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GABON 2014

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9781783020843

ISBN 978-1-78302-084-3

The power of informationEtienne Dieudonné NGOUBOUMinister of Petroleum and Hydrocarbons

Enterprise developmentGabriel TCHANGOMinister of Small and Medium-Sized Enterprises, Crafts, Industry and Commerce

Totally flared upBenoît CHAGUÉGeneral ManagerTOTAL GABON

ARTICLES | INTERVIEWS | VIEWPOINTS | MARKET ANALYSIS | RESOURCES | PROJECTS | MAPS | INVESTOR SPOTLIGHTS

THE OIL & GAS YEAR The Who’s Who of the Global Energy Industry

4 THE YEAR IN REVIEW

5 INTERVIEW: Ali Bongo Ondimba, President of Gabon6 IN COMPARISON: Regional reserves-to-production

ratios7 INTERVIEW: Etienne Dieudonné Ngoubou,

Minister of Petroleum & Hydrocarbons8 COMMENT: Transparency tribulations. New code clarifies9 THE YEAR’S AWARDS

10 GABON AT A GLANCE11 THE INVESTORS INDEX12 THE YEAR IN ENERGY

14 DIPLOMACY & POLITICS

15 ARTICLE: Defeat the drop. Gabon aims to boost all sectors of its economy, and a new code may help with oil and gas

16 IN FDI: FDI flows into Gabon 2009-201317 INTERVIEW: Jacqueline Bignoumba, UPEGA17 IN INVESTMENT: FDI flows into Gabon by country18 INTERVIEW: Jean-François Desmazieres, Former French

Ambassador to Gabon19 INTERVIEW: Paul Aimé Bagafou, ONEP20 ARTICLE: The new oil and gas regime. An overview of the

country’s new hydrocarbons code22 VIEWPOINT: A helping hand. Zouera Youssoufou, World

Bank23 INTERVIEW: Gabriel Tchango, Minister of SMEs, Crafts,

Industry and Commerce25 INTERVIEW: Nine Alida Abouna, APIEX

26 EXPLORATION & PRODUCTION

27 ARTICLE: Reverse the trend. Pre-salt discoveries stir hopes28 IN PRODUCTION: Gabon’s daily production and world

oil prices, 2003-201329 ARTICLE: Big issues with big oil. The Addax case worries

Gabon’s international investors30 INTERVIEW: Benoît Chagué, Total Gabon30 IN PRODUCTION: Change in production in west central

Africa, 2012-201331 COMMENT: Necessary reforms. Energy industry restructured32 GEOLOGY REPORT: Prehistoric promise

32 RESOURCE: Continental separationFOLDOUT MAP: The Anguille Development33 INTERVIEW: Rodney Macalister, Vaalco Energy33 IN RANKING: Ease of doing business in West Africa, 2014 34 MAP: Gabon’s hydrocarbons licences36 COMMENT: Vaalco offshore update. The state of the

company’s production off Gabon 37 INTERVIEW: Keith Dodd, Ophir Energy38 PROJECT HIGHLIGHT: Shakthi block39 COMPANY PROFILE: Addax Petroleum40 COMPANY PROFILE: Shell Gabon41 INTERVIEW: Jean-Médard Madama, Tullow Oil Gabon42 COMPANY PROFILE: Perenco43 COMMENT: New PSCs signed. Six IOCs strike deals44 PROJECT HIGHLIGHT: Onal oilfield development45 COMMENT: Ezanga exploration. Maurel & Prom’s key PSC

46 STRATEGIC ROUNDTABLE

47 PARTICIPANTS48 SECTOR FOCUS DEBATE

54 THE YEAR’S FOCUS: Gabonisation

55 ARTICLE: Major league entrance. The advent of the Gabon Oil Company

55 IN PRODUCTION: Total oil production in Gabon in 201357 ARTICLE: School’s out. In order to supply the country with

a larger pool of skilled labour, Gabon is stepping up investments in education

59 COMPANY PROFILE: Stream Oil Owali60 RESOURCE: API gravity and sulphur content of various

Gabonese feedstocks60 COMPANY PROFILE: Gabon Oil Company62 FORUM: Local content: the missing link. Public-private

partnerships aim to improve training for local workers 64 MARKET ANALYSIS: Class in session. Marc-Antoine

Igondjo, The Oil and Gas Institute65 COMPANY PROFILE: Hydro Oil and Gas Training66 ARTICLE: Local content in context. Gabon pushes for more

hiring of nationals in oil and gas 67 VIEWPOINT: Beyond meeting quotas. Nicolas Balesme,

Deloitte

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14Diplomacy & PoliticsGabon’s new hydrocarbons code was finallypublished in September 2014, giving the statesignificant power over the country’s resourcesand putting Gabonisation at the top of theagenda. It is clear that the government intendsto take an active role in the domestic oil andgas industry, but there are fears that this con-trol goes too far and will adversely impact thecountry’s ability to attract foreign investments.

26Exploration & ProductionThough the hopes stirred by Total’s pre-salt findsin 2013 have not been entirely dashed, theyhave been significantly tempered by the lack ofmajor discoveries in 2014. August saw the sign-ing of new production-sharing contracts, butthese were negotiated under the terms of thecountry’s earlier hydrocarbons code, which hasnow been replaced. Any new discoveries willhave to be quite large if they are to overcomeinvestor worries about the new code’s provisions.

The Who’s Who of the Global Energy Industry

THE OIL & GAS YEAR

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MINISTÈRE DU PÉTROLEET DES HYDROCARBURES

54The Year’s Focus: GabonisationThe Gabon Oil Company (GOC) has been grow-ing quickly and is beginning to establish itselfas a major oil and gas business in the country.GOC, created in 2011 by presidential decree, isthe first time Gabon has had a state-ownedhydrocarbons company since 1987. GOC hasfast been gaining the industry experienceneeded to compete with global oil companies.

