EIA Country Analysis: Gabon

Sep 25, 2002 02:00 AM

Gabon is sub-Saharan Africa's third largest producer and exporter of crude oil, the country's main export commodity. Recent declines in oil production have led the government to encourage further expoloration and exploitation of oil reserves, while concerns over a long-term decline in proven oil reserves has brought about further development of the non-oil sector.

Since its independence from France on August 17, 1960, Gabon has remained relatively peaceful and stable. Gabon's President Omar Bongo, re-elected on December 6, 1998, is Africa's second longest serving head of state, in power since 1967. In December 2001, the Parti Democratique Gabonais (PDG), the President's party, won a sweeping victory in the parliamentary elections.
Gabon's economy continues to rely heavily on exports of crude oil, which account for nearly 65 % of the government's budget, 80 % of total export revenues, and 43 % of gross domestic product (GDP). Gabon's current account balance worsened significantly in 2001 due to a combination of slightly lower world oil prices, weaker forestry exports, and a high increase in imports.
This followed a dramatic improvement in Gabon's current account balance in 2000 spurred by higher world oil prices. Non-oil sector GDP increased by about 4 %, mainly in the commerce, agriculture, and wood processing industries. Timber products typically have been Gabon's second largest export, comprising around 12 % of total exports and about 5 % of GDP. Exports of manganese also contribute significantly to Gabon's GDP, and are expected to grow by 600,000 tpy now that the new Industrial Complex of Moanda has been built.

In part as a result of the lower-than-expected oil export revenues, Gabon's real GDP grew by 1.7 % in 2001, falling short of projections. Consumer prices rose by 2.5 % in 2001. In 2002, Gabon's real GDP is expected to grow by 1.5 % while inflation is projected to grow by 0.7 %.
Gabon is still recovering from an economic crisis in 1999, which prompted the national government to take steps to increase the country's economic growth by diversifying the structure of its exports, restructuring and reducing its civil service, and privatising several parastatal industries.
In October of 2001, following a ten-year debate, legislation was enacted to create a duty free zone in a 5.8 square mile area surrounding Port-Gentil. Companies operating within the zone will be exempt from minimum investments, customs duties on imports and exports, price controls, import/export quotas, and licenses.

In April 2002, the International Monetary Fund (IMF) allowed an agreement providing for an 18-month stand-by credit of $ 119 mm to lapse. The IMF cited Gabon's failure to meet necessary criteria for keeping it in place. The IMF credit line, conditional upon the attainment of several quantitative and structural benchmarks, had been designed to support Gabon's economic reform program in the event that oil prices fell in 2001.
The agreement ended a break in relations with the IMF which occurred after an earlier three-year structural adjustment plan expired in March 1999. Gabon continues to have one of the highest per capita incomes (around $ 3,700) in sub-Saharan Africa, but its income distribution is extremely uneven and almost half of the population lives below the poverty line.
Since the 1994 devaluation of the CFA franc by 50 %, Gabon's informal sector has grown dramatically due to higher domestic prices, relatively lower salaries, and a scarcity of official or formal -- particularly public sector -- employment opportunities (unemployment was estimated at 25 % in 1997).

Gabon is aiming for greater regional economic integration. In January 1999, the Central Africa Economic and Monetary Community (CEMAC), which includes Gabon and five other countries, agreed to take steps towards convergence of their macroeconomic policies, stabilization of their common currency, creation of a common market, and harmonization of their sectoral policies. In December 1998, Gabon's currency, the CFA franc, wasofficially pegged to the Euro, the common currency adopted by 11 European members of the European Community.
In November 1999, President Bongo hosted a sub-regional summit on peace prospects, stability, and the management of key resources, including oil. The summit resulted in the creation of the Gulf of Guinea Commission, a mechanism for dialogue and consultation to prevent, manage, and resolve conflicts linked to the economic and commercial exploitation of the natural resources within the territorial limits of member states.
The meeting was called by Nigeria's President Olusegun Obasanjo and was attended by Presidents Denis Sassou Nguesso of Congo, Teodoro Obiang Nguema of Equatorial Guinea, Miguel Trovoada of Sao Tome and Principe, and Foreign Ministers Augustin Kontchou Kouomegni of Cameroon and Joao Bernardo de Miranda of Angola.
Since the creation of the Gulf of Guinea Commission, a long-standing maritime border dispute between Gabon and Sao Tome and Principe has been resolved, and the Commission is likely to debate the issue of maritime borders between Gabon and Equatorial Guinea.

