OBG talks to Etienne Ngoubou, Minister of Petroleum, Energy and Hydroelectricity

Interview: Etienne Ngoubou

What are the biggest hurdles still remaining to the successful conclusion of the 10th bidding round?

ETIENNE NGOUBOU: The government is particularly concerned with good governance for the process of allocation for the deep and very deep offshore blocks in our sedimentary basin. In order to successfully promote these blocks, our country needs to implement a new hydrocarbons code to effectively regulate oil operations as well as to encourage the entry of new multinationals and the creation of consortiums. Gabon will have to use a mechanism for awarding available blocks on a competitive, transparent and ethical basis.

What sort of challenges are involved in implementing the new hydrocarbons code?

NGOUBOU: The hydrocarbons code project must create a framework for awarding, negotiating and renegotiating contracts that maximises state revenues and ensures favourable conditions for investors. Owing to the maturity of active oilfields, drumming up interest in exploration is a priority, and given the success of other countries around the Gulf of Guinea and the geological analogies with Brazilian basins, the potential for new discoveries in these offshore zones is high. As such, legal and tax incentives have been established for investors and for Gabon to make the most of its hydrocarbons resources. We are also looking to establish a legal and regulatory system that promotes the participation of Gabonese companies in the oil sector.

How much domestic demand is there for petroleum products in Gabon?

NGOUBOU: The domestic oil products market is equal to 650,000 tonnes per year, with diesel representing 50-60% of volume. Consumption will increase considerably as the implementation of various projects contributes to the country’s development. Demand for butane gas has grown significantly in the past 10 years, with consumption jumping from 20,000 to almost 30,000 tonnes per year. Bitumen demand in Gabon and the Gulf of Guinea region reaches up to 500,000 tonnes per year. Assuming 5-10% annual market growth in Gabon, in a decade Société Gabonaise de Raffinage will not be able to meet domestic consumption in its current state. Given that the refinery cannot meet international quality standards, there is a need to increase refining and storage capacity for oil products in Gabon.

Is there regional growth potential in the downstream refining sector?

NGOUBOU: Due to the small size of the overall market any local refining capacity cannot be targeted exclusively to satisfy the domestic market. A map of the world’s refining facilities shows that the needs for oil products in Africa is such that there is scope for at least two large refining units, particularly in the Gulf of Guinea and in southern Africa, which could supply this entire area – perhaps even beyond. Gabon is ideally placed to capitalise on this. Our estimates see a need for a refinery of 2.5m-5m tonnes per year in the Gulf of Guinea, along with hydrocarbons depots large enough to store supplies for this growing market.

How can gas production meet the growing demand?

NGOUBOU: The electricity sector has been the driving force for gas use in the country. The role of gas in energy supply will continue with the development of forestry projects in the Nkok and Mayumba zones, while the share of gas used in industry is also set to increase thanks to the Port-Gentil petrochemicals complex.

Oil production generates significant quantities of associated gas, but a large proportion of this is flared at extraction sites. The first measure is to prevent gas flaring in order to supply the electrical and industrial sectors with additional gas. The other is to facilitate access for certain companies to existing infrastructure to encourage the recovery of associated gas. Finally, in order to increase currently available reserves, the government is seeking to encourage gas exploration by establishing an attractive legal and fiscal framework.