82Downstream & GasGabon faced fuel shortages in June 2014,highlighting the inadequacy of its ageing Sog-ara refinery, scheduled to be replaced by anew facility in 2016. Meanwhile, the govern-ment is attempting to diversify the country’sdownstream output through the constructionof a new fertiliser plant. Gabon is also takingsteps, albeit small ones, to put its natural gasresources to work for electricity generation.

68Banking, Finance & LegalGabon relies on the hydrocarbons industry forabout 56 percent of its GDP, making it vulnera-ble to price shocks and commodities fluctua-tions. The country now seeks to diversify itseconomy by implementing a series of reforms,such as changes to the hydrocarbons code andsupporting small businesses. However, afterrecent high-profile disputes with global oilcompanies, doubts have started to emergeabout Gabon’s commitment to investment.

68 BANKING, FINANCE & LEGAL

69 ARTICLE: Diversification support. Gabon’s aim of diversifying its economy proves difficult

69 IN GROWTH: GDP growth rate estimates and forecasts,2012-2016

71 INTERVIEW: Jean-Pierre Bozec, Project Lawyers72 VIEWPOINT: Open to interpretation. Alexis Majnoni

D’Intignano, KPMG73 INTERVIEW: Erik Watremez, EY74 MARKET ANALYSIS: At a standstill. Laurent Pommera,

PWC74 IN RANKING: S&P foreign currency rating, 201475 MARKET ANALYSIS: Exploration contracts cause a stir.

Charles Tchen, Independent Petroleum Consultants76 INVESTOR SPOTLIGHTS: New Ace, BICIG77 INTERVIEW: Juliette Weisflog, Citi Gabon78 COMMENT: More SMEs, fewer problems. Small business

loans are helping local SMEs grow, with an eye towards reducing the industry’s reliance on international majors

79 COMPANY PROFILE: Ecobank Gabon80 INVESTOR SPOTLIGHTS: Ogar Group, Banque

Gabonaise de Développement, Alios Finance Gabon, BGFI Bank

81 ARTICLE: Tomorrow’s good news. Gabon’s insurance sector looks to benefit from a recent uptick in oil and gas activity

82 DOWNSTREAM AND GAS

83 ARTICLE: Fertilised plans. Gabon’s oil and gas industry needs increased refining capacity to add value within the country

83 IN TOTAL: Composition of Sogara refinery imports85 INTERVIEW: Joseph-Denis Antchouey, Libya Oil Gabon,

Groupement Professionnel Pétrolier87 COMPANY PROFILE: SGEPP88 MARKET ANALYSIS: Bottom of the barrel. Félix Boni,

Total Marketing Gabon89 INTERVIEW: Lucein Ouzuaki, Pizolub90 INTERVIEW: Gagan Gupta, Olam International90 IN COMPARISON: Market share of downstream

distribution in Gabon, 2009-2013

91 INTERVIEW: Anas Benbarka, World Bank92 ARTICLE: Refinery woes. Greater refining capacity could

address Gabon’s fuel shortages93 VIEWPOINT: Sonara yet so far. Jean Baptiste Bikalou,

PetroGabon

94 OILFIELD SERVICES

95 ARTICLE: The waiting game. Oilfield services company await increased activity following the 2013 bid round

95 IN RIGS: Average number of rigs in Central Africa by country, Q1 2013 - Q3 2014

97 INTERVIEW: Marc Tchango, Foraserv98 VIEWPOINT: Promote local businesses. Ghislain

Moundounga, GM Energy98 IN EXPORTS: Gabonese petrol exports by destination99 INTERVIEW: Franck Urbanik, Expro99 IN ACCOUNTS: Expro Group revenues, 2010-2013101 INVESTOR SPOTLIGHTS: Schlumberger, Impact

Environnment Gabon 103 INVESTOR SPOTLIGHTS: Weatherford, Halliburton

Gabon, Geolog International104 MARKET ANALYSIS: Tried and tested. Bobby Byll, SGS105 COMMENT: SMEs ready to serve. Government initiatives

aim to create a better environment for Gabon’s SMEs106 MARKET ANALYSIS: Mature exploration. Indira Moudi,

Baker Hughes107 COMMENT: Untapped potential. Prospects at the

Nziembou licence

108 ASSOCIATED SERVICES

109 ARTICLE: Broad foundations. Gabon needs to emphasise education and job creation

111 INTERVIEW: Florentin Mboumba, Société Nationale de Prestations de Services

112 COMPANY PROFILE: Friedlander Gabon113 COMPANY PROFILE: Petrogas Gabon113 IN COMPARISON: Petrol prices in West Africa, October

2014114 INTERVIEW: Patrick Pince, Héli-Union Gabon115INVESTOR SPOTLIGHTS: Gabonaise de Chimie, Solsi,

AGS Frasers, Transportation and Logistics Consulting

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The Oil & Gas Year is audited by BPA Worldwide

116 MARKET ANALYSIS: An affordable alternative. Rohit Vedhara, AUM Energy

117 INVESTOR SPOTLIGHTS: Trade Concept, Global Sourcing & Supply, PLM

118 MARKET ANALYSIS: Allocate resources. Alain-Claude Kouakoua, ACK Group

119 ARTICLE: Developing gas projects. Ensuring efficient monetisation of natural gas

120 INVESTOR SPOTLIGHTS: Acciona Infrastructuras, Rig Africa

121 COMPANY PROFILE: Ortec Group122 COMMENT: The risks of non-payment for smaller

operators. The Gabonese government owes SMEs123 VIEWPOINT: The training gap. Koffi Tchegnon,

Gabon Maintenance Industrielle124 INVESTOR SPOTLIGHTS: Oil Integrated Services Gabon,

