4.375
%
Positive
76
mm boe
62
%
The government has achieved the balance between risk and return, with both the country and contractor benefiting from the winning and sale of its resources.
April 23, 2024
Africa - Central
mm bbl
bcf
Central Africa, on the Atlantic coast, south of Gabon.
PSC/PSA
The licensing process is designed to be flexible. There are no formal licensing rounds; licences are negotiated on an individual basis. Prospecting licences are awarded on a non-exclusive basis and are valid for one year, with several one-year extensions allowed. Exploration licences are awarded on an exclusive with an initial period of 4 years with two 3-year extension options possible, subject to meeting work obligations; at each renewal, a maximum of 50% of the exploration acreage must be relinquished. Production licences are granted for a maximum of 20 years (less for smaller fields). An extension of up to 5 years can be obtained, after which a new production licence must be negotiated. Most recent contracts include a ‘super profit sharing’ mechanism, where the contractor and government share the value of production over a base price, which is currently estimated to be $60/bbl by OGA. While the split is negotiable, we estimate it to be 65%/35% in the government’s favour. As this is the first claim on production, the state’s share is an effective royalty. There are further royalties, which are again negotiable, by approximately 12% for onshore and shelf oil, 15% for deepwater oil and 5% for gas in all areas.
The Republic of the Congo (“ROC”) government welcomes foreign direct investment (“FDI”) in most sectors, particularly in the oil sector, which accounts for 90 per cent of FDI inflows. In official statements and direct conversations, the government has communicated an urgent need to attract investment outside of the petroleum sector. No known laws or practices discriminate against foreign investors, by prohibiting, limiting, or conditioning foreign investment in any sector of the economy.ROC’s Agency for the Promotion of Investments (“API”), established in 2013, promotes economic diversification by seeking to expand the pool of external investors. API provides French-language advisory services to potential investors and maintains a database of government projects seeking private investor partners. Despite increased attempts to sign MOUs with new investors, the government has made no significant efforts to retain foreign investments or maintain dialogue with investors. The High Committee for Public-Private Dialogue, established in 2012, convened a meeting chaired by the prime minister in February 2023.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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