Congo-Brazzaville Waits on New Fields: Congo-Brazzaville's Fortunes Have Been in Decline over the Past Decade with Falling Oil Output and an Economy Still Limping from the Impact of a Series of Civil Wars. but Several New Oilfields Which Should Come on Stream Later This Year Are Expected to Halt the Decline

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The government of Congo-Brazzaville is banking on new production from Total's Haute Mer permit this year to reverse the slow decline in national oil output over the past few years. Production peaked at 280,000 barrels a day (b/d) in 2000 but has since fallen to 240,000 b/d as the result of delays in bringing new fields on stream. However, the Moho and Bilondo fields on Haute Mer are expected to be brought on stream this year, as the first in a new wave of field development.

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Congo-Brazzaville has been relatively stable over the past two years by the standards of the country's recent history. It is recovering from a series of armed conflicts between 1997 and 2003 and although the conflict rarely directly impacted on the oil sector, it did severely affect the rest of the economy, reinforcing the government's dependence on oil revenues and intensifying the desire for new discoveries. The civil war seems to have come to an end and higher oil revenues have improved the government's financial position. High global oil prices have ensured that the country benefits from record oil revenues but a slump in world demand would hit the economy hard.

The country is one of Africa's most mature oil producers but its decline has been exaggerated by the improving fortunes of many other African oil powers. As a result, Congo-Brazzaville is now only the sixth biggest oil producer in sub-Saharan Africa, behind Nigeria, Angola, Sudan, Equatorial Guinea and Gabon. However, unlike in neighbouring Gabon, where few finds have been made to replace exhausted fields, some major new discoveries have been made, so output is expected to increase over the next few years.

The new fields under development include the Libondo, Litanzi, Tchibeli and Yanga Sud fields, as well as the Bilondo and Moho fields on Total's Haute Mer C permit. Moho and Bilondo are being developed in a combined $1bn project that is employing a floating production storage and offloading (FPSO) vessel, which is linked to the fields by sub-sea lines. First oil is expected this year at around 75,000 b/d but is expected to rise given that Moho alone contains around 400m barrels. Apart from Bilondo and Moho, the government is hopeful that its deepwater acreage will yield other productive discoveries, while Total is even exploring some ultra deepwater areas.

The government has changed the oil investment regime to more closely mirror regulatory arrangements elsewhere in the region. The old joint ventures have been replaced by production sharing agreements, so that foreign oil companies provide all development costs and recoup their investment once production is brought on stream. In addition, the state now receives almost a third of all oil produced on each concession and there is now less variation in oil revenue from year to year. The government's share of production on each field is sold by the state oil company Societe Nationale des Petroles du Congo (SNPC).

As a result, an attractive investment regime is vital if the government is to make the most of its marginal fields by attracting investment from smaller independents. Most of the country's reserves in production lie on smaller fields, with only Nkossa and Kitina fields providing large concentrations at 500m and 145m barrels respectively. Total subsidiary Elf Congo is the most important operator in the country, accounting for almost two-thirds of national output.

Despite the new oil sector developments, Congo-Brazzaville has thus far failed to make the most of its 3.2 trillion cubic feet of natural gas reserves. Although Nigeria and now also Equatorial Guinea and Angola are developing sizeable gas industries, Brazzaville has failed to attract large scale investment into the sector. Its reserves are probably not enough to justify the development of a large liquefied natural gas (LNG) plant but the gas could be used in power generation or as feedstock for a more modest gas processing plant. …