CAMA Services, Apave Gabon125 INVESTOR SPOTLIGHTS: Heliatec Export, Daron: SAM

Gabon, Gabon Instrum Technology Services, 127 INVESTOR SPOTLIGHTS: Seas Services, Courtage

Gabon Logistique, Chimec

128 MARINE & LOGISTICS

129 ARTICLE: Over the river and through the jungle. Gabon scrambles to build necessary infrastructure to accommodate predicted increases in production

129 IN COMPARISON: Logistics Performance Index –West and Central Africa

131 INTERVIEW: Philippe Gery, Gabon Port Management132 INTERVIEW: Mohamed Ait Ben Ali, Satram133 INVESTOR SPOTLIGHTS: Soleo, Bolloré Africa Logistics,

Smit Lamnalco134 PROJECT HIGHLIGHT: Afrijet Terminal135 PULLOUT MAP: Gabon’s hydrocarbon’s licences136 INTERVIEW: Antoine Changarnier, Bourbon Offshore137 COMMENT: The road to diversity. Development is

underway at Port-Gentil in the hopes that the expansion of the downstream sector will help the economy over all

138 MAP: Oil and gas infrastructure in Gabon139 COMMENT: Swashbucklers from the Gulf of Guinea. The

problem of regional piracy threatens to inhibit the growth of Gabon’s oil and gas industry

140 INVESTOR SPOTLIGHTS: Delmas, Robert Services, Peschaud, Moundele Moon

141 COMPANY PROFILE: Necotrans Gabon

142 EXECUTIVE GUIDE

143 ACCOMMODATION146 EVENTS147 ACKNOWLEDGMENTS147 ADVERTISERS INDEX148 IN BRIEF

Publisher: Emmanuelle Berthemet Editor-in-Chief: Gilles Valentin COO: Aslı Konyalı Regional Directors: Ioana Marins, James Chester Country Director: Marielle De LeenerCountry Editor: Vivaddhana Khaou Managing Editor: Simon Johns Production Manager: Alex Mazonowicz Chief Sub-Editor: Amanda Towle News Editor: Nick AugusteijnSub-Editors: Sibel Akbay, Nick Augusteijn, Suzanne Carlson, John Houghton Brown, James Kiger, Laura Moth, Daniel Salinas, Christina St. John Editorial Intern: FaustineDeffobis Web Editor: Angus Foggie Contributors: Ian Ackerman, Barış Altıntaş, Dan Brooks, Eric Eissler, Aylin Erman, Hermione Gee, Max Harwood, John Hemming, MattMossman, Daniel Rossinsky-Larsson, Joel Sam, Reuben Silverman, Oliver Tree, Nicholas Triolo, Creative Director: Begum Alpay Co-ordinating Art Director: Javier GonzálezArt Directors: Ahmet Sağır, Didem Tereyağoğlu, Melis Tüzün General Manager: Eda Nuhoğlu Director of Global Circulation: Ebru Ak Human Resources: Serra Pelit CFO:Gönul Yıldız Printing: APA Uniprint Production: Wildcat International FZ-LLC ISBN 978-1-78302-084-3 E-mail [email protected] visit www.theoilandgasyear.comCover: photograph courtesy of Total

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THE OIL & GAS YEAR


108Associated ServicesThe Gabonese government is pushing to en-courage the development of small andmedium-sized enterprises, which will be crucialto helping the country diversify its economyaway from the oil and gas industry. Better train-ing and education are also needed for the localworkforce to be able to compete with foreigncompanies and employees and bring downthe local unemployment rate of 20 percent.

128Marine & LogisticsGabon depends on maritime transportation tomove goods within the country and export thenatural resources that form the base of its econ-omy. The $15.5-billion Emerging Gabon pro-gramme includes the construction of new portsroads, freezones and railways by 2016. Process-ing time at the Libreville port has been halved,and Port-Gentil is set to undergo similar im-provements. Expansion of the road networkshould reduce dependence on river transport.

94Oilfield ServicesGabon’s 2013 licensing round, which the in-dustry hopes will help to reverse the country’sdeclining production rates, saw many newcompanies enter the market. The governmenthas raised local content requirements in thenew hydrocarbons code and held its first na-tional forum on oil sub-contracting in May2014. A qualified local workforce that can com-pete with international companies is develop-ing, but will need more training and funding.

www.theoilandgasyear.com

5 Collective momentumAli BONGO ONDIMBAPresident of Gabon

7 The power of informationEtienne Dieudonné NGOUBOUMinister of Petroleum and Hydrocarbons

12 The Year in Energy

THE YEAR IN REVIEWph

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How can the government of Gabon help topromote the development of domestic smalland medium-sized enterprises (SMEs) in thecountry’s oil and gas industry? Gabon is developing an economy that is notonly attractive for international investors, butalso supports and encourages the growth ofthe SME sector. Specifically, the government ispromoting local SMEs using two approaches:the growth of an industrial base and the strength-ening of national capacities.

In encouraging an industrial base, our aimis to support the development of local SMEs

that provide services to multinational companiesin the oil and gas industry. To further this initiative,the government organised a national forum foroil and gas subcontracting work in May 2014.

Strengthening national capacity also makesup a crucial part of our policies. It is with this inmind that we established the Oil and Gas Institutein Port-Gentil in January 2014. This institute willserve as a constant source of locally trained,qualified and competent workers.

Additionally, the government and the Unionof Gabonese Oil Companies signed a conventionfor the professional advancement of young grad-uates in the country on May 3, 2014.

What incentives does the government provideto encourage local companies to engage inthe country’s oil and gas industry?Local companies have already developed astrong interest in oil and gas. In 2014, domesticbusinesses make up around 20 percent of theoil and gas industry and the objective is to

increase their presence in this industry. This isclosely linked to the quality of the available localworkforce, as well as a company’s ability tofinance its activities, as the oil and gas industryrequires significant investment. It is our role toensure that local companies have this access.

