Production Sharing Agreements

PSA Structure

Production Sharing Agreements (PSAs) are the primary contractual framework governing petroleum exploration and production in Angola. Under a PSA, the state (through the ANPG as concessionaire) grants the contractor group the right to explore and produce petroleum in a defined area for a specified period. The contractor bears all exploration and development costs and risks. If commercial production is achieved, the revenue is divided between cost recovery (reimbursement of the contractor's capital and operating costs) and profit oil (the remaining revenue, split between the state and the contractor group according to the PSA terms).

Key Fiscal Elements

Angola's PSA fiscal framework includes several elements: cost oil — typically capped at a percentage of production value, used to reimburse contractor costs (capex, opex, exploration); profit oil split — the remaining revenue divided between the state and the contractor group, often on a sliding scale based on production volume or R-factor; Petroleum Income Tax (PIT) — applied to the contractor's share; Petroleum Production Tax (PPT) — a royalty on gross production; and surface fees and signature bonuses at contract award.

For deepwater blocks like Block 20/11, where exploration risk and development costs are significantly higher than shallow-water or onshore operations, the PSA terms are generally more favorable to the contractor group — lower royalty rates, higher cost oil caps, and more favorable profit oil splits. The Kaminho project's breakeven below $30/bbl reflects the combination of competitive fiscal terms and TotalEnergies' capital-efficient development design.

Block 20/11 PSA

The specific PSA terms for Block 20/11 are commercially confidential. However, the transaction history provides some insight: TotalEnergies paid $400 million at closing (2019), $100 million at FID (2024), and has contingency payments capped at $250 million based on production and crude oil price triggers. Petronas paid $400 million for its 40% stake (2023). These implied valuations, combined with the $6 billion development cost and 70,000 bpd plateau, suggest a project that generates competitive returns under the prevailing PSA fiscal terms.

For Angola's broader regulatory framework, licensing rounds, and investment analysis, see our dedicated pages.