BMI View: With production in terminal decline and few new projects expected to come onstream over the next decade, the Republic of Congo (RoC)’s upstream oil outlook does not inspire much confidence.
However, Eni’s vast oil sands project in the country’s south could offer some long-term opportunities despite what is otherwise a rather bleak outlook. If it is realised, this would be the first such project on the continent.
Main trends and developments we highlight for the RoC’s Oil and Gas sector are as follows: • BMI expects oil production to be in continuous decline throughout the decade due to most of the production coming from mature fields and from the lack of new projects coming onstream. We see production falling from a peak of 303,000 barrels per day (b/d) in 2010 to 266,000b/d in 2016 before hitting 251,000b/d in 2021. This stable decline is explained by a stream of new project coming onstream, offset by a steady decline rate.
• Meanwhile, consumption of crude is likely to rise at an average of 5.4% rate from 2011 to 2021. We therefore anticipate that consumption will rise from an estimated 11,800b/d in 2011, to hit 19,400b/d by 2021.
• BMI forecasts that gas production will increase from 0.9bn cubic metres (bcm) in 2011 to 3.9bcm by 2021, thanks to a boom in domestic demand. This will increase the incentive for a better use of associated gas resources in order to avoid resorting to imports to satisfy local consumption.
• Gas demand is set to rise at an average growth rate of 21.0%. This high rate is explained by high macroeconomic growth, with nominal GDP expected to grow at an average of nearly 7.0% for the same period. Domestic gas consumption will also be boosted by the implementation of enhanced oil recovery techniques which are to include the reinjection of gas in mature fields to improve natural lift.
• Congolese crude reserves are likely to start declining from their 1.6bn barrels (bbl) peak of the 2007-2011 period. Unless substantial discoveries are made, new deepwater basins opened or oil sands resources proven to be commercially viable, current discovery rates would see reserves falling to 1.5bn bbl in 2016 and then to 1.3bn bbl by 2021. With regards to gas, given the lack of investment in the sector, reserves are likely to continue to remain stuck at their 1997 level of 90.61bcm.
• In the downstream sector, the authorities have struggled to modernise CORAF, the country’s sole refinery. Despite an US$868mn investment deal signed with Saudi Arabia’s Rawabi Holding Company in February 2008 to increase capacity at the plant to 100,000b/d, there has been no sign of upgrade at the plant. We have not factored any expansion in our forecasts and we see capacity stagnating at 21,000b/d with an average utilisation rate of 66.9% throughout the decade.
The republic of Congo’s dependence on oil prices leads to high volatility in the country’s export revenues. Our assumptions of a slower growth in China, a faltering recovery in the US and a worsening eurozone debt crisis, clearly pose a threat to global demand. As a result, we assume OPEC basket oil prices to fall from US$107.52/bbl in 2011 to US$99.38/bbl in 2012, thus creating a downside risk for the Congolese macroeconomic outlook.

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