The strategy for a stronger presence of localcompanies in the hydrocarbons industry alignswith our Strategic Plan for Emerging Gabon.Within this plan, the Ministry of Petroleum andHydrocarbons has been tasked with determiningstrategies and policies to allow local SMEs tobetter benefit from oil and gas activities.

How can the oil and gas industry assist in fur-thering national development and what arethe government’s goals in this regard?The oil and gas industry already contributesgreatly to the progress of the country. Profitscoming from oil production allow us to reinvestin other sectors, such as healthcare, infrastructureand education. With the creation of the GabonOil Company, we are ensuring that the industryis beneficial for Gabon’s citizens in the long term.

How will the new hydrocarbons code strength-en the foundations of Gabon’s oil and gas in-dustry and how will that assist development? The legislation established in 1962, which guidedthe activities in the oil and gas industry into2014, was outdated and no longer reflected theconditions of the market.

The new hydrocarbons legislation regulatesthe playing field by ensuring that all the com-panies involved in the industry respect the samerules. These laws also take into account Gabon’sinternational responsibilities in other sectors,notably banking regulations and environmentalprotection, including issues such as gas flaring.

This new hydrocarbons legislation containsvarious incentives for the use of gas and the ex-ploration of oil in deep waters. Additionally, thelaws simplify Gabon’s fiscal regime, so as toavoid overwhelming oil companies.

What key oil and gas projects and initiativeswill benefit other sectors and contribute tothe diversification of Gabon’s economy?Encouraging gas development is part of thegovernment’s strategy to produce more electricity

Profits coming fromoil production allow usto reinvest in othersectors such ashealthcare, infrastructureand education.

IN FIGURES

Oil and Gas Institute in Port-Gentil established

January 2014National forum for oil and gassubcontracting work took place

May 2014Convention for the professionaladvancement of younggraduates in Gabon took place

May 2014


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Elected president in 2009, Ali Bongo Ondimba has begun an initiative to diversifyGabon’s economy. The president has prioritised local companies and the domesticworkforce, ensuring that Gabonese citizens benefit from the oil and gas industry. Hetalks to TOGY about the purpose of the government’s hydrocarbons legislation andefforts to make Gabon an attractive investment destination for foreign companies.

Collective momentum

Ali BONGO ONDIMBAPresident of Gabon

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from power plants in Libreville and Owendo, aswell as the special economic zone of Nkok. Theimpact of these projects will bring about increasedbenefits nationwide and across all sectors ofthe economy. The government’s main objective

is diversification and the creation of a competitiveindustrial base. Oil revenues, belonging to theGabonese people, must benefit and be redis-tributed across all the sectors of the economy.

We are financing the construction of thenew airport in Port-Gentil, set to be completeby September 2015 and have also been able tofund the construction of an internationally recog-nised medical research centre, the InternationalCentre of Medical Research of Franceville.

When do you expect Gabon’s economy to be-come less dependent on oil and gas revenue?Giving a precise date for the exhaustion of ouroil and gas reserves is impossible. However, it isundeniable that they will run out one day. Tothis end, we have based Gabon’s growth onthree fundamental pillars. These are environment,industry and services. This strategy for sustainabledevelopment has been named Emerging Gabon.

The green pillar is based on the sustainabledevelopment of our ecosystem through agri-culture, fishing and forestry industries. The in-dustrial pillar favours the local transformation ofraw materials, the export of value-added productsand the diversification of the national economy.Finally, the services pillar aims to develop infra-structure and Gabon’s human resources. Initiatedin 2011, this strategy is already well advanced.We have made significant developments across

various sectors such as tourism, agriculture andlivestock farming, wood, fishing and aquaculture.Our economy has already started to diversifyitself to become less dependent on oil and gas.

How is Gabon making itself a more attractiveinvestment destination for foreign companies,notably in the hydrocarbons industry?Gabon is experiencing a sustained growth rateand presents minimal political or economic risks,while offering attractive investment opportunities.The country offers the potential for high profitabil-ity, alongside economic diversification.

The country continues to benefit from along period of political and social stability, hasthe advantage of a strategic position in theheart of the African continent and offers a pro-tective framework for businesses.

Our flagship policies includes renewed sec-tor-specific legislation, the creation of specialeconomic zones and free trade zones offeringnumerous fiscal advantages, the creation of acentralised services centre for establishing com-panies, the reinforcement of endeavours to com-bat corruption and fund misappropriation.

These are all core elements to attractingforeign international companies to Gabon. Weare continuously seeking to create an economyand a country that is reliable and offers interestingand attractive investment opportunities.

How can Gabon support the Economic andMonetary Community of Central Africa (CEMAC)region through oil and gas activities?The growth of the CEMAC region is stronglylinked to political, economic and social stability,not only within the community, but also acrossthe continent as a whole. Our nation is a modelfor stability and growth – in part due to our oiland gas industry activities – and can contributeto the development of the region.

However, Gabon alone will not be able tosupport the entire CEMAC region. We need, firstand foremost, genuine regional co-operationbetween the six member states of CEMAC.

President Ondimba believes his country’s stability and growth can contribute to development in the region

IN FIGURES

Legislation that previouslyguided oil and gas activity in Gabon established

1962New hydrocarbonscode came into force

2014

The legislationestablished in 1962,which guided theactivities in the oil andgas industry into 2014,was outdated.

0 10 20 30 40 50

Angola

Chad

Congo – Brazzaville

Equatorial Guinea

Gabon

Nigeria

Source: BP 2014 Statistical Review

Regional reserves-to-production ratios(years)

COMPARISONIN

What are the government’s expectations re-garding the potential of oil discoveries inGabon’s deep offshore?The government conducted 2D-seismic sur-veys prior to the October 2013 licensinground. Based on the results of the survey,the government believes that within fiveor six years Gabon will increase its oil pro-duction by an additional 200,000-400,000barrels of oil per day (bopd). A number ofinteresting prospects were found in blockC11, in the country’s deep offshore.

