Can you provide an overview of UPEGA and its role within the sector?

UPEGA, or Union Pétrolière Gabonaise, is a union that brings together various actors in the hydrocarbons sector, including both exploration and production companies, as well as service providers. Currently, UPEGA has 69 members, including nine production companies, 11 exploration companies, and a range of service providers and subcontractors. The main role of UPEGA is to promote the oil sector and advocate for the interests of its members, particularly in relation to administrative burdens. The union engages with the government on various issues, such as economic regulation and permitting, and serves as a forum for industry coordination. In recent years, UPEGA has closely followed the development of new exploration projects.

What is the main challenge facing the oil industry in Gabon?

The most pressing challenge for the oil industry in Gabon is currently the issue of currency exchange controls. The new oil code does not provide clear guidance on this matter. UPEGA is actively collaborating with the Ministry of Economy and Finance, as well as the Ministry of Oil, to seek clarity and address this issue. The union’s ambition for 2020 is to work with the legislature and reach an agreement to remove currency controls, which would greatly enhance Gabon’s attractiveness to investors. It is crucial for the oil sector to ensure a return on local investment while complying with global petroleum standards. The new oil code should not only specify the applicable laws and regulations in Gabon but also provide recommendations on negotiating with the BEAC (Bank of Central African States).

How has the industry received the new oil code of 2019, which aims to attract further investment?

The new oil code is generally seen as attractive, although there are still certain areas where it falls short of industry expectations. As mentioned earlier, the lack of provisions for BEAC regulations and uncertainty regarding repatriation of earnings discourage investment. However, the updates to the fiscal framework are viewed positively and will encourage exploration activities. The offshore basin of Gabon remains largely unexplored, presenting significant potential for discoveries, both in terms of gas and oil. Conventional onshore fields also offer promising opportunities. Gabon possesses extensive untapped resources. What the industry needs most is a stable and predictable fiscal environment, where both parties can have confidence in their contractual commitments. While the oil code no longer acts as a deterrent to the extent it did in the past, there is still room for improvement.

What are the industry’s most important needs in relation to the government?

Stability and predictability are two crucial needs of the industry when it comes to the government. It is essential to establish a stable business framework that ensures contracts are honored and facilitates adherence to legislation. Taxation is a key aspect for the oil business since it contributes significantly to government revenue. However, it is equally important that the rules remain consistent to avoid disrupting deals that may be jeopardized by changes in fiscal policy.

How does the under-developed infrastructure in Gabon impact the industry?

The inadequate road infrastructure poses a significant challenge for the industry. The existing infrastructure projects in Gabon have not adequately considered the region’s heavy rainfall, which hinders construction and increases operational costs for production and exploration projects. UPEGA is actively collaborating with the government to encourage better infrastructure development. Gabon has emerged from the crisis of 2015 and is now looking towards the future. The development of robust road and port infrastructure will play a central role in the country’s path towards economic growth and development.

What are your expectations for 2020?

In 2020, our main objective is to reach an agreement with the BEAC to resolve the existing exchange regulation issues. We are determined to attract more oil companies to Gabon, and we are taking steps to increase the country’s visibility. Recent months have witnessed a resurgence in oil activities, which is crucial for job creation and reducing unemployment. Between 2015 and 2019, Gabon experienced a significant loss of jobs, and the revitalization of the oil sector will help mitigate this impact and contribute to the overall economy of the country.