Over the last 50 years Gabon’s economy has been largely dependent on oil extraction and, despite declining levels of oil production and government efforts to promote economic diversification, this continues to be true today. According to the World Bank, oil has on average accounted for 45% of GDP, 81% of exports and 60% of budget revenue over the last five years.

PRODUCTION LEVELS: Gabon first found a commercially exploitable oil field in 1956 and, as new discoveries continued, so did drilling and production. This eventually made Gabon the third-largest oil producer in sub-Saharan Africa during most of the 1980s and 1990s. After achieving peak production in 1997, with 370,000 barrels per day (bpd), maturing oil fields and a lack of major new finds caused output to decline by one-third, down to 245,000 bpd in 2012.

Gabon has historically relied on large oil fields, such as the Gamba/Ivinga projects (1963-73), the Grondin Mandaros area (1974-88) and the Rabi field ( 1989-2010), to achieve and maintain high levels of oil production. After production in Rabi started declining in 1997, the country encouraged the development of smaller oil fields, which today represent a bigger share of total production and have helped slow the overall decline. To reverse this downward trend, the government is now encouraging deepwater exploration, which could increase production levels if results are positive.

According to the “2013 BP Statistical Review of World Energy”, Gabon’s oil production in 2012 registered a year-on-year fall of 3.5%, going from 254,000 to 245,000 bpd. BP estimates that a total of 90.2m oil barrels, the equivalent of 12.3m tonnes of oil, were produced in 2012. Total Gabon, a subsidiary of the French oil giant, sets the bar a bit lower in its 2012 annual report, recording instead 84m oil barrels, for a year-on year decrease of 5.6%. In either scenario, Gabon is the fifth-largest producer of oil in sub-Saharan Africa, behind Nigeria, Angola, the Republic of Congo and Equatorial Guinea.

RESERVES: With 2bn barrels of proven oil reserves, accounting for 0.1% of the world’s total, Gabon has the fourth-largest oil reserves in the sub-Saharan region, behind Nigeria, Angola and South Sudan.

As for the evolution of oil reserves in Gabon, they appear to have stabilised at 2bn barrels in recent years, although the recent discovery of a viable hydrocarbons complex in one of Total’s deep offshore blocks may see the figure begin to tick upwards again. According to BP, the country’s reserves remained unchanged from 2011 to 2012, after growing significantly in the 1990s, going from 800m barrels in 1992 to 2.4bn in 2002, due to changing production dynamics and new discoveries. At current production levels, BP expects the country’s oil reserves to last about 22 years.

OIL EXPORTS: According to the US Energy Information Administration (EIA), Gabon exports more than 90% of its crude oil. Key export destinations for Gabonese crude in 2012 included the US (15%), India (14%), Europe (12%), Indonesia (11%), Australia (10%) and Japan (9%), representing an increasingly diverse export range, particularly compared to the 1990s and first half of the 2000s, when the US on average accounted for almost 60% of the country’s crude oil exports.

The majority of Gabonese oil exports currently consist of Mandji and Rabi Light. Mandji is a medium-heavy crude, high in sulphur, and supplied mainly to refineries on the Mediterranean, as well as to the US Gulf Coast and to Singapore. Rabi Light is comparatively low in sulphur and is supplied to North America’s petrol market and Asia’s low sulphur fuel oil market. Both Mandji and Rabi Light trade at a differential to the price of Dated Brent. In 2012, Mandji traded at an average discount of $4.75 per barrel, while Rabi Light traded at an average premium of $0.34 per barrel.

The price of oil in Gabon is determined in reference to that of North Sea crude oil, also called Dated Brent due to its set delivery dates. Dated Brent averaged $111.67 per barrel in 2012, reflecting a $0.40 per barrel increase over 2011. During the first quarter of 2013, it reached an average of $112.6 per barrel, down 5% from the $118.6 recorded in the same period of 2012.

OPERATING COMPANIES: Of the 22 operators reportedly present in the country, eight are currently producing oil, including majors Shell Gabon and Total Gabon and a number of smaller companies, notably Perenco, Addax, Maurel & Prom, VAALCO and Tullow Oil. A stateowned oil company, the Gabon Oil Company (GOC), was also recently created.

