Gabon’s oil minister has announced that the introduction of a new oil law previously expected at the end of 2013 will not now come into effect until early 2015. Gabon has long been working towards implementing a more transparent and rigid oil law, particularly in light of a forecast increase in output over the next decade.
Uncertainty in Delay
Etienne Ngoubou, Gabon’s oil minister, described the central African country as “committed to a new and transparent direction” in referring to the prospective law. He said it would apply to contracts from January 2015 but did not give a reason for the delay. French oil major Total, one of the largest producers operating in Gabon, said the new 2015 target date for the law was troubling as it left more time for the government to change tack. Total are reported as saying “the fact that the government has delayed the publication is making us nervous.”
In August 2013 Total made a significant offshore discovery beneath a salt layer in deep waters off the coast of Gabon, raising both the industry profile of the country and the hopes of explorers in the west coast region. Total’s partners in the Diaba licence where the discovery was made are Marathon Oil, Cobalt International Energy and the government of Gabon.
Gabon currently pumps close to 240,000 barrels per day (bpd), down from a peak of around 370,000 bpd in 1997, with the hydrocarbons sector accounting for approximately 80% of the country’s export earnings. The government hopes for a revival in production following Total’s discovery and says it expects production to reach 500,000 bpd in the near future.
Ngoubou also indicated that Gabon may revoke the licences of companies that fail to respect their contractual obligations. Gabon conducted audits in 2011 and 2012 of the hydrocarbons sector and there is a clear movement on the part of the government to contract with foreign oil companies on more robust terms. In January 2013 Gabon revoked the Obangué licence of Addax Petroleum, a subsidiary of top Chinese refiner Sinopec, after Addax allegedly failed to pay customs duties and comply with other laws. Gabon’s ministry of oil transferred the onshore field from Addax to the recently-created national Gabon Oil Company, which now operates Obangué. Addax has denied the allegations against it and the case – in which it is understood claims and counter-claims total more than $1 billion – remains before the International Chamber of Commerce’s arbitration court. “If other companies don’t respect their obligations, they will also risk losing their contracts,” Ngoubou said.
Despite the delay in introducing a new oil law Gabon’s prospects are likely to continue to attract considerable interest. The country awarded 13 blocks to 11 companies as part of a major deepwater licensing round in October 2013, and Ngoubou has said the country will consider rejoining OPEC as its production rises.