Gabon seeks tougher terms from oil companies

Mon Dec 3, 2012 5:40pm IST

Related Topics


Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

* Oil executives say Gabon demanding tougher terms, back-tax claims

* State also seeking equity stakes in new contracts

* Oil minister says conducting audits on contracts

* Executives say Sinopec unit threatened with loss of oil field

By Tom Bergin and Shadia Nasralla

LONDON, Dec 3 (Reuters) - Gabon is seeking to squeeze more money out of foreign oil companies operating in the country, executives say, potentially damping enthusiasm for a long-awaited deepwater licensing round due next year.

The move mirrors similar steps by resource-rich nations around the world over the past decade, when countries such as Kazakhstan or Venezuela clawed back projects or tightened the terms for international companies as energy prices soared.

Oil accounts for around half of Gabon's economy but output has fallen by a third since peaking at 370,000 barrels per day in 1997. However, the country's reserves are put at around 3.7 billion barrels, giving it several decades yet of hydrocarbon wealth.

The West African country's government has launched audits of oil producers that have led to big back-tax claims and is demanding tougher terms for, and equity stakes in, new contracts, said executives, who declined to be named for fear of jeopardising their interests in the country.

"I think it is really driven by the desire to get a better deal for the state," said one oil executive.

The government declined to respond to questions about whether it had launched a concerted drive to extract more money from oil companies but the country's oil and energy minister confirmed some companies were being audited.

"We got the opportunity to do some audits to see if a contract is well run and ... we noticed a lot of exceptions," said Etienne Ngoubou.

"You engage in some negotiations with the operation company to check each exception and to agree if you have some tax (due)," he added in an interview with Reuters.

Three executives said Addax Petroleum, a unit of China's Sinopec, had been threatened with the loss of an oil field in a dispute over terms.

Ngoubou acknowledged the dispute but said the disagreement was over environmental problems at the field, which one executive identified as the Obangue onshore field.

"They got some accidents. Their facility doesn't respect the rules of the Institute of Petroleum ... They have to fit with the specifications. Otherwise we take some decisions," he said.

Sinopec was not available for comment. Sinopec took control of the field through the purchase of Addax in 2009 in what was then China's largest overseas oil acquisition.

Other companies affected by the governments' moves include Canadian Natural Resources and French groups Maurel & Prom and unlisted Perenco.


In addition to auditing existing contracts, the government is demanding tougher fiscal terms to extend contracts that are close to expiring.

Perenco had to agree to tougher terms on the renewal of one of its licences, two industry executives said. The company declined comment.

Executives said the government was starting to demand that its new national oil company be given equity stakes in new fields and fields whose licences were due for renewal.

The government did not respond to questions about whether equity stakes in existing fields were being sought but Ngoubou said he planned for the state oil company to take a 10-20 percent stake in new offshore licences.

It is not unusual for state oil companies to retain stakes in oil licences awarded to foreign oil companies, but the executives said this was new for Gabon.

Four executives said the government was also targeting oil services companies, including, two of them said, the local unit of French helicopter charter firm Heli-Union.

The government had sought a stake in Heli-Union's Gabon operation and required the company to hire more Gabon nationals, forcing the company to hike its charter prices by 25 percent, one executive said.

The company and the Gabon government declined to comment.

Gabon plans to launch a new deepwater oil licensing round in June 2013, and recent discoveries in the region have boosted hopes that big reserves could be discovered.

The exploration blocks were previously offered in 2010, but that sale was pulled following concerns about offshore drilling safety after BP's Gulf of Mexico oil spill and because the government wanted to make some legal changes.

Deepwater exploration is an expensive business, with individual wells costing in excess of $100 million, requiring foreign know-how and cash.

Oil executives say the government's moves to exert more control over the sector in the past year could deter bidders from the planned auction.

"It's probably not the time to scare potential investors," one foreign oil man said.


After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage