LIBREVILLE, Gabon — Foreign investors in Gabon”s oil production sector might face tougher conditions, under new government plans aimed at squeezing more money from international companies, industry executives whose identity cannot be revealed told Reuters.
Gabon”s economy is heavily dependent on the country”s oil industry, as it accounts for almost half of its GDP. However output has been declining since its peak in 1997, when it came in at 370,000 barrels, and is currently down by a third. Still, the country”s reserves are estimated at about 3.7 billion barrels, suggesting that Gabon has a few decades in which resources can be used.
According to the sources, Gabon is looking into ways to introduce tougher terms for foreign companies, such as including equity stakes in contracts. In attempt to increase the country”s profit the government has ordered audits of oil producers, which have resulted in substantial back-tax claims.
Potential moves in that direction might put off companies from expanding their business into the West African country, similarly to what happened in Venezuela and Kazakhstan, which lost a number of contracts when they implemented stricter terms for international companies, Reuters commented. The move is directly linked to the state”s desire to get better deals for Gabon and to squeeze more money from international businesses on the market, Reuters quoted an oil executive as saying.
The government declined to comment on the matter but oil and energy minister Etienne Ngoubou confirmed that several companies are being audited. He told Reuters that the audits provide the government with the opportunity to see how the contracts work in practice, if they are well run and if there are any tax issues to be settled.
According to three different executives, Addax Petroleum, a subsidiary of China-based Sinopec Group, is at risk of losing an oil field as a direct result of a dispute over contract terms. Ngoubou told Reuters in an interview that there was a dispute but it was over environmental issues regarding the field. He said that there had been accidents at the field and operations there did not fully comply with Institute of Petroleum requirements, and added that the ministry will take action if companies do not comply.
Gabon”s government is taking a step further by insisting on tougher financial terms for contracts that are close to their expiry date, as a condition for their extension, Reuters has been told. Its sources claimed that the newly established national oil company required equity stakes in new oil fields and fields whose licenses are soon to be renewed.
Although Ngoubou did not answer questions regarding this information, he said that the national oil company plans to take a stake of between 10 and 20 percent in newly licensed fields. This has been an established practice in a number of countries but has so far not been used in Gabon, the oil executives commented.
In light of next year”s planned deepwater oil licensing that might discover substantial oil reserves, the oil executives are concerned that moves from the government might scare potential investors and might have an adverse effect on the industry, Reuters said.