Daughter of Angola’s ex-president sacked as state oil chief

This file photo taken on May 3, 2014 shows Angolan businesswoman and chief executive of Angolan state oil firm Sonangol Isabel dos Santos attending an art exhibition in Porto, northern Portugal. (AFP)
Updated 15 November 2017

Daughter of Angola’s ex-president sacked as state oil chief

LUANDA: Angolan President Joao Lourenco on Wednesday fired his predecessor’s daughter from her influential post as head of the Sonangol state oil company, the presidency said in a statement.
The sacking marks a watershed moment in Lourenco’s young presidency as he seeks to assert his authority and clear out the legacy of his controversial predecessor Jose Eduardo dos Santos, who ruled with an iron grip for 38 years.
Lourenco swept to power as the ruling party’s candidate in August elections after pledging to clean up Angola’s endemic graft, tackle nepotism and revive its listless economy.
“Under the powers vested in him by the constitution, the president... has decided to relieve the following directors who make up the board of Sonangol,” said the statement, which named the former president’s daughter Isabel.
During his campaign to win the presidency, Lourenco, the 63-year-old former defense minister, vowed to distance himself from his all-powerful predecessor who remains head of the ruling party.
“Nobody will be above the law,” he told foreign media on the eve of his election victory.
Known derisively as “the princess,” 44-year-old Isabel became the public face of the Dos Santos business empire during her father’s presidency.

Isabel dos Santos described herself as an “entrepreneur” on her Twitter account and the US-based Forbes magazine claims that she is Africa’s richest woman.
It estimates that her personal fortune could be as much as $3.3 billion (2.8 billion euros).
She is also active in the telecoms sector and notably controls Unitel, Angola’s leading mobile phone operator, as well as satellite TV network Zap.
She also holds 25 percent of the capital of Portuguese media giant NOS and has invested heavily in the banking sector.
Isabel’s removal from Sonangol’s top job comes as a surprise, for she had often stated that she wanted to remain in the top job.
“The job of Sonangol is not dependent on the electoral process... I want to continue,” she said ahead of the August elections.
Isabel has faced increasing pressure from foreign oil companies in recent weeks, according to Alex Vines, an analyst at the Chatham House think tank in London.
“A number of international oil companies wrote last month to President Lourenco asking for reform... structural reform of Sonangol is the result,” he said.
Benjamin Auge of the French Institute of International Relations added that Lourenco was unable to control Isabel and “preferred to have his hand on the economic heart of the country.”
Angola’s opposition accuses the ruling People’s Movement for the Liberation of Angola (MPLA) party of suppressing dissent and the Dos Santos family of bleeding the country dry through corruption and decades of mismanagement.
Black gold provides 70 percent of Angola’s revenues and almost all of its hard currency, but many of the country’s citizens are mired in poverty.
Even through the collapse in oil prices in recent years, crude has remained Angola’s leading revenue source.
Angola, which along with Nigeria is one of Africa’s top oil producers, has been in the grip of an economic crisis since 2014 as the global price of oil has remained flat.


Exxon turnaround sapped by chemicals, refining

Updated 2 min 44 sec ago

Exxon turnaround sapped by chemicals, refining

  • Chemicals and refining businesses blamed for weak fourth-quarter results

HOUSTON: At Exxon Mobil Corp, CEO Darren Woods’ plan to revive earnings at the largest US oil and gas company is being sidetracked by the two businesses he knows best: Chemicals and refining.

Another year of poor profit could require Exxon to re-evaluate its bold spending plans or weaken its ability to weather the next oil-price downturn, say oil analysts. Exxon already must borrow or sell assets to help cover shareholder dividends.

The world’s biggest publicly traded oil firm after Saudi Arabian Oil Co, Exxon was long considered one of the best-managed majors and most capable of coping with volatile prices due to its size.

Those advantages have slipped in recent years, however, with the drop in once-steady earnings from chemicals. Its total shareholder returns of negative 13 percent in the five years through this month compared with a 25 percent gain at Chevron Corp. and 82 percent at BP, according to Refinitiv.

Two years ago, CEO Woods promised to restore flagging earnings by heavily investing in operations even as rivals cut spending. The plan to crank up chemicals, refining and increase oil output pushes capital expenditures to as much as $35 billion this year, up from $19 billion in 2016, the year before Woods took over as CEO after running Exxon’s refining and chemical businesses.

Last March, he forecast potential earnings could hit $25 billion this year and nearly $31 billion in 2021, close to the $32.5 billion it earned in 2014 before the oil-price collapse.

The hoped-for payoff, however, has run headlong into a global chemicals glut, tariffs on US exports to China, and lower margins in fuels. Exxon’s refining profit last year fell on equipment outages.

The company declined to comment ahead of quarterly earnings, expected on Friday.

On Monday, Exxon shares traded under $65 — close to their level of 10 years ago.

The company recently telegraphed weak fourth-quarter results because of chemicals and refining businesses. Wall Street cut profit forecasts through 2021 on the sour outlook for both. Exxon “seems to be tracking way behind their own expectations,” said Evercore ISI analyst Doug Terreson, who slashed his quarterly forecast by a third, to 55 cents a share.

In chemicals, Woods expanded the company’s output of polyethylene, a business where it has 9 percent of global production capacity, to benefit from demand for plastic bags, food packaging and consumer goods. Output rose last summer at the depth of the US-China trade dispute, and industry margins for a key polyethylene fell 30 percent compared with levels between 2016 and 2018, said James Wilson, analyst at pricing provider ICIS.

“The industry ended up overbuilding,” said Pavel Molchanov, an analyst with investment firm Raymond James. “Exxon, of course, is among the companies that led that build-out.”

In refining, outages and higher maintenance costs at Exxon refineries in the US, Canada and Saudi Arabia hurt profit, according to regulatory filings.

Crude oil prices and slack global demand from the trade dispute are squeezing profit across the industry, said Garfield Miller, chief executive at Aegis Energy Advisers.

This month, an Exxon regulatory filing implied a loss in chemicals of about $200 million for the fourth quarter, and refining earnings of just $400 million.

In contrast, chemicals and refining delivered $7 billion to $11 billion annually for Exxon between 2013 and 2018. In the first nine months of last year, the combined profit was $2.37 billion. Exxon’s regulatory filing indicates 2019 earnings for the two at about $2.52 billion, the lowest in at least a decade.

Woods has halted the company’s oil output declines by ramping up in shale. Oil volume has risen year-over-year for five straight quarters, reversing annual declines between 2016 and 2018.

Ending the trade dispute represents the biggest challenge. Global demand for the plastic resins and pellets that Exxon makes is rising, said Marc Levine, chief executive of Plantgistix, which provides logistics for US plastic manufacturers.

“This is the first time in my lifetime and in the plastics industry’s lifetime where we make plastics resin for export,” said Levine.

China in 2018 placed an additional 25 percent tariff on US polyethylene imports, a move that helped send North American margins to the lowest levels since 2011, said Joel Morales, a polymers analyst at consultancy IHS Markit.

“Imagine having a lot of something and your biggest, easiest consumer you can’t do business with,” Morales said.

The January US-China agreement does not remove Chinese or US tariffs on chemicals, plastics or oil.

Exxon has ramped up asset sales, aiming to collect $15 billion by next year to balance spending. So far, results have been tepid. It expects to receive about $3.6 billion from selling Norwegian oil and gas production assets.

Weak demand for those assets comes as rivals have written off the value of their own properties. BP, Chevron, Equinor, Repsol and Royal Dutch Shell last year cut a total of $22 billion primarily on US assets due to sharply lower gas prices. Exxon has not signaled whether it expects any writedowns.