Petroleum Industry
Gabon is a sub-Saharan Africa’s third largest oil producer and as such the upstream oil industry plays a critical role in the economy representing approximately 80% of the country’s export revenues. In 2000, the proven reserves are listed as 2.5 billion barrels, almost double the 1996 figure of 1.3 billion barrels. Production rates in 1999 averaged at 341,000 barrels per day (bpd). Exploration and production occur both onshore and offshore.
Gabon’s export crudes are in the 30· to 35· API range, with a small amount of 25· API. Export crudes are the Rabi Light (35· API) and the Mandji Blend (30· API) streams.
Although the proven reserves have increased there has been a general decrease in production levels. The Gabonese government is keen to maintain production levels into the future by encouraging foreign investment. It is the government policy to keep production at a level of approximately 350,000 bpd until it can find new investors to bring oil on stream in 2002.
The Gabonese downstream industry is modest incorporating the Sogara refinery at Port Gentil that has a nameplate capacity of 21,000 bpd and a retail network of about 100 sites. Gabon’s main export partners are the United States, Western Europe and to a lesser extent the Far East.
The state oil company is Société Nationale Petrolière Gabonaise.
Ownership of oil and gas and all mineral rights is vested in the State. Companies provide services on behalf of the State and finance hydrocarbon exploration and exploitation activities. Exploration and production companies are licensed under the Exploration and Production Contract (ESPC) established by Law No 14/82 in January 1983 which replaced the Concession Agreement.
Gabon was a member of OPEC until 1996, when it left citing the high annual dues required by the organisation as its reason.
Upstream Gabon’s upstream oil sector is an important part of its economy. Oil represents 80% of its export revenue. Gabon has proven reserves of 2.5 billion barrels of oil and 1.2 Tcf of gas with oil production at 341,000 bpd in 1999 down from the 1996 level of 362,000 bpd produced in 1998. The decline in production is a matter of concern for the government who wish to encourage foreign investment into exploration and production.
Gabon’s largest oil field is the Shell operated Rabi-Kounga oilfield, with estimated reserves of 440 million barrels and production of 150,000 bpd which accounts for 40% of national output. The second largest field is the Gamba-Ivinga field, also operated by Shell with production rates of 10,000 to 15,000 bpd.
About 20 companies have interests in Gabon’s upstream oil industry. The focus of exploration is both onshore and offshore with the latest licensing round in 1998 offering deep water concessions offshore.
Gabon has natural gas reserves of 1.2 Tcf. Gas production in 1998 was 3.5 Bcf. All gas produced in Gabon is used for electricity or refinery fuel.
Downstream Gabon has a modest downstream industry. This includes a refinery at Port Gentil and a retail network of 100 sites.
Legislation All ownership of oil and gas is vested in the State. It is the only titleholder of mining rights. The Mining Code was established by Law No 15/62 (1962), Decree No 981/PR (1970) and modified under Ordinance 45/73 (1973). The new taxation system is governed by Law No 14/74.
Oil exploration and production licences are acquired by means of Exploration and Production Sharing Contracts (EPSC). Law No 14/82 passed in January 1983 established the EPSC which replaces the Concession Agreement. The terms can be summarised as follows:
· The exploration phase can comprise either two periods of five years, or three periods comprising an initial five years followed by two 2-year terms. This is based on the location of the block and the work programme.
· The exploitation phase comprises an initial 10 year period followed by a second and third period of 5 years each.
· There is a 10% minimum state participation and 5% minimum Royalty payment (as a function of production)
· In terms of tax and payments, cost oil is limited to 55%. If development costs have not been recovered after five years of production, this could be raised to 75% at the company’s request.
· Signature bonuses are recoverable after 10 years.