Oil
Gabon is sub-Saharan Africa's third largest oil producer. The country's total oil production of 302,000 bpd in 2001 represented a 7.4 % decline from the 326,000 bpd produced in 2000 and a 9 % drop from 1999 production levels. Gabon's proven oil reserves have increased to 2.5 bn barrels in 2002 from 1.3 bn barrels in 1996.
Most of this crude oil has gravities in the 300 to 350 API range, with a small amount of heavier, 250 API output. Gabon's primary crude exports are the Rabi Light (340 API) and Mandji Blend (300 API and 1.1 % sulphur) streams. Gabon exported about 140,000 bpd of crude oil to the United States in 2001, accounting for over 46 % of Gabon's crude oil production.
Western Europe is also a key destination for Gabonese crude, with occasional spot shipments to the Far East. Gabon officially left OPEC in 1996, citing the organization's high annual dues of $ 1.9 mm.

Although Gabon's proven oil reserves have nearly doubled since 1996, the government is concerned about a longer-term trend of diminishing oil reserves. Production from Gabon's largest oil field, Rabi-Kounga, fell to 100,000 bpd in 2000, down from the 1997 peak of 217,000 bpd. Only one quarter of the Shell -operated Rabi-Kounga field's estimated recoverable reserves of 850 mm barrels remains available for further production.
Former Shell Gabon chairman John Barry estimates that Rabi-Kounga will remain Gabon's biggest producing field over the next five years, even as output declines. To help boost reserves and production, Gabon's oil ministry has revised its production-sharing contracts to attract new investors and has increased the number of exploration permits issued.
In its ninth oil licensing round, which opened in April 2000 and closed in January 2001, Gabon offered 27 blocks, of which 13 were onshore, five were located in shallow water and nine were found in deep water. The government of Gabon described the response from international petroleum companies as disappointing and pledged to continue to promote the blocks.

Despite the possibility of declining reserves, and the disappointing response to the new exploration permits, several foreign oil companies have invested in Gabon's oil sector in recent years. Most recently, in April 2002, Energy Africa signed a production sharing agreement that allows the company to operate in the area covered by the Akoum permit.
At present, Energy Africa is planning at least one exploration well, and holds a 100 % interest, although Gabon's government has an option to buy a 10 % share at first production. In December 2000, Shell Gabon signed a production sharing agreement for the Douka Marin and Panga Marin blocks.
Meanwhile, Pioneer Natural Resources has a production-sharing contract covering the Olowi block that lies three miles south of Gabon's Gamba oil field. The company drilled a new well named Awena Marin -- 1 in April 2002, with 34 degrees oil flowing at non-commercial rates. Overall, reservoir quality was lower than in the previous Olowi Marin discovery.

In 2001, Elf Gabon's (a subsidiary of TotalFinaElf) net profit from operations in Gabon declined by 31 % (to $ 124.5 mm) due to lower oil prices and a 4.6 % decrease in production. Faced with declining onshore and shallow-water production, Elf Gabon is turning to deep-water exploration.
In April 2001, the company signed a concessional agreement for Olonga Marin which covers 4,000 square miles. Oil in the concession is believed to lie at a depth between 9,900 and 11,500 feet below the Atlantic floor. In August 2000, Elf Gabon also began a seismic survey in the Akori block, 36 miles off Port Gentil.
In October 2001, Vaalco Energy executed a five-year extension of its Production Sharing Contract for the 1,864 square mile Etame Block. Vaalco Energy formed a consortium in 1998 to evaluate recent discoveries on the block including those of Etame and Tchibala. This consortium is comprised of Vaalco Energy (30.4 %), Pan African Energy Corporation Ltd (32.5 %), Sasol Petroleum International (30 %), PetroEnergy Resources Corporation (4.5 %), and Nissho Iwai Corporation (2.6 %).
In June 2002, Vaalco Energy announced that the first of three wells to be drilled on the Etame Development Project had been completed successfully. Known as the ET-3H well, it flowed at a rate of 7,630 bpd. One month later the second well (ET-4H) was completed, flowing at a rate in excess of 9,800 bpd. The third well, known as ET-1VA, was completed in September 2002 and flowed at a rate of 4,130 bpd. The Etame Project is expected to increase Gabon's oil production by around 15,000 bpd when the field is brought fully onstream.

