Côte d’Ivoire's restructuring of state oil firm brings momentum to energy sector

In a bid to support the bottom line of state-owned oil producer Société Nationale d’Opérations Pétrolière de la Côte d’Ivoire (Petroci), the government decided to implement a financial and operational restructuring plan in 2015. A few years on and the strategy is bearing fruit, with Petroci set to post its third consecutive year of profits in 2018.

Debts

Weakened by the drop in international oil prices, Petroci lost 75% of its revenue in 2015, most of which came from oil production in offshore fields. That year the company posted a loss of CFA39bn (€58.5m), a figure that put the firm close to bankruptcy. The situation was compounded by a number of existing problems. In 2013 an audit carried out by French accounting and auditing firm Associés Audit et Conseil revealed serious mismanagement and debts of at least CFA15bn (€22.5m). It also pointed out poorly managed deals. For example, a gas and oil pipeline linking Abidjan to Yamoussoukro, built to ease the number of tankers using the highway, cost CFA160bn (€240m), which was 32% more than the CFA121bn (€181.5m) originally budgeted.

“Petroci has been deeply affected by the decade-long political crisis. The oil sector needs investment to stay up to date in terms of technology,” Cheikhou Badio, director-general of the Société Africaine d’Ingénierie Financiere, told OBG. “It is also a very speculative industry. The company had accumulated a level of debt that was unsustainable, and it was necessary to restructure the business and redefine new objectives,” he added.

Restructuring

In late 2015 Ibrahima Diaby, a top official at the Ministry of Mines, Petroleum and Energy, was appointed the new CEO of Petroci and tasked with resolving the company’s financial problems. Diaby launched a vast restructuring programme, which included reducing the company’s workforce and cancelling expansion plans in the Democratic Republic of the Congo and Oman.

Management decided to refocus Petroci’s efforts on its production and exploration activities at home. In 2015 the company sold the majority of its share in the logistics base specialising in oil services at the Port of Abidjan to the Belgian company SEA-Invest. Petroci also did away with its network of 37 petrol stations and sold them to multinational firm Puma Energy, a subsidiary of Amsterdam-based Trafigura, in late February 2018. As of December 2017 Petroci’s stations made up about 8% of the country’s oil marketing sector. Under the deal, estimated at around CFA20bn (€30m), Trafigura holds an 80% stake in the new company running the network, while Petroci holds 20% of shares. Discussions have also been launched to privatise Petroci’s butane gas distribution segment, which lost market share over the past few years – from 33% in 2012 to 22% in 2016 – because of a lack of investment.

At the end of 2018 Petroci was channelling its efforts on a number of projects. The company is part of a consortium building a floating storage and re-gasification unit to feed the country’s thermal plants (see overview). It is also working on the extension of the Abidjan-Bouaké pipeline to the northern city of Ferkéssedougou, while continuing its activities in oil exploration and production. Petroci also manages the Lion and Panthère fields in the CI-11 block, where oil and gas production rose by 37% and 66%, respectively, in 2017.

Profits

Three years after the start of its implementation, the firm’s restructuring plan has started to pay off. In 2017 the company posted a net profit of CFA6.3bn (€9.5m), up 17% from the CFA5.4bn (€8.1m) profit recorded in 2016, after a net loss in 2015. According to report by the IMF in June 2018, the positive trends seen in the years after the restructuring launch are set to continue. The global financial institution expects profits to continue to rise in 2018 and beyond, due to greater efficiency.