Crude oil from a few large but maturing fields has traditionally accounted for the majority of Gabon’s government revenues, little of which has been reinvested in refining and downstream infrastructure. Despite its hydrocarbon wealth, Gabon imports roughly 45% of its refined petroleum products (primarily from Europe), driving up state expenditures and the cost of living for its citizens. After a failed attempt to merge upstream and downstream capabilities within national oil company Gabon Oil Company (GOC) in 2019, several state-run downstream companies were left to operate independently from 2020. These include the Gabonese Company for the Storage of Petroleum Products (SGEPP) and Gabon Oil Downstream, which is responsible for retail. But the cornerstone of Gabon’s downstream ecosystem is the Gabonese Refining Company (SOGARA), which was taken over by the government in 1973, having previously served as a refining hub for the entire West African region.

SOGARA runs the country’s only refinery located in the oil and gas hub of Port Gentil. This is connected via an 18-km pipeline to the Cap Lopez Oil Terminal, which accumulates production from nearby producing fields run by Perenco, BW Offshore, VAALCO Energy, TotalEnergies and Assala Energy. Current refining capacity stands at 1.2 million tons of crude oil per year, which produces around 55% of the country’s refined petroleum products consumption in the form of diesel, kerosene, butane and unleaded gasoline. Yet output remains limited relative to the size of Gabon’s oil industry, with the refinery operating at a loss and subsidized by the government.

As a result, SOGARA plans to expand its processing capacity to 1.5 million tons per year with the addition of a hydrocracking unit, which is expected to increase domestic production of diesel and butane, eliminate the need for subsidies and allow the company to turn a profit for the first time. This expansion coincides with projected increases in output of Gabon’s famously light, sweet Rabi crude variety for which the refinery is designed, while heavier varieties, like Mandji, will be exported as crude.

Bolstering Gabon’s downstream future is the newfound potential for gas production and associated industries. Anglo-Swiss company Perenco has been leading the country’s major gas infrastructure projects to date, reaching a final investment decision last February on its one-billion-dollar Cap de Lopez LNG facility, which will produce up to 700,000 tons of LNG and 20,000 tons of butane when it comes online in 2026. This will complement the 15,000 tons of butane set to be produced from the company’s LPG plant in Batanga, which is currently under construction and expected to achieve first gas later this year. Last April, Perenco also signed an MOU with Gabon Power Company for the construction of a gas-fired power plant in Mayumba, which will recover associated gas from offshore fields through a 35-km gas line. The plant will initially provide 21 MW (to be increased to 50 MW in its second phase) to electrify several of Gabon’s remote southern provinces. Harnessing the power of Gabon’s natural gas reserves will have wide-ranging economic implications, as energy-intensive industries like mining, manufacturing, steel and petrochemicals become feasible even in underdeveloped parts of the country. An increase in ammonia and urea fertilizer production – manufactured directly from natural gas – would also be a boon to local farming and help offset Gabon’s costly food imports.

Finally, Gabon’s mid- and downstream ambitions are extending beyond its borders with the development of the Central African Pipeline System (CAPS), for which a coalition of Central African nations signed an MOU last September. Connecting Gabon, Equatorial Guinea, Cameroon, Chad, the Republic of Congo and the Democratic Republic of Congo (DRC), CAPS represents a 6,500-km oil and gas pipeline network with connections to LNG terminals, storage depots, power plants, and refineries to meet regional demand for electricity and refined petroleum products. If current feasibility studies are favorable, the project could connect up to 125 billion barrels of crude oil and 1.6 trillion cubic feet of natural gas reserves with the global economy by 2030, positioning Gabon at the center of a major regional downstream hub.

All this and more will be further unpacked in Energy Capital & Power’s (www.EnergyCapitalPower.com) upcoming market report, Energy Invest Gabon. Keep following for more information about this exciting report!