Historically, the principal oil producers in Gabon have been Shell Gabon and Total Gabon. Shell Gabon, a subsidiary of Royal Dutch Shell, has been in the country for over 50 years and generated an average 64,000 bpd in 2012, making it the most productive oil operator. Total Gabon, which arrived more than 80 years ago, and has regularly been one of the primary producers, produced 55,800 bpd in 2012, a slight decline year-on-year due to maturing fields and scheduled work conducted at the Grondin and Torpille platforms.

SMALLER PLAYERS: Smaller companies have recently begun playing a more important role as producers in the country. French oil firm Perenco has been in Gabon since 1992 and, as a result of an ambitious development and acquisition strategy, achieved an average of 58,000 bpd, making it the second-mostproductive oil operator in 2012.

Bought in 2009 by China Petroleum & Chemical Corporation (Sinopec), Addax Petroleum has been operating in Gabon since 2004. Until recently, Addax held a working interest in five exploration and production sharing contracts (EPSCs), including three producing fields, two of which, Obangue and Tsiengui, were operated by Addax independently, while the third, Koula, is operated by Shell. Together the three have so far yielded about 40,000 bpd. In January 2013, however, the government took over the Obangue field, citing a breach of contract, and in June 2013 announced it did not intend to renew the licence for Tsiengui. According to local media, the GOC is now operating the Obangue field.

VAALCO Gabon, a subsidiary of the Houston-based VAALCO Energy, has two production sharing contracts, one for Etame Marin, an offshore block dating from 1995, the other for Mutamba Iroru, an onshore block acquired in 2005. In 2012, VAALCO generated a total of 7m oil barrels, equivalent to about 19,180 bpd.

Paris-based Maurel & Prom made its entrance to Gabon in late 2004 and has attained stakes in five production and four exploration permits. Of the company’s five production permits, four are 85% owned by Maurel & Prom, with the final permit being 92.5% owned. In 2012, the company’s share of production accounted for a total of 15,057 bpd.

Tullow Oil arrived in 2005 and is currently a partner in 21 licences, 14 of which include producing fields. While the British firm does not independently operate fields in Gabon, partnerships with operators Addax, Maurel & Prom, Perenco and VAALCO have allowed it to post a total production of 14,000 bpd in 2012.

The GOC, for its part, became a producer in 2013 and it now operates two fields: Remboue, acquired in 2012 via a production sharing contract, and the recently requisitioned Obangue field, from which the state company expects to generate about 9000 bpd by 2014.

NATIONAL OIL COMPANY: The GOC was created by presidential decree in June 2011 in order for the state to increase its involvement in the oil industry, from exploration and production to commercialisation.

Gabon did not have a national oil company for over two decades, since 1987, when the previous company, Petrogab was disbanded. The new company is expected to administrate all state activities, contracts and stakes in the sector.

The new national oil company has a diverse set of functions. According to the decree, its key tasks include: holding, managing and participating in a wide range of activities, including both upstream and downstream, on behalf of the state; managing state participation in oil and gas fields, as well as overseeing companies holding conventions of establishment and production sharing contracts; monitoring and operating – alone or in association, partnership or joint venture – hydrocarbons deposits and any related or associated substances; and, in general, performing all financial transactions related directly or indirectly to the hydrocarbons industry under Gabonese or foreign law. For the moment, it is still unclear how these functions will be carried out. Once approved, the new hydrocarbons code is likely to shed some light on the future role of the GOC.

UPSTREAM RE-DEVELOPMENT: International oil companies (IOCs) have in recent years been investing significantly in re-development of their operations to boost production capacity and mitigate the gradual decline of oil output as existing fields mature.

Chief among these investments has been Total Gabon’s $2bn, five-year redevelopment programme. According to Henri-Max Ndong Nzue, Total Gabon’s director for strategy, planning and business, “The redevelopment of the country’s first offshore oil field, Anguille, together with a drilling campaign in other fields, will allow Total Gabon to raise its oil production level to over 60,000 bpd for a few years, increasing the company’s production for the first time in a decade.” In 2012, Total Gabon invested $882m in development activities, up from $700m in 2011.

Smaller operators have also made investments in upstream re-development. Perenco is currently undertaking a re-development programme in northern Gabon, with the company investing $400m in 2012 and expecting to reach $500m for the first time in 2013. VAALCO is planning to build and install two new production platforms in Etame Marin. Together with their associated new wells, this investment will total some $500m. “The two platforms,” VAALCO Gabon’s general manager, Rodney J MacAlister, told OBG, “aim to return field production to plateau rates.” MacAlister continued, “The terms of the contract enable us to recover our investment fairly quickly with an adequate return.” Maurel & Prom, for its part, invested €153m for development work in 2012– almost twice as much as in 2011 – in large part to raise production with the goal of reaching 27,000 bpd by 2013 and 35,000 bpd by 2014.

