SSI 9.534.167 10.019.159 10.549.370 9.763.625 39.866.321 -5%

Galp 776.081 731.495 713.431 665.260 2.886.267 -19%

Somoil 642.983 617.299 589.162 530.889 2.380.333 -18%

Ajoco 625.052 589.751 568.737 469.278 2.252.818 -23%

Acrep 119.774 123.723 113.298 103.266 460.061 -18%

INA-NAFTA 125.010 117.950 113.747 93.856 450.564 -23%

NAFTAGAS 125.010 117.950 113.747 93.856 450.564 -23%

Prodoil 83.117 85.637 78.658 73.011 320.423 -17%

Pluspetrol 46.839 52.736 63.928 69.621 233.124 -23%

China Sonangol 55.017 50.450 26.310 - 131.777 -96%

Force Petroleum 17.032 19.177 23.246 25.317 84.772 -23%

Falcon Oil 15.685 15.141 15.003 20.001 65.831 -1%

Kotoil, S.A 9.803 9.463 9.377 12.501 41.145 -1%

Poliedro Oil 9.803 9.463 9.377 12.501 41.145 -1%

Cupet 4.258 4.794 5.812 6.329 21.193 -23%

Total 147.436.522 148.712.936 153.568.978 146.091.688 595.810.124 -5%

0,01%0,1%0,1%0,1%0,4%0,4%

1,8%5,4%

6,9%7,3%

8,7%15,0%

17,2%36,7%

0,00% 5,00% 10,00% 15,00% 20,00% 25,00% 30,00% 35,00% 40,00%

Associação FS

Block 2/05

Cabinda Sul

Block 3/05A

Block 4/05

Associação FST

Block 3/05

Block 14

Block 18

Block 15/06

Block 31

Block 0

Block 15

Block 17

Graphic 4Crude oil production in Angola by block

The ownership of crude oil produced in Angola is shown below:


32 33

Table 9 Crude oil production by operator

U.M.: Bbls



Total 55.818.234 53.636.652 55.276.528 53.759.304 218.490.718 -5%Chevron 27.996.909 31.389.117 31.759.743 30.446.390 121.592.160 -3%

ESSO 26.247.570 25.857.392 25.969.527 24.287.327 102.361.816 -11%

BP 25.398.423 22.889.160 23.269.306 21.514.261 93.071.150 -16%

ENI 7.460.696 10.609.310 13.124.094 12.456.409 43.650.509 54%

SNL P&P 3.711.769 3.558.142 3.397.929 2.830.475 13.498.315 -22%

Somoil 717.760 677.279 655.619 670.938 2.721.596 -11%

Pluspetrol 85.161 95.884 116.232 126.584 423.861 -23%

Total 147.436.522 148.712.936 153.568.978 146.091.688 595.810.124 -5%Daily Average 1.638.184 1.634.208 1.669.228 1.587.953 1.632.357 -5%

By companies, foreign oil opera-tors in Angola produced 97.3% of the total volume of crude oil pro-duction during the period under review, led by TOTAL E&P Angola with 36.7% of total production, followed by CHEVRON with 20.4%, ESSO with 17.2%, BP with 15.6%,

ENI with 7.3% and Pluspetrol with 0.1%, The remaining 2.7% corres-pond to the production of national operators (Sonangol Pesquisa e Produção and Somoil), with 2.3% and 0.5%, respectively.

Graphic 5Crude oil production by operator

0,1%

0,5%

2,3%

7,3%

15,6%

17,2%

20,4%

36,7%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Pluspetrol

Somoil

SNL PP

ENI

BP

ESSO

Chevron

TOTAL

In terms of achieving the targets established by the operators of the concessions in production, there were technical and operational constraints, which are described below:

• Cabinda ConcessionIn this concession, the production was slightly below what was ex-pected due to the closure of some producing wells in Takula, Malongo and Mafumeira Sul reservoirs, caused by operational problems and by the monitoring and opti-mization works in Nemba, Ndola, Lomba and Bomboco reservoirs. Despite the above, production levels were supported by the entry into operation of thirteen (13) wells from Mafumeira Sul project and by the optimization of the Gas Oil Ratio (GOR) in Nemba and Sanha reservoirs.

• Cabinda SulProduction was above the forecas-ts, although it was slightly compro-mised in the 1st quarter due to the low pressure in the reservoir and the interventions in well Noz-1,

in order to remove the paraffin to create communication with the bottom of the well. In the following quarters, the reservoir production improved significantly, with the re-entry of well CA-04.

• FS/FST ConcessionIn this concession, production levels were below expectations due to the closure of some wells, na-mely sixty-two (62) producing wells and three (3) injecting wells, due to several operational problems such as oil leaks in in the three-inch line, malfunction in the instrumen-tation system and unavailability of the gas system.

• Block 2/05The reservoirs remain closed, except for the Essungo field, which went into operation with only two wells, in order to support the FS/FST production line. The well Es-trela-A, in Bagre field, was reope-ned in December 2017.

• Block 3/05The production has been affected by the loss of pressure of some

producing wells, the lack of water injection in all the reservoirs and the closure of some wells, due to the advanced stage of maturity of the reservoirs. It should be noted in this Block that, currently, there are ninety-three (93) wells closed: forty-eight (48) producing wells and forty-five (45) injecting wells.

• Block 3/05AThe downturn in production was due to the closure of the well, since 3 October, due to the accumulation of paraffins, thus, the well cleaning work is currently in progress.

• Block 4/05The production was slightly below expectations due to some operatio-nal problems and the low injection in some wells.

• Block 14The production was slightly below the expected. Despite the good performance of the reservoirs and the gas lift optimization works, there were some operational pro-blems in some wells and unplan-ned stoppages.


34 35

• Block 14KThere was a sharp decrease in production in Lianzi field, mainly due to the formation of “Scale”.

