"The crisis affects also governmental efforts to promote the Gabonese sedimentary basin. The closure of the 12th bidding round for the allocation of 35 oil blocks, launched in November 2018, has once again been postponed due to the serious obstacles players are facing in relation to the COVID-19 pandemic and the containment measures locally introduced."

Nicolas Balesme

MANAGING PARTNER AND O&G LEADER, DELOITTE GABON & CENTRAL AFRICA

October 05, 2020

Could you give us a brief overview of Deloitte’s operations in Gabon?

Deloitte Gabon is part of the Deloitte Francophone Africa cluster and it relies on over 100 professionals across its two offices in Libreville and Port Gentil. We offer our clients tailored support via a thorough understanding of the immediate challenges in terms of audit, consulting, financial, risk advisory, accounting, business process services, tax and legal services. Deloitte Gabon is the hub for our Central African regional platform. Deloitte has invested directly creating offices in Equatorial Guinea (Malabo-2005), Congo-Brazzaville (Pointe-Noire – 2007), and finally to Chad (N’Djamena – 2014).

How has the oil price crisis affected competition among E&P players in Gabon?

The steep drop in oil prices hit the industry worldwide, and Gabon E&P was no exception. After 50 years of operating in the country, Shell production sold its onshore assets to Assala Energy. CNOOC International has executed agreements to become the 100% working interest owner and operator of the BC9 and BCD10 licences.

Together with Shell, Total and Perenco used to be the three biggest producers, together accounting for more than 75% of total output. This ranking has changed drastically: Total sold some of its mature assets to Perenco in 2017. Perenco has become the largest producer, followed by Assala and Total. For the past three to four years, drilling offshore and deep offshore has been at a stand- still.

The crisis affects also governmental efforts to promote the Gabonese sedimentary basin. The closure of the 12th bidding round for the allocation of 35 oil blocks, launched in November 2018, has once again been postponed due to the serious obstacles players are facing in relation to the COVID-19 pandemic and the containment measures locally introduced. The lack of visibility in this health crisis prevented the government from engaging on a new deadline .

What are the prospects for the Gabonese oil industry in the future?

Since the onset of the COVID-19 crisis, lower oil prices have reduced the attractiveness of E&P operations, especially for deep-water drilling, which is much more expensive. The new oil code becomes incredibly strategic in this context. We are waiting on the results of the 12th bidding round which will be seen as a signal of Gabon’s attractiveness compared to competing countries in the region also calling for O&G tenders. Although the government’s priority has been to diversify the economy into mining, forestry, and agriculture, the oil industry remains the main economic contributor for the years to come. Prospects for the oil industry are positive, but these are contingent on three factors: the attractiveness of the regulatory framework, which was realized through the new hydrocarbons code; exploitation of deep-water and pre-salt offshore deposits; and the promotion of local content to create value for the population.

What benefits does the new oil code bring to potential investors?

Compared to the previous legislation, the new hydrocarbons code is a clear positive evolution, improving the licensing and fiscal terms for O&G companies. The government ownership threshold was reduced from 20% to 15% carried interest in discoveries. Royalty rates were set between 7% to 15% for oil, and between 5% to 10% for gas in conventional offshore areas, with even lower rates in ultra-deep offshore. Profit from oil is to be set at 45% in conventional zones (40% in deep-water offshore and ultra- deep-water zones) and it now includes the corporate income tax due by the contractor (meaning the transfer to the State of its share in profit from oil is in full discharge of corporate income tax).

How is Deloitte assisting its private and institutional clients to navigate regulatory challenges in the country?

Our understanding of the O&G industry enables us to deliver solutions that suit our clients’ needs across the value chain, supporting them to capitalize on the opportunities and manage the challenges. Through our consultancy and risk advisory wing, Deloitte Consulting helps companies build value by taking a risk-intelligent approach. Within the legal and tax services, Deloitte offers clients specialized tax advisory tailored to local regulation. We also help clients address fraud, forensic investigations, litigations, and re-organizations through our financial advisory arm. We provide support for strategic investments, M&As, divestments, capital planning, due diligence, and vendor assistance. Finally, our BPS arm (Business Process Services) is an outsourcing service for accounting, financial reporting, payroll, and tax compliance. The whole scope of these professional services is supported by our Deloitte global network.

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