The extraction and exploitation of oil in Gabon regularly changes hands. Many extractive groups invested there between 2002 and 2009. While seismic studies have not indicated any major reservoirs since 2012, oil companies are fleeing the country one by one.
From Vienna to Libreville, the theory of the butterfly effect has once again been verified. In the midst of the price war between Russia and Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC) has brought its members together in Austria with one goal: to ask Russia to reduce global oil production, with the aim of stop the fall in crude oil prices. By April 12, OPEC members Russia and the United States, among others, finally reached an agreement, called OPEC ++.
If the latter made it possible to avoid the worst for the sector, it also caught the oil companies which had recently invested in Gabon by surprise. At the start of 2020, Franco-Briton Perenco and Briton Assala Energy had both increased their extraction efforts by 9 and 600 barrels respectively.
The Perenco group went even further, signing three new contracts with Libreville for the exploration and production sharing of three new offshore blocks. An operation the amount of which was around 80 million euros. In addition, there are the assets of Total, which Perenco acquired in 2018.
But the OPEC ++ agreement had consequences as far as Gabon: the African country has indeed decided to reduce its hydrocarbon production by 23%. However, new contracts had already been signed, and the country had to review its already attractive taxation upwards, increasing the State's share in the Proportional Mining Royalty (RPM).
The influence of CEMAC and OPEC
Gabon's decision, although sovereign, endangered the investment of oil companies in the country. It should be remembered that oil represents 53% of Gabon's GDP. A political decision of this magnitude also means that Gabon values above all its relations with OPEC (in particular Saudi Arabia) than its relations with oil companies active in the country.
It should also be noted that the participation of African States in the production cuts decided by OPEC is particularly high: 27% for all African member countries, and 23% for Gabon alone. The only country that has not signed up to the OPEC ++ agreement is Egypt.
Gabon is taking risks by taking such a decision: it risks wiping out the last improvements in GDP due to oil production, which is likely to tumble, but also to weaken the agreement on the stimulus plan signed with the IMF in 2017. The latter has already reported, casually, more than 540 million dollars in Gabon.
For its part, the Economic and Monetary Community of Central Africa (Cémac) further complicates the task of oil companies. Bank loans for oil projects fell by 43% for companies based in Gabon, for all of their projects in the Cémac zone. As if the economic community was discreetly trying to put partner companies with African states in competition with the supermajors. However, in the case of Gabon, the state loses as much as Western companies, where oil extraction and exploitation could have allowed the economy, affected by the health crisis, to breathe.
Since the rise in tensions between Gabon and the oil companies, the latter are trying to flee the country as quickly as possible, to minimize losses. After Shell in 2017, Total in 2018, Sinopec in 2019, it is the turn of the smallest companies to liquidate their assets in Gabon.
The latest is the Irish-British company Tullow Oil, which has just sold all its exploration and production contracts to a single buyer, Panoro Energy, for 150 million euros.
This is the third purchase agreement between Scandinavian and British oil companies in Africa. Panoro, a Norwegian company, offered Tullow 8 million euros, in addition to the gross value of the transaction, in order to eliminate all competition.
These operations raise questions, in a tense context for the oil companies which, with the OPEC ++ agreement, cannot for the moment gain much by investing in Gabon. It remains to be seen what lies behind the Tullow Oil-Panoro Energy agreement. The British company could, according to several sources, have obtained from Céma an assurance of profitability. Despite limited funds, Panoro decided to invest for the long term. DH ave new oil reserves been discovered in the Gulf of Guinea? It is in any case one of the most plausible options.