Africa’s second-largest crude producer, Angola, is cutting tax rates on development of marginal oil fields, a new feat, Joao Lourenco, the country’s president, is trying, in order to slow down the decline of oil production.
The Angolan president in a series of decrees, halved petroleum production tax on fields with less than 300 million barrels of reserves to 10 percent from the typical 20 percent tax, while also slashing the petroleum income tax on marginal fields to 25 percent from 50 percent.
In March, the International Energy Agency (IEA) had predicted that unless new investments were made in new oil discoveries, Angola’s oil fields which are maturing and are nearing depletion would take a turn for the worse.
Angola, whose economy has suffered from the low oil prices in recent years has also been struggling to attract international investments in its deepwater higher-breakeven oil resources.
Lourenco, Angola’s first new president since 1979, is trying to implement a reform package that could both spur economic growth and investment in the country’s oil resources.
Fitch Ratings raised its outlook last month on the African country to stable from negative, saying that its prospects for economic recovery have improved significantly as a result of higher oil prices and fiscal reforms.