Republic of Congo bouncing back
The central African nation looked to be a hydrocarbons has-been, but chunky discoveries in recent years have reversed the trend
Despite gloomy forecasts a few years ago, and allegations of corruption in the hydrocarbons sector, the Republic of Congo (RoC) is nevertheless still churning out oil. It has even managed to nudge itself up the international production league table in recent years.
New production, largely from France's
Total and Eni, is expected to boost the country's oil output by some 40,000 barrels a day in 2017, to around 350,000 b/d. This estimate (from Opec data) is a notable turnaround for an industry, which seemed to have peaked a decade ago. Output has generally been in the 250,000-300,000 b/d range over recent years.
Eni's discovery in 2012 of the Nene Marine oilfield, offshore from Pointe Noire near the Angolan border, has been instrumental in reversing the trend.
Production from the Marine XII block, which includes Nene Marine, as well as the Litchendjili and Minsala Marine finds, is due to ramp up to 20,000 barrels of oil equivalent a day by end-2017, with potential to grow to more than 140,000 boe/d, according to the company. Marine XII contains total resources estimated at 3.5bn boe/d and 5.5 trillion cubic feet of gas. Eni Congo holds a 65% share in the block, while state oil company Société Nationale des Pétroles du Congo (SNPC) has 10% and a vehicle owned by UK-based New-Age holds 25%.
Output has been further bolstered by Total's investment in expanding its Moho offshore development, also close to the Angolan maritime boundary. In March, the French company started production from the Moho Nord deep offshore project. Output could reach 100,000 boe/d at full capacity.
The development includes 34 wells tied back to a new tension leg platform—Total's first in Africa—and to the new Likouf floating production unit. After processing on Likouf, oil is then sent to the Djeno onshore terminal, also operated by Total, for export. As operator, Total holds a 53.5% stake in the project, while
Chevron Overseas (Congo) Limited has 31.5% and the SNPC holds the state's 15% share.
The first phase of the Moho development, on the Moho Bilondo field, began production in 2008 and was the country's first deepwater oil project, with output peaking at 90,000 boe/d. Phase 1b, which also started in 2008, added further production of 40,000 boe/d via an 11-well subsea tieback to the FPU Alima floating production unit. Total says it has developed 16 fields in the former French colony and discovered around 65% of the country's reserves.
This oil wealth has done little to bring prosperity to Congo's population of 3.8m, many of whom live below or close to the poverty line. The country's history of financial mismanagement and corruption allegations is long and inglorious—often focusing on the relationship between the government, various influential figures close to the president and the oil industry.
The RoC has regularly needed financial support from international donors, despite its hydrocarbons revenues. But the International Monetary Fund, World Bank and other multilaterals have struggled to provide meaningful support since President Denis Sassou-Nguesso came to power, following a civil war, in 1997 and remained in charge, barring five years in the 1990s.
140,000 boe/d - Estimated production potential for the Marine XII block
The Breton Woods institutions have often been critical of the country; Paul Wolfowitz, the IMF head in 2004-07 expressed reservations over the level of corruption in the RoC, when weighing a debt relief package for the country worth $2.9bn in 2006 to tackle a public debt mountain that by then had risen to more than $9bn—an impressive amount for a small country with oil.
Baffled by government explanations of how it handles oil income, the IMF has commissioned audits of the RoC's oil finances and insisted on transparent reporting of oil data. However, progress has been limited.
By late 2017, the government was again in talks with the IMF over a possible bail-out to get it over its latest financial crisis, having under-reported the scale of its current debts, before correcting the figure for the IMF in June. The government now acknowledges public debt is running at 117% of GDP, double the level permitted by the rules of the six-country Central African CFA franc bloc, of which the RoC is a member.
Against this background, it isn't much of a surprise that the operations of the IOCs working in the country come in for scrutiny. Most recently, Eni said the Italian finance police had notified the firm that it was being investigated in relation to "alleged international corruption". The company denies any wrong-doing.
In a half-yearly results filing to the US Securities and Exchange Commission, published at the end of August, Eni said the Italian probe focused on exploration and production agreements signed by Eni Congo with the Ministry of Hydrocarbons in 2013-15. The request "concerns the verification of the relationship between Eni and its subsidiaries from 2012 to date with certain third-party companies", Eni said in the SEC filing.
Whatever the outcome of that investigation, doing business in the Republic of Congo is likely to remain a challenge. Although one that experienced operators, and some smaller players in offshore exploration there, clearly think is worth surmounting.
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