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By 2018, oil projects in the Congo Republic will boost output by 25 percent to 350,000 barrels per day according to a new report by Reuters.
By next year, the former French colony will become the third-largest oil producer in sub-Saharan Africa, potentially offering the country a path out of debt and civil unrest.
New policies have made investment in nation more profitable. The Congo, which is the smaller neighbor of former Zaire, the Democratic Republic of the Congo, recently reduced royalties for oil and gas in a bid to stimulate further investment in the industry. From 15 percent, oil royalties were cut to 12 percent, while gas royalties were slashed from 15 to 5 percent.
“Congo is bucking the trend,” according to Wood Mackenzie analyst Jean-Baptiste Bouzard. "Five years ago, there were uncertainties over the country's remaining potential. ENI changed the game with the Nene Marine discovery.”
ENI’s discovery, now a viable oilfield, will pump out 20,000 barrels of oil equivalent a day by December. But the site has the capacity to reach a 150,000-boed rate in the near future, an Eni spokesperson said.
High production costs have forced big African producers like Angola to shutter rigs to avoid breaking the bank. But the Congo has managed to secure investments from French Total and China’s Wing Wah Petrochemical. Together, the two new facilities will add 150,000 bpd of output by the end of next year, according to government figures.
Corruption could still derail any hopes of infrastructural development using the new funds, analysts say.
"Starting production at the Moho Nord will unquestionably provide a welcome source of income," Maja Bovcon, an analyst at Verisk Maplecroft, said. "Rampant corruption and a dysfunctional bureaucracy help explain why Congo's goal of becoming an emerging economy remains a distant hope despite its vast oil wealth.”
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…