Gabon's oil industry received a modest boost in March 2001 when the Atora field came on stream, producing 20,000 bpd. Atora is estimated to contain between 50 mm and 100 mm barrels. The field is operated by Elf Gabon, with Amerada Hess Gabon controlling a 40 % share and Shell Gabon managing a 20 % share.
The production from Atora made Elf Gabon the largest producer of oil in the country. Another modest boost is expected from Shell Gabon's 2002 discovery of a new oil field on the Ozigo concession, which is expected to increase Gabonese oil production by a further 20,000 bpd when fully developed.
In February 2001, PanAfrican Energy signed a concession agreement to reactivate the Remboue field, where initial production was due to begin in July 2001. Output was expected to reach 1,800 bpd by mid-2002 as additional wells are brought on stream. In addition, PanAfrican has built an onshore, $ 2.2-mm pipeline from its 1,000-bpd Obangue field to the nearby Avocette field, operated by TotalFinaElf, to replace a river barge that has carried oil to market since Obangue was brought on stream in 1998.

In December 1999, ENI, the Italian oil and natural gas company, through its subsidiary Agip Gabon, signed a farm-out agreement with Petronas Carigali (Overseas), a subsidiary of the Malaysian national oil company Petronas, for oil exploration in Gabon's southern deep waters. Under the agreement ENI was required to sell a 25 % stake in each of three exploration blocks offshore Gabon to Petronas Carigali.
The three blocks, Mpolo, Chaillu, and Meboun, cover a total area of 22,508 sq km (9,000 square miles) in the Gabon Basin. Petronas, jointly with Energy Africa, also has equity participation in four other blocks in Gabon. ENI has been active in Gabon since 1981 and currently produces oil from the Limande offshore field.

Refining
The Sogara refinery at Port Gentil is Gabon's only refinery. Opened in 1967, Sogara is jointly owned by the Gabonese government (25 %), private investors (9.2 %), and a consortium of international oil firms led by TotalFinaElf. The refinery is currently operating at 82 % (17,300 bpd) of its 21,000 bpd nameplate capacity.

Natural gas
Gabon's natural gas reserves total 1.2 tcf. The majority of the natural gas produced in Gabon is used in the generation of electricity or asa refinery fuel. Carbide Holdings is proposing to establish an iron works that would utilize gas currently flared, as well as gas that is re-injected into the Rabi-Kounga field.

Electricity
Hydroelectric stations account for 71 % of Gabon's electricity production. The primary sites are at Tchimbele (69 MW) and Kinguele (57.6 MW) on the M'Bei River, and Poubara on the Ogooue River. There is an estimated total hydropower potential of 6,000 MW if all possible sites were to be developed.
In March 1997, Gabon announced that a 20-year concession to run the state-owned electricity and water utility, the Societe d'Electricite et d'Eaux du Gabon (SEEG), was awarded to the French firm VIVENDI (formerly known as Compagnie Generale des Eaux).
This is the first privatisation of a sub-Saharan water and electric utility that entails full commitment for future investment by the private operator to upgrade and modernize the systems. VIVENDI received a 51 % interest in the SEEG, 5 % was offered to SEEG's employees, and the remaining 44 % was offered to the general public.

Country overview
President: El-Hadj Omar Bongo
Prime Minister: Jean-Francois Ntoutoume Emane
Independence: August 17, 1960 (from France)
Population (2001E): 1.3 mm
Location/size: West Central Africa, bordering the Atlantic Ocean at the Equator between Cameroon, the Congo and Equatorial Guinea/267,670 sq km (103,000 square miles), about the size of Colorado
Major cities: Libreville (capital); Port-Gentil; Franceville
Languages: French (official), Fang; Myene; Bateke; Obamba; Bapounou/Eschira; Bandjabi
Ethnic groups: About 40 Bantu tribes, including four major tribal groupings (Fang, Eschira, Bapounou, Bateke); about 100,000 expatriate Africans and Europeans (27,000 French)
Religion: Christian (55 %-75 %); Muslim (less than 1 %); traditional beliefs
Defence (8/98): Army (3,200); Navy (500); Air Force (1,000); Paramilitary Forces 4,800 (including a Gendarmerie of 2,000)