• Block 15In the first quarters, the production was compromised by the closu-re of some wells due to the high water and gas contents. In the 3rd quarter, the production was slightly higher than expected, due to the good performance of the Reser-voirs, with the entry into operation of well BAV-106 and the stabiliza-tion of the ALNG Plant.

• Block 15/06The production was above expecta-tions due to the good performance

of the Reservoirs, the beginning of operations of Cabaça Sudeste field, with two wells and the entry of injection well CSE-402, as well as the beginning of operations of Polo Este field.

• Block 17The production levels were slightly below expectations due to the good performance of the Reservoirs. These production levels were supported by the beginning of operations of Dália project, Phase 1A and 2, and Girassol M14.

• Block 18Production levels were compromi-sed due to the low pressure in re-servoirs, the closure of some wells

in order to optimize production and the decrease in water production. • Block 31The production levels were below expectations due to the low water injection in the reservoir, caused by several constraints in the injection water treatment system.

4.1.2.2 CRUDE OIL RIGHTS OF NATIONAL CONCESSIONAIRE

Table 10 Concessionaire’s crude oil rights

U.M.: Bbls

Concessions & Blocks

ExecutionVariance

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter CollectionsCabinda Onshore 7.407 7.792 9.265 10.013 34.480 -21%

Block 2/05 30.000 - 20.000 20.000 70.000 n.a

Block 3/05 1.633.064 870.689 711.571 857.053 4.072.377 -17%

Block 3/05A 60.000 50.000 - - 110.000 -4%

Block 4/05 - 81.321 - 79.800 161.121 -27%

Block 14 1.664.662 1.608.742 2.083.129 2.279.483 7.636.016 -12%

Block 14K 59.756 50.067 70.969 51.935 232.726 -19%

Block 15 9.252.460 7.416.370 10.482.994 7.834.591 34.986.415 -20%

Block 15/06 488.538 626.231 1.058.409 968.488 3.141.666 32%

Block 17 14.516.626 15.277.678 17.969.499 20.700.021 68.463.824 9%

Block 18 2.936.101 2.907.348 2.910.042 2.856.522 11.610.013 -18%

Block 31 1.124.916 962.665 939.399 762.332 3.789.312 -22%

Total 31.773.530 29.858.903 36.255.277 36.420.238 134.307.947 -6%Daily Average 349.160 328.120 394.079 395.872 367.967 -6%

A total of 134,307,947 barrels of crude oil, corresponding to a daily average of 367,967 Bbl, were obtained by the Concessionaire. The year was marked by a 6% decrease resulting, mainly, from the decrease in production, caused by the natural decline in Block 17 (Girassol, Jasmim, Rosa, Dália and Pazflor) and Block 15 (Kizomba A and B, Mondo, Saxi and Batuque) fields.

Gráfico 6Direitos de Petróleo Bruto da Concessionária por Bloco

0

10.000.000

20.000.000

30.000.000

40.000.000

50.000.000

60.000.000

70.000.000

Bloco 14 OutrosBloco 17 Bloco 18Bloco 15 Bloco 3/05 Bloco 31 Bloco 15/06

2017 2016

0

50.000

100.000

150.000

200.000

250.000

300.000

Bloco 2/05 Bloco 14K

Bloco 4/05CabindaOnshore

Bloco3/05 A

Regarding the rights collected by block, we continue to highlight Block 17 and 15, representing 77% of the total volume collected. Also, the higher collections were made in Dália, Girassol, Plutónio, Pazflor, Hungo and Mondo fields.


36 37

4.1.2.3 GAS PRODUCTION4.1.2.3.1 PRODUCTION OF ASSOCIATED NATURAL GAS

Table 11 Production of Associated Natural Gas

M.U.: Cubic feet (ft3)

BlocksExecution


Offshore 293.265 292.949 304.867 290.803 1.181.883 -9%Block 0 110.078 119.819 126.218 121.660 477.775 -1%

Area A 27.733 31.098 36.808 35.147 130.786 2%

Area B 82.345 88.721 89.410 86.513 346.989 -1%

Block 2/05 - - - - - n.a

Block 3/05 4.478 9.488 5.569 6.948 26.483 20%

Block 3/05A 167 227 145 - 539 -34%

Block 4/05 340 372 422 266 1.400 -7%

Block 14 8.879 8.184 6.561 6.773 30.397 -38%

Block 14k 1.038 911 780 606 3.335 38%

Block 15 52.836 53.017 54.315 54.220 214.388 -18%

Block 15/06 8.728 10.515 14.253 11.521 45.017 27%

Block 17 65.325 51.029 58.090 53.478 227.922 -12%

Block 18 23.589 24.855 22.100 22.661 93.205 -14%

Block 31 17.807 14.531 16.412 12.672 61.422 -11%

Onshore 998 1.805 1.873 1.689 6.365 13%Cabinda Sul 98 887 895 771 2.651 -3%

FS Concession 12 14 16 14 56 180%

FST Concession 888 904 962 904 3.658 27%

Total 294.263 294.754 306.740 292.492 1.188.248 -8%

During 2017, 1,188,248 cubic feet of gas were produced in Angola’s oil production concessions, corresponding to a decrease of 8% when compared to the previous year.

4.1.2.3.2 LPG PRODUCTION

Table 12 LPG production in Angola

M.U.: MT

OriginExecution


Sanha 80.169 82.648 100.323 90.149 353.289 -15%Butane 33.446 34.996 41.625 37.195 147.262 -14%

Propane 46.723 47.652 58.698 52.954 206.027 -16%

Cabinda Gas Plant 15.021 10.489 10.084 12.090 47.684 -32%Butane 6.884 4.954 4.403 5.363 21.604 -33%

Propane 8.137 5.535 5.681 6.727 26.080 -32%

Refinaria de Luanda 7.209 7.527 6.401 5.607 26.744 -2%ALNG 166.818 205.930 212.663 214.065 799.476 266%

Butane 69.899 83.397 83.690 84.540 321.526 242%

Propane 96.919 122.533 128.973 129.525 477.950 284%

Total 269.217 306.594 329.471 321.911 1.227.193 68%

When compared to 2016, LPG production increased 68%, the equivalent to 495,124 metric tons. This increa-se was mainly due to the good performance of Angola LNG factory.

