With OPEC-led production quotas effective from May and domestic production dwindling, Angola has reduced its oil shipments to China that were used to service some of its existing debt.
Angola is estimated to carry over $20 billion in bilateral debt, with China representing the country’s primary creditor and the top oil importer globally. In return for funds borrowed to build energy, transportation and agricultural infrastructure, the Central African country ships oil cargoes to major Chinese state-owned oil firms to repay part of its debt.
Next month, China’s Sinochem is expected to receive five oil cargoes from Angola, compared to the typical seven or eight cargoes, according to Reuters. Unipec, the trading arm of Sinopec, will not receive any Angolan oil cargoes in July, compared to the two or three cargoes typically received per month.
In addition to its debt with China, Angola was granted a $3.7 billion loan from the International Monetary Fund last year. Meanwhile, state-owned Sonangol secured $2.5 billion from banks between the end of 2018 and the middle of 2019.
In an effort to ease pressure on the country’s finances, Angola’s Ministry of Finance announced earlier this month that it was in advanced discussions with some of the importers of its crude oil to adjust financing facilities, which would better reflect current market conditions and OPEC-mandated production cuts.
The country has also implored the G20 to suspend servicing its bilateral debt under the G20 Debt Service Suspension Initiative, which could provide much-needed debt relief assistance.