The Republic of The Congo – Energy: New infrastructure & logistics

Introduction

The Republic of the Congo has been producing oil since 1957, but production increased sharply following offshore discoveries in the early 1980s at Pointe-Noire that have since made the Republic of the Congo the fourth largest oil producer in Sub-Saharan Africa. Pointe-Noire, the country’s second largest city and main economic center, benefits from its location on the West Coast of Africa, providing easy access to the to the Congo Basin and Central Africa. Thanks to its flourishing oil industry and an ongoing project to build a deep-water harbor, the region can look forward to a bright future. Over the last 15 years, heavy investment in the oil industry has helped strengthen international confidence in the Congo’s economy.

Challenges:

Oil production in the Republic of the Congo is now around 310,000 barrels/day, generating 90 percent of government revenue and 90 percent of export earnings. The French company Total controls around 60 percent of output; Italy’s ENI produces 30 percent, and the remaining 10 percent is divided between the smaller players Congrep, Murphy and the state company SNPC. Last year in 2011, annual production hit a record 109 million barrels. The government is aware of the need to use its hydrocarbon revenue wisely and is looking to the future. “Investing in education is as important as investing in oil and mining extraction. If we do not make the effort now, we will not be able to progress with the economic development of our country,” says André Raphaël Loemba, ministre des hydrocarbures.

Outlook:

There are two natural oil basins in the Republic of the Congo. The coastal sedimentary basin, exploited since the 1960s, is to undergo a new exploration campaign to identify new offshore fields. The second area is in the Cuvette Basin, which has yet to become operational. Bids have been invited from investors interested in exploring there. A new legal framework is expected to help promote further investment in the oil sector of the Republic of the Congo. Analysts say that the country must renew its stocks to slow down the natural decline of mature fields as well as anticipate the predicted decline of oil revenues.

Facts and Figures:

Around 95 percent of oil production is currently offshore; exploration and production of hydrocarbons take place deep offshore under difficult operating conditions, resulting in technologically-intensive barrels. Total E&P Congo is the largest oil operator in the country, producing around 200,000 barrels per day. The country’s largest private employer and leading investor, Total is a major player in the Congolese economy. Total began its activities in the Congo in 1968, and the Congolese subsidiary has since opened several conventional offshore sites. Moho-Bilondo, the first deep offshore field, was discovered in 1998 at a depth of 700 meters on the Haute Mer block. It began production in April 2008, marking a milestone in the Congo’s oil industry. While maintaining its conventional offshore presence, the group has also oriented its strategy toward the very deep offshore, including the development of Moho Nord. Total also took part in the exploration of MTPS (Mer Très Profonde Sud: 2,000 to 2,500 meters deep) where five discoveries have been made. “After 40 years in the Congo, we retain our ambition to continue working here, and our efforts are intended to strengthen and sustain our position as a major player in the Congo. Our mission is to respect the planet and local communities, to remain committed to major output, to use cutting edge technology, and to develop our workforce and to work with all stakeholders,” says Jacques Azibert, CEO of Total.

Optimizing Logistics:

