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Oil & Gas – Production recovery for Cameroon

Oil & Gas – Production recovery for Cameroon

Despite falling oil prices, Cameroon is scaling up production and expanding its refinery capacity.

Production recovery for Cameroon

After years of decline, the Cameroon oil industry now has a more positive story to tell. It was never an oil producer of the same order as neighbouring Ga-bon, Congo-Brazzaville or more latterly Equatorial Guinea, with production peaking at 180,000 b/d in 1988. Moreover, it lacks deepwater acreage on the scale of Equatorial Guinea, Nigeria and Angola that has yielded so many discover-ies in recent years. Yet from a low point of 75,000 b/d in 2008, oil production has rebounded to 100,000 b/d for the first time in 13 years, as government reforms have enabled the country to make the most of the natural resources that it does possess.

In addition, the World Bank predicts a big rise in production to more than 150,000 b/d next year. This is an odd time to secure such a significant increase. Cameroon has tiny proven reserves of just 200m bar-rels, while the government and oil companies will earn less from tapping them now than they might expect at almost any other time. Yet the investment decisions surrounding these projects were made about five years ago, when oil prices were much higher. Although they would like higher prices, investors are now eager to recoup their initial outlays.

Cameroon should also benefit from expanding its existing oil refinery. The Sonara plant is in the middle of an expansion programme, with production capacity increasing from 45,000 b/d last year to 60,000 b/d now and 100,000 b/d due by 2017. A second refinery is also planned at Kribi, the Cameroon port at the end of the Chad-Cameroon Oil Pipeline, by Russian firm Rusgaz, oil companies operating in the country and the govern-ment of Cameroon. This would be on the same scale as the expanded Sonara scheme and the two facilities would give Cameroon the biggest oil refining capacity in West and Central Africa. Nigeria’s four refineries have greater nameplate capacity but have operated at a much lower level for many years. The government of Cameroon hopes that its two refineries will be able to source feedstock from neighbouring oil producing states, including Angola and Nigeria.

Its plans to do the same thing in the gas sector have thus far come to nothing. Yaoundé had hoped to source natural gas from Nigeria and Equatorial Guinea in or-der to supply an LNG plant but initial agreements have not been followed up. However, Cameroon’s own gas reserves have been tapped by British firm Victoria Oil & Gas to supply industrial projects onshore Cameroon, including the Bassa and Logbaba power plants. A total of 28 firms have already signed supply agreements and talks over further contracts are being held, while more gas is needed by the Kribi power plant, which came on stream in 2013 with generating capacity of 216 MW but which needs more feedstock to reach 330 MW. French firm Perenco is to provide the additional gas.

Perenco also hopes to install a floating liquefied natural gas (FLNG) plant at Kribi, in conjunction with GDF-Suez and Cameroon’s state-owned Société Nationale des Hydrocarbures (SNH). The director general of the SNH, Adolphe Moudiki, said: “The re-sources are higher than the needs identified for all of the ongoing gas projects. In fact, the envisaged floating unit can be put in place without any influence on the supply of gas to the Kribi thermal power station and the Douala-based industries, or on the production of chemical fertilisers in Limbe and liquefied natural gas at Mboro.” The FLNG scheme is scheduled to be in place by 2017 with production capacity of 1.2m tonnes a year.

Neil Ford

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Written by African Business Magazine

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