Gabon’s amelioration of its upstream terms and conditions has necessitated the return of the East African country to the global map of E&P investments.
Gabon in 2019 amended its Petroleum Code with some striking changes – a move industry stakeholders and observers considered to be very timely as goes in the opposite direction of Nigeria’s recent drive to tax offshore projects more.
The country’s upstream code operational some five years ago was believed to have been responsible for the political tensions between the Gabonese authorities and Shell, Total, Tullow Oil and other European investors.
Wading into the issue, the then-Prime Minister David Cameron in a personal letter to President Ali Bongo, stated that the latter’s $100 million back-tax claims were unsubstantiated and that both sides would be better off if international operators would have full freedom to choose whom they employ for appraisal-related activities like seismic surveying.
According to reports, Gabon’s stance came at the back of a 2014 fiscal regime tightening by the Gabonese government, which chose to act in a predictably rigid way when confronted with the ramifications of a price freefall.
Presently, Gabon is witnessing a rather unexpected flurry of upstream activity, having awarded two offshore blocks to the Chinese CNOOC in November, bringing the total of E&P allocations in the past four months to seven.
The current figure is said to be more than double of the past four years’ aggregate, bright developments that have been attributed to the new amended 2019 Petroleum Code.
Some of the striking changes the new Petroleum Code brought include the elimination of the 35 per cent corporate tax, the capping of state participation at 10 per cent and decrease in royalty rates by 3-4 per cent, as well as the prolongation of offshore exploration periods and many others – escalate Gabon from one of the least active performers of the 2010s into one of the potentially most interesting upstream regions of Africa.
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