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Cameroon stages oil revival as new fields boost sector

Cameroon’s oil industry, often overlooked among its larger neighbors in West Africa, has been on something of a road to recovery in recent years, with the country seeing crude production rise to its highest level in more than a decade earlier this year.

Crude production rose above 100,000 b/d for the first time since 2002 at the end of April, the country’s national oil company, Societe Nationale des Hydrocarbures (SNH), said this month, with volumes to date in 2015 up more than 17% on the same period of last year. According to sources, the increase is largely due to a rise in production from the Dissoni field, as well as from the Padouk, Inter Inoua-Barombi and Barombi fields, which were only commissioned last year.

Cameroon, like other countries in the region, had been struggling to increase production mainly because of maturing fields and technical issues but some new fields have helped reverse that trend. “The trend is that we have had a lot of fields that are mature, and have been producing over 30 years. There are some potential new discoveries,” an oil marketing source at SNH told Platts. Production fell from a peak of about 185,000 b/d in the late 1980s and stabilized around 110,000-120,000 b/d at the end of 2000, before falling to around 70,000-80,000 b/d in the late 2000s.

But now, with production just over 100,000 b/d, things are beginning to improve again, the source said. “We have some new fields that we are using to blend in to the existing crudes,” he said.

Demand from India, Europe Cameroonian crude is of a similar quality to some light sweet crudes from Nigeria and Equatorial Guinea. Its main export grade is Kole, a light sweet grade with an API of 30-34 degrees, resembling the Zafiro grade from Equatorial Guinea. It sometimes gets sold at a slight premium to Dated Brent, though recently in the current oversupplied and weak market, Kole has been trading at a discount.

Another grade it exports is Lokele, a heavier slightly acidic crude. Europe and India are the two biggest customers of this grade and SNH has been particularly active in marketing these crudes recently. “We market our own crude though we do sell it to traders from time to time,” the SNH source said. “We felt we don’t always need someone between us and the refiners.” The Mediterranean is now a big buyer of Kole and Lokele, especially Spain and Portugal, while it also finds some appetite among Indian refiners. Cameroon’s other export crude is now Dissoni, which is heavier and gets blended into Kole, he said. For domestic consumption the country uses Ebome crude which is about 34-36 API. Despite its production renaissance, Cameroon has not been able to avoid the impact of the substantial decline in oil prices over the past year. Another marketing official at SNH said that it has become difficult for state oil companies to make investments during this time, to balance the budget, and to reduce expenditure.

Refining capacity It is not only in the upstream sector that the West African country is looking to focus its efforts. With rising gasoline and gasoil demand at home and across the region, Cameroon has had to increase its refining throughput capacity too. There is currently only one refinery in Cameroon — the 60,000 b/d Limbe refinery operated by Sonara. It recently increased capacity to 60,000 b/d from 46,000 b/d after completing phase 2 of its upgrade project in the first quarter of the year. There is also a plan to increase capacity to 100,000 b/d, sources close to the matter said, with the final upgrade expected to be completed in 2016-17. The refinery also plans to build a hydrocracker as the country consumes 10 ppm diesel, and gasoil is used only for power generation. The plant largely runs on light sweet crudes, particularly grades from Nigeria such as Erha, Escravos, EA Blend and Okwori. The good quality crude allows the refinery to produce low sulfur fuel oil, significant amounts of which are exported to the US. The refinery also exports refined products to countries in the region, particularly the Central African Republic, Gabon and the Republic of Congo.

There are also plans to build a second refinery, as Rusgazengineering, a Russian company involved in oil and gas engineering projects, has been selected by the Cameroon energy ministry to carry out a pre-feasibility study for the building of an oil refinery in Kribi, southern Cameroon. Gas projects Cameroon is also gradually hoping to shift some of its upstream focus from oil to gas. The biggest project currently is the Etinde field, which has estimated gas and condensate resources of 345 million barrels of oil equivalent, according to NewAge, one of the shareholders. The second SNH source reiterated this position. “We are focusing more on gas, and we see it at as the future in the hydrocarbon industry. We don’t have much offshore crude like Nigeria and Angola,” the source said.

“We have this project with the Etinde fertilizer plant and we are focusing on removing condensate for the gas right now,” he said. “People were looking for oil but they accidentally found gas and this could trigger the hydrocarbon industry for us and give us access to the gas industry. We need to build some liquefaction plants now [too].” Another reason that Cameron is focusing on gas it that it does not have much potential to find oil offshore. It is locked in an ongoing maritime dispute with Equatorial Guinea and most of the oil found offshore the country lies in the territorial waters of Bioko Island, which is part of Equatorial Guinea.

“We don’t have much oil offshore so no further exploration for now,” he said. “There is some oil north of the basin of Chad… but because of the insecurity caused by the spread of Boko Haram we have stopped exploration.”

Source : www.platts.com/
Posted On: 6/22/2015 12:00:00 AM

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