While in the short term investments in upstream redevelopment are likely to help stabilise, or in some cases even slightly increase, oil production levels, over the long term the future of oil production in Gabon will depend on major new offshore finds, especially at deep and ultra-deep depths.

Gabon has seen a strong drive for offshore exploration in recent years due to a number of factors, including declining levels of oil production in maturing fields, potential geological similarities between the Brazilian and Gabonese basins, and Brazilian oil finds at several levels of water depth, particularly pre-salt oil discoveries in ultra-deep waters (beyond 1500 metres of water depth). Several countries alongside the Gulf of Guinea have seen success with deposits of increasing depth in their offshore areas, such as Ghana’s Jubilee field at 1100 metres. With these elements in mind, a few oil companies in Gabon have started drilling test wells in search of untapped oil reserves, some of which have shown encouraging initial results (see analysis).

10TH BIDDING ROUND: The most prominent harbinger of the potential offshore fortunes is Total’s exploratory drilling in the Diaba block. Conceded in late 2006 to Total Gabon, the block is believed to share many characteristics with other deepwater pre-salt plays. In the summer of 2013, operators hit a viable hydrocarbons system in the block – primarily gas with condensate – and began evaluating the recoverable potential. The final outcome will likely affect the long-awaited bidding round for offshore blocks, and could potentially have a major impact on the country’s upstream production.

The Gabonese government had scheduled a 10th licence bidding round for October 2010, containing 42 exploration blocks covering a geographical extension of 118,000 sq km, extending through both deep and ultra-deep waters. Despite the strong interest expressed by the industry at the time, the government subsequently cancelled the bidding, citing delays in the new hydrocarbons code as well as security and environmental concerns raised by the Deepwater Horizon incident in the Gulf of Mexico in April 2010.

Speaking to the media during the fifth African Oil Congress held in Libreville in March 2013, the minister of petroleum, energy and hydroelectric resources, Etienne Ngoubou, explained that the government would engage in individual negotiations – including with a number of reportedly interested IOCs, such as ExxonMobil, Marathon Oil, Total, Noble Energy and Sinopec – to allocate available blocks for exploration in deep and ultra-deep waters. Negotiations have since been ongoing and, while the new code is yet to be approved, the government is expecting to submit the code to parliament by the end of 2013. As for the suspended licensing round, a document reportedly circulated at the WTO in July 2013 suggested that the government plans to hold a licensing round for the deepwater and ultradeepwater blocks once the new code is adopted.

LEGAL FRAMEWORK: The hydrocarbons sector was originally regulated by Gabon’s old mining code, a document dating from 1962. Yet after several revisions, sector regulation was essentially left to a diverse set of texts, including the tax code, petroleum laws and EPSCs. In March 2013, the government acknowledged that this situation had resulted in large disparities among economic operators and an overall lack of transparency.

A number of key taxes apply to the gas and oil industry including corporate tax, an annual surface rent and royalties on production. Royalties range from 6% to 12% of total production. The annual surface rent is calculated per sq km and depends on the activity undertaken, with rent on exploration ranging from $0.03 to $0.06 per ha and rent on production varying between $4 and $8 per ha. While the common tax rate for oil and gas net profits is set at 35%, with the introduction of EPSCs in 1983, companies under EPSCs are subject to different tax rates. They are also exempt from corporate tax or any other tax, except for those already expressed in their contract, the minimum rate usually ranging from 35% to 40%. For companies still under a concession regime, the tax rate is 73%.

CODE IN THE MAKING: The government has been working on a new hydrocarbons code for some time. While the final structure of the code has yet to be made public, some of its chief features have already been discussed. Harmonising existing regulations is said to be a key element of the text, especially considering existing contracts are currently framed by varying fiscal conditions, depending on the time and context under which they were signed. According to Ernst & Young’s Gabon country managing partner, Erik Watremez, one of the major contributions of the code “will be to ensure that all operators play by the same rules. For this to occur, a transition period would be useful.”

Increasing the amount of oil revenue received by the government and, more generally, the amount of value staying in the country, is also said to be an important element of the code, especially in light of the growing capital needed to fund economic development plans. However, improving local capture of commodity production is hardly unique to Gabon, and major producers elsewhere are frequently looking to do the same.

