Could you provide an overview of Yinson’s current activities in Gabon?

Yinson’s involvement in Gabon began in 2015 when they acquired the FPSO units previously owned by Fred Olsen Production Company. At that time, Yinson took over the Allan FPSO, which operates at CNR International’s Olowi field, while the Petróleo Nautipa FPSO became part of BW Offshore. Apart from the FPSOs, Yinson also operates two FSOs (Floating Storage and Offloading units) in Gabon in partnership with Perenco, which are used for storage and export purposes. The Olowi field, where the Allan FPSO operates, is currently producing around 1,500 barrels of oil per day.

How does the current level of production in Gabon impact Yinson’s business?

The current production level does reduce Yinson’s profits, but it does not significantly affect their overall business. As the operator of the FPSO, Yinson has certain obligations to maintain minimum personnel on board to retain international certifications for the FPSO. These obligations include a mix of expatriate ship crew contracted directly with Yinson and Gabonese personnel contracted through Knock Allan Gabon. Yinson employs around 90 people for offshore operations and an additional five in the office. Failing to maintain these personnel could result in penalties and potentially jeopardize the FPSO’s operations.

How long will the current contract with CNR International last, and is there a possibility of renewal?

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 whether CNR will be able to fulfill the contract until its expiration date. Even the government is facing challenges at the moment. The minister of hydrocarbons has contacted Yinson multiple times, requesting cost reductions because the government bears 50% of the costs when production falls below 1,500 barrels of oil per day. Due to the limited oil reserves and the insufficient gas for commercial development in the block, the contract will not be extended. Yinson is currently reinjecting gas to enhance oil production.

What needs to be done for Gabon to monetize its natural gas resources?

While there have been some offshore gas discoveries in Gabon, the country lacks the necessary infrastructure, technology, and logistics to produce and monetize the gas on a large scale. Significant investments would be required to develop the gas reserves, and currently, there are no favorable conditions for such investments. Gabon needs substantial funding and supportive economic conditions to attract investors and develop its gas resources. However, it’s important to note that the gas discoveries in Gabon are relatively small compared to other global gas reservoirs found in countries like Mozambique, Algeria, and Senegal.

Historically, FPSO operators in African markets have faced challenges with contractual terms and inflation. Is this still the case in Gabon?

Currently, there is no inflation in Gabon, as the currency is pegged to the euro. While salaries have seen slight increases, the requirements of the new hydrocarbons code and the stable economic conditions in Central Africa have not posed significant risks to investments in the medium and long term. However, economic factors can change rapidly, and the potential devaluation of the Central African Franc or other external factors could make investments in Gabon more challenging in the near future. Other African countries like Angola and Nigeria have experienced permanent devaluations, leading to difficulties in the oil industry and overall economies.

In terms of economic viability, is it better to work with FSOs or FPSOs in Gabon?

The choice between FSOs and FPSOs depends on the operator’s willingness to invest and the specific requirements of the project. Having a production unit on board an FPSO is necessary to separate water, sand, and other impurities from the oil. However, if an operator has invested in new-generation production platforms that have all the necessary facilities, including accommodations, social amenities, and separators, they may opt for an FSO instead. FSOs have lower mobilization costs and are more suitable when a dedicated production unit is already available.

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

Yinson is open to procuring new contracts in Gabon if the market conditions and opportunities align. The company is already established in Gabon and has trained a significant number of Gabonese personnel who possess the technical and security knowledge to operate FPSOs. Yinson’s plans for Gabon depend on market fluctuations and the timing of potential opportunities. The company remains prepared to continue its ventures in Gabon, although securing new contracts does not solely depend on their direct actions.

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

The main challenge faced by the Gabonese hydrocarbons market is the lack of financial resources. Banks and the government are facing financial constraints, and many entities are nearing bankruptcy. The government is seeking international credits for various projects, including infrastructure development related to the 2017 Africa Cup of Nations and major works like the construction of the Port-Gentil to Libreville road. The scarcity of funding and financial instability pose significant obstacles to the stability and growth of the hydrocarbons sector in Gabon.