The SNPC (National Society for Congolese Petroleum) was created in 1998 and is active throughout the entire oil chain. The SNPC has recently acquired a drilling rig, making it an operator. In 2002, Hydro-Congo, Chevron, Total and Tacoma/Puma- Energy (U.K.) formed the Société Commune de Logistique Petroliere (SCLOG) to transport oil products throughout the country. SCLOG has signifi cant infrastructure assets: nine warehouses and a storage capacity of 750,000 m3. Since 1976, petroleum refi ning has been carried out by CORAF (Congolese Refi ning), a subsidiary of SNPC. The only public refi nery in the Republic of the Congo is relatively old, with obsolete technology that increasingly fails to meet international quality standards. The current project for its restoration is a key issue for the whole downstream oil sector in the Congo. There are several petroleum product distributors in the Congo, among them Total, PUMA, X-OIL and SNPC. Inspectors are also present, and they offer international expertise to companies in the oil sector: SGS, Bureau Veritas, ITS, etc. Regarding carriers, mass transport is operated by SCLOG or by private operators such as PHOENIX, KARGO, or FAAKI. The downstream sector is regulated by ARAP, the regulatory authority for the downstream oil Industry. Created on February 23, 2000, the Congolese Shippers’ Council (Conseil des Chargeurs Congolais) is a national trade promotion body that provides assistance to shippers. The CCC’s current CEO, Jean- Jacques Banuanina, says the body’s job is “to contribute to trade facilitation, promote freight policy and defend the interests of Congolese shippers. Our task consists of negotiating freight rates and conditions with international ship-owners, port authorities, as well as auxiliary transport carriers in all modes.” The CCC has recently initiated two major projects. The fi rst Electronic Cargo Tracking (CGS), monitors international traffi c, as well as identifying goods, providing statistics, maintaining safety standards and generally facilitating the traceability of cargo. The second, the Maritime Single Window, known as GUMAR, is a computerized system that speeds up and simplifi es communication between shipping companies and port authorities.

The Local Content:

Foreign companies operating in the Congo are committed to developing local content in terms of employment and suppliers, community activities and application of national regulations. This provides social and economic benefi ts, and creates a stable relationship with host communities. Local content maximization is an important aspect that is always considered during the recruitment and vendor process. People management is focused on skills improvement. “Since the French international oil services company SCHLUMBERGER began operating in the Congo in 1970, it has been committed to local content,” says Joel Nana Kontchou, CEO of SCHLUMBERGER CONGO. “The international values of SCHLUMBERGER are applied 100 percent in the Congo. What makes SCHLUMBERGER Congo stand out is its emphasis on the development of local forces skills. SCHLUMBERGER has some 600 employees in the Congo, including 120 expatriates, with more than 50 Congolese abroad for training.” The Congolese subsidiary started out operating in SCHLUMBERGER’s core business—evaluation of oil wellscore business—evaluation of oil wells and has gradually expanded its range of activities. Today, SCHLUMBERGER assists oil companies in areas such as seismic surveys, angled drilling, and construction of wells from the exploration phase through to production, on to the end of a well’s life cycle. Current SCHLUMBERGER projects in the Congo involve deep water wells and the optimization of onshore fields.

New Infrastructure:

government policy to build new infrastructure has created a boom for the construction industry. “The development of road infrastructures will improve traffic and transportation in the Congo Basin, and this should allow us to access larger markets, for example, DRC,” says Bassam BERRO, CEO and founder of TRANSLOGISTIQUE, a company specializing in the rental of large vehicles and some minor construction services. TRANSLOGISTIQUE has been operating in the Congo since 2009; it has a permanent workforce of 15 and a fleet of about 60 vehicles. The Republic of the Congo’s economic capital is Pointe- Noire. The deep water port at Pointe-Noire is one of the largest and deepest ports in West Africa and is a vital communication axis in equatorial Africa, serving the entire Congo Basin including the Democratic Republic of Congo (DRC), Central African Republic and northern Angola. The port is capable of berthing Panamaxsized vessels and is a regional center for container traffic with bulk materials handling facilities and a logistics center for offshore oil exploration. The BOLLORÉ group is involved in work on transport corridors in the Congo Basin. The road between Pointe-Noire and Brazzaville will have a huge impact on logistics and transport in the country. Approximately 600 km long, the road linking the two main cities is close to completion. This road from the ocean to the hinterland illustrates the Republic of the Congo’s vision to become an African transport hub. The road will bring industrial goods to rural areas and provide an outlet for agricultural output and facilitate tourism. In October 2010, the Republic of the Congo became self-sufficient in electricity production, but the distribution network is largely unable to meet demand. As with much of Africa, secure electricity supplies remains the decisive challenge for the Republic of the Congo.

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