Economic overview
Minister of Finance: Paul Toungui
Currency: Communaute Financière Africaine (CFA) franc
Market exchange rate (9/06/02): $ 1 = 662 CFA
Gross Domestic Product (GDP) (2001E): $ 4.7 bn
Real GDP growth rate (2001E): 1.7 % (2002E): 1.5 %
Inflation rate (2001E): 2.5 % (2002E): 0.7 %
Current account balance (2001E): $ 200.3 mm
Major trading partners: France, United States, Japan, China, Côte d'Ivoire
Merchandise exports (2001E): $ 2.5 bn
Merchandise imports (2001E): $ 0.9 bn
Major export products: Oil, timber, manganes
e Major import products: Machinery and transport equipment, other manufactures, food Total external debt (2002E): $ 4.0 bn

Energy overview
Minister of State for Mines and Energy: Richard Onouviet
Proven oil reserves (1/1/02E): 2.5 bn barrels
Oil production (2001E): 302,000 bpd, of which almost all is crude oil (2002E): average of 299,000 bpd (data for first six months of 2002).
Oil consumption (2001E): 19,000 bpd
Net oil exports (2001E): 283,000 bpd
Major crude oil customers: United States (nearly 50 %), Western Europe
Crude oil refining capacity (1/1/02E): 17,300 bpd
Natural gas reserves (1/1/02E) : 1.2 tcf
Natural gas production (2000E): 3.5 bn cf
Natural gas consumption (2000E): 3.5 bn cf
Electric generation capacity (1/1/2000E): 0.3 GW
Electricity production (2000E): 0.85 bn kWh (of which thermal electricity was 29 %, hydroelectric was 71 %)

Environmental overview
Minister of Forest Economy, Water, Fishing, and in charge of Environment: Emile Doumba
Total energy consumption (2000E): 0.05 quadrillion Btu* (<0.1 % of world total energy consumption)
Energy-related carbon emissions (2000E): 1.68 mm tons of carbon (<0.1 % of world carbon emissions)
Per capita energy consumption (2000E): 41.7 mm Btu (vs. US value of 351.0 mm Btu)
Per capita carbon emissions (2000E): 1.4 tons of carbon (vs. US value of 5.5 tons of carbon
Energy intensity (2000E): 9,262 Btu/ $ 1995 (vs. US value of 10,918 Btu/ $ 1995)** Carbon intensity (2000E): 0.31 tons of carbon/thousand $ 1995 (vs. US value of 0.17 tons/thousand $ 1995)**
Sectoral share of energy consumption (1998E): Industrial (37.6 %), transportation (17.8 %), residential (45.0 %), commercial (2.5 %)
Sectoral share of carbon emissions (1998E): Transportation (48.6 %), industrial (37.3 %), residential (11.3 %), commercial (2.6 %)
Fuel share of energy consumption (2000E): Oil (80.3 %), natural gas (7.3 %), coal (0.0 %)
Fuel share of carbon emissions (2000E): Natural gas (56.0 %), oil (44.0 %), coal (0.0 %)
Renewable energy consumption (1998E): 44 t Btu* (0 % increase from 1997)
Number of people per motor vehicle (1998): 34.5 (vs. US value of 1.3)

Status in climate change negotiations: Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified January 21st, 1998). Not a signatory to the Kyoto Protocol.
Major environmental issues: Deforestation and poaching.
Major international environmental agreements: A party to Conventions on Biodiversity, Climate Change, Desertification, Endangered Species, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94 and Wetlands.

* The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar, wind, wood and waste electric power. The renewable energy consumption statistic is based on International Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions are also based on IEA data.
**GDP based on EIA International Energy Annual 2000

Oil and gas industries
State oil company: Societe Nationale Petroliere Gabonaise
Major refineries (capacity-bpd): Port Gentil (17,300)
Oil terminals:
-- Onshore: Cap Lopez, Oguendjo, Gamba, Port Gentil
-- Offshore: Lucina, M'Bya
Major foreign oil company involvement: Amerada Hess, Broken Hill Petroleum, Devon Energy, Energy Africa, ENI, Marathon, PanAfrican Energy, Perenco, Petrofields, Petronas, Pioneer Natural Resources, Shell, Sasol Petroleum International, TotalFinaElf (Elf Gabon), Vaalco, Vanco

Source: EIA
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