Oil: Italy’s ENI and Portuguese state pave way for boosted Sonangol stake in Galp

4 August 2008

Lisbon, Portugal, 4 Aug – The door is open for Sonangol to take a majority shareholding in Galp Energia, Portugal’s biggest company, following the announcement by the Portuguese government and Italy’s ENI that they will sell off their remaining stakes in the firm.

“It is not part of our long-term strategy to keep only 33.34 percent of Galp…or control Galp or transfer our stake”, said ENI CEO Paolo Scaroni. The Italian company holds an equal stake in Galp to those of Amorim Emergia, Sonangol and the Amorim group.

Scaroni was speaking Thursday to analysts shortly after the Portuguese government approved the sale of its remaining 7 percent stake in Galp Energia. He also said Galp’s situation will show developments within “three to five years” and that ENI wishes to stick to a partnership accord for no changes until 2010 to the share structure of Amorim Energia, the holding company with Angolan capital that owns another 33.4 percent of the company.

Sonangol has a 45 stake in Amorim Energia (held in the name of offshore-registered Esperanza), with the Amorim group, Caixa Galicia and two offshore firms holding the other 55 percent of shares.

ENI is regarded as a potential partner of Sonangol, given its previous oil exploration interest in Angola, as well as Agip being awarded a new oil exploration undertaking after Sonangol’s Galp acquisition.

Portuguese media have reported ENI’s signaling of its wish to sell its shareholding as coming as a surprise to the Lisbon government, as well as Amorim Energia. Sonangol has yet to make any comment on the reported business.

Diario Economico reported ENI has had difficult relations with its other shareholders, even after a calm period established after the signing of a shareholders’ accord.

Portuguese business tycoon Americo Amorim, added the Lisbon business daily, has made public his interest in bolstering Sonangol’s power in the shareholding structure and of establishing a trial partnership with Russia’s Gazprom, which could eventually lead to a share purchase.

But market watchers note there is no lack of interest in Galp due to its stakes in oil exploration projects in Angola and Brazil, both highly valued in current market forecasts.

“The interest of big oil firms is not just in buying reserves but also in controlling decisions and operations on their development,” energy specialist and lawyer Rui Amendoeira told Diario Economico.

Of particular interest are Galp’s stakes in Brazil’s Tupi and Jupiter oil fields where the Portuguese firm operates in partnership with Petrobras.

The Portuguese state’s sale of its 7 percent stake in Galp will be undertaken via a public share issue targeted at institutional investors with each share valued at 5.81 euros. These shares are currently worth around double this amount after the ENI chief’s comments last week.

In addition to Galp Energia, Sonangol has invested a considerable proportion of its record oil revenues in Portugal, holding just under 10 percent of shares in Portugal’s biggest private bank, Millennium BCP, making it the largest single shareholder.

The Africa Newsletter said recently that these investments have been dictated by a “financial and economic logic” and are a fix to Angola’s problems of excess liquidity resulting from high oil prices and the poor capacity of the country’s economy to absorb this wealth. These overseas investments also enhance Sonangol’s reputation outside Angola, increasing its influence on key sectors of Portuguese society, and create a favorable climate for private Angolan investment in Portugal and countries like Spain.

“Excess liquidity generated by constant accumulation of oil revenues was invested in international pension funds or converted into offshore deposit accounts. It was considered more convenient, for reasons of security and profitability, to invest in business assets,” noted the Africa Newsletter.

Sonangol’s upped stake in Galp will also give the Angolan firm access to areas where the Portuguese company has proven expertise, such as refining, trading and retail. (macauhub)

MACAUHUB FRENCH