With the bulk of upstream activity having been focused on oil, Gabon’s gas reserves have been left largely untouched. This, however, is due to change in the coming years. Gas is a primary component of fertiliser production, and Gabon hopes to become a major fertiliser producer, with an eye to profiting from demand growth in sub-Saharan Africa.
Sowing Growth
Africa accounted for only 3% of world fertiliser consumption in 2013, but the “World Fertiliser Trends and Outlook to 2018”, published in 2015 by the UN’s Food and Agricultural Organisation (FAO), forecasts that sub-Saharan Africa will post the highest compound annual growth in fertiliser demand globally. Global demand for nitrogen, phosphate and potash fertilisers is expected to rise 1.8% per year to the end of 2018, while for sub-Saharan Africa it is forecast to rise 4.7%, with nitrogen and potash fertilisers to rise 4.6% and 9.4%, respectively.
Two projects are planned in the future special economic zone on Mandji Island near Port-Gentil to tap into the continent’s potential market. The first is an integrated ammonia-urea fertiliser plant currently being developed by the Gabon Fertiliser Company (GFC), a joint venture between Olam International (80%) and the government (20%). Production is aimed to start in 2017-18, with an expected capacity of up to 1.4m tonnes of granular urea per year from ammonia production of 2200 tonnes per day.
In 2014 an agreement was signed between Moroccan phosphate producer OCP and Gabonese state-owned mining group Société Equatoriale des Mines (SEM), for a roughly $2.3bn project. The companies aim to produce 2m tonnes per year of phosphate fertilisers. According to OCP, the production from the facility could potentially cover at least 30% of the continent’s total demand for phosphate fertilisers in the coming years.
Gassing Up
Natural gas is a key ingredient in ammonia production, accounting for about two-thirds of its production capacity. Gabon has proven reserves of 28.3bn cu metres, but more than 90% of its production of 2.2bn cu metres in 2012 was reinjected for oil production or flared. With new offshore discoveries by Total, Shell and Eni, Gabon could see a significant increase in gas production and the fertiliser projects would allow the country to start monetising its gas reserves.
The siting of the projects in the Mandji Island special economic zone also offers favourable taxation benefits and close proximity to the port of Port-Gentil. GFC’s project, which is slated to come on-line in 2017, will entail the building of an export jetty, as well as on-site and off-site utility facilities.
Key Benefits
The production of fertilisers ticks all the right boxes for the government, meeting its goals of diversifying the economy, using natural resources to create value-added products, increasing export revenues and supporting job creation. The projects will also contribute to the government’s aim of boosting domestic food production by increasing the availability of more competitively priced fertilisers, which will help farmers raise their yields.
One of the key benefits will be the creation of thousands of jobs directly and indirectly during the construction and operation of the complexes, in turn supporting the development of the local private sector, particularly small and medium-sized enterprises, through outsourcing services. GFC alone expects to need around 3000 workers during the construction phase, of which one-third will be Gabonese, and to create 350 direct jobs including management, engineers, semi-skilled technicians and unskilled support staff. Both developers are committed to building local technical and knowledge capacity, educating the local workforce through training programmes. GFC is educating 100 local workers on plant operations, enrolling them in courses at technical institutions, in-house courses and on-the-job training modules.
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