Foreign
A long-standing oil giant of sub-Saharan Africa, Gabon is embracing its potential as a natural gas producer and emerging with revitalized plans for sustainable, energy-led growth. To date, reliance on large, easily accessible, low-sulfur oil reserves has dampened enthusiasm for the development of other sources of energy in the country.
But with oil production and government revenues on the wane, attention is turning to the untapped potential of natural gas – of which Gabon is thought to hold anywhere from three to five trillion cubic feet – and its ability to advance regional cooperation, relieve energy insecurity and lower carbon emissions.
The road to diversifying Gabon’s economy has spanned more than a decade. Supported by the United Nations, UN, Development Program and the UN Economic Commission for Africa, the Emerging Gabon Strategic Plan (Plan Strategique Gabon Emergent) was launched in 2009.
It aimed to bolster sustainable economic growth while preserving the environment, in part through the adoption of clean fuels such as natural gas. Notably, the World Bank has praised Gabon as one of the few countries in the region to have demonstrably committed to preserving biodiversity and taking action on climate change.
The Plan identified natural gas and its associated value-added industries as strategic sectors for sustainable economic growth and stated the aim to raise production to 220,000 cubic feet per day by 2020. Although this initial target was missed, the breadth of its ambition signifies the country’s drive to transform its energy industry, with implications extending far beyond its borders.
Gabon currently holds 1.2 trillion cubic feet of proven natural gas reserves, the majority of which is situated off the country’s Atlantic coast. Domestic gas output stalled at around 70 billion cubic feet in 2021, largely due to wastage, insufficient infrastructure and a lack of technical expertise in working in Gabon’s challenging deep-water environment, where the majority of the country’s oil and associated gas fields lie. The country’s Gas Master Plan has aimed to address these deficiencies by reducing gas flaring, attracting new investment and improving the reliability and reach of domestic gas infrastructure.
Accordingly, a new legal framework for the sector was adopted in 2019 in a bid to attract gas-focused investments, and a regulatory authority for the hydrocarbon sector was established to provide single-window operations to investors.
The resulting liberalization of sectoral regulations was complemented by licensing rounds to grant offshore exploration rights for the first time since 2014. Concurrently, investments are being channeled towards the development of liquefied natural gas (LNG) infrastructure and improved distribution through the construction of new pipelines and processing facilities. Increasing domestic liquefaction capacity remains a top priority for Gabon, as well as increasing the use of liquefied petroleum gas locally. A Presidential Gas Task Force was set up in 2021 to supervise the sector’s development and conduct investor outreach.
While placing an emphasis on the utilization of natural gas for domestic consumption, the Gas Master Plan also aims to leverage gas monetization as a means of regional energy trade. To this end, Gabonese authorities are liaising with their counterparts in Equatorial Guinea in the development of the regional Gas Mega Hub.
However, such aspirations are not without their challenges. Developing natural gas infrastructure requires considerable international support, in the form of both investment and technical execution. Sustainable development plans must consider domestic capacity, with the policy framework striking a delicate balance between ambition and practical limitations. If it flourishes, the natural gas industry could deliver bountiful economic prospects for Gabon, as well as represent a significant milestone towards achieving international climate goals.
Distributed by APO Group on behalf of Energy Capital & Power.
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