Gráfico 7Direitos de Petróleo Bruto da Concessionária por Bloco

ALNG38%

Sanha29%

Cabinda Gas Plant

4%

Refinaria de Luanda

2%

ALNG was responsible for 65% of the production, followed by Sanha with 29%, Cabinda Gas Plant with 4% and Refinaria de Luanda with 2%.


38 39

4.1.2.3.3 LNG AND CONDENSATES PRODUCTION

Table 13 LNG production in Angola

Table 14 Condensate production in Angola

M.U.: MT

OriginExecução


Angola LNG 913.402 1.027.650 1.194.231 1.235.734 4.371.017 387%

Total 913.402 1.027.650 1.194.231 1.235.734 4.371.017 387%

M.U.: MT

OriginExecução


Angola LNG 43.679 55.391 62.003 63.398 224.471 199%

Total 43.679 55.391 62.003 63.398 224.471 199%

In the period under review, the production of Liquefied Natural Gas was 4,371,017 metric tons, 387% above the volume rea-ched in 2016. The production of Condensates was 224,471 metric

tons. When compared to 2016, there was an increase of 199%.

It should be noted that, in 2016, the Angola LNG factory resumed its production only in May, after

a long stoppage period, with an additional maintenance stoppage in August. In 2017 there was no stoppage with a relevant impact in production, thus explaining the increase in production.

During the period under review, the weighted average operating cost of the oil industry was USD 6.74/Bbl, excluding abandon-ment costs, registering a 12% decrease when compared to the previous year.

The highest levels of efficiency were recorded in Block 17 and 31, having presented the unit

4.1.3 ECONOMIC MANAGEMENT OF CONCESSIONS4.1.3.1 PRODUCTION COSTS

Table 15 Operation costs in production concessions

U.M.: USD/Bbl

BlocksProduction Costs

Variance2017 2016

Block 0 11,67 11,80 -1%

Block 2/05 31,37 15,22 106%

Block 3/05 14,71 17,84 -18%

Block 3/05A 13,93 6,78 105%

Block 4/05 28,78 33,00 -13%

Block 14 7,11 12,00 -41%

Block 14K 7,64 17,18 -56%

Block 15 5,69 4,42 29%

Block 15/06 11,27 10,43 8%

Block 17 3,85 6,36 -39%

Block 18 6,33 6,87 -8%

Block 31 4,82 4,73 2%

Cabinda Sul 16,11 12,38 30%

FS Concession 29,70 25,42 17%

FST Concession 27,94 21,59 29%

Industry Total 6,74 7,66 -12%

cost of USD 3.85/Bbl and USD 4.82/Bbl, respectively.

In contrast, lower efficiency le-vels were observed in Block 2/05 at a cost of USD 31.37/Bbl and in FS Associations and Block 4/05, at a cost of USD 29.70/Bbl and USD 28.78/Bbl, respectively.


40 41

4.1.4 CONCESSIONAIRE EXPORTS

Table 16 Exports Map of Sonangol Concessionaire

U.M.: Bbls

Exported BranchesExecutado

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Exported Quantity

Dália 4.624.518 8.410.537 9.239.320 11.116.434 33.390.809 19%

Girassol 5.135.506 3.917.805 3.961.685 4.657.618 17.672.614 -14%

Paz Flor 3.756.048 1.947.787 2.765.414 3.671.129 12.140.378 44%

Mondo 2.777.320 2.762.183 2.706.385 2.866.678 11.112.566 7%

Hungo 3.623.917 1.842.596 4.667.001 - 10.133.514 -36%

Kissange 1.809.652 1.855.970 1.891.373 2.762.341 8.319.336 -17%

Nemba 1.724.418 1.589.827 1.941.458 2.312.328 7.568.031 -23%

CLOV 1.000.554 1.001.546 2.003.079 954.840 4.960.019 -2%

Saxi-Batuque 940.027 955.624 916.882 1.903.865 4.716.398 -28%

Saturno 1.124.916 962.974 939.399 762.332 3.789.621 -20%

Plutónio 980.257 - 949.911 - 1.930.168 -60%

Sangos 414.412 275.133 560.947 554.464 1.804.956 -20%

Olombendo 74.126 351.099 497.462 414.024 1.336.711 n.a

Gimboa - 81.321 - 79.800 161.121 -66%

Total 27.985.671 25.954.402 33.040.316 32.055.853 119.036.242 -6%

During 2017, the Concessionaire’s exports were 119,036,242 barrels of crude oil, corresponding to a 6% decrease when compared to the previous year.

Dália was the field with the grea-test weight in the volume of ex-ports, corresponding to 28% of the Concessionaire’s exports in the year. The beginning of operations of the Olombendo field, from Block 5/06, should also be highlighted, representing 1% of the exports.

4.1.4.1 RECOVERY OF INVESTMENTS MADE IN PRODUCTION CONCESSIONS

Table 17 Recovered Costs in Production Concessions

During the period under review, the recovered costs in produc-tion concessions, correspon-ding to development expenses, amounted to MUSD 167,495,597, representing a 9% increase in the recovery of costs when compared to 2016. This increa-se is mainly due to the rise of the oil price in the international market.

