FeaturedNews

Hydrocarbon: Côte d’Ivoire confirms its surge in sector

The major offshore oil and natural gas discovery made by the Italian company ENI in Côte d’Ivoire announced in early September is a reward for the active policy to develop the sector by the Ivorian authorities. The challenge now is to capitalize on this.

By Issiaka Nguessan, in Abidjan

Côte d’Ivoire starts dreaming of black gold!  After the announcement on September 1 of the discovery by the Italian group ENI of a promising offshore oil reservoir (reserves estimated between 1.5 and 2 billion barrels of crude) near the Ghanaian border, it is the Ivorian Minister of Mines, Oil and Energy, Thomas Camara, who rushed to the public television RTI 1 to affirm that this new discovery will “greatly increase the proven reserves of Côte d’Ivoire as well as its oil and gas production in the years to come”. Alassane Ouattara, the President of Côte d’Ivoire, was also delighted with “this important discovery […]”, a guarantee of “good prospects […] in the years to come”. 

More broadly, this new announcement fosters the active policy of development of the extractive sector initiated by the Ivorian authorities, which have been multiplying initiatives for many years to attract companies in the sector (promotion of blocks, revision of the oil code in 2015). With a clear objective: to significantly increase current production – about 34,000 barrels/day, from four blocks managed by the Société Nationale des Opérations Pétrolières (Petroci), Canadian Natural Resources and Foxtrot International -, which remains modest compared with neighboring Ghana (110,000 barrels/day) or the Nigerian giant (2.2 million barrels/day). 

 « It is therefore possible to see the revenues of Côte d’Ivoire quadruple »

The announcement of the discovery by ENI takes place in a context of post-COVID recovery, with an oil price close to 80 dollars, up sharply from its lows of June 2020 (around 35 dollars). It equally confirms, if need be, the profound change in the sector on the continent in recent years, with the emergence of new producing or developing areas (Senegal, Ghana, Côte d’Ivoire, Tanzania, Kenya, Uganda, Mozambique), now in competition with the traditional African oil states (Libya, Algeria, Nigeria, Angola, Congo, Gabon, Equatorial Guinea …) 

Stéphane Dan, an Ivorian expert in Energy and Resources, sees a number of beneficial consequences for Côte d’Ivoire with this expected entry into operation. On the financial level in particular. “With a current domestic production estimated at 35,000 barrels of crude oil and 220 million cubic feet of gas per day, the State of Côte d’Ivoire has revenues of between 20 and 40 billion CFA francs per year (between 30 and 60 million euros). However, in the exploitation phase, this discovery would increase daily production by more than 100,000 barrels of crude oil. It is therefore possible to see the revenues of Côte d’Ivoire quadruple,” the expert predicts. 

Impact on employment

Another expected positive spin-off is “the impact on the recruitment of workers in the sector”, as the example of Senegal seems to show. The country of Teranga – a new entrant to the African oil arena – has seen its local training institutes (INPG, IST, polytechnic schools in Dakar and Thiès, etc.) multiply in recent years to train a qualified workforce that is increasingly in demand by operators in the sector. However, a person familiar with the matter recalls, on condition of anonymity, that there could be, on the contrary, “a reduction in employment if the installation of the extractive company destroys jobs in the vicinity of the installation site”. This is not to mention “the environmental degradation that could produce food poisoning, water and air pollution, negative consequences on fisheries resources and the degradation of marine and underwater biodiversity with its corollary of evils on the marine balance,” argues this source.

However, this does not put a damper on the optimism of Stéphane Dan, who affirms that this surge of the Ivorian hydrocarbon sector “will have a positive impact on the Gross Domestic Product, [because] the players in the value chain, particularly the technical support companies for operations, the staff recruitment companies and the offshore catering companies [will see] their activities grow.”

 «Ability to negotiate better contracts and increase its share of revenues»

The country should also “be able to negotiate better contracts and increase its share of revenues”, says the specialist, who cites the example of Nigeria, where “the state has better leverage, which allows it to negotiate contracts with shares around 50%. The recent discovery in Côte d’Ivoire leads us to believe that future contracts will see the State’s share increase,” concludes Stéphane Dan, who also points out that “Côte d’Ivoire is an active member of the Extractive Industries Transparency Initiative (EITI) and regularly communicates on revenues from extractive activities. The allocation key in force grants 90% of the shares to the company conducting the exploration and 10% to Côte d’Ivoire, through its national company Petroci Holding. 

Ce message est également disponible en : FrenchArabic