Oil Production Stages Unlikely Comeback in Congo Republic

 

Congo Republic, whose oil sector was ravaged by a dip in prices and production since 2014, has been rejuvenated by new projects scheduled to boost output by 25 percent to 350,000 barrels per day (bpd) next year and help an ailing economy hobbled by huge debt, civil unrest and deep-rooted corruption.

 

The former French colony, ruled by President Denis Sassou Nguesso for all but five years since 1979, is expected to be the third largest oil producer in sub-Saharan Africa by next year, according to analysts.

 

It is still a way off top African producers like Nigeria, where output is around 2 million bpd, and its new-found bounty will not affect oil prices.

 

But a sustained rebound could help relaunch hospitals and water and power lines in one of the world's poorest countries, shelved during the downturn.

 

"Congo is bucking the trend," said Jean-Baptiste Bouzard, a sub-Saharan oil analyst at Wood Mackenzie, comparing the Central African country with the fading fortunes of nearby producers like Gabon, where output is falling.

 

Oil production in Congo was dropping in 2012, squeezing an economy that relies on crude for most of its revenues. Then Italy's ENI found the Nene Marine oil field in shallow water 17 kms (10 miles) offshore.

 

The 2012 discovery became the first in a string of finds off the country's Atlantic Coast that are now beginning to produce.

 

"Five years ago, there were uncertainties over the country's remaining potential. ENI changed the game with the Nene Marine discovery," said Bouzard.

 

Nene Marine will by the end of this year produce 20,000 barrels of oil equivalent each day (boed) but has the potential to reach 150,000 boed in the coming years, an ENI spokeswoman said.

 

France's Total in March started the country's biggest oil venture yet, called Moho Nord, which will have the capacity to hit 100,000 bpd. The Banga Kayo field, run by China's Wing Wah Petrochemical, will add 50,000 bpd by the end of 2017 or early 2018, the government said last month.

 

Whether that will be enough to bring development to the country of around five million people, which adjoins the much larger Democratic Republic of Congo, is another question.

 

Government revenues fell by more than half between 2014 and 2016 because of tanking oil prices, the World Bank says, costing thousands of jobs. Public debt runs at near 80 percent of GDP, according to the IMF.

 

Meanwhile corruption continues to bleed the treasury. Thousands of "ghost workers" on the public payroll cost the state over $11 million a year, according to Maja Bovcon, senior Africa analyst at risk consultancy Verisk Maplecroft.

 

"Starting production at the Moho Nord will unquestionably provide a welcome source of income," Bovcon said. However, "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," she said.