The Republic of Congo’s recently unveiled licensing round in its oil and gas sector has sent a clear signal to the international community the government remains focused on promoting new investment.
The fresh bidding round comes on the back of upheaval in recent years of the nation’s fiscal and regulatory framework and follows on from the passing of the new hydrocarbons code.
The Licensing Round Phase II 2018/2019 offers 18 blocks in the Cuvette and Coastal Basins. Additionally, the government is increasing its focus on gas development, following on from the incentives introduced under the code.
The Republic of Congo’s accession to The Organization of the Petroleum Exporting Countries (OPEC) might pose an additional risk to investors as a result of OPEC’s quota restrictions. The primary motivations for joining OPEC were to receive aid from OPEC’s development and aid programs established for minor member countries, maximizing profits from exporting oil and participating in the negotiations influencing the price of oil.
However, for investors, there might be an additional risk. Joining OPEC will boost the country’s policy alignment with the other members reinforcing its investment appeal, but it will also require the Republic of Congo’s oil production to comply with OPEC’s imposed production quotas.
The Republic of Congo has announced it is drafting a gas code. The aim of the code will be to provide a clearer regulatory framework to support the development of the sector through four avenues: gas to power, gas to industry, petrochemicals projects, and gas export.
The country has been committed to reducing gas flaring since 2007 when Presidential Decree No. 294-2007 outlawed gas flaring from all oil and gas facilities and established that all new field developments had to be systematically designed for zero-routine flaring.
The Ministry of Hydrocarbons is looking to promote significant new gas utility projects, that will target over 6 trillion cubic feet of gas resources. In addition to the specific utility projects, midstream infrastructure will likely require expansion and this may depend on government policy and the regulatory environment. Overall, the speed of development of the gas sector will likely depend on the progress that the government makes in developing a conducive investment climate, of which the gas code will likely be a major part.
Regime flow chart: production sharing agreement, Republic of Congo