The Gabonese Government is about to enact a new petroleum code (the “Petroleum Code” or the “Code”).
The aim behind this new Code is to increase the State revenues stemming from the oil industry, from the current 20% of the profits generated by the sector, to 30% within the next 5 years and 35-45% within the next 20 years.
The proposed Code will replace the current regulations composed of various laws dating back to 1983 that merely stated the main principles and general rules applicable to petroleum exploration and production. The Code aims to modernise these rules, make them more transparent and build on them by adding tax rules on upstream, midstream and downstream petroleum activities.
The preliminary draft of the Petroleum Code sets a period of 12 years as the maximum duration of the Exploration Phase and a period of 20 years for the Production Phase. It also outlines the necessity of incorporating a Gabonese company with an effective head office in the country and reinforces the requirement to involve Gabonese capital in this sector. Additionally, in order to attract international oil companies, the Code will impose limits on public ownership of foreign companies, restricting the State’s share to a maximum of 62.5%. The Government also plans to strengthen its national presence in the sector by setting ambitious goals in order to train and employ Gabonese people and use national services and products.
International oil operators that invest extensively in Gabon will probably have to change their corporate structures, such as establishing a head office in the country if it had not already done so and/or transforming existing branches into local companies.