INTERVIEW: Republic of Congo to double hydrocarbons output by 2025 with pivot to gas

The Republic of Congo is sub-Saharan Africa's third largest oil producer but is tilting its energy mix towards gas as it awaits the start-up of its Marine XII project, which could make the country one of the world's top five LNG exporters and a key supplier to Europe.

The project, whose first LNG cargo is due to be exported in December, will help raise Congo's hydrocarbons output to 500,000 b/d of oil equivalent in two years, Bruno Itoua, the country's oil minister, told S&P Global Commodity Insights.

That is also the timeframe in which Congo's new 50,000 b/d Chinese-built refinery is due to come online, he said.

"Based on what we know today we think that in 2025, 2026 we should reach a level of 500,000 boe/d," Itoua said in an interview on the sidelines of African Energy Week in Cape Town.

Eni, which is developing Marine XII, has its Tango FLNG vessel en route to Congo. The Marine XII project is expected to produce 2.5 million mt of gas in 2025 and comes as European buyers are scrambling for new supplies in place of Russian gas cut off due to the war in Ukraine.

It will add to the country's current 250,000 b/d of crude production, according to the latest Platts survey of OPEC+ output by S&P Global Commodity Insights.

Beyond Marine XII, a number of foreign oil companies are prospecting in the country, which has been an OPEC member since 2018.

"The blocks that will influence production in Congo will be those operated by Eni, who announced a discovery on the Marine XI Bis block, and those with the [Chinese] operator Wing Wah who are in the process of traversing the Banga Kayo," Raoul Ominga, head of state owned Société Nationale de Pétrole du Congo, in a separate interview. "We also have Perenco who have made a discovery, and a new operator Mercuria who are starting exploration and production."

SNPC's own production will rise from 50,000 b/d today to 60,000 b/d in 2024, Ominga said.

New refinery

With a stated aim of "making energy poverty history by 2030," attendees at African Energy Week lamented the continent's meager refining capacity. Although Africa produces plenty of crude, insufficient downstream infrastructure forces countries to buy refined products on volatile international markets.

Congo-Brazzaville is in such a situation, having seen its 25,000 b/d Pointe-Noire refinery fall into disrepair.

"It is a big issue for us. Our refinery in Pointe-Noire is too small. The efficiency is very, very bad," said Itoua. "We know the solution to improve efficiency, to have a better return on investment, but all the solutions are very expensive. And right now we, the government, don't have money to put into the old one to improve the way it is working. The SNPC don't have money, so we try to raise funds for that."

One solution is a Chinese-built second refinery which, at 50,000 b/d, would meet domestic demand and leave excess production for export. Itoua said construction would begin in Q1 2024, with production starting 18 months later.

"They have all the equipment ready now to be put on the boat, I think next month, so they think they will be able to start working in the beginning of next year," Itoua said. "It's good news for us to avoid importing the manufactured products which are very expensive for us."

Crude supply to the new refinery still needs to be ironed out though, he said.

For now, Congo-Brazzaville continues to find buyers for its flagship Djeno crude in China, despite Beijing's increased demand for cheaper Russian barrels following the Ukraine war.

"They have even bought Iranian oil, despite that the market has stayed the same. The energy demand in China is enormous," Ominga said, adding that Congo's ideal oil price to balance production and new development is $75/b.

Platts, a unit of S&P Global Commodity Insights, last assessed Dated Brent at $93.09/b on Oct. 23.

Djeno is a medium, sweet crude with an API gravity of 26.4 and sulfur content of 0.54, according to the Platts Periodic Table of Oil by S&P Global. Its average volume was 210,000 b/d in 2022.

Congo also produces light sweet N'Kossa and heavy sweet Yombo.

OPEC quotas

Congo's focus on gas comes as its crude production has declined due to its maturing fields. It is not alone in this among Africa's OPEC members.

Following hours of tense negotiations at the last OPEC+ ministerial meeting in June, Congo-Brazzaville, Nigeria, Angola and Equatorial Guinea – all of whom have failed to hit their output quotas due to underinvestment and frequent outages – agreed to 2024 baseline and quota downgrades unless they could boost production by November.

Itoua said oil production would remain just under 300,000 b/d in 2024. Its OPEC quota currently stands at 310,000 b/d.

Despite reports that African countries had been strong-armed into accepting lower production baselines, Itoua said the revisions would improve transparency and cooperation.

"Last time we had a meeting in Vienna we decided for some countries, mainly for African countries, to have a certification of...production capacity," Itoua said. "And after that all the country members will do the same thing, so we will have the same basis and knowledge of capacity of production and based on that we will be able to say, 'if you want to cut we are cutting on the same basis.'"

With Saudi Arabia and Russia co-chairing the OPEC+ alliance, the inability of many African members to hit their quotas has lessened the continent's influence in the group, which requires spare production capacity to act as the market's swing producer. The vast majority of the world's spare capacity is now in the hands of Saudi Arabia and the UAE.

But retaining membership in the group remains key for Congo, Itoua and Ominga insisted. The alliance is set to meet Nov. 26 to discuss production policy into 2024, amid conflicting economic signals and potential disruptions from the Israel-Hamas war.

"Africa's voice counts [at OPEC]," Ominga said. "It is not just about oil, it's also about politics. And the Saudis have a responsibility to unify. If you listen to the African Petroleum Producers Organization countries, the language that they use is basically the same as that encouraged by OPEC, that creates synergy."