FEATURE: Congo in uphill battle to hit 'ambitious' 500,000 boe/d goal

OPEC member Republic of Congo has reestablished its lofty aim of supercharging oil and gas output to 500,000 b/d of oil equivalent within three years, as it looks to put past mistakes behind it and battle other mature African producers for investors' attention.

Analysts and oil executives say it will be easier said than done.

"Our national development plan is to develop the economy, but we cannot start without the development of hydrocarbons," Bruno Itoua, Congo's oil minister, told an energy conference in Brazzaville last week.

"We have hope that by the next three years, we will have big discoveries that will make a big change," he continued. "That we will go beyond [500,000 boe/d]."

Oil output has fallen to 260,000 b/d, from 350,000 b/d in 2019, according to the Platts OPEC Survey from S&P Global Commodity Insights, driven by field maturation, limited exploration, and underinvestment.

A reversal of fortunes looks challenging after the yearslong slide.

On March 26, a long-awaited deepwater-focused bid round launch, planned to coincide with the Brazzaville conference, was abruptly postponed.

"To reach 500,000 is ambitious, it's a good target, it requires a lot of money and requires that we have good discussion with the government in terms of fiscal terms and attracting investors," Jean-Michel Jacoulot, CEO of Trident Energy, which recently purchased Congolese assets from Chevron and TotalEnergies, told Platts on the event's sidelines.

Mature fields

Congo-Brazzaville holds an estimated 2 billion barrels of proven oil reserves, but its current output comes from a smattering of mostly mature fields operated by European IOCs, smaller producers and a handful of independents.

Unlike Nigeria's NNPC and Angola's Sonangol, Congo's heavily indebted national oil company, SNPC, is not in a position to undertake exploration. Talk of a global energy transition has triggered a flight of Western capital from mature basins in Africa, exacerbated by the pandemic, leaving Congo to compete with regional producers for exploration dollars.

TotalEnergies is the country's largest oil producer, at 102,000 b/d of oil, followed by Perenco, then by increasingly gas-focused Eni at 70,000 boe/d according to company sources, and Wing Wah and Trident with 56,000 b/d and 30,000 b/d, respectively.

Investors say reaching Congo's stated goal will require production increases at marginal fields, significant new exploration and chunky gas production in the form of LNG.

Jacoulot said "a lot of investment" was needed around existing fields, particularly those held by Trident, Perenco, TotalEnergies, and Ammat, a small Congolese player. Through workovers, infill drilling and infrastructure-led exploration, Trident can add around 12,000 b/d of oil in the next three years at Nkossa, Jacoulot said, while the upcoming Moho-G well being drilled by TotalEnergies and Trident could increase production slightly.

Chinese player Wing Wah is looking to boost output by 24,000 b/d with an upcoming horizontal drilling campaign.

Exploration dollars

However, eking additional barrels out of mature fields will not get the job done, experts say.

"You won't get to 500,000 with existing assets alone, you will need some exploration," Tim O'Hanlon, the longtime former head of Tullow Oil's Africa operations, told the Brazzaville conference, imploring the government to establish a "drop-dead gorgeous fiscal environment" to encourage investment.

"There's nothing missing, you have brave investors ready to invest, cutting edge tech. So it's up to the government to really encourage us to deploy those resources," he said. "Money is lazy, it will go wherever it finds the easiest path."

Jacoulot said there had "not been enough exploration in Congo to feed the machine and continue to find new oil. It needs to happen."

The new licensing round should feature onshore and offshore exploration blocks, the ministry previously said, some with existing hydrocarbon signs.

Meanwhile, Itoua said Brazzaville was "looking to redo the hydrocarbon code of 2016 to make it more attractive," noted that the licensing round was "ready for the official launch", and said he was bullish that "we will have new discoveries in the coming years that are significant".

But analysts hint that without quick action on fiscal terms and new licenses, Congo could be running out of time to secure the investment required to achieve its target.

"Investor interest in Congo seems to have picked up, but people appear to be waiting for the announcement of both the bid round and improved fiscal terms before pursuing potential investments in the country," said Lucinda Valerie Ross, a senior analyst with S&P Global Commodity Insights.

Gas strategy

The third pillar is gas, which has long played second fiddle to oil for Congo's government, but which is now seen as the key to rapid production growth and industrialization.

"We have a particular need for gas," Itoua said, adding that Congo would be appointing a director general for gas and opening a Congo gas office to run the local market.

It will get a boost in December 2025 when Eni ramps up production at its Marine XII FLNG project — often called Congo LNG — to about 75,000 boe/d, or 4.5 Bcm/y, from around 16,000 boe/d currently.

Trident could add as much as 40,000 boe/d of gas production at its Nkossa field, Jacoulot said, but first must agree a gas monetization deal with the government.

The country has been slow to produce a gas master plan and gas code, laying out fiscal terms and incentives. Itoua said the national gas strategy "is not ready yet and is taking time."

"We need clarity of what will be there, for us to deliver the gas project we need to know the conditions," Jacoulot said on the gas code.

According to Commodity Insights analyst estimates, Congo gas production could triple by 2028 to almost 120,000 boe/d thanks to Eni's Marine XII FLNG expansion and Wing Wah's Banga Kayo project.

In recent months, Congolese energy officials have held discussions with their counterparts in Senegal, Angola, Chad and Gabon, and are aware of the intense battle for exploration dollars, sources said.

In his remarks to the conference, Itoua vowed a change of approach. "We will speed up negotiations, speed up licenses, establishment of fiscal terms, legal frameworks," he said.

"Congo seems to be open for business and focused," Anastasia Deulina, CFO of Africa-focused Afentra, which holds assets in Angola, told Platts on the sidelines of the conference, adding that Congo was currently Afentra's "second most interesting" jurisdiction in the region.

"Whether or not the 500,000 barrels is achievable, we'll wait and see," she said, "but at least there is a plan, there is an ambition."