Regarding the costs to be re-covered, block 31 remains the asset with the largest volume, representing 25% of total costs to be recovered, due to the high cost of development of PSVM, which production started in the 4th quarter of 2012. block 31 is followed by block 17, with costs to be recovered representing approximately 24% of total costs, due to the investments in Pazflor project, which was completed

U.M.: MIL usd

Blocks Incurred Costs RecoveredcostsCosts to be recovered

Block 2/05 1.920.700 21.182 1.899.518

Block 3/05 6.085.478 5.433.122 652.356

Block 3/05A 653.919 49.014 604.905

Block 4/05 2.617.095 2.375.557 241.538

Block 14 28.727.340 22.856.600 5.870.740

Block 15 45.421.397 41.139.812 4.281.585

Block 15/06 15.462.397 3.140.058 12.322.339

Block 17 77.379.280 63.842.993 13.536.287

Block 18 20.281.847 18.974.990 1.306.856

Block 31 23.450.001 9.557.551 13.892.450

COS 877.679 104.717 772.962

Total 222.877.135 167.495.597 55.381.538

in 2011, and more recently the CLOV project, completed in mid-2014.

The costs to be recovered re-garding Block 15/06 represent 22% of the total of costs to be recovered. It should be noted that, since the beginning of production in 2014, only 20% of the recoverable costs have been recovered due to, on one hand, the high development costs and, on the other hand, the fact that production started when the oil price in the market began to decline progressively until the end of 2017.

In block 15, the reported cos-ts are related to development expenses in Kizomba Satellite Phase 2, which came on stream in June 2015.


42 43

4.2 PRIMARY VALUE CHAIN – UPSTREAM SEGMENT

4.2.1 PRODUCTION OF CRUDE OIL OF SONANGOL INVESTIDORA

The Exploration and Production activity is a critical segment of Sonangol’s activity, which is reflected in the Company’s own investment strategy, with this segment representing 90,6% of the total investment made in 2017, as mentioned in 2.4.

In 2017, Angola produced a total of 595,810,124 barrels of Crude Oil, of which 82,517,635 are re-lated to Sonangol, representing a 3% increase over the same

period last year. This increase is due to the increase in pro-duction of Sonangol Pesquisa e Produção in Block 15/06 (54% increase) and from the increase in production of Sonangol E.P. in Block 0, Area A (increase of 13%).

Regarding the production of LPG, the increase of the ALNG plant production, where Sonan-gol has a 22.8% share, reflected positively in the increase of pro-

duction of 35% and in the reduc-tion of imports in 98% compared to the previous year.

In 2017,the Upstream pri-mary chain recorded sales and EBITDA in the amount of AOA 2,130,340 million and AOA 541,117 million, respectively, the equivalent to 87% of the Com-pany’s total EBITDA.

Table 18 Crude Oil Production of Sonangol Investidora

U.M.: Bbls



SNL E.P 7.943.254 9.537.171 9.771.418 9.452.393 36.704.235 4%Block 0 7.943.254 9.537.171 9.771.418 9.452.393 36.704.235 4%

Área A 5.255.780 6.579.498 6.983.194 6.703.335 25.521.807 13%

Área B 2.687.474 2.957.672 2.788.224 2.749.058 11.182.428 -11%

SNL P&P 11.234.109 11.078.615 12.156.101 11.344.575 45.813.400 2%Operated Blocks 1.260.746 1.215.961 1.167.311 985.256 4.629.273 -6%Block 3/05 944.188 892.762 889.994 762.577 3.489.520 1%

Block 3/05A 46.765 42.882 22.364 - 112.010 -46%

Block 4/05 269.794 280.317 254.953 222.679 1.027.743 -19%

Non-operated Blocks 9.973.363 9.862.654 10.988.791 10.359.319 41.184.127 3%Cabinda Sul 21.294 22.410 26.638 28.788 99.130 -20%

FS/FST Concession 31.967 30.079 29.031 28.547 119.624 -12%

Block 14 1.198.846 1.098.068 997.090 919.958 4.213.962 -16%

Block 14K 178.296 161.946 152.467 138.979 631.688 -26%

Block 15/06 2.542.381 3.615.334 4.472.298 4.244.770 14.874.783 54%

Block 31 6.000.579 4.934.817 5.311.267 4.998.278 21.244.940 -13%

Total 19.177.363 20.615.785 21.927.519 20.796.968 82.517.635 3%Daily Average 213.082 226.547 238.343 226.054 226.076 3%

During 2017, there was a 3% increase in the production of crude oil of Sonangol Investido-ra when compared to the same period in 2016.

The 4% increase in Sonangol EP’s share in Block 0 was due to the increase in the production

Of the total LPG Production, 373,423 metric tons were produced by Sonangol, of which 49% came from Angola LNG, 39% from Sanha and the remaining 12%

M.U.: MT

OriginProduced Quantity


Sanha (41%) 32.869 33.886 41.132 36.961 144.848 -15%Butane 13.713 14.348 17.066 15.250 60.377 -14%

Propane 19.156 19.537 24.066 21.711 84.471 -16%

Cabinda Gas Plant (41%) 6.159 4.300 4.134 4.957 19.550 -32%Butane 2.822 2.031 1.805 2.199 8.858 -33%

Propane 3.336 2.269 2.329 2.758 10.693 -32%

Refinaria de Luanda (100%) 7.209 7.527 6.401 5.607 26.744 -2%ALNG (22,8%) 38.035 46.952 48.487 48.807 182.281 266%Butane 15.937 19.015 19.081 19.275 73.308 242%

Propane 22.098 27.938 29.406 29.532 108.973 284%

Total 84.271 92.665 100.155 96.332 373.423 35%

4.2.2 GAS PRODUCTION OF SONANGOL E.P.4.2.2.1 LPG PRODUCTION

Table 19 Sonangol’s Share in LPG Production

from Refinaria de Luanda and the Cabinda Gas Plant, 7% and 5% respectively. Compared to 2016, Sonangol registered a 35% increase in LPG production.

of Area A, following the be-ginning of operations of thirteen (13) wells from Mafumeira Sul project.

