Gabon's Minister of Oil and Hydrocarbons Pascal Houangni Ambouroué has unveiled a new offshore licensing round covering 12 shallow-water and 23 deep-water blocks.
A report from global law firm Dentons pointed out that this new bid round for offshore licenses takes place in the context of the adoption of a new hydrocarbons code for Gabon in a bid to attract further investment in to the country's upstream industry with more generous terms on offer.
According to Denton, the Minister announced that such revised legal framework should be adopted by the end of the year and aims at fostering competitiveness and adaptation to oil price fluctuations. One flagship change to the regime is that corporate income tax will be reduced from 35% to zero.
According to details revealed by Gabonese authorities, under the new regime interested companies would bid for production sharing contracts with an exploration period of 10 years and an exploitation period of 15 years for oil and 20 years for gas, which could both be further extended by an additional 15 years.
Dentons, world's first polycentric global law firm, said that this proposal in the new hydrocarbons code appears to mark a significant increase in the periods for both exploration, and development and production.
Under the proposed regime, the Government of Gabon will own a 15% carried interest once a discovery has been made (down from 20% under the Hydrocarbons Law). It is not yet clear whether the national oil company will continue to be able to acquire up to 15% in each production sharing contract at market conditions, as it is currently is able to do under the Hydrocarbons Law.
As for royalties, rates are to be set at 7% for oil and for 4% for gas in conventional offshore areas, decreasing to 5% for oil and 2% for gas in ultra-deep offshore areas. This constitutes a significant reduction compared with the current Gabonese upstream legal framework, where royalties rates are contractually set between 13% and 17% for conventional areas and between 9% and 15% for deep offshore.
Profit oil is to be set at 45% and cost oil recovery capped at 75% for oil and 90% gas.