In September 2014, Paris-based CGGVeritas conducted 3D-seismic surveys to

confirm prospects that were highlightedduring the 2D-seismic surveys.

Once we have a better understandingof the prospects in the blocks we are puttingup for auction, we will ensure that theseblocks are allocated to companies that areable to produce the resources there.

We are anticipating a new licensinground in September 2015. This will provideus with enough time to complete the 3D-seismic survey. The interpretation of the3D-seismic acquisition should be completedin August 2015. Interested companies willbe asked to submit their bids for the newblocks in January 2016.

How does the government envision the de-velopment of the oil and gas industry forGabon in the coming years?Firstly, the conventional domain has beenexplored intensively, but it is still revealingnew possibilities. For example, British-French

Perenco, an exploration and productioncompany, has made two discoveries inGabon in the past few years.

Offshore discoveries also offer potential.The decline in Gabon’s oil production, whichdropped from 232,587 bopd in 2012 to220,276 bopd in 2013, could be lessenedby discoveries of new oil and gas depositsin offshore Gabon. This means that our oilproduction could potentially stabilise ataround 250,000 bopd.

President Ali Bongo Ondinba’s willingnessto develop the petrochemicals industry wasmade clear in his development programme,through which he aims to diversify theeconomy and make the country economi-cally competitive by 2025.

What potential do gas discoveries holdfor the country’s energy mix?We are working towards building the gasmarket, as it will be used for energy pro-duction across the country by feeding powergeneration plants. A productive gas marketwould also help us develop the country’sagricultural market, as we could use petro-chemicals to produce fertiliser. This will bebeneficial for the diversification of Gabon’seconomy, and it would also enable us toreinforce our gas network.

In the coming months, Gabon will startdeveloping a national gas market, allowinginvestors to begin industrial gas and powergeneration projects. As oil companies nowaim to have zero gas flaring, we expect ourvarious producers, such as Total and Perencoto feed associated gas into the network.

Gas has a lot of potential in Gabon. Thiswill offer new opportunities for the hydro-carbons industry, especially while we waitfor the big oil discoveries in Gabon’s deepoffshore, which we envision happeningwithin the next seven or eight years.

How does the country stand to benefitfrom the reforms introduced in the recentlypublished hydrocarbons code?Gabon will benefit more from the industrythan before. Revenue from oil companieswill support local industries, such as fishing

A productive gasmarket would also helpus develop the country’sagricultural market, as wecould use petrochemicalsto produce fertiliser.

IN FIGURES

11th licensing round expected

2015Expected additional oilproduction in six years

200,000 bopd-400,000 bopd


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The Ministry of Petroleum and Hydrocarbons has been conducting a 3D-seismiccampaign to better understand its prospects ahead of a potential bidding roundin 2015. Minister Etienne Dieudonné Ngoubou discusses the survey and theconsiderable expectations placed on the country’s oil industry.

The power of information

Etienne DieudonnéNGOUBOUMinister of Petroleum and Hydrocarbons

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The Who’s Who of the Global Energy Industry

COMMENT

Gabon has offered the energy industry a stableoperating environment for decades, but in 2014the country found itself struggling to maintain it.

At a time when the government would like toboost new investment and ensure that new pro-duction compensates for the decline from ageingfields, it has become clear that the legal regimefor oil and gas dating to 1962 no longer reflectsthe current situation of Gabon’s energy industry.

In response to the challenge, the governmentdrafted a new hydrocarbons code and a newagency to publish energy industry data.

In early 2013, Gabon was delisted from theExtractive Industries Transparency Initiative (EITI)when it failed to provide a number of documentsin the given time frame. Although not necessarilyoff-putting to investors, Gabon needs to get backon the list in 2015 to ensure transparency standardsfor the extractive industries are recognised.

For producers, the problem has been felt inthe awarding of blocks. Bidding rounds have beenperceived as unfair, as winners have been decidedbased on individual negotiations between gov-ernment and interested parties. Operators present,as well as foreign investors outside the energy in-dustry, also complain of delays in reimbursementsfor value-added taxes paid, which are supposedto be paid monthly. With the taxes at a rate of 18percent, and with refund delays of reportedly asmuch as five years, the problem has grown.

The new code was initially proposed in 2011,and was officially published in September 2014.Details of the drafts were made public on two oc-casions before official publication, highlighting alack of order in the government.

The code’s finalised contents include an op-tional 15-percent stake in all hydrocarbons projectsfor the state-run Gabon Oil Company purchasedat market price, local content obligations that capforeign workers in the oil and gas industry at 10percent of each company’s workforce, a reductionin gas flaring by up to 90 percent so that associatedgas can be used for electricity generation, andthe newly formed transparency agency. This trans-parency agency publishes corporate and govern-ment information on production volumes, taxpayments, equity stakes and reserves estimates.

Transparency tribulations

and agriculture. The revenue that is generatedby the code will be used in the developmentof local content – such as engineers, techniciansand mechanics – which will be beneficial forlocal industries in the long-term.

The second advantage is that businessesin the Gabonese oil industry will be obligatedto respect the country’s regulations.

According to the new code, foreign com-panies working in Gabon will have to complywith the directives of the Economic Communityof Central African States and the Conferencefor Inter-African Insurance Markets. This meansthat these companies will become actors inour country’s economic development.

The code is a result of the evolution ofcontracts that we have had for the past 15years. The principal innovations to the taxsystem and other terms has resulted from thedevelopment of the production-sharing con-tracts. The code allowed us to officialise a tacitagreement between the administration andthe oil and gas companies.

These companies will be more active on anational scale and this will reinforce their localcitizenship, as they will be more involved inthe country’s development.