Regarding Sonangol Pesquisa e Produção, there was an incre-ment of 2%, mainly due to the increase in production in Block

15/06, a non-operated block where Sonangol participates as an investor, where two wells came on stream, in the Cabaça Sudeste field.


44 45

4.2.2.2 LNG PRODUCTION AND CONDENSATES

Table 20 Sonangol’s Share in LNG Production

Table 21 Sonangol’s Share in Condensate Production

M.U.: MT

OriginExecution


Angola LNG 208.256 234.304 272.285 281.747 996.592 387%

Total 208.256 234.304 272.285 281.747 996.592 387%

M.U.: MT

SourceExecution


Angola LNG 9.959 12.629 14.137 14.455 51.179 199%

Total 9.959 12.629 14.137 14.455 51.179 199%

4.3 PRIMARY VALUE CHAIN – MIDSTREAM SEGMENT

4.3.1 REFINING BUSINESS

The Refining and Transportation segment recorded sales equivalent to AOA 208,776 million in 2017 and an EBITDA of AOA 41,207 million, corresponding to 7% of Sonangol’s total EBITDA. Regarding the activity of Refi-naria de Luanda, there was a decrease in raw material supply of 7% and, consequently, a decrease in the use of the installed refining capacity of 3% in relation to the same period of the previous year. This negative perfor-mance was proportionally reflected in the decrease of the volume of crude oil processed and the volume of refined products produced (3%).

Regarding the Refining business, Sonangol maintains Refinaria de Luanda with a nominal installed capacity of 65,000 Bbl/d. The average utilization rate of installed capacity, in 2017, was of 80%. The decrease was due to the 7% reduction in the supply of raw materials, as a result of the reduction in the supply from the Plutónio and Palanca fields, of 4% and 11%, respectively.

During 2017, Sonangol’s LNG production amounted to 996,592 metric tons and the production of Con-densates reached 51,179 metric tons. Both productions took place in the Angola LNG plant.

Table 22 Average Utilization Rate of Installed Capacity

Table 23 Volume of crude oil processed

Table 24 Refined production

Crude Oil ProcessingExecução

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Processing

Instaled Capacity Utilisation Rate (BOPD) 85% 84% 77% 75% 80% -3%

U.M.: Bbls

BranchesExecução

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Processing

Palanca 2.665.106 1.996.352 2.183.772 1.431.414 8.276.644 -11%

Nemba - - 119.947 180.956 300.903 201%

Plutónio 2.237.569 2.767.310 2.147.578 2.562.479 9.714.936 -4%

Hungo 75.440 188.079 148.086 334.069 745.674 388%

Total 4.978.115 4.951.741 4.599.383 4.508.918 19.038.157 -3%

Daily crude oil processed 55.312 54.415 49.993 49.010 52.159

M.U.: MT

ProductExecution


LPG 7.898 7.527 6.401 5.390 27.216 0%

Nafta 67.077 66.147 64.423 80.064 277.711 -9%

Gasoline 16.440 11.691 6.518 - 34.649 5%

Jet B 17.860 11.899 20.638 20.634 71.031 -9%

Jet A1 75.278 60.385 70.813 72.170 278.646 7%

Kerosene 17.325 24.233 6.508 3.885 51.951 -39%

Diesel 158.882 164.962 140.108 142.988 606.940 1%

Ordoil 57.918 13.525 33.039 56.988 161.470 -19%

Fuel Oil 224.457 274.678 243.250 205.075 947.460 -2%

Asphalto 2.122 5.509 2.506 6.162 16.299 395%

Cutback 20 41 - - 61 -94%

Total 645.277 640.597 594.204 593.356 2.473.434 -3%

The average utilization rate of installed capacity was of 80%, 3% below the rate recorded in 2016.

In 2017, Refinaria de Luanda acquired 18,579,108 barrels of crude oil distributed by Plutónio (52%), Palanca (42%), Hungo (4%) and Nemba (2%).

This allowed 19,038,157 barrels of crude oil to be processed, corresponding to a daily average of 52,159 bar-rels, i.e., a total production of 2,473,434 MT of refined products.


46 47

In 201 7, refined production re-gistered a decrease of 3% when compared to 201 6, mainly due to the following situations:

• Malfunction of critical equipment, due to 7 years of intensive use, which increases the need to perform the Gene-ral Stop (the last general stop occurred in 201 0);

• Power cuts due to the stoppage of the GT35 turbine;

• Cancellations or delays in shipments of crude oil, espe-cially from Plutónio;

• Failure to comply with the Fuel Oil withdrawal plans by the Katyavala ship and the cement production compa-nies, threatening the exports programs;

• Lack of spare parts to repair equipment (more than 3 years without stock replenishment in the warehouse);

• Delays in the replenishing of chemical stocks, resulting from delays in payments to suppliers;

• Excessive bureaucracy in procurement processes and, consequently, in payments to suppliers.

The production of Gasoline was interrupted in September, due to the inefficiency of the U700 Ca-talyst (end of another lifecycle), thus, the regeneration process was initiated.

Considering the time of existen-ce of the current catalyst and the successive processes of regene-ration that it has endured, new catalysts have been acquired for replacement purposes. LPG extraction has declined in the last 3 years as a result of the crude oil mix being processed, as the Refinery started to use mainly the Plutonio field, resul-ting in a level of LPG extraction of only 1 .06% of the total crude oil processed. This situation ini-tiated the production of Asphalt with 50/70 penetration, thus responding to the specification of the product that the market demanded. In this way, Asphalt production increased 4 times more when compared with the previous year.

Graphic 8Production profile of refined products

Fuel Oil38%

Kerosene2%

Diesel25%

Cutback0%

Gasoline1%

LPG1%

Ordoil7%

Asphalt1%

Jet A111% Jet B3%

Nafta11%

When compared to 201 6, there was a 1 7% increase in the quantity of crude oil transported. This segment represented 9.2% of the total investment made in 201 7, the second largest after the Exploration and Produc-tion segment..

