Results from the Republic of Congo’s first licensing round, with the award of blocks to Kosmos Energy and Perenco and the provisional allocation of a block to Total, has provided a positive backdrop for the country’s second round which will close in June 2019, said data and analytics company GlobalData
The company’s ‘Republic of Congo Upstream Fiscal and Regulatory Report’ explained that this second 18-block licensing round will be the second test for the new hydrocarbon framework, which was introduced in 2016 when the country adopted a new hydrocarbon code and production sharing model.
Regionally, the Republic of Congo presents relatively attractive contractual terms for oil and favourable terms for natural gas, it added.
Alessandro Bacci, Oil and Gas Analyst at GlobalData, commented, “Much of the fiscal burden under new contracts are linked to negotiable terms and may, therefore, depend on the levels of investor interest. The results of the first round appear encouraging, though, after the closing of the first licensing round, it took a long time to award the blocks to the IOCs. Five blocks on offer through the second licensing round were already unsuccessfully offered during the first round.”
The report also noted that the country aims to increase the development of its gas sector. Specifically, the country wants to promote development through four avenues: gas to power (the only one implemented right now), gas to industry, petrochemicals projects, and gas export.
Bacci added, “Although the new hydrocarbons code has improved gas terms, the passage of a new gas code is crucial to support such developments. Most gas projects are in the early design stages, and a clear government policy and regulatory environment will be needed to attract investment.”