VZCZCXRO4338
RR RUEHDE RUEHDU RUEHJO RUEHMR
DE RUEHLU #0336 0961206
ZNR UUUUU ZZH
R 061206Z APR 06
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 2687
INFO RUEHHH/OPEC COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS LUANDA 000336 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EPET ENRG ETRD EINV KCOR CH AO
SUBJECT: ANGOLA:NEWEST OIL CONCESSIONS:LANDMARK 
TRANSPARENCY AND PRICES OFFERED 
 
REF: A. LUANDA 00176 
     ¶B. 05 LUANDA 01332 
 
¶1. (U) Summary:  In a formal ceremony to open and announce 
bids for the current licensing round of oil concessions in 
Angola, Sonangol entered a new era of transparency, reading 
aloud details on each bid, including the signature bonus.  In 
an afternoon of  firsts, Italian petroleum producer ENI 
offered a whopping USD 902 million as a signature bonus for 
the relinquished areas of Block 15.  End Summary. 
 
¶2. (U) Sonangol, the Angolan oil parastatal, on Monday, April 
3, 2006, held a Ceremony for the Opening of the Proposals for 
the Licensing Rounds of blocks 1, 5, 6, and 26 and the 
relinquished areas of Block 15.   The meeting was open to 
representatives of those companies submitting bids, although 
not to the general public or the press.  In a level of 
transparency not before seen in Angola ) or in many 
oil-producing countries ) sealed envelopes containing the 
bids were opened in front of the group and bids were read 
aloud, including the signature bonus offers.  Sonangol will 
convoke a jury during the next thirty days to examine the 
bids, work programs, and social programs to determine the 
operators for each block.  Note: Blocks 17 and 18, which were 
previously linked to the construction of the planned oil 
refinery, have been delinked and thus bidders were given more 
time to submit bids.  The Ceremony for the Opening of 
Proposals for these blocks will occur on May 8, 2006. 
 
¶3. (U) The stunning news of the afternoon was the signing 
bonus offered by Italian oil company ENI for the relinquished 
parts of Block 15 ) a whopping USD 902 million.  This marks 
a world record for a signature bonus offer; the average 
previously hovered at USD 350-400 million.  The second 
largest signature bonus offer was made by SSI for USD 750 
million.  This information was divulged to the press by 
Chevron,s legal representative and confirmed by our contacts 
present during the ceremony.  Experts believe that ENI has 
based its calculations on expectations of production of 1 
billion barrels and oil prices above USD 50 per barrel. 
 
¶4. (SBU) US based Exxon-Mobil is the original operator for 
Block 15. Its current production through the Kizomba A and B 
wells total approximately 585,000 bpd.  Exxon-Mobil 
relinquished parts of Block 15 not in production as the time 
limit had expired on its exploration contract.  We understand 
that Exxon-Mobil submitted a signature bonus bid of USD 150 
million on the relinquished parts of Block 15.  Multinational 
oil company reps also told us that SSI, the joint venture 
between Sonangol and Sinopec, submitted high bids for a 
number of the blocks.  Many of the western oil companies 
expressed astonishment at the elevated signing bonuses 
offered, and expressed concern that they may walk away with 
little to show from the current round. 
 
EFIRD