M.U.: MT

FleetExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Transported quantities

Fleet SUEZMAX 1.716.922 1.886.172 1.658.055 1.973.202 7.234.351 30%Crude Oil 1.716.922 1.886.172 1.658.055 1.973.202 7.234.351 30%

Fleet CABOTAGEM 625.177 568.445 828.842 531.395 2.553.859 -8%Crude Oil 625.177 568.445 828.842 531.395 2.553.859 -8%

Total 2.342.099 2.454.617 2.486.897 2.504.597 9.788.210 17%

M.U.: MT

Fleet/ProductExecution

Variação Homóloga1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Transportedquantities

Cabotagem Fleet 1.018.883 953.435 866.446 995.975 3.834.739 -32%Domestic Use 1.008.866 937.620 858.080 982.592 3.787.158 -32%

Diesel 569.725 545.453 463.788 553.185 2.132.151 -39%

Gasoline 353.605 277.617 234.381 297.750 1.163.353 -30%

Kerosene 1.186 - - - 1.186 -63%

Jet A1 3.077 4.878 2.570 2.677 13.202 -65%

LPG 81.273 109.672 157.341 128.980 477.266 43%

Export 10.017 15.815 8.366 8.927 43.125 -2%Diesel 5.897 11.113 5.892 4.987 27.889 -6%

Gasoline 1.845 2.248 1.714 1.623 7.430 12%

Jet A1 2.275 2.454 760 2.317 7.806 -1%

Import - - - 4.456 4.456 -67%Lubricants & Oil - - - 4.456 4.456 -67%

LNG Fleet 350.871 350.241 278.594 337.366 1.317.072 n.aLNG 350.871 350.241 278.594 337.366 - n.a

Total 1.369.754 1.303.676 1.145.040 1.333.341 5.151.811 -8%

4.3.2 CRUDE OIL, REFINED AND GAS TRANSPORTATION BUSINESS

Table 25 Volume of crude oil transported

Table 26 Volume of oil derivative products transported by segment

The transport of crude oil and its derivatives amounted to 14,940,021 metric tons.

Suezmax (74%) and Cabotagem (26%) fleets were responsible for transporting 9,788,210 metric tons of crude oil, representing a 17% decrease when compared with the previous year.


48 49

The transport of refined products also decreased 8%, following the same basis of comparison. Cabotagem fleet repre-sented 74% of the total volume of pro-ducts transported while the LNG fleet represented only 26%.

Graphic 9Refined products and gas transportation

LPG9%

Diesel42%

Kerosene0%

Lubr. & Oil0%

Gasoline23%

LNG26%

Even so, Diesel was the most transported refined product, representing 41.9% due to its multipurpose use (transport and indus-try), followed by LNG with 25,6%, Gasoline with 22.7%, LPG with 9.3% and Jet A1, Lu-bricants and Kerosene with 0.5%.

The Logistics and Distribution segment recorded sales equi-valent to AOA 743,645 million in 2017 and an EBITDA of AOA 148,332 million, corresponding to 10% of the total EBITDA re-corded by Sonangol.

The increase in the prices of refined products, as a conse-quence of the elimination of the price subvention, had a direct impact on this segment. There was a reduction of 1% and 15%, respectively, in the purchase of refined products and marke-ted products when compared to 2016. Meanwhile, it should

4.4 PRIMARY CHAIN – DOWNSTREAM SEGMENTbe noted that 36% of the total amount supplied originated from the domestic market.

In the Logistics activity, and in line with the contraction of demand, there was a general reduction in volumes supplied (decrease of 10%) and in storage capacity (decrease of 22%). The latter was due to the termination of the vessel rental agreement for floating storage.

Regarding the Distribution ac-tivity, the most traded products continue to be Gasoline and Die-sel, representing more than 70%

of sales, especially in the Con-sumer and Retail segment. Even though these are the segments with the highest consumption, they are also the most competi-tive ones.

In the international market, there was also a reduction in exports of Crude Oil (3% decrea-se), while the exports of refined products increased 8%. During the period, 4,797,032 MT

of refined crude oil products were acquired, registering a 1% decrease when compared with the previous period, due to the retraction in the consumption of oil derivatives.

4.4.1 LOGISTICS BUSINESS4.4.1.1 PROCUREMENT

Table 27 Acquisition of refined products by origin

M.U.: MT

ProductsExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Supplied Quantity

Import 605.149 726.313 1.067.573 835.228 3.267.227 -7%Sonangol Logística 595.276 716.145 1.048.015 855.059 3.214.495 -6%Diesel 363.253 455.131 764.786 640.536 2.223.706 -5%

Gasoline 232.023 261.014 283.229 181.559 957.825 -7%

Jet A1 - - - 32.964 32.964 0%

Sonagás - - 1.600 - 1.600 -98%LPG - - 1.600 - 1.600 -98%

Sonangol Distribuidora 9.873 10.168 17.958 13.133 51.132 113%Gasóleo (MGO) - - - - - -100%

Asphalt 9.873 10.168 17.958 13.133 51.132 113%

Luanda’s Refinery 279.581 269.402 287.972 285.720 1.122.675 9%Diesel 152.595 141.180 157.787 157.891 609.453 2%

Gasoline 11.211 11.719 15.500 15.203 53.633 91%

Jet A1 70.047 71.933 72.196 72.967 287.143 28%

Jet B 17.120 17.079 14.283 11.538 60.020 -20%

Kerosene 21.399 19.964 21.805 22.514 85.681 11%

LPG 7.209 7.527 6.401 5.607 26.744 -2%

Topping Malongo 20.551 19.574 19.993 19.882 80.001 5%Diesel 15.593 14.889 14.894 14.798 60.175 -2%

Jet A1 606 484 411 387 1.889 -34%

Kerosene 4.352 4.200 4.688 4.697 17.937 48%

Sanha Gás 32.869 33.886 41.132 36.961 144.848 -15%LPG 32.869 33.886 41.132 36.961 144.848 -15%

Angola LNG 38.035 46.952 48.487 48.807 182.281 266%LPG 38.035 46.952 48.487 48.807 182.281 266%

Total 986.058 1.106.295 1.483.116 1.239.731 4.797.032 -1%

From total acquisitions, 68% came from the foreign market and the remaining 32% from the domestic market.