We have also been able to improve thecountry’s finances, since the majority of the in-ternational oil companies’ revenues will nowbe placed in local banks, rather than being ex-patriated to foreign bank accounts.

What is the role of the government in thedevelopment of Gabon’s oil industry? Howdo its responsibilities differ from companies?It is the responsibility of the Ministry of NationalEducation to provide the country with compe-tent executives who are prepared to enter theoil and natural gas market.

It is then the duty of the Ministry of Profes-sional Training to provide the necessary skillsto labourers. The Ministry of Petroleum andHydrocarbons is then accountable for trainingyoung Gabonese in employment opportunitiesfor the oil and gas industry.

Once these conditions have been met, oiloperators will be able to play a role in the de-velopment of Gabon’s industry. More importantly,the Ministry of Commerce and Small and Medi-um Enterprises is in charge of actively supportingsmaller businesses so they are able to create asource of wealth for the economy. The respon-sibility belongs first and foremost to the gov-ernment, followed by oil and gas companies.

The majority of the oilcompanies’ revenues willnow be placed in localbanks, rather than beingexpatriated to foreignbank accounts.

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THE YEAR’S AWARDS – GABON 2014


Founded in 2012, oilfield services provider Foraserv, a sister company of Impact EnvironmentGabon, has become one of the few homegrown companies directly involved in upstreamoperations in the country’s oil and gas industry, providing workover services for mature onshorefields through contracts with upstream operator Perenco. Foraserv marked its entry into the hy-drocarbons industry through an initial deal in 2013 and has set a strong example for localservices companies by reinvesting around 20 percent of annual turnover in training personnel.

WOMAN OF THE YEAR

Jacqueline BIGNOUMBA

President of the Gabon Oil Union Jacqueline Bignoumba has played acritical role in representing the domestic oil and gas industry’s interestsand concerns, while also playing a key part in bridging the gap betweenadministration and industry. The union has been instrumental in theestablishment a new hydrocarbons code, which was published in Sep-tember 2014. The code ensures greater participation of the governmentin oil and gas developments, while taking into account the country’sinternational responsibilities in other sectors, including bankingregulations and environmental protection. Bignoumba has also workedto converge local content initiatives between state and energy industry.

Anglo-French company Perenco maintained average output in Gabon of more than 50,000barrels of oil per day in 2013. As of 2014, it operates 28 production licences and seven explorationlicences. Since establishment in Gabon in 1992, Perenco has drilled 350 onshore and offshorewells. Oil production aside, the company has streamlined the provision of gas for powergeneration, supplying the Power and Water Company of Gabon in Port-Gentil with all of itsfeedstock. It will also use its gas production capacity to support industrial development projects.

UPSTREAM COMPANY OF THE YEAR

After three years in the making, Gabon’s Ministry of Petroleum and Hydrocarbons successfullypushed through the much-anticipated new hydrocarbons code, published in the OfficialGazette in September 2014. The new code replaces legislation that was established in 1962 andhad guided domestic oil and gas activities through 2014. Included in the code is a minimumparticipation of 20 percent for the Gabonese government in exploration and productionactivities, with the Gabon Oil Company delegated a minimum share of 15 percent.

LEGISLATION OF THE YEAR

On July 31, 2014, Eni Gabon, the local division of Italian multinational Eni, confirmed a majorgas and condensates discovery at the Nyonie Deep exploration prospect, with initial estimatesof 500 million barrels of oil equivalent. The discovery at the Nyonie Deep-1 well revealeda 320-metre hydrocarbons zone in a more than 40-square-kilometre structure. Eni Gabon isconducting preliminary studies relating to commercial development at the asset, which is located 13 kilometres offshore in block D4 and is part of the prolific North Gabon Basin.

PROSPECT OF THE YEAR

In 2003, partnering with the government, Total Gabon financed the construction of the Centrefor Professional Specialisation to provide national workers engaged in hydrocarbons activitieswith the necessary technical skills. In 2010, the company joined Gabon’s government again asthe primary investors in the Oil and Gas Institute at Port-Gentil under a public-privatepartnership that also incorporated Perenco and Shell. As of August 2014, the institute hadgraduated 55 production operators and had inaugurated a new campus in January that year.

LOCAL CONTENT DEVELOPER OF THE YEAR

GABONESE COMPANY OF THE YEAR

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POLITICS

Official name: The Gabonese Republic

Political system: Presidential republic

Head of state: Ali Bongo Ondimba

Date of independence: August 17, 1960

Official language: French

Ethnic groups: Fang, Punu, Nzebi, French, Mpongwe

Population: 1.67 million (2013)

GEOGRAPHY

Area: 267,667 square kilometres

Capital: Libreville

Terrain: Extensive rainforests, coastal plains and mountainous areas

Climate: Equatorial

ECONOMY

Currency: Central African Franc, XAF ($1:XAF483.243)

Natural resources: petroleum, magnesium, gold, cocoa, timber

GDP (official exchange rate): $19.97 billion (2013 estimate)

Real GDP growth rate: $5.9 percent (2013)

Inflation rate: 0.5 percent (2013)

Budget deficit: 7.9 percent of GDP (2013 estimate)

Public debt: 23.2 percent of GDP (2013 estimate)

Sources: World Bank, BBC, CIA World Factbook

© 2014 Wildcat International FZ-LLC, The Oil & Gas Year GABON 2014. All rights reserved.

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THE INVESTORS INDEX

The Gabon 2014 Investors Index

Source: The survey was conducted by The Oil & Gas Year in Gabon between May 2014 and September 2014

Extremely difficult8.06

Difficult48.39

Easy38.71

Very easy4.84

How would you rate the ease ofdoing business in this country?

Very easy 4.84 %

Easy 38.71 %

Difficult 48.39 %

Extremely difficult 8.06 %

How would you rate the level oftransparency in this oil and gasmarket?

