IN A world where more and more the only constant is change, forecasts and outlooks are increasingly more difficult to make, despite the abundance of data, the improvement of the technological tools available and the experience earned through the lessons of the past.
There is however some consistency between the views on what the next years will have in store for the African oil and gas upstream industry, in particular in the sub-Saharan portion of the continent.
Even with reasonable prospects of slightly higher oil prices on the horizon, capital investment is expected to be cut by some $100billion over the next five years, with the current daily production of more than 4.75million barrels being nearly halved in a matter of 15 years (with top producers Angola and Nigeria being hit the hardest).
Merger and acquisition operations are also not expected to pick up dramatically, unless in a continued low oil prices scenario.
Governments are called upon to strike a demanding balance between dealing with plunging oil-related state revenues and evermore stringent local content requirements, and creating favorable (in particular, legal and tax) conditions to attract investors and reviving the local industry.
Will Congo-Brazzaville succeed in doing so?
A new hydrocarbons code has just recently been approved by the Parliament and is pending promulgation by the president.
The statute is expected to be enacted in the coming days, and is the result of the realization that its 1994 predecessor was no longer aligned with the current requirements of the industry and the market, either from a technical or operational standpoint, or in legal, economic, environmental and social terms.
The new code, whose preparation included consultation with industry players, will govern legal, fiscal, customs and foreign exchange matters, and will apply to all (oil companies and service providers alike) engaged in the local oil and gas industry.
It was declaredly aimed at rendering the Congolese legal scenario more consistent with best industry practices, the regional context, and the current environmental and technological standards, whilst simultaneously trying to address the economic and social challenges faced by the country.
Will the above-mentioned balance be struck?
To a great extent, the answer to the above questions will be given by the outcome of the licensing round launched back in 2015 and which will now enter into its decisive stages, with the tender documents (including the promulgated code) becoming available in mid-October, the offers having to be submitted by the end of January 2017, and the results being announced two months after.
Eight offshore blocks in the deepwater and ultra-deepwater, and five onshore blocks were put on offer, and some 30 companies – including international majors contemplating investing in Congo-B for the first time – have formally expressed their interest.
To a lesser extent, another critical factor will be the manner in which the Congolese authorities will apply the new code to existing projects (a grace period of two years is afforded for compliance), but there are reasons to believe that the flexible and out-of-the-box approach we have witnessed in recent years will be maintained.
It is a change for the better. Let it be a constant.