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Gabon to Curb Own Cut in New Oil Blocks to 63 Pct

Source: Reuters 3/24/2010, Location: Africa

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Gabon will limit its share of oil output from soon-to-be opened offshore exploration blocks to 62.5 percent as part of an effort to draw major international firms, an energy ministry official said.

The terms for the 42 new blocks, which will be offered in May, were set as Africa's seventh biggest crude oil producer struggles to compete with regional neighbours to attract the investment needed to stem output declines. "We're trying to offer better fiscal terms than Cameroon and Equatorial Guinea," Louis Gaston Aubame, Director of Economic Affairs at the energy ministry told Reuters on the sidelines of an Africa oil conference.

"We also want to compete with Angola and Nigeria, with the terms we are offering and also with our political stability."

Gabon, which produces roughly 250,000 barrels per day of crude oil and relies on energy for the bulk of its revenues, announced earlier this month it would offer 42 new deepwater and ultra-deepwater blocks for exploration on May 5.

Aubame said in addition to royalties and production costs, Gabon would seek a 50 percent share of production for resulting fields producing up to 75,000 bpd, 52 percent for fields of 75,001-150,000 bpd, 55.5 percent for fields of 150,001-250,000 bpd, and 62.5 percent for fields of 250,001-300,000 bpd.

He declined to say how the terms compared with those for existing blocks, but an industry source, who declined to be named, said the state had taken up to 80 percent in past deals.

In fellow African producer Libya, the government has taken in excess of 90 percent in some production sharing contracts.

Aumbe added that exploration rental costs for the 42 blocks would be offered at $6 per square metre, while production rental would be offered at $8 per hectare.

Gabon's oil sector is one of the continent's most mature and already home to several international companies including France's Total. Output has been in decline since the late 1990s when it peaked around 350,000 bpd. Gabon's oil minister, Julien Nkoghe Bekale, declined to comment on the terms for the new blocks, but said the country was seeking to attract investors with new incentives.

"Gabon is in the course of improving its investment climate to attract the maximum number of investors -- we need to have an attractive fiscal system," he said.

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