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BMI View: Gabon's oil sector remains vulnerable to the decline in global oil prices, with reports of delays
to a key upstream project on the back of uncertain economic conditions. Continued upstream investment is
indicative of the market's untapped potential, but above-ground worries ranging from industrial action to
unattractive fiscal terms will remain obstacles to the sustained investment necessary to reverse declining
reserves and output.
The main trends and developments we highlight for Gabon's oil and gas sector are as follows:
? Our Country Risk team believes that outbreaks of violence across the Gabonese capital, Libreville, will
not be enough to unseat re-elected President Ali Bongo. Bongo's victory in the August 27 presidential
election is unlikely to be overturned, and they expect the unrest following the official results
announcement, that has seen the burning of the parliament building and a raid on opposition
headquarters, to calm in the coming days and weeks. Oil production should therefore not be impacted by
the events, unless massive strike actions take place, something that has already taken place in the past
within the industry.
? Gabon rejoined OPEC in June 2016, becoming the 14th and smallest member of the group in terms of
? In October 2015, Gabon launched its 11th licensing round. The round offers five deepwater blocks in the
Gabon South basin: E12, E14, F12, F13 and G14. In March 2016, the licensing round was extended to
allow for changes in the fiscal terms on offer. In our view, Gabon will need to show substantial flexibility
in its licensing in order to draw investment into its frontier deepwater and ultra-deepwater acreage.
? Shell reported in April 2016 that it is looking to divest its onshore assets in Gabon, worth about
USD700mn. Should a sale occur, this yields downside risk to our Gabon oil production forecast: Shell's
assets notably include the Rabi Kounga and Gamba fields. We will wait to see whether the fields are sold
and to whom before updating our forecast.