According to the government, less than 20% of oil revenues currently stay in Gabon. The new hydrocarbons code is expected to raise this to 30% within five years, and between 35% and 45% within 20 years. While it remains as yet unclear how these goals will be pursued, the government could eventually employ a number of options, such as a revision of taxes and royalties or the creation of new production sharing schemes. The future hydrocarbons code is also expected to boost the state’s participation in the sector through the GOC, which the government reportedly intends to make an indispensable working partner in new deepwater and ultra-deepwater exploration initiatives. The government could further support greater revenue retention by mandating joint ventures between the state-owned GOC and foreign producers.

Finally, inspired in part by changes to the mining framework, which faces many of the same issues, the code is set to address a number of government concerns regarding the sustainable development of communities affected by hydrocarbons sector activities, the application of safety and environmental standards, and enforcement of local content requirements.

The proposed introduction of the new hydrocarbons code has generated much debate in Gabon, primarily within the oil community. Faced with major regulatory changes, oil companies are seeking greater understanding of the rules that may apply in the near future in order to plan their activities.

Jean Baptiste Bikalou, CEO of Petro Gabon, told OBG, “The hydrocarbons code will be beneficial for all companies involved in the energy sector. It is a tool made to clarify partnerships and help participants understand the rules of the game.” However, despite the clarity that the new code promises to provide, there are still some key issues of concern for industry players, most predominantly whether the new rules will apply from the introduction of the code.

SECTOR CONCERNS: Other causes for concern among the oil community have also emerged, including, most notably, the oil industry audit currently being undertaken by the US-based inspection and analysis firm Alex Stewart International and government actions targeting a few industry members and ending in field requisitions or non-renewal of contracts as a result of observed irregularities. The identified irregularities have so far included shortfalls in tax and Customs payments, as well as a failure to comply with environmental norms. In the case of Addax, the issues cited by the audit have resulted in a transfer of ownership for two of its producing fields. These actions, Ngoubou explained in June 2013 to the Financial Times, are merely the result of a better enforcement of contracts.

While the deepwater finds bode well for the upstream outlook, and the country’s long-term fundamentals look solid, the regulatory changes have generated a sense of uncertainty in the oil industry, compounded in part by Gabon’s February 2013 loss of its candidate status for the Extractive Industries Transparency Initiative (EITI). The country plans to continue with the EITI admission process in the future, but the change in status nonetheless clouds the short-term outlook.

HUMAN RESOURCES: Ensuring quality staffing is a challenge for economic operators in the hydrocarbons sector. Gabon’s education system is only just beginning to cater to their needs and it will take some time before it is able to churn out sufficient numbers of graduates. This, in turn, makes it difficult for companies to comply with national labour laws, most notably a 2010 reform requiring companies to limit their foreign staff to 10% of the total work force. Perceived failures to fully enforce and comply with labour laws have sometimes led to strikes by the national oil union, the National Organisation of Petroleum Employees, the latest of which took place in March 2013.

While a lack of local expertise and demanding hiring requirements pose a challenge to operators in the short to medium term, long-term investments in education and training may help improve the situation. To help alleviate this situation, the Gas and Oil Institute (Institut du Pétrole et du Gaz, IPG) was created in 2010 as a result of a public-private partnership between the government and a group of oil companies, including Total Gabon, Addax Petroleum, ENI, Shell Gabon and Perenco Gabon. With a budget of CFA4bn (€6m) for 2013-14, the IPG is designed to offer a superior technical and professional education in a variety of oil industry trades, from exploration to commercialisation. The institute is located in Port-Gentil and has already graduated about 30 students, 95% of which are currently employed by local oil companies.

GAS: A 2012 study conducted by the Gabonese government and a number of oil companies estimated the country’s gas reserves at 39bn cu metres. Proven reserves are concentrated in associated deposits in Ogooué-Maritime, a south-west province of the country encompassing Port-Gentil and Gamba. Key gas fields include Moukouti, Mwengui, Turnix, Rembo-Kotto, Ompoyi, Orindi, Oba, Olende and Niungo. Despite existing resources, the country has yet to take advantage of gas as a marketable source of energy. According to the EIA, Gabon produced 2.2bn cu metres of natural gas in 2011, of which only 170m cu metres were marketed, with the remainder being vented and flared (1.4bn cu metres) or reinjected (630m cu metres).

