Opportunities in Congo have the potential to drive Africa’s socio-economic development while reaping lucrative returns for industry participants
The recent state visit by Mohammed Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries (Opec), to Congo has reaffirmed the role of oil in both the Congo and the wider region.
Opportunities in Congo have the potential to drive Africa’s socio-economic development while reaping lucrative returns for industry participants.
Having been a major petroleum producer since the 1970s, the home of the African Petroleum Producers Association (APPO) and the newest member of the Organization of the Petroleum Exporting Countries (Opec), Congo has and continues to garner significant interest from the international energy community.
With a reformed hydrocarbon code, a dedicated national oil company, and the support of international oil companies (IOCs) behind it, Congo is committed to driving exploration and production in the face of declining output levels from maturing fields.
By leveraging its 2.9-billion-barrel crude oil reserves and 10 trillion cu ft of natural gas, the Congo’s hydrocarbon sector will be a major catalyst of Africa’s economic growth.
The country has been committed to establishing a competitive hydrocarbon market in which an increase in exports will help drive socio-economic development.
Accordingly, with the participation of IOCs such as Total, Eni, and Chevron, the Congo has accelerated production in recent years, leading to the country’s standing as the third-largest oil producer in sub-Saharan Africa.
Notable developments include the Moho Bilondo Phase 1B project and the Moho Nord extension with a joint production capacity of 14,000 bpd; the 50,000-bpd Nene Marine offshore development; and the 40,000-bpd Lianzi offshore area.
However, declining levels in mature oilfields present a challenge for production and so, the government has implemented measures to drive upstream exploration.
Through changes with its regulatory and fiscal framework and the introduction of two bid licensing rounds, Congo’s government has been proactive in enhancing the sector’s attractiveness for international investors.
By offering increasingly favorable terms provided for by the revised hydrocarbon code, the Congo aims to accelerate exploration so as to increase production and revenue. Notable amendments include royalty reductions regarding natural gas and crude oil from 15 per cent to 5 per cent and from 15 per cent to 12 per cent, respectively.
In conjunction with the availability of lucrative offshore blocks, Congo has taken fundamental measures to drive investment, emphasizing the role of oil in alleviating poverty and driving economic development.
"The oil and gas industry has a very bright future around the world and in sub-Saharan Africa in particular," Barkindo said at a meeting with the SNPC, the national oil company of Congo.
Meanwhile, the country aims to bolster exports with the construction of refinery and pipeline developments.
Focused on becoming a regional refined product exporter, and yet with only one existing refinery in the country, the Congo has signed a deal with Beijing Fortune Dingsheng Investment Company for the construction of a new 110,000 bpd refinery at Pointe-Noire.
With the demand for petroleum products increasing regionally, the new refinery will significantly enhance capacity, enabling the increased export of products.
Additionally, the SNPC has announced that it is constructing a pipeline to transport refined products.
According to Maixent Raoul Ominga, Director General of the SNPC: "Studies have been done for the first trunk of the pipeline which is about 500 km. The pipeline is going to be used to transport gasoline, jet fuel and diesel."
By ensuring adequate infrastructure development, and directing investment to exploration and production, the Congo is making significant progress in creating a competitive, export-focused industry. The Congo serves as an example of how an African market experiencing ageing oilfields can significantly enhance its sectoral attractiveness and drive associated investment and development.
Congolese oil has a crucial role to play in ensuring a viable, regional energy supply, alleviating energy poverty on a continent-wide scale by accelerating economic development.
The country’s resources, coupled with its progressive and inclusive hydrocarbon code, will be a major contributor to achieving universal energy access by 2030, and other African countries can learn from the Congo.