What are the current activities of Yinson in Gabon?

Yinson’s current activities in Gabon involve operating the FPSO units in the country. In 2015, Yinson acquired the Allan FPSO from Fred Olsen Production Company, while the Petróleo Nautipa FPSO became part of BW Offshore. The Petróleo Nautipa FPSO is operating at the Etame Marin field for Vaalco Energy, and the Allan FPSO is operating at CNR International’s Olowi field. Additionally, there are two FSOs (Floating Storage and Offloading) in Gabon, which serve as storage facilities in partnership with Perenco.

How does the current level of production affect Yinson’s business?

The current level of production has an impact on Yinson’s profits but does not significantly affect the overall business. Yinson operates the FPSOs, and there are minimum personnel requirements necessary to maintain the FPSOs’ international certifications. While the production level may reduce profits, Yinson is obligated to retain the necessary personnel, which includes expatriate ship crew and Gabonese personnel employed by Knock Allan Gabon branch. Failure to maintain these personnel could result in penalties and the risk of losing international certifications, which would impact field operations.

How long will the current contract with CNR International last, and is it renewable?

The current contract with CNR International is set to last until 2019. Originally, it was a 10-year fixed contract, but there are concerns about CNR International’s ability to fulfill the contract until 2019, considering the current challenges faced by the company and the government. The government has expressed concerns about costs and has approached Yinson about reducing expenses. If the production falls below 1,500 bopd (barrels of oil per day), the company is not obligated to share the production with the state but is required to cover half of the costs. The contract will not be extended because the block has limited oil reserves and insufficient gas for commercial development, especially given the current barrel prices. Currently, gas is being reinjected to maximize oil production.

What measures should be taken for Gabon to monetize its natural gas resources?

Despite recent offshore discoveries, Gabon’s natural gas resources are not significant enough to support a gas economy without substantial investments. Monetizing these resources would require significant investments in technology, infrastructure, and logistics. Currently, the conditions in Gabon do not favor such investments. The absence of ongoing projects and drilling campaigns by oil companies suggests a lack of room for investment or access to financing, especially for medium-sized gas reservoirs. Therefore, to monetize Gabon’s natural gas resources, significant investments and favorable conditions are needed.

Has the historically unfavorable contractual terms for FPSO operators in African markets, in terms of inflation adjustments, improved in Gabon?

Currently, there is no inflation in Gabon. The local currency is pegged to the euro, providing stability. While salaries have slightly increased and the new hydrocarbons code has introduced changes, the overall landscape remains favorable for investments in the medium and long term. However, economic factors can change rapidly, and there is a possibility of significant devaluation of the Central African Franc in the future, which could impact investments and payment of salaries. For now, the inflation rate is under control, and the stability of the currency is beneficial for investments. However, if the situation extends beyond 2017, it could pose challenges for oil-dependent countries like Gabon, as well as countries like Brazil.

Is it more economically viable for Yinson to work with FSOs or FPSOs?

The choice between FSOs and FPSOs depends on the operator’s willingness to invest and the market conditions. If there is a demand for tankers, Yinson would focus on producing FSOs. However, if the market favors FPSOs, it is preferable as the mobilization costs are lower, and FPSOs offer additional capabilities, such as accommodations, social facilities, and separators.

What is Yinson’s strategy for Gabon in both the short and long term?

Yinson is prepared to procure new contracts in Gabon if the market conditions are favorable. The company has already established its presence and has trained Gabonese staff to operate FPSOs efficiently. The decision to pursue new contracts depends on market fluctuations and timing, as opportunities can arise or decline unexpectedly. Yinson Production remains ready to continue its ventures in Gabon, although contract procurement is not solely within their control.

What is the main factor currently affecting the Gabonese hydrocarbons market?

The Gabonese hydrocarbons market is facing multiple pressures, primarily due to the lack of financial resources. Banks and the government are facing financial constraints, leading to difficulties in funding projects and investments. The government is seeking international credits for crucial projects, including those related to the 2017 Africa Cup of Nations and major infrastructure developments like the road from Port-Gentil to Libreville. The overall economic situation, with depleted reserves and low oil prices, poses significant challenges to the hydrocarbons market in Gabon.