Very transparent 1.61 %

Transparent 33.87 %

Not transparent 64.52 %

Corrupt 0 %

How would you describe thepolicies of this government vis-à-vis the oil and gas industry?

Pro-business 22.58 %

Pro-business, but restrictive 61.29 %

Anti-business, but accommodating 3.23 %

Anti-business 12.9 %

How would you rate the ease ofstarting an oil and gas businessin this market?

Very easy 4.84 %

Easy 25.81 %

Difficult 62.9 %

Extremely difficult 6.45 %

How would you rate the level ofpolitical and economic stabilityin this oil and gas market?

Highly stable 14.52 %

Stable 67.74 %

Unstable 17.74 %

Highly unstable 0 %

RESPONSEIN

In the wake of Total Gabon’s Diaba block dis-covery, which in February 2013 saw the firstdeepwater pre-salt well spud in the country,anticipation of increased offshore activity hasbeen ratified. Yet this initial upstream optimismhas, for a part, been met by ensuing scepticism.

Eni Gabon has been able to somewhatreassure the market, after a 500 million-bar-rels-of-oil-equivalent gas and condensatespre-salt discovery, marking the first and onlylocal discovery of 2014. Onshore, the country’slarge mature assets have helped industryplayers maintain their oil and gas portfolio.

The downstream sector saw a little moreturbulence than usual when a four-day fuelshortage affected Gabon in June 2014. TheSogara refinery had to import 300,000 barrels

of oil from Côte d'Ivoire to boost supply.

FOGGY VISION: In assessing national eco-nomic and political stability, 82.3 percent ofrespondents to the Gabon 2014 InvestorsIndex had an optimistic outlook.

However, events that include the transferof operating rights from China’s Addax Pe-troleum to the Gabon Oil Company in 2013as well as Total and Addax’s audit for taxevasion and breaches of contractual obligationshave led investors to maintain their stancethat Gabon still lacks in transparency.

A 64.5-percent share of TOGY intervieweesqualified the country as non-transparent.Combined with preparations for the 2016elections, investor confidence in the countryis wavering. Still, a share of 58 percent of in-terviewees saw 2014 as a good time to investin the domestic hydrocarbons industry, witha similar portion (56.5 percent) believingthat this would be the case into 2015.

BUSINESS INCENTIVE: When asked aboutthe government polices with regards to businessin Gabon, 22.6 percent of respondents con-sidered these to be pro-business, with 61.3percent opting for “pro-business but restrictive,”while 3.23 percent and 12.9 percent describedthe government’s policies as anti-business butaccommodating and anti-business, respectively.

Small and medium-sized enterprises havebeen an important topic of discussion in theindustry, led by the Ministry Petroleum and

Hydrocarbons and the Ministry of Small andMedium-Sized Enterprises, Crafts, Industryand Commerce. A total of 62.9 percent ofinterviewees believed that it is difficult tostart an oil and gas business in the country.

ABOUT THE INDEX: The TOGY Investors Indexis a figure out of 100 (61.9 in the case of Gabon)that embodies confidence among oil and gas in-vestors as expressed in their level of spending inany given market. The index is valued based onresponses to a survey conducted by TOGY.

A reading above 50 on the index representsa positive perception among oil and gas investors,while a reading below 50 indicates more of apessimistic outlook. The Gabon 2014 index isbased on the responses of 62 different investors.

40 50 60 70 80 90 100

Kuwait 93

Equatorial Guinea 89.6

Brazil 84.6

Colombia 83.5

Angola 72

Gabon 61.9

BY MARKET61.9

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14 Maurel & Promacquires drillingactivities from Tuscany InternationalDrilling in Africa.

5 Gabon raises $1.5billion throughEurobond and partialbuyback to fundinfrastructure and power projects.

1 Oil India signs new nine-year contract with Gabon for theShakhti block.

16 Addax Petroleum, asubsidiary of Sinopec,concludes a $400-million settlement foran oil dispute with the government.

18 President Ondimbaofficially inauguratesGabon’s Institute of Oiland Gas campus in Port-Gentil.

21 Addax Petroleum and the Gabonesegovernment sign a 10-year production-sharingcontract (PSC) for threefields: Tsiengui, Obangueand Autour.

18 Ophir Energy beginsdrilling operations onthe Padouck Deep-1well in the Ntsina blockoffshore Gabon, usingthe Vantage TitaniumExplorer drillship.

24 Gabon grants Maurel& Prom a new 20-yearPSC to replace theOmoueyi permit, inorder to meet newdevelopment objectives.

4 Vaalco Energy receivesa $65-million reserve-based loan facility fromIFC to support oil andgas development on theEtame Marin blockoffshore Gabon.

21 Total Gabon is fined $805 million in taxes owed between 2008 and 2010.

19 Ophir Energy drills adry well in the PadouckDeep-1 well in theNtsina block to 3,297 metres.

28 Vaalco Energycompletes the firstscheduled maintenanceworks on its rented FPSOvessel for the EtameMarin block.

27 Gabon agrees to dropveto rights to anychange in Maurel &Prom’s shareholding.

1 Tata Chemicals pullsout of OlamInternational’s Gabonammonia-urea fertiliser project.

11 Total Gabonannounces that netincome fell by 8 percentto $302 million in 2013.However, revenuesamounted to $1.81billion in 2013, 6 percenthigher than the 2012.

2013

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14 Perenco’s Sputnik-1well in Gabon’s Arouweblock hits non-commercialhydrocarbons pay.

2 The governmentlaunches national forumfor oil and gassubcontracting work.

14 Gabon drops NobleEnergy, CobaltInternational Energyand Elenilto from adeepwater oil-licensinground, after they weredeemed unable to meet investmentrequirements.

27 Ophir Energyannounced nosignificant discovery ofoil and gas at its AffangaDeep-1 well offshoreGabon, the second well drilled in the exploration campaign.

