Gabon – An Oil Sector on the Rise
Find the French version here
Gabon – officially a member of the Organization of Petroleum Exporting Countries (OPEC) – is largely subsidized by oil exports. Indeed, at the beginning of the decade, up to one third of the country’s gross domestic product (GDP) came from the oil sector, while petroleum products accounted for 85% of total exports.
The government, supported by the International Monetary Fund (IMF), put together a plan to revitalize the Gabonese economy in 2019. On June 19, six months after an extraordinary summit held in Yaoundé, Cameroon by the Central African Economic and Monetary Community, Gabon was the first country in the area to sign an agreement with IMF for a $642 million loan aiming to fund the Gabon emergence plan, initiated in 2012. International organizations subsequently showed their confidence in the country’s economic recovery plan, such as the African Development Bank, which unlocked $329 million in November 2016.
While implementing strategies to diversify its economy, the government aims to revamp its petroleum sector by turning to deep offshore exploration. In 2017, Shell and Total, two global supermajors, left the country by selling their assets to Assala Energy and Perenco, respectively. Furthermore, from 2014 to 2019, Gabon didn’t sign any exploration contracts. Aiming to boost attractiveness, Noël Mboumba was appointed Minister of Oil and Hydrocarbons in June 2019. One of his first major targets is to implement a new petroleum code, hoping to bring major players back to the industry.
Promulgated on July 16, 2019, the new petroleum codes boasts four key measures – corporate tax on profit oil was reduced from 35% to 0%, a move which had been requested for a long time by operators; the state’s stake in the production and sharing agreements (PSCs) is now capped at 10%, down from the previous 2014’s code at 20%; the state-owned Gabon National Oil Company (GOC) is entitled to a 15% stake in the PSCs and, finally, the new code introduces operating agreement contracts which are to be signed with GOC. These agreements will mainly cover operations on marginal and mature fields.
The new code was implemented after Gabon launched a new licensing round in 2018, offering most of the open acreage offshore Gabon. The license includes both shallow and deep water blocks offshore Gabon, leveraging the new insights on exploration potential offered by the use of new 3D seismic data on the margin over a number of different exploration plays. New commercial terms were also announced, encouraging new investment in Gabon’s petroleum sector offshore.
In February 2020, Gabon announced a new closing date for its 12th shallow and deep-water licensing round, from 10 January 2020 to 30 April 2020. The round was initially set with a deadline of April 2019 and has been further extended, with a new date to be announced this year.
Thirty-five blocks are be on offer; 12 shallow water and 23 deep water blocks. Geophysical company TGS was appointed as an official technical partner in support of Gabon’s Directorate General of Hydrocarbons and it has gained 17,000km2 of 3D broadband services across key areas, in addition to offering strategically placed national 2D seismic coverage.
On December 2, 2019, Vincent de Paul Massassa was appointed Minister of Oil, Gas, Hydrocarbons and Mines in replacement of Noël Mboumba.
Gabon has relatively low resources in natural gas, standing at 26 billion cubic meters. In 2019, former Minister Mboumba expressed the country’s objective of developing a domestic gas value chain aiming to feed interior demand. In the mid-term, Gabon hopes to make further discoveries in the deep offshore and increase the stake of natural gas in its energy mix and exports.