Oil companies and the Société d’Énergie et d’Eau du Gabon (SEEG), the national utility company responsible for water and electricity production and distribution, are at present the main consumers of gas. SEEG has a contract with Perenco and uses gas to fuel its power stations in Libreville and Port-Gentil, whereas oil companies consume gas for oil field operations.

The government is working to encourage the development of the domestic and export gas markets as part of its strategy for economic diversification. To this end, it currently supports a number of gas-related projects, such as the construction of a fertiliser plant in PortGentil, two thermal power plants based in Libreville (70 MW) and Port-Gentil (105 MW), and a liquefied natural gas export project.

Gas production has been helped in part by the continued enforcement of the ban on flaring. Flaring in Gabon has diminished in recent years, going from 5.13 to 4.67 cu metres, between 2009 and 2011. Two decrees adopted in 2009 and 2010 currently prohibit unauthorised gas flaring in the country and stipulate penalties for those who fail to respect them.

REFINING: Gabon has only one refinery, located in Port-Gentil and operated by the Société Gabonaise de Raffinage (SOGARA), a firm owned by the Gabonese government (25%) and a consortium of private companies (75%). Created in 1967, the refinery processes about 10% of Gabon’s crude oil, the remainder of which is exported. Production in 2012 did not meet the company’s expected 900,000 tonnes, reaching instead 750,000 tonnes, as a result of a five-year mandatory check-up carried out early in the year and a few technical incidents, that together interrupted production for almost a month and a half. SOGARA produces a series of petroleum products for export and local consumption. While 80% of the company’s production targets the domestic market, the refinery is not able to fully meet Gabonese demand and imports are required to make up for the shortfall.

The construction of a new refinery should help boost production capacity, and Gabon and South Korean firm Samsung Construction and Trading signed an agreement in July 2012 for the construction of a new refinery to be located in the Mandji Island Free Zone, close to Port-Gentil. The construction of the refinery is estimated to cost about CFA700bn (€1.05bn) and it is expected to come on-line in 2016. It will have a capacity of 50,000 bpd, compared to the 21,000 bpd currently processed by SOGARA. About half of output would be exported, with the rest supplying the local market.

The future of SOGARA’s refinery is still uncertain. Given its limited capacity, and the costs of meeting rising international standards, SOGARA choose to close the refinery in the medium to long term.

STORAGE & DISTRIBUTION: Gabon’s petroleum storage facilities are managed by three firms. The Société Gabonaise d’Entreposage de Produits Pétroliers, owned by the government and a group of private oil companies, operates two storage facilities, located in Owendo and Moanda respectively. Total Marketing operates a depot in Lambaréné and OiLibya manages two facilities, one in Ndjolé and one in Port-Gentil.

As for the distribution of petroleum products, four operators exist: Total Marketing, Petro Gabon, Engen and OiLibya. Total Marketing remained the chief supplier of petroleum products in 2012, followed by Petro Gabon, Engen and OiLibya. The overall volume of sales grew by 5.6% between 2011 and 2012, going from 655,230 to 692,000 tonnes. SOGARA has a monopoly on domestic sales of fuel, which it provides to distributors, although the import of oil lubricants is allowed.

Growth in petroleum product distribution is likely to follow overall economic growth, with operators in the extractive industries and construction sector continuing to play a key role as clients in the foreseeable future. Government plans for economic diversification, including greater use of cleaner energies such as gas in the medium to long run, could affect the market if major consumers start shifting from diesel to gas. For this to occur and have an impact, however, the country would have to further develop gas storage and distribution infrastructures, which are currently limited.

ELECTRICITY: The government estimates that 85% of urban areas and 50% of rural areas have access to electricity. SEEG is in charge of production and distribution under a 20-year concession granted by the state in 1997, with Veolia Water, a French multinational, currently holding a controlling stake in the company.

Despite an overall production capacity of about 390 MW, including 170 MW of installed hydroelectric power and 220 MW of installed thermal power, electricity generation in Gabon has not kept up with growing demand (see analysis). To meet rising electricity needs and power economic development plans, the government has created a strategic plan (2010-20) for the electricity sector, focusing on the development of clean energies. Ongoing projects include the construction of two thermal plants (70 MW and 105 MW), the Grand Poubara dam (160 MW) and two smaller hydroelectric projects, Fe 2 (52.5 MW) and Chutes de l’Impératrice (70 MW). Three other dams, Dibwangui, Ngoulmendjim and Booué, and 5000 km of transmission lines are also planned to be built by 2020.

