EXCLUSIVE-Angola cuts oil shipments to China as it seeks debt relief
By far, its biggest creditor is China. Analysts say Angola has over $20 billion in bilateral debt with the lion's share owed to China. Much of the cash was borrowed to build roads, hospitals, houses and railways across the southern African country.
On top of its Chinese debt, Luanda secured a $3.7 billion loan from the International Monetary Fund last year and state oil firm Sonangol has borrowed $2.5 billion from banks between end-2018 and mid-2019, the IMF said.
A global oil output cut deal led by the Organization of the Petroleum Exporting Countries (OPEC) has added to Luanda's woes.
As an OPEC member, Angola was pressured to cut oil exports starting from May. The result has left the country with fewer and lower-value cargoes to split between paying off its Chinese debt and filling its depleted coffers.
The sources said that China's state-owned Sinochem would receive five cargoes in July, down from the usual seven or eight, while the trading arm of Chinese giant Sinopec called Unipec would receive none.
Unipec typically receives two to three cargoes earmarked as debt repayment.
Sonangol, Angola's finance ministry, Sinopec and Sinochem did not immediately respond to requests for comment.
China's foreign ministry said on Wednesday that the relevant departments were in contact with Angola over its request for debt relief.
"These oil-backed loans create stronger interdependence (between lender and borrower) than traditional financing. This tactic of diverting cargoes is not new as seen elsewhere," David Mihalyi, a senior economic analyst with the Natural Resource Governance Institute, said.
Chad threatened to cut repayment cargoes to commodities trader and miner Glencore GLEN.L during a major loan restructuring in 2017. Similarly, Congo Republic has cut many repayment oil cargoes to Glencore and commodities trader Trafigura as discussions drag.
Angola is not the only African country heavily indebted to China. The IMF and ratings agency Moody's have raised concerns about debt levels in sub-Saharan Africa particularly with China.
(Reporting by Julia Payne; Editing by Emelia Sithole-Matarise)
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