African Energy Week’s third day of debates, round table discussions and presentations started off with a session dedicated to Angola’s national oil company. The lively session covered the company’s oil production ambitions, focusing on raising its percentage of Angola’s operated oil production from 2% to 10% in the coming years; its plans to reduce its carbon footprint, from planting mangroves to investing in renewable energy solutions; and finally, on the very fundamental issue for oil and gas in Africa in today’s world, which is financing.

“A lot of people claim that we will run out of oil. I think we are likely to run out of cash much before we run out of oil,” said Ricardo Van-Deste, CEO for the exploration and production Unit at Sonangol.

If the fight to attract foreign investment to the oil industry has always been a reality in

Africa, with many oil producers being almost exclusively dependent on foreign expertise and foreign companies to exploit their resources, the struggle has become much harsher in recent years, as a number of countries and financial institutions have started to ban investments in hydrocarbon-related projects due to their environmental implications.

As the narrative of the energy transition continues to unfold at varying speeds, the situation is likely to worsen for the continent’s oil and gas producers, and not least for Sonangol. As Mr. Van-Deste himself suggested, “the day might come that banks will simply no longer give us money.”

To respond to that imminent threat and as a part of its regeneration program, Sonangol is finding alternative solutions to find capital to expand its operations. If it started by alienating its various non-core properties, which included at a point, travel agencies, hotels and catering services among many other assets, it is now focusing on other types of assets.

“We have identified 8 blocks to be included in our divest to invest strategy, where we have exploration blocks as well as producing assets. This gives an opportunity to interested companies with varying profiles to enter the market without having to go through a national bidding tender,” Van-Deste added.

These 8 blocks were selected because they either have lower profitability margins or have higher development costs and its sale will provide cash for Sonangol to be able to finance further investment on its more profitable assets.

This act of portfolio balancing is central to give the company breathing room for its financial obligations.

“We need to diversify the way we get money. We need to wait for the year end to assess what we can get from our divesting program and assess what other means of financing we can find,” he added.

These other means of financing will likely mean the long announced IPO of the NOC. It is no secret that Angola’s political leadership and Sonangol’s board have been in favour of floating at least part of the company in the stock market, be it in Luanda, London or New York, but the date for that to take place remains elusive. Sebastião Gaspar Martins, President of the Board of Directors at Sonangol, announced in September, in Luanda, that the company was planning to “accelerate” the launch of its IPO, but it is uncertain exactly what that means.

One thing seems certain, financing oil and gas projects in Africa will only get harder as the energy transition progresses, and companies like Sonangol will have to get creative in order to remain solvent and continue to explore for oil, as for as much as the world might be getting warmer, it is still hungry for 100 million barrels of crude oil, every day.