The government also plans to build additional smaller hydroelectric dams as well. Construction is currently under way at Malinga (470 KW) and Iboundji (400 KW), both of which are being undertaken by Spanish company Acciona. Feasibility studies are also being carried out on a number of additional locations, including sites near Mbougou, Moulengui-Binza, Lope and Ndindi, which should be ready by September 2013.

WATER: SEEG is also responsible for water production and distribution, and the company has struggled in recent years to meet rising demand (see analysis). Key challenges in meeting demand include not only a lack of water production capacity, but also deficient distribution between production and storage points.

To tackle these challenges, the government is supporting the construction of new infrastructure, including a third water pipeline connecting the town of Ntoum to Libreville and a seventh water treatment station in Ntoum (see analysis). The government is also developing an institutional reform that is set to revise SEEG’s functions in the management of the electricity and water sectors (see analysis). The new reform is expected to be ready during the second half of 2013 and aims to give greater coherence to the electricity and water sectors, taking into consideration a number of reforms already undertaken in recent years.

RENEWABLE ENERGIES: Hydroelectricity has traditionally been the main form of electricity generation in Gabon, although thermal generation has recently surpassed it. Despite the growth of thermal generation, the country is still looking to expand generation of hydroelectric and other forms of renewables. “Solar energy has potential as an alternative source of energy, particularly for providing electricity to isolated rural areas across the country,” Bonjean Nang Ngomo, director for new and renewable energies at the Ministry of Petroleum, Energy and Hydroelectric Resources, told OBG. Solar power has been in use in the country since the early 2000s, when Siemens and the government implemented a pilot project to install a series of photovoltaic panels in 100 villages.

Other renewable energies, such as wind, are also thought to have potential. In 2010, the government contracted Canadian firm Hatch to assess wind and solar resources at six national parks in the country. The first results of the study identified winds of an average of eight metres per second in the Moukalaba area.

The government has also been considering options for using biomass to generate electricity. One such project is a proposed plan to recover waste generated in the Nkok Special Economic Zone, especially wood residue, with the intent of producing 10 MW of electricity. Another option under consideration involves recovering animal waste to generate electricity. A demonstration of the latter method took place in August 2012 in a local slaughterhouse in Owendo and the government is now working on identifying a number of sites where this project could be implemented.

FISCAL INCENTIVES: In the meantime, in order to stimulate the development of the renewable energy sector and allow its potential to be further exploited, the government is working on a revision to the existing regulations. “The aim of the reform,” Nang Ngomo told OBG, “is to put in place a regulatory framework and a set of incentives that facilitate the introduction of renewable energies into the country’s energy mix. To this end, fiscal benefits and Customs exonerations could be conceded to investors and economic operators interested in the renewable energy sector. The reform would also authorise better energy exchanges between SEEG and independent producers that are generating electricity through renewable means.”

The government is also exploring ways of making renewable energy development sustainable, especially solar energy, the cost of which is currently covered by the state to ensure free service. Rural populations that benefit from access to solar energy have a low purchasing power and are therefore unable to share the cost. The government is looking for solutions and has engaged in discussions with the World Bank to study alternative and sustainable forms of financing.

OUTLOOK: Potential in the hydrocarbons sector remains sizeable despite plateauing production in onshore fields, although short-term growth will likely be modest as IOCs wait for the new hydrocarbons code to be released. Production in smaller fields has so far contributed to helping stabilise overall oil production levels, but growth in the long term is likely to depend on a major discovery, the possibility of which appears to be higher offshore, at deep and ultra-deep depths.

While the results of Total’s first exploratory well in Diaba block could be indicative of the pre-salt potential of the Gabonese basin, only further exploration through the assignment of the remaining 42 blocks may provide concrete answers as to the amount of recoverable oil reserves it holds. Going forward, a balanced and flexible code could contribute to maintaining and even raising sector investment levels.

Plans to boost electricity and water production by building gas-fired power plants and hydroelectric dams could contribute to overcoming current sector challenges and, in particular, help meet growing demand – although this is also likely to depend on improved distribution and urban planning. An institutional reform, currently in development, should also help to improve sector efficiency over time. Access to cheaper sources of energy, such as natural gas, are likely to hinge on the development of appropriate distribution infrastructure in the medium to long term. As for renewables, alternative sources of energy appear to hold potential, particularly for providing electricity to isolated areas.