The Société Nationale des Hydrocarbures, the national oil company of Cameroon, announced earlier in the year a new licensing round for five onshore and offshore blocks in previously explored and frontier regions.

Petroleum production in the central African state has been in decline over the last 25 years. According to reports, Cameroon’s crude oil production averaged just over 70,000 barrels per day in 2012, down from a peak of 185,000 barrels per day in 1977. With reportedly diminishing reserves – the U.S. Energy Information Administration estimates Cameroon’s proven oil and gas reserves as 20 million barrels of oil and 5 trillion cubic feet of gas – it appears Cameroon is keen to attract investment that will boost production.

In recent years, Cameroon has targeted the commercialisation of reportedly substantial gas reserves, as opposed to flaring or re-injection. Following an oil and gas discovery by Addax Petroleum in the Rio del Rey basin, the commencement of gas production (in 2016) at Etinde by Bowleven, as well as a substantial commercial discovery, by Victoria Oil & Gas, in the onshore Logbaba gas field, Cameroon is reportedly developing an LNG export project with GDF Suez.

What’s on Offer?

  • There are five onshore and offshore licensing blocks up for auction:
    • the Lungahe, Bomana and Dissoni exploration blocks are situated in offshore shallow waters of the Rio del Rey basin (an established oil-producing region with existing discoveries, and surrounded by the Kole/Bavo-Asoma production hub). The blocks are covered by 3D seismic;
    • the Kombe-Nsepe exploration block is situated onshore in the Douala/Kribi-Camp basin. The block is covered by 2D seismic, and also has some discoveries and identified leads; and
    • the Manyu exploration block is situated onshore in the Mamfe basin. It has no well or seismic data.
  • Exploration blocks (b) and (c), above, are qualified as “Special Petroleum Operations Zones” due to their locations in a forest reserve and a forest game reserve, requiring more stringent regulations. Extended exploration periods have been offered due to reportedly tough operating conditions (mangrove and swamp).
  • The contents of the proposals to be submitted will include:
    • technical evaluation of the block;
    • work programmes and corresponding budgets for each exploration phase;
    • documentation to demonstrate a company’s or operator’s technical and financial capability (including, but not limited to, previous years’ balance sheets, similar experience, capabilities in environmental protection and decommissioning, and local content).
  • The deadline for providing submission of proposals is 14 June 2013. Notification of the results will be provided on 5 July 2013.

Legislation, Contractual and Fiscal terms


  • The Lungahe, Bomana and Dissoni exploration blocks will be licensed for an initial period of up to three years, renewable twice (each renewal for a period of two years).
  • The Kombe-Nsepe and the Manyu exploration blocks will be licensed for an initial period of up to four years and five years, respectively, both renewable twice (each renewal for a period of two years).
  • The work programme for the Lungahe, Bomana and Dissoni exploration blocks will include at least two wells (including seismic data acquisition/processing/reprocessing/interpretation and geosciences studies).
  • The work programmes for each of the Kombe-Nsepe and the Manyu exploration blocks will include at least one exploration well (including seismic work and geosciences studies).
  • In accordance with the production sharing contract, the production of hydrocarbons is shared between the contractor and the Cameroonian state.
  • Upon a commercial discovery, pursuant to the Cameroonian Petroleum Code, the initial exploitation period is limited to 25 years for liquid hydrocarbons, and 35 years for gaseous hydrocarbons. The exploitation period can be extended once, by a maximum of 10 years.
  • The Cameroon Government may exercise an option to acquire a participating interest of up to 25 per cent in the block.

Bonuses and royalties

  • A signature bonus of at least US$3 million will be payable.
  • Corporation tax will be charged at 40 per cent.
  • A production bonus will be payable at the following rates:

Click here to see table.  

Cost/profit petroleum and gas

  • A percentage of gas produced (up to a percentage limit to be negotiated) may be retained by the contractor to meet costs. Cost oil will be set at 60 per cent.
  • Profit oil and profit gas split is negotiable (condensate is considered as oil and LPG as gas), in function of an “R” factor to be proposed by the bidder. For a given calendar year, “R” factor refers to the ratio of “Net Cumulative Revenue” over “Cumulative Investments”, calculated at the end of the preceding year. The gas terms will be negotiable in accordance with Cameroon’s policy of maintaining the commodity price of natural gas.

Other issues for investors to note

  • The contractor will be required to contribute annually to a training fund, amounting to US$50,000 during the exploration period and US$100,000 during the development/exploitation period.
  • The contractor must comply with local content laws and give preference to Cameroonian companies when entering into construction contracts, and contracts for the supply of goods and services, in so far as such services and materials are available competitively at market rates and are of sufficient quality etc.
  • Bidders’ proposals will be evaluated along the following criteria: presentation (5 points), technical evaluation of the block (30 points), work programmes and corresponding budgets (40 points), contractual and fiscal terms (20 points), and local content (5 points).
  • The Cameroon Government reserves the right to enter into negotiations with several companies at the same time on a block, with the objective of selecting the best proposal.


Cameroon, like its neighbouring countries in the region, is competing for international oil and gas development funding. With dwindling reserves and declining production of crude oil, it will be interesting to see if this licensing round sparks major interest from international oil and gas companies. Following recent, promising gas discoveries, Cameroon is hoping to benefit from its large, unexploited gas reserves, and it is reportedly developing an LNG export project to monetise this commodity.