Despite the decrease in its ge-neral performance, purchases to

Refinaria de Luanda registered a 9% increase when compared with the same period in 2016, due to the production increase for Gasoline and Jet A1.


50 51

Table 28 Refining products procurement

Table 29 Storage Capacity

M.U.: MT

ProductsExecution


Diesel 531.441 611.201 937.467 813.225 2.893.334 -18%

Gasoline 243.234 272.733 298.729 196.762 1.011.458 -4%

Jet A1 70.653 72.417 72.607 73.354 289.032 27%

Jet B 17.120 17.079 14.283 11.538 60.020 -20%

Kerosene 25.751 24.164 26.492 27.210 103.618 16%

Asphalt 9.873 10.168 17.958 13.133 51.132 113%

LPG 78.113 88.365 97.621 91.375 355.473 12%

Total 976.185 1.096.127 1.465.158 1.226.598 4.764.068 -10%

U.M.: M3

Av erage Storage Capacity

ExecutionVariance

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Supplied QuantityOn shore 358.510 358.510 358.510 358.510 358.510 -6%

Floating 340.170 340.170 340.170 340.170 340.170 -34%

Total 698.680 698.680 698.680 698.680 698.680 -22%

The products with the highest volume of supply were Diesel (53%) and Gasoline (25%), totalling 79%. There was an increase in the volumes of LPG (12%) and a slight increase in the volume of Jet A1 (15%), when compared to 2016.

The storage capacity of refined products was 698.680 M3, of which 358.51 0 M3 were onshore and 340.1 70 on floating storage vessels, a decrease of 22% when compared to the the previous year. This decrease is due to the

4.4.1.2 STORAGE

withdrawal of Múcua ship, within the readjustment of the needs of the company, having resulted in the termination of the lease contract of that unit.

A total of 3,638,761 MT of oil deri-vative products were sold, cor-responding to a decrease of 15% compared to the previous period.

This reduction is explained by the contraction of demand, given the current national economic situa-tion.

Diesel and gasoline remain the most traded products, represen-ting together 73% of the quantities sold.

By business segment, there is a greater representativeness for the consumer sec-tor, due to the supply of diesel for thermal power stations.

4.4.2 DISTRIBUTION BUSINESS4.4.2.1 SALES

Table 30 Quantities of Refined Products Sold

M.U.: MT

ProductExecution


Diesel 521.067 508.238 464.234 532.204 2.025.744 -23%

Gasoline 163.675 159.050 161.355 158.871 642.951 -22%

LPG (Butane G as) 77.133 80.484 82.330 80.945 320.892 44%

Jet A1 64.408 65.782 68.647 71.065 269.901 7%

Other 20.182 12.966 96.149 18.386 147.683 1075%

Jet B 17.033 12.027 18.561 22.821 70.443 -9%

Asphalt 1.671 5.883 12.564 40.932 61.049 136%

Fuel Extra Heavy 35.592 1.282 313 6.013 43.199 -71%

Kerosene 11.315 13.139 7.498 4.551 36.503 -33%

Fuel Oil 1500 - - - 11.005 11.005 37%

Lubricants 2.706 2.369 2.346 1.821 9.242 -34%

Cutback 24 44 66 - 134 -86%

Aviation Gas 5 - 8 3 16 -100%

Total 914.811 861.265 914.070 948.615 3.638.761 -15%

Graphic 10Sales of Refined Products by Business Segment

45%

32%

15%

8%

0,28%

49%

33%

11%6%

0,35%0%

10%

20%

30%

40%

50%

60%

Consumption Retail Navy Aviation Lubricant

2017 2016


52 53

Graphic 11Market Share by Business Segment

100%92% 86%

56%

72%

100% 100%89%

60%66%

0%

20%

40%

60%

80%

100%

120%

Navy Aviation Consumption Retail Lubricants

Mar

ket s

hare

2017 2016

The Retail and Consumer segments are the ones that face the greatest competition and, thus, registered de-creases in its Market Share in 2017. On the other hand, the market share in the Lubricant segment increased 6% due to the stabilisation of the production unit.

5,6%Cabinda(17)

6%Zaire(12)

0,9%Uíge(26)

0,5%Bengo(7)57,7%

Luanda(89)

0,7%Cuanza Norte(4)

2,1%Malanje(18)

0,7%Lunda Norte(8)

1,1%Bié(16)

2,8%Moxico(11)

0,9%Cuando Cubango(12)

0,3%Lunda Sul(9)1,6%

Cuanza Sul(21)

8,2%Benguela(52)

3,8%Huambo(50)

2%Namibe(16)

4,4%Huíla(43)

0,8%Cunene(8)

5 Major consumption centers

(#) Number of operational PA’s

5 Smallest consumer centers

Other consumer centers

Figure 3Sales of Refined Products by Regions

The provinces of Luanda, Benguela, Zaire, Cabinda and Huíla continue to lead the consumption of refined products, representing 82% of the total recorded in the period.

Foreign sales of crude oil decre-ased 3% when compared with the same period of 2016, with 198,301,082 barrels exported.

