In the face of low oil prices, what changes has Total made to maintain its presence in Gabon?

Total Gabon faced the challenge of the sudden drop in oil prices in 2014, with a decline from nearly USD 110 per barrel to less than USD 50. To adapt to this new environment, the company implemented a reorganization strategy focused on two main areas. Firstly, Total Gabon reevaluated its asset portfolio and decided to divest its mature onshore fields to actors who could continue their economic life in a profitable manner, benefiting both local communities and the Gabonese authorities. The company concentrated on offshore assets, where they saw real opportunities for development. They have recently been finalizing a drilling campaign in the sea, demonstrating the coherence of their strategic approach. Secondly, Total Gabon aimed to streamline its organization, implementing plans for voluntary departures and creating two distinct entities. One entity, the Division of Production Performance, focuses on maximizing production in the short term, while the other entity, the Division of Business and Development Management, takes a long-term approach to ensure the sustainability of operations in Gabon. Additionally, the company underwent a major cultural change, adopting a cost-conscious approach and challenging contractors to optimize expenses.

What are the objectives of Total Gabon for 2019/2020 in terms of oil production?

Total Gabon’s strategy for 2019/2020 revolves around three key objectives. The first objective is ensuring the safety of its employees, making it a core value for the company. The second objective is to support production by focusing on efficient and cost-effective operations. Total Gabon worked closely with its suppliers of goods and services to ensure that every dollar spent is utilized effectively. They also improved the availability of their facilities, increasing the utilization rate from 80-83% in 2013 to 90% in the present, resulting in a significant boost in production. The third objective involves launching productive investments, such as the drilling campaign in the Torpille field. In exploration, Total Gabon has been at the forefront, being the first to drill deep offshore at a depth of more than 1,700 meters with the exploration well in Diaba. Although natural gas condensate was discovered, the quantities found were not sufficient at this stage to justify further development.

Could you provide more details about the Torpille drilling program?

The Torpille drilling campaign consists of two infill wells aimed at supporting production and improving the recovery rate from the deposit. Additionally, a water injection well will be drilled to maintain pressure in the reservoir. The campaign also required adjustments to the surface installations to accommodate the new wells being drilled. The well depth is expected to reach 2,500 meters, and the platform is situated at a water depth of approximately 40-50 meters.

What is the potential of Gabon’s gas resources?

Gabon’s gas potential is currently primarily associated with oil production. The gas is mainly utilized for electricity generation within the company’s operations or for enhanced oil recovery purposes. While some actors are producing gas from non-associated gas fields for power generation in Libreville or Port-Gentil, the overall gas resources in Gabon are considered modest. At present, there are no significant gas resources that would justify the construction of a pipeline network to transport the gas or its liquefaction. However, deep offshore exploration holds potential for the discovery of new gas resources that could be used for the production of liquefied natural gas (LNG) or to meet domestic market demand.

What kind of service providers does Total Gabon work with?

Total Gabon collaborates with two types of service providers. The first group comprises well-known international companies that have a presence in Gabon. The second group consists of local companies that have emerged through Total Gabon’s local content policy. The company gives priority to local companies when their health, safety, and environmental standards are satisfactory and their service quality is comparable. Total Gabon actively supports the development of local actors by presenting them with business opportunities and providing training programs, particularly in health, safety, and environmental practices. They have also encouraged international companies to establish Gabonisation programs or participate in the training of young Gabonese individuals. For instance, Total Gabon partnered with Ponticelli to establish a welding department at the professional training center of Port-Gentil, resulting in a high employment rate for its graduates.

How does Total Gabon support the development of local content?

Total Gabon has implemented several initiatives to support and stimulate the development of local companies. They prioritize local companies when evaluating offers, considering factors such as health, safety, and environmental standards, as well as service quality. The company regularly presents its activity program to local companies to help them identify business opportunities. Additionally, Total Gabon provides training programs, particularly in health, safety, and environmental practices, to enable local companies to meet the required standards. In some cases, Total Gabon even offers pre-financing to support the operations and investments of selected companies. Furthermore, the company encourages international companies participating in tenders to implement Gabonisation programs for their teams or engage in training programs for young Gabonese individuals. An example of this is the welding department established in collaboration with Ponticelli at the professional training center in Port-Gentil, which has resulted in a high employment rate for its graduates.

How crucial is the 12th bidding round to supporting Gabon’s oil production?

The 12th bidding round is considered crucial for revitalizing the oil industry in Gabon and finding production relays for the country. The previous bidding round in 2014 did not meet expectations due to the global oil price crisis and the perceived lack of attractiveness of the new hydrocarbons code for oil companies. The current bidding round is essential for driving exploration activities and addressing the challenges faced in Gabon’s sedimentary basin, where no new developments with reserves exceeding 50 million barrels have occurred in the past decade.

What measures are being taken by the government to attract foreign interest in the bidding round?

The government is taking measures to make the new hydrocarbons code more attractive and flexible, allowing for increased competition and negotiation opportunities for less attractive blocks. The removal of taxes on the contractor’s profit share is a significant step taken by the government to encourage foreign interest. However, concerns regarding certain provisions in the code related to operations management have been raised, and Total Gabon has conveyed these concerns to the relevant authorities. The government is expected to consider these observations in the field. In addition to the hydrocarbons code, resolving the issue of repatriating export earnings is crucial to attract bidders. Companies operating in the industry require the freedom to manage their revenues to repay loans obtained from shareholders and banks, as the industry operates primarily in US dollars.

What are Total Gabon’s objectives through 2020?

In the near term, Total Gabon aims to finalize the drilling campaign at the Torpille field. Looking ahead to 2020, the company’s objectives revolve around consolidating operations. This includes ongoing maintenance work on facilities and improving the reliability of the compression network to enhance production potential. These priorities will be key focus areas for Total Gabon in the coming years.

You may also be interested in...