The Republic of Congo’s energy industry was brought to the spotlight during last week’s historic OPEC state-visit. The small oil-producing nation used the opportunity to showcase improvements made in the oil & gas sector and its potential for investment and development. OPEC Secretary-General, H.E. Mohammed Barkindo, applauded the Congo’s renewed efforts to promote its energy industry and reaffirmed his endorsement of the country’s nomination to OPEC’s rotating presidency in 2022. This is a turning point for the Congo. Although it has sought to increase private sector participation and foreign direct investment for a number of years, the OPEC delegation helped solidify the country’s position among established and leading oil-producing partners. The Congo has ably capitalized on its recent admission to OPEC and now aims to take on a leading role as the seventh African nation to join the organization and as sub-Saharan Africa’s third largest oil producer.
Part of this success can be attributed to the Société Nationale des Pétroles du Congo (SNPC), the country’s national oil company established in 1998. Indeed, the SNPC has been at the forefront of bringing innovative solutions to Congo’s energy industry, outlining a comprehensive strategy to tackle performance issues in upstream and downstream activities. In this regard, the SNPC seeks to enhance its E&P capabilities, to improve the supply of refined petroleum products across the country, to enhance the overall performance of the company so as to increase its contribution to the state budget, to develop its human capital through continuous training, and to focus on Quality, Health, Safety and Environment as well as Corporate Social Responsibility.
To that effect, the SNPC employs three of its six subsidiaries to address upstream challenges including SONAREP, which conducts well testing and E&P activities, and SFP for drilling activities. SNPC and SONAREP currently operate either conjointly or separately the fields of Kundji and Tilapia close to Pointe-Noire. Their combined output has reached 3 million barrels since the start of operations. The SNPC has continues E&P activities and has of the last year drilled five appraisal wells, which are undergoing a testing phase. The company hopes with new oil field developments to increase production by around 30,000 barrels per day (bpd). What’s more, the SNPC is looking to form a joint venture to start operations on a third ‘dormant’ field and has stated that it is cooperating with the Ministry of Hydrocarbons in order to find a company for the project.
Moreover, aiming to diversify its energy mix and to monetize reserves, the SNPC recently finished preparing a Gas Master Plan (GMP), which was done in collaboration with the firm Wood Mackenzie. With proven gas reserves estimated at 284 billion cubic feet and with domestic and regional demand increasing, the GMP’s framework is set to greatly incentivize foreign direct investments in the country’s energy sector.
The SNPC’s downstream activities are geared toward commodity trading with its subsidiary SNPC Trading in Singapore, a refinery with the Congo Société de Raffinage (CORAF) and SNPC Distribution, which distributes refined petroleum products. The Congo is currently building the country’ second oil refinery, which will have a yearly production capacity of 2.5 million tons and improve its distribution of refined petroleum products with the construction of a new pipeline, which will connect Pointe-Noire to the south and north of the country. The pipeline will transport gasoline, jet fuel and diesel. Additionally, the SNPC has launched a butane gas cylinder filling project.
The 2016 revision to the Congo’s Hydrocarbons Code has allowed the SNPC to have at least 15% of the share of all permits issued in the energy sector, enabling the company to involve itself in major oil & gas operations with IOCs, including ENI and Perenco. This revision is also a bid to increase the nations’ human capital. Indeed, IOCs operating in the country are requested to hire in priority Congolese nationals and to promote them to senior level positions when possible. Moreover, they are to prioritize the use of local goods and services.
Challenges are bound to arise as the country is still in the process of recovering from the economic downturn due to the COVID-19 pandemic and lacks a reliable power grid and basic infrastructure, however, the SNPC has expertly addressed issues of contention. With the OPEC visit, its participation in international energy forums such as the AEW and viable oil & gas development plan and investment in energy infrastructure, the Congo is expected to attract high-level investors with lucrative investment opportunities and spur long-term socioeconomic growth.
Energy Capital & Power will launch Congo-Brazzaville’s first ever energy sector specific report, Africa Energy Series: Congo-Brazzaville 2022, in the second quarter of 2022, which will outline the country’s COVID-19 recovery strategy and unpack its ambitious plans for the development of its hydrocarbons industry including natural gas development; environmental and social governance; and the energy transition.