This decrease was due to a slight decrease in Sonangol’s Exporta-tion Rights during 2017. However, there was an increase in revenues,

4.4.3 INTERNATIONAL SALES4.4.3.1 CRUDE OIL

Table 31 Exports of crude oil by types

U.M.: Bbls

Exported TypesExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Exported Quantity

Dália 4.624.518 8.410.537 9.239.320 11.116.434 33.390.809 19%

Saturno 7.355.548 6.414.777 6.391.202 5.435.306 25.596.833 -14%

Cabinda 5.594.177 6.449.950 6.404.239 6.494.517 24.942.883 15%

Nemba 5.671.775 5.749.208 5.701.543 6.697.587 23.820.113 -7%

Girassol 5.135.506 3.917.805 3.961.685 4.957.618 17.972.614 -12%

Paz-flor 3.756.048 1.947.787 2.765.414 3.671.129 12.140.378 44%

Mondo 2.777.320 2.762.183 2.706.385 2.866.678 11.112.566 7%

Hungo 3.623.917 1.842.596 4.667.001 - 10.133.514 -36%

Sangos 2.718.548 1.855.762 2.720.532 1.813.867 9.108.709 -24%

Kissanje 1.809.652 1.855.970 1.891.373 2.762.341 8.319.336 -17%

Olombendo 410.926 1.946.315 2.814.199 1.811.919 6.983.359 n.a

CLOV 1.000.554 1.001.546 2.003.079 954.840 4.960.019 -2%

Saxi-batuque 940.027 955.624 916.882 1.903.865 4.716.398 -28%

Palanca 1.022.065 - - 986.646 2.008.711 2%

Plutónio 980.257 - 949.911 - 1.930.168 -60%

Gimboa - 547.989 - 534.817 1.082.806 -36%

Lianzi 81.866 - - - 81.866 -96%

Total 47.502.704 45.658.049 53.132.765 52.007.564 198.301.082 -3%

due to the positive performance of the Angolan oil types, driven by a strong demand from Asian refiners as well as the global shortage of the supply of heavy oil types that ended up contributing positively to a better positioning of Sonangol in the negotiations of these oil types.


54 55

The biggest responsibility for crude oil exported fell on the Dália type with 18%, Saturn with 14%, Cabinda with 13%, Nemba with 13% and Girassol with 9%, corresponding to 67% of the total volume traded. On the other hand, the oil types with less weight on the exports were Lianzi, Gimboa, Palanca and Plutónio, that totalled only 3%.

Graphic 12Exports of crude oil by type

Other3%

Nemba13%

Dália18%

Cabinda13%

Mondo6%

Hungo5%

Sangos5% Kissanje

4%Olombendo4%

Girassol9%

Paz-flor6%

Saturno14%

Figure 4 Destination of the crude oil

Canada3,9%

Portugal1,5% Spain

2,4%

South Africa2,4%

India11,2% China

69,6%Japan1%

Thailand0,3%

Indonesia0,5%

Taiwan2,8%

Malaysia2,1%

Italy0,2%

USA1%

Colombia1,2%

China (70%) and India (11%) were the main responsible for imports of Angolan crude oil, having bought 81% of Angolan crude oil during 2017.

During the period, the Angolan oil types reached the maximum weighted price of 68.08 USD/Bbl and the minimum price of 44.60 USD/Bbl, corresponding to a weighted avera-ge of 54.14 USD/Bbl in the period.

* The prices of Angolan types are indexed at the dated Brent (crude oil extracted in the North Sea and traded on the London Stock Exchange); Angolan oil type price = price Brent dated + Premium/discount.

Table 32 Crude oil exports by destination

M.U.: MT

DestinationExecution

Variance1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ExportedQuantity

China 37.983.356 31.438.574 32.291.649 36.306.420 138.019.999 8%

India 3.898.292 5.898.929 6.766.699 5.719.290 22.283.210 12%

Canada 905.911 2.123.643 3.764.940 954.840 7.749.334 -8%

Taiwan 946.807 - 1.849.288 2.836.431 5.632.526 n.a

South Africa - - 1.854.134 2.849.416 4.703.550 -18%

Spain 907.060 997.000 908.245 1.859.423 4.671.728 -2%

Malasya 1.306.718 950.843 1.888.940 - 4.146.501 12%

Portugal 1.004.560 956.057 1.002.100 - 2.962.717 -49%

Colombia - 957.077 1.405.384 - 2.362.461 n.a

Japan - 1.952.854 - - 1.952.854 n.a

U.S.A. - - 1.401.386 534.817 1.936.203 -1%

Indonesia - - - 946.927 946.927 n.a

Thailand 550.000 - - - 550.000 n.a

Italy - 383.072 - - 383.072 -60%

Total 47.502.704 45.658.049 53.132.765 52.007.564 198.301.082 -3%

4.4.3.2 PRICE OF THE ANGOLAN TYPESGráfico 13Evolução do Preço do Brent e Ramas Angolanas

54,67 55,11

51,5652,54

50,4348,47

49,2251,64 56,05

57,36

62,6264,19

53,61 54,28

50,87 51,3349,89

46,21

48,45

51,48

56,4958,42

62,6565,07

40,00

45,00

50,00

55,00

60,00

65,00

70,00

Janeiro Fevereiro Março Abril Maio Junho Julho Agosto Setembro Outubro Novembro Dezembro

USD/

Bbl

Brent Datado 2017 Ramas Angolanas 2017


56 57

In the last months of the year, the Angolan oil types were sold with a premium due to the low freight rates, the good margins of the medium and heavy distillates and the decrease of the Brent/Dubai differential.

The Angolan oil types, being medium oil types, adapt easily to a wider range of refiners at global

The volume of exported refined products was 1,467,920 metric tons, corresponding to an increase of 8% when compared with the same period in 2016, resulting from the increase in the production of Propane Gas by the ALNG plant.

level, independently of the market conditions. In this sense, the posi-tive behaviour of the differentials was more notorious in the

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