3 Total Gabon’s tax fineis reduced to $400 million.

7-10 The country faces athree-day nationwideshortage of retail fuel atmost petrol stations.

13 The Sogara refineryoutput falls to 600,000barrels per day andGabon is forced toimport 300,000 barrelsfrom Côte d’Ivoire.

26 Ophir Energy ends adisappointingexploration campaignafter drilling a third dryexploration well.

11-14 The NationalAssembly and Senate ofGabon adopt newhydrocarbons code.

21 Harvest NaturalResources declarescommerciality andexclusive exploitationauthorisation for theDussafu block offshore Gabon.

24 Perenco makesdiscovery of around 20million barrels at theNziembou licence.

23 The newhydrocarbons code ispassed by parliament.

30 BGP completes 1,500square kilometres of 3Dseismic acquisitionoffshore for Perenco.

31 Eni makes a gas andcondensate discovery of500 million barrels of oilequivalent in Gabon’spre-salt.

8 The government signsoffshore PSCs with sixcompanies, includingNoble Energy, MarathonOil, Impact Oil & Gas and Petronas.

23 Vaalco Energy shutsdown production at itsrented FPSO for thesecond set of scheduledmaintenance works.

29 Vaalco Energyresumes production atits rented FPSO aftermaintenance works.

8 The new hydrocarbonscode is published in theOfficial Gazette.

JULMAY SEPJUN AUG

15 Defeat the drop17 Comprehensive dialogue needed

Jacqueline BIGNOUMBAPresidentUPEGA

18 European connectionsJean-François DESMAZIERESFormer French Ambassador to Gabon

DIPLOMACY & POLITICS

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Gabon is aiming to become an emerging economyby 2025 and has put its efforts in high gear by re-structuring its fiscal priorities, diversifying itseconomy, attracting foreign investment and at-tempting the Gabonisation of the oil and gas industry.

The country needs a sound economy and outsideinterest in order to fund its €25.5-billion infra-structural plans. However, Gabon’s hopes for sig-nificant economic advancement are likely to be re-alised later, rather than sooner, due largely to thecountry’s declining oil production, bureaucratic in-efficiencies, unattractive tax laws and overall lackof transparency. Growth is still in the cards andGabon is to make economic reforms in due time.

DEPENDENT ECONOMY: Hydrocarbons are a centralto Gabon’s wellbeing. The industry comprises up to90 percent of the country’s total export earnings, ofwhich 80 percent is crude oil exports. Meanwhile,

revenue for oil makes up approximately 56 percentof the total government income. According the BPStatistical Review 2014, Gabon has 2 billion barrelsof proven oil reserves, the fifth largest in Sub-Saharan Africa. Today, the country is the seventh-largest oil producer in Africa.

Despite Gabon’s efforts to shift away from oil asits predominant source of income, the state remainsdependent on it. The government is working tofurther strengthen the industry, especially as oiloutput dwindles, since it still remains the key toGabon’s survival. From its peak at 370,000 barrelsof oil per day (bopd) in 1997, the country’s oil pro-duction dropped to 220,276 bopd in 2013.

NEW CODE: To help raise output and attract investors,Gabon has also been restructuring its energy industry,starting with the creation of the state-owned Gabon

Oil Company in 2011. In early 2014, Gabon confirmedthat a new hydrocarbons code was underway, readyto change the face of the country’s energy industryand reaffirm its hydrocarbons future. The code hasbeen in the works since 2010 with the goal ofreplacing legislation from 1962.

The code has become a cause for concern in theindustry, bringing into question the extent of thestate’s control in energy matters, uncertainties sur-rounding transparency and ease of bureaucracy inGabon and the level of diversification taking placeat all levels of the country’s economy.

DEFEAT THE PURPOSE: A drop in oil productionmeans the government must back its energy industrywith a sound regulatory framework in order to en-courage oil and gas operations as well as attractforeign investment to the country.

When the code was first posited, stakeholderswere unclear about the exact contents of thebill’s draft, with many pointing to the delaysand uncertainty surrounding the bill as a largerindication of the incapacity of the governmentto manage its affairs swiftly and transparently,a bottleneck tarnishing the otherwise politicallyand economically stable region. At one point,two separate drafts were circulating. Never-theless, the Gabonese Senate and Parliamenteach approved the code in July 2014.

The bill introduces provisions aimed toensure transparency in the energy industry. Itwill set up a new agency to publish information

regarding output volumes, tax contributions, equityinterests and detailed reserve estimates of companies.The code also reinforces local content quotas, re-quiring 90 percent of workers be Gabonese.

HIGH STAKES: One of the most contentious stipu-lations included in the bill is that the Gabon OilCompany will be allowed to take a 15-percent equitystake in all assets. The state will have a mandatory20 percent. This point has critics wondering if thebill allows the state to meddle too much in energyaffairs and profit more than is reasonable, defyingthe code’s original, investment-friendly intent.

President Ali Bongo Ondimba had brought inthe new reform as a way to attract foreign investment,but it has instead given extra control to the govern-ment to take part in and dictate energy affairs.With each dollar earned by a company generating

FIGURESGABON’SINFRASTRUCTUREPLANS TOTAL

€25.5billion

HYDROCARBONSMAKE UPSOME

90 percentOF GABON’STOTALEXPORTS

THE NEWHYDROCARBONSCODEREQUIRES

90 percentLOCALCONTENT

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Gabon’s most recent legislation concerning hydrocarbons has served as a mechanism tounderstand the state of the country’s affairs and the missing links in its trek towards becoming adeveloping nation. With a rapidly growing economy that is set to expand by as much as 7.8percent in 2014, Gabon is attempting to give a boost to all of its industries.

Defeat the drop

To help raise output and attract

investors, Gabon has also been

restructuring its energy industry,

starting with the creation of the state-